HENRY T. SOHO, PLAINTIFF-APPELLEE, VS. ROMEO TOQUERO, DEFENDANT, FILINVEST CREDIT CORPORATION, DEFENDANT-APPELLANT.

Questioned in this Appeal^[1] filed under Rule 41 of the Rules of Court is the Decision^[2]
dated October 24, 2008 of the Regional Trial Court of San Fernando
City, La Union, Branch 28 (“lower court” for brevity) in Civil Case No.
3307 for “Damages.”^[3]

Plaintiff-appellee Henry T. Soho (“plaintiff-appellee” for brevity) filed a Complaint^[4]
for “Damages” against defendant-appellant Filinvest Credit Corporation
(“defendant-appellant FCC” for brevity) and defendant Romeo Toquero
(“defendant Toquero” for brevity).

The other salient facts are those as stated in the assailed Decision^[5] of the lower court:

“In his complaint, plaintiff (plaintiff appellee here)
alleged that he is the absolute owner of a motor vehicle known as Fuso
cargo truck bearing plate number NEE 213 (subject vehicle here) having
acquired the same from defendant Romeo Toquero (defendant Toquero here)
by means of a deed of sale with assumption of mortgage executed on
August 31, 1981. The value of said vehicle is P150,000.00. Defendant
Toquero purchased the vehicle through the credit facilities of
defendant Filinvest Credit Corporation (Filinvest) (defendant-appellant FCC here)
in whose favor the corresponding promissory note and other credit
papers were assigned and indorsed. The aforementioned deed of sale with
assumption of mortgage was duly sanctioned and approved by defendant
Filinvest and the plaintiff has been regularly paying the corresponding
monthly installment amortizations directly to said defendant
corporation. On January 6, 1982, while said cargo truck was in Metro
Manila and being unloaded of cement cargo, defendant Romeo Toquero in
company and with assistance of two armed civilians as well as in
connivance with defendant Filinvest, forcibly seized the cargo truck
from the plaintiff’s driver under the pretext that the cargo truck was
being repossessed by reason to (sic) an alleged foreclosure of the
covering chattel mortgage. The two armed civilians aforementioned
represented themselves as sheriff and employee of defendant Filinvest.
On the same day, defendant Toquero took the cargo truck to the premises
of defendant Filinvest in Makati, Metro Manila, with the alleged
employee of said defendant issuing a receipt but which was issued to and
with the conformity of defendant Toquero who misrepresented himself as
the customer and owner. As a consequence of the unjustified acts of said defendants, the plaintiff sustained damages.

Defendant Filinvest Credit Corporation, in its answer,
alleged that it had no knowledge of any deed of sale with assumption of
mortgage executed by defendant Toquero in favor of the plaintiff,
neither had it consented with any arrangement between the plaintiff and
defendant Toquero. If any such document exists, it is not binding and
has no legal effect to defendant Filinvest for lack of written consent
nor conformity. Defendant Filinvest did not connive with defendant
Toquero on the alleged forcible seizure of the cargo truck. In fact,
said cargo truck was voluntarily surrendered by defendant Toquero, the
registered owner, and a receipt was accordingly issued in good faith.

xxx

Defendant Toquero, in his answer, alleged that sometime in July
1981, the plaintiff intimated to said defendant his desire to purchase a
cargo truck to be used by plaintiff in his hauling business to be
financed by defendant Filinvest Credit Corporation. However, since
plaintiff’s credit standing was not acceptable by Filinvest, plaintiff
requested defendant Toquero to appear as buyer of the vehicle with the
condition that plaintiff shall pay the monthly amortization of the unit
to defendant Filinvest. Defendant Toquero accommodated the
request of the plaintiff and the said cargo truck was purchased and
financed by defendant Filinvest under the name of defendant Toquero. On August 31, 1981, upon request of plaintiff due to his desire to transfer the cargo truck to La Union for hauling purposes, defendant
Toquero signed a deed of sale with assumption of mortgage in favor of
the plaintiff transferring the ownership of said vehicle to the
plaintiff. Defendant Toquero signed the aforementioned document
and plaintiff and defendant Toquero agreed that plaintiff will secure
the approval by defendant Filinvest of the transfer aforestated and
further agreed that plaintiff will have the name of defendant Toquero
removed from the records of defendant Filinvest as mortgagor/owner of
the cargo truck. The plaintiff failed to make the necessary
follow-ups with defendant Filinvest nor made the necessary documents to
transfer ownership of said vehicle under his name and defendant Toquero
still appear as the registered owner of the vehicle mortgaged to
defendant Filinvest. On August 31, 1981, defendant Toquero received
letters from defendant Filinvest requesting immediate payment of overdue
accounts of the aforesaid cargo truck with the statement that a Court
action will be filed against defendant Toquero if no payments on the
overdue accounts will be made or the truck will not be surrendered by
defendant Toquero. Defendant Toquero immediately, upon receipt of said
letters, went to the office of defendant Filinvest to verify and he
discovered that the documents of said cargo truck were still under
defendant Toquero’s name and that the checks issued by plaintiff in
payment of [said] cargo truck to defendant Filinvest had bounced. On
January 6, 1982, while said cargo truck was within the premises of
defendant Toquero’s trucking company, an employee of defendant Filinvest
accompanied by a sheriff arrived and seized the vehicle. Defendant
Toquero signed a seizure papers (sic) because the cargo truck was under his name.”^[6] (Emphasis supplied)

On October 24, 2008, the lower court rendered the Decision^[7]
appealed from, which ordered defendant-appellant FCC and defendant
Toquero to return the subject vehicle and to pay Damages, all to
plaintiff-appellee. The dispositive portion of the Decision decreed:

“WHEREFORE, judgment is hereby rendered ordering the defendants, Filinvest Credit Corporation and Romeo Toquero:

1. to return to the plaintiff at his residence, Lingsat, San
Fernando, La Union, the motor vehicle, Fuso cargo truck bearing plate
number NEE 213, in the same condition as it was taken by them, or, in
the alternative, to indemnify the plaintiff, jointly and severally, the
value of said vehicle in the amount of P150,000.00;

2. to pay the plaintiff the amount of P10,000.00, as attorney’s fees; and

3. to pay the costs of this suit.

SO ORDERED.”^[8]

Because of this, defendant-appellant FCC filed the instant Appeal praying that:

“WHEREFORE, APPELLANT FILINVEST CREDIT CORPORATION most
respectfully prays to the Honorable Court to set aside and reverse the
appealed Decision of the Regional Trial Court and to render another
dismissing the plaintiff’s complaint and granting the prayers of the
defendant appellant in its counterclaim and granting other just and
equitable relief and remedies.”^[9]

The Appeal raised this sole assignment of error:

“The Regional Trial Court erred in ordering defendants
Filinvest Credit Corporation and Romeo Toquero to return to the
plaintiff at his residence, Lingsant, San Fernando, La Union, the motor
vehicle, Fuso Cargo Truck bearing plate number NEE 213, in the same
condition as itg (sic) was taken by them, or
in the alternative, to indemnify the plaintiff jointly and severally,
the value of said vehicle in the amount of P150,000.00, to pay the
plaintiff amount of P10,000.00, as attorney’s fees, and to pay the cost s
(sic) of this suit and in NOT dismissing the complaint.”^[10] (Emphasis was made in the original)

At the outset, the Appeal is dismissible because of
defendant-appellant FCC’s failure to include a Subject Index in its
Appellant’s Brief.^[11] Such Subject Index is required under Section 13 (a), Rule 44 of the Rules of Court, to wit:

“SEC. 13. Contents of appellant’s brief.– The appellant’s brief shall contain, the order herein indicated, the following:

(a) A subject index of the matter in the brief with a digest
of the arguments and page references, and a table of cases
alphabetically arranged, textbooks and statutes cited with references to
the pages where they are cited;” (Emphasis was made in the original)

The absence of a Subject Index is fatal to the instant Appeal,
considering that it is one of the grounds for the dismissal of an Appeal
pursuant to Section 1 (f), Rule 50 of the Rules of Court, to wit:

“SEC. 1. Grounds for dismissal of Appeal.– An appeal may be dismissed by the Court of Appeals, on its own motion or on that of the appellee, on the following grounds: (Emphasis was made in the original)

(f) Absence of specific assignment of errors in the appellant’s brief, or of page references to the record as required in section 13, paragraphs (a), (c), (d) and (f) of Rule 44;” (Emphasis Supplied)

That defendant-appellant FCC’s failure to include a Subject Index in its Appellant’s Brief^[12] warrants the dismissal of its Appeal was as similarly declared by the Supreme Court in Adelia
C. Mendoza and as Attorney-in-Fact of Alice Malleta vs. United Coconut
Planters Bank, Inc., G.R. No. 165575, February 2, 2011, as follows:

“In this case, the Appellants’ Brief of petitioners did
not have a subject index. The importance of a subject index should not
be underestimated. De Liano v. Court of Appeals declared that the
subject index functions like a table of contents, facilitating the
review of appeals by providing ready reference. It held that:

[t]he first requirement of an appellant’s brief is a subject index.
The index is intended to facilitate the review of appeals by providing
ready reference, functioning much like a table of contents. xxx The
subject index makes readily available at one’s fingertips the subject
of the contents of the brief so that the need to thumb through the brief
page after page to locate a party’s arguments, or a particular
citation, or whatever else needs to be found and considered, is
obviated.

xxx

Some may argue that adherence to these formal requirements
serves but a meaningless purpose, that these may be ignored with little
risk in the smug certainty that liberality in the application of
procedural rules can always be relied upon to remedy the infirmities.
This misses the point. We are not martinets; in appropriate instances,
we are prepared to listen to reason, and to give relief as the
circumstances may warrant. However, when the error relates to
something so elementary as to be inexcusable, our discretion becomes
nothing more than an exercise in frustration. It comes as an unpleasant
shock to us that the contents of an appellant’s brief should still be
raised as an issue now. There is nothing arcane or novel about the
provisions of Section 13, Rule 44. The rule governing the contents of
appellants’ briefs has existed since the old Rules of Court, which took
effect on July 1, 1940, as well as the Revised Rules of Court, which
took effect on January 1, 1964, until they were superseded by the
present 1997 Rules of Civil Procedure. The provisions were substantially
preserved, with few revisions.

In fine, the Court upholds the Resolutions of the
Court of Appeals dismissing the appeal of petitioners on the ground that
their Appellants’ Brief does not comply with the requirements provided
in Section 13, Rule 44 of the 1997 Rules of Civil Procedure, as the
dismissal is supported by Section 1 (f), Rule 50 of the 1997 Rules of
Civil Procedure and jurisprudence.” (Emphasis Supplied)

Besides, even if defendant-appellant FCC could be considered to
have complied with the requirement of a Subject Index, still, contrary
to defendant-appellant FCC’s sole assignment of error, the
lower court properly held defendant-appellant FCC solidarily liable with
defendant Toquero to pay Damages to plaintiff-appellee.

Defendant-appellant FCC had argued that:

“Clearly, at the time of the recovery of the vehicle by
defendant Romeo Toquero and of his voluntary surrender to Filinvest
Credit Corporation, there was an outstanding obligation in favor of
defendant Filinvest Credit Corporation[.]

In ordering the defendant Filinvest Credit Corporation
to return the vehicle or to pay its value for P150,000.00, the Regional
Trial Court was making the plaintiff Henry T. Soho unjustly enriched at
the expense of the defendant Filinvest. Filinvest would lose its credit
and demandable obligation and at the same time would be bound to return
the vehicle or pay its value. Thus[,] Henry T. Soho would have the
vehicle or its value and the same time escape his liability, which was
the outstanding obligation payable to Filinvest Credit Corporation.
Obviously, he would be unjustly enriched at the expense of Filinvest, a
lawful creditor.

xxx

Who among the parties was the one at fault? The plaintiff
himself. Firstly, in conniving with the defendant Romeo Toquero to
execute the sale over the vehicle without the knowledge and consent of
defendant Filinvest, he already committed fraud and criminal offense.
Their act violated the Chattel Mortgage provision of the Revised Penal
Code. Therefore, in going to the Honorable Court, he had an unclean
hand. He wanted to seek damages out of an act criminally punishable.
Should he be rewarded for his unlawful act? Plaintiff Henry Soho
was not a lawful owner of the property because the sale between him and
Romeo Toquero was criminally punishable. The sale was therefore void ab
initio. Plaintiff was therefore not a lawful owner and possessor over
the vehicle with respect to third persons, including defendant Filinvest
Credit Corporation. For all legal purposes with respect to third
persons, the defendant Romeo Toquero was the lawful owner and possessor
of the vehicle.

Romeo Toquero from whom plaintiff acquired his rights,
had agreed that in case of his default, that the corporation may at any
time take possession over the vehicle. He was the registered owner, and
therefore such ownership was binding to the whole world. He among others
was the one who took possession over the vehicle which he had legally
owned and he had voluntarily surrendered it to the defendant Filinvest
Credit Corporation.

There was no force or intimidation actually exerted or imposed
upon the plaintiff. Therefore, there was no legal injury committed
against the plaintiff.

xxx

The facts did not show that in the exercise of its
rights, the defendant corporation did not act in an orderly manner, and
that created a breach of peace, subjecting itself to an action to
trespass. There was and is nothing in the records to show that Filinvest
created any breach of peace or committed any trespass. The defendant
corporation therefore did not commit any legal wrong.”^[13] (Emphasis supplied)

Defeating defendant-appellant FCC’s arguments however, is that
defendant-appellant FCC, as the mortgagee, could not immediately take
possession of the subject vehicle. Defendant-appellant FCC should have
first filed a civil action to recover possession of the mortgaged
vehicle, or filed an action to obtain judicial foreclosure of the
Chattel Mortgage. This was as also found by the lower court, to wit:

“It is ruled that if a mortgagee cannot obtain
possession of the mortgaged property for the non-payment of the monthly
installments of the unit, a civil action be filed either to recover
possession as a preliminary step or to bring judicial foreclosure. In a case Bachrach Motor Co. vs. Summers, 42 Phil 3, the Supreme Court ruled: Where,
however, [the] debtor refuses to yield up the property, the creditor
must institute an action, either to effect a judicial foreclosure
directly, [or] to secure possession as a preliminary to the sale
contemplated in the provision above quoted. He cannot lawfully take the
property by force against the will of the debtor. Upon this point the
American authorities are even more harmonious that they are upon the
point that the creditor is entitled to possession. As was said many
years ago by the writer of this opinion in a monographic article
contributed to an encyclopedic legal treatise, ‘if possession cannot be
peaceably obtained, the mortgagee must bring an action.’ xxx In
the Article of Chattel Mortgages, in Corpus Juris, we find the
following statement of the law on the same point: ‘The only restriction
on the mode by which the mortgagee shall secure possession of the
mortgaged property after breach of condition is that he must act in an
orderly manner and without creating a breach of the peace, subjecting
himself to an action to trespass.[‘]

Defendant Filinvest, as a mortgagee, upon default by the
mortgagor of his obligation, have the right to take possession of the
mortgaged property. The cargo truck was in the possession of the
plaintiff. To secure possession of the cargo truck, defendant Filinvest
must bring a civil action. In this case, no civil action was filed.”^[14] (Emphasis supplied)

That before a mortgagee, such as defendant-appellant FCC, could
take possession of a mortgaged vehicle, he should first file an action
to recover possession of such vehicle, or should file an action to
obtain judicial foreclosure, is pursuant to the following ruling of the
Supreme Court in Uypitching, et al. v. Quiamco, G.R. No. 146322, December 6, 2006:

“True, a mortgagee may take steps to recover the mortgaged
property to enable it to enforce or protect its foreclosure right
thereon. There is, however, a well-defined procedure for the
recovery of possession of mortgaged property: if a mortgagee is unable
to obtain possession of a mortgaged property for its sale on
foreclosure, he must bring a civil action either to recover such
possession as a preliminary step to the sale, or to obtain judicial
foreclosure.

Petitioner corporation failed to bring the proper civil
action necessary to acquire legal possession of the motorcycle. Instead,
petitioner Uypitching descended on respondent’s establishment with his
policemen and ordered the seizure of the motorcycle without a search
warrant or court order. Worse, in the course of the illegal seizure of
the motorcycle, petitioner Uypitching even mouthed a slanderous
statement.

No doubt, petitioner corporation, acting through its
co-petitioner Uypitching, blatantly disregarded the lawful procedure for
the enforcement of its right, to the prejudice of respondent.
Petitioners’ acts violated the law as well as public morals, and
transgressed the proper norms of human relations.” (Emphasis supplied; italics was made in the original)

Defendant-appellant FCC could not also properly argue that
plaintiff-appellee committed fraud and violated the Chattel Mortgage by
alleging that the latter connived with defendant Toquero because
defendant Toquero supposedly assigned his rights over the subject
vehicle to plaintiff-appellee without defendant-appellant FCC’s consent.
This is because defendant-appellant FCC failed to present any evidence
that would substantiate its allegation of fraud.^[15]

Considering all these, then, defendant Toquero and defendant-appellant FCC were considered to have acted in bad faith^[16]
in immediately taking possession of the subject vehicle from
plaintiff-appellee. This was as similarly found by the lower court, to
wit:

“Defendant Filinvest, for seizing the cargo truck with
the assistance of a sheriff and defendant Toquero’s signing the seizure
papers, committed bad faith in violation of Article 19 of the Civil Code which provides:

Every person must, in the exercise of his rights and in the
performance of his duties, act with justice, give everyone his due, and
observe honesty and good faith.

In common usage, good faith is ordinarily used to
describe that state of mind denoting honesty of purpose, freedom from
intention to defraud, and, generally speaking, means being faithful to
one’s duty or obligation. It consists of the honest intention to abstain
from taking an unconscionable and unscrupulous advantage of another.”^[17] (Emphasis supplied)

After careful consideration of all the facts, arguments, and
issues appearing on the records as well as of the pertinent laws and
jurisprudence, and, in accordance with what is best determined to be
proper under the circumstances, the following disposition is therefore
made on these matters.

WHEREFORE, the Appeal is DENIED.

SO ORDERED.

Dicdican (Chairman) and Paredes, JJ., concur.

^[1] Rollo, pp. 18-22.

^[2] Records, pp. 319-326.

^[3] Records, pp. 1-4.

^[4] Records, pp. 1-4.

^[5] Records, pp. 319-326.

^[6] Records, pp. 319-322.

^[7] Records, pp. 319-326.

^[8] Records, pp. 325-326.

^[9] Rollo, p. 22.

^[10] Rollo, p. 20.

^[11] Rollo, pp. 18-22.

^[12] Rollo, pp. 18-22.

^[13] Rollo, pp. 20-21.

^[14] Records, pp. 324-325.

^[15] Department of Public Works and Highways v. Quiwa, et al., G.R. No. 183444, February 8, 2012.

^[16] “Malice or bad faith implies a conscious and intentional design to do a wrongful act for a dishonest
purpose or moral obliquity; it is different from the negative idea of negligence in that malice or bad faith
contemplates a state of mind affirmatively operating with furtive design or ill will.” (Regala v. Carin, G.R.
No. 188715, April 6, 2011)

^[17] Records, p. 325.