TOOL vs CA/CBR KING FACTS: PR Rolando Lantan was employed at the Elisco Tool Manufacturing Corporation as head of its

cash department. In 1980, he entered into an agreement with the company that he will lease a car 2 door Colt Cancer model 1979 from the company for 1,010.65 monthly for 5 years. Payment will be through salary deduction. It was also included in the contract that all the expenses for vehicle maintenance will be shouldered by the employee. At the end of 5 years, he may exercise the option to purchase from the employer and that all the monthly rentals will be applied to the full purchase price. If he desires to purchase, he will do so by paying the remaining balance, this OPTION IS LIMITED to the employee. Failure to pay 3 accumulate monthly rentals will vest upon the employer the full right to lease the vehicle to another employee. On the same day, PR executed a Promissory note for 60, 639 php After taking possession of the car, private respondent installed accessories therein worth P15,000.00. In 1981, Elisco Tool ceased operations, as a result of which private respondent Rolando Lantan was laid off. Nonetheless, as of December 4, 1984, private respondent was able to make payments for the car in the total amount of P61,070.94. On June 6, 1986, petitioner filed a complaint, entitled replevin plus sum of money, against private respondent Rolando Lantan, his wife Rina, and two other persons, identified only as John and Susan Doe, before the Regional Trial Court of Pasig, Metro Manila. Petitioner alleged that private respondents failed to pay the monthly rentals which, as of May 1986, totalled P39,054.86; that despite demands, private respondents failed to settle their obligation thereby entitling petitioner to the possession of the car; ISSUE: IS THERE A CONTRACT OF SALE IN THIS CASE? YES WON replevin is the proper remedy for this case? NO.

HELD: Although the agreement provides for the payment by Lantan of monthly rentals, the 5th paragraph thereof gives them the option to purchase the motor vehicle at the end of the 5th year or upon payment of the 60 thmonthly rental when all monthly rentals shall be applied to the payment of the full purchase price of the car. Clearly, the transaction is a lease in name only. The so-called monthly rentals are in truth monthly amortizations on the cars price . Being a contract of sale on installment, A.1484 &1485 apply. As such, the case should be considered as one for specific performance pursuant to A.1484(1). The prayer for a writ of replevin is only for the purpose of ensuring specific performance by private respondents. However, the private respondents could no longer be held liable for the payment of interest on unpaid monthly rentals since it was entered into in pursuance of a car plan adopted by petitioner for the benefit of its deserving employees. Further, private respondents default in payment was due to the cessation of operations of petitioners sister company. Elizalde Steel Company. That petitioner accepted payments from Lantan more than 2 years after the latters

employment have been terminated constitutes a waiver of petitioners right to collect interest upon delayed payment. What private respondents paid should be considered the payment in full.