G.R. No. 107846 . April 18, 1997.
LEOVILLO C. AGUSTIN, petitioner, vs. COURT OF APPEALS and FILINVEST FINANCE CORP., respondents.

FACTS

Petitioner Leovillo C. Agustin executed a promissory note in favor of ERM Commercial, secured by a chattel mortgage over a truck, which was later assigned to respondent Filinvest Finance Corporation. Upon Agustin’s default, Filinvest filed a complaint for replevin, obtained a writ, and repossessed the vehicle. After repossession, Filinvest discovered the truck was in disrepair and incurred expenses for repairs and transport. It then foreclosed the chattel mortgage and sold the vehicle at public auction.
Filinvest subsequently filed a supplemental complaint to recover these repossession expenses. Agustin moved to dismiss, arguing the trial court lost jurisdiction due to the extrajudicial foreclosure. The trial court initially dismissed the case, but the Court of Appeals reversed, ruling the repossession expenses were recoverable, and remanded the case for reception of evidence on the amount. On remand, the trial court awarded Filinvest a sum for repossession expenses. Both parties appealed, and the Court of Appeals affirmed the award. Agustin now contends the award violates Article 1484 of the Civil Code, as the foreclosure should extinguish all further claims.

ISSUE

Whether the mortgagee, after foreclosing the chattel mortgage, can still recover from the mortgagor the expenses incurred in repossessing the mortgaged property.

RULING

The Supreme Court denied the petition and affirmed the appellate court’s decision. The legal logic rests on two grounds. First, the “law of the case” doctrine applies. The Court of Appeals, in its prior final and executory decision (CA- G.R. No. 56718 -R), had already settled the propriety of awarding repossession expenses. That ruling, having been remanded solely for the determination of the correct amount, became the established law of the case between the same parties. Agustin cannot relitigate this already settled issue in a subsequent appeal.
Second, on the merits, the award is proper and constitutes a recognized exception to the rule in Article 1484(3). Citing Filipinas Investment & Finance Corporation v. Ridad, the Court held that where a mortgagor refuses to deliver the chattel upon default, the mortgagee may incur necessary expenses to regain possession through a replevin action. Such expenses, including those for seizing the chattel, are logically for the account of the defaulting mortgagor and are recoverable. These expenses are distinct from the recovery of any unpaid balance of the price, which is barred by foreclosure. Therefore, the award for repossession expenses does not contravene Article 1484.