Borbon II vs. Servicewide Specialists, Inc., 258 SCRA 634, G.R. No.
106418 July 11, 1996
Facts:
The plaintiff’s evidence shows among others that on December 7, 1984, defendants Daniel L. Borbon and Francisco Borbon signed a
promissory note (Exh. A) which states among others as follows:
‘For value received (installment price of the chattel/s purchased), I/We jointly and severally, promised to pay Pangasinan Auto Mart, Inc. or
order, at its office at NMI Bldg., Buendia Avenue, Makati, MM the sum of One Hundred Twenty Two Thousand Eight Hundred Fifty Six only
(P122,856.00), Philippine Currency, to be payable without need of notice or demand, in installments of the amounts following and at the dates
hereinafter set forth, to wit: P10,238.00 monthly for Twelve (12) months due and payable on the 7th day of each month starting January,
1985, provided that a late payment charge of 3% per month shall be added on each unpaid installment from due date thereof until fully paid.
‘It is further agreed that if upon such default, attorney’s services are availed of, an additional sum equal to twenty five percent (25%) of the
total sum due thereon, which shall not be less than five hundred pesos, shall be paid to the holder hereof for attorney’s fees plus an
additional sum equivalent to twenty five percent (25%) of the total sum due which likewise shall not be less than five hundred pesos for
liquidated damages, aside from expenses of collection and the legal costs provided for in the Rules of Court.
‘It is expressly agreed that all legal actions arising out of this note or in connection with the chattel(s) subject hereof shall only be brought in or
submitted to the jurisdiction of the proper court either in the City of Manila or in the province, municipality or city where the branch of the
holder hereof is located.
‘Acceptance by the holder hereof of payment of any installment or any part thereof after due dated (sic) shall not be considered as extending
the time for the payment or any of the installments aforesaid or as a modification of any of the conditions hereof. Nor shall the failure of the
holder hereof to exercise any of its right under this note constitute or be deemed as a waiver of such rights.
To secure the Promissory Note, the defendants executed a Chattel Mortgage (Exh. B) on ‘One (1) Brand new 1984 Isuzu.
The rights of Pangasinan Auto Mart, Inc. was later assigned to Filinvest Credit Corporation on December 10, 1984, with notice to the
defendants (Exh. C, p. 10, Record).
On March 21, 1985, Filinvest Credit Corporation assigned all its rights, interest and title over the Promissory Note and the chattel mortgage to
the plaintiff (Exh. D; p. 3, tsn, Sept. 30, 1985).
The promissory note stipulates that the installment of P10,238.00 monthly should be paid on the 7th day of each month starting January 1985,
but the defendants failed to comply with their obligation (p. 3, tsn, Sept. 30, 1985).
Because the defendants did not pay their monthly installments, Filinvest demanded from the defendants the payment of their installments
due on January 29, 1985 by telegram (Exh. E; pp. 3-4, tsn, Sept. 30, 1985).
After the accounts were assigned to the plaintiff, the plaintiff attempted to collect by sending a demand letter to the defendants for them to
pay their entire obligation which, as of March 12, 1985, totaled P185,257.80 (Exh. H; pp. 3-4, tsn, Sept. 30, 1985).
For their defense, the defendants claim that what they intended to buy from Pangasinan Auto Mart was a jeepney type Isuzu K. C. Cab. The
vehicle that they bought was not delivered (pp. 11-12, tsn, Oct. 17, 1985). Instead, through misrepresentation and machination, the
Pangasinan Motor, Inc. delivered an Isuzu crew cab, as this is the unit available at their warehouse. Later the representative of Pangasinan
Auto Mart, Inc. (assignor) told the defendants that their available stock is an Isuzu Cab but minus the rear body, which the defendants agreed
to deliver with the understanding that the Pangasinan Auto Mart, Inc. will refund the defendants the amount of P10,000.00 to have the rear
body completed (pp. 12-34, Exhs. 2 to 3-3A).
Despite communications with the Pangasinan Auto Mart, Inc., the latter was not able to replace the vehicle until the vehicle delivered was
seized by order of this court. The defendants argue that an assignee stands in the place of an assignor which, to the mind of the court, is
correct. The assignee exercise all the rights of the assignor (Gonzales vs. Rama Plantation Co., C.V. 08630, Dec. 2, 1986).
The defendants further claim that they are not in default of their obligation because the Pangasinan Auto Mart was first guilty of not
fulfilling its obligation in the contract. The defendants claim that neither party incurs delay if the other does not comply with his obligation.
(citing Art. 1169, N.C.C.)
Issue: WON he vendor-mortgagee or its assignees loses any right to recover any unpaid balance of the price and such agreement would be
void after instituting the action for replevin for the foreclosure of the vehicle.
Ruling: Yes. When the assignee forecloses on the mortgage, there can be no further recovery of the deficiency, and the seller-mortgagee is
deemed to have renounced any right thereto.—When the seller assigns his credit to another person, the latter is likewise bound by the same
law. Accordingly, when the assignee forecloses on the mortgage, there can be no further recovery of the deficiency, and the seller-mortgagee
is deemed to have renounced any right thereto. A contrario, in the event the seller-mortgagee first seeks, instead, the enforcement of the
additional mortgages, guarantees or other security arrangements, he must then be held to have lost by waiver or non-choice his lien on the
chattel mortgage of the personal property sold by and mortgaged back to him, although, similar to an action for specific performance, he may
still levy on it.
