G.R. No. L-43821 May 26, 1977
INDUSTRIAL FINANCE CORPORATION, petitioner, vs. HON. PEDRO A. RAMIREZ, Judge of the Court of First Instance of Manila, and CONSUELO ALCOBA, respondents.

FACTS

Consuelo Alcoba purchased a car from Arnaldo Dizon, payable in installments and secured by a chattel mortgage. Dizon assigned his rights under the mortgage to Industrial Finance Corporation (IFC). Upon Alcoba’s default, IFC filed a “replevin with damages” complaint, praying primarily for recovery of the car via a writ of replevin and, alternatively, for payment of the unpaid balance. The sheriff failed to seize the car, preventing any extrajudicial foreclosure. The trial court, after Alcoba was declared in default, rendered a money judgment against her for the deficiency, which became final. Alcoba made a partial payment. Subsequently, through an alias writ of execution, the car was levied upon and sold at a public auction where IFC was the purchaser. IFC then moved for a third alias writ to satisfy the remaining judgment balance.

ISSUE

Whether the execution sale of the mortgaged car constitutes a foreclosure of the chattel mortgage that bars IFC from recovering a deficiency judgment under Article 1484 of the Civil Code.

RULING

No. The execution sale did not constitute a foreclosure, and IFC is entitled to a deficiency judgment. The legal logic hinges on the distinction between an action for specific performance (exact fulfillment) and an action for foreclosure under Article 1484. IFC’s complaint was for replevin with an alternative prayer for payment; it was not a judicial foreclosure action under Rule 68. The primary objective was to recover possession of the car to enable extrajudicial foreclosure. However, because the sheriff could not seize the car due to Alcoba’s actions, no extrajudicial foreclosure ever occurred. The subsequent money judgment was for specific performance. The levy and sale of the car were effected under a writ of execution to satisfy this money judgment, not as a incident of a foreclosure proceeding. Article 1484 bars a deficiency claim only if the vendor exercises the third remedy—foreclosure of the chattel mortgage. Since IFC never validly foreclosed the mortgage but instead pursued and obtained a final judgment for specific performance, the execution sale did not transform the action into a foreclosure. Consequently, the rule that a foreclosure precludes a deficiency judgment is inapplicable. IFC remains entitled to enforce the unsatisfied portion of its final and executory money judgment.