G.R. No. 135362 - Heirs of Salas, Jr. vs. Laperal Realty Corp.

Petitioners (spouses Romulo de la Cruz and Delia de la Cruz, and Daniel Fajardo) purchased one (1) unit Hino truck on an installment basis from Benter Motor Sales Corporation (BENTER).
To secure the installment payments for the truck, the following instruments were executed on September 22, 1982:

A chattel mortgage in favor of BENTER over the vehicle.
A promissory note for the total price of P282,360.00 payable in thirty (30) monthly installments of P9,412.00 each.

On the same day, BENTER assigned its rights and interests in the vehicle to Asian Consumer and Industrial Finance Corporation (ASIAN).

Although petitioners initially made several payments, they subsequently defaulted on more than two (2) installments.
In response to the default and in light of the "Recto Law" (Article 1484 of the New Civil Code), ASIAN opted for the remedy of extrajudicial foreclosure by sending a demand letter and then initiating foreclosure proceedings.
On September 26, 1984, ASIAN filed a petition for extrajudicial foreclosure of the chattel mortgage.

The sheriff’s attempt to seize the truck failed due to the refusal of the son of petitioners Romulo and Delia de la Cruz to surrender the vehicle.
The sheriff’s return indicated that the service for repossession was not satisfied.

On October 10, 1984, Romulo de la Cruz voluntarily brought the truck to ASIAN’s office, where it was inventoried and inspected.
Despite eventual possession, ASIAN did not pursue the foreclosure sale of the vehicle—no public auction was conducted.
On November 27, 1984, ASIAN instituted an ordinary action in court to recover the unpaid balance of the purchase price, amounting to P196,152.99, along with liquidated damages and attorney’s fees.

The trial court rendered a judgment in favor of ASIAN for the collection of the balance due.
The Court of Appeals affirmed the trial court’s decision.
Petitioners contested, arguing that ASIAN, having opted for foreclosure and then recovered the asset before completing an auction sale, should be constrained from switching to the remedy of exact performance/collection of balance.

Whether a chattel mortgagee, after electing the remedy of extrajudicial foreclosure for a purchase on installment, may later resort to demanding the exact fulfillment of the obligation (i.e., collection of the unpaid balance) when the foreclosure process was not consummated by way of an auction sale.
Whether the failure to complete extrajudicial foreclosure—due to the default of petitioners’ representative (their son) in surrendering the vehicle—permits ASIAN to shift remedy and recover the outstanding balance under the alternative remedies provided in Article 1484 of the New Civil Code.
Whether allowing ASIAN to both retain possession of the mortgaged chattel and collect the unpaid balance would result in unjust enrichment.