G.R. No. L-67181 - Nonato vs. Intermediate Appellate Court

On June 28, 1976, spouses Restituto Nonato and Ester Nonato purchased one unit of a Volkswagen Sakbayan from People’s Car, Inc. on an installment basis.
To secure the installment payments, the Nonatos executed a promissory note and a chattel mortgage in favor of People’s Car, Inc.
The rights and interests under the promissory note and mortgage were subsequently assigned by People’s Car, Inc. to Investors Finance Corporation (IFC).

The Nonatos defaulted on their obligation by failing to pay two or more of the stipulated installments despite repeated demands.
As a consequence of this default, IFC (as assignee) repossessed the vehicle on March 20, 1978.
At the time of repossession, IFC provided a receipt indicating that the vehicle could be redeemed within fifteen (15) days by paying the balance of the purchase price.

Despite the repossession, IFC demanded that the Nonatos pay the outstanding balance of the purchase price, as evidenced by accompanying exhibits.
On June 9, 1978, IFC instituted a complaint in the Court of First Instance of Negros Occidental seeking the recovery of the balance, along with damages and attorney’s fees.
The trial court rendered judgment in favor of IFC, ordering the Nonatos to pay an amount with respective interest, attorney’s fees, litigation expenses, and costs.
The appellate court subsequently affirmed the trial court’s decision.

The Nonatos contended that repossession of the vehicle constituted a cancellation of the sale, thereby invoking the cancelation remedy provided under Article 1484 of the Civil Code, which bars the vendor from demanding the balance of the purchase price.
IFC, however, maintained that the act of repossession was undertaken solely for the purposes of safeguarding, appraising, and storing the vehicle pending full payment—and not as an exercise of the cancellation option under the Civil Code.
Evidence, particularly the receipt indicating a redemption period and the testimony of Mr. Ernesto Carmona, confirmed that the repossession operated as a cancellation, leaving IFC without a claim over the unpaid balance.

Whether the act of repossession of the vehicle by the vendor (or its assignee) constitutes an exercise of the option to cancel the sale under Article 1484 of the Civil Code.

Is the repossession, accompanied by a notice allowing redemption within a stipulated period, an indication that the vendor intended to cancel the sale?
Does the evidence support that repossession, once done as a cancellation remedy, bar the vendor from additionally claiming the balance of the purchase price?

Whether, under the doctrine that the remedies provided in Article 1484 are alternative and not cumulative, the vendor (IFC) can recover the unpaid balance after repossession has been effectuated.

Does the vendor’s conduct demonstrate an intent to cancel rather than merely safeguard the vehicle pending full payment?
What is the legal significance of the receipt indicating a fifteen-day redemption period in establishing the vendor’s intent?

Whether the exercise of one option (repossession as cancellation) precludes the application of any other remedy (i.e., exacting payment of the balance) under the same contractual framework established by Article 1484.