Recovery of Deficiency (1997)
AB sold to CD a motor vehicle for and in consideration of P120,000.00 to be paid in twelve monthly equal installments of P10,000,00, each installment being due and payable on the 15th day of each month starting January 1997.
To secure the promissory note, CD (a) executed a chattel mortgage on the subject motor vehicle, and (b) furnished a surety bond issued by Philam life, CD failed to pay more than two (2) installments, AB went after the surety but he was only able to obtain three-fourths (3/4) of the total amount still due and owing from CD. AB seeks your advice on how he might, if at all, recover the deficiency.
How would you counsel AB?
SUGGESTED ANSWER:
Yes, he can recover the deficiency. The action of AB to go after the surety bond cannot be taken to mean a waiver of his right to demand payment for the whole debt, The amount received from the surety is only payment pro tanto, and an action may be maintained for a deficiency debt.
From the ANSWERS TO BAR EXAMINATION QUESTIONS in CIVIL LAW by the UP LAW COMPLEX and PHILIPPINE ASSOCIATION OF LAW SCHOOLS.
