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BPI
ISSUE: Whether respondent bank may be held entitled to the possession of the
motor vehicle subject of the instant case for replevin, or the payment of its value and
damages, without proof of prior demand.
HELD: The CA is correct that no prior demand was necessary to make petitioners'
obligation due and payable. The Promissory Note with Chattel Mortgage clearly
stipulated that "[i]n case of my/our [petitioners'] failure to pay when due and payable,
any sum which I/We x x x or any of us may now or in the future owe to the holder of
this note x x x then the entire sum outstanding under this note shall immediately
become due and payable without the necessity of notice or demand which I/We
hereby waive." Petitioners are bound by the aforementioned stipulation in the
Promissory Note with Chattel Mortgage waiving the necessity of notice and demand
to make the obligation due and payable. Clearly, as stated above, Article 1169 (1) of
the Civil Code allows a party to waive the need for notice and demand. Petitioners'
argument that their liability cannot be deemed due and payable for lack of proof of
demand must be struck down.
Magsano, et al. vs. Pangasinan Savings and Loan Bank, Inc.,
HELD: 1. Yes, the mortgage is void. While she herself as the co-owner had the
right to mortgage or even sell her undivided interest in the subject property, she
could not mortgage or otherwise dispose of the same in its entirety without the
consent of the other co-owners. Consequently, the validity of the subject Real Estate
Mortgage and the subsequent foreclosure proceedings therefor conducted in favor of
respondent respondent bank should be limited only to the portion which may be
alloted to it, as Susana's successor-in-interest, in the event of partition, thereby
making it a co-owner with petitioners pending partition.
2. No. While the rule is that every person dealing with registered land may safely rely
on the correctness of the certificate of title issued therefor and the law will in no way
oblige him to go beyond the certificate to determine the condition of the
property, where the land sold is in the possession of a person other than the
vendor, as in this case, the purchaser must go beyond the certificate of title
and make inquiries concerning the actual possessor. Furthermore, as correctly
pointed out by petitioners, the claim that one is an innocent purchaser for value is a
matter of defense. Hence, while petitioners alleged that Sps. Manuel were
purchasers in bad faith, the rule is that he who asserts the status of a purchaser in
good faith and for value has the burden of proving the same, and this onus
probandi cannot be discharged by mere invocation of the legal presumption of good
faith, i.e. that everyone is presumed to act in good faith.
PNB vs. Heirs of Benedicto and Azucena Alonday,
FACTS: The Spouses Benedicto and Azucena Alonday (Spouses Alonday) obtained
an agricultural loan of P28,000.00 from the petitioner at its Digos, Davao del Sur
Branch, and secured the obligation by constituting a real estate mortgage on their
parcel of land situated in Sta. Cruz, Davao del Sur. On June 11, 1980, the Spouses
Alonday obtained a commercial loan for Pl6,700.00 from the petitioner's Davao City
Branch, and constituted a real estate over their 598 square meter residential lot
situated in Ulas, Davao. The Spouses Alonday made partial payments on the
commercial loan, which they renewed on December 23, 1983 for the balance of Pl
5,950.00. The renewed commercial loan, although due on December 25, 1984, was
fully paid on July 5, 1984.3 On August 6, 1984, respondents Mercy and Alberto
Alonday, the children of the Spouses Alonday, demanded the release of the
mortgage over the property . The petitioner informed them, however, that the
mortgage could not be released because the agricultural loan had not yet been fully
paid, and that as the consequence of the failure to
pay, it had foreclosed the mortgage over the property. The petitioner applied for the
extrajudicial
against the petitioner in RTC to recover damages averring that the foreclosure and
sale of the property was illegal. The RTC ruled in favour of respondents. The CA
likewise rules in favor of the respondent.
ISSUE: Whether the dragnet clause securing the past and future obligations is
valid?
HELD: Yes. There is no question, indeed, that all-embracing or dragnet clauses
have been recognized as valid means to secure debts of both future and past
origins. Even so, we have likewise emphasized that such clauses were an
exceptional mode of securing obligations, and have held that obligations could only
be deemed secured by the mortgage if they came fairly within the terms of the
mortgage contract. For the all-embracing or dragnet clauses to secure future
loans, therefore, such loans must be sufficiently described in the mortgage
contract. If the requirement could be imposed on a future loan that was
uncertain to materialize, there is a greater reason that it should be applicable
to a past loan, which is already subsisting and known to the parties.
Under Article 1306 of the Civil Code, the contracting parties "may establish such
stipulations, clauses, terms and conditions as they may deem convenient, provided
they are not contrary to law, morals, good customs, public order or public policy."
This is an expression recognition by the law of the right of the people to enter into all
manner of lawful conventions as part of their safeguarded liberties. The objection
against a contract of adhesion lies most often in its negation of the autonomy of the
will of the parties in contracts. A contract of adhesion, albeit valid, becomes
objectionable only when it takes undue advantage of one of the parties -- the weaker
party -- by having such party just adhere to the terms of the contract. In such
situation, the courts go to the succor of the weaker party by construing any obscurity
in the contract against the party who prepared the contract, the latter being
presumed as the stronger party to the agreement, and as the party who caused the
obscurity.
FACTS: Babiano was hired by CPI as Director of Sales As CPFs Vice President for
Sales, Babiano was remunerated the following benefits: (a) monthly salary of
P70,000.00; (b) allowance of P50,000.00; and (c) 0.5% override commission for
completed sales. His employment contract also contained a "Confidentiality of
Documents and Non-Compete Clause which, among others, barred him from
disclosing confidential information, and from working in any business enterprise that
is in direct competition with CPI "while [he is] employed and for a period of one year
from date of resignation or termination from [CPI]." Should Babiano breach any of
the terms thereof, his "forms of compensation, including commissions and incentives
will be forfeited." nroblesla
During the same period, Concepcion was initially hired as Sales Agent by CPI and
was eventuallypromoted as Project Director. As such, she signed an employment
agreement, denominated as "Contract of Agency for Project Director" which
provided, among others, that she would directly report to Babiano, and receive, a
monthly subsidy of P60,000.00, 0.5% commission, and cash incentives. On March
31, 2008, Concepcion executed a similar contract anew with CPI in which she would
receive a monthly subsidy of P50,000.00, 0.5% commission, and cash incentives as
per company policy. Notably, it was stipulated in both contracts that no employer-
employee relationship exists between Concepcion and CPI. Babiano tendered his
resignation and revealed that he had been accepted as Vice President of First
Global BYO Development Corporation (First Global), a competitor of CPI.
On the other hand, Concepcion resigned as CPFs Project.
On August 8, 2011, respondents filed a complaint for non-payment of commissions
and damages against CPI and Antonio before the NLRC. CPI claimed to have validly
withheld Babiano's commissions, considering that they were deemed forfeited for
violating the "Confidentiality of Documents and Non-Compete Clause.On
Concepcion's money claims, CPI asserted that the NLRC had no jurisdiction to hear
the same because there was no employer-employee relations between them, and
thus, she should have litigated the same in an ordinary civil action.
ISSUE: Whether the non involvement clause contained in the contract is ambiguous.
HELD: No. Article 1370 of the Civil Code provides that "[i]f the terms of a contract
are clear and leave no doubt upon the intention of the contracting parties, the literal
meaning of its stipulations shall control. the foregoing clause is not only clear and
unambiguous in stating that Babiano is barred to "work for whatsoever capacity x x x
with any person whose business is in direct competition with [CPI] while [he is]
employed and for a period of one year from date of [his] resignation or termination
from the company," it also expressly provided in no uncertain terms that should
Babiano "[breach] any term of [the employment contract], forms of compensation
including commissions and incentives will be forfeited." Here, the contracting parties
- namely Babiano on one side, and CPI as represented by its COO-Vertical, John
Victor R. Antonio, and Director for Planning and Controls, Jose Carlo R. Antonio, on
the other -indisputably wanted the said clause to be effective even during the
existence of the employer-employee relationship between Babiano and CPI, thereby
indicating their intention to be bound by such clause by affixing their respective
signatures to the employment contract. More significantly, as CPFs Vice President
for Sales, Babiano held a highly sensitive and confidential managerial position as he
"was tasked, among others, to guarantee the achievement of agreed sales targets
for a project and to ensure that his team has a qualified and competent manpower
resources by conducting recruitment activities, training sessions, sales rallies,
motivational activities, and evaluation programs." Hence, to allow Babiano to freely
move to direct competitors during and soon after his employment with CPI would
make the latter's trade secrets vulnerable to exposure, especially in a highly
competitive marketing environment. As such, it is only reasonable that CPI and
Babiano agree on such stipulation in the latter's employment contract in order to
afford a fair and reasonable protection to CPI. Indubitably, obligations arising from
contracts, including employment contracts, have the force of law between the
contracting parties and should be complied with in good faith. Corollary thereto,
parties are bound by the stipulations, clauses, terms, and conditions they have
agreed to, provided that these stipulations, clauses, terms, and conditions are not
contrary to law, morals, public order or public policy, as in this case.
AMBRAY v. TSOUROUS
FACTS: The subject matter of the present controversy is a parcel of land. Petitioners
and respondents Sylvia A. Tsourous,Carmencita Ambray-Laurel, Hedy Ambray-
Azores, Vivien Ambray-Yatco, Nancy Ambray-Escudero, Maristela Ambray-Ilagan
(Maristela), Elizabeth Ambray-Soriano, Ma. Fe Luisa Ambray-Arcilla (Ma. Fe
Luisa), and Cristina Ambray-Labit are siblings. With the exception of Sylvia, they are
the children of the late Ceferino Ambray (Ceferino, Sr.) and Estela Trias (Estela),
who passed away on February 5, 1987 and August 15, 2002, respectively.
During their lifetime, Ceferino, Sr. and Estela owned several properties, one of which
was a parcel of land. Ceferino, Sr. mortgaged Lot 2 with Manila Bank for the amount
of P180,000.00. The mortgage was discharged. Prior to the discharge of the
mortgage, Lot 2 was subdivided into three (3) lots: Lot 2-A, Lot 2-B, and the subject
property, Lot 2-C.
In June 1996, Maristela discovered that TCT No. T-22749 covering Lot 2-C had been
cancelled and in its stead, TCT No. T-41382 was issued in the name of petitioners. It
appears that by virtue of a notarized Deed of Absolute Sale Ceferino, Sr., with the
consent of Estela, allegedly sold "a portion of lot 2 of the consolidation subd. Plan to
petitioners for a consideration of P150,000.00. The Deed of Sale was registered with
the Register of Deeds. This prompted respondents to file a criminal case for
falsification of public document against petitioners. The MTCC acquitted petitioners
of the charge for failure of the prosecution to prove their guilt beyond reasonable
doubt.
Respondents filed the instant complaint for annulment of title, reconveyance, and
damages against petitioners and, alleging that the Deed of Sale were null and void
because the signatures of Ceferino, Sr. and Estela thereon were forgeries.
Defendants claimed that the issue on the authenticity of the signatures of Ceferino,
Sr. and Estela on the Deed of Sale had already been passed upon in the falsification
case where petitioners were eventually acquitted; hence, the matter was res
judicata. The RTC granted the motion and dismissed the case on said ground.
The RTC nullified the Deed of Sale. The RTC found that respondents were able to
prove, by a preponderance of evidence, that the Deed of Sale executed by Ceferino,
Sr. conveying Lot 2-C in favor of petitioners was spurious and of dubious origin. The
CA affirmed the RTC Decision and found that respondents were able to sufficiently
discharge the required burden of proof that the subject Deed of Sale is spurious.
ISSUE: Whether the the disposition of Lot 2-C to petitioners was valid.
HELD: YES. The RTC noted, and found it puzzling, that the Deed of Sale did not
specifically mention the exact area that was being sold to petitioners, disposing only
of "a portion of lot 2" without specifying the metes and bounds thereof. As such, the
RTC concluded that Ceferino, Sr. could not have sold a specific portion of Lot 2 to
petitioners, having been subdivided only in 1984. However, Article 1463 of the Civil
Code expressly states that "[t]he sole owner of a thing may sell an undivided interest
therein." As Ceferino, Sr. was the sole owner of the original Lot 2 from whence came
Lot 2-C, he is therefore allowed by law to convey or sell an unspecified portion
thereof. Hence, the disposition of Lot 2-C to petitioners, a portion of Lot 2 yet to be
subdivided in 1978, was therefore valid.
LOGARTA v. MANGAHIS
The RTC granted the petition and ordered the cancellation of the subject entries. It
found that the subject entries are adverse claims which ceased to be effective 30
days after registration and should, therefore, be cancelled, pursuant to Section 70 of
Presidential Decree No. (PD) 1529
The CA dismissed petitioner's appeal and affirmed the RTC ruling. It agreed with the
trial court that the subject entries are akin to an annotation of adverse claim which is
a measure designed to protect the interest of a person over a piece of real property
and governed by Section 70 of PD 1529.
ISSUE: Whether CA and the RTC erred in ordering the cancellation of the subject
entries.
HELD: YES. An adverse claim is a type of involuntary dealing designed to protect the
interest of a person over a piece of real property by apprising third persons that there
is a controversy over the ownership of the land. It seeks to preserve and protect the
right of the adverse claimant during the pendency of the controversy, where
registration of such interest or right is not otherwise provided for by the Property
Registration Decree. An adverse claim serves as a notice to third persons that any
transaction regarding the disputed land is subject to the outcome of the dispute. It is
settled that in a deed of conditional sale, ownership is transferred after the full
payment of the installments of the purchase price or the fulfillment of the condition
and the execution of a definite or absolute deed of sale. Verily, the efficacy or
obligatory force of the vendor's obligation to transfer title in a conditional sale is
subordinated to the happening of a future and uncertain event, such that if the
suspensive condition does not take place, the parties would stand as if the
conditional obligation had never existed. Given the foregoing, the MOA is essentially
a dealing affecting less than the ownership of the subject property that is governed
by Section 54 of PD 1529. Moreover, being a conditional sale, the MOA is a
voluntary instrument which, as a rule, must be registered as such and not as an
adverse claim.
NISSAN CAR LEASE PHILS., INC. v. LICA MANAGEMENT, INC. AND PROTON
PILIPINAS, INC.
FACTS: LMI is the absolute owner of a property It entered into a contract with NCLPI
for the latter to lease the property for a term often (10) years. NCLPI, with LMFs
consent, allowed its subsidiary Nissan Smartfix Corporation (NSC) to use the leased
premises. ySubsequently, NCLPI became delinquent in paying the monthly rent.
Nissan and Lica verbally agreed to convert the arrearages into a debt to be covered
by a promissory note and twelve (12) postdated checks,. While NCLPI was able to
deliver the postdated checks per its verbal agreement with LMI, it failed to sign the
promissory note and pay the checks. Thus, in a letter dated October 16, 1996, which
was sent on October 18, 1996 by registered mail, LMI informed NCLPI that it was
terminating their Contract of Lease due to arrears in the payment of rentals. It also
demanded that NCLPI (1) pay the amount of P2,651,570.39 for unpaid rentals and
(2) vacate the premises within five (5) days from receipt of the notice.uallawlibrary
NCLPI entered into a Memorandum of Agreement with Proton whereby the former
agreed to allow Proton "to immediately commence renovation work even prior to the
execution of the Contract of Sublease LMI, entered into a Contract of Lease with
Proton over the subject premises.chanroblesvirtuallawlibrary
LMI filed a Complaint for sum of money with damages seeking to recover from
NCLPI the amount of P2,696,639.97, equivalent to the balance of its unpaid rentals.
NCLPI demanded Proton to vacate the leased premises. However, Proton replied
that it was occupying the property based on a lease contract with LMI. In a letter of
even date addressed to LMI, NCLPI asserted that its failure to pay rent does not
automatically result in the termination of the Contract of Lease nor does it give LMI
the right to terminate the same. NCLPI also informed LMI that since it was unlawfully
ousted from the leased premises and was not deriving any benefit therefrom, it
decided to stop payment of the checks issued to pay the
rent.chanroblesvirtuallawlibraryProton further asserted that NCLPl had vacated the
premises as early as during the negotiations for the sublease and, in fact, authorized
the former to enter the property and commence renovations.When NCLPl ultimately
failed to obtain LMI's consent to the proposed sublease and its lease contract was
terminated, Proton, having already incurred substantial expenses renovating the
premises, was constrained to enter into a Contract of Lease with LMI. The trial court
found that NCLPI purposely violated the terms of its contract with LMI when it failed
to pay the required rentals and contracted to sublease the premises without the
latter's consent. Under Article 1191 of the Civil Code, LMI was therefore entitled to
rescind the contract between the parties and seek payment of the unpaid rentals and
damages. In addition, the trial court ruled that LMFs act of notifying NCLPI of the
termination of their lease contract due to non-payment of rentals is expressly
sanctioned under paragraphs and of their contract.chanroblesvirtuallawlibrary
Aggrieved, NCLPI filed a Petition for Review with the CAThe CA denied NCLPI's
appeal and affirmed the trial court's decision with modification.
HELD: YES. It is true that NCLP1 and LMI's Contract of Lease does not contain a
provision expressly authorizing extrajudicial rescission. LMI can nevertheless rescind
the contract, without prior court approval, pursuant to Art. 1191 of the Civil Code.
Art. 1191 provides that the power to rescind is implied in reciprocal obligations, in
cases where one of the obligors should fail to comply with what is incumbent upon
him. Otherwise stated, an aggrieved party is not prevented from extrajudicially
rescinding a contract to protect its interests, even in the absence of any provision
expressly providing for such right. [T]he law definitely does not require that the
contracting party who believes itself injured must first file suit and wait for a judgment
before taking extrajudicial steps to protect its interest. Otherwise, the party injured
by the other's breach will have to passively sit and watch its damages
accumulate during the pendency of the suit until the final judgment of
rescission is rendered when the law itself requires that he should exercise due
diligence to minimize its own damages (Civil Code, Article 2203) We are aware of
this Court's previous rulings in Tan v. Court of Appeals, Iringan v. Court of
Appeals, and EDS Manufacturing, Inc. v. Healthcheck International, Inc., for
example, wherein we held that extrajudicial rescission of a contract is not possible
without an express stipulation to that effect.chanroblesvirtuallawlibrarWhether a
contract provides for it or not, the remedy of rescission is always available as a
remedy against a defaulting party. When done without prior judicial imprimatur,
however, it may still be subject to a possible court review.
DESIGNER BASKETS, INC v. AIR SEA TRANSPORT, INC. AND ASIA CARGO
CONTAINER LINES, INC
FACTS:
DBI then made several demands to Ambiente for the payment of the shipment, but to
no avail. Thus, on DBI filed the Original Complaint against ASTI, ACCLI and ACCLFs
incorporators. The trial court found ASTI, ACCLI, and Ambiente solidarity liable to
DBI for the value of the shipment.
The trial court declared that the liability of Ambiente is "very clear." As the buyer, it
has an obligation to pay for the value of the shipment. The trial court noted that "[the
case] is a simple sale transaction which had been perfected especially since delivery
had already been effected and with only the payment for the shipment remaining left
to be done. The CA affirmed the trial court's finding that Ambiente is liable to DBI, but
absolved ASTI and ACCLI from liability. The CA found that the pivotal issue is
whether the law requires that the bill of lading be surrendered by the
buyer/consignee before the carrier can release the goods to the former. It then
answered the question in the negative.
chanRoblesvirtualLawlibrary
There is nothing in the applicable laws that require the surrender of bills of
lading before the goods may be released to the buyer/consignee.
ISSUE: Whether Article 1503 of the Civil Code applies to contracts for carriage
of goods.
HELD: No. DBFs assertion is untenable. Article 1503 is an exception to the general
presumption provided in the first paragraph of Article 1523, which reads:Article
1523. Where, in pursuance of a contract of sale, the seller is authorized or
required to send the goods to the buyer, delivery of the goods to a carrier,
whether named by the buyer or not, for the purpose of transmission to the
buyer is deemed to be a delivery of the goods to the buyer, except in the cases
provided for in Articles 1503, first, second and third paragraphs, or unless a
contrary intent appears.
Unless otherwise authorized by the buyer, the seller must make such contract with
the carrier on behalf of the buyer as may be reasonable, having regard to the nature
of the goods and the other circumstances of the case. If the seller omit so to do, and
the goods are lost or damaged in the course of transit, the buyer may decline to treat
the delivery to the carrier as a delivery to himself, or may hold the seller responsible
in damages.
Unless otherwise agreed, where goods are sent by the seller to the buyer under
circumstances in which the seller knows or ought to know that it is usual to insure,
the seller must give such notice to the buyer as may enable him to insure them
during their transit, and, if the seller fails to do so, the goods shall be deemed to be
at his risk during such transit. Article 1503, on the other hand, provides:
chanRoblesvirtualLawlibrary
Article 1503. When there is a contract of sale of specific goods, the seller may,
by the terms of the contract, reserve the right of possession or ownership in the
goods until certain conditions have been fulfilled. The right of possession or
ownership may be thus reserved notwithstanding the delivery of the goods to the
buyer or to a carrier or other bailee for the purpose of transmission to the buyer.
Where goods are shipped, and by the bill of lading the goods are deliverable to the
seller or his agent, or to the order of the seller or of his agent, the seller thereby
reserves the ownership in the goods. But, if except for the form of the bill of lading,
the ownership would have passed to the buyer on shipment of the goods, the seller's
property in the goods shall be deemed to be only for the purpose of securing
performance by the buyer of his obligations under the contract.
Where goods are shipped, and by the bill of lading the goods are deliverable to
order of the buyer or of his agent, but possession of the bill of lading is
retained by the seller or his agent, the seller thereby reserves a right to the
possession of the goods as against the buyer.
Where the seller of goods draws on the buyer for the price and transmits the bill of
exchange and bill of lading together to the buyer to secure acceptance or payment of
the bill of exchange, the buyer is bound to return the bill of lading if he does not
honor the bill of exchange, and if he wrongfully retains the bill of lading he acquires
no added right thereby. If, however, the bill of lading provides that the goods are
deliverable to the buyer or to the order of the buyer, or is indorsed in blank, or to the
buyer by the consignee named therein, one who purchases in good faith, for value,
the bill of lading, or goods from the buyer will obtain the ownership in the goods,
although the bill of exchange has not been honored, provided that such purchaser
has received delivery of the bill of lading indorsed by the consignee named therein,
or of the goods, without notice of the facts making the transfer wrongful.
Articles 1523 and 1503, therefore, refer to a contract of sale between a seller and a
buyer. In particular, they refer to who between the seller and the buyer has the right
of possession or ownership over the goods subject of the sale. Articles 1523 and
1503 do not apply to a contract of carriage between the shipper and the common
carrier. The third paragraph of Article 1503, upon which DBI relies, does not oblige
the common carrier to withhold delivery of the goods in the event that the bill of
lading is retained by the seller. Rather, it only gives the seller a better right to the
possession of the goods as against the mere inchoate right of the buyer. Thus,
Articles 1523 and 1503 find no application here. The case before us does not involve
an action where the seller asserts ownership over the goods as against the buyer.
Instead, we are confronted with a complaint for sum of money and damages filed by
the seller against the buyer and the common carrier due to the non-payment of the
goods by the buyer, and the release of the goods by the carrier despite non-
surrender of the bill of lading. A contract of sale is separate and distinct from a
contract of carriage.
FACTS:
Jesus Delos Santos and Rosita Delos Santos Flores were the judgment awardees
of the two-thirds portion or 9,915 square meters of four adjoining lots . Pea averred
that he is the transferee of Jesus and Rosita's adjudged allotments over the subject
lots. He claimed that he bought the same from Atty. Romeo Robiso (Atty. Robiso)
who in turn, acquired the properties from Jesus and Rosita through assignment and
sale
Atty. Robiso later on sold Lots No. 393-A and 394-D to Pea
The plaintiffs opposed Pea's motion claiming .that the conveyance made by Jesus
and Rosita in favor of Atty. Robiso was null and void for being a prohibited
transaction because the latter was their counsel in the case. The RTC partially
granted Pea's motion and ruled that Jesus and Rosita lost their standing in the case
upon the conveyance of their adjudged 2,000 sq m portion in favor of Atty. Robiso
whose ownership rights were afterwards acquired by Pea. The RTC upheld that the
conveyance made by Jesus and Rosita in favor of Atty. Robiso is valid since it was
not made during the pendency of litigation but after judgment has been rendered.
The CA reversed the RTC and ruled that the conveyance made by Jesus and Rosita
in favor of Atty. Robiso was null and void because it is a prohibited transaction under
Article 1491(5) of the Civil Code. When the two Deeds of Sale in favor of Atty. Robiso
were executed on May 4, 2005 and December 5, 2005 and the Confirmation of Sale
on December 15, 2006, the case was still pending with the Supreme Court, before
which Jesus and Rosita were still represented by Atty. Robiso.
ISSUE: Whether the sale is a prohibited sale.
HELD: Yes. Article 1491(5) of the Civil Code expressly prohibits lawyers from
acquiring property or rights that may be the object of any litigation in which they may
take part by virtue of their profession,
chanRoblesvirtualLawlibrary
Art. 1491. The following persons cannot acquire by purchase, even at a public or
judicial auction, either in person or through the mediation of another:
(5) Justices, judges, prosecuting attorneys, clerks of superior and inferior courts, and
other officers and employees connected with the administration of justice, the
property and rights in litigation or levied upon an execution before the court within
whose jurisdiction or territory they exercise their respective functions; this prohibition
includes the act of acquiring by assignment and shall apply to lawyers, with respect
to the property and rights which may be the object of any litigation in which they may
take part by virtue of their profession.
Clearly then, since the property conveyed to Atty. Robiso by Jesus and Rosita was
still the object of litigation, the deeds of conveyance executed by the latter are
deemed inexistent. Under Article 1409 of the Code, contracts which are expressly
prohibited or declared void by law are considered inexistent and void from the
beginning.28 This being so, Atty. Robiso could not have transferred a valid title in
favor of Pea over the lots awarded to Jesus and Rosita in Civil Case No. 3683.
Consequently, Pea has no legal standing to be substituted in the stead of or joined
with Jesus and Rosita as the first set of intervenors and to move for issuance of a
writ of execution in Civil Case No. 3683.
This is notwithstanding the fact that the sale to Atty. Robiso was made pursuant to a
contingency fee contract. It is true that contingent fee agreements are recognized in
this jurisdiction as a valid exception to the prohibitions under Article 1491(5) of the
Civil Code. The Court cannot extend a similar recognition to the present case,
however, since the payment to Atty. Robiso of his contingency fees was made during
the pendency of litigation. "A contingent fee contract is an agreement in writing
where the fee, often a fixed percentage of what may be recovered in the action, is
made to depend upon the success of the litigation. The payment of the contingent
fee is not made during the pendency of the litigation involving the client's property
but only after the judgment has been rendered in the case handled by the lawyer."
Pea cannot rely on Article 1437 by claiming that Jesus and Rosita are already
estopped from questioning the validity of their deeds of conveyance with Atty.
Robiso. Estoppel is a principle in equity and pursuant to Article 1432 it is adopted
insofar as it is not in conflict with the provisions of the Civil Code and other laws.
Otherwise speaking, estoppel cannot supplant and contravene the provision of law
clearly applicable to a case. 35 Conversely, it cannot give validity to an act that is
prohibited by law or one that is against public policy. 36
The rationale advanced for the prohibition in Article 1491(5) is that public policy
disallows the transactions in view of the fiduciary relationship involved, i.e., the
relation of trust and confidence and the peculiar control exercised by these persons.
It is founded on public policy because, by virtue of his office, an attorney may easily
take advantage of the credulity and ignorance of his client and unduly enrich himself
at the expense of his client. 37 The principle of estoppel runs counter to this policy and
to apply it in this case will be tantamount to sanctioning a prohibited and void
transaction.
FACTS: Cardline leased four machines from Orix. Cardlirte's principal stockholders
and officers, Mary C. Calubad, Sony N. Calubad, and Ng Beng Sheng signed the
suretyship agreements in their personal capacities to guarantee Cardline's
obligations under each lease agreement. Cardline defaulted in paying the rent. Orix
formally demanded payment from Cardline but the latter refused to pay. Orix filed
a complaint for replevin, sum of money, The RTC issued a writ of seizure allowing
Orix to recover the machines from Cardline. The RTC rendered judgment in Orix's
favor and ordered the respondents to pay Orix. The CA,and subsequently this Court,
denied the respondents' appeal. The CA granted the petition, annulled the RTC's and
prohibited the sheriff from executing the judgment.
HELD: No. The terms of a contract govern the parties' rights and obligations. When a
party undertakes to be "jointly and severally" liable, it means that the obligation is
solidary. Furthermore, even assuming that a party is liable only as a guarantor, he
can be held immediately liable without the benefit of excussion if the guarantor
agreed that his liability is direct and immediate. In effect, the guarantor waived the
benefit of excussion pursuant to Article 2059(1) of the Civil Code.
In the present case, the records show that the individual respondents bound
themselves solidarity with Cardline. Section 31. of the lease agreements states that
the persons who sign separate instruments to secure Cardline's obligations to Orix
shall be jointly and severally liable with Cardline.
Even assuming arguendo that the individual respondents signed the continuing
surety agreements merely as guarantors, they still cannot invoke the benefit of
excussion. The surety agreements provide that the individual respondents' liability is
"solidary, direct, and immediate and not contingent upon" Orix's remedies against
Cardline. The continuing suretyship agreements also provide that the individual
respondents "individually and collectively waive(s) in advance the benefit of
excussion xxx under Articles 2058 and 2065 of the Civil Code."Without any doubt,
the individual respondents can no longer avail of the benefit of excussion.
PEN v. SPOUSES SANTOS AND LINDA JULIAN
FACTS: The Julians obtained a P60,000.00 loan from Adelaida Pen. They were
again extended loans in the amounts of P50,000.00 and PI0,000.00. The initial
interests were deducted by appellant Adelaida.
Appellees failed to pay despite several demands. As such, appellant Adelaida
decided to institute foreclosure proceedings. However, she was prevailed upon by
appellee Linda not to foreclose the property because of the cost of litigation and
since it would cause her embarrassment as the proceedings will be announced in
public places at the City. Instead, appellee Linda offered their mortgaged property as
payment.
HELD: No. Article 2088 of the Civil Code prohibits the creditor from appropriating the
things given by way of pledge or mortgage, or from disposing of them; any
stipulation to the contrary is null and void. The elements for pactum commissorium to
exist are as follows, to wit: (a) that there should be a pledge or mortgage wherein
property is pledged or mortgaged by way of security for the payment of the principal
obligation; and (b) that there should be a stipulation for an automatic appropriation
by the creditor of the thing pledged or mortgaged in the event of non-payment of the
principal obligation within the stipulated period. The first element was present
considering that the property of the respondents was mortgaged by Linda in favor of
Adelaida as security for the former's indebtedness. As to the second, the
authorization for Adelaida to appropriate the property subject of the mortgage upon
Linda's default was implied from Linda's having signed the blank deed of sale
simultaneously with her signing of the real estate mortgage. The haste with which
the transfer of property was made upon the default by Linda on her obligation, and
the eventual transfer of the property in a manner not in the form of a valid dacion en
pago ultimately confirmed the nature of the transaction as a pactum commissorium.
It is notable that in reaching its conclusion that Linda's deed of sale had been
executed simultaneously with the real estate mortgage, the CA first compared the
unfilled deed of sale presented by Linda with the notarized deed of sale adduced by
Adelaida. The CA justly deduced that the completion and execution of the deed of
sale had been conditioned on the non-payment of the debt by Linda, and reasonably
pronounced that such circumstances rendered the transaction pactum
commissorium. The Court should not disturb or undo the CA's conclusion in the
absence of the clear showing of abuse, arbitrariness or capriciousness on the part of
the CA.10chanroblesvirtuallawlibrary
The petitioners have theorized that their transaction with the respondents was a
valid dacion en pago by highlighting that it was Linda who had offered to sell her
property upon her default. Their theory cannot stand scrutiny. Dacion en pago is in
the nature of a sale because property is alienated in favor of the creditor in
satisfaction of a debt in money.11 For a valid dacion en pago to transpire, however,
the attendance of the following elements must be established, namely: (a) the
existence of a money obligation; (b) the alienation to the creditor of a property by the
debtor with the consent of the former; and (c) the satisfaction of the money obligation
of the debtor.12 To have a valid dacion en pago, therefore, the alienation of the
property must fully extinguish the debt. Yet, the debt of the respondents subsisted
despite the transfer of the property in favor of Adelaida.
The petitioners insist that the parties agreed that the deed of sale would not yet
contain the date and the consideration because they had still to agree on the
price.13 Their insistence is not supported by the established circumstances. It
appears that two days after the loan fell due on October 15, 1986, 14Linda offered to
sell the mortgaged property; 15 hence, the parties made the ocular inspection of the
premises on October 18, 1986. By that time, Adelaida had already become aware
that the appraiser had valued the property at P70,000.00. If that was so, there was
no plausible reason for still leaving the consideration on the deed of sale blank if the
deed was drafted by Adelaida on October 20, 1986, especially considering that they
could have conveniently communicated with each other in the meanwhile on this
significant aspect of their transaction. It was also improbable for Adelaida to still hand
the unfilled deed of sale to Linda as her copy if, after all, the deed of sale would be
eventually notarized on October 22, 1986.
According to Article 1318 of the Civil Code, the requisites for any contract to be valid
are, namely: (a) the consent of the contracting parties; (b) the object; and (c) the
consideration. There is a perfection of a contract when there is a meeting of the
minds of the parties on each of these requisites. 16 The following passage has fittingly
discussed the process of perfection in Moreno, Jr. v. Private Management
Office:17chanroblesvirtuallawlibrary
To reach that moment of perfection, the parties must agree on the same thing in the
same sense, so that their minds meet as to all the terms. They must have a distinct
intention common to both and without doubt or difference; until all understand alike,
there can be no assent, and therefore no contract. The minds of parties must meet at
every point; nothing can be left open for further arrangement. So long as there is any
uncertainty or indefiniteness, or future negotiations or considerations to be had
between the parties, there is not a completed contract, and in fact, there is no
contract at all.18chanrobleslaw
In a sale, the contract is perfected at the moment when the seller obligates herself to
deliver and to transfer ownership of a thing or right to the buyer for a price certain, as
to which the latter agrees.19The absence of the consideration from Linda's copy of
the deed of sale was credible proof of the lack of an essential requisite for the sale.
In other words, the meeting of the minds of the parties so vital in the perfection of the
contract of sale did not transpire. And, even assuming that Linda's leaving the
consideration blank implied the authority of Adelaida to fill in that essential detail in
the deed of sale upon Linda's default on the loan, the conclusion of the CA that the
deed of sale was a pactum commisorium still holds, for, as earlier mentioned, all the
elements of pactum commisorium were present.
With MERALCO in bad faith for its failure to follow the strict requirements under R.A.
7832 in the disconnection of the respondents' electric service, we agree with the CA
that the award of damages is in order. However, we deem it proper to modify the
award in accordance with prevailing jurisprudence.
FACTS: During their marriage, Jose and Milagros bought a house and lot. Milagros
sold to the petitioner Tomas P. Tan, Jr. the subject property, as evidenced by a deed
of sale executed by Milagros herself and as attorney-in-fact of Jose, by virtue of a
Special Power of Attorney (SPA) executed by Jose in her favor. Jose filed
a Complaint for Annulment of Sale/Cancellation of Title/Reconveyance and
Damages against Milagros, Tomas, and the Register of Deeds of Naga City.The
complaint was filed before the Regional Trial Court. In the complaint, Jose averred
that while he was working in Japan, Milagros, without his consent and knowledge,
conspired with Tomas to execute the SPA by forging Jose's signature making it
appear that Jose had authorized Milagros to sell the subject property to
Tomas.chanroblesvirtuallawlibrary
The RTC decided in favor of Jose and nullified the sale of the subject property to
Tomas. The RTC held that the SPA wherein Jose supposedly appointed Milagros as
his attorney-in-fact, was actually null and void. Tomas appealed the RTC's ruling to
the CA. The CA affirmed the RTC ruling that the deed of sale and the SPA were void
ISSUE: Whether the deed of sale can be used as the basis for the amount of
consideration paid.
HELD: Yes. The deed of sale as documentary evidence may be used as a means to
ascertain the truthfulness of the consideration stated and its actual payment. The
purpose of introducing the deed of sale as evidence is not to enforce the terms
written in the contract, which is an obligatory force and effect of a valid contract. The
deed of sale, rather, is used as a means to determine matters that occurred in the
execution of such contract, i.e., the determination of what each party has given
under the void contract to allow restitution and prevent unjust enrichment.
VILLARTA, v. TALAVERA
FACTS: Appellant Oscar Villarta filed the complaint a quo for reformation of contracts
appellee Gaudioso Talavera, Jr. He alleged: he owned four parcels of land. He
obtained several loans from appellee who was a distant relative; as of 1996, his loan
already reached P800,000.00, inclusive of 3% interest per month; he religiously paid
the interest, but when the 1997 financial crisis struck, appellee raised the interest to
a rate between 7% and 10%. Appellee employed insidious words and machinations
in convincing him to execute a deed of absolute sale. However, the real agreement
was that the lot would only serve as security for the several loans he obtained.
ISSUE: Whether the transaction between the parties was an equitable mortgage.
HELD: No. Not an Equitable Mortgage. Respondent was able to sufficiently explain
why the presumption of an equitable mortgage does not apply in the present case.
The inadequacy of the purchase price in the two deeds of sale dated 18 May 2001
was supported by an Affidavit of True Consideration of the Absolute Sale of the
Property. Respondent did not tolerate petitioner's possession of the lots. Respondent
caused the registration and subsequent transfer of TCT No. T-214950 to TCT No. T-
333921 under his name, and paid taxes thereon. There were no extensions of time
for the payment of petitioner's loans; rather, petitioner offered different modes of
payment for his loans. Art. 1602. The contract shall be presumed to be an equitable
mortgage, in any of the following cases:
3. When upon or after the expiration of the right to repurchase another instrument
extending the period of redemption or granting a new period is executed;
4. When the purchaser retains for himself a part of the purchase price;
5. When the vendor binds himself to pay the taxes on the thing sold;
6. In any other case where it may be fairly inferred that the real intention of the
parties is that the transaction shall secure the payment of a debt or the performance
of any other obligation.
In any of the foregoing cases, any money, fruits or other benefit to be received by the
vendee as rent or otherwise shall be considered as interest which shall be subject to
the usury laws.
HELD: Yes. When Rosalina affixed her signature to the Real Estate Mortgage as
mortgagor and to the Surety Agreement as surety which covered the loan transaction
represented by the Promissory Note, she thereby bound herself to be liable to China
Bank in case the principal debtors, Barbara and Rebecca, failed to pay. She
consequently became liable to respondent bank for the payment of the debt of
Barbara and Rebecca when the latter two actually did not pay. China Bank, on the
other hand, had a right to proceed after either the principal debtors or the surety
when the debt became due. It had a right to foreclose the mortgage involving
Rosalina's property to answer for the loan.
Respondent Ermilinda R. Abejar (Abejar), Reyes' paternal aunt and the person who
raised her since she was nine (9) years old, filed before the Regional Trial Court a
Complaint for damages against Bautista and Caravan. Abejar alleged that Bautista
was an employee of Caravan and that Caravan is the registered owner of the van
that hit Reyes. The Regional Trial Court found that Bautista was grossly negligent in
driving the vehicle. It awarded damages in favor of Abejar. The Court of Appeals
affirmed with modification the Regional Trial Court.
HELD: No. But the petitioner is liable under the principle of registered owner rule.
Contrary to petitioner's position, it was not fatal to respondent's cause that she
herself did not adduce proof that Bautista acted within the scope of his authority. It
was sufficient that Abejar proved that petitioner was the registered owner of the van
that hit Reyes. The resolution of this case must consider two (2) rules. First, Article
2180's specification that "[e]mployers shall be liable for the damages caused by their
employees . . . acting within the scope of their assigned tasks" Second, the operation
of the registered-owner rule that registered owners are liable for death or injuries
caused by the operation of their vehicles. These rules appear to be in conflict when it
comes to cases in which the employer is also the registered owner of a vehicle.
Article 2180 requires proof of two things: first, an employment relationship between
the driver and the owner; and second, that the driver acted within the scope of his or
her assigned tasks. On the other hand, applying the registered-owner rule only
requires the plaintiff to prove that the defendant-employer is the registered owner of
the vehicle.
Thus, it is imperative to apply the registered-owner rule in a manner that harmonizes
it with Articles 2176 and 2180 of the Civil Code. Rules must be construed in a
manner that will harmonize them with other rules so as to form a uniform and
consistent system of jurisprudence.
FACTS: M/V Dona Paz was an inter-island passenger vessel owned and operated
by Sulpicio Lines, Inc. Traversing its Leyte to Manila when it collided with M/T Vector,
a commercial tanker.
The heirs of the victims instituted a class action with the Civil District Court for the
Parish of Orleans, State of Louisiana. The Louisiana Court entered a conditional
judgment dismissing the said case on the ground of forum non-conveniens. A civil
action for damages for breach of contract of carriage and quasi-delict with the
Regional Trial Court against petitioners, Sulpicio, Vector Shipping, and Steamship
Mutual Underwriting Association, Bermuda Limited (Steamship). The RTC of motu
proprio dismissed the complaint pursuant to Section 1, Rule 9 of the 1997 Rules of
Civil Procedure as the respondents' cause of action had already prescribed. In an
unusual turn of events however, the petitioners as defendants therein, who were not
served with summons, filed a motion for reconsideration, alleging that they are
waiving their defense of prescription, among others. The dismissal of the complaint
prompted the respondents to have the case reinstated with the Louisiana Court. The
Louisiana Court once again conditionally dismissed the respondents' action, ordering
the latter to bring their claims to the RTC of Manila by intervening in the consolidated
cases filed before the latter court. It was also stated in the judgment that the
Louisiana Court will allow the reinstatement of the case if the Philippine court "is
unable to assume jurisdiction over the parties or does not recognize such cause of
action or any cause of action arising out of the same transaction or occurrence." The
RTC of Manila ruled that the RTC of Catbalogan had already dismissed the case
with finality; that a final and executory prior judgment is a bar to the filing of the
complaint in intervention of the respondents; and that the waivers of the defense of
prescription made by the petitioners, Sulpicio and Steamship are of no moment. The
CA concurred with the RTC of Manila that the finality of the Order issued by the RTC
of Catbalogan has the effect of res judicata, which barred the respondents' motion to
intervene and complaint-in-intervention with the RTC of Manila.
ISSUE: Whether the petitioners has the right to waive the prescription.
HELD : No. he petitioners cannot be permitted to assert their right to waive the
defense of prescription when they had foregone the same through their own
omission, as will be discussed below. The Court shall first discuss the prescription of
the respondents' cause of action against the petitioners. Article 1106 of the Civil
Code provides that "[b]y prescription, one acquires ownership and other real rights
through the lapse of time in the manner and under the conditions laid down by law. In
the same way, rights and conditions are lost by prescription." The first sentence
refers to acquisitive prescription, which is a mode of "acquisition of ownership and
other real rights through the lapse of time in the manner and under the conditions
provided by law." The second sentence pertains to extinctive prescription "whereby
rights and actions are lost by the lapse of time." It is also called limitation of action.
This case involves the latter type of prescription, the purpose of which is to protect
the diligent and vigilant, not the person who sleeps on his rights, forgetting them and
taking no trouble of exercising them one way or another to show that he truly has
such rights. The rationale behind the prescription of actions is to suppress fraudulent
and stale claims from springing up at great distances of time when all the proper
vouchers and evidence are lost or the facts have become obscure from the lapse of
time or defective memory or death or removal of witnesses. There is no dispute that
the respondents' cause of action against the petitioners has prescribed under the
Civil Code. In fact, the same is evident on the complaint itself. The respondents
brought their claim before a Philippine court only on March 6, 2001, more than 13
years after the collision occurred.Article 1139 of the Civil Code states that actions
prescribe by the mere lapse of time fixed by law. Accordingly, the RTC of Catbalogan
cannot be faulted for the motuproprio dismissal of the complaint filed before it. It is
settled that prescription may be considered by thecourts motu proprio if the facts
supporting the ground are apparent from the pleadings or the evidence on record.
FACTS: The property subject of this case is a 480-square meter lot. Spouses Bajao
sold 200 square meters for P1,000. Spouses Bajao sold another 280 square meters
of Lot . Both transactions were evidenced by separate Deeds of Absolute Sale.
Petitioners initiated the segregation of the property from through a survey. As a result
of the survey, petitioners acquired Lot. They allegedly acquired possession over the
land immediately, fenced the area, introduced improvements, and planted it with
fruit-bearing trees. Respondent and Anastacia Bajao executed an Extrajudicial
Settlement Among Heirs. Petitioners filed a Complaint for Reconveyance with Writ of
Preliminary Mandatory Injunction and Damages. They alleged that they were
innocent purchasers for value who took possession of the property after the sale and
religiously paid its real property taxes.Petitioners also alleged that respondent was in
bad faith since he knew about the sale of the property between them and his
parents, and the existing survey and segregation over the area, yet he fraudulently
included the same in his share upon the issuance of TCT.
The trial court found the two Deeds of Absolute Sale free from infirmities. It ruled that
their execution was equivalent to the delivery of the thing sold; registration not being
necessary to make the contract of sale valid and effective as between the parties.
The trial court also found respondent in bad faith. Respondent admitted that he was
aware of the adverse claim annotated at the back of the title when he went to the
Register of Deeds to register the Extrajudicial Settlement. The CA dismissed the
complaint and noted that an implied trust between the parties under Article 1456 of
the Civil Code was created at the time Anastacia Bajao and respondent executed the
Extrajudicial. The CA held that an action for reconveyance based on an implied trust
prescribes in 10 years from the registration of title in the Office of the Register of
Deeds.
HELD No. Article 1456 of the Civil Code provides that a person acquiring property
through mistake or fraud becomes, by operation of law, a trustee of an implied trust
for the benefit of the real owner of the property. An action for reconveyance based on
an implied trust generally prescribes in 10 years, the reckoning point of which is the
date of registration of the deed or the date of issuance of the certificate of title over
the property. Thus, petitioners had 10 years from 1981 or until 1991 to file their
complaint for reconveyance of property. The Complaint, however, was filed only on
January 21, 2000, or more than 10 years from the issuance of TCT .Hence, the
action is already barred by prescription.
The exception to the ten-year rule on prescription is when the plaintiff is in
possession of the land to be reconveyed. In such case, the action becomes one for
quieting of title, which is imprescriptible. Here, petitioners allege that they were in
juridical possession of the property from the time they put up a fence on it until the
filing of the Complaint. Respondent disputes this claim, countering that petitioners
are not in actual and material possession of the property.Whether petitioners have
actual possession of the lot is a question of fact. We have repeatedly ruled that a
petition for review on certiorari under Rule 45 of the Rules of Court shall raise only
questions of law and not questions of facts. When supported by substantial
evidence, the findings of fact of the CA are conclusive and binding on the parties and
are not reviewable by us, unless the case falls under any of the recognized
exceptions. Petitioners never raised any of these exceptions. Assuming they did,
none of the exceptions would apply.
HELD: Yes. Citing Article 1484 of the Civil Code, specifically paragraph 3 thereof,
the CA ruled that petitioner had already waived its right to recover any unpaid
installments when it sought - and was granted - a writ of replevin in order to regain
possession of the subject vehicle. As such, petitioner is no longer entitled to receive
respondent's late partial payments in the aggregate amount of P103,000.00.
barArticle 1484. In a contract of sale of personal property the price of which is
payable in installments, the vendor may exercise any of the following remedies:
(1) Exact fulfilment of the obligation, should the vendee fail to pay;
(2) Cancel the sale, should the vendee's failure to pay cover two or more
installments;
(3) Foreclose the chattel mortgage on the thing sold, if one has been constituted,
should the vendee's failure to pay cover two or more installments. In this case, he
shall have no further action against the purchaser to recover any unpaid balance of
the price. Any agreement to the contrary shall be void. (Emphases and underscoring
supplied) In this case, there was no vendor-vendee relationship between respondent
and petitioner. A judicious perusal of the records would reveal that respondent never
bought the subject vehicle from petitioner but from a third party, and merely sought
financing from petitioner for its full purchase price. In order to document the loan
transaction between petitioner and respondent, a Promissory Note with Chattel
Mortgage dated August 18, 2005 was executed wherein, inter alia, respondent
acknowledged her indebtedness to petitioner in the amount of P1,196,100.00 and
placed the subject vehicle as a security for the loan. Indubitably, a loan contract with
the accessory chattel mortgage contract - and not a contract of sale of personal
property in installments - was entered into by the parties with respondent standing as
the debtor-mortgagor and petitioner as the creditor-mortgagee. Therefore, the
conclusion of the CA that Article 1484 finds application in this case is misplaced, and
thus, must be set aside.The Promissory Note with Chattel Mortgage subject of this
case expressly stipulated, among others, that: (a) monthly installments shall be paid
on due date without prior notice or demand; (b) in case of default, the total unpaid
principal sum plus the agreed charges shall become immediately due and
payable; and (c) the mortgagor's default will allow the mortgagee to exercise the
remedies available to it under the law. In light of the foregoing provisions, petitioner
is justified in filing his Complaint before the RTC seeking for either the recovery of
possession of the subject vehicle so that it can exercise its rights as a
mortgagee, i.e., to conduct foreclosure proceedings over said vehicle; or in the event
that the subject vehicle cannot be recovered, to compel respondent to pay the
outstanding balance of her loan. Since it is undisputed that petitioner had regained
possession of the subject vehicle, it is only appropriate that foreclosure proceedings,
if none yet has been conducted/concluded, be commenced in accordance with the
provisions of Act No. 1508, otherwise known as "The Chattel Mortgage Law," as
intended. Otherwise, respondent will be placed in an unjust position where she is
deprived of possession of the subject vehicle while her outstanding debt remains
unpaid, either in full or in part, all to the undue advantage of petitioner - a situation
which law and equity will never permit.
Further, there is nothing in the Promissory Note with Chattel Mortgage that bars
petitioner from receiving any late partial payments from respondent. If at all,
petitioner's acceptance of respondent's late partial payments in the aggregate
amount of P103,000.00 will only operate to reduce her outstanding obligation to
petitioner from P664,500.00 to P561,500.00. Such a reduction in respondent's
outstanding obligation should be accounted for when petitioner conducts the
impending foreclosure sale of the subject vehicle. Once such foreclosure sale has
been made, the proceeds thereof should be applied to the reduced amount of
respondent's outstanding obligation, and the excess of said proceeds, if any, should
be returned to her.
HELD: The status of being an employee and officer of [Alibudbud] in [Malayan] was,
therefore, one of the pre-condition before she could avail of the benefits of the Car
Financing Plan. Such being the case, there is no doubt that [Alibudbud's] availing of
the Car Financing Plan being offered by [Malayan] was necessarily and intimately
connected with or related to her employment in the aforesaid Company."alawred
It should be noted, however, that the present action involves the parties' relationship
as debtor and creditor, not their "employer-employee" relationship. Malayan's
demand for Alibudbud to pay the 50% company equity over the car or, to surrender
its possession, is civil in nature.