G.R. No. 115902 September 27, 1995
FILINVEST CREDIT CORPORATION, petitioner, vs. HON. COURT OF APPEALS and SPOUSES EDILBERTO and MARCIANA TADIAMAN, respondents.

FACTS

The respondent spouses Tadiaman purchased a truck on installment from Jordan Enterprises, Inc., executing a promissory note and a chattel mortgage. The credit instruments were subsequently assigned to petitioner Filinvest Credit Corporation. Upon the spouses’ default, Filinvest filed an action for replevin. The writ was implemented by persons representing themselves as special sheriffs but who were actually Filinvest employees, who seized the truck in Isabela and brought it to Metro Manila.
The spouses filed a counterbond, and the court ordered the truck’s return. Filinvest employed delaying tactics, and when the spouses finally located the vehicle at Filinvest’s garage in Las Piñas with the aid of a deputy sheriff, they found it “cannibalized”—stripped of parts and with others replaced with worn-out components. The spouses then filed a counterclaim for damages.

ISSUE

Whether the petitioner is liable for damages arising from its improper and abusive conduct in implementing the writ of replevin and in obstructing the court-ordered return of the vehicle.

RULING

Yes, the petitioner is liable for damages. The Supreme Court affirmed the findings of the lower courts but modified the awarded amounts. The legal logic proceeds from the principle that a mortgagee, like Filinvest, has the right to foreclose upon default. However, the enforcement of this right must be done in accordance with law and without abuse.
The Court found that Filinvest acted in a wanton, reckless, and oppressive manner. First, it implemented the writ through its own employees misrepresenting themselves as court officers, a deceptive and irregular act. Second, after the court ordered the vehicle’s return due to the filing of a counterbond, Filinvest unjustly refused immediate compliance, engaged in clear delaying tactics, and concealed the truck’s location. Most egregiously, the vehicle was returned in a “cannibalized” state, demonstrating bad faith and a willful disregard of the spouses’ rights as owners who had posted a counterbond to retain possession.
This abusive conduct, separate from the valid filing of the collection suit, constituted a quasi-delict under Article 2176 of the Civil Code. The act of seizing and impairing the property through deceit and obstruction of a court order was an independent, wrongful act that caused damage, establishing civil liability. Consequently, the Court upheld the award of actual damages for the loss in value (though reduced to the proven amount of P33,222.00), moral damages of P50,000.00 for the mental anguish suffered, and exemplary damages of P20,000.00 to set a corrective example. The award of attorney’s fees was deleted, as the act of filing the main collection case was a valid exercise of a right.