G.R. No. L-10789; May 28, 1957
AMADOR TAJANLANGIT, ET AL., plaintiff-appellants, vs. SOUTHERN MOTORS, INC., ET AL., defendants-appellees.

FACTS

In April 1953, spouses Amador and Angeles Tajanlangit bought two tractors and a thresher from Southern Motors, Inc. on installment, executing a promissory note for P24,755.75. They defaulted on all installments. Southern Motors sued on the note in Civil Case No. 2942 (Iloilo CFI, Branch I). The spouses defaulted, and judgment was rendered in favor of Southern Motors for the full amount plus interest and attorney’s fees. To execute this judgment, the sheriff levied on the purchased machineries, sold them at public auction for P10,000, and Southern Motors was the highest bidder. Since the judgment amount was not fully satisfied, Southern Motors obtained an alias writ of execution, and the sheriff levied on the Tajanlangits’ real properties. The Tajanlangits then filed the present action in another branch (Branch IV) of the Iloilo CFI to annul the alias writ and subsequent proceedings, advancing two main theories: (1) they had returned the machineries and Southern Motors accepted them, settling the account, which is why they did not contest the original suit; and (2) under Article 1484 (Recto Law) of the New Civil Code, Southern Motors’ repossession of the mortgaged chattels relieved them of further liability. Southern Motors denied any settlement or voluntary repossession, asserting the machineries were attached by the sheriff and deposited with it merely for safekeeping before the auction. The trial court (Branch IV) dismissed the complaint, holding it could not invalidate the orders of another court of equal rank (Branch I).

ISSUE

Whether the trial court (Branch IV) correctly dismissed the complaint seeking to annul the alias writ of execution issued in Civil Case No. 2942 (Branch I), primarily on the grounds that: (1) the vendor’s act of purchasing the mortgaged chattels at the execution sale constitutes a foreclosure under Article 1484 of the New Civil Code, barring any further action for the unpaid balance; and (2) there was a settlement by return and acceptance of the goods.

RULING

The Supreme Court affirmed the dismissal of the complaint. On the first issue, the Court held that Article 1484 of the New Civil Code did not apply. Southern Motors elected the first remedy under the article—to exact fulfillment of the obligation by suing on the promissory note. It did not choose the third remedy of foreclosing the chattel mortgage. The prohibition against recovering any unpaid balance applies only when the vendor elects to foreclose the chattel mortgage and the mortgaged chattel is sold in accordance with the Chattel Mortgage Law. The sale at public auction here was an ordinary execution sale to satisfy a money judgment, not a foreclosure sale. Therefore, Southern Motors was not limited to the proceeds of that sale and could seek satisfaction of the balance from the debtor’s other properties. On the second issue, the Court found the claim of settlement and cancellation unsubstantiated, noting Southern Motors’ denial and the sheriff’s testimony that the goods were attached and deposited, not voluntarily returned and accepted. Furthermore, this theory contradicted the final and binding judgment in Civil Case No. 2942, which could only be set aside in a proper proceeding, which the present action was not. The Court deemed it unnecessary to resolve the procedural issue of whether one branch could enjoin proceedings in another, as the plaintiffs were not entitled to relief on the merits.