No. L-10789 – AMADOR TAJANLANGIT, ET AL., plaintiffs and appellants, vs. SOUTHERN MOTORS, INC., ET AL., defendants and appellees.
BENGZON, J.
Rule Synopsis
When the seller opted for the exact fulfillment of the obligation under the contract of sale, prohibition against further collection will not apply.
Facts
Amador Tajanlangit and wife (buyers) bought two tractors and a thresher from Southern Motors Inc. (seller) for P24k, payable in installments; a mortgage was also instituted on the machineries. They executed a promissory note which states that in case of default, the principal sum shall be demandable. The buyers defaulted in two or more installments, so the seller brought an action for collection of the P24k on the note for which the seller obtained a favorable judgment. The farm implements bought were then levied and sold at public auction for P10k; the seller being the highest bidder. The seller also obtained an alias writ of execution for the balance; as such, the sheriff levied the buyers’ rights and interests in certain real properties for another execution sale.
Thus, the buyers filed an action seeking to annul the said alias writ of execution. They argued, among others, that they were relieved from further responsibility under the Recto Law since the seller already repossessed the machines purchased on installment. They cited Art. 1484(3) whereby the seller is precluded from recovering the deficiency in case the chattel mortgage on the property sold was foreclosed. The CFI judge upheld the writ of execution. The SC affirmed.
Issue
Was the seller precluded from making further collection against the buyer in view of the sale of the subject properties under Art. 1484(3) of the Civil Code?
Ruling and Discussion
No. The seller was not precluded from making further collection against the buyer.
There has been no foreclosure of the chattel mortgage nor a foreclosure sale. Therefore the prohibition against further collection does not apply. While there is indeed a chattel mortgage on the purchased goods, the seller elected to sue on the note exclusively, i.e. to exact fulfillment of the obligation to pay. The seller had the right to choose among the three remedies provided for under Art. 1484. In choosing to sue on the note, it is then not limited to the proceeds of the sale of the mortgaged goods.
Dispositive
Judgment affirmed.