ELISCO TOOL MFG CORP vs.

CA
GR # 109966, May31, 1999

FACTS: Private respondent Rolando Lantan entered into an agreement with his empl
oyer, herein petitioner, leasing unto the former a Colt lancer fro a period of 5
years. The contract also provided that at the end of the 5 year period, Lantan
may exercise the option to purchase price of the car and he should just pay the
remaining balance. Said option is limited to the employee. It also provided t
hat upon Lantan s failure to pay 3 accumulated monthly rentals, the petitioner wil
l have the option to lease said vehicle to another. Lantan also has to return th
e car in case he resigns or is dismissed. He was laid off after petitioner ceas
ed operations in 1981. At that time, he has paid P61, 070.94. Petitioner then f
iled a replevin case against Lantan and his wife, alleging that they have failed
to pay the monthly rentals despite repeated demands. HELD: Although the agreem
ent provides for the payment by Lantan of monthly rentals , the 5th paragraph ther
eof gives them the option to purchase the motor vehicle at the end of the 5th ye
ar or upon payment of the 60th monthly rental when all monthly rentals shall be a
pplied to the payment of the full purchase price of the car. Clearly, the transac
tion is a lease in name only. The so-called monthly rentals are in truth monthl
y amortizations on the car s price. Being a contract of sale on installment, A.14
84 &1485 apply. As such, the case should be considered as one for specific perf
ormance pursuant to A.1484 (1). The prayer for a writ of replevin is only for th
e purpose of ensuring specific performance by private respondents. However, the
private respondents could no longer be held liable for the payment of interest
on unpaid monthly rentals since it was entered into in pursuance of a car plan a
dopted by petitioner for the benefit of its deserving employees. Further, priva
te respondents default in payment was due to the cessation of operations of petit
ioner s sister company. Elizalde Steel Company. That petitioner accepted payments
from Lantan more than 2 years after the latter s employment have been terminated c
onstitutes a waiver of petitioner s right to collect interest upon delayed payment
. What private respondents paid should be considered the payment in full.