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Spouses Nonato vs. IAC [G.R. No. L-67181. November 22, 1985.] should the vendee fail to pay; (2) Cancel the sale, should the
vendee’s failure to pay cover two or more installments; (3) Foreclose
Second Division, Escolin (J): 4 concur
the chattel mortgage on the thing sold, if one has been constituted,
Facts: On 28 June 1976, spouses Restituto Nonato and Ester Nonato should the vendee’s failure to pay cover two or more installments. In
purchased 1 unit of Volkswagen Sakbayan from the People’s Car, Inc., this case, he shall have no further action against the purchaser to
on installment basis. To secure complete payment, they executed a recover any unpaid balance of the price. Any agreement to the
promissory note and a chattel mortgage in favor of People’s Car, Inc. contrary shall be void.”
People’s Car, Inc., assigned its rights and interests over the note and
mortgage in favor of Investor’s Finance Corporation (IFC). For failure of
the spouses to pay two or more installments, despite demands, the car 2. Meaning of Article 1484
was repossessed by IFC on 20 March 1978. Despite repossession, IFC
The meaning of the provision has been repeatedly enunciated in a
demanded from the spouses that they pay the balance of the price
long line of cases. Thus; “Should the vendee or purchaser of a personal
of the car.
property default in the payment of two or more of the agreed
On 9 June 1978, IFC filed before the CFI Negros Occidental a installments, the vendor or seller has the option to avail of any of these
complaint against the spouses for the latter to pay the balance of the three remedies — either to exact fulfillment by the purchaser of the
price of the car, with damages and attorney’s fees. In their answer, obligation, or to cancel the sale, or to foreclose the mortgage on the
the spouses alleged by way of defense that when the company purchased personal property, if one was constituted. These remedies
repossessed the vehicle, it had, by that act, effectively cancelled the have been recognized as alternative, not cumulative, that the
sale of the vehicle. It is therefore barred from exacting recovery of the exercise of one would bar the exercise of the others.
unpaid balance of the purchase price, as mandated by the provisions
3. Repossession an exercise of canceling the contract of sale not
of Article 1484 of the Civil Code. The trial court, however, after due
merely to appraise the car’s value
hearing, rendered a decision in favor of IFC, ordering the spouses to
pay IFC the amount of P17,537.60 with interest at the rate of 14% per It is not disputed that the company had taken possession of the car
annum from 28 July 1976 until fully paid, 10% of the amount due as purchased by the Nonatos on installments. While the Nonatos
attorney’s fees, litigation expenses in the amount of P133.05 plus the maintain that the company had, by that act, exercised its option to
costs of the suit; without any pronouncement as to other charges and cancel the contract of sale, the company contends that the
damages, the same not having been proven to the satisfaction of the repossession of the vehicle was only for the purpose of appraising its
Court. value and for storage and safekeeping pending full payment by the
Nonatos of the purchasing price. The records show otherwise. The
On appeal, the appellate court affirmed the judgment. Hence, the
receipt issued by the company to the Nonatos when it took possession
petition for review on certiorari.
of the vehicle states that the vehicle could be redeemed within 15
The Supreme Court set aside the judgment of the appellate court in days. This could only mean that should the spouses fail to redeem the
CA-GR 69276-R and dismissed the complaint filed by Investors Finance car within the period by paying the balance of the purchase price,
Corporation against the Nonato spouses in Civil Case 13852; without the company would retain permanent possession of the vehicle. The
costs. assertion that the company repossessed the vehicle merely for the
purpose of appraising its current value is untenable, for even after it
1. Article 1484 of the Civil Code; Remedies available to vendor of
had notified the Nonatos that the value of the car was not sufficient to
personal property in sale payable in installments
cover the balance of the purchase price, there was no attempt at all
Article 1484 of the Civil Code (on sale of personal property on on the part of the company to return the repossessed car.
installment) provides that “In a contract of sale of personal property
4. Cancellation of contract bars company from exacting payment of
the price of which is payable in installments, the vendor may exercise
any of the following remedies: (1) Exact fulfillment of the obligation,
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The acts performed by the corporation are wholly consistent with the
conclusion that it had opted to cancel the contract of sale of the
vehicle. It is thus barred from exacting payment from petitioners of the
balance of the price of the vehicle which it had already repossessed.
It cannot have its cake and eat it too.

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