Anexo 2 6SIGMA
XII. PAPELES Y RESPONSABILIDADES
NONATO vs IAC
Spouses Nonanto purchased a Volkwagen Sakbayan from People’s Car, Inc. on installment basis.
To secure payment, Investor’s Finance Corp (respondents) executed a promissory note &
chattel mortgage.
People’s Car assigned its rights & interests over the note & mortgage to Investor’s.
For failure of the Nonatos to pay 2/more installments despite demands, the car was repossessed. Despite reposession, Investor’s demanded from the Nonatos payment of the balance of the price.
Finally, Investor’s filed a complaint for payment of the balance. The Nonatos defense is that when the company repossessed the car, it had effectively cancelled the sale & thus barred from exacting recovery of the unpaid balance.
TC: Nonatos to pay Investor’s. CA: Affirmed.
W/N a vendor or his assignee who had cancelled the sale of a motor vehicle for failure of the buyer to pay 2 or more of the stipulated installments may also demand payment of the balance of the purchase price.
Art.1484 Sale of personal property in installments. Should the vendor/purchaser default in the payment of 2/more of the agreed installments, the vendor/seller has the option to avail of any of the 3 remedied: either to exact fulfillment by the purchaser OR to cancel the sale OR to foreclose the mortgage on the purchased personal property if one was constituted. These are alternative remedies not cumulative. The exercise of one would bar the exercise of the others.
Accdg to the company the repossession was only for the purpose of appraising the car’s value & for storage and safekeeping pending full payment of the purchase price.
The receipt issued by the company when it took possession states that the vehicle would be redeemed w/in 15 days. This could only mean that should Nonatos fail to redeem w/in the said period, the company would retain permanent possession of the vehicle, w/c it did in fact. Furthermore, even after the company 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.
The acts performed were consistent with the conclusion that it had opted to cancel the contract of sale of the car. DISMISSED.
RIDAD vs FILIPINAS INVESTMENT & FINANCE CORP.
Ridad spouses purchased from Supreme Sales & Devpt Corp 2 brand new Ford Consul Sedans w/ accessories for 26K payable in 24 monthly installments.
To secure payments, Ridad executed a promissory note & a deed of chattel mortgage on the 2 vehicles & another vehicle (a Chevrolet) & they’re franchise/certificate of public convenience for the operation of a taxi fleet.
With Ridad’s consent, Supreme Sales assigned its rights, title & interest to Filipinas Investment.
Due to the failure of Ridad to pay monthly installments, Filipinas foreclosed the chattel mortgage extrajudicially & at public auction of the 2 Ford Consuls, of w/c Ridad was not notified, Filipinas was the highest bidder & purchaser.
Another auction sale was held involving the other properties and at the public auction, the taxi franchise was sold to Filinvest who later on sold it to Sebastian who then filed w/ the Public Service Commission an application for the approval of the sale in his favor.
Ridad filed an action for annulment of the contract. LC: Chattel mortgage null & void as so far as the Chevrolet & taxi franchise is concerned. CA: Certified appeal to the SC.
W/N the chattel mortgage is valid in so far as the franchise & its subsequent sale to Sebastian was concerned.
Art.1484 Sale of personal property in installments. Should the vendor/purchaser default in the payment of 2/more of the agreed installments, the vendor/seller has the option to avail of any of the 3 remedied: either to exact fulfillment by the purchaser OR to cancel the sale OR to foreclose the mortgage on the purchased personal property if one was constituted. These are alternative remedies not cumulative. The exercise of one would bar the exercise of the others.
The purpose of the law is to prevent mortgagees from seizing the mortgaged property, buying it at foreclosure sale for a low price then bringing suit against the mortgagor for a deficiency judgment, otherwise the mortgage would find himself w/o the property & still owing practically the full amount of the original indebtedness.
Filipinas elected to foreclose its mortgage upon default in the payment of installments.
Thus, it has renounced any and all rights w/c it might otherwise have under the promissory note & the chattel mortgage as well as the payment of the unpaid balance.
As for the taxi franchise, it was ruled that should the vendor choose to foreclose the mortgage, he has to content himself w/ the proceeds of the sale at the public auction of the chattels w/c were sold on installment and mortgaged to him and cannot insist on the sale of the other properties as it would be equivalent to obtaining a writ of execution against the buyer concerning other properties w/c are separate and distinct from those w/c were sold on installment. This would be contrary to public police & the purpose of the law limiting the vendor’s right to foreclose the chattel mortgage only on the thing sold.
AFFIRMED
Filinvest Credit Corporation vs CA (1989) FACTS:
Spouses Jose Sy Bang and Iluminada Tan (private respondents) were engaged in the sale of gravel produced from crushed rocks and used for construction purposes.
To increase their production, they engaged the services of Mercurio, the proprietor of Gemini Motor Sales, to look for a rock crusher which they could buy.
Mercurio referred the spouses to the Rizal Consolidated Corporation which had with them such machinery.
Oscar Sy Bang, a brother of PR, inspected the machine at the Rizal Consolidated's plant site.
Satisfied with the machinery, PR signified their intent to purchase it. However, the machinery amounted to P550k
The PR applied for financial assistance from the petitioner, Filinvest Credit Corporation.
The petitioner agreed to extend to the PR financial aid on the following conditions:
1. that the machinery be purchased in the petitioner's name;
2. that it be leased (with option to purchase upon the termination of the lease period);
3.
that the PR execute a real estate mortgage in favor of the petitioner as security for the amount advanced by the latter. A contract of lease of machinery (with option to purchase) was entered into by the parties.
And to guarantee their compliance with the lease contract, the PR executed a real estate mortgage over two parcels of land in favor of the petitioner.
PR, claiming that they had only tested the machine for a month, sent a letter-complaint to the petitioner, alleging that contrary to the 20 to 40 tons per hour capacity of the machine as stated in the lease contract, the machine could only process 5 tons of rocks and stones per hour.
Based on such claim, PR stopped payment on the remaining checks they had issued to the petitioner.
As a consequence of the non-payment by the PR, petitioner extrajudicially foreclosed the real estate mortgage.
PR filed a complaint to enjoin the foreclosure, rescission of the contract of lease with option to purchase, and annulment of the real estate mortgage
RTC: ruled in favor of PR
CA: affirmed decision
Filinvest’s argument: it merely financed the purchase and therefore any defect on the machinery should be addressed to Rizal Consolidated, the seller.
ISSUE: I. W/N the contract entered into bet. PR and Filinvest is a contract of lease or a sale.
HELD: I. SALE (FILINVEST IS THE OWNER OF THE MACHINERY)
1. The nomenclature of the agreement cannot change its true essence, i.e., a sale on installments.
2. Upon completion of the payments, then the rock crusher, subject matter of the contract, would become the property of the PR.
3. This form of agreement has been criticized as a lease only in name.
4. The Court held that the contract of lease with option to buy is at times resorted to as a means to circumvent Art. 1484, particularly par. 3.
5. Through the set-up, the vendor, by retaining ownership over the property in the guise of being the lessor, retains, likewise, the right to repossess the same, without going through the process of foreclosure.
6. There arises therefore no need to constitute a chattel mortgage over the movable sold.
7. More importantly, the vendor, after repossessing the property and, in effect, cancelling the contract of sale, gets to keep all the installments-rentals already paid.
Note: The Court ruled that the PR have defaulted on their contract with the finance company, and therefore dismissed the complaint of the PR.
DELTA MOTOR SALES vs. NIU KIM DUAN (1992)
1. NKD purchased from Delta 3 units of Daikin air-conditioner worth 19,350. A deed of conditional sale was issued which states that:
a. NKD would pay a downpayment of 774 and the balance of 18k+ shall be paid in 24 monthly installments
b. title to properties would remain with Delta until the price is fully paid
c. if any 2 installments are not paid by NKD on their due dates, the the whole of the principal sum remaining unpaid would become due
2. To secure the payment of the balance, NKD jointly and severally executed in favor of Delta a promissory note.
3. The airconditioners were delivered and received. But after paying almost 7k, NKD failed to pay at least monthly installments. Delta tried to recover extrajudicially, but they failed to do so. A writ of replevin then was issued by the court and the payment of almost 7k was treated as rentals of the aircons.
Issue: Can Delta treat the payments as rentals? What are the remedies of Delta?
Held:
1. Yes. A stipulation in the contract that the installments paid shall not be returned to the vendee is valid as it is not unconscionable and is under Art. 1486. The amount NKD has paid only corresponds to 7 months. Since they admit using it already for 22 months, this means that they did not pay for 15 months thus used the aircons for free to the prejudice of Delta.
2. The vendor in a sale of personal property payable in installments may exercise 1 of 3 remedies:
a) exact the fulfillment of the obligation, should the vendee fail to pay b) cancel the sale upon the vendee's failure to pay 2 or more installments
c) foreclose the chattel mortgage, if one has been constituted on the property sold, upon the vendee's failure to pay 2 or more installments
* C option is subject to the limitation that the vendor cannot recover any unpaid balance of the price and any agreement to the contrary is void
The 3 remedies are alternative and not cumulative. In the case at bar, Delta filed a case to seek a judicial declaration that it had validly rescinded the deed of conditional sale (through the writ of replevin). Delta chose alternative B. Having done so, Delta is barred from exacting payment from NKD of the balance of the price. It cannot have its cake and eat it too.
LC decision set aside.