RICARDO VILLAFLOR, Petitioner, vs.

COURT OF APPEALS and PEOPLE OF THE PHILIPPINES

G.R. No. 46210 : December 26, 1990

FACTS:

On June 7, 1967, Ricardo Villaflor went to the house of Mariano Locsin to secure a loan amounting to
P1,000. As a collateral, Mr. Villaflor offered to Mr. Locsin his Opel car, and it was agreed that the loan
would be given a condition that it would be secured by a proper chattel mortgage on the said motor
vehicle. With the assurance from Mr. Villaflor that the car was fully paid and free from any
encumbrance, Mr. Locsin gave Mr. Villaflor a note addressed to one Atty. Azaña requesting the latter to
prepare the document. Accordingly, the chattel mortgage contract over the Opel car which was in the
possession of Mr. Villaflor was prepared by Atty. Azaña, and after Mr. Locsin and Mr. Villaflor had signed
the same, the loan of P1,000.00 was handed to the latter. The loan was also evidenced by a promissory
note, dated June 7, 1967, wherein Mr. Villaflor promised to pay the sum of P1,000.00 eight (8) days
therefrom.

When Mr. Villaflor failed to pay the loan on time, Mr. Locsin thought of taking physical possession of the
car but when he went to the office of the Northern Motors, Inc., he found, to his surprise, that the Opel
car had been repossessed by said firm for failure of Mr. Villaflor to pay the installments. Demands to pay
were made but to no avail. On September 18, 1967, Mr. Locsin wrote a formal letter of demand giving
him ten (10) days within which to settle his obligation, otherwise he will file a case against Mr. Villaflor.

ISSUE:

Whether or not Mr. Villaflor is guilty of estafa under Article 318 of the Revised Penal Code.

SUPREME COURT:

Yes.

Even if the chattel mortgage was so executed, the fact that deceit was employed by appellant cannot be
gainsaid. Both parties are engaged in business and it is normal for them to require some form of security
to protect their interests in lending money to other persons. In fact, Article 2140 of the Civil Code
provides that "(b)y a chattel mortgage, personal property is recorded in the Chattel Mortgage Register
as a security for the performance of an obligation.”
As aptly commented by the Solicitor General, "appellant's denial that he had not employed deceit in
obtaining the loan from Mariano Locsin because it is the latter who suggested that he would be able to
borrow P1,000.00 if he (appellant) executes a chattel mortgage on his sedan car . . . although Mario
Locsin suggested that he would be able to lend him the amount asked for by appellant only on the
condition that a security be given thereto (sic), the assurance made by appellant that the car offered as
a security had never been encumbered and his failure to disclose to Mario Locsin that said car was
previously mortgaged to the Northern Motors, Co., constitute deception.
EQUITABLE SAVINGS BANK V ROSALINDA PALCES

GR NO 214752, MARCH 9, 2016

FACTS:

On August 15, 2005, respondent purchased a Hyundai Starex GRX Jumbo (subject vehicle) through a
loan granted by petitioner in the amount of P1,196,100.00. In connection therewith, respondent
executed a Promissory' Note with Chattel Mortgage in favor of petitioner, stating, inter alia, that: (a)
respondent shall pay petitioner the aforesaid amount in 36-monthly installments of P33,225.00 per
month, beginning September 18, 2005 and every 18th of the month thereafter until full payment of the
loan; (b) respondent's default in paying any installment renders the remaining balance due and payable;
and (c) respondent's failure to pay any installments shall give petitioner the right to declare the entire
obligation due and payable and may likewise, at its option, x x x foreclose this mortgage; or file an
ordinary civil action for collection and/or such other action or proceedings as may be allowed under the
law.

From September 18, 2005 to December 21, 2006, respondent paid the monthly installment of
P33,225.00 per month. However, she failed to pay the monthly installments in January and February
2007, thereby triggering the acceleration clause contained in the Promissory Note with Chattel
Mortgage and prompting petitioner to send a demand letter dated February 22, 2007 to compel
respondent to pay the remaining balance of the loan in the amount of P664,500.00. As the demand
went unheeded, petitioner filed on March 7, 2007 the instant Complaint for Recovery of Possession with
Replevin with Alternative Prayer for Sum of Money and Damages against respondent before the RTC,
praying that the court a quo: (a) issue a writ of replevin ordering the seizure of the subject vehicle and
its delivery to petitioner; or (b) in the alternative as when the recovery of the subject vehicle cannot be
effected, to render judgment ordering respondent to pay the remaining balance of the loan, including
penalties, charges, and other costs appurtenant thereto.

ISSUE:

1. Whether or not Article 1484 of the Civil Code (sale of personal property in installments) is
applicable in this case.
2. Whether or not CA is correct ordering the petitioner to return the P103,000 to the respondent
representing late payments
SUPREME COUR RULING:

No.

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
Mortgage29 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.30 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.