Sales Week 3 Dacion en Pago Philippine Lawin Bus Co.

(Lawin) vs CA Doctrine: Nature: RTC- Suit to claim for a sum of money against Lawin, case was dismissed CA- Reversed RTC and ruled that Lawin has to pay ACC SC- Affirmed CAs decision and ordered Facts: Lawin initially loaned from Advance Capital Corp. (ACC) Php 8M payable w/in 1 yr and guaranteed by a chattel mortgage of Lawins 9 buses. Lawin was in default in its payments and was able to pay only Php 1.8M. Lawin obtained its second loan of 2M payable in one month under a promissory note. Lawin was in default again hence it asked ACC for a restructuring of the loan despite this Lawin was still not able to pay. The buses for foreclosed and it was sold for 2M. ACC sent Lawin demand letters to settle its indebtedness amounting to hp 16,484,992.42 then subsequently filed a suit for sum of money against Lawin. Lawin in its defense said that there was already an arrangement to settle the obligation o A. Sale of 9 buses and its proceeds will cover for the full payment; OR o B. ACC will shoulder the rehabilitation of the buses and the earnings of the operation will be then applied to the loan Issue/Held: W/N there was a dacion en pago bet. the parties? NO Ratio: Dacion en Pago is a special mode of payment, the debtor offers another thing to the creditor who accepts it as equivalent of payment of the outstanding obligation. It partakes the nature of a sale whose essential elements are a) consent b)object certain and c) cause and the contract is perfected at the moment of the meeting of the minds of the parties. In this case there was no meeting of the minds between Lawin and ACC that the obligation would be extinguished by dacion en pago. The receipts shows that the delivery of the 2 buses to ACC didnt transfer the ownership of the bus to ACC rather they were deemed to be only as Lawins agent in the sale of the bus whereby the proceeds are then to be applied as payment for the loan.

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