GR L 5535; (May, 1953) (Digest)
G.R. No. L-5535; May 29, 1953
U. S. COMMERCIAL CO., plaintiff-appellant, vs. FORTUNATO F. HALILI, defendant-appellee.
FACTS
The plaintiff, as representative of the U.S. Government, entered into two contracts with the defendant on December 22, 1945, and February 18, 1946, leasing a total of eight used army vehicles for a term of one year each. The contracts fixed the value of the vehicles, required a substantial initial payment, and divided the remaining balance into twelve equal monthly rentals with 6% interest on the unpaid balance. Title was to remain with the lessor until all rentals equaled the total fixed value, at which point title would transfer to the lessee. The contracts granted the lessor the right to terminate and repossess the vehicles upon the lessee’s default, stipulated that payments made would be forfeited upon such termination, and included a waiver by the lessee of “the benefit of section 145-A, Philippine Civil Code.” After paying several installments, the defendant defaulted. One year after the default, the plaintiff requested the return of the vehicles, and the defendant voluntarily complied. The plaintiff then filed this action to recover the unpaid rentals.
ISSUE
1. Whether the defendant’s voluntary surrender of the vehicles took the contracts out of the operation of Article 1454-A of the old Civil Code.
2. Whether the defendant’s waiver of the benefit of Article 1454-A was valid.
RULING
1. No. The voluntary surrender was made in obedience to the plaintiff’s demand, constituting a choice by the lessor to deprive the lessee of the enjoyment of the property. Article 1454-A does not require that such deprivation be effected through court action.
2. No. Article 1454-A expressly provides that “any agreement to the contrary shall be null and void.” Therefore, the waiver clause in the contracts, being contrary to the law’s letter and policy, is invalid.
The Court affirmed the trial court’s judgment dismissing the complaint. The contracts were leases of personal property with an option to purchase, governed by Article 1454-A of the old Civil Code. By choosing to repossess the vehicles, the plaintiff lost the right to sue for the recovery of any unpaid balance.