9/7/2020 PHILIPPINE REPORTS ANNOTATED VOLUME 069

[No. 46306. October 27, 1939]

LEVY HERMANOS, INC., plaintiff and appellant, vs.

LAZARO BLAS GERVACIO, defendant and appellee.

1. INSTALLMENT SALES; ARTICLE 1454-A OF THE

CIVIL CODE (ACT No. 4122).—In Macondray & Co. vs.
De Santos (33 Off. Gaz., 2170), we held that "in order to
apply the provisions of article 1454-A of the Civil Code it
must appear that there was a contract for the sale of
personal property payable in installments and that there
has been a failure to pay two or more installments." The
contract, in the instant case, while a sale of personal
property, is not, however, one on 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.

2. ID.; ID.—Undoubteclly, the law is aimed at those sales

where the price is payable in several installments, for,
generally, it is in these cases that partial payments consist
in relatively small amounts, constituting thus a great
temptation for improvident purchasers to buy beyond
their means. There is no such temptation where the price
is to be paid in cash, or, as in the instant case, partly in
cash and partly in one term, for, in the latter case, the
partial payments are not so small as to place purchasers
off their guard and delude them to a miscalculation of
their ability to pay. Theoretically, perhaps, there is no
difference between paying the price in two installments
and paying the same partly in cash and partly in one
installment, in so far as the size of each partial payment is
concerned; but in actual practice the difference exists, for,
according to the regular course of business, in contracts
providing for payment of the price in two installments,
there is generally a .provision for initial payment. But all
these considerations are immaterial, the language of the
law being so clear as to require no construction at all.
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APPEAL from a judgment of the Court of First Instance of

Manila. Montemayor, J.
The facts are stated in the opinion of the court.
Felipe Caniblas for appellant.
Abreu, Lichauco & Picazo for appellee.
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VOL. 69, OCTOBER 27, 1939 53

Hermanos Inc. vs. Gervacio

MORAN, J.:

On February 24, 1938, plaintiff filed a complaint in the

Court of First Instance of Manila, which substantially
recites the following facts:
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, payable on or
before June 15,1937, with interest at 12 per cent 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 ?800. The present
action is for the collection of the balance of P1,600 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 articles 1454-A of the Civil Code, and
rendered judgment in favor of the defendant. Plaintiff
appealed.
Article 1454-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 Macondray & Co. vs. De Santos (33 Off. Gaz., 2170), we

held that "in order to apply the provisions of article 1454-A
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9/7/2020 PHILIPPINE REPORTS ANNOTATED VOLUME 069

of the Civil Code it must appear that there was a contract

for the sale of personal property payable in installments
and that there has been a failure to pay two or more
installments." The contract, in the instant case,

54

54 PHILIPPINE REPORTS ANNOTATED

Hermanos Inc. vs. Gervacio

while a sale of personal property, is not, however, one on

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.
Undoubtedly, the law is aimed at those sales where the
price is payable in several installments, for, generally, it is
in these cases that partial payments consist in relatively
small amounts, constituting thus a great temptation for
improvident purchasers to buy beyond their means, There
is no such temptation where the price is to be paid in cash,
or, as in the instant case, partly in cash and partly in one
term, for, in the latter case, the partial payments are not so
small as to place purchasers off their guard and delude
them to a miscalculation of their ability to pay.
Theoretically, perhaps, there is no difference between
paying the price in two installments and paying the same
partly in cash and partly in one installment, in so far as the
size of each partial payment is concerned; but in actual
practice the difference exists, for, according to the regular
course of business, in contracts providing for payment of
the price in two installments, there is generally a provision
for initial payment. But all these considerations are
immaterial, the language of the law being so clear as to
require no construction at all.
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 as a payment by installment, and even if it can
be so considered, still the law does not apply, for it requires
nonpayment of two or more installments in order that its
provisions may be invoked. Here, only one installment was
unpaid.

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9/7/2020 PHILIPPINE REPORTS ANNOTATED VOLUME 069

Judgment is reversed, and defendant-appellee is hereby

sentenced to pay plaintiff-appellant the sum of P1,600 with

55

VOL. 69, OCTOBER 28, 1939 55

Manila Racing Club vs. Manila Jockey Club et al.

interest at the rate of 12 per cent per annum from June 15,
1937, and the sum of P52.08 with interest at the rate of 6
per cent from the date of the filing of the complaint, with
costs in both instances against the appellee.

Avanceña, C. J,, Villa-Real, Imperial, Diaz, and

Concepcion, JJ., concur.

Judgment reversed.

_________

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