BPI Credit Corporation vs Court of AppealsG.R. No. 96755December 4, 1991

FACTS:

In 1982 Dominador Cabacungan purchased the brand new Isuzu KBD 26 pick-up on an instalment basis from BMD Inc. In addition to the Deed of Chattel Mortgage, there is a Deed of Assignment assigned to BPI Credit Corporation which passes its rights, title and interest in the aforesaid Chattel Mortgage and Promissory Note.

After one year, the employees of Filinvest seized to pick up the vehicle from Dominador Roduta and Ruben Cabacungan, the driver and the helper. In the office of the said corporation it issued a receipt showing that the car was surrendered to Filinvest due to Cabacungans failure to pay overdue amortizations. Cabacungan filed a complaint for replevin because the appellant possession of the vehicle was through force and intimidation.

However, Filinvest denied that the seizure of the car was through force and intimidation. It also claimed that the vehicle was voluntarily surrendered by the driver and the helper. Moreover, it also contended that Cabacungan has no cause of action having defaulted in the payment of two installments and the chattel mortgage provide that upon default of one installment the entire remaining amount will become due and demandable.After four years, Filinvest appealed from the decision of the court and asked for reversal. For the court, the Chattel mortgage deed very clearly provided that demand for the surrender of the vehicle should be made to the mortgagor himself which obviously was not followed by Filinvest since it was the one who initiated the seizure of the said vehicle. Furthermore, it is not disputed that upon the default by a mortgagor in his obligations, the mortgagee has the right to the possession of the property mortgaged preparatory to sell it in a public auction.

The court later on assumed that the writ of replevin was never implemented, Filinvest did not foreclose the mortgage and that the latter has the vehicle in its possession and control. Cabacungan also explicitly admits that the value of the vehicle as of September 12, 1983 is P62,255.55 which Fiinvest also admit. Accordingly, the latter must be ordered to pay the said amount instead of P44,914.The also court stand with its decision that it will be just to order Filinvest to pay Cabacungan the corresponding damages because Filinvest failed to pay docket fees based on the P960 000 damages. The court also upholds the respondent courts decision that the mortgage is a contract of adhesion.

ISSUE:

The issues in the case are (1) whether or not the taking of the truck by Filinvest was lawfully made, (2), whether or not Cabacungan was in arrears in the payment of his obligations to Filinvest, and (3) whether or not damages were due from one to the other.

DECISION:

The decision of the respondent court was affirmed by the Supreme Court.

LAW:

The law regarding Chattel Mortgage provides that if the debtor refuses to yield up the property, the creditor must institute an action, either to effect a judicial foreclosure directly, or to secure possession as a preliminary to the sale contemplated. He cannot lawfully take the property by fore against the will of the debtor. Moreover, in the article on Chattel Mortgages, in Corpus Juris, the law on the same point is made: The only restriction on the mode by which the mortgagee hall secure possession of the mortgaged property after breach of condition is that he must act in an orderly manner and without creating a breach of peace, subjecting himself to an action for trespass.