Short answer. Not if he foreclosed the chattel mortgage on the car. Article 1484 gives the seller three remedies and lets him take only one; having foreclosed, he shall have no further action against the purchaser to recover any unpaid balance, and any agreement to the contrary is void.
What the law says
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.
Civil Code, Article 1484 — Recto Law (Installment Sale of Personalty). Read the full provision →
Three remedies, and they are alternatives
Article 1484 sets out what a seller of personal property payable in installments may do when the buyer stops paying. He may exact fulfilment of the obligation, that is sue for the price. He may cancel the sale, if the default covers two or more installments. Or he may foreclose the chattel mortgage on the thing sold, on the same two-installment condition. The word doing the work is any: he chooses one path. The three are not steps in a sequence and he cannot try one, come up short, and then move to another to recover the shortfall.
Foreclosure closes the account for good
The foreclosure remedy carries its own consequence in the same breath: he shall have no further action against the purchaser to recover any unpaid balance of the price. So if the car was sold at the foreclosure sale for less than what you still owed, the deficiency is the seller's loss, not your debt. This is not a technicality you have to invoke — the article then adds that Any agreement to the contrary shall be void, which strikes down the deficiency clause that installment contracts routinely print for exactly this situation.
What the seller actually did is what binds him
The election is made by conduct, not by what the contract calls it. A seller who sues you for the whole price has chosen fulfilment and keeps that claim, but he has not taken the car. A seller who takes the car back and sells it under the mortgage has chosen foreclosure and has spent his remedy. So the first question in any repossession dispute is a factual one: was the vehicle seized and sold under the chattel mortgage, or merely surrendered while the seller pursues the balance? The answers point to different outcomes, so get the documents.
Where the article does not reach
Two limits matter. Article 1484 governs personal property sold on installment, so land bought on installment is not covered by it and is governed by other law entirely. And the rule is not confined to contracts labelled sales: Article 1485 applies the same article to contracts purporting to be leases of personal property with option to buy, once the lessor has deprived the lessee of possession or enjoyment of the thing. That closes the obvious workaround of writing a financed purchase as a lease-purchase and then repossessing and suing for the rest.
Cases citing this provision
These Supreme Court decisions cite the provision above. We list them so you can read them yourself; the summaries of what each decided are not ours to give.
- PCI Leasing & Finance InC. vs. Giraffe-X Creative Imaging, Inc, G.R. No. 142618, July 12, 2007 — read the decision on LawPhil →
- Spouses Alfredo and Brigida Rosario vs. PCI Leasing and Finance Inc, G.R. No. 139233, November 11, 2005 — read the decision on LawPhil →
- Daniel L. Borbon II, et al. vs. Servicewide Specialists, et al, G.R. No. 106418, July 11, 1996 — read the decision on LawPhil →
- Equitable Savings Bank vs. Rosalinda C. Palces, G.R. No. 214752, March 9, 2016 — read the decision on LawPhil →
Related provisions
- Civil Code, Article 1484 — Recto Law (Installment Sale of Personalty)
- Civil Code, Article 1485 — Recto Law Extends to Leases With Option to Buy