What is an action?
Ruperto G. Cruz, et. al. v. Filipinas
Investment and Finance Corporation
Facts:
·
Petitioner
Ruperto Cruz purchased on installments one (1) unit of Isuzu Diesel bus from Far East Motors;
·
Petitioner
issued a promissory note as evidence of his indebtedness to Far East Motors;
·
To
secure such promissory note, chattel mortgage was instituted on the said
vehicle;
·
Since
no down payment was made by Cruz, an additional security was required by Far East
Motors;
·
The
additional security was given by plaintiff Felicidad de Reyes over her land which
at the time was mortgaged to DBP;
·
Later,
Far East Motors assigned all its rights and interests to the Deed of Chattel
Mortgage and Deed of Real Estate Mortgage to respondent, with due notice of
assignment to the petitioners;
·
Subsequently,
petitioner defaulted on the promissory note so respondent foreclosed the
chattel mortgage on the bus;
·
However,
the proceeds from the chattel mortgage were insufficient to discharge fully the
indebtedness;
·
Preparatory
to extra-judicially foreclosing the real estate mortgage on Reyes’ land,
defendant paid DBP her unpaid balance;
·
Petitioner
Reyes sent a letter demanding cancellation of her real estate mortgage, but
defendant did not heed so the former instituted a suit against the latter for
cancellation of said real estate mortgage;
Lower court rulings:
RTC:
sustained petitioner and declared that the extrajudicial foreclosure of the
chattel mortgage on the bus barred further action against the additional
security put up by Reyes
Ratio
of the lower court:
There
is no controversy that, involving as it does a sale of personal property on
installments, the pertinent legal provision in this case is Article 1484 of the
Civil Code, to wit:
“Art.
1484. In a contract of sale of personal property the price of which is payable
in installments, the vendor may exercise any of the following remedies:
(1) Exact fulfillment of the obligation,
should the vendee fail to pay;
(2) Cancel the sale, should the vendee’s
failure to pay cover two or more installments;
(3) Foreclose the chattel mortgage on the
thing sold, if one has been constituted, should the vendee’s failure to pay
cover two or more installments. In this case, he shall have no further action
against the purchaser to recover any unpaid balance of the price. Any
agreement to the contrary shall be void.
VERY
IMPORTANT FACTUAL MILIEU:
*defendant
brought the present appeal immediately to the Supreme Court arguing, among
others, that the law speaks of “action”, the restriction should be confined only to the bringing of judicial suits or
proceedings in court
Issue: WON the action referred in Art. 1484 is confined only to
those actions where there is a judicial suit or proceeding in court
Ruling: No, the “action” referred to in Art. 1484 is not limited
to judicial suits or proceedings.
The
word ‘action’ is without a definite or exclusive meaning. It has invariably
been defined as:
“…the
legal demand of one’s right, or rights;
…the
lawful demand of one’s right in a court of justice;
…the
legal and formal demand of one’s rights from another person or party, made and
insisted on in a court of justice;
…a
claim made before a tribunal;
…an
assertion in a court of justice of a right given by law;
…a
demand or legal proceeding in a court of justice to secure one’s rights;
…the
prosecution of some demand in a court of justice;
…the
means by which men litigate with each other;
…the
means that the law has provided to put the cause of action into effect;…”
Considering
the purpose for which the prohibition contained in Article 1484, the word
“action” used therein may be construed as referring to any judicial or
extrajudicial proceeding by virtue of which the vendor may lawfully be enabled
to exact recovery of the supposed unsatisfied balance of the purchasing price
form the purchaser or his privy. Certainly, an extrajudicial foreclosure of a
real estate mortgage is one such proceeding.
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