BPI Credit Corporation vs Court of Appeals

G.R. No. 96755

December 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.