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147002-1961-Southern Motors Inc. v. Moscoso
147002-1961-Southern Motors Inc. v. Moscoso
SYLLABUS
DECISION
PAREDES , J : p
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
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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."
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
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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.