Topic

Case No. L-27645 / November 28, 1965

Case Name: Ridad v. Filipinas Investment and Finance Corp.
Ponente Castro, J.

RELEVANT FACTS:

 The spouses Ridad purchased from the Supreme Sales & Development Corporation, the appellee’s assignor-in-
interest a Ford Consul sedan for the total price of P13,371.40.
o The sum of P1,160 was paid on delivery, the balance of P12,211.50 being payable in twenty-four equal
monthly installments, with interest at 12% per annum
o To secure the payment thereof, the plaintiffs executed a promissory note and a chattel mortgage on the
car executed on March 19, 1964.

 Due to the failure of the plaintiffs to pay their monthly installments as per the promissory note, the defendant
corporation foreclosed the chattel mortgage extrajudicially.
o On October 13, 1965, the appellee instituted a replevin suit in the city court of Manila for the seizure of
the car or the recovery of the unpaid balance in case delivery could not be effected.
 The car was then seized by the sheriff of Manila and Possession thereof was awarded to the
appellee.

o On December 22, 1965, the car was sold at public auction with the appellee as the highest bidder and
purchaser.

 Due to the failure of the defendants-spouses to appear at the scheduled hearing of the case allegedly due to
non-receipt of the summons, they were declared in default.
o The default judgment ordered them to pay to the appellee the sum of P500 as attorney’s fees, and
P163.65 representing actual expenses relative to the seizure of the car, plus cost.
o When the case was called for pre-trial, the CFI stated that there was no need for the parties to adduce
evidence and that the case could be decided on the basis of the pleadings submitted by the parties.
 September 5, 1966, rendered judgment for the appellee, as follows:
- the only issue remaining to be resolved is whether the plaintiff is entitled to receive
P500.00 as attorney’s fees and P163.65 for expenses incurred by the plaintiff in the
seizure of the car which was the object of the chattel mortgage executed by the
defendants in favor of the plaintiff.
- the court holds that the plaintiff is entitled to recover the amount of P163.65 which
represents the expenses incurred by the plaintiff in the seizure of the car involved in this
case
- the only question said defendants raised before this court is the amount of attorney’s
fees, the court in the exercise of its equitable jurisdiction reduces the attorney’s fees
granted to the plaintiff by the lower court to P300.00
 ISSUE AND RATIO DECIDENDI

Issue
Is the plaintiff entitled Yes. Due to default judgment, the defendants were ordered to pay to the appellee.
to receive P500 as
attorney’s fees and
P163.65 for expenses
incurred in seizing the
car?
Ratio
1. Under the Art. 1484 of the new Civil Code, the vendor of personal property the
purchase price of which is payable in installments, has the right, should the vendee
default in the payment of two or more of the agreed installments, to exact fulfillment
by the purchaser of the obligation, or to cancel the sale, or to foreclose the mortgage
on the purchased personal property, if one was constituted.
a. The remedies given by Art. 1484 to the vendor are alternative, not
cumulative.
i. The law prohibits the vendor from further bringing action to
recover the balance of the debt not covered by the foreclosure of
the mortgage.
b. Purpose of the law is to prevent mortgagees from seizing the mortgaged
property, buying it at foreclosure sale for a low price and then bringing
suit against the mortgagor for a deficiency judgment, otherwise, the
mortgagor-buyer would find himself without the property and still owing
practically the full amount of his original indebtedness
2. In this case, the defendant corporation elected to foreclose its mortgage upon default
by the plaintiffs in the payment of the agreed installments during the progress of the
case.
a. Having chosen to foreclose the chattel mortgage, and bought the
purchased vehicles at the public auction as the highest bidder, it
submitted itself to the consequences of the law as specifically mentioned,
by which it is deemed to have renounced any and all rights which it might
otherwise have under the promissory note and the chattel mortgage as
well as the payment of the unpaid balance.

Is the 1. In Macondray & Co v.Eustaquio, the Court sustained the nullity of the mortgage in so
far as should the vendor choose to foreclose the mortgage, he has to content himself
with the proceeds of the sale at the public auction of the chattels which were sold on
installment and mortgaged to him, and having chosen the remedy of foreclosure, he
cannot nor should he be allowed to insist on the sale of the house and lot of the
vendees.

RULING

NOTES
 Topic
Case No. L-13373/ July 26, 1960
Case Name: Luneta Motor Co. v. Salvador, Et Al.,
Ponente Castro, J.

RELEVANT FACTS:

 The remedy sought is conjunctive and not alternative

o The appellee therein foreclosed the mortgage on the motor vehicle during the progress of the action
and action for the sum of money
o Had to be dismissed since the same could not prosper as it would constitute a separate action for the
recovery of unpaid balance contemplated in Article 1484
 Due to appellant’s unjustifiable failure and refusal to comply with the appellee’s demand, the court awarded
attorney’s fees, cost of suit and expenses incurred in seizing the motor vehicle by virtue of the writ replevin
because the appellee was compelled to institute the replevin suit.

ISSUE AND RATIO DECIDENDI

Issue Ratio
Does alternative type of Yes. Alternative is the applicable type of remedy to be applied in the new Civil Code in which
remedy applicable to recto law must govern the resolution of this issue.
recto law? 1. Under the Art. 1484 of the new Civil Code, The remedies given by Art.
1484 to the vendor are alternative, not cumulative.
ii. The law prohibits the vendor from further bringing action to
recover the unpaid balance of the debt not covered by the
foreclosure of the mortgage.
2. Purpose of the law is to prevent mortgagees from seizing the mortgaged
property, buying it at foreclosure sale for a low price and then bringing
suit against the mortgagor for a deficiency judgment, otherwise, the
mortgagor-buyer would find himself without the property and still owing
practically the full amount of his original indebtedness
3. In this case, the defendant corporation elected to foreclosed its mortgage
(motor vehicle)
b. Having chosen to foreclose the chattel mortgage, the present action is one
of replevin
RULING

Whereby,

NOTES