Case Summary (G.R. No. L-67181)
Background Facts
On June 28, 1976, the Nonatos purchased a Volkswagen Sakbayan from People's Car, Inc. through an installment plan. To ensure payment, they executed a promissory note and a chattel mortgage. Following the assignment of the note and mortgage rights to IFC, the spouses defaulted on payments, leading to the repossession of the vehicle by IFC on March 20, 1978. After the repossession, IFC demanded payment of the remaining balance from the Nonatos and later filed a complaint for recovery of that amount.
Legal Issue
The central issue presented in this case is whether a vendor or his assignee, after cancelling a sale due to the buyer's default on installment payments, may still demand payment of the outstanding balance of the purchase price.
Procedural History
The Nonatos asserted in their defense that IFC's repossession of the vehicle amounted to a cancellation of the sales contract, thereby barring IFC from seeking the balance of the purchase price under Article 1484 of the Civil Code. The trial court ruled in favor of IFC, ordering the Nonatos to pay the remaining amount, attorney’s fees, and litigation expenses. This judgment was affirmed by the Intermediate Appellate Court, prompting the Nonatos to seek a petition for review.
Applicable Law
Article 1484 of the Civil Code provides remedies available to the vendor in the event of a buyer's default on installment payments. It allows the vendor to either demand exact fulfillment of the obligation, cancel the sale, or foreclose the chattel mortgage, with a clear stipulation that if the vendor opts to cancel the sale, they cannot recover any unpaid balance.
Court's Reasoning
The court examined the actions of IFC upon repossessing the vehicle. The evidence, including a receipt indicating that the vehicle could be redeemed within fifteen days, suggested that the repossession could be interpreted as a cancellation of the sale rather than mere storage or appraisal of the vehicle’s value. Furthermore, the testimonies indicated that IFC had no intention of returning the vehicle unless payment was received,
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Case Overview
- The case involves a petition for review by spouses Restituto Nonato and Ester Nonato against the Intermediate Appellate Court and Investor's Finance Corporation (IFC).
- The primary legal issue is whether a vendor, or their assignee, can demand the balance of the purchase price after cancelling a sale due to the buyer's failure to pay two or more installments.
Factual Background
- On June 28, 1976, the Nonatos purchased a Volkswagen Sakbayan from People’s Car, Inc. on an installment basis, securing the transaction with a promissory note and a chattel mortgage.
- The rights and interests of People’s Car, Inc. were subsequently assigned to Investor's Finance Corporation.
- The Nonatos defaulted on two or more installments, leading to the repossession of the vehicle by IFC on March 20, 1978.
- Despite repossession, IFC demanded payment of the remaining balance of the purchase price from the Nonatos and filed a complaint for recovery on June 9, 1978.
Legal Contentions
- The Nonatos contended that the repossession of the vehicle constituted an effective cancellation of the sale, which barred IFC from seeking the unpaid balance based on Article 1484 of the Civil Code.
- IFC argued that the repossession was merely a precautionary measure for appraising the vehicle’s value and not an exe