Facts On June 4, 1965, Casiano Sapinoso purchased from Northern Motors, Inc. an Opel Kadett car for the price of P12,171.00, making a down payment and executing a romissory note for the balance of P10,540.00 payable in installments with interest at 12% per annum. To secure the payment of the promissory note, Sapinoso executed in favor of Northern Motors, Inc. a chattel mortgage on the car. The mortgage contract provided, among others, that upon default by the mortgagor in the payment of any part of the principal or interest due, the mortgagee may elect any of the following remedies: (a) sale of the car by the mortgagee; (b) cancellation of the contract of sale; (c) extrajudicial foreclosure; (d) judicial foreclosure; (e) ordinary civil action to exact fulfillment of the mortgage contract. It was further stipulated that “[w]hichever remedy is elected by the mortgagee, the mortgagor expressly waives his right to reimbursement by the mortgagee of any and all amounts on the principal and interest already paid by him.” Sapinoso failed to pay the first installment of P361.00 due on July 5, 1965, and the second, third, fourth and fifth installments of P351.00 The vendee-mortgagor having failed to make further payments, Northern Motors, Inc. filed the present complaint on July 22, 1966, against Sapinoso In its complaint, Northern Motors, Inc. stated that it was availing itself of the option given it under the mortgage contract of extrajudicially foreclosing the mortgage, and prayed that a writ of replevin be issued upon its filing of a bond for the seizure of the car and for its delivery to it; that after hearing, the plaintiff be adjudged to have the rightful possession and ownership of the car; that in default of delivery, the defendants be ordered to pay the plaintiff the sum of P10,218.10 with interest, at 12% per annum from April 18, 1966, until full payment of the said sum, as well as an amount equivalent to 25% of the sum due as and for attorney’s fees and expenses of collection, and the costs of the suit. Plaintiff also prayed for such other remedy as might be deemed just and equitable in the premises.
Issue: Should Sapinoso pay the balance of his obligation even before the foreclosure of chattel mortgage?
No. Sapinoso is not obligated to pay the deficiency. The legal effect of the filing of the action was not to bar plaintiff-appellant from accepting further payments on the promissory note. That the ultimate object of the action is the foreclosure of the chattel mortgage, is of no moment, for it is the fact of foreclosure and actual sale of the mortgaged chattel that bar further recovery by the vendor of any balance on the purchaser’s outstanding obligation not satisfied by the sale. In any event, what Article 1484(3) prohibits is “further action against the purchaser to recover any unpaid balance of the price;” and although this Court has construed the word “action” in said Article 1484 to mean “any judicial or extrajudicial proceeding by virtue of which the vendor may lawfully be enabled to exact recovery of the supposed unsatisfied balance of the purchase price from the purchaser or his privy”, there is no occasion at this stage to apply the restrictive provision of the said article, because there has not yet been a foreclosure sale resulting in a deficiency. The payment of the sum of P1,250.00 by defendant-appellee Sapinoso was a voluntary act on his part and did not result from a “further action” instituted by plaintiff-appellant.
Digest Credit: Mac Burdeos Camposuelo