G.R. No. L-14475; May 30, 1961
SOUTHERN MOTORS, INC., plaintiff-appellee, vs. ANGELO MOSCOSO, defendant-appellant.

FACTS

Plaintiff-appellee Southern Motors, Inc. sold a Chevrolet truck to defendant-appellant Angelo Moscoso on an installment basis. Moscoso executed a promissory note for the unpaid balance and constituted a chattel mortgage on the truck as security. After Moscoso defaulted on three installments, Southern Motors filed an ordinary civil action to recover the unpaid balance. Simultaneously with the complaint, Southern Motors applied for and obtained a writ of attachment, which was levied on the mortgaged truck and on a house and lot owned by Moscoso. The attached truck was taken into custody. Before the case could be tried on the merits, and upon motion of Southern Motors, the Provincial Sheriff sold the truck at public auction. Southern Motors was the sole bidder, purchasing it for P1,000. The trial court subsequently rendered judgment, ordering Moscoso to pay the full unpaid balance.

ISSUE

Whether the act of the vendor in attaching and causing the public sale of the mortgaged vehicle, during the pendency of an action for specific performance to recover the unpaid balance, constitutes an election of the remedy of foreclosure under Article 1484 of the Civil Code, thereby barring a deficiency judgment.

RULING

No. The Supreme Court affirmed the judgment of the trial court, holding that Southern Motors validly elected the first remedy under Article 1484—to exact fulfillment of the obligation. The legal logic is clear: the choice of remedy is determined by the nature of the action instituted, not by the procedural incidents that follow. Southern Motors filed an ordinary civil action for a sum of money, which is the classic route for specific performance. The ancillary writ of attachment and the subsequent sale of the property were merely provisional remedies incidental to that main action, governed by the Rules of Court (Rules 59 and 39), and not the special foreclosure procedures under the Chattel Mortgage Law. The Court emphasized that had foreclosure been intended, the vendor would not have gone to court for a money judgment but would have simply caused an extrajudicial sale. The attachment of other properties (the house and lot) further demonstrated an intent to proceed against the debtor’s general assets, not just the mortgaged chattel. Therefore, the creditor’s act of attaching the very object of the chattel mortgage was lawful and did not transform the action into a foreclosure. Consequently, the creditor retained the right to seek a deficiency judgment for the unpaid balance after applying the proceeds from the auction sale. The ruling prevents debtors from mischaracterizing legitimate collection steps as an implied election of foreclosure, which would unfairly grant them immunity from liability for any deficiency.