Case Summary (G.R. No. 74730)

Introduction

This document summarizes the decision rendered by the Supreme Court concerning the petition for review on certiorari filed by Caltex Philippines, Inc. against the Intermediate Appellate Court and Herbert Manzana. The case revolves around a dispute regarding a collection of debts secured by a mortgage, the foreclosure of which occurred during ongoing litigation.

Background Facts

• Parties Involved:
  • Petitioner: Caltex Philippines, Inc. (CALTEX)
  • Respondent: Herbert Manzana
• Debt Details:
  • Manzana purchased petroleum products on credit, accumulating a debt of ₱361,218.66 by August 31, 1969.
  • A Deed of First Mortgage was executed by Manzana in favor of CALTEX on October 4, 1969, securing the debt with a parcel of land.

Procedural History

• Initial Complaint: CALTEX filed a complaint for recovery of the debt on August 17, 1970.
• Foreclosure: CALTEX extrajudicially foreclosed the mortgaged property on September 15, 1970, selling it for ₱20,000.00.
• Trial Court Judgment: On July 23, 1980, the trial court ordered Manzana to pay ₱353,218.66 after accounting for a payment of ₱8,000.00 made by Traders Insurance and Surety Company.
• Intermediate Appellate Court Decision: The court initially affirmed the trial court's decision on June 29, 1984, then vacated it on January 31, 1986, remanding the case for further proceedings.

Issues Presented

1. Simultaneous Actions: Can CALTEX simultaneously pursue a personal action for collection and an extrajudicial foreclosure?
2. Waiver of Foreclosure: Does the filing of a collection suit imply a waiver of the right to foreclose?
3. Splitting Causes of Action: Does pursuing both remedies constitute splitting a single cause of action?

Legal Principles

1. Simultaneous Actions

• Legal Principle: A mortgage creditor may choose between a personal action for debt recovery or foreclosure but cannot pursue both simultaneously.
• Key Definitions:
  • Personal Action: A lawsuit seeking monetary compensation.
  • Foreclosure: The legal process by which a lender takes possession of a mortgaged property due to non-payment.
• Consequences: Pursuing both actions is seen as an abuse of the judicial system and may lead to dismissal of one of the actions.

2. Waiver of Foreclosure

• Legal Principle: Filing a collection suit constitutes a waiver of the right to foreclose.
• Key Definitions:
  • Waiver: The voluntary relinquishment of a known right.
• Important Procedures:
  • Once a collection suit is filed, the creditor cannot later foreclose on the property without waiving the collection suit.

3. Splitting Causes of Action

• Legal Principle: A single cause of action exists for non-payment of a debt, and the creditor cannot split the action into multiple suits for collection and foreclosure.
• Key Definitions:
  • Cause of Action: The legal basis for a lawsuit, which must arise from the same facts.
• Consequences: If a creditor files for collection first, they are barred from later filing for foreclosure on the same debt.

Court's Decision

• The Supreme Court ruled that the Intermediate Appellate Court erred in its decision to remand the case. It affirmed the trial court’s ruling, limiting Manzana's liability to ₱233,218.66 with interest and attorney's fees.

Key Takeaways

• Creditor must choose between pursuing a personal action or foreclosure; both cannot be pursued concurrently.
• Filing a collection suit waives the right to forec...continue reading

Case Syllabus (G.R. No. 74730)

Case Overview

• This case involves a petition for review on certiorari filed by Caltex Philippines, Inc. (CALTEX) against the resolution of the Intermediate Appellate Court (now Court of Appeals) dated January 31, 1986, which vacated a prior decision and ordered the remand of records to the trial court.
• The case centers around the collection of a debt owed by Herbert Manzana to CALTEX, which arose from the purchase of petroleum products on credit.

Factual Background

• Herbert Manzana purchased petroleum products from CALTEX on credit, accumulating an indebtedness of P361,218.66 as of August 31, 1969.
• To secure this debt, Manzana executed a Deed of First Mortgage over a parcel of land on October 4, 1969.
• CALTEX sent statements of account and demanded payment from Manzana, who failed to comply.
• Consequently, CALTEX filed a complaint on August 17, 1970, for the recovery of the total debt.
• CALTEX foreclosed the mortgaged property extrajudicially on September 15, 1970, and sold it at auction to itself for P20,000.00.
• Manzana claimed he was unaware of the foreclosure until much later, specifically on October 4, 1980.
• The trial court ruled in favor of CALTEX on July 23, 1980, ordering Manzana to pay a modified amount of P353,218.66, which included additional fees and interests.

Legal Issues Raised

• Manzana appealed, raising two main issues:
  1. Whether CALTEX could pursue both a personal action and an extrajudicial foreclosure simultaneously.
  2. Whether CALTEX could seek a deficiency judgment after having foreclosed ...continue reading