Agustin vs. Court of Appeals

A mortgagee may recover repossession expenses from the mortgagor notwithstanding Article 1484(3) of the Civil Code where the mortgagor plainly refuses to deliver the chattel subject of the mortgage upon failure to pay installments, or conceals the chattel to place it beyond the mortgagee's reach. Additionally, when an appellate court passes on a question and remands the cause to the lower court for further proceedings, the question there settled becomes the law of the case upon subsequent appeal and may not be relitigated.

Petitioner Leovillo C. Agustin executed a promissory note dated October 28, 1970, in favor of ERM Commercial for P43,480.80, payable in monthly installments and secured by a chattel mortgage over an Isuzu diesel truck. Both the note and the mortgage were subsequently assigned to private respondent Filinvest Finance Corporation. The dispute concerns the application of Article 1484 of the Civil Code, which governs the remedies available to a vendor in a contract of sale of personal property with installment payments.

Petitioner Leovillo C. Agustin executed a promissory note dated October 28, 1970, in favor of ERM Commercial for the amount of P43,480.80, payable in monthly installments and secured by a chattel mortgage over an Isuzu diesel truck. Both the promissory note and the chattel mortgage were subsequently assigned to private respondent Filinvest Finance Corporation. When petitioner defaulted in paying the installments, private respondent demanded payment of the entire balance or, in lieu thereof, possession of the mortgaged vehicle. Neither payment nor surrender was made.

Private respondent filed a complaint with the Regional Trial Court of Manila, Branch 26, praying for the issuance of a writ of replevin or, in the alternative, for payment of P32,723.97 plus interest at 14% per annum from due date until fully paid. Trial ensued, and a writ of replevin was issued. By virtue thereof, private respondent acquired possession of the vehicle. Upon repossession, private respondent discovered that the vehicle was no longer in running condition and that several parts were missing, which private respondent replaced. The vehicle was then foreclosed and sold at public auction.

Private respondent subsequently filed a "supplemental complaint" claiming additional reimbursement worth P8,852.76 as the value of replacement parts and for expenses incurred in transporting the mortgaged vehicle from Cagayan to Manila. Petitioner moved to dismiss the supplemental complaint, arguing that RTC Branch 26 had already lost jurisdiction over the case because of the earlier extra-judicial foreclosure of the mortgage. The lower court granted the motion and dismissed the case.

Private respondent appealed to the Court of Appeals, docketed as CA-G.R. No. 56718-R, which set aside the order of dismissal and ruled that repossession expenses incurred by private respondent should be reimbursed. This decision became final and executory, and the case was remanded to RTC Branch 40 for reception of evidence to determine the amount due from petitioner. After trial, RTC Branch 40 found petitioner liable for repossession expenses, attorney's fees, liquidated damages, bonding fees, and other expenses in the aggregate sum of P18,547.38. On reconsideration, RTC Branch 40 modified its decision by lowering the monetary award to P8,852.76, the amount originally prayed for in the supplemental complaint.

Both parties appealed to the Court of Appeals, which affirmed the modified order of RTC Branch 40 in CA-G.R. No. 24684. Petitioner's motion for reconsideration was denied, prompting the petition for review on certiorari before the Supreme Court.

• Violation of Article 1484: Petitioner contended that the award of repossession expenses to private respondent as mortgagee is "contrary to the letter, intent and spirit of Article 1484 of the Civil Code."
• Foreclosure as Full Satisfaction: Petitioner asserted that private respondent's repossession expenses have been amply covered by the foreclosure of the chattel mortgage, hence he could no longer be held liable.
• Excess Award: Petitioner impugned the trial court's order for him to pay P8,852.76, an amount over and above the value received from the foreclosure sale.

N/A — The decision does not recount the respondent's arguments in detail beyond the procedural history of the case.

• Law of the Case: Whether the propriety of awarding repossession expenses had already been settled with finality in the prior appeal (CA-G.R. No. 56718-R), thereby becoming the "law of the case" that could no longer be relitigated.
• Recoverability of Repossession Expenses: Whether the award of repossession expenses to private respondent is proper notwithstanding Article 1484(3) of the Civil Code.
• Attorney's Fees: Whether the denial of the award for attorney's fees was proper.

• Law of the Case: Yes. The appellate court had already settled the propriety of awarding repossession expenses in favor of private respondent in CA-G.R. No. 56718-R, which ruling had long acquired finality. The remand to RTC Branch 40 was solely for determining the correct amount of expenses, not for relitigating the accuracy of the award.
• Recoverability of Repossession Expenses: Yes. The award for repossession expenses is proper under the exception recognized in Filipinas Investment & Finance Corporation vs. Ridad, where the mortgagor plainly refuses to deliver the chattel subject of the mortgage upon failure to pay installments.
• Attorney's Fees: Yes, the denial was proper. The trial court and respondent court found no evidence to support the claim for attorney's fees, and this factual finding is binding on the Supreme Court.

• Law of the Case: The Court applied the principle that "when an appellate court passes on a question and remands the cause to the lower court for further proceedings, the question there settled becomes the law of the case upon subsequent appeal." Having exactly the same parties and issues, the decision in the former appeal (CA-G.R. No. 56718-R) became the established and controlling rule. The Court emphasized that judgments of courts should attain finality at some point in time, otherwise there will be no end to litigation. Petitioner was not allowed to resuscitate and revive formerly settled issues in a subsequent appeal or in the petition before the Supreme Court.

• Recoverability of Repossession Expenses: Even if the "law of the case" doctrine were brushed aside, the Court found the award for repossession expenses still proper. Citing Filipinas Investment & Finance Corporation vs. Ridad, the Court recognized an exception to the rule under Article 1484(3). The Court quoted: "Where the mortgagor plainly refuses to deliver the chattel subject of the mortgage upon his failure to pay two or more installments, or if he conceals the chattel to place it beyond the reach of the mortgagee, what then is the mortgagee expected to do? It logically follows as a matter of common sense, that the necessary expenses incurred in the prosecution by the mortgagee of the action for replevin so that he can regain possession of the chattel, should be borne by the mortgagor. Recoverable expenses would, in our view, include expenses properly incurred in effecting seizure of the chattel and reasonable attorney's fees in prosecuting the action for replevin."

• Attorney's Fees: The Court found the denial of the award for attorney's fees in order. The trial court and respondent court found no evidence to support the claim for attorney's fees, and this factual finding is binding on the Supreme Court. No compelling reason was presented to set aside this ruling.

• Law of the Case — Defined as "a term applied to an established rule that when an appellate court passes on a question and remands the cause to the lower court for further proceedings, the question there settled becomes the law of the case upon subsequent appeal." The Court applied this doctrine to bar petitioner from relitigating the propriety of the repossession expenses award, which had been settled with finality in the prior appeal.

• Exception to Article 1484(3) of the Civil Code — Where the mortgagor plainly refuses to deliver the chattel subject of the mortgage upon failure to pay two or more installments, or conceals the chattel to place it beyond the reach of the mortgagee, the necessary expenses incurred in the prosecution by the mortgagee of the action for replevin should be borne by the mortgagor. Recoverable expenses include expenses properly incurred in effecting seizure of the chattel and reasonable attorney's fees in prosecuting the action for replevin.

• "This principle is defined as 'a term applied to an established rule that when an appellate court passes on a question and remands the cause to the lower court for further proceedings, the question there settled becomes the law of the case upon subsequent appeal.'" — This passage defines the law of the case doctrine and explains why petitioner could not relitigate the propriety of the repossession expenses award.

• "Where the mortgagor plainly refuses to deliver the chattel subject of the mortgage upon his failure to pay two or more installments, or if he conceals the chattel to place it beyond the reach of the mortgagee, what then is the mortgagee expected to do? It logically follows as a matter of common sense, that the necessary expenses incurred in the prosecution by the mortgagee of the action for replevin so that he can regain possession of the chattel, should be borne by the mortgagor." — This passage articulates the exception to Article 1484(3) and forms the basis for allowing recovery of repossession expenses.

• "Judgment of courts should attain finality at some point in time, as in this case, otherwise, there will be no end to litigation." — This passage underscores the policy rationale behind the law of the case doctrine and the principle of finality of judgments.

• Filipinas Investment & Finance Corporation vs. Ridad, 30 SCRA 564 — Controlling precedent recognizing the exception to Article 1484(3) of the Civil Code, allowing the mortgagee to recover repossession expenses where the mortgagor refuses to deliver the chattel or conceals it.
• Trinidad vs. Roman Catholic Archbishop of Manila, 63 Phil. 881 — Cited for the definition of the law of the case doctrine.
• Rodriguez vs. COMELEC and Marquez, G.R. No. 120099, July 24, 1996 — Cited in support of the law of the case doctrine.
• Margolles vs. Court of Appeals, 230 SCRA 97 — Cited for the principle that factual findings of the trial court, when affirmed by the appellate court, are binding on the Supreme Court.
• Go Ong vs. Court of Appeals, 154 SCRA 270 — Cited for the same principle regarding binding factual findings.

• Article 1484, Civil Code — Provides that in a contract of sale of personal property with installment payments, the vendor may: (1) exact fulfillment of the obligation; (2) cancel the sale should the vendee's failure to pay cover two or more installments; or (3) foreclose the chattel mortgage, in which case the vendor shall have no further action against the purchaser to recover any unpaid balance. The Court recognized an exception to paragraph (3) allowing recovery of repossession expenses where the mortgagor refuses to deliver the chattel.

• Chief Justice Narvasa (Chairman)
• Justice Davide, Jr.
• Justice Melo
• Justice Panganiban

N/A — No dissenting opinions were noted in the decision.