GR 35453; (September, 1989) (Digest)
G.R. No. 35453 September 15, 1989
INDUSTRIAL FINANCE CORPORATION, petitioner, vs. HON. SERGIO A.F. APOSTOL, Judge of the Court of First Instance of Rizal, Branch XVI, Quezon City, JUAN DELMENDO and HONORATA DELMENDO and JOAQUIN PADILLA and SOCORRO PADILLA, respondents.
FACTS
Spouses Joaquin and Socorro Padilla purchased three Isuzu trucks on credit from Industrial Transport and Equipment, Inc. They executed a promissory note for the balance, secured by a chattel mortgage on the trucks and a real estate mortgage on their property. The seller subsequently endorsed the note and assigned the real estate mortgage to petitioner Industrial Finance Corporation (IFC). Due to the Padillas’ default, IFC filed a personal action for collection of a sum of money against Joaquin Padilla (Civil Case No. Q-14417) and obtained a favorable final judgment for the unpaid balance.
Meanwhile, private respondents Juan and Honorata Delmendo acquired the mortgaged real property from the Padillas. They filed a complaint (Civil Case No. Q-15942) against IFC and the Padillas, seeking the cancellation of the mortgage lien annotated on the title. The Delmendos argued that by electing to file a personal action for collection, IFC had waived its right to enforce the real estate mortgage. The trial court granted the Delmendos’ motion for summary judgment, ordering the cancellation of the mortgage lien.
ISSUE
Whether the filing by a mortgagee of a personal action for the recovery of a debt constitutes a waiver of the right to enforce the real estate mortgage securing the same obligation.
RULING
Yes. The Supreme Court affirmed the summary judgment, ruling that IFC, by instituting and pursuing to finality a personal action for the collection of the debt, waived its mortgage lien. The Court reiterated the settled doctrine that a mortgage creditor has a single cause of action arising from the debtor’s non-payment. This single cause of action encompasses two remedies: a personal action for the debt and a real action to foreclose the mortgage. The creditor is compelled to elect one remedy, as pursuing both would constitute splitting a single cause of action and result in vexatious litigation.
The legal logic is that the mortgage is merely accessory to the principal obligation. By choosing to sue on the principal obligation via a personal action, the creditor opts for a complete remedy that allows execution on all properties of the debtor, including the mortgaged asset. This election precludes the subsequent enforcement of the accessory mortgage security. Consequently, IFC’s final judgment in the personal collection case operated as an abandonment of its mortgage lien. As transferees of the property, the Delmendos were entitled to have the title cleansed of the encumbrance. The Court found no error in the trial court’s application of this doctrine and affirmed the judgment ordering the cancellation of the mortgage annotation.