SOUTHERN MOTORS, INC., PLAINTIFF AND APPELLEE, VS. ANGEL MOSCOSO, DEFENDANT AND APPELLANT.

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 filed 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 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 finding 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 filing the complaint, demanding payment of
the unpaid balance of the purchase price, it has availed of the first remedy
provided in said article i.e. to exact fulfillment of the obligation
(specific performance); fee 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 camouflage its acts by filing
a complaint purportedly to exact the fulfillment 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 deficiency judgment would be without legal
basis.

We do not share the views of the appellant on this matter. Manifestly, the
appellee had chosen the first 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
mortgaged 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, 100 Phil., 155; 52 Off. Gaz., [17] 7252, 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 cost of
collection, the plaintiff elected to exact the fulfillment 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 fulfillment 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
sufficient 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
fulfillment 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 sufficient 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 affirmed, with costs
against the defendant-appellant.

Bengzon, C.J., Bautista Angelo, Labrador, Concepcion, Dizon, De Leon,
and Natividad, JJ., concur.

REYES, J. B. L., J.:

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.