DY, JR.

VS CA-198 SCRA 836

(GR NO. 97160, JUNE 19, 1991)
FACTS:
Wilfredo Dy purchased a truck and a farm tractor through LIBRA which was also
mortgaged with the latter, as a security to the loan.
Petitioner, expresses his desire to purchase his brother’s tractor in a letter to LIBRA
which also includes his intention to shoulder its mortgaged. LIBRA approved the
request. At the time that Wilfredo Dy executed a deed of absolute sale in favor of
petitioner, the tractor and truck were in the possession of LIBRA for his failure to pay the
amortization.
When petitioner finally fulfilled its obligation to pay the tractor, LIBRA would only release
the same only if he would also pay for the truck. In order to fulfill LIBRA’s condition,
petitioner convinced his sister to pay for the remaining truck, to which she released a
check amounting to P22, 000. LIBRA however, insisted that the check must be first
cleared before it delivers the truck and tractor.
Meanwhile, another case penned “Gelac Trading Inc vs. Wilfredo Dy” was pending in
Cebu as a case to recover for a sum of money (P12, 269.80). By a writ of execution the
court in Cebu ordered to seize and levy the tractor which was in the premise of LIBRA, it
was sold in a public auction to which it was purchased by GELAC. The latter then sold
the tractor to Antonio Gonzales.
RTC rendered in favor of petitioner. CA dismissed the case, alleging that it still belongs
to Wilfredo Dy.
ISSUE:
Whether or not there was a consummated sale between Petitioner and LIBRA?
HELD:
NO. The payment of the check was actually intended to extinguish the mortgage
obligation so that the tractor could be released to the petitioner. It was never intended
nor could it be considered as payment of the purchase price because the relationship
between Libra and the petitioner is not one of sale but still a mortgage. The clearing or
encashment of the check which produced the effect of payment determined the full
payment of the money obligation and the release of the chattel mortgage. It was not
determinative of the consummation of the sale. The transaction between the brothers is
distinct and apart from the transaction between Libra and the petitioner. The contention,
therefore, that the consummation of the sale depended upon the encashment of the
check is untenable.