Magna Financial Services Group Inc., vs.

Elias Colarina
GR No. 158635

Facts:

Colarina bought a Suzuki multicab from the petitioner on June 11, 1997 with P229,284 as down payment and the
balance payable in 36 equal monthly installments. To secure payment, he executed a promissory note and chattel
mortgage in favor of the petitioner. Beginning 1999, Calorina failed to pay the monthly amortization accumulating to
P131K. thereafter, petitioner file for a foreclosure of chattel mortgage with replevin. RTC ruled in favor of the petitioner
and ordered Colarina to pay the balance, and upon default, the multicab will be sold at public auction to satisfy the
judgement. Colarina appealed to the CA which ruled in his favor stating that RTC erred in ordering Colarina to pay the
unpaid balance while the complaint was for the foreclosure of the mortgage. Petitioner appealed but was denied. Hence,
the case was elevated to the SC.

Issue:

Whether the nature of a foreclosure of a chattel mortgage is an exercise of the 3 rd option under article 1484 paragraph 3
of the civil code.

Ruling:

Yes. Article 1484, paragraph 3, provides that if the vendor has availed himself of the right to foreclose the chattel
mortgage, he shall have no further action against the purchaser to recover any unpaid balance of the purchase price. Any
agreement to the contrary is void. In other words, in all proceedings for the foreclosure of chattel mortgages executed on
chattels which have been sold on the installment plan, the mortgagee is limited to the property included in the
mortgage. Since the, petitioner has undeniably elected a remedy of foreclosure under Art. 1484(3), it is bound by its
election and thus may not be allowed to change what it has opted for nor to ask for more.