Divine Grace A.

Carlos
I. SHORT TITLE Borbon II v. Servicewide Specialists
II. FULL TITLE DANIEL L. BORDON II AND FRANCISCO L. BORBON, petitioners,
vs. SERVICEWIDE SPECIALISTS, INC. & HON. COURT OF APPEALS,
respondents. G.R. No. 106418. July 11, 1996
III. TOPIC
IV. STATEMENT OF FACTS

Defendants Daniel L. Borbon and Francisco Borbon signed a promissory

note to the order of Pangasinan Auto Mart Inc., to pay without notice or
demand the amount of P 122,856 payable in installment for 12 months and a
late payment charge of 3% shall be added on each unpaid installment. It was
further stipulated that acceptance by the holder of payment of any
installment after due date will not be considered as extending the time for
payment nor the failure of the holder to exercise any of its rights be deemed
a waiver of such rights.
The rights of Pangasinan Auto Mart was later assigned to Filinvest
Credit Corporation. Filinvest assigned all its rights, interest and title over the
Promissory notes and the chattel mortgate to the plaintiff. Defendants failed
to pay their monthly installments, Filinvest demanded from defendants
payment of their installments. After accounts were assigned to the plaintiff, it
attempted to collect by sending a demand letter to the defendant for them to
pay their entire obligation. Defendants claim that what they intend to buy
from Pangasinan was a jeepney type isuzu K.C Cab. The vehicle they bought
was not delivered.
Instead, through misinterpretation 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. 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 asignee stands in the place of an
assignor which, to the mind of the court, is correct. The asignee exercise all
the rights of the assignor. 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.
V. STATEMENT OF THE CASE

Regional Trial Court, confirmed the disputed possession of a motor vehicle

in favor of private respondent and ordered the payment to it by petitioners of
liquidated damages and attorney's fees, the instant appeal was interposed.

In sustaining the decision of the court a quo, the appellate court ruled
that petitioners could not avoid liability under the promissory note and the
chattel mortgage that secured it since private respondent took the note for
value and in good faith.
 In their appeal to this Court, petitioners merely seek a modification of the
decision of the appellate court insofar as it has upheld the court a quo in the
award of liquidated damages and attorney's fees in favor of private
respondent.
VI. ISSUE Whether petitioners could not avoid liability under the promissory note
and the chattel mortgage
VII. RULING
NO. 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 an
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
innefectual 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 a foreclosure.

VIII. DISPOSITIVE PORTION

WHEREFORE, the appealed decision is MODIFIED by deleting therefrom

the award for liquidated damages; in all other respects the judgment of the
appellate court is AFFIRMED. No cost.

SO ORDERED.