Rigor Case Digest - 2

Rigor Case Digest Held: CA: In this wise, both the Promissory Note and the Chattel
Facts: Petitioners obtained a loan from private respondent Mortgage should be treated as a singular contract with one
Consolidated Orix Leasing and Finance Corporation in the amount of complementing the other. Appropriately, Article 1374
P1,630,320.00. Petitioners executed a promissory note on July 31, provides:chanrob1es virtual 1aw library
1996 promising to pay the loan in 24 equal monthly installments. To
secure payment of the loan, petitioners executed in favor of private ‘Art. 1374. The various stipulations of a contract shall be interpreted
respondent a deed of chattel mortgage over two dump together, attributing to the doubtful ones that sense which may result
trucks.chanrob1es virtua1 1aw 1ibrary from all of them taken jointly.’
Petitioners failed to pay several installments despite demand from And in giving meaning to the contract, an interpretation of all its
private respondent, so private respondent sought to foreclose the provisions must be adopted as will give effect to all. The stipulations
chattel mortgage by filing a complaint for Replevin with Damages of the contract shall be interpreted together attributing to the
against petitioners before the Regional Trial Court of Dagupan City. doubtful ones that sense which may result from all of them taken
Petitioners moved to dismiss the complaint on the ground of jointly [Layug v. Intermediate Appellate Court, 167 SCRA 627 (1988)].
improper venue based on a provision in the promissory note which Tolentino, in his Civil Code of the Philippines, Vol. 4, 1995 Reprint, pp.
states that,." . . all legal actions arising out of this note or in 563-564 said:chanrob1es virtual 1aw library
connection with the chattels subject hereof shall only be brought in
or submitted to the proper court in Makati City, Philippines.” ‘. . . The whole contract must be interpreted or read together in order
to arrive at its true meaning. Certain stipulations cannot be
Private respondent opposed the motion to dismiss and argued that segregated and then made to control; neither do particular words or
venue was properly laid in Dagupan City where it has a branch office phrases necessarily determine the character of a contract. The legal
based on a provision in the deed of chattel mortgage which states effect of the contract is not to be determined alone by any particular
that,." . . in case of litigation arising out of the transaction that gave provision disconnected from all others, but in the ruling intention of
rise to this contract, complete jurisdiction is given the proper court of the parties as gathered from all the language they have used; and
the city of Makati or any proper court within the province of Rizal, or from their contemporaneous, and subsequent acts.chanrob1es
any court in the city, or province where the holder/mortgagee has a virtua1 1aw 1ibrary
branch office, waiving for this purpose any proper venue."
Provisions of a contract are to be given a reasonable and practical
The Dagupan trial court denied petitioners’ motion to dismiss and the interpretation so as to be efficacious. Titles given to sections of a
Dagupan trial court denied their motion to reconsider. contract may be resorted to in interpreting its scope. An
interpretation that gives effect to the contract as a whole should be
Not satisfied with the orders, petitioners filed a petition adopted.’
for certiorari before the Court of Appeals imputing grave abuse of
discretion by the Dagupan trial court in denying the motion to dismiss. By and large, it was therefore not an error or grave abuse of discretion
On October 19, 1998, the Court of Appeals rendered the decision when the controversial Motion to Dismiss was denied by the
denying due course and dismissing the petition. On November 27, respondent court. Indeed, venue is properly laid in the case at bar
1998, the Court of Appeals issued a resolution denying the motion for under the provisions of the Chattel Mortgage in issue."
reconsideration.chanrob1es virtua1 1aw 1ibrary
SC: There is no dispute that the words "shall only" preceding the
Hence, the instant petition. designation of venue in the promissory note, standing alone, is
mandatory and restrictive. However, the deed of chattel mortgage
Petitioners argue that the promissory note should prevail over the executed to secure the loan obligation provides alternative venues.
deed of chattel mortgage because this is the principal contract being Should we disregard the venue provision in the deed of chattel
sued upon while the deed of chattel mortgage "merely accompanies" mortgage as mere surplusage as contended by petitioners?
the promissory note. According to petitioners, the words "shall only"
in the promissory note makes exclusive and restricts venue to the The answer is in the negative.
proper court in Makati City. Petitioners contend that the venue
provision in the promissory note does not contain qualifying words The chattel mortgage constituted over the two dump trucks is an
that the parties intended the venue provision in the deed of chattel accessory contract to the loan obligation as embodied in the
mortgage to be a modification of the venue in the promissory note. promissory note. 11 The chattel mortgage cannot exist as an
Petitioners maintain that the Court of Appeals erroneously applied independent contract since its consideration is the same as that of the
Article 1374 of the Civil Code in construing the promissory note and principal contract. 12 A principal obligation is an indispensable
the deed of chattel mortgage. According to petitioners, this article condition for the existence of an accessory contract. Indeed,
applies only to conflicting provisions in one and the same contract and contracts may be classified according to the degree of dependence.
not to those found in two distinct and entirely separate contracts such 13 Loans, sales or leases are classified as principal contracts while
as in the instant case. Petitioners further assert that any ambiguity pledges, mortgages and suretyships are classified as accessory
should be decided against private respondent under the contract of contracts because their existence is dependent upon the principal
adhesion doctrine. obligations they guarantee or secure.
The promissory note and the deed of chattel mortgage must be

Issue: WON VENUE WAS PROPERLY LAID UNDER THE PROVISIONS OF construed together.
THE CHATTEL MORTGAGE CONTRACT IN THE LIGHT OF ARTICLE 1374
OF THE CIVIL CODE? YES. Petition denied.

Rigor Case Digest - 2

Uploaded by

Copyright:

Available Formats

Rigor Case Digest - 2

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Rigor Case Digest - 2

Uploaded by

Copyright:

Available Formats

Rigor Case Digest Held: CA: In this wise, both the Promissory Note and the Chattel

The promissory note and the deed of chattel mortgage must be

You might also like