Case Summary (G.R. No. 150673)
Transaction Details
In 1995, Superlines, lacking sufficient funds, entered into negotiations with ICC for a loan to purchase five new buses, valued at P 10,873,582.00. ICC agreed to finance the purchase under a three-year term at a fixed interest rate of 22% per annum, with the buses to be used as collateral. A deed of chattel mortgage was executed to secure the loan, requiring Superlines to register the buses under its name prior to the finalization of the transaction.
Loan Repayment and Default
After acknowledging receipt of the buses and registering them with the Land Transportation Office, Superlines executed the necessary documents, including a promissory note. The first installment was due on December 23, 1995. However, after making only seven payments, Superlines defaulted, leading ICC to take legal action on April 21, 1997, seeking recovery of funds owed along with a writ of replevin to recover the buses.
Court Proceedings and Findings
The trial court initially ruled in favor of Superlines, deciding that the transaction constituted a consumer loan and thus the provisions related to deficiency judgments were not applicable after the foreclosure. However, upon ICC’s appeal, the Court of Appeals reversed this decision, establishing that the transaction was an amortized commercial loan, affirming ICC’s entitlement to a deficiency claim after the foreclosure sale of the buses.
Legal Arguments
The petitioners contended that the Court of Appeals erred in its characterization of the loan as commercial instead of consumer-based, arguing that this interpretation overlooked evidence indicating a vendor-vendee relationship between ICC and Superlines. The appellate court found, however, that the evidence presented did not substantiate petitioners’ claims regarding a special agreement or arrangement for the transaction’s classification.
Conclusion and Judicial Reasoning
In its ruling, the Supreme Court indicated that the findings of fact of the Court of Appeals were substantiated by the evidence presented in the lower court. It was established that the transaction did not create a vendor-vendee relationship, confirming ICC
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Case Background
- Superlines Transportation Co., Inc. (Superlines) sought to acquire five new buses priced at P 10,873,582.00 from Diamond Motors Corporation in 1995.
- Lacking financial resources, Superlines authorized its President, Manolet Lavides, to negotiate a loan with a financing corporation.
- Superlines entered into negotiations with ICC Leasing & Financing Corporation (ICC), represented by Assistant Vice-President Aida F. Albano, who proposed a loan with a three-year term and a fixed interest rate of 22% per annum, using the buses as collateral.
Transaction Details
- On October 19, 1995, Superlines received the buses from Diamond Motors Corporation.
- By November 22, 1995, the buses were registered under Superlines' name.
- Superlines executed a chattel mortgage and a promissory note in favor of ICC, committing to pay the loan amount in monthly installments.
- The chattel mortgage included terms allowing ICC to take possession of the buses without judicial order in case of default.
Default and Legal Proceedings
- After making only seven monthly payments, Superlines defaulted on the loan.
- On April 2, 1997, ICC demanded full payment of the outstanding obligation, which amounted to P 12,606,020.55.
- Following Superlines' failure to respond, ICC filed a complaint for collection and replevin on April 21, 1997, against Superlines and Lavides.
Court Actions
- The trial court issued a writ of seizure, leading to the sheriff taking possession of the buses on May