G.R. No. 111426 - Dizon-Pamintuan vs. People

Malayan Insurance Company, Inc. (Malayan) employed Diana P. Alibudbud as Senior Vice President for the Sales Department starting July 5, 2004.
Under Malayan’s Car Financing Plan, Alibudbud was issued a 2004 Honda Civic sedan (plate no. XPR 822) subject to conditions, including a minimum three-year service requirement and repayment obligations upon early separation (resignation, retirement, or termination).
To secure her indebtedness, Alibudbud executed a Promissory Note and a Deed of Chattel Mortgage that detailed:

A loan of P360,000.00 payable in 60 monthly installments at a fixed rate.
A clause requiring repayment of Malayan’s 50% equity in the vehicle (or P360,000.00) if she left the company within three years.
Immediate acceleration of the unpaid balance upon separation and strict deadlines for payment.
Authorization for Malayan to appropriate any funds due to Alibudbud from the company to satisfy her obligations.
Compound interest and a penalty rate of 16% per annum on unpaid amounts, with additional costs including attorney’s fees should she default.

Alibudbud was dismissed on July 18, 2005 due to redundancy, prompting Malayan to demand the return of the vehicle.
Alibudbud resisted surrendering the car, which led Malayan to file a Complaint for replevin and/or sum of money on September 21, 2005 before the Regional Trial Court (RTC) of Manila.
The replevin action sought either the delivery of the car or payment amounting to the principal debt, late charges, and attorney’s fees, subject to the condition of the vehicle’s maintainable condition.

On October 12, 2005, Alibudbud filed a complaint for illegal dismissal before the Labor Arbiter (LA), seeking her reinstatement as well as relief on damages and attorney’s fees.
In her Answer with Compulsory Counterclaim, she argued for a depreciation deduction from the car’s book value and concomitantly counterclaimed for compensatory damages and attorney’s fees.
She also sought the suspension of the replevin proceedings on the ground that the pending labor dispute raised a prejudicial question regarding her rights and obligations.

The RTC conducted trial on the merits and denied several of Alibudbud’s motions:

A motion to dismiss the replevin action on the ground of an improper surety bond was denied.
Reiterations to suspend proceedings pending resolution of the labor case were denied, as the RTC found the issues in the civil and labor cases to be separate.

The RTC, on November 28, 2008, issued a Decision granting the complaint for replevin by converting it into a money claim and reiterating that Alibudbud remained under obligation to pay the vehicle’s acquisition cost, given the “encumbered” state of title and her contractual duties.

Malayan’s replevin case was elevated to the Court of Appeals (CA), which, on May 15, 2013, set aside the RTC decision.
The CA ruled that the RTC lacked jurisdiction to hear the replevin action because of the inherent employer-employee relation between the parties—a relationship fundamental to her availing of the Car Financing Plan.
The CA’s decision rested on Section 1, Rule 9 of the 1997 Rules of Court, asserting that jurisdictional issues can be raised at any stage of the proceedings.

Malayan filed a Petition for Review under Rule 45 of the 1997 Rules of Court, prompting the Supreme Court to reexamine the case on April 20, 2016.
The Supreme Court clarified that the replevin action fundamentally arises from a debtor-creditor relationship established by the Promissory Note and Deed of Chattel Mortgage, not from the employment relationship.
Emphasizing the separability of issues, the Supreme Court determined that the pending labor dispute for illegal dismissal is immaterial to the replevin case.
The Court reversed the CA decision, reinstated the RTC Decision, and upheld the enforcement of the contractual obligations binding Alibudbud.

Whether the RTC properly exercised jurisdiction in hearing the replevin action, despite the underlying employer-employee context.
Whether the application of Section 1, Rule 9 of the 1997 Rules of Court appropriately justified dismissing the replevin claim on the ground of lack of jurisdiction.

Whether the replevin claim should be recognized as a debtor-creditor dispute arising from the Promissory Note and Deed of Chattel Mortgage.
Whether, and to what extent, the replevin action is distinct and separable from the issues raised in the illegal dismissal (labor) case.

Whether the resolution of the labor case for illegal dismissal should influence or suspension of the replevin proceedings.
Whether the alleged prejudicial question from the labor dispute warrants deferment of the civil proceedings.

Whether Alibudbud’s acceptance of the Car Financing Plan confirms her unequivocal obligation under the executed Promissory Note and Deed of Chattel Mortgage.
Whether her subsequent offer to settle the car’s obligation was inconsistent with the contractual terms and enforceable provisions therein.