59.
Ridad vs Filipinas Investment and
Finance Corporation GR No. 39806
January 27, 1983
FACTS:
On April 14, 1964, Luis and Lourdes
Ridad purchased from Supreme Sales 2 Ford
Consul Sedans, payable in 24 installments.
To secure the payment, Ridad executed on
the same day a promissory note with chattel
mortgage not only on the two vehicles but
also on another car, the Chevrolet and
Ridad’s franchise to operate taxi cabs.
Then, with the conformity of Ridad,
Supreme Sales thereafter assigned its rights
under the Promissory Note to Filinvest.
Ridad failed to pay their monthly
installments and as per promissory note, the
defendant corporation (Filinvest) foreclosed
the chattel mortgage extrajudicially, and at
the public auction, the sale of the two Ford
Consul Sedan, and the Corporation was the
highest bidder.
Another auction was held involving the
remaining properties since, Ridad’s
obligation was not fully satisfied by the
previous sale of the vehicles. And thus, 5
units of the taxi were sold and it was sold to
Jose Sebastian.
On February, 1966, Ridad filed for the
annulment of contract of sale involving the
properties during the 2nd auction.
The trial court rendered the sale of the
Chevrolet and the taxicab franchise null and
void and of no legal effect. Thus, this appeal.
ISSUE:
W/N Filinvest may still foreclose the
Chevrolet and the franchise to fully satisfy
the debt
HELD:
NO. Under the above-quoted article of
the Civil Code, the vendor of personal
property, the purchase price of which is
payable in installments, has the right, should
the vendee default in the payment of two or
more of the agreed installments, to exact
fulfillment by the purchaser of the obligation,
or to cancel the sale, or to foreclose the
mortgage on the purchased personal
property, if there is a mortgage constituted.
Whichever right the vendor elects, he cannot
avail of the other, because these remedies
are alternative, and not cumulative.
Furthermore, if the vendor avails
himself of the right to foreclose his
mortgage, the law prohibits him from further
bringing an action against the vendee for the
purpose of recovering whatever balance of
the debt secured not satisfied by the
foreclosure sale.
In this case, by choosing to foreclose
on the Ford sedans, Filinvest renounced all
other rights which it might have had under
the Promissory note; thus, it must content
itself with the proceeds of the sale of the 2
sedans at the first public auction.
Thus, the 2nd auction sale involving the
Chevrolet and the taxicab franchise is null
and void.