147002-1961-Southern Motors Inc. v. Moscoso

EN BANC
[G.R. No. L-14475. May 30, 1961.]
SOUTHERN MOTORS, INC., plaintiff-appellee, vs. ANGEL MOSCOSO,

defendant-appellant.
Diosdado Garingalao for plaintiff-appellee.

Calixto Zaldivar for defendant-appellant.
SYLLABUS
1. SALE ON INSTALLMENTS; ACTION FILED IS FOR SPECIFIC

PERFORMANCE; MORTGAGED PROPERTY ATTACHED; SALE OF MORTGAGED
PROPERTY NOT TANTAMOUNT TO FORECLOSURE OF MORTGAGED; DEFICIENCY
JUDGMENT. — In sales on installments, where the action instituted is for speci c
performance and the mortgaged property is subsequently attached and sold, the sale
thereof does not amount to a foreclosure of the mortgaged; hence, the seller-creditor is
entitled to deficiency judgment.
DECISION
PAREDES , J : p
The case was submitted on agreed statement of facts.

On June 6, 1957, plaintiff-appellee, Southern Motors, Inc. sold to defendant-
appellant Angel Moscoso one Chevrolet truck, on installment basis, for P6,445.00.
Upon making a down payment, the defendant executed a promissory note for the sum
of P4,915.00, representing the unpaid balance of the purchase price (Annex A,
complaint), to secure the payment of which, a chattel mortgage was constituted on the
truck in favor of the plaintiff (Annex B). Of said account of P4,915.00, the defendant had
paid a total of P550.00, which P110.00 was applied to the interest up to August 15,
1957, and P400.00 to the principal, thus leaving an unpaid balance of P4,475.00. The
defendant failed to pay 3 installments on the balance of the purchase price.
On November 4, 1957, the plaintiff led a complaint against the defendant, to
recover the unpaid balance of the promissory note. Upon plaintiff's petition, embodied
in the complaint, a writ of attachment was issued by the lower court on the properties
of the defendant. Pursuant thereto, the said Chevrolet truck, and a house and lot
belonging to defendant, were attached by the Sheriff of San Jose, Antique, where
defendant was residing on November 25, 1957, and said truck was brought to the
plaintiff's compound in Iloilo City, for safe keeping.
After attachment and before the trial of the case on the merits, acting upon the
plaintiff's motion dated December 23, 1957, for the immediate sale of the mortgaged
truck, the Provincial Sheriff of Iloilo on January 2, 1958, sold the said truck at public
auction in which plaintiff itself was the only bidder for P1,000.00. The case had not
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been set for hearing then.
The trial court on March 27, 1958, condemned the defendant to pay the plaintiff
the amount of P4,475.00 with interest at the rate of 12% per annum from August 16,
1957, until fully paid, plus 10% thereof as attorney's fees and costs, against which
defendant interposed the present appeal, contending that the trial court erred —
(1) In not nding that the attachment caused to be levied on the truck
and its immediate sale at public auction, was tantamount to the foreclosure of
the chattel mortgage on said truck; and
(2) In rendering judgment in favor of the plaintiff-appellee.
Both parties agreed that the case is governed by Article 1484 of the new Civil
Code, which provides: —
"ART. 1484. In a contract of sale of personal property the price of
which is payable in installments, the vendor may exercise any of the following
remedies:
(1) Exact fulfillment of the obligation, should the vendee fail to pay;
(2) Cancel the sale, should the vendee's failure to pay cover two or
more installments;
(3) Foreclose the chattel mortgage on the thing sold, if one has been
constituted, should the vendee's failure to pay cover two or more installments. In
this case, he shall have no further action against the purchaser to recover any
unpaid balance of the price. Any agreement to the contrary shall be void."
While the appellee claims that in ling the complaint, demanding payment of the
unpaid balance of the purchase price, it has availed of the rst remedy provided in said
article i.e. to exact ful llment of the obligation (speci c performance); the appellant, on
the other hand, contends that appellee had availed itself of the third remedy viz, the
foreclosure of the chattel mortgage on the truck.
The appellant argues that considering the history of the law, the circumstances
leading to its enactment, the evil that the law was intended to correct and the remedy
afforded (Art. 1454-A of the old Civ. Code; Act No. 4122; Bachrach Motor Co. vs. Reyes
62 Phil., 461, 466-469); that the appellee did not content itself by waiting for the
judgment on the complaint and then execute the judgment which might be rendered in
its favor, against the properties of the appellant; that the appellee obtained a
preliminary attachment on the subject of the chattel mortgage itself and caused said
truck to be sold at public auction, in which he was the bidder for P1,000.00; the result
of which, was similar to what would have happened, had it foreclosed the mortgage
pursuant to the provisions of sec. 14 of Act No. 1508 (Chattel Mortgage Law); the said
appellee had availed itself of the third remedy aforequoted. In other words, appellant
submits that the matter should be looked at, not by the allegations in the complaint, but
by the very effect and result of the procedural steps taken and that appellee tried to
camou age its acts by ling a complaint purportedly to exact the ful llment of an
obligation, in an attempt to circumvent the provisions of article 1484 of the new Civil
Code. Appellant concludes that under his theory, a de ciency judgment would be
without legal basis.
We do not share the views of the appellant on this matter. Manifestly, the
appellee had chosen the rst remedy. The complaint is an ordinary civil action for
recovery of the remaining unpaid balance due on the promissory note. The plaintiff had
not adopted the procedure or methods outlined by sec. 14 of the Chattel Mortgage
Law but those prescribed for ordinary civil actions, under the Rules of Court. Had
appellee elected the foreclosure, it would not have instituted this case, in court; it would
not have caused the chattel to be attached under rule 59, and had it sold at public
auction, in the manner prescribed by Rule 39. That the herein appellee did not intend to
foreclose the mortgage truck, is further evinced by the fact that it had also attached the
house and lot of the appellant at San Jose, Antique. In the case of Southern Motors, Inc.
vs. Magbanua, G.R. No. L-8578, Oct. 29, 1956, we held:
"By praying that the defendant be ordered to pay it the sum of P4,690.00
together with the stipulated interest at 14% per annum from 17 March 1954 until
fully paid, plus 10% of the total amount due as attorney's fees and costs of
collection, the plaintiff elected to exact the ful llment of the obligation and not to
foreclose the mortgage on the truck. Otherwise, it would not have gone to court to
collect the amount as prayed for in the complaint. Had it elected to foreclose the
mortgage on the truck, all the plaintiff had to do was to cause the truck to be sold
at public auction pursuant to section 14 of the Chattel Mortgage Law. The fact
that aside from the mortgaged truck, another Chevrolet truck and two parcels of
land belonging to the defendant were attached, shows that the plaintiff did not
intend to foreclose the mortgage.
"As the plaintiff has chosen to exact the ful llment of the defendant's
obligation, the former may enforce execution of the judgment rendered in its favor
on the personal and real property of the latter not exempt from execution
su cient to satisfy the judgment. That part of the judgment against the
properties of the defendant except the mortgaged truck and discharging the writ
of attachment on his other properties is erroneous."
We perceive nothing unlawful or irregular in appellee's act of attaching the

mortgaged truck itself. Since herein appellee has chosen to exact the ful llment of the
appellant's obligation, it may enforce execution of the judgment that may be favorably
rendered hereon, on all personal and real properties of the latter not exempt from
execution su cient to satisfy such judgment. It should be noted that a house and lot at
San Jose, Antique were also attached. No one can successfully contest that the
attachment was merely an incident to an ordinary civil action. (Sections 1 & 11, Rule 59;
sec. 16 Rule 39.) The mortgage creditor may recover judgment on the mortgage debt
and cause an execution on the mortgaged property and may cause an attachment to be
issued and levied on such property, upon beginning his civil action (Tizon vs. Valdez, 48
Phil., 910-911).
IN VIEW HEREOF, the judgment appealed from hereby is a rmed, with cots
against the defendant-appellant.
Bengzon, C.J., Bautista Angelo, Labrador, Concepcion, Dizon, De Leon and
Natividad, JJ., concur.
Separate Opinions
REYES, J.B.L. , J., concurring :
I fully concur in the opinion, and would only add that appellant's argument ignores
a substantial difference between the effect of foreclosing the chattel mortgage and
attaching the mortgaged chattel. The variance lies in the ability of the debtor to retain
possession of the property attached by giving a counterbond and thereby discharging
the attachment. This remedy the debtor does not have in the event of foreclosure.

147002-1961-Southern Motors Inc. v. Moscoso

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147002-1961-Southern Motors Inc. v. Moscoso

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EN BANC

[G.R. No. L-14475. May 30, 1961.]

SOUTHERN MOTORS, INC., plaintiff-appellee, vs. ANGEL MOSCOSO,

Diosdado Garingalao for plaintiff-appellee.

1. SALE ON INSTALLMENTS; ACTION FILED IS FOR SPECIFIC

The case was submitted on agreed statement of facts.

(2) In rendering judgment in favor of the plaintiff-appellee.

We perceive nothing unlawful or irregular in appellee's act of attaching the

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