GR 42256; (April, 1935) (Digest)
G.R. No. 42256 ; April 25, 1935
THE BACHRACH MOTOR CO., INC., plaintiff-appellant, vs. PABLO A. MILLAN, defendant-appellee.
FACTS
Plaintiff Bachrach Motor Co. sold a second-hand car to defendant Pablo Millan on installment, secured by a promissory note and a chattel mortgage. Defendant defaulted on three monthly installments. Plaintiff filed an action to recover the unpaid balance on the promissory note without foreclosing the chattel mortgage. Defendant had offered to return the car in full payment, but plaintiff refused. The trial court dismissed the complaint, holding that under Article 1454-A of the Civil Code (as amended by Act No. 4122 ), the vendor, upon default in two or more installments, must elect either to cancel the sale or foreclose the mortgage, and since plaintiff did not foreclose, it could only cancel the sale and retain installments paid.
ISSUE
Does Article 1454-A of the Civil Code limit the remedies of a vendor in a sale of personal property on installments to only cancellation of the sale or foreclosure of the chattel mortgage, thereby precluding an action to exact fulfillment of the obligation (i.e., to recover the unpaid balance)?
RULING
No. The Supreme Court reversed the trial court. Article 1454-A does not repeal or eliminate the vendor’s right under Article 1124 of the Civil Code to exact fulfillment of the obligation. The amendment was intended primarily to remedy abuses in chattel mortgage foreclosures by prohibiting a deficiency judgment if the vendor chooses foreclosure. It does not expressly or impliedly prohibit the vendor from suing to enforce the obligation itself. Therefore, in a sale of personal property on installments, the vendor may elect to: (1) exact fulfillment of the obligation, (2) cancel the sale, or (3) foreclose the mortgage. If the vendor elects to cancel or foreclose, the provisions of Article 1454-A apply (e.g., no deficiency judgment after foreclosure). Here, plaintiff validly chose to exact fulfillment. Judgment was entered in favor of plaintiff for the unpaid balance with interest and attorney’s fees.
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