101 PHIL. 606
In April, 1953, Amador Tajanlangit and his wife Angeles, residents of Iloilo, bought from Southern Motors, Inc.of Iloilo two tractors and a thresher. In payment for the same, they executed the Promissory Note whereby they undertook to satisfy the total purchase price of P24, 755.75 in several installments (with interest) payable on stated dates from May 18, 1953 to December 10, 1955. The note stipulated that if default be made in the payment of interest or of any installment, then the total principal sum still unpaid with interest shall at once become demandable, etc.
The spouses failed to meet any installment. Wherefore, they were sued, in the above Civil, Case No., 2942, for the amount of the Promissory Note. The spouses defaulted, and the court, after listening to the Southern Motor’s evidence, entered judgment for it in the total, sum of P24, 755.75 together with interest at 12 percent, plus 10 percent of the total attorney’s fees and cost of collection.
Carrying out the order of execution, the sheriff levied on the same machineries and farm implements which had been bought by the spouses; and later sold them at public auction to the highest bidder which turned out to be the Southern Motors itself for the total sum of P10,000. As its judgment called for much more, the Southern Motors subsequently asked and obtained, an alias writ of execution, pursuant thereto, the Provincial sheriff levied attachment on Tajanlangits’ rights and interests in crtain real properties with a view to another sale on execution.
To prevent such sale, the Tajan,langits’ instituted this action in the Iloilo Court of First Instance for the purpose among others, of annulling the alias writ of execution and all proceedings subsequent thereto.
Their two main theories:
(1) They had returned the machineries and farm implements to the Southern Motors Inc., the latter accepted them, and had thereby settled their accounts, for that reason, said spouses did not contest the action in Civil Case No. 2942; and
(2) as the Southern Motors Inc,. had repossessed the machineries purchased on installment and (mortgaged) the buyers where thereby relieved from further responsibility, in view of the Recto Law, now Article 1484 of the New Civil Code.
Whether or not the appellants validly invoke paragraph 3 of Article 1484 of the Civil Code.
The court ruled in the negative.
Art. 1484. In a contract of sale of personal property the price of which is payable in installments, the vendor may exercise of the following remedies:
(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.
Appellants invoke the last paragraph. But there has been no foreclosure of the Chattel Mortgage nor a foreclosure sale. Therefore the prohibition against further collection dos not apply. It is true that there was a Chattel Mortgage on the goods sold. But the Southern Motors elected to due on the note exclusively, i.e. to exact fulfillment of the obligation to pay. It had a right to select among the three remedies established in Article 1484. In choosing to sue on the note, it was not thereby limited to the proceeds of the sale, on execution, of the mortgaged good.
*Case digest by Jelyn C. Ondong, JD-4 Andres Bonifacio Law School, SY 2019-2020