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digest of Zayas v. Luneta Motor Co. (G.R. No. L-30583)

digest of Zayas v. Luneta Motor Co. (G.R. No. L-30583)

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Published by Rafael Pangilinan

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Categories:Types, Business/Law
Published by: Rafael Pangilinan on Nov 08, 2011
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11/08/2011

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Zayas, Jr. v. Luneta Motor Company, et al.
G.R. No. L-30583 October 23, 1982
Gutierrez, Jr., J.
Facts:
Eutropio Zayas, Jr, purchased on installment basis a motor vehicle from Mr. RoqueEscaño of the Escaño Enterprises in Cagayan de Oro City, dealer of respondent Luneta MotorCompany , under the following terms and conditions:Selling priceP7,500.00Financing chargeP1,426.82 Total Selling PriceP8,926.82Payable on DeliveryP1,006.82Payable in 24 months at 12% interest per annumP7,920.00 The motor vehicle was delivered to the petitioner who paid the initial payment in theamount of P1,006.82, and executed a promissory note in the amount of P7,920.00, thebalance of the total selling price, in favor of respondent Luneta Motor Company. Thepromissory note stated the amounts and dates of payment of 26 installments covering theP7,920.00 debt. Simultaneously with the execution of the promissory note and to secure itspayment, the petitioner executed a chattel mortgage on the subject motor vehicle in favorof the respondent. After paying a total amount of P3,148.00, the petitioner was unable topay further monthly installments prompting the respondent Luneta Motor Company to extra- judicially foreclose the chattel mortgage. The motor vehicle was sold at public auction withthe respondent Luneta Motor Company as the highest bidder in the amount of P5,000.00.Since the payments made by petitioner Zayas, Jr. plus the P5,000.00 realized from theforeclosure of the chattel mortgage could not cover the total amount (P7,920.00) of thepromissory note executed by the petitioner in favor of the respondent Luneta MotorCompany, the latter filed an action for the recovery of the balance of P1,551.74 plusinterests.
Issue:
whether or not a deficiency amount after the motor vehicle, subject of the chattelmortgage, has been sold at public auction could still be recovered by respondent company
Held:
No. The main defense of respondent Luneta Motor Company is that EscañoEnterprises, Cagayan de Oro City from which petitioner Zayas, Jr. purchased the subjectmotor vehicle was a distinct and different entity; that the role of Luneta Motor Company inthe said transaction was only to finance the purchase price of the motor vehicle; and that inorder to protect its interest as regards the promissory note executed in its favor, a chattelmortgage covering the same motor vehicle was also executed by petitioner Zayas, Jr. Inshort, respondent Luneta Motor Company maintains that the contract between the companyand the petitioner was only an ordinary loan removed from the coverage of Article 1484 of the New Civil Code. This is untenable. The Escaño Enterprises of Cagayan de Oro City was an agent of LunetaMotor Company. Avery significant evidence which proves the nature of the relationshipbetween Luneta Motor Company and Escaño Enterprises is Annex “A” of the petitioner’sOpposition to Urgent Motion for Reconsideration. Annex “A” is a Certification from thecashier of Escaño Enterprises on the monthly installments paid by Zayas, Jr. In thecertification, the promissory note in favor of Luneta Motor Company was specificallymentioned. There was Escaño Enterprises, a dealer of respondent Luneta Motor Company,

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