No. L-67181 – SPOUSES RESTITUTO NONATO and ESTER NONATO, petitioners, vs. THE HONORABLE INTERMEDIATE APPELLATE COURT and INVESTOR’S FINANCE CORPORATION, respondents.
ESCOLIN, J.
Rule Synopsis
The remedies provided for under Art. 1484 to a seller of a personal property in installments, where the buyer defaulted in at least two installments, is alternative not cumulative.
Facts
Sps Nonator purchased a car from People’s Car, Inc. (predecessor of Investor’s Finance Corp. — IFC) on installment basis. The Sps executed a PN for its payment. They also constituted a chattel mortgage over the car. Sps Nonato then failed to pay at least two installments. IFC repossessed the car and also demanded for payment of the balance. The Sps refused.
Thus, IFC filed an action for collection of the balance.
As defense, Sps Nonato said that, in repossessing the car, IFC effectively cancelled the sale. Thus, it is barred from recovering the unpaid balance citing Art. 1484 of the Civil Code.
The trial court ruled in favor of IFC. The CA affirmed. The SC reversed — IFC is not entitled to the recovery of the balance.
Issue
May a vendor, or his assignee, who had cancelled the sale of a motor vehicle for failure of the buyer to pay two or more of the stipulated installments, also demand payment of the balance of the purchase price?
Ruling and Discussion
No. A vendor, or his assignee, who had cancelled the sale of a motor vehicle for failure of the buyer to pay two or more of the stipulated installments, may not also demand payment of the balance of the purchase price.
Art. 1484 provides:
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:
(a) Exact fulfillment of the obligation, should the vendee fail to pay;
(b) Cancel the sale, should the vendee’s failure to pay cover two or more installments;
(c) 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.
The remedies provided for under Art. 1484 have been recognized as alternative, not cumulative, that the exercise of one would bar the exercise of the others.
While IFC denies having exercised its right to cancel the sale of the repossessed car, the Court held that its acts are wholly consistent with the conclusion that it had opted to cancel the contract of sale of the vehicle.
(a) Should Sps Nonato fail to redeem the car by paying the balance of the purchase price within 15 days, as stated in the receipt issued by IFC, the latter would retain permanent possession of the vehicle, as it did in fact.
(b) Even after IFC had notified the Nonatos that the value of the car was not sufficient to cover the balance of the purchase price, there was no attempt at all on the part of the company to return the repossessed car. This belies their claim that the repossession was merely intended to appraise the value of the car.
As the remedy of cancellation was already exercised by IFC, it can no longer claim exact fulfillment of the same.
Dispositive
Judgment set aside.