BORBON II v SERVICEWIDE SPECIALISTS INC.

- DINGLASAN
FACTS:
Daniel and Francisco Borbon issued a PN in favor of Pangasinan Auto Mart for the
purchase of certain chattels. It was secured by a chattel mortgage. The rights under
the note were assigned to Filinvest, which later assigned said rights to Servicewide.
The Borbons failed to pay, thus the mortgages were foreclosed. The Borbons aver
that the seller delivered chattels not strictly in accord with their instructions;
nonetheless, they cannot evade liability because the notes have passed to holders for
value and in good faith. The trial court sustained the foreclosure but awarded
liquidated damages and attorneys fees in addition to the proceeds of the auction
sale.
ISSUE:
W/N it was proper for the trial court to award liquidated damages and attorneys
fees in addition to the proceeds of the auction sale
HELD:
NO. First, when a person assigns credits to another, the latter is bound under the
same law; thus, Art. 1484 is equally applicable. In case of foreclosure, the legislative
intent is not merely to limit the proscription to collecting the unpaid balance of the
debt but also to other claims including costs of litigation and attorneys fees. That
being the case, the SC struck down the award of liquidated damages, but considering
the facts of the case, the award of attorneys fees is reasonable and sustained.

Note.In a contract of sale of personal property payable in installments the mere

fact that the vendor secures possession of the unpaid articles through an attachment
does not necessarily mean that it would resort to a foreclosure of the mortgage.
(Palma vs. Court of Appeals, 232 SCRA 714 [1994]) Borbon II vs. Servicewide
Specialists, Inc., 258 SCRA 634, G.R. No. 106418 July 11, 1996