G.R. No. 117187, July 20, 2001
Union Motor Corporation, petitioner-appellant, vs. The Court of Appeals, Jardine-Manila Finance, Inc., Spouses Albiato Bernal and Milagros Bernal, respondents-appellees.

FACTS

On September 14, 1979, respondent spouses Bernal purchased a Cimarron Jeepney from petitioner Union Motor Corporation (UMC) for P37,758.60, payable in installments. They executed a promissory note and chattel mortgage in favor of UMC. UMC then assigned the promissory note and chattel mortgage to Jardine-Manila Finance, Inc. (Jardine). Through UMC’s agent, Manuel Sosmeña, the spouses were required to sign various documents (notice of assignment, deed of assignment, sales invoice, registration certificate, affidavit, disclosure statement) as a condition for the approval of their application and delivery of the vehicle. The spouses made a downpayment of P10,037.00, which UMC accepted, approving the sale. Despite signing a receipt as required by Sosmeña for delivery, the spouses never physically possessed the vehicle. They paid installments totaling P7,507.00 to Jardine based on a promise of delivery, but discontinued payments due to non-delivery, alleging Sosmeña took the vehicle in his personal capacity. Jardine filed a collection suit (Civil Case No. 42849) against the spouses, later amended to include UMC as an alternative defendant. The spouses filed an amended answer with a cross-claim against UMC. During trial, UMC failed to present evidence as its witness’s testimony was stricken off the record for repeated failure to appear for cross-examination. The trial court ruled in favor of the spouses, ordering Jardine to return the P7,507.15 installments, UMC to return the P10,037.00 downpayment, and UMC to pay Jardine P23,268.29 plus attorney’s fees. UMC was also ordered to pay the spouses moral damages and attorney’s fees. The Court of Appeals affirmed the trial court’s decision. UMC appealed to the Supreme Court.

ISSUE

1. Whether there was a delivery, physical or constructive, of the subject motor vehicle to the respondent spouses.
2. Whether the petitioner was deprived of due process.
3. Whether the award of moral damages was proper.

RULING

1. No, there was no delivery, physical or constructive, of the subject motor vehicle. The Supreme Court ruled that the signed documents (sales invoice, delivery receipt, registration certificate) did not constitute proof of delivery or transfer of ownership. These were merely requirements for processing the application and approval of the sale, not an acknowledgment of physical acquisition. The spouses never came into possession of the vehicle. The chattel mortgage did not prove transfer of ownership, as the mortgagor need not be the owner. Since there was no delivery, ownership and risk of loss did not pass to the spouses. The contract of sale was not perfected, and UMC, as seller, had the obligation to deliver the determinate thing sold. UMC’s failure to deliver entitled the spouses to a refund of their downpayment.
2. No, the petitioner was not deprived of due process. UMC had the opportunity to present its evidence but failed to do so when its witness did not appear for cross-examination, leading the trial court to deem the presentation of evidence waived. UMC’s own negligence caused its inability to present evidence.
3. No, the award of moral damages was not proper. The Court found no proof that UMC acted in a wanton, fraudulent, or reckless manner. The acts of its agent, Sosmeña, in taking the vehicle were done in his personal capacity, and there was no evidence of conspiracy between UMC and Jardine to defraud the spouses. However, the award of attorney’s fees to the spouses was affirmed, as they were compelled to litigate and incur expenses to protect their interest due to the collection suit.
The Supreme Court AFFIRMED the Court of Appeals’ decision with MODIFICATION, deleting the award of moral damages.