Source: http://lawlibrary.chanrobles.com/index.php?option=com_content&amp;view=article&amp;id=50096:gr-148980-2007&amp;catid=1496&amp;Itemid=566
Timestamp: 2019-04-21 12:21:26+00:00

Document:
G.R. No. 148980 - PCI Leasing & Finance Inc v. Sps. George M. Dai etc.
PCI LEASING & FINANCE, INC., Petitioner, v. SPOUSES GEORGE M. DAI and DIVINA DAI, Respondents.
Respondents, spouses George and Divina Dai, obtained a loan on June 16, 1994 from petitioner, PCI Leasing and Finance, Inc., evidenced by a promissory note1 for the sum of P3,352,892 payable in monthly installments of P152,265 starting on July 16, 1994. The proceeds of the loan partly financed the purchase by respondents of a vessel-fishing boat which was named "F/B Sea Doll." To secure the payment of the loan, respondents executed a chattel mortgage2 over the vessel in favor of petitioner.
In their Answer, respondents claimed that, inter alia, the possession of the vessel including its registration certificate had been surrendered to petitioner before the filing of the complaint. Respondents thus prayed for the award of damages and attorney's fees by way of Counterclaim.
Following the filing by respondents of their Answer, petitioner foreclosed the chattel mortgage and bought the vessel at the public auction conducted on January 13, 1995 for P2,000,000.5 A Certificate of Sale of the vessel in favor of petitioner was subsequently issued on January 16, 1995.
The evidence further shows that defendants were not able to pay off their obligation to plaintiff due to the fact that their fishing area in Batanes and their boat were badly damaged. Defendants in fact informed plaintiff of their predicament by sending plaintiff a copy of a letter explaining such predicament (Exh. "2"). There was no bad faith on defendants' part when they failed to comply with their obligation.
The Court is convinced that plaintiff is not entitled to recover from defendants attorney's fees and liquidated damages in the sum of P1,225,733.25. "In determining whether a penalty clause is 'iniquitous and unconscionable,' a court may very well take into account the actual damages sustained by a creditor who has been compelled to sue the defaulting debtor x x x." (Pacific Mills, Inc. v. Court of Appeals, G.R. No. 87182, February 17, 1992, 206 SCRA 317, 327) No substantial damage having been sustained by plaintiff as it already had in its possession the certificate of registration of the vessel and had in fact foreclosed the mortgage on said vessel, its claim for attorney's fees and liquidated damages must fail.
Accordingly, the trial court dismissed the parties' respective claims for damages and attorney's fees. No appeal having been taken from the trial court's decision, it became final and executory.
Petitioner thus prayed that the court render judgment in its favor and against respondents, ordering them to pay.
3. The costs of suit and collection expenses.
It is . . . apparent that plaintiff's present action for deficiency judgment is barred by the prior judgment in CEB-16691. The parties and the cause of action in CEB-16691 and the instant case are the same. Plaintiff's prayer in CEB-16691 is in the alternative. Having availed of foreclosure of the chattel mortgage, plaintiff cannot anymore come to court again and avail of its second alternative prayer. The instant case should, therefore, be dismissed. (Section 1(f), Rule 16, 1997 Rules of Civil Procedure).
Being a preparatory action for the foreclosure of the mortgage, necessarily therefore, the claim of the petitioner (deficiency judgment) which is the subject of Civil Case No. CEB-22585 was not yet covered or an issue in the said civil case. The deficiency claim of the petitioner is only determined after the extrajudicial foreclosure.
Section 9. Judgment. - After trial of the issues, the court shall determine who has the right of possession to and the value of the property and shall render judgment in the alternative for the delivery thereof to the party entitled to the same, or for its value in case delivery can not be made and also for such damages as either party may prove, with costs.
But replevin is, as the above-cited BA Finance Corp. case holds, usually described as a mixed action.
Petitioner's complaint for replevin was doubtless a mixed action - in rem with respect to its prayer for the recovery of the vessel, and in personam with respect to its claim for damages. And it was, with respect to its alternative prayer, clearly one in personam.
1 RTC records, p. 07.
3 Id. at 07, 10.
5 RTC records, p. 12; CA rollo, pp. 32, 36.
6 CA rollo, p. 35.
9 RTC records, pp. 01-06.
16 Penned by Court of Appeals Associate Justice Martin S. Villarama, Jr. with the concurrences of Associate Justices Conrado M. Vasquez, Jr. and Perlita J. Tria Tirona. CA rollo, pp. 40-44.
x x x The conclusion x x x reached by the lower court was erroneous because in the case at bar, the obligation contracted by the principal debtor (Depositario) with a solidary co-maker (private respondent herein), was one of loan secured by a chattel mortgage, executed by the principal debtor, and not a sale where the price is payable on installments and where a chattel mortgage on the thing sold was constituted by the buyer and, further, the obligation to pay the installments having been guaranteed by another. (Underscoring supplied) G.R. No. 62415, August 20, 1990, 188 SCRA 642, 646. Vide CA rollo, p. 43.
24 Development Bank of the Philippines v. Court of Appeals, G.R. No. 110203, May 9, 2001, 357 SCRA 626, 633.
26 CA rollo, p. 31, underscoring supplied.
27 Id. at 30-31. Vide Servicewide Specialists, Inc. v. Court of Appeals, 376 Phil. 602, 612 (1999): "When the mortgagee seeks a replevin in order to effect the eventual foreclosure of the mortgage, it is not only the existence of, but also the mortgagor's default on, the chattel mortgage that, among other things, can properly uphold the right to replevy the property."
28 Regalado, Remedial Law Compendium, Vol. I.
29 G.R. No. 102998, July 5, 1996, 258 SCRA 102, 110-111.
30 Aguila v. J.M. Tuazon & Co., Inc., G.R. No. L-24223, February 23, 1968, 22 SCRA 690, 693-694; Viray v. MariÃ±as, et al., 151 Phil. 148, 152-153 (1973).

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