Contract of adhesion, Manner of breach-delay

Nature: Petition for Review on Certiorari under Rule 45

[ Replevin and Damages ]

Vicente D. Cabanting and Lalaine V. Cabanting vs. BPI Family Savings Bank, Inc.
G.R. No. 201927
February 17, 2016
Ponente: Peralta, J.
Division

Facts:

On January 14, 2003, petitioners bought on instalment basis from Diamond Motors
Corporation a 2002 Mitsubishi Adventure SS MT and for value received, they also signed, executed
and delivered to Diamond Motors a Promissory Note with Chattel Mortgage. Therein, petitioners
jointly and severally obligated themselves to pay Diamond Motors the sum of P836,032.00, payable
in monthly instalments in accordance with the schedule of payment indicated therein, and which
obligation is secured by a chattel mortgage on the aforementioned motor vehicle. On the day of the
execution of the document, Diamond Motors, with notice to petitioners, executed a Deed of
Assignment, thereby assigning to Respondent BPI Family Savings Bank, Inc. all its rights, title and
interest to the Promissory Note with Chattel Mortgage.

Come October 16, 2003, however a Complaint was filed by BPI Family against petitioners
for Replevin and damages before the RTC, praying that petitioners be ordered to pay the unpaid
portion of the vehicles purchase price, accrued interest thereon, attorneys fees and liquidated
damages as stipulated on the Promissory Note with Chattel Mortgage.

Issue:

Whether or not prior demand is necessary to make petitioners obligation to respondent due
and payable.

Ruling:

The High Court ruled in the negative. It stated that the Promissory Note with Chattel Mortgage
clearly stipulated that in case of my/our [petitioners] failure to pay when due and payable, any sum
which I/We xxx or any of us may now or in the future owe to the holder of this note xxx then 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.

It was added that a provision on waiver of notice or demand has been recognised as legal and
valid in long line of cases decided by the Supreme Court. The Civil Code in Article 1169 provides
that one incurs in delay or is in default from the time the obligor demands the fulfilment of the
obligation from the obligee. However, the law expressly provides that demand is not necessary under
certain circumstances, and one of these is when the parties expressly waive demand. Hence, since the
co-signors expressly waived demand in the promissory notes, demand was not necessary for them to
be in default.