Case Digest (G.R. No. L-25951)
Facts:
Filipinas Investment & Finance Corporation v. Julian R. Vitug, Jr. and Supreme Sales & Development Corporation, G.R. No. L-25951, June 30, 1969, the Supreme Court En Banc, Barredo, J., writing for the Court.The plaintiff-appellant Filipinas Investment & Finance Corporation sued defendants Julian R. Vitug, Jr. (the buyer) and Supreme Sales & Development Corporation (the seller/assignor) to recover a deficiency remaining after appellant foreclosed a chattel mortgage and sold at public auction the motor vehicle that Vitug had purchased from Supreme Sales. The amended complaint (filed July 16, 1965) alleged that Vitug executed a promissory note for P14,605.00 secured by a chattel mortgage on the 4‑door Consul sedan; on November 4, 1964 Supreme Sales negotiated (assigned) the note and mortgage to appellant and expressly reserved a right of recourse against Supreme Sales should the maker default.
The complaint alleged Vitug defaulted on the installment due January 6, 1965 and on the subsequent three monthly installments, whereupon appellant, authorized by Supreme Sales, exercised remedies to take possession of the automobile (a writ of replevin was obtained but Vitug voluntarily surrendered the car). Appellant foreclosed and sold the vehicle at public auction; proceeds left a deficiency of P8,349.35 plus interest at 12% per annum from April 21, 1965. Appellant sought the deficiency, interest, attorney’s fees and costs from Supreme Sales as assignor on the with‑recourse assignment.
On August 4, 1965 Supreme Sales moved to dismiss, arguing that Article 1484 of the Civil Code (the Recto Law) bars any action to recover unpaid balance of the price after foreclosure of chattel mortgage and that any agreement to the contrary is void. The Court of First Instance of Manila granted the motion and on August 30, 1965 dismissed the complaint as to Supreme Sales, reasoning that by pursuing...(Pro-only)
Issues:
- Does Article 1484 of the Civil Code (the Recto Law) bar the assignee (appellant) from suing the assignor (Supreme Sales) to recover a deficiency after foreclosure and sale of the mortgaged chattel when the assignment expressly reserved a right of recourse against the assignor?
- If Article 1484 does not bar the action, is an assignment of a sale‑installment promissory note made on a with‑recourse basis enforceable against the assignor such that...(Pro-only)
Ruling:
- (Pro-only)
Ratio:
- (Pro-only)
Doctrine:
- (Pro-only)