In Uypitching, et al. v. Quiamco, G.R. No. 146322, December 6, 2006, there was a sale of a motorcycle with mortgage as security for the payment of the balance of the purchase price. When the vendee failed to pay, the seller went to the buyer’s establishment with the police and ordered the seizure of the motorcycle which he even mouthed slanderous statement. Sued for damages, he contended that there is no liability for the exercise of the right as seller-mortgagee to recover the mortgaged vehicle preliminary to the enforcement of its right to foreclose on the mortgage in case of default. Is the contention correct? Why?


Answer: No. True, a mortgagee may take steps to recover the mortgaged property to enable it to enforce or protect its foreclosure right thereon. There is, however, a well-defined procedure for the recovery of possession of mortgaged property: if a mortgagee is unable to obtain possession of a mortgaged property for its sale on foreclosure, he must bring a civil action either to recover such possession as a preliminary step to the sale, or to obtain judicial foreclosure. (Filinvest Credit Corp. v. CA, G.R. No. 115902, September 27, 1995, 248 SCRA 549).


            The seller failed to bring the proper civil action necessary to acquire legal possession of the motorcycle. Instead, he descended to the buyer’s establishment with his policemen and ordered the seizure of the motorcycle without a search warrant or court order. Worse, in the course of the illegal seizure of the motorcycle, petitioner Uypitching even mouthed a slanderous statement.


            No doubt, the seller, acting through its co-petitioner Uypitching, blatantly disregarded the lawful procedure for the enforcement of its right, to the prejudice of respondent. Its acts violated the law as well as public morals, and transgressed the proper norms of human relations.


            The basic principle of human relations, embodied in Article 19 of the Civil Code, provides:


            Art. 19. Every person must in the exercise of his rights and in the performance of his duties, act with justice, give every one his due, and observe honesty and good faith.

            Article 19, also known as the “principle of abuse of right”, prescribes that a person should not use his right unjustly or contrary to honesty and good faith, otherwise he opens himself to liability. (HSBC v. Catalan, G.R. No. 159590-91, October 18, 2004; 440 SCRA 498). It seeks to preclude the use of, or the tendency to use, a legal right (or duty) as a means to unjust ends.


            There is an abuse of right when it is exercised solely to prejudice or injure another. (HSBC v. Catalan). The exercise of a right must be in accordance with the purpose for which it was established and must not be excessive or unduly harsh; there must be no intention to harm another. (HSBC v. Catalan). Otherwise, liability for damages to the injured party will attach.

            In this case, the manner by which the motorcycle was taken at the seller’s instance was not only attended by bad faith but also contrary to the procedure laid down by law. Considered in conjunction with the defamatory statement, the seller’s exercise of the right to recover the mortgaged vehicle was utterly prejudicial and injurious to the buyer. On the other hand, the precipitate act of filing an unfounded complaint could not in any way be considered to be in accordance with the purpose for which the right to prosecute a crime was established. Thus, the totality of the buyer’s actions showed a calculated design to embarrass, humiliate and publicly ridicule the buyer. The seller acted in an excessively harsh fashion to the prejudice of the buyer. Contrary to law, the seller willfully caused damage to the buyer. Hence, they should indemnify him.


Article 22; its application.


            In Republic, et al. v. Lacap, G.R. No. 158253, March 2, 2007 the SC had the occasion to once again say that Article 22, NCC was formulated as basic principles to be observed for the rightful relationship between human beings and for the stability of the social order, x x x designed to indicate certain norms that spring from the fountain of good conscience, x x x guides human conduct that should run as golden threads through society to the end that law may approach its supreme ideal which is the sway and dominance of justice. (Advance Foundation Construction Systems Corp. v. New World Properties and Ventures, Inc., G.R. Nos. 143154 & 143177, June 21, 2006, 491 SCRA 557, 578; Security Bank & Trust Co. v. Court of Appeals, 319 Phil. 312, 317 (1995)). The rules thereon apply equally well to the Government. (Palma Development Corp. v. Municipality of Malangas, Zamboanga Del Sur, 459 Phil. 1042, 1050 (2003); Republic v. Court of Appeals, No. L-31303-04, May 31, 1978, 83 SCRA 453, 480). Since respondent had rendered services to the full satisfaction and acceptance by petitioner, then the former should be compensated for them. To allow petitioner to acquire the finished project at no cost would undoubtedly constitute unjust enrichment for the petitioner to the prejudice of respondent. Such unjust enrichment is not allowed by law.


            In this case, the respondent undertook works for the government, made advances for the purchase of materials and payment for labor costs. The State however refused to pay on the ground that it had an expired license at the time of the execution of the contract. Despite the same, it is entitled to be paid for completed projects.