G.R. No. L-17061 December 30, 1961
LUNETA MOTOR COMPANY, petitioner, vs. ANGEL DIMAGIBA and NATIVIDAD NORIEL, respondents.

FACTS

Petitioner Luneta Motor Company sold a truck to respondent Angel Dimagiba on installment. The obligation was secured by a chattel mortgage on the purchased truck and a separate chattel mortgage on another truck owned by co-respondent Natividad Noriel. Dimagiba subsequently executed additional promissory notes for tires and spare parts, which were also covered by the original chattel mortgage. Upon Dimagiba’s default in paying several installments, the company filed a complaint for replevin and recovery of the unpaid balance. The court issued a writ of seizure, and the mortgaged trucks were delivered to the company. During the pendency of the case, the company caused the extrajudicial sale of Noriel’s truck at public auction, purchasing it itself. After trial, the lower court dismissed the complaint for the balance against both defendants, ruling that by seizing the trucks and foreclosing the mortgages, the company elected the remedy of foreclosure under Article 1484 of the Civil Code, thereby forfeiting its right to recover any deficiency.

ISSUE

Whether the vendor, having seized the mortgaged property through a replevin action and caused its extrajudicial sale, can still recover the unpaid balance of the purchase price from the vendee or the mortgagor-guarantor.

RULING

No. The Supreme Court affirmed the lower courts’ decisions. Article 1484 of the Civil Code provides three mutually exclusive remedies for the vendor in an installment sale of personal property: (1) exact fulfillment of the obligation, (2) cancel the sale, or (3) foreclose the chattel mortgage on the thing sold. If the vendor chooses to foreclose, he shall have no further action against the purchaser to recover any unpaid balance. In this case, the company’s actions constituted an election of the foreclosure remedy. By filing a complaint combining a prayer for recovery of the balance with a request for a writ of seizure (replevin) to take possession of the mortgaged chattels, and by subsequently procuring the extrajudicial sale of Noriel’s truck during the litigation, the company unmistakably pursued foreclosure. This scheme, seeking to simultaneously enforce the mortgage and obtain a money judgment for the deficiency, is a flagrant circumvention of the prohibition in Article 1484. The law aims to prevent oppression by preventing the vendor from recovering both the sold property and its full price. Consequently, having chosen to foreclose through its actions, the company is barred from recovering any remaining balance from Dimagiba. Noriel’s liability, being merely that of a guarantor mortgagor, is also extinguished. The Court found no error in the lower courts’ application of the law.