Phil. Lawin Bus Co et al v CA

G.R. No. 130972. January 23, 2002

Art. 1245 – Dation in Payment

Facts:

·            Advance Capital Corporation, a licensed lending investor, extended a loan to petitioner Philippine Lawin Bus Company of P8,000,000.00 payable within 1 year.

·            To guarantee payment of the loan, Lawin executed in favor of Advance the following documents: (1) A Deed of Chattel Mortgage wherein 9 units of buses were constituted as collaterals: (2) A joint and several UNDERTAKING of defendant Master Tours and Travel Corporation, signed by Isidro Tan and Marciano: and (3) A joint and several UNDERTAKING, executed and signed by Esteban, Isidro, Marciano and Henry, all surnamed Tan.

·            Out of the P8,000,000.00 loan, P1,800,000.00 was paid. Thus, Lawin was able to avail an additional loan of P2,000,000.00 for one (1) month.

·       LAWIN failed to pay the promissory note and the same was renewed.

·       But LAWIN failed to pay the two promissory notes so that it was granted a loan re-structuring for two (2) months. Despite the restructuring, LAWIN failed to pay.

·       Respondent foreclosed the mortgaged buses and as the sole bidder thereof, the amount of P2,000,000.00 was accepted by the deputy sheriff conducting the sale and credited to the account of LAWIN.

·       Thereafter, identical demand letters were sent to petitioners to pay their obligation.  Despite repeated demands, petitioners failed to pay their indebtedness which totaled of P16,484,992.42.

·       Thus, the suit for sum of money, wherein the respondent prays that defendants solidarily pay plaintiff.

Issue:

WoN there was dacion en pago between the parties upon the surrender or transfer of the mortgaged buses to the respondent.

Held:

            No, the Court affirms with CA that there was no dacion en pago that took place between the parties.

            Article 1245 of the Civil Code provides that the law on sales shall govern an agreement of dacion en pago. A contract of sale is perfected at the moment there is a meeting of the minds of the parties thereto upon the thing which is the object of the contract and upon the price.

            In this case, there was no meeting of the minds between the parties on whether the loan of the petitioners would be extinguished by dacion en pago. 

The receipts show that the two buses were delivered to respondent in order that it would take custody for the purpose of selling the same. Such an agreement negates transfer of absolute ownership over the property to respondent, as in a sale.

Thus, the Court REVERSES and SETS ASIDE the appealed decision.