EN BANC[G.R. No. 34727. March 9, 1932.]PACIFICCOMMERCIALCOMPANY,plaintiff-appellee,vs.ERMITAMARKET&COLDSTORES, INC.,defendant-appellant.Jose Perez CardenasandGuevara, Francisco & Recto,for appellant.Jose Yulo, for appellee.SYLLABUS1.SALES; REFRIGERATING MACHINE. Plaintiff contracted to sell to defendant an automatic refrigerating machine as per description stated in the sales contract. The machine was delivered and by mutual agreement the vendor installed the machine. The machine did not give the results expected from it, and the defendant refused to pay the balance of its purchase price and the cost of the installation of the machine. Thereupon plaintiff brought this action.Held:The fact that the defendant could not use the machine satisfactorily in the threecoldstoresdivisions cannot be attributed to plaintiff's fault; the machine was strictly in accordance with the written contract between the parties, and the defendant can hardly honestly say that there was any deception by the plaintiff. (Seearticle 327, Code of Commerce; Palancavs.Fred Wilson &Co., 37 Phil., 506.D E C I S I O NOSTRAND,Jp:This is an appeal from a judgment of the Court of First Instance of Manila, ordering defendant to pay plaintiff the sum of P1,740 with interest thereon at the rate of 10 per cent per annum from January 1, 1928, to date of payment; likewise, to pay plaintiff P174 for attorneys' fees and costs of collection; and to pay P250.67 with legal interest from date of filing of complaint to date of payment for work, labor, and services rendered and for materials used in the installation of a refrigerating machine for the defendant, and pay the costs.It appears that on September 14, 1927, thePacificCommercialCo., the plaintiff herein, sold to theErmitaMarket&ColdStores, Inc., the defendant herein, an automatic refrigerating machine of the following description:"Una maquina refrigeradora automaticaYorkStyle Y-26 capacidad Dos toneladas de refrigeracion consistente en: Compresor de amoniacoYork,de Doble Cilindro, Condensador, Recibidor, Separador de aceite, Juego de manometros, Valvulas, Valvula reguladora de agua, Control automatico, Aparato de seguridad, Motor Electrico G-E de cinco caballos de fuerza 220volts Corriente alterna, de Una Fase, montadas todas en una base de hierro, asi como tambien incluye una bomba centrifuga para circulacion de agua y correas."The parties signed the usual printed sales-contract form of the plaintiff company, the purchase price being P2,550, payable by instalments on dates and in amounts stated in the sales contract. The delivery of the machine was made on December 7, 1927, and by mutual agreement between the vendor and the vendee, the former installed the machine which was completed on December 28, 1927. The installation, including materials used, amounted to P250.67, to be paid by theErmitaMarket&ColdStores, Inc., to thePacificCommercialCompany. Complying with the terms of the sales contract, the defendant paid the plaintiff the amount of P810 against the purchase price of the machine, leaving a balance of P1,740.A few days after the installation of the automatic refrigerating machine, theErmitaMarket&ColdStoresadvised thePacificCommercialCompany that the machine was not serving the purpose for which it was sold to defendant and that it was lacking ammonia receiver and oil separator. The plaintiff company in turn advised the defendant that the machine installed was complete, having all the accessories as stated in the contract. However, upon the insistence of the defendant, the plaintiff, just to please the president of the defendant company, delivered and installed on the machine an additional oil separator without charge. The machine did not give the results expected from it, and the defendant refused to pay the balance of its purchase price and the cost of the installation of the machine. ThePacificCommercialCompany thereupon brought this action.In its answer, the defendant generally and specifically denied the allegations contained in plaintiff's complaint, and by way of special defense alleged substantially that the machine delivered to the defendant by the plaintiff was not the machine described in the contract of sale inasmuch as the said machine was not automatic and as it was lacking ammonia receiver, oil separator, and the implements necessary to make the said machine automatic.By way of cross-complaint, the defendant further alleges that it bought the machine in question from the plaintiff for the purpose of running the business ofcoldstorage; that the temperature in the refrigerating rooms did not reach, and had never reached, the necessary temperature for the preservation of meat, fish, vegetables, and fruits; that owing to the negligence of the plaintiff in not repairing or putting in good working condition the said refrigerating machine, the defendant had been forced to close its establishment and for which reason the defendant claimed damages against the plaintiff as follows:"P5,000 for expenses in advertising and propaganda;"P15,000 as the value of fish, pork, meat, vegetables and fruits alleged to have deteriorated in the refrigerating rooms;"P30,000 for the loss of its clientele and decrease in its sales;"P20,000 for the loss of the whole business; and"P3,600 for rentals of the premises, salaries of the manager, guard and warehouseman, from May 10, 1928, up to October of the same year, at the rate of P600 a month, because of the refusal of the plaintiff to withdraw the refrigerating machine in question from the premises where it was installed. In other words, the defendant asks for damages in the total sum of P73,600."Replying to the defendant's cross-complaint, the plaintiff denied generally and specifically each and every allegation in the said cross-complaint and by way of special defense, alleged that whatever defects or deficiency there might have been in the temperature in the refrigerating rooms of defendant's establishment, or in the functioning of the machine, these were due to the defects and imperfections of the coils which were supplied and installed by the defendant itself, as well as to the incompetency and inefficiency of the defendant's personnel to operate the machine.After trial, the court below rendered the judgment above mentioned, and, as hereinbefore stated, the defendant appealed to this court.After a careful examination of the record, we have not the least doubt that the plaintiff delivered the machine as described in the sales contract, and the fact that the defendant could not use it satisfactorily in the threecoldstoresdivisions cannot be attributed to plaintiff's fault; as far as we can see, the machine was strictly in accordance with the written contract between the parties, and the defendant can hardly honestly say that there was any deception by the plaintiff. (Seearticle 327, Code of Commerce; Palancavs.Fred Wilson &Co., 37 Phil., 506.)But it is clear that the defendant company did not fully understand the use of the motor. If complains that the machine would not properly refrigerate the refrigerating rooms, but it is evident that the machine could not operate automatically when the defendant had three refrigerating rooms which it expected to maintain at three different temperatures.The defendant also complained that the machine was not equipped with a thermostat and that the lack of it obstructed the work of the refrigerating. In the first place, the thermostat was not included in the sales contract and in the second place it would not have been of any service to defendant because it could not possibly operate automatically at three different temperatures with the defendant's insufficient equipment.The defendant's complaint that the machine did not contain an oil separator is not true; the oil separator is combined with the receiver and condenser in a single combined piece in the machine.The evidence in this case is clear to us, and we cannot find any errors committed by the court below. It may be that the machine could have given satisfaction to the defendant if the coils had been installed properly and the machine had been operated by competent persons. Any deficiency in this regard could not be the plaintiff's fault; the coils were supplied and installed by someone other than the plaintiff, and the machine was being operated by the defendant itself.The judgment appealed from is therefore affirmed in its entirety, with costs against appellant. So ordered.Avancea, C.J., Johnson, Street, Malcolm, Villamor, Romualdez, Villa-RealandImperial, JJ.,concur.EN BANC[G.R. No. 42416. April 9, 1935.]MACONDRAY&CO., INC.,plaintiff-appellant,vs. PRAXEDES R.DESANTOS,defendant-appellee.Jose Agbulosfor appellant.Pedro Magsalinfor appellee.SYLLABUS1.CONTRACT; SALE OF PERSONAL PROPERTY PAYABLE IN INSTALLMENT; ARTICLE 1454-A OF THE CIVIL CODE. The defendant as the only ground of her demurrer, alleges that under the provisions of Act No. 4122, article 1454-A of the Civil Code, there is no cause of action against her. Granting that there was a contract between the parties for the sale of personal property payable in installments, which does not clearly appear in the record before this court, the complaint does not allege nor does it appear in the record that there was a failure to pay two or more installments. In order to apply the provisions of article 1454-A of the Civil Code it must appear that there was a contract for the sale of personal payable in installments and that there has been a failure to pay two or more installments.D E C I S I O NGODDARD,Jp:In this case the defendant demurred to the complaint, the trial court sustained the demurrer and gave the plaintiff five days within which to amend, if it so desired. Within the time designated the plaintiff excepted to the order sustaining the demurrer and gave notice that it elected to stand upon its complaint and thereupon the lower court, upon motion of the defendant, dismissed the complaint with costs against the plaintiff. In due time the plaintiff excepted to the order dismissing the complaint and moved for a new trial. Upon the denial of this motion the plaintiff excepted and upon appeal to this court alleges that the trial court erred:"I.In sustaining the demurrer of the defendant to the plaintiff's complaint;"II.In dismissing the case;"III.In not rendering judgment in accordance with the prayer of the plaintiff's complaint;"IV.Conceding, but not admitting, that the case falls under the provisions of Act No. 4122, the lower court erred in not finding that the said law is unconstitutional in that it confiscates property without due process of law and denies the equal protection of the laws to the plaintiff."V.In not granting the plaintiff's motion for new trial."The complaint alleges, for a first cause of action, that on January 11, 1934, the defendant executed and delivered to the plaintiff a promissory note for the sum of P1,000, with interest thereon at the rate of 12 per cent per annum, payable in installments as set forth in said promissory note and in case of default in the payment of the principal or interest an additional sum equal to 20 per cent of the total amount due was to be paid as attorney's fees; that to guarantee the payment of this note the defendant executed a duly registered chattel mortgage on aWillis 77, Sedan, automobile; that one of the conditions of said mortgage is that if the mortgaged property be lost, destroyed or damaged, for any cause whatsoever, the mortgagee would immediately have the right to foreclose and declare the whole amount of the principal and interest, secured by said mortgage, due and payable; that on January 21, 1934, the mortgaged automobile, while in possession and control of the defendant, met with an accident resulting in its total wreck and loss; that by reason of the failure of the defendant to replace or to restore the automobile to its former condition or to pay the value thereof plaintiff foreclosed its mortgage and what remained of the wrecked automobile was sold at public auction for the sum of P50; that after applying this amount to the account of defendant there was an unpaid balance of P980.39 plus interest at 12 per cent per annum from March 24, 1934, until paid, and 20 per cent of the amount due as attorney's fees, which defendant refused to pay in spite of demand therefor.As a second and alternative cause of action, the plaintiff reproduces the allegations contained in the first cause of action and alleges that another condition of the abovementioned chattel mortgage is that the defendant agreed to use extraordinary care and diligence in the preservation and maintenance of the mortgaged property and further engaged to pay any and all damages for deterioration, reasonable wear and tear excepted, resulting directly or indirectly from carelessness or neglect of any kind on the part of the mortgagor and alleges further that through the carelessness, neglect or reckless imprudence of the defendant and or her agents while the automobile was in her possession or under her control the same was totally wrecked by reason of which the plaintiff was damaged in the sums mentioned in the first cause of action and therefore the plaintiff prays that defendant be sentenced to pay the plaintiff the above-mentioned sum of P980.39 with interest at the rate of 12 per cent per annum from March 24, 1934, until paid, and 20 per cent of said sum as attorney's fees and the costs of this case.The defendant, as the only ground of her demurrer, alleges that under the provisions of Act No. 4122, article 1454-A of the Civil Code, there is no cause of action against her. That article of the Civil Code reads as follows:."ART. 1454-A.In a contract for the sale of personal property payable in installments, failure to pay two or more installments shall confer upon the vendor the right to cancel the sale or foreclose the mortgage if one has been given on the property, without reimbursement to the purchaser of the installments already paid, if there be an agreement to this effect."However, if the vendor has chosen to foreclose the mortgage he shall have no further action against the purchaser for the recovery of any unpaid balance owing by the same, and any agreement to the contrary shall be null and void."Granting that there was a contract between the parties for the sale of personal property payable in installments, which does not clearly appear in the record before this court, the complaint does not allege nor does it appear in the record that there was a failure to pay two or more installments. On the contrary the promissory note, copied in the complaint, was executed January 11, 1934, and, according to the complaint, on or about January 21, 1934, the automobile, while in the possession of the defendant, was wrecked and by reason of the failure of the defendant to replace said automobile or to pay the value thereof the plaintiff foreclosed the mortgage on what remained of the wrecked automobile and brought this suit to recover the balance due on the promissory note executed in its favor.In order to apply the provisions of article 1454-A of the Civil Code it must appear that there was a contract for the sale of personal property payable in installments and that there has been a failure to pay two or more installments.In view of the above, the trial court erred in sustaining the demurrer. The appellant's first, second, third and fifth assignments of error are sustained. Wherefore it is not necessary to pass upon the fourth assignment of error.The order of the trial court dismissing the complaint is hereby set aside and this case will be remanded to the trial court for further proceedings in accordance with law, with the costs of this appeal against the defendant-appellee.Malcolm, AbadSantos, Hull, Vickers, ButteandDiaz, JJ.,concur.EN BANC[G.R. No. 46306. October 27, 1939.]LEVYHERMANOS, INC.,plaintiff-appellant,vs. LAZARO BLASGERVACIO,defendant-appellee.Felipe Caniblasfor appellant.Abreu, Lichauco & Picazofor appellee.SYLLABUS1.INSTALLMENT SALES; ARTICLE 1454-A OF THE CIVIL CODE (ACT No. 4122). In Macondray & Co.vs. De Santos (33 Off. Gaz., 2170), we held that "in order to apply the provisions of article 1454-A of the Civil Code it must appear that there was a contract for the sale of personal property payable in installments and that there has been a failure to pay two or more installments." The contract, in the instant case, while a sale of personal property, is not, however, one on installments, but on straight term, in which the balance, after payment of the initial sum, should be paid in its totality at the time specified in the promissory note. The transaction is not, therefore, the one contemplated in Act No. 4122 and accordingly the mortgagee is not bound by the prohibition therein contained as to its right to the recovery of the unpaid balance.2.ID.; ID. Undoubtedly, the law is aimed at those sales where the price is payable in several installments, for, generally, it is in these cases that partial payments consist in relatively small amounts, constituting thus a great temptation for improvident purchasers to buy beyond their means. There is no such temptation where the price is to be paid in cash, or, as in the instant case, party in cash and partly in one term, for, in the latter case, the partial payments are not so small as to place purchasers off their guard and delude them to a miscalculation of their ability to pay. Theoretically, perhaps, there is no difference between paying the price in two installments and paying the same partly in cash and partly in one installment, in so far as the size of each partial payment is concerned; but in actual practice the difference exists, for, according to the regular course of business, in contracts providing for payment of the price in two installments, there is generally a provision for initial payment. But all these considerations are immaterial, the language of the law being so clear as to require no construction at all.D E C I S I O NMORAN,Jp:On February 24, 1938, plaintiff filed a complaint in the Court of First Instance of Manila, which substantially recites the following facts:On March 15, 1937, plaintiffLevyHermanos, Inc., sold to defendant Lazaro BlasGervacio, a Packard car. Defendant, after making the initial payment, executed a promissory note for the balance of P2,400, payable on or before June 15, 1937, with interest at 12 per cent per annum, and to secure the payment of the note, he mortgaged the car to the plaintiff. Defendant failed to pay the note at its maturity; wherefore, plaintiff foreclosed the mortgage and the car was sold at public auction, at which plaintiff was the highest bidder for P800. The present action is for the collection of the balance of P1,600 and interest.Defendant admitted the allegations of the complaint, and with this admission, the parties submitted the case for decision. The lower court applied the provisions of Act No. 4122, inserted as articles 1454-A of the Civil Code, and rendered judgment in favor of the defendant. Plaintiff appealed.Article 1454-A of the Civil Code reads as follows:"In a contract for the sale of personal property payable in installments, failure to pay two or more installments shall confer upon the vendor the right to cancel the sale or foreclose the mortgage if one has been given on the property, without reimbursement to the purchaser of the installments already paid, if there be an agreement to this effect."However, if the vendor has chosen to foreclose the mortgage he shall have no further action against the purchaser for the recovery of any unpaid balance owing by the same, and any agreement to the contrary shall be null and void."In Macondray & Co.vs. De Santos (33 Off. Gaz., 2170), we held that "in order to apply the provisions of article 1454-A of the Civil Code it must appear that there was a contract for the sale of personal property payable in installments and that there has been a failure to pay two or more installments." The contract, in the instant case, while a sale of personal property, is not, however, one on installments, but on straight term, in which the balance, after payment of the initial sum, should be paid in its totality at the time specified in the promissory note. The transaction is not, therefore, the one contemplated in Act No. 4122 and accordingly the mortgagee is not bound by the prohibition therein contained as to its right to the recovery of the unpaid balance.Undoubtedly, the law is aimed at those sales where the price is payable in several installments, for, generally, it is in these cases that partial payments consist in relatively small amounts, constituting thus a great temptation for improvident purchasers to buy beyond their means. There is no such temptation where the price is to be paid in cash, or, as in the instant case, partly in cash and partly in one term, for, in the latter case, the partial payments are not so small as to place purchasers off their guard and delude them to a miscalculation of their ability to pay. Theoretically, perhaps, there is no difference between paying the price in two installments and paying the same partly in cash and partly in one installment, in so far as the size of each partial payment is concerned; but in actual practice the difference exists, for, according to the regular course of business, in contracts providing for payment of the price in two installments, there is generally a provision for initial payment. But all these considerations are immaterial, the language of the law being so clear as to require no construction at all.The suggestion that the cash payment made in this case should be considered as an installment in order to bring the contract sued upon under the operation of the law, is completely untenable. A cash payment cannot be considered as a payment by installment, and even if it can be so considered, still the law does not apply, for it requires non-payment of two or more installments in order that its provisions may be invoked. Here, only one installment was unpaid.Judgment is reversed, and defendant-appellee is hereby sentenced to pay plaintiff-appellant the sum of P1,600 interest at the rate of 12 per cent per annum from June 15, 1937, and the sum of P52.08 with interest at the rate of 6 per cent from the date of the filing of the complaint, with costs in both instances against the appellee.Avancea, C.J., Villa-Real, Imperial, DiazandConcepcion, JJ.,concur.SECOND DIVISION[G.R. No. 158635. December 9, 2005.]MAGNAFINANCIALSERVICESGROUP, INC.,petitioner,vs. ELIASCOLARINA,respondent.D E C I S I O NCHICO-NAZARIO,Jp:The undisputed facts of this case show that on 11 June 1997, EliasColarinabought on installment fromMagnaFinancialServicesGroup, Inc., one (1) unit of Suzuki Multicab, more particularly described as follows:MAKE- SUZUKI MULTICABMODEL- ER HTENGINE NO.- 834963FRAME NO.- LTO-067886-RO7-CCOLOR- WHITE1After making a down payment,Colarinaexecuted a promissory note for the balance of P229,284.00 payable in thirty-six (36) equal monthly installments at P6,369.00 monthly, beginning 18 July 1997. To secure payment thereof,Colarinaexecuted an integrated promissory note and deed of chattel mortgage over the motor vehicle.Colarinafailed to pay the monthly amortization beginning January 1999, accumulating an unpaid balance of P131,607.00. Despite repeated demands, he failed to make the necessary payment. On 31 October 2000MagnaFinancialServicesGroup, Inc. filed a Complaint for Foreclosure of Chattel Mortgage with Replevin2before the Municipal Trial Court in Cities (MTCC), Branch 2, Legaspi City, docketed as Civil Case No. 4822.3Upon the filing of a Replevin Bond, a Writ of Replevin was issued by the MTCC. On 27 December 2000, summons, together with a copy of the Writ of Replevin, was served onColarinawho voluntarily surrendered physical possession of the vehicle to the Sheriff, Mr. Antonio Lozano. On 02 January 2001, the aforesaid motor vehicle was turned over by the sheriff toMagnaFinancialServicesGroup, Inc.4On 12 July 2001,Colarinawas declared in default for having filed his answer after more than six (6) months from the service of summons upon him. Thereupon, the trial court rendered judgment based on the facts alleged in the Complaint. In a decision dated 23 July 2001, it held:5WHEREFORE, judgment is hereby rendered in favor of plaintiffMagnaFinancialServicesGroup, Inc. and against the defendant EliasColarina, ordering the latter:a)to pay plaintiff the principal sum of one hundred thirty one thousand six hundred seven (P131,607.00) pesos plus penalty charges at 4.5% per month computed from January, 1999 until fully paid;b)to pay plaintiff P10,000.00 for attorney's fees; andc)to pay the costs.The foregoing money judgment shall be paid within ninety (90) days from the entry of judgment. In case of default in such payment, the one (1) unit of Suzuki Multicab, subject of the writ of replevin and chattel mortgage, shall be sold at public auction to satisfy the said judgment.6Colarinaappealed to the Regional Trial Court (RTC) of Legazpi City, Branch 4, where the case was docketed as Civil Case No. 10013. During the pendency of his appeal before the RTC,Colarinadied and was substituted in the case by his heirs.7In a decision dated 30 January 2002, the RTC affirmedin totothe decision of the MTCC.8Colarinafiled a Petition for Review before the Court of Appeals, docketed as CA-G.R. SP No. 69481. On 21 January 2003, the Court of Appeals rendered its decision9holding:. . . We find merit in petitioners' assertion that the MTC and the RTC erred in ordering the defendant to pay the unpaid balance of the purchase price of the subject vehicle irrespective of the fact that the instant complaint was for the foreclosure of its chattel mortgage. The principal error committed by the said courts was their immediate grant, however erroneous, of relief in favor of the respondent for the payment of the unpaid balance without considering the fact that the very prayer it had sought was inconsistent with its allegation in the complaint.CTDAaEVerily, it is beyond cavil that the complaint seeks the judicial foreclosure of the chattel mortgage. The fact that the respondent had unconscionably sought the payment of the unpaid balance regardless of its complaint for the foreclosure of the said mortgage is glaring proof that it intentionally devised the same to deprive the defendant of his rights. A judgment in its favor will in effect allow it to retain the possession and ownership of the subject vehicle and at the same time claim against the defendant for the unpaid balance of its purchase price. In such a case, the respondent would luckily have its cake and eat it too. Unfortunately for the defendant, the lower courts had readily, probably unwittingly, made themselves abettors to respondent's devise to the detriment of the defendant.xxx xxx xxxWHEREFORE, finding error in the assailed decision, the instant petition is hereby GRANTED and the assailed decision is hereby REVERSED AND SET ASIDE. Let the records be remanded to the court of origin. Accordingly, the foreclosure of the chattel mortgage over the subject vehicle as prayed for by the respondent in its complaint without any right to seek the payment of the unpaid balance of the purchase price or any deficiency judgment against the petitioners pursuant to Article 1484 of the Civil Code of the Philippines, is hereby ORDERED.10A Motion for Reconsideration dated 11 February 200311filed byMagnaFinancialServicesGroup, Inc., was denied by the Court of Appeals in a resolution dated 22 May 2003.12Hence, this Petition for Review onCertioraribased on the sole issue:WHAT IS THE TRUE NATURE OF A FORECLOSURE OF CHATTEL MORTGAGE, EXTRAJUDICIAL OR JUDICIAL, AS AN EXERCISE OF THE 3RD OPTION UNDER ARTICLE 1484, PARAGRAPH 3 OF THE CIVIL CODE.In its Memorandum, petitioner assails the decision of the Court of Appeals and asserts that a mortgage is only an accessory obligation, the principal one being the undertaking to pay the amounts scheduled in the promissory note. To secure the payment of the note, a chattel mortgage is constituted on the thing sold. It argues that an action for foreclosure of mortgage is actually in the nature of an action for sum of money instituted to enforce the payment of the promissory note, with execution of the security. In case of an extrajudicial foreclosure of chattel mortgage, the petition must state the amount due on the obligation and the sheriff, after the sale, shall apply the proceeds to the unpaid debt. This, according to petitioner, is the true nature of a foreclosure proceeding as provided under Rule 68, Section 2 of the Rules of Court.13On the other hand, respondent countered that the Court of Appeals correctly set aside the trial court's decision due to the inconsistency of the remedies or reliefs sought by the petitioner in its Complaint where it prayed for the custody of the chattel mortgage and at the same time asked for the payment of the unpaid balance on the motor vehicle.14Article 1484 of the Civil Code explicitly provides:ART. 1484.In a contract of sale of personal property the price of which is payable in installments, the vendor may exercise any of the following remedies:(1)Exact fulfillment of the obligation, should the vendee fail to pay;(2)Cancel the sale, should the vendee's failure to pay cover two or more installments;(3)Foreclose the chattel mortgage or the thing sold, if one has been constituted, should the vendee's failure to pay cover two or more installments. In this case, he shall have no further action against the purchaser to recover any unpaid balance of the price. Any agreement to the contrary shall be void.Our Supreme Courtin Bachrach Motor Co., Inc. v. Millan15held: "Undoubtedly the principal object of the above amendment (referring to Act 4122 amending Art. 1454, Civil Code of 1889) was to remedy the abuses committed in connection with the foreclosure of chattel mortgages. This amendment prevents mortgagees from seizing the mortgaged property, buying it at foreclosure sale for a low price and then bringing the suit against the mortgagor for a deficiency judgment. The almost invariable result of this procedure was that the mortgagor found himself minus the property and still owing practically the full amount of his original indebtedness."ICcDaAIn its Complaint,MagnaFinancialServicesGroup, Inc. made the following prayer:WHEREFORE, it is respectfully prayed that judgment render ordering defendant:1.To pay the principal sum of P131,607.00 with penalty charges at 4.5% per month from January 1999 until paid plus liquidated damages.2.Ordering defendant to reimburse the plaintiff for attorney's fee at 25% of the amount due plus expenses of litigation at not less than P10,000.00.3.Ordering defendant to surrender to the plaintiff the possession of the Multicab described in paragraph 2 of the complaint.4.Plaintiff prays for other reliefs just and equitable in the premises.It is further prayed thatpendent lite, an Order of Replevin issue commanding the Provincial Sheriff at Legazpi City or any of his deputies to take such multicab into his custody and, after judgment, upon default in the payment of the amount adjudged due to the plaintiff, to sell said chattel at public auction in accordance with the chattel mortgage law.16In its Memorandum before us, petitioner resolutely declared that it has opted for the remedy provided under Article 1484(3) of the Civil Code,17that is, toforeclosethe chattel mortgage.It is, however, unmistakable from the Complaint that petitioner preferred to avail itself of the first and third remedies under Article 1484, at the same time suing for replevin. For this reason, the Court of Appeals justifiably set aside the decision of the RTC. Perusing the Complaint, the petitioner, under its prayer number 1, sought for the payment of the unpaid amortizations which is a remedy that is provided under Article 1484(1) of the Civil Code, allowing an unpaid vendee to exact fulfillment of the obligation. At the same time, petitioner prayed thatColarinabe ordered to surrender possession of the vehicle so that it may ultimately be sold at public auction, which remedy is contained under Article 1484(3). Such a scheme is not only irregular but is a flagrant circumvention of the prohibition of the law. By praying for the foreclosure of the chattel,MagnaFinancialServicesGroup, Inc. renounced whatever claim it may have under the promissory note.18Article 1484, paragraph 3, provides that if the vendor has availed himself of the right to foreclose the chattel mortgage, "he shall have no further action against the purchaser to recover any unpaid balance of the purchase price. Any agreement to the contrary shall be void." In other words, in all proceedings for the foreclosure of chattel mortgages executed on chattels which have been sold on the installment plan, the mortgagee is limited to the property included in the mortgage.19Contrary to petitioner's claim, a contract of chattel mortgage, which is the transaction involved in the present case, is in the nature of a conditional sale of personal property given as a security for the payment of a debt, or the performance of some other obligation specified therein, the condition being that the sale shall be void upon the seller paying to the purchaser a sum of money or doing some other act named.20If the condition is performed according to its terms, the mortgage and sale immediately become void, and the mortgagee is thereby divested of his title.21On the other hand, in case of non payment, foreclosure is one of the remedies available to a mortgagee by which he subjects the mortgaged property to the satisfaction of the obligation to secure that for which the mortgage was given. Foreclosure may be effected either judicially or extrajudicially, that is, by ordinary action or by foreclosure under power of sale contained in the mortgage. It may be effected by the usual methods, including sale of goods at public auction.22Extrajudicial foreclosure, as chosen by the petitioner, is attained by causing the mortgaged property to be seized by the sheriff, as agent of the mortgagee, and have it sold at public auction in the manner prescribed by Section 14 of Act No. 1508, or the Chattel Mortgage Law.23This rule governs extrajudicial foreclosure of chattel mortgage.aCSEcAIn sum, since the petitioner has undeniably elected a remedy of foreclosure under Article 1484(3) of the Civil Code, it is bound by its election and thus may not be allowed to change what it has opted for nor to ask for more. On this point, the Court of Appeals correctly set aside the trial court's decision and instead rendered a judgment of foreclosure as prayed for by the petitioner.The next issue of consequence is whether or not there has been an actual foreclosure of the subject vehicle.In the case at bar, there is no dispute that the subject vehicle is already in the possession of the petitioner,MagnaFinancialServicesGroup, Inc. However, actual foreclosure has not been pursued, commenced or concluded by it.Where the mortgagee elects a remedy of foreclosure, the law requires the actual foreclosure of the mortgaged chattel. Thus, inManila Motor Co. v. Fernandez,24our Supreme Court said that it is actual sale of the mortgaged chattel in accordance with Sec. 14 of Act No. 1508 that would bar the creditor (who chooses to foreclose) from recovering any unpaid balance.25And it is deemed that there has been foreclosure of the mortgage when all the proceedings of the foreclosure, including the sale of the property at public auction, have been accomplished.26That there should be actual foreclosure of the mortgaged vehicle was reiterated in the case ofDe la Cruz v. Asian Consumer and Industrial Finance Corporation:27It is thus clear that while ASIAN eventually succeeded in taking possession of the mortgaged vehicle, it did not pursue the foreclosure of the mortgage as shown by the fact that no auction sale of the vehicle was ever conducted. As we ruled inFilinvest Credit Corp. v. Phil. Acetylene Co., Inc. (G.R. No. 50449, 30 January 1982, 111 SCRA 421) Under the law, the delivery of possession of the mortgaged property to the mortgagee, the herein appellee, can only operate to extinguish appellant's liability if the appellee had actually caused the foreclosure sale of the mortgaged property when it recovered possession thereof (Northern Motors, Inc. v. Sapinoso, 33 SCRA 356 [1970];Universal Motors Corp. v. Dy Hian Tat, 28 SCRA 161 [1969];Manila Motors Co., Inc. v. Fernandez, 99 Phil. 782 [1956]).Be that as it may, although no actual foreclosure as contemplated under the law has taken place in this case, since the vehicle is already in the possession ofMagnaFinancialServicesGroup, Inc. and it has persistently and consistently avowed that it elects the remedy of foreclosure, the Court of Appeals, thus, ruled correctly in directing the foreclosure of the said vehicle without more.WHEREFORE, premises considered, the instant petition is DENIED for lack of merit and the decision of the Court of Appeals dated 21 January 2003 is AFFIRMED. Costs against petitioner.SO ORDERED.Puno, Austria-Martinez, Callejo, Sr.andTinga, JJ.,concur.Footnotes1.Rollo, p. 50.2.Annex A, CARollo, p. 23.3.Annex I,Rollo, p. 50.4.CARollo, p. 39.5.CARollo, pp. 40-41.6.CARollo, p. 41.7.CARollo, p. 15.8.Annex H, CARollo, pp. 43-47.9.Penned by Associate Justice Josefina Guevara-Salonga with Associate Justices Marina L. Buzon and Danilo B. Pine, concurring; CARollo, pp. 66-73.10.CARollo, pp. 71-73.11.Rollo, pp. 27-30.12.Rollo, p. 39.13.Memorandum for the Petitioner, p. 3;Rollo, p. 87.Rule 68, Section 2 of the Revised Rules of Court on Foreclosure of Real Estate Mortgage provides:SEC. 2.Judgment on foreclosure for payment or sale. If upon the trial in such action the court shall find the facts set forth in the complaint to be true, it shall ascertain the amount due to the plaintiff upon the mortgage debt or obligation, including interest and other charges as approved by the court, and costs, and shall render judgment for the sum so found due and order that the same be paid to the court or to the judgment obligee within a period of not less than ninety (90) days nor more than one hundred twenty (120) days from the entry of judgment, and that in default of such payment the property shall be sold at public auction to satisfy the judgment.14.Rejoinder,Rollo, p. 95.15.61 Phil. 409, 415 (1935).16.CARollo, pp. 24-25.17.Rollo, p. 88.18.Luneta Motor Co. v. Dimagiba, 113 Phil. 864 (1961).19.Macondray and Co., Inc. v. Benito, et al., 62 Phil. 137, 142 (1935).20.Act No. 1508 An Act providing for the Mortgaging of personal property and for the registration of the mortgages so executed.Section 3. A chattel mortgage is a conditional sale of personal property as security for the payment of a debt, or the performance of some other obligation specified therein, the condition being that the sale shall be void upon the seller's paying to the purchaser a sum of money or doing some other act named. If the condition is performed according to its terms the mortgage and sale immediately become void, and the mortgagee is thereby divested of his title.21.Bachrach Motor Co. v. Summers, 42 Phil. 3 (1921).22.59 C.J.S. 482 cited in De Leon Credit Transaction, 1995 Ed., p. 384.23.Bataan Hardwood Corporation v. Dy Pac and Co., G.R. No. L- 29492, 29 February 1972, 43 SCRA 450.Section 14, Act No. 1508 of the Chattel Mortgage Law provides:SEC. 14 The mortgagee, his executor, administrator, or assign, may, after thirty days from the time of condition broken, cause the mortgaged property, or any part thereof, to be sold at public auction by a public officer at a public place in the municipality where the mortgagor resides, or where the property is situated, provided at least ten days notice of the time, place, and purpose of such sale has been posted at two or more public places in such municipality, and the mortgagee, his executor, administrator, or assign, shall notify the mortgagor or person holding under him and the persons holding subsequent mortgages of the time and place of sale, either by notice in writing directed to him or left at his abode, if within the municipality, or sent by mail if he does not reside in such municipality, at least ten days previous to the sale.24.99 Phil. 782, 786 (1956).25.Pacific Commercial Co. v. De la Rama, 72 Phil. 380 (1941).26.Macondray & Co., Inc. v. Tan, 38 O.G. 2606; see alsoRadiowealth, Inc. v. Lavin, L-18563, 27 April 1963, 7 SCRA 804;Vda. De Quiambao, et al. v. Manila Motor Co., Inc., G.R. No. L-17334, 31 October 1961, 3 SCRA 444, 448-449.27.G.R. No. 94828, 18 September 1992, 214 SCRA 103, 107.SECOND DIVISION[G.R. No. 109966. May 31, 1999.]ELISCOTOOLMANUFACTURING CORPORATION,petitioner,vs. COURT OF APPEALS, ROLANDO LANTAN, and RINA LANTAN,respondents.Sycip, Salazar, Hernandez and Gatmaitanfor petitioner.Gabriel P. De Jesusfor private respondent.SYNOPSISRolando was the head of the cash department ofEliscoToolManufacturing Corporation when he entered into a car plan agreement with the latter. The contract entered into on January 9, 1980 provides that the lease rental was for P1,010.65 a month for five years payable thru salary deduction, with option to purchase at the end of the 5-year period or upon payment of the 60th monthly rental where all monthly rentals paid shall be applied to the full purchase price. In 1981, however,EliscoToolceased operations and Rolando was laid off. Nonetheless, as of December 4, 1984, Rolando was able to make payments for the car in the total amount of P61,070.94. Thus, when EliseoToolfiled a complaint against Rolando alleging failure to pay monthly rentals, the trial court held that Rolando had fully paid the price of the car. On appeal to the Court of Appeals, the decision of the trial court was affirmedin toto. Hence, this petition for review.cdasiaRolando acquired the car to question under a typical car plan for executives of the Elizalde group of companies, where the transaction is a lease in name only. The so-called monthly rental are in truth monthly amortizations on the price of the car. Rolando's default in paying the installments was due to the cessation of operations of Elizalde Steel Corporation, and the latter's acceptance of payments through cash and checks from Rolando could have been impelled solely by petitioner's inability to deduct the amortizations from Rolando because of the termination. Hence, when petitioner accepted even late payments from Rolando more than 2 years after the latter's employment had been terminated, the same constituted a waiver of petitioner's right to collect interest upon the delayed payments. Consequently, the P61,070.94 already paid to petitioner would be considered payment of the full purchase price of the car or the total installments paid. Thus, it was correctly ruled that Rolando had already fulfilled his part of the obligation.SYLLABUS1.CIVIL LAW; CONTRACTS; TYPICAL COMPANY CAR PLANS; ELUCIDATED. Rolando Lantan acquired the vehicle in question under a car plan for executives of the Elizalde group of companies. Under a typical car plan, the company advances the purchase price of a car to be paid back by the employee through monthly deductions from his salary. The company retains ownership of the motor vehicle until it shall have been fully paid for. However, retention of registration of the car in the company's name is only a form of a lien on the vehicle in the event that the employee would abscond before he has fully paid for it. There are also stipulations in car plan agreements to the effect that should the employment of the employee concerned be terminated before all installments are fully paid, the vehicle will be taken by the employer and all installments paid shall be considered rentals per agreement.cdasia2.ID.; ID.; CONTRACT OF SALE ON INSTALLMENT DENOMINATED AS CONTRACT OF LEASE, ACKNOWLEDGED; REMEDIES OF VENDOR; CASE AT BAR. This Court has long been aware of the practice of vendors of personal property of denominating a contract of sale on installment as one of lease to prevent the ownership of the object of the sale from passing to the vendee until and unless the price is fully paid, like this case. Hence, the contract being one of sale on installment, the Court of Appeals correctly applied Art. 1484 and 1485 of the Civil Code which provides remedies the vendor may exercise. The remedies provided for in Art. 1484 are alternative, not cumulative. The exercise of one bars the exercise of the others. This limitation applies to contracts purporting to be leases of personal property with option to buy by virtue of Art. 1485. The condition that the lessor has deprived the lessee of possession or enjoyment of the thing for the purpose of applying Art. 1485 was fulfilled in this case by the filing by petitioner of the complaint for replevin to recover possession of movable property. By virtue of the writ of seizure issued by the trial court, the deputy sheriff seized the vehicle on August 6, 1986 and thereby deprived private respondents of its use. The car was not returned to private respondent until April 16, 1989, after two (2) years and eight (8) months, upon issuance by the Court of Appeals of a writ of execution.3.ID.; ID.; ID.; ID.; SPECIFIC PERFORMANCE; ALREADY SATISFIED IN CASE AT BAR. This case should be considered as one for specific performance, pursuant to Art. 1484(1), consistent with its prayer with respect to the unpaid installments. The prayer for the issuance of a writ of replevin is only for the purpose of insuring specific performance by private respondents. However, private respondents could no longer be held liable for the payment of interest on unpaid monthly "rentals" or installments because it was entered into in pursuance of a car plan adopted by the company for the benefit of its deserving employees. Indeed, private respondent's default in paying installments was due to the cessation of operations of Elizalde Steel Corporation, petitioner's sister company. Petitioner's acceptance of payments made by private respondents through cash and checks could have been impelled solely by petitioner's inability to deduct the amortizations from private respondent Rolando Lantan's salary which he stopped receiving when his employment was terminated in September 1982. Apparently, to minimize the adverse consequences of the termination of private respondent's employment, petitioner accepted even late payments. That petitioner accepted payments from private respondent Rolando Lantan more than two (2) years after the latter's employment had been terminated constitutes a waiver of petitioner's right to collect interest upon the delayed payments. The 2% surcharge is not provided for in the agreement. Its collection by the company would in fact run counter to the purpose of providing "added emoluments" to its deserving employees. Consequently, the total amount of P61,070.94 already paid to petitioner should be considered payment of the full purchase price of the car or the total installments paid.4.ID.; DAMAGES; CASE AT BAR. Private respondents presented evidence that they "felt bad, were worried, embarrassed and mentally tortured" by the repossession of the car. This has not been rebutted by petitioner. There is thus a factual basis for the award of moral damages. In addition, petitioner acted in a wanton, fraudulent, reckless and oppressive manner in filing the instant case, hence, the award of exemplary damages is justified. The award of attorney's fees is likewise proper considering that private respondents were compelled to incur expenses to protect their rights.CHDAaSD E C I S I O NMENDOZA,Jp:This is a petition for review of the decision1of the Court of Appeals which affirmedin totothe decision of the Regional Trial Court of Pasig, Branch 51, declaring respondent spouses Rolando Lantan and Rina Lantan owners of a 1979 model 2-door Colt Lancer car which they had acquired under a car plan for top employees of the Elizalde group of companies.cdtaiThe facts are as follows:Private respondent Rolando Lantan was employed at theEliscoToolManufacturing Corporation as head of its cash department. On January 9, 1980, he entered into an agreement with the company which provided as follows:2That, EMPLOYER is the owner of a car Colt Lancer 2-door, Model 1979, with Serial No. 3403 under LTC Registration Certificate No. 0526558;That, for and in consideration of a monthly rental of ONE THOUSAND TEN & 65/100 ONLY (P1,010.65) Philippine Currency, EMPLOYER desire to lease and EMPLOYEE accept in lease the motor vehicle aforementioned for a period of FIVE (5) years;That, the EMPLOYEE agree as he hereby agreed to pay the lease rental thru salary deduction from his monthly remuneration in the amount as above specified for a period of FIVE (5) years;That, for the duration of the lease contract, all expenses and costs of registration, insurance, repair and maintenance, gasoline, oil, part replacement inclusive of all expenses necessary to maintain the vehicle in top condition shall be for the account of the EMPLOYEE;That, at the end of FIVE (5) year period or upon payment of the 60th monthly rental, EMPLOYEE may exercise the option to purchase the motor vehicle from the EMPLOYER and all monthly rentals shall be applied to the payment of the full purchase price of the car and further, should EMPLOYEE desire to exercise this option before the 5-year period lapse, he may do so upon payment of the remaining balance on the five-year rental unto the EMPLOYER, it being understood however that the option is limited to the EMPLOYEE;That, upon failure of the EMPLOYEE to pay THREE (3) accumulated monthly rentals will vest upon the EMPLOYER the full right to lease the vehicle to another EMPLOYEE;That, in the event of resignation and or dismissal from the service, the EMPLOYEE shall return the subject motor vehicle to the EMPLOYER in its compound at Kalawaan Sur, Pasig, Metro Manila in good working and body condition.On the same day, January 9, 1980, private respondent executed a promissory note reading as follows:3PROMISSORY NOTEP60,639.00FOR VALUE RECEIVED, we promise to pay [to] the order ofELISCOTOOLMFG. CORP. SPECIAL PROJECT, at its office at Napindan, Taguig, Metro Manila, Philippines, the sum of ONE THOUSAND TEN & 65/100 PESOS (P1,010.65), Philippine Currency, beginning January 9, 1980, without the necessity of notice or demand in accordance with the schedule of payment hereto attached as an integral part hereof.In case of default in the payment of any installment on the stipulated due date, we agree to pay as liquidated damages 2% of the amount due and unpaid for every thirty (30) days of default or fraction thereof. Where the default covers two successive installments, the entire unpaid balance shall automatically become due and payable.It is further agreed that if upon such default attorney's services are availed of, an additional sum equal to TWENTY (20%) percent of the total amount due thereon, but in no case be less than P1,000.00 shall be paid to holder(s) hereof as attorney's fees in addition to the legal costs provided for by law. We agree to submit to the jurisdiction of the proper courts of Makati, Metro Manila or the Province of Rizal, at the option of the holder(s) waiving for this purpose any other venue.In case extraordinary inflation or deflation of the currency stipulated should occur before this obligation is paid in full, the value of the currency at the time of the establishment of the obligation will be the basis of payment.Holder(s) may accept partial payment reserving his right of recourse against each and all endorsers who hereby waive DEMAND PRESENTMENT and NOTICE.Acceptance by the holder(s) of payment or any part thereof after due date shall not be considered as extending the time for the payment of the aforesaid obligation or as a modification of any of the condition hereof.After taking possession of the car, private respondent installed accessories therein worth P15,000.00.In 1981,EliscoToolceased 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; that petitioner was ready to post a bond in an amount double the value of the car, which was P60,000; and that in case private respondents could not return the car, they should be held liable for the amount of P60,000 plus the accrued monthly rentals thereof, with interest at the rate of 14%per annum, until fully paid. Petitioner's complaint contained the following prayer:WHEREFORE, plaintiffs prays that judgment be rendered as follows:ON THE FIRST CAUSE OF ACTIONOrdering defendant Rolando Lantan to pay the plaintiff the sum of P39,054.86 plus legal interest from the date of demand until the whole obligation is fully paid;ON THE SECOND CAUSE OF ACTIONTo forthwith issue a Writ of Replevin ordering the seizure of the motor vehicle more particularly described in paragraph 3 of the Complaint, from defendant Rolando Lantan and/or defendants Rina Lantan, John Doe, Susan Doe and other person or persons in whose possession the said motor vehicle may be found, complete with accessories and equipment, and direct deliver thereof to plaintiff in accordance with law, and after due hearing to confirm said seizure and plaintiff's possession over the same;ON THE ALTERNATIVE CAUSE OF ACTIONIn the event that manual delivery of the subject motor vehicle cannot be effected for any reason, to render judgment in favor of plaintiff and against defendant Roland Lantan ordering the latter to pay the sum of SIXTY THOUSAND PESOS (P60,000.00) which is the estimated actual value of the above-described motor vehicle, plus the accrued monthly rentals thereof with interests at the rate of fourteen percent (14%)per annum until fully paid;PRAYER COMMON TO ALL CAUSES OF ACTION1.Ordering the defendant Rolando Lantan to pay the plaintiff an amount equivalent to twenty-five percent (25%) of his outstanding obligation, for and as attorney's fees;2.Ordering defendants to pay the cost or expenses of collection, repossession, bonding fees and other incidental expenses to be proved during the trial; and3.Ordering defendants to pay the costs of suit.Plaintiff also prays for such further reliefs as this Honorable Court may deem just and equitable under the premises.Upon petitioner's posting a bond in the amount of P120,000, the sheriff took possession of the car in question and after five (5) days turned it over to petitioner.4In due time, private respondents filed their answer. They claimed that the agreement on which the complaint was based had not been signed by petitioner's representative, Jose Ma. S. del Gallego, although it had been signed by private respondent Rolando Lantan; that their true agreement was "to buy and sell and not lease with option to buy" the car in question at a monthly amortization of P1,000; and that petitioner accepted the installment payments made by them and, in January 1986, agreed that the balance of the purchase price would be paid on or before December 31, 1986. Private respondents cited the provision of the agreement making respondent Rolando Lantan liable for the expenses for registration, insurance, repair and maintenance, gasoline, oil and part replacements, inclusive of all necessary expenses, as evidence that the transaction was one of sale. Private respondents further alleged that, in any event, petitioner had waived its rights under the agreement because of the following circumstances: (a) while the parties agreed that payment was to be made through salary deduction, petitioner accepted payments in cash or checks; (b) although they agreed that upon the employee's resignation, the car should be returned to the employer, private respondent Rolando Lantan was not required to do so when he resigned in September 1982; (c) petitioner did not lease the vehicle to another employee after private respondent Rolando Lantan had allegedly failed to pay three monthly "rentals"; and (d) petitioner failed to enforce the manner of payment under the agreement by its acceptance of payments in various amounts and on different dates.cdasiaIn its reply, petitioner maintained that the contract between the parties was one of lease with option to purchase and that the promissory note was merely a "nominal security" for the agreement. It contended that the mere acceptance of the amounts paid by private respondents and for indefinite periods of time was not evidence that the parties' agreement was one of purchase and sale. Neither was it guilty of laches because, under the law, an action based on a written contract can be brought within ten (10) years from the time the action accrues. On August 31, 1987, the trial court5rendered its decision.The trial court sustained private respondents' claim that the agreement in question was one of sale and held that the latter had fully paid the price of the car having paid the total amount of P61,070.94 aside from installing accessories in the car worth P15,000.00. Said the trial court:Plaintiff now comes claiming ownership of the car in question and has succeeded in repossessing the same by virtue of the writ of seizure issued in this case on July 29, 1986. Not content with recovering possession of the said car, plaintiff still asks that defendants should pay it the sum of P39,054.86, allegedly representing the rentals due on the car from the time of the last payment made by defendants to its repossession thereof. This is indeed a classic case of one having his cake and eating it too! Under the Recto law (Arts. 1484 & 1485, Civil Code), the vendor who repossesses the goods sold on installments, has no right to sue the vendee for the unpaid balance thereof.The Court can take judicial notice of the practice wherein executives enjoy car plans in progressive companies. The agreement of January 9, 1980 between the parties is one such car plan. If defendant Rolando Lantan failed to keep up with his amortizations on the car in question, it was not because of his own liking but rather he was pushed to it by circumstances when his employer folded up and sent him to the streets. That plaintiff was giving all the chance to defendants to pay the value of the car and acquire full ownership thereof is shown by the delay in instituting the instant case. . . .The court likewise found that the amount of P61,070.94 included a 2% penalty for the late payments for which there was no stipulation in the agreement:. . . The agreement and defendant Roland Lantan's promissory note of January 9, 1980 do not provide even for interest on the remaining balance of the purchase price of the car. This privilege extended by corporations to their top executives is considered additional emolument to them. And so the reason for the lack of provision for interest, much less penalty charges. Therefore, all payments made by defendant should be applied to the principal account. Since the principal was only P60,639.00, the defendants have made an overpayment of P431.94 which should be returned to defendant by plaintiff.For this reason, it ordered petitioner to pay private respondents the amount of P431.94 as excess payment, as well as rentals at the rate of P1,000 a month for depriving private respondents of the use of their car, and moral damages for the worry, embarrassment, and mental torture suffered by them on account of the repossession of the car.The dispositive portion of the trial court's decision reads as follows:WHEREFORE, judgment is hereby rendered in favor of defendants and against plaintiff, dismissing plaintiff's complaint; declaring defendants the lawful owners of that Colt Lancer 2-door, Model 1979 with Serial No. 3403 under Registration Certificate No. 0526558; ordering plaintiff to deliver to defendants the aforesaid motor vehicle complete with all the accessories installed therein by defendants; should for any reason plaintiff is unable to deliver the said car to defendants, plaintiff is ordered to pay to defendants the value of said car in the sum of P60,639.00 plus P15,000.00, the value of the accessories, plus interest of 12% on the said sums from August 6, 1986; and sentencing plaintiff to pay defendants the following sums:a)P12,431.94 as actual damages broken down as follows:1)P431.94 overpayment made by defendants to plaintiff; and2)P12,000.00 rental on the car in question from August 6, 1986 to August 5, 1987, plus the sum of P1,000.00 a month beginning August 6, 1987 until the car is returned by plaintiff to, and is received by, defendant;b)the sum of P20,000.00 as moral damages;c)the sum of P5,000.00 as exemplary damages; andd)the sum of P5,000.00 as attorney's fees.Costs against the plaintiff.SO ORDERED.Petitioner appealed to the Court of Appeals. On the other hand, private respondents filed a motion for execution pending appeal. In its resolution of March 9, 1989, the Court of Appeals granted private respondents' motion and, upon the filing of a bond, in the amount of P70,000.00, it issued a writ of execution, pursuant to which the car was delivered to private respondents on April 16, 1989.6On August 26, 1992, the Court of Appeals rendered its decision, affirmingin totothe decision of the trial court. Hence, the instant petition for review oncertiorari.Petitioner contends that the Court of Appeals erred (a)in disregarding the admission in the pleadings as to what documents contain the terms of the parties' agreement.(b)in holding that the interest stipulation in respondents' Promissory Note was not valid and binding.(c)in holding that respondents had fully paid their obligations.It further argues that On the assumption that the Lease Agreement with option to buy in this case may be treated as a sale on installments, the respondent Court of Appeals nonetheless erred in not finding that the parties have validly agreed that the petitioner as seller may [i] cancel the contract upon the respondent's default on three or more installments, [ii] retake possession of the personality, and [iii] keep the rents already paid.First. Petitioner does not deny that private respondent Rolando Lantan acquired the vehicle in question under a car plan for executives of the Elizalde group of companies. Under a typical car plan, the company advances the purchase price of a car to be paid back by the employee through monthly deductions from his salary. The company retains ownership of the motor vehicle until it shall have been fully paid for.7However, retention of registration of the car in the company's name is only a form of a lien on the vehicle in the event that the employee would abscond before he has fully paid for it. There are also stipulations in car plan agreements to the effect that should the employment of the employee concerned be terminated before all installments are fully paid, the vehicle will be taken by the employer and all installments paid shall be considered rentals per agreement.8This Court has long been aware of the practice of vendors of personal property of denominating a contract of sale on installment as one of lease to prevent the ownership of the object of the sale from passing to the vendee until and unless the price is fully paid. As this Court noted inVda.de Jose v.Barrueco:9Sellers desirous of making conditional sales of their goods, but who do not wish openly to make a bargain in that form, for one reason or another, have frequently resorted to the device of making contracts in the form of leases either with options to the buyer to purchase for a small consideration at the end of term, provided the so-called rent has been duly paid, or with stipulations that if the rent throughout the term is paid, title shall thereupon vest in the lessee. It is obvious that such transactions are leases only in name. The so-called rent must necessarily be regarded as payment of the price in installments since the due payment of the agreed amount results, by the terms of the bargain, in the transfer of title to the lessee.casiaIn an earlier case,Manila Gas Corporation v.Calupitan,10which involved a lease agreement of a stove and a water heater, the Court said:. . . [W]e are of the opinion, and so hold, that when in a so-called contract of lease of personal property it is stipulated that the alleged lessee shall pay a certain amount upon signing the contract, and on or before the 5th of every month, another specific amount, by way of rental, giving the alleged lessee the right of option to buy the said personal property before the expiration of the period of lease, which is the period necessary for the payment of the said amount at the rate of so much a month, deducting the payments made by way of advance and alleged monthly rentals, and the said alleged lessee makes the advance payment and other monthly installments, noting in his account and in the receipts issued to him that said payments are on account of the price of the personal property allegedly leased, said contract is one of sale on installment and not of lease.11InU.S. Commercial v.Halili,12a lease agreement was declared to be in fact a sale of personal property by installment. Said the Court:13. . . There can hardly be any question that the so-called contracts of lease on which the present action is based were veritable leases of personal property with option to purchase, and as such come within the purview of the above article [Art. 1454-A of the old Civil Code on sale of personal property by installment]. In fact the instruments (Exhibits 'A' and 'B') embodying the contracts bear the heading or title 'Lease-Sale (Lease-Sale of Transportation and/or Mechanical Equipment).' The contracts fix the value of the vehicles conveyed to the lessee and expressly refer to the remainder of said value after deduction of the down payment made by the lessee as 'the unpaid balance of thepurchase priceof the leased equipment.' The contracts also provide that upon the full value (plus stipulated interest) being paid, the lease would terminate and title to the leased property would be transferred to the lessee. Indeed, as the defendant-appellant points out, the inclusion of a clause waiving benefit of Article 1454-A of the old Civil Code is conclusive proof of the parties' understanding that they were entering into a lease contract with option to purchase which come within the purview of said article.Being leases of personal property with option to purchase as contemplated in the above article, the contracts in question are subject to the provision that when the lessor in such case "has chosen to deprive the lessee of the enjoyment of such personal property," "he shall have no further action" against the lessee "for the recovery of any unpaid balance" owing by the latter, "agreement to the contrary being null and void."It was held that in choosing to deprive the defendant of possession of the leased vehicles, the plaintiff waived its right to bring an action to recover unpaid rentals on the said vehicles.In the case at bar, although the agreement provides for the payment by private respondents of "monthly rentals," the fifth paragraph thereof gives them the option to purchase the motor vehicle at the end of the 5th year or upon payment of the 60th monthly rental when "all monthly rentals shall be applied to the payment of thefull purchase price of the car." It is clear that the transaction in this case is a lease in name only. The so-called monthly rentals are in truth monthly amortizations on the price of the car.Second.The contract being one of sale on installment, the Court of Appeals correctly applied to it the following provisions of the Civil Code:ART. 1484.In a contract of sale of personal property the price of which is payable in installments, the vendor may exercise any of the following remedies:(1)Exact fulfillment of the obligation, should the vendee fail to pay;(2)Cancel the sale, should the vendee's failure to pay cover two or more installments;(3)Foreclose the chattel mortgage on the thing sold, if one has been constituted, should the vendee's failure to pay cover two or more installments. In this case, he shall have no further action against the purchaser to recover any unpaid balance of the price. Any agreement to the contrary shall be void.ART. 1485.The preceding article shall be applied to contracts purporting to be leases of personal property with option to buy, when the lessor has deprived the lessee of the possession or enjoyment of the thing.The remedies provided for in Art. 1484 are alternative, not cumulative. The exercise of one bars the exercise of the others.14This limitation applies to contracts purporting to be leases of personal property with option to buy by virtue of Art. 1485.15The condition that the lessor has deprived the lessee of possession or enjoyment of the thing for the purpose of applying Art. 1485 was fulfilled in this case by the filing by petitioner of the complaint for replevin to recover possession of movable property. By virtue of the writ of seizure issued by the trial court, the deputy sheriff seized the vehicle on August 6, 1986 and thereby deprived private respondents of its use.16The car was not returned to private respondent until April 16, 1989, after two (2) years and eight (8) months, upon issuance by the Court of Appeals of a writ of execution.17Petitioner prayed that private respondents be made to pay the sum of P39,054.86, the amount that they were supposed to pay as of May 1986, plus interest at the legal rate.18At the same time, it prayed for the issuance of a writ of replevin or the delivery to it of the motor vehicle "complete with accessories and equipment."19In the event the car could not be delivered to petitioner, it was prayed that private respondent Rolando Lantan be made to pay petitioner the amount of P60,000.00, the "estimated actual value" of the car, "plus accrued monthly rentals thereof with interests at the rate of fourteen percent (14%)per annum until fully paid."20This prayer of course cannot be granted, even assuming that private respondents have defaulted in the payment of their obligation. This led the trial court to say that petitioner wanted to eat its cake and have it too.Notwithstanding this impossibility in petitioner's choice of remedy, this case should be considered as one for specific performance, pursuant to Art. 1484(1), consistent with its prayer with respect to the unpaid installments as of May 1986. In this view, the prayer for the issuance of a writ of replevin is only for the purpose of insuring specific performance by private respondents.Both the trial court and the Court of Appeals correctly ruled that private respondents could no longer be held liable for the amounts of P39,054.86 or P60,000.00 because private respondents had fulfilled their part of the obligation. The agreement does not provide for the payment of interest on unpaid monthly "rentals" or installments because it was entered into in pursuance of a car plan adopted by the company for the benefit of its deserving employees. As the trial court correctly noted, the car plan was intended to give additional benefits to executives of the Elizalde group of companies.Petitioner contends that the promissory note provides for such interest payment. However, as the Court of Appeals held:The promissory note in which the 2% monthly interest on delayed payments appears does not form part of the contract. There is no consideration for the promissory note. There is nothing to show that plaintiff advanced the purchase price of the vehicle for Lantan so as to make the latter indebted to the former for the amount stated in the promissory note. Thus, as stated in the complaint: "That sometime in January, 1980, defendant Rolando Lantan entered into an agreement with the plaintiff for the lease of a motor vehicle supplied by the latter, with the option to purchase at the end of the period of lease . . ." In other words, plaintiff did not buy the vehicle for Rolando Lantan, advancing the purchase price for that purpose. There is nothing in the complaint or in the evidence to show such arrangement. Therefore, there was no indebtedness secured by a promissory note to speak of. There being no consideration for the promissory note, the same, including the penalty clause contained thereon, has no binding effect.21There is no evidence that private respondents received the amount of P60,639.00 indicated in the promissory note as its value. What was proven below is the fact that private respondents received from petitioner the 2-door Colt Lancer car which was valued at P60,000 and for which private respondent Rolando Lantan paid monthly amortizations of P1,010.65 through salary deductions.Indeed, as already stated, private respondents' default in paying installments was due to the cessation of operations of Elizalde Steel Corporation, petitioner's sister company. Petitioner's acceptance of payments made by private respondents through cash and checks could have been impelled solely by petitioner's inability to deduct the amortizations from private respondent Rolando Lantan's salary which he stopped receiving when his employment was terminated in September 1982. Apparently, to minimize the adverse consequences of the termination of private respondent's employment, petitioner accepted even late payments. That petitioner accepted payments from private respondent Rolando Lantan more than two (2) years after the latter's employment had been terminated constitutes a waiver of petitioner's right to collect interest upon the delayed payments. The 2% surcharge is not provided for in the agreement. Its collection by the company would in fact run counter to the purpose of providing "added emoluments" to its deserving employees. Consequently, the total amount of P61,070.94 already paid to petitioner should be considered payment of the full purchase price of the car or the total installments paid.cdlexThird.Private respondents presented evidence that they "felt bad, were worried, embarrassed and mentally tortured" by the repossession of the car.22This has not been rebutted by petitioner. There is thus a factual basis for the award of moral damages.In addition, petitioner acted in a wanton, fraudulent, reckless and oppressive manner in filing the instant case, hence, the award of exemplary damages is justified.23The award of attorney's fees is likewise proper considering that private respondents were compelled to incur expenses to protect their rights.24WHEREFORE, the decision of the Court of Appeals is AFFIRMED with costs against petitioner.aisadcSO ORDERED.Bellosillo, Puno, Quisumbing,andBuena, JJ., concur.Footnotes1.Per Acting Presiding Justice Santiago M. Kapunan and concurred in by Associate Justices Oscar M. Herrera and Serafin V.C. Guingona.2.Exh. A, Record, pp. 63-64.3.Exh. B, Record, p. 65.4.Record, pp. 35-37.5.Presided by Judge Eutropio Migrio.6.CARollo, pp. 43-44.7.Nestle Philippines, Inc. v. NLRC, 195 SCRA 340 (1991).8.Tesorero v. Mathay, 185 SCRA 124, 132 (1990).9.67 Phil. 191, 195 (1939).10.66 Phil. 747, 752 (1938).11.Id., at 752.12.93 Phil. 271 (1953).13.Id., at 273-274.14.Delta Motor Sales Corporation v. Niu Kum Duan, G.R. No. 61043, September 2, 1992, 213 SCRA 259, 264 (1992).15.5 Arturo M. Tolentino,Civil Code of the Philippines33 (1992), citingFilinvest Credit Corporation v. Court of Appeals, 178 SCRA 188 (1989).16.Record, pp. 36-37.17.CARollo, pp. 43-44.18.Record, pp. 2 & 4.19.Id., p. 5.20.Ibid.21.Decision, pp. 11-12;Rollo, pp. 41-42.22.RTC Decision, pp. 4-5.23.Civil Code, Arts. 2232 and 2234.24.Summa Insurance Corporation v. Court of Appeals, 323 Phil. 214 (1996).FIRST DIVISION[G.R. No. 142618. July 12, 2007.]PCILEASINGANDFINANCE,INC.,petitioner,vs.GIRAFFE-XCREATIVE IMAGING,INC.,respondent.D E C I S I O NGARCIA,Jp:On a pure question of law involving the application of Republic Act (R.A.) No. 5980, as amended by R.A. No. 8556, in relation to Articles 1484 and 1485 of the Civil Code, petitionerPCILeasingandFinance,Inc. (PCILEASING, for short) has directly come to this Courtviathis petition for review under Rule 45 of the Rules of Court to nullify and set aside the Decision and Resolution dated December 28, 1998 and February 15, 2000, respectively, of the Regional Trial Court (RTC) of Quezon City, Branch 227, in itsCivil Case No. Q-98-34266, a suit for a sum of money and/or personal property with prayer for a writ of replevin, thereat instituted by the petitioner against the herein respondent,Giraffe-XCreative Imaging,Inc. (GIRAFFE, for brevity).The facts:On December 4, 1996, petitionerPCILEASINGand respondentGIRAFFEentered into aLease Agreement,1whereby the former leased out to the latter one (1) set ofSilicon High Impact Graphicsand accessories worth P3,900,000.00 and one (1) unit ofOxberry Cinescan 6400-10worth P6,500,000.00. In connection with this agreement, the parties subsequently signed two (2) separate documents, each denominated asLease Schedule.2Likewise forming parts of the basic lease agreement were two (2) separate documents denominatedDisclosure Statements of Loan/Credit Transaction (Single Payment or Installment Plan)3thatGIRAFFEalso executed for each of the leased equipment. These disclosure statementsinter aliadescribedGIRAFFE,vis--visthe two aforementioned equipment, as the "borrower" who acknowledged the "net proceeds of the loan," the "net amount to be financed," the"financial charges,"the "total installment payments" that it must pay monthly for thirty-six (36) months, exclusive of the 36%per annum"late payment charges." Thus, for theSilicon High Impact Graphics,GIRAFFEagreed to pay P116,878.21 monthly, and forOxberry Cinescan, P181,362.00 monthly. Hence, the total amountGIRAFFEhas to payPCILEASINGfor 36 months of the lease, exclusive of monetary penalties imposable, if proper, is as indicated below:cdasiajurP116,878.21 @ month (for theSilicon HighImpact Graphics)x36 months=P4,207,615.56 PLUS P181,362.00 @ month (for theOxberryCinescan)x36 months=P6,529,032.00Total Amount to be paid byGIRAFFE(or theNET CONTRACT AMOUNT)P10,736,647.56===========By the terms, too, of theLease Agreement,GIRAFFEundertook to remit the amount of P3,120,000.00 by way of "guaranty deposit," a sort of performance and compliance bond for the two equipment. Furthermore, the same agreement embodied a standard acceleration clause, operative in the eventGIRAFFEfails to pay any rental and/or other accounts due.A year into the life of the Lease Agreement,GIRAFFEdefaulted in its monthly rental-payment obligations. And following a three-month default,PCILEASING, through one Atty. Florecita R. Gonzales, addressed a formal pay-or-surrender-equipment type of demand letter4dated February 24, 1998 toGIRAFFE.The demand went unheeded.Hence, on May 4, 1998, in the RTC of Quezon City,PCILEASINGinstituted the instant case againstGIRAFFE. In its complaint,5docketed in said court asCivil Case No. 98-34266and raffled to Branch 2276thereof,PCILEASINGprayed for the issuance of a writ of replevin for the recovery of the leased property, in addition to the following relief:2.After trial, judgment be rendered in favor of plaintiff [PCILEASING] and against the defendant [GIRAFFE], as follows:a.Declaring the plaintiff entitled to the possession of the subject properties;b.Ordering the defendant to pay the balance of rental/obligation in the total amount of P8,248,657.47 inclusive of interest and charges thereon;c.Ordering defendant to pay plaintiff the expenses of litigation and cost of suit. . . . (Words in bracket added.)EIDTAaUponPCILEASING'sposting of a replevin bond, the trial court issued a writ of replevin, paving the way forPCILEASINGto secure the seizure and delivery of the equipment covered by the basic lease agreement.Instead of an answer,GIRAFFE, as defendanta quo, filed aMotion to Dismiss, therein arguing that the seizure of the two (2) leased equipment strippedPCILEASINGof its cause of action. Expounding on the point,GIRAFFEargues that, pursuant to Article 1484 of the Civil Code on installment sales of personal property,PCILEASINGis barred from further pursuing any claim arising from the lease agreement and the companion contract documents, adding that the agreement between the parties is in reality a lease of movables with option to buy. The given situation,GIRAFFEcontinues, squarely brings into applicable play Articles 1484 and 1485 of the Civil Code, commonly referred to as theRecto Law. The cited articles respectively provide:ART. 1484.In a contract of sale of personal property the price of which is payable in installments, the vendor may exercise any of the following remedies:(1)Exact fulfillment of the obligation, should the vendee fail to pay;(2)Cancel the sale, should the vendee's failure to pay cover two or more installments;(3)Foreclose the chattel mortgage on the thing sold, if one has been constituted, should the vendee's failure to pay cover two or more installments. In this case, he shall haveno further action against the purchaser to recover any unpaid balance of the price. Any agreement to the contrary shall be void. (Emphasis added.)ART. 1485.The preceding article shall be applied to contracts purporting to be leases of personal property with option to buy, when the lessor has deprived the lessee of the possession or enjoyment of the thing.EaISDCIt is thusGIRAFFE'sposture that the aforequoted Article 1484 of the Civil Code applies to its contractual relation withPCILEASINGbecause the lease agreement in question, as supplemented by the schedules documents, is really alease with option to buyunder the companion article, Article 1485. Consequently, soGIRAFFEargues, upon the seizure of the leased equipment pursuant to the writ of replevin, which seizure is equivalent to foreclosure,PCILEASINGhas no further recourse against it. In brief,GIRAFFEasserts in its Motion to Dismiss that the civil complaint filed byPCILEASINGis proscribed by the application to the case of Articles 1484 and 1485,supra, of the Civil Code.In itsOppositionto the motion to dismiss,PCILEASINGmaintains that its contract withGIRAFFEis astraight lease without an option to buy. Prescinding therefrom,PCILEASINGrejects the applicability to the suit of Article 1484 in relation to Article 1485 of the Civil Code, claiming that, under the terms and conditions of the basic agreement, the relationship between the parties is one between an ordinary lessor and an ordinary lessee.In a decision7dated December 28, 1998, the trial court grantedGIRAFFE'smotion to dismiss mainly on the interplay of the following premises: 1) the lease agreement package, as memorialized in the contract documents, is akin to the contract contemplated in Article 1485 of the Civil Code, and 2)GIRAFFE'sloss of possession of the leased equipment consequent to the enforcement of the writ of replevin is "akin to foreclosure, . . . the condition precedent for application of Articles 1484 and 1485 [of the Civil Code]." Accordingly, the trial court dismissed Civil Case No. Q-98-34266, disposing as follows:WHEREFORE, premises considered, the defendant [GIRAFFE] having relinquished any claim to the personal properties subject of replevin which are now in the possession of the plaintiff [PCILEASING], plaintiff is DEEMED fully satisfied pursuant to the provisions of Articles 1484 and 1485 of the New Civil Code. By virtue of said provisions, plaintiff is DEEMED estopped from further action against the defendant, the plaintiff having recovered thru (replevin) the personal property sought to be payable/leased on installments, defendants being under protection of said RECTO LAW. In view thereof, this case is hereby DISMISSED.cIADaCWith its motion for reconsideration having been denied by the trial court in its resolution of February 15, 2000,8petitioner has directly come to this Courtviathis petition for review raising the sole legal issue of whether or not the underlying Lease Agreement, Lease Schedules and the Disclosure Statements that embody the financialleasingarrangement between the parties are covered by and subject to the consequences of Articles 1484 and 1485 of the New Civil Code.As in the court below, petitioner contends that the financialleasingarrangement it concluded with the respondent represents a straight lease covered by R.A. No. 5980, theFinancing Company Act, as last amended by R.A. No. 8556, otherwise known asFinancing Company Act of 1998, and is outside the application and coverage of theRecto Law. To the petitioner, R.A. No. 5980 defines and authorizes its existence and business.The recourse is without merit.R.A. No. 5980, in its original shape and as amended, partakes of a supervisory or regulatory legislation, merely providing a regulatory framework for the organization, registration, and regulation of the operations of financing companies. As couched, it does not specifically define the rights and obligations of parties to a financialleasingarrangement. In fact, it does not go beyond defining commercial or transactional financialleasingand other financialleasingconcepts. Thus, the relevancy of Article 18 of the Civil Code which reads:Article 18.In matters which are governed by . . . special laws, their deficiency shall be supplied by the provisions of this [Civil] Code.Petitioner foists the argument that theRecto Law, i.e., the Civil Code provisions on installment sales of movable property, does not apply to a financialleasingagreement because such agreement, by definition, does not confer on the lessee the option to buy the property subject of the financial lease. To the petitioner, the absence of an option-to-buy stipulation in a financialleasingagreement, as understood under R.A. No. 8556, prevents the application thereto of Articles 1484 and 1485 of the Civil Code.cDTHIEWe are not persuaded.The Court can allow that the underlying lease agreement has the earmarks or made to appear as afinancialleasing,9a term defined in Section 3 (d) of R.A. No. 8556 as a mode of extending credit through a non-cancelable lease contract under which the lessor purchases or acquires, at the instance of the lessee, machinery, equipment, . . . office machines, and other movable or immovable property in consideration of the periodic payment by the lessee of a fixed amount of money sufficient to amortize at least seventy (70%) of the purchase price or acquisition cost, including any incidental expenses and a margin of profit over an obligatory period of not less than two (2) years during which the lessee has the right to hold and use the leased property . . . but with no obligation or option on his part to purchase the leased property from the owner-lessor at the end of the lease contract.In its previous holdings, however, the Court, taking into account the following mix: the imperatives of equity, the contractual stipulations in question and the actuations of parties vis--vis their contract, treated disguised transactions technically tagged as financing lease, like here, as creating a different contractual relationship. Notable among the Court's decisions because of its parallelism with this case isBAFinanceCorporation v. Court of Appeals10which involved a motor vehicle. Thereat, the Court has treated a purported financial lease as actually a sale of a movable property on installments and prevented recovery beyond the buyer's arrearages. Wrote the Court inBAFinance:The transactioninvolved . . .isone ofa "financial lease"or"financialleasing," where a financing company would, in effect, initially purchase a mobile equipment and turn around to lease it to a client who gets, in addition, an option to purchase the property at the expiry of the lease period. . . . .xxx xxx xxxThe pertinent provisions of [RA] 5980, thus implemented, read:"'Financing companies,' . . . are primarily organized for the purpose of extending credit facilities to consumers . . . either by . . .leasingof motor vehicles, . . . and office machines and equipment, . . . and other movable property.""'Credit' shall mean any loan, . . . any contract to sell, or sale or contract of sale of property or service, . . . under which part or all of the price is payable subsequent to the making of such sale or contract; any rental-purchase contract; . . . .;"TSHIDaThe foregoing provisions indicate no less than a mere financing scheme extended by a financing company to a client in acquiring a motor vehicle and allowing the latter to obtain the immediate possession and use thereof pending full payment of the financial accommodation that is given.In the case at bench, . . . .[T]he term of the contract[over a motor vehicle] was for thirty six (36) months at a "monthly rental" . . . (P1,689.40), or for a total amount of P60,821.28. The contract also contained [a] clause [requiring the Lessee to give a guaranty deposit in the amount of P20,800.00] . . .After the private respondent had paid the sum of P41,670.59, excluding the guaranty deposit of P20,800.00, he stopped further payments. Putting the two sums together, the financing company had in its hands the amount of P62,