DIGEST: Cabanting v. BPI, G.R. No. 201927, February 17, 2016

Replevin and Damages

VICENTE D. CABANTING AND LALAINE V. CABANTING,

v.

BPI FAMILY SAVINGS BANK, INC.

G.R. No. 201927

Third Division

February 17, 2016

Peralta, J.

Facts:

Cabanting bought a Mitsubishi Adventure from Diamond Motors on installment basis. He also executed a Promissory note with Chattel Mortgage on the vehicle in favor of Diamond Motors wherein the parties stipulated that in case of failure to pay “the entire sum outstanding under this note shall immediately become due and payable without the necessity of notice or demand which I/We hereby waive."  On the same day, Diamond motors assigned to BPI Bank all its right, title and interest to the Promissory note.

When Cabanting failed to pay his monthly amortizations, BPI filed a case for Replevin and damages against Cabanting. RTC rendered a decision in favor of BPI and ordered Cabanting to pay his unpaid balance. The decision was affirmed by the CA on appeal. Cabanting now raised as error that there was no proof of prior demand and that the stipulation on its waiver must be deemed invalid for being a contract of adhesion.

Issues:

Whether or not prior demand by the respondent bank is necessary before the obligation of Cabating becomes due and demandable.

Ruling:

No. The Supreme Court held that no prior demand was necessary. Decision of the CA affirmed. According to the SC:

Petitioners are bound by the aforementioned stipulation in the Promissory Note with Chattel Mortgage waiving the necessity of notice and demand to make the obligation due and payable. Agner v. BPI Family Savings Bank, Inc., which is closely similar to the present case, is squarely applicable. Petitioners therein also executed a Promissory Note with Chattel Mortgage containing the stipulation waiving the need for notice and demand. The Court ruled:

xxx Even assuming, for argument's sake, that no demand letter was sent by respondent, there is really no need for it because petitioners legally waived the necessity of notice or demand in the Promissory Note with Chattel Mortgage, which they voluntarily and knowingly signed in favor of respondent's predecessor-in-interest. Said contract expressly stipulates:

In case of my/our failure to pay when due and payable, any sum which I/We are obliged to pay under this note and/or any other obligation which I/We or any of us may now or in the future owe to the holder of this note or to any other party whether as principal or guarantor xxx then the entire sum outstanding under this note shall, without prior notice or demand, immediately become due and payable.

A provision on waiver of notice or demand has been recognized as legal and valid in Bank of the Philippine Islands v. Court of Appeals, wherein We held:

The Civil Code in Article 1169 provides that one incurs in delay or is in default from the time the obligor demands the fulfillment of the obligation from the obligee. However, the law expressly provides that demand is not necessary under certain circumstances, and one of these circumstances is when the parties expressly waive demand. Hence, since the co-signors expressly waived demand in the promissory notes, demand was unnecessary for them to be in default.

Further, the Court even ruled in Navarro v. Escobido that prior demand is not a condition precedent to an action for a writ of replevin, since there is nothing in Section 2, Rule 60 of the Rules of Court that requires the applicant to make a demand on the possessor of the property before an action for a writ of replevin could be filed.

Clearly, as stated above, Article 1169 (1) of the Civil Code allows a party to waive the need for notice and demand. Petitioners' argument that their liability cannot be deemed due and payable for lack of proof of demand must be struck down.