EMMANUEL SAMALA, VIOLETA SAMALA AND HEIRS OF EMILIANO SAMALA, PETITIONERS, VS. COURT OF APPEALS, REGIONAL TRIAL COURT, BRANCH 154, PASIG CITY, METRO MANILA AND PILHINO SALES COR…

Samala versus Pilhino Sales Corporation

The Case

This is a petition for review on certiorari brought by Emmanuel Samala, Violeta Samala, and the heirs of Emiliano Samala against Pilhino Sales Corporation, the Court of Appeals, and the Regional Trial Court of Pasig City. The Samalas were buyers of Hino trucks who defaulted on their installment obligation, and Pilhino sued them, secured a writ of replevin, and took possession of three trucks. The Samalas now ask the Supreme Court to reverse the lower courts, claiming that more trucks were seized than were ever mortgaged, that the seizure was illegal, and that Pilhino privately sold the trucks without accounting to them. The case matters because it is a compact lesson on the finality of factual findings in a Rule 45 petition, and on how a party who fails to prove a violation of the Chattel Mortgage Law cannot win on bare allegation.

Procedural History

Pilhino filed a complaint against the Samalas in the Regional Trial Court of Pasig City, praying for a writ of replevin over the mortgaged trucks or, in the alternative, for judgment for the unpaid balance with interest, damages, and attorney's fees. The trial court granted the prayer for a writ of seizure, and three trucks were seized and placed in Pilhino's possession. After trial, the trial court rendered judgment in favor of Pilhino, confirming its possession of the three trucks, declining to pronounce on any balance because the value of the trucks was more than sufficient to cover it, and dismissing the Samalas' counterclaim.

The Samalas appealed to the Court of Appeals, which affirmed the trial court's judgment in full. Their motion for reconsideration was denied. The Samalas then elevated the matter to the Supreme Court through a petition for review on certiorari under Rule 45 of the Rules of Court.

Facts

Pilhino Sales Corporation was engaged in the sale of trucks, buses, and service vehicles. On November 28, 1981, it sold to Emmanuel Samala two units of Hino trucks at 444,162 pesos per unit, for a total purchase price of 888,324 pesos. The parties agreed on installment payment, beginning with a down payment of 84,804 pesos. The remaining balance of 803,520 pesos was payable in thirty-six monthly installments and was covered by two promissory notes executed jointly and severally by Emmanuel, Violeta, and Emiliano Samala. To secure the balance, the Samalas executed two contracts of chattel mortgage in favor of Pilhino.

The Samalas defaulted. Pilhino sued, claiming an unpaid obligation of 250,115 pesos and forty-three centavos, and asserting that the chattel mortgages covered seven units of Hino trucks. On September 6, 1985, the trial court issued an order granting the prayer for a writ of seizure. Three trucks owned by the petitioners were seized and placed in Pilhino's possession.

The Samalas answered with a counterclaim. They insisted they had not refused to pay but merely sought a correct accounting, and that their obligation was less than the amount claimed. They denied offering seven trucks as security, saying only the two units purchased in 1981 were mortgaged. They alleged that Pilhino, in collusion with two sheriffs, illegally seized a truck that was not among those mortgaged, depriving them of income. They prayed for the return of the trucks, damages, and lost earnings. The trial court and the Court of Appeals both found that seven trucks had indeed been mortgaged, that one truck had been mortgaged twice, and that its release from an earlier mortgage did not affect the later one.

Issues

• Whether or not the Supreme Court may review the factual findings of the lower courts on how many trucks were offered as collateral and on the legality of the seizure.
• Whether or not the seizure of the three trucks was legally justified.
• Whether or not Pilhino illegally confiscated the three trucks of the petitioners.
• Whether or not the petitioners are entitled to damages for the alleged illegal seizure.
• Whether or not Pilhino's private sale of the seized trucks, without informing the petitioners, was illegal.

Applicable Provisions

Rule 45 of the Rules of Court governs the petition, and the Court states the settled rule that only questions of law may be entertained:

It is settled that only questions of law are entertained in petitions for review on certiorari under Rule 45 of the Rules of Court.

This confines the Court's review to legal error and leaves the factual findings of the trial court, affirmed by the Court of Appeals, binding and conclusive.

The Chattel Mortgage Law, Act Number 1508, supplies the standard against which the alleged private sale must be measured:

However, as correctly found by the Court of Appeals, petitioners failed to present evidence before the trial court to support their allegation that Pilhino, in selling said mortgaged trucks, did not comply with the applicable provisions of Act 1508, otherwise known as the Chattel Mortgage Law.

Because the Samalas offered no proof of noncompliance with the Chattel Mortgage Law, their claim of an illegal private sale cannot stand.

Ruling

On the first issue, the Court held that the questions of how many trucks were mortgaged and whether the seizure was justified are factual matters beyond its province in a Rule 45 petition. It acknowledged the recognized exceptions to the rule that factual findings are binding, but found that the petitioners failed to show that any exception applied. The findings of both lower courts were supported by competent evidence: seven trucks were offered as collateral, one truck was twice mortgaged, and its release from the earlier mortgage did not affect the later one.

On the second and third issues, the Court found no error in the Court of Appeals' affirmance of the trial court. The three seized trucks were included as collateral in the chattel mortgage executed on November 28, 1981, and they were taken by virtue of a writ of replevin validly issued by the trial court on September 6, 1985. The seizure being valid and legal, the confiscation was not illegal.

On the fourth issue, since the seizure was valid, the petitioners are not entitled to damages on account of it.

On the fifth issue, the Court held that the petitioners failed to present evidence before the trial court to support their claim that Pilhino, in selling the mortgaged trucks, did not comply with the Chattel Mortgage Law. They even failed to present competent proof that Pilhino actually conveyed the trucks to third persons in a private sale.

Doctrine

First, in a petition for review on certiorari under Rule 45 of the Rules of Court, only questions of law may be entertained. The factual findings of the trial court, especially when affirmed by the Court of Appeals, are generally binding and conclusive upon the Supreme Court, and the recognized exceptions must be shown to exist before review is warranted.

Second, a seizure made by virtue of a validly issued writ of replevin over property included as collateral in a chattel mortgage is lawful, and no damages may be recovered on account of such a seizure.

Third, a party who alleges that a mortgagee violated the Chattel Mortgage Law in conducting a private sale must prove it with competent evidence; bare allegation, unsupported by proof of the sale itself, cannot sustain a claim.

Disposition

The petition was denied for lack of merit, and the decision and resolution of the Court of Appeals were affirmed, with costs against the petitioners.

Remember This

Memorize this line: factual findings of the trial court, affirmed by the Court of Appeals, are binding on the Supreme Court in a Rule 45 petition absent any of the recognized exceptions. Examiners use this case to test the limits of a petition for review on certiorari and the burden of proving a violation of the Chattel Mortgage Law.