G.R. No. L-25140. July 15, 1980.
Universal Motors Corporation, plaintiff-appellant, vs. Mariano D. Velasco, et al., defendants-appellees.

FACTS

Universal Motors Corporation sold a Mercedes-Benz truck to Mariano D. Velasco on an installment basis, secured by a promissory note and a chattel mortgage. Upon Velasco’s default in payments, Universal Motors demanded the surrender of the truck per the mortgage terms. Velasco refused, prompting Universal Motors to file an action for replevin to recover the vehicle as a preliminary step to foreclosure. The trial court issued a writ, and the truck was seized. The parties later submitted a Stipulation of Facts, wherein Velasco admitted his indebtedness and the plaintiff’s right to possession. Universal Motors waived its claim for a deficiency judgment on the principal debt but sought to recover specific expenses incurred due to the suit and Velasco’s refusal to surrender the truck, including the replevin bond premium, sheriff’s expenses, costs of suit, a mechanic’s lien, and attorney’s fees.
The trial court ruled that Universal Motors was entitled to these expenses and attorney’s fees. However, it ordered that these amounts be satisfied only from the proceeds of the auction sale of the repossessed truck, citing Article 1484 of the Civil Code. This provision states that if the vendor forecloses the chattel mortgage, it shall have no further action against the purchaser to recover any unpaid balance of the price. Universal Motors appealed, arguing the lower court erred in limiting the satisfaction of the adjudged sums to the vehicle’s proceeds.

ISSUE

Whether the amounts awarded for expenses and attorney’s fees in the replevin action are to be satisfied only from the proceeds of the sale of the mortgaged vehicle, pursuant to Article 1484 of the Civil Code.

RULING

No. The Supreme Court modified the decision, ruling that the defendant, Mariano D. Velasco, is personally liable to pay the adjudged amounts. The legal logic is twofold. First, the action instituted was not for the judicial foreclosure of the chattel mortgage but for replevin—a distinct action to recover possession preparatory to extrajudicial foreclosure. Article 1484(3), which bars a further action for any unpaid balance after foreclosure, is therefore inapplicable to this procedural context. Second, the amounts awarded were not part of the “unpaid balance of the price” or a deficiency judgment, which Article 1484 expressly prohibits. Instead, they were expenses directly occasioned by Velasco’s breach of his contractual obligation to peacefully deliver the vehicle upon default, as stipulated in the mortgage contract. These expenses, including the bond premium, sheriff’s fees, costs, and attorney’s fees, are separate from the principal debt and arise from the necessary legal steps taken to enforce the mortgagee’s right to possession. Consequently, the mortgagee is entitled to a personal judgment for these sums against the mortgagor, not limited to the foreclosure proceeds.