[G.R. No. L-10789. May 28, 1957.] AMADOR TAJANLANGIT, ET AL., plaintiffs-appellants, vs. SOUTHERN MOTORS, INC., ET AL.

, defendants-appellees. SYLLABUS 1.SALE; PERSONAL PROPERTY SOLD ON INSTALLMENTS; WHEN VENDOR MAY RECOVER THE UNPA ID BALANCE OF THE PURCHASE PRICE. In a contract of sale of personal property the p rice of which is payable in installments, secured by a mortgage on the goods sol d, the vendor who chooses to exact fulfillment of the obligation to pay is not l imited to the proceeds of the sale, on execution, of the mortgaged goods. The ve ndor may still recover from the purchaser the unpaid balance of the price, if an y. D E C I S I O N BENGZON, J p Facts Amador Tajanlangit and his wife Angeles bought two tractors and a thresher from Southern Motors Inc. They then executed a promissory note, in favor of such debt (24,755.75php). The note provides that failure to pay interest of any installme nt, the debt shall be demandable. When they failed to pay such debt, an action t o recover the amount of the promissory note was filed against them by Southern M otors, wherein they were defaulted, so the court entered judgment in favor of So uthern Motors. The sheriff levied the machineries and sold them in public auctio n which the Southern Motors itself was the highest bidder, for 10,000php. When a n alias writ of execution was filed by Southern Motors, the sheriff levied other properties belonging to the Tajanlangits. In lieu of this, the Tajanlangits ins tituted an action to annul the alias writ of execution on the view that, they ha ve returned such machines to Southern Motors, therefore they have accepted their offer for settlement of their accounts, and that the repossession of the machin es purchased by installment relieves them from liability.

Issue Whether or not the Southern Motors is prohibited to attach and sell the attached real properties of the tajanlangits because the return of the machines purchase d and the sale of which extinguish their liability

Held The Supreme court applied the provision of Art. 1484 in this present case. The c ourt held that all the 3 remedies stated in the provision are available as a rem edy for Southern Motors. In Art. 1484 it was provided that, In a contract of sal e of personal property the price of which is payable in installments, the vendor may exercise 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 instal lments; (3) Foreclose the chattel mortgage on the thing sold, if one has been constitute d, should the vendee's failure to pay cover two or more installments. In this ca se, 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.

Southern Motors opted to avail of the exact fulfillment of the obligation to pay , as it filed an action to recover the amount stipulated in the promissory note, thus it is therefore not limited to the proceeds of the sale on the execution o f the mortgaged good. On their second argument that the machines were duly retur ned by them, and accepted by Southern Motors, therefore the conditional sale is ipso facto cancelled. This is argument has no merit. The sheriff argues on this matter that such goods were deposited in its shop when the sheriff attached them in pursuance to the execution of judgment. It would also run counter to the dec ision of the court in the earlier civil case, which would say that the Tajanlang it did not owe anything from the Southern Motors, which is not the case.

Thus, the court dismissed the case, in favor of the Southern Motors Corporation.

[G.R. No. 139233. November 11, 2005.] SPOUSES ALFREDO and BRIGIDA ROSARIO, petitioners, vs. PCI LEASING AND FINANCE, I NC., respondent. D E C I S I O N CALLEJO, SR., J p: Facts: Spouses Rosario purchased an Isuzu Elf Pick-up Utility vehicle from CarMerchants , Inc. The transaction was covered by a Purchase Agreement whereby the spouses u ndertook to make a downpayment of P190,000.00 of the total purchase price of P38 0,000.00. The spouses then applied for a loan with PCI Leasing to pay for the ba lance of P190,000.00. Upon the approval of their loan application, the spouses Rosario executed a Prom issory Note on May 6, 1994, in favor of PCI Leasing covering the amount of the loan plus P84,008.00 as finance charges, in the total amount of P274,008.00. The spouses undertook to pay the loan in monthly installments of P11,417.00, spouse s Rosario also agreed that, in case of default, the payment of the outstanding s um with interest shall immediately become due and payable. To secure the payment of the loan, they executed, on the same day, a Chattel Mortgage 4 in favor of P CI Leasing over the truck. spouses Rosario failed to pay the amortizations on their loan to PCI Leasing PCI Leasing filed a Complaint 8 against the spouses Rosario In their Answer to t he complaint, spouses Rosario alleged that the chattel mortgage they executed in favor of PCI Leasing covering the motor vehicle was in effect a contract of sal e of personal property, payable in installments to be governed by Article 1484 o f the New Civil Code. The trial court rendered judgment on September 12, 1996 in favor of PCI Leasing. Spouses Rosario appealed to the CA but it was dismissed declaring that the spou ses Rosario failed to prove their claim that PCI Leasing had agreed to be subrog ated to the right of CarMerchants, Inc. to collect the unpaid balance of the pur chase price of the motor vehicle. The appellate court also ruled that even if Ar ticle 1484 of the New Civil Code were to be applied, the chattel mortgage had no t been foreclosed; hence, PCI Leasing was not precluded from collecting the bala nce of the appellants' account. It held that the remedy of the unpaid seller und er Article 1484 of the New Civil Code is alternative and not cumulative. ISSUE: whether or not PCI Leasing WAS IN FACT AN ASSIGNEE AND SUBROGATED TO TH E RIGHTS AND THE LIMITATIONS THEREOF OF CARMERCHANTS HELD: It bears stressing that, under Article 1625 of the New Civil Code, an assignment of credit, right or action must appear in a public document to bind third perso

ns. There is no evidence on record to prove that Car Merchants, Inc. executed su ch a deed, assigning its right to collect the balance of the purchase price of t he vehicle from the petitioners; hence, Article 1484 of the New Civil Code does not apply in this case. A reading of the respondent's complaint in the RTC will readily show that the r espondent did not allege that it was the assignee of CarMerchants, Inc. insofar as the right to collect the balance of the purchase price of the vehicle from th e petitioners was concerned. Neither did the respondent adduce any evidence that it was such assignee Even assuming that the respondent is the assignee of CarMerchants, Inc. and that Article 1484 of the New Civil Code is applicable, it is not proscribed from sui ng the petitioners for their unpaid balance. The fact of the matter is that the respondent did not foreclose the chattel mortgage, but opted to sue the petition ers for the balance of their account under the promissory note, with a plea for a writ of replevin. By securing a writ of replevin, the respondent did not there by foreclose the chattel mortgage. As correctly ruled by the CA: We rule: if there has been no foreclosure of the chattel mortgage or a foreclosu re sale, then the prohibition against further collection of the balance of the p rice does not apply. Where the remedy is not foreclosure of the chattel mortgage , but specific performance of the obligation to do payment, then the levy on the property is indeed not a foreclosure of the mortgage but is instead a levy on e xecution (Tanjanlangit, et al. v. Southern Motors, Inc., L-10789, May 28, 1957; Southern Motors v. Moscoso, 2 SCRA 168). In the case before Us, that there was foreclosure of the chattel mortgage has no t been established; as a matter of fact, this is not obvious either in the evide nce having been presented to the court. What is only apparent was the execution of the promissory note and the chattel mortgage.

[G.R. No. 40062. May 3, 1989.] MONTELIBANO ESGUERRA, petitioner, vs. HON. COURT OF APPEALS, G.A. MACHINERIES, I NC., JOSE TINO and MANUEL DORE, respondents. [G.R. No. 40102. May 3, 1989.] G.A. MACHINERIES, INC., petitioner, vs. HONORABLE COURT OF APPEALS and MONTELIBA NO ESGUERRA, respondents. 3.ID.; ID.; SALES; ARTICLE 1484 OF NEW CIVIL CODE; REMEDIES OF VENDOR THEREUNDER Having opted to foreclose the chattel mortgage, resp , ALTERNATIVE NOT CUMULATIVE. ondent GAMI can no longer cancel the sale. The three remedies of the vendor in c ase the vendee defaults, in a contract of sale of personal property the price of which is payable in installment under Article 1484 of the Civil Code, are alter native and cannot be exercised simultaneously or cumulatively by the vendor-cred itor. BIDIN, J p: FACTS: This is a case for the recovery of a Ford-Trader cargo truck, allegedly, unlawfu lly seized by the agents of G.A. Machineries, Inc. (GAMI for short). This said c argo truck, on October 21, 1964, was sold by GAMI to Hilario-Lagmay and Bonifaci o Masilungan. Subsequently, the right to the same was bought by Montelibano Esgu erra, the latter assuming the unpaid purchase price of P20,454.74. In so doing, Esguerra executed in favor of GAMI a promissory note and a chattel mortgage over the said truck. Esguerra having defaulted in his obligation and GAMI having gra nted his request for extension, a new chattel mortgage and a new promissory note were executed to secure the unpaid balance of P16,000.00 plus 1% per month, pa yable in monthly installments of P1,000.00, the first installment to be due on M arch 15, 1966 and the succeeding monthly installments on the 15th day of each mo nth. Esguerra alleged, among others, that due to his failure to pay the installments due, the agents of GAMI, representing themselves as deputy sheriffs and with u se of force, threats and intimidation, seized the cargo truck in question from h

is driver and that despite repeated demands, GAMI refused and failed to return t he same. On appeal by Esguerra, the Court of Appeals sustained the findings of the trial court that it was not unlawful on the part of GAMI to repossess the cargo truck in question as Esguerra gave his consent to the repossession. However, said appe llate court, took exception to GAMI's failure to sell at public auction said tru ck. It held that while it is true that under the chattel mortgage contract, the mortgagee can take possession of the chattel but such taking did not amount to t he foreclosure of the mortgage. Otherwise stated, GAMI should have foreclosed th e mortgage. Thus, in a Decision promulgated respondent appellate court set asid e the appealed decision. Both Esguerra and GAMI, et al. moved for the reconsider ation of the decision, but in a Resolution dated January 14, 1975, both motions were denied. Hence, this appeal Issue: Whether or not the mortgagee-vendor of personal property sold on installment is legally obligated to foreclose the chattel mortgage and sell the chattel subjec t thereof at public auction in case the mortgagor-vendee defaults in the payment of the agreed installments. HELD: As clearly stated in the chattel mortgage contract, the express purpose of the t aking of the mortgaged property is to sell the same and/or foreclose the mortgag e constituted thereon either judicially or extrajudicially and thereby, liquidat e the indebtedness in accordance with law. More than that, even if such automatic appropriation of the cargo truck in quest ion can be inferred from or be contemplated under the aforesaid mortgage contrac t, such stipulation would be pactum commissorium which is expressly prohibited b y Article 2088 of the Civil Code and therefore, null and void. Having opted to foreclose the chattel mortgage, respondent GAMI can no longer ca ncel the sale. The three remedies of the vendor in case the vendee defaults, in a contract of sale of personal property the price of which is payable in install ment under Article 1484 of the Civil Code, are alternative and cannot be exercis ed simultaneously or cumulatively by the vendor-creditor. In Cruz vs. Filipinas Investment and Finance Corporation (23 SCRA 791, [1968]; the Supreme Court const ruing Article 1484 of the Civil Code, held: "Should the vendee or purchaser of a personal property default in the payment of two or more of the agreed installments, the vendor or seller has the option to avail of any one of these three remedies - either to exact fulfillment by the pu rchaser of the obligation, or to cancel the sale, or to foreclose the mortgage o n the purchased personal property, if one was constituted. These remedies have b een recognized as alternative, not cumulative, that the exercise of one would ba r the exercise of the others. It may also be stated that the established rule is to the effect that the foreclosure and actual sale of a mortgaged chattel bars further recovery by the vendor of any balance on the purchaser's outstanding obl igation not so satisfied by the sale." . On the other hand, the appellate court is of the view and rightly so that the mortgagee should have immediately foreclosed the mortgage and offered the truck for sale at public auction as provided under the chattel mortgage contract. It will be recalled, that under the chattel mortgage contract, the mortgagee is expressly authorized to sell the mortgaged property and the mortgagee had alread y commenced foreclosure of the chattel mortgage (par. 13, amended answer) but th e sale presumably could not be immediately made because of the request of the mo rtgagor himself to give him a chance to settle his account.