Title
Caltex Philippines, Inc. vs. Intermediate Appellate Court
Case
G.R. No. 74730
Decision Date
Aug 25, 1989
A debtor's P361,218.66 debt secured by a P120,000 mortgage led to conflicting remedies: CALTEX pursued both debt recovery and foreclosure. The Supreme Court ruled against splitting causes of action, reducing liability to P233,218.66 with interest and attorney's fees.
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Case Digest (G.R. No. 74730)

Facts:

1. Background of the Debt:
Private respondent Herbert Manzana purchased petroleum products on credit from petitioner Caltex Philippines, Inc. (CALTEX). As of August 31, 1969, his indebtedness amounted to P361,218.66.

2. Execution of the Mortgage:
On October 4, 1969, Manzana executed a Deed of First Mortgage in favor of CALTEX over a parcel of land covered by OCT No. 0-274 to secure his debts. The mortgage stipulated that the maximum amount secured was P120,000.00, but the deed also contained conflicting provisions suggesting the entire debt was secured.

3. Demand for Payment and Foreclosure:
CALTEX sent statements of account and demanded payment. Due to Manzana's failure to pay, CALTEX filed a complaint for recovery of the debt on August 17, 1970. Meanwhile, on September 15, 1970, CALTEX foreclosed the mortgaged property extrajudicially, and the property was sold at auction to CALTEX for P20,000.00 on October 30, 1970.

4. Trial Court Decision:
On July 23, 1980, the trial court ordered Manzana to pay CALTEX P353,218.66 (after deducting P8,000.00 paid by Traders Insurance and Surety Company) with 12% interest per annum from August 17, 1970, plus 20% attorney's fees.

5. Appeal to the Intermediate Appellate Court:
Manzana appealed, raising two issues:

  • Whether CALTEX could simultaneously pursue a personal action for debt recovery and extrajudicial foreclosure.
  • Whether CALTEX could claim a deficiency judgment after foreclosure.

6. Appellate Court's Initial Decision:
On June 29, 1984, the Intermediate Appellate Court affirmed the trial court's decision. However, upon Manzana's motion for reconsideration, the court vacated its decision on January 31, 1986, and remanded the case to determine the deficiency due to CALTEX.

7. CALTEX's Petition to the Supreme Court:
CALTEX filed a petition for review, challenging the appellate court's resolution.

Issue:

  1. Whether the respondent court erred in considering the issue of CALTEX's simultaneous pursuit of a personal action and extrajudicial foreclosure, which was raised for the first time on appeal.
  2. Whether the filing of a collection suit for a debt secured by a real estate mortgage constitutes a waiver of the remedy of foreclosure.
  3. Whether the filing of a complaint for debt recovery and subsequent extrajudicial foreclosure constitutes splitting of a single cause of action.

Ruling:

  • (Subscriber-Only)

Ratio:

  • (Subscriber-Only)


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