69 PHIL. 52


On March 15, 1937, plaintiff Levy Hermanos, Inc., sold to defendant Lazaro Blas Gervacio, a Packard car. Defendant after making the initial payment executed a promissory note for the balance of P2, 400.00, payable on or June 15, 1937, with interest at 12 percent per annum, and to secure the payment of the note, he mortgaged the car to the plaintiff.

Defendant failed to pay the note at its maturity; wherefore, plaintiff foreclosed the mortgage and the car was sold at public auction; at which plaintiff was the highest bidder for P 800.00. The present auction is for the collection of the balance of P 1, 600.00 and interest.

Defendant admitted the allegations of the complaint, and with this admission, the parties submitted the case for decision. The lower court applied the provisions of Act. No. 4122, inserted as Article 1454-A of the Civil Code, and rendered judgment in favor of the defendant. Plaintiff appealed.


Whether or not Article 1454-A of the Civil Code is applicable in the contract of sale entered into by the parties.


Supreme Court ruled in the negative.

Article 1452-A of the Civil Code reads as follows:

“In a contract for the sale of personal property payable in installments, failure to pay two or more installments shall confer upon the vendor the right to cancel the sale or foreclose the mortgage if one has been given on the property, without reimbursement to the purchaser of the installments already paid, if there be an agreement to this effect.

“However, if the vendor has chosen to foreclose the mortgage he shall have no further action against the purchaser for the recovery of any unpaid balance owing by the same, and any agreement to the contrary shall be null and void.”

In the instant case, the contract, while a sale of personal property, is not however, one in installments, but on straight term, in which the balance after payment of the initial sum, should be paid in its totality at the time specified in the promissory note. The transaction is not, therefore, the one contemplated in Act No. 4122 and accordingly the mortgagee is not bound by the prohibition therein contained as to its right to the recovery of the unpaid balance.

The suggestion that the cash payment made in this case should be considered as an installment in order to bring the contract sued upon under the operation of the law, is completely untenable. A cash payment cannot be considered a payment by installment, and even if it can be so considered, still the law does not apply, for it requires non-payment of two or more installments in order that its provisions may be invoked. Here only one is unpaid.

*Case digest by Jelyn C. Ondong, JD-4 Andres Bonifacio Law School, SY 2019-2020