Borbon II v.

Servicewide specialist, 258 SCRA 634 (1996)

FACTS:

-Daniel Borbon and Francisco Borbon purchased from Pangasinan AutoMart Inc. Brand new 1984 Isuzu
KCD 20 crew cab and signed a promissory note payable in 12 monthly installments.

-To secure the promissory note, the Borbon’s executed a chattel mortgage over the vehicle.

-The right of Pangasinan Automart Inc was later assigned to Filinvest Credit Corporation with notice to the
Borbons.

-FCC in turn assigned all its rights, interest and title over the promissory note and the chattel mortgage to
Sevicewide Specialists.

-When the Borbon’s failed to comply with their obligation, Servicewide Specialist filed an action for
replevin for the foreclosure of the mortgage property.

-The Borbon’s claimed that they were not in default because Pangasinan Automart delivered a vehicle
different from what they have intended to buy and despite communication, the latter was not able to
replace the vehicle until it was seized by the court.

-Sustaining the decision of the court a quo, the appellate court upheld the award of liquidated damages
and attorney’s fees in favor of Servicewide Specialists.

HELD:

-The remedies under Article 1484 of the Civil Code are not cumulative but alternative and exclusive,
which means, that -

"x x x Should the vendee or purchaser of a personal property default in the payment of two
or more of the agreed installments, the vendor or seller has the option to avail of any of these
three remedies — either 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 one was constituted.
These remedies have been recognized as alternative, not cumulative, that the exercise of one
would bar the exercise of the others."

-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 any mortgaged back to him, although, similar to an
action for specific performance, he may still levy on it.

-In ordinary alternative obligations, a mere choice categorically and unequivocally made and then
communicated by the person entitled to exercise the option concludes the parties. The creditor may not
thereafter exercise any other option, unless the chosen alternative proves to be ineffectual or unavailing
due to no fault on his part. This rule, in essence, is the difference between alternative obligations, on the
one hand, and alternative remedies, upon the other hand, where, in the latter case, the choice generally
becomes conclusive only upon the exercise of the remedy. For instance, in one of the remedies
expressed in Article 1484 of the Civil Code, it is only when there has been a foreclosure of the chattel
mortgage that the vendee-mortgagor would be permitted to escape from a deficiency liability. Thus, if the
case is one for specific performance, even when this action is selected after the vendee has refused to
surrender the mortgaged property to permit an extrajudicial foreclosure, that property may still be levied
on execution and an alias writ may be issued if the proceeds thereof are insufficient to satisfy the
judgment credit. So, also, a mere demand to surrender the object which is not heeded by the mortgagor
will not amount to a foreclosure, but the repossession thereof by the vendor-mortgagee would have the
effect of foreclosure