ellee," without pronouncement regarding costs. So ordered.

PHILIPPINE LAWIN BUS, CO., MASTER TOURS & TRAVEL CORP., MARCIANO TAN, ISIDRO TAN, ESTEBAN TAN
and HENRY TAN v. CA and ADVANCE CAPITAL CORPORATION
G.R. No. 130972 January 23, 2002 PARDO, J.
"On 7 August 1990 plaintiff Advance Capital Corporation, a licensed lending investor, extended a loan to defendant
Philippine Lawin Bus Company (hereafter referred to as LAWIN), in the amount of P8,000,000.00 payable within a
period of one (1) year, as evidenced by a Credit Agreement (Exhibits "B" to "B-4-B"). The defendant, through Marciano
Tan, its Executive Vice President, executed Promissory Note No. 003, for the amount of P8,000,000.00 (Exhs. "C" to "C1").
"To guarantee payment of the loan, defendant Lawin executed in favor of plaintiff the following documents: (1) A Deed
of Chattel Mortgage wherein 9 units of buses were constituted as collaterals (Exhibits "F" to "F-7"): (2) A joint and
several UNDERTAKING of defendant Master Tours and Travel Corporation dated 07 August 1990, signed by Isidro Tan
and Marciano Tan (Exhs. "H" to "H-1): and (3) A joint and several UNDERTAKING dated 21 August 1990, executed and
signed by Esteban, Isidro, Marciano and Henry, all surnamed Tan (Exhs. "I" to "I-6").
"Out of the P8,000,000.00 loan, P1,800,000.00 was paid. Thus, on 02 November 1990, defendant Bus Company was
able to avail an additional loan of P2,000,000.00 for one (1) month under Promissory Note 00028 (Exhs. "J"-"J-1").
"Defendant LAWIN failed to pay the aforementioned promissory note and the same was renewed on 03 December 1990
to become due on or before 01 February 1991, under Promissory Note 00037 (Exh. "K").
"On 15 May 1991 for failure to pay the two promissory notes, defendant LAWIN was granted a loan re-structuring for
two (2) months to mature on 31 July 1991.
"Despite the restructuring, defendant LAWIN failed to pay. Thus, plaintiff foreclosed the mortgaged buses and as the
sole bidder thereof, the amount of P2,000,000.00 was accepted by the deputy sheriff conducting the sale and credited
to the account of defendant LAWIN.
"Thereafter, on 27 May 1992, identical demand letters were sent to the defendants to pay their obligation (Exhs. "X" to
"CC"). Despite repeated demands, the defendants failed to pay their indebtedness which totaled of P16,484,992.42 as
of 31 July 1992 (Exhs. "DD"-"DD-1").
"Thus, the suit for sum of money, wherein the plaintiff prays that defendants solidarily pay plaintiff as of July 31, 1992
the sum of (a) P16,484,994.12 as principal obligation under the two promissory notes Nos. 003 and 00037, plus
interests and penalties: (b) P300,000.00 for loss of good will and good business reputation: (c) attorneys fees
amounting to P100,000.00 as acceptance fee and a sum equivalent to 10% of the collectible amount, and P500.00 as
appearance fee; (d) P200,000.00 as litigation expenses; (e) exemplary damages in an amount to be awarded at the
courts discretion; and (f) the costs.
"On 04 September 1993, a writ of preliminary injunction was issued with respect to movable and immovable properties
of the defendants.
"In answer to the complaint, defendants-appellees assert by way of special and affirmative defense, that there was
already an arrangement as to the full settlement of the loan obligation by way of:
"17.A. Sale of the nine (9) units passenger buses the proceeds of which will be credited against the loan amount as full
payment thereof; or in the alternative.
"17.B. Plaintiff will shoulder and bear the cost of rehabilitating the buses, with the amount thereof to be included in the
total obligation of defendant Lawin and the bus operated, with the earnings thereof to be applied to the loan obligation
of defendant Lawin." (p. 4 Answer; p. 166, rec.)
"Defendants further assert that the foreclosure sale was in violation of the aforequoted arrangement and prayed for the
nullification of the same and the dismissal of the complaint." 4
On 28 June 1995, the trial court rendered a decision dismissing the complaint, as follows:
"WHEREFORE, judgment is rendered as follows:
"1. Dismissing the complaint for lack of merit;
"2. Declaring the foreclosure and auction sale null and void;
"3. Declaring the obligation or indebtedness of defendants EXTINGUISHED;
"4. Declaring the writ of attachment issued in this case null and void and, therefore, is hereby declared dissolved; and
"5. Ordering the Sheriff of this Branch or whoever is in possession, to return all the personal properties attached in this
case to the owner/s thereof within one (1) week from the finality of this decision;
"6. Dismissing defendants counterclaim for lack of sufficient merit.
"No pronouncement as to costs.
"SO ORDERED."5
In time, respondent Advance Capital Corporation appealed from the decision to the Court of Appeals. 6
On 30 September 1997, the Court of Appeals promulgated a decision reversing that of the trial court, the dispositive
portion of which is set out in the opening paragraph of this decision.
Hence, this appeal.7
The Issue

The issue raised is whether there was dacion en pago between the parties upon the surrender or transfer of the
mortgaged buses to the respondent.8
The Courts Ruling
We deny the petition, with modification.
The issue raised is factual. In an appeal via certiorari, we may not review the factual findings of the Court of
Appeals.9 When supported by substantial evidence, the findings of fact of the Court of Appeals are conclusive and
binding on the parties and are not reviewable by this Court, 10 unless the case falls under any of the recognized
exceptions to the rule.11
Petitioner failed to prove that the case falls within the exceptions. 12 The Supreme Court is not a trier of facts. 13 It is not
our function to review, examine and evaluate or weigh the probative value of the evidence presented. 14 A question of
fact would arise in such event.15
Nonetheless, we agree with the Court of Appeals that there was no dacion en pago that took place between the parties.
In dacion en pago, property is alienated to the creditor in satisfaction of a debt in money. 16 It is "the delivery and
transmission of ownership of a thing by the debtor to the creditor as an accepted equivalent of the performance of the
obligation."17 It "extinguishes the obligation to the extent of the value of the thing delivered, either as agreed upon by
the parties or as may be proved, unless the parties by agreement, express or implied, or by their silence, consider the
thing as equivalent to the obligation, in which case the obligation is totally extinguished." 18
Article 1245 of the Civil Code provides that the law on sales shall govern an agreement of dacion en pago. A contract of
sale is perfected at the moment there is a meeting of the minds of the parties thereto upon the thing which is the
object of the contract and upon the price.19 In Filinvest Credit Corporation v. Philippine Acetylene Co., Inc., we said:
"x x x. In dacion en pago, as a special mode of payment, the debtor offers another thing to the creditor who accepts it
as equivalent of payment of an outstanding obligation. The undertaking really partakes in one sense of the nature of
sale, that is, the creditor is really buying the thing or property of the debtor, payment for which is to be charged
against the debtors debt.1wphi1 As such, the essential elements of a contract of sale, namely, consent, object
certain, and cause or consideration must be present. In its modern concept, what actually takes place in dacion en
pago is an objective novation of the obligation where the thing offered as an accepted equivalent of the performance of
an obligation is considered as the object of the contract of sale, while the debt is considered as the purchase price. In
any case, common consent is an essential prerequisite, be it sale or novation, to have the effect of totally extinguishing
the debt or obligation."20
In this case, there was no meeting of the minds between the parties on whether the loan of the petitioners would be
extinguished by dacion en pago. The petitioners anchor their claim solely on the testimony of Marciano Tan that
heproposed to extinguish petitioners obligation by the surrender of the nine buses to the respondent acceded to as
shown by receipts its representative made. 21 However, the receipts executed by respondents representative as proof
of an agreement of the parties that delivery of the buses to private respondent would result in extinguishing
petitioners obligation do not in any way reflect the intention of the parties that ownership thereof by respondent would
be complete and absolute. The receipts show that the two buses were delivered to respondent in order that it would
take custody for the purpose of selling the same. The receipts themselves in fact show that petitioners deemed
respondent as their agent in the sale of the two vehicles whereby the proceeds thereof would be applied in payment of
petitioners indebtedness to respondent. Such an agreement negates transfer of absolute ownership over the property
to respondent, as in a sale. Thus, in Philippine National Bank v. Pineda22 we held that where machinery and equipment
were repossessed to secure the payment of a loan obligation and not for the purpose of transferring ownership thereof
to the creditor in satisfaction of said loan, no dacion en pago was ever accomplished.
The Fallo
IN VIEW WHEREOF, the Court DENIES the petition and AFFIRMS the decision of the Court of Appeals 23 with
MODIFICATION as follows:
WHEREFORE, the appealed decision is hereby REVERSED and SET ASIDE. In lieu thereof, judgment is hereby
rendered ordering defendants-appellees to pay, jointly and severally, plaintiff-appellant Advance Capital Corp. the
following amounts:
(1) P16,484,994.42, the principal obligation under the two promissory notes plus 12% per annum from the finality of
this decision until fully paid;
(2) P50,000.00 as attorneys fees;
(3) Costs of suit.
All other monetary awards are deleted. SO ORDERED.
FILINVEST CREDIT CORPORATION v. CA, JOSE SY BANG and ILUMINADA TAN SY BANG
G.R. No. 82508 September 29, 1989 SARMIENTO, J.
The private respondents, the spouses Jose Sy Bang and Iluminada Tan, were engaged in the sale of gravel produced
from crushed rocks and used for construction purposes. In order to increase their production, they engaged the
services of Mr. Ruben Mercurio, the proprietor of Gemini Motor Sales in Lucena City, to look for a rock crusher which
they could buy. Mr. Mercurio referred the private respondents to the Rizal Consolidated Corporation which then had for
sale one such machinery described as:
ONE UNIT LIPPMAN PORTABLE CRUSHING PLANT (RECONDITIONED) [sic]
JAW CRUSHER-10xl6 DOUBLE ROLL CRUSHER 16x16

3 UNITS PRODUCT CONVEYOR

75 HP ELECTRIC MOTOR
8 PCS. BRAND NEW TIRES CHASSIS NO. 19696 GOOD RUNNING CONDITION

Oscar Sy Bang, a brother of private respondent Jose Sy Bang, went to inspect the machine at the Rizal Consolidated's
plant site. Apparently satisfied with the machine, the private respondents signified their intent to purchase the same.
They were however confronted with a problem-the rock crusher carried a cash price tag of P 550,000.00. Bent on
acquiring the machinery, the private respondents applied for financial assistance from the petitioner, Filinvest Credit
Corporation. The petitioner agreed to extend to the private respondents financial aid on the following conditions: that
the machinery be purchased in the petitioner's name; that it be leased (with option to purchase upon the termination
of the lease period) to the private respondents; and that the private respondents execute a real estate mortgage in
favor of the petitioner as security for the amount advanced by the latter. Accordingly, on May 18,1981, a contract of
lease of machinery (with option to purchase) was entered into by the parties whereby the private respondents agreed
to lease from the petitioner the rock crusher for two years starting from July 5, 1 981 payable as follows:
P10,000.00 - first 3 months
23,000.00 - next 6 months
24,800.00 - next 15 months
The contract likewise stipulated that at the end of the two-year period, the machine would be owned by the private
respondents. Thus, the private respondents issued in favor of the petitioner a check for P150,550.00, as initial rental
(or guaranty deposit), and twenty-four (24) postdated checks corresponding to the 24 monthly rentals. In addition, to
guarantee their compliance with the lease contract, the private respondents executed a real estate mortgage over two
parcels of land in favor of the petitioner. The rock crusher was delivered to the private respondents on June 9, 1981.
Three months from the date of delivery, or on September 7, 1981, however, the private respondents, claiming that
they had only tested the machine that month, sent a letter-complaint to the petitioner, alleging that contrary to the 20
to 40 tons per hour capacity of the machine as stated in the lease contract, the machine could only process 5 tons of
rocks and stones per hour. They then demanded that the petitioner make good the stipulation in the lease contract.
They followed that up with similar written complaints to the petitioner, but the latter did not, however, act on them.
Subsequently, the private respondents stopped payment on the remaining checks they had issued to the petitioner. 5
As a consequence of the non-payment by the private respondents of the rentals on the rock crusher as they fell due
despite the repeated written demands, the petitioner extrajudicially foreclosed the real estate mortgage. 6 On April 18,
1983, the private respondents received a Sheriff s Notice of Auction Sale informing them that their mortgaged
properties were going to be sold at a public auction on May 25, 1983 at 10:00 o'clock in the morning at the Office of
the Provincial Sheriff in Lucena City to satisfy their indebtedness to the petitioner. 7 To thwart the impending auction of
their properties, the private respondents filed before the Regional Trial Court of Quezon, on May 4, 1983, 8 a complaint
against the petitioner, for the rescission of the contract of lease, annullment of the real estate mortgage, and for
injunction and damages, with prayer for the issuance of a writ of preliminary injunction. 9 On May 23, 1983, three days
before the scheduled auction sale, the trial court issued a temporary restraining order commanding the Provincial
Sheriff of Quezon, and the petitioner, to refrain and desist from proceeding with the public auction. 10 Two years later,
on September 4, 1985, the trial court rendered a decision in favor of the private respondents, the dispositive portion of
which reads:
WHEREFORE, PREMISES CONSIDERED, judgment is hereby rendered:
1. making the injunction permanent;
2. rescinding the contract of lease of the machinery and equipment and ordering the plaintiffs to return to the
defendant corporation the machinery subject of the lease contract, and the defendant corporation to return to plaintiffs
the sum of P470,950.00 it received from the latter as guaranty deposit and rentals with legal interest thereon until the
amount is fully restituted;
3. annulling the real estate mortgage constituted over the properties of the plaintiffs covered by Transfer Certificate of
Title Nos. T32480 and T-5779 of the Registry of Deeds of Lucena City;
4. ordering the defendant corporation to pay plaintiffs P30,000.00 as attorney's fees and the costs of the suit.
SO ORDERED.

11

Dissatisfied with the trial court's decision, the petitioner elevated the case to the respondent Court of Appeals.
On March 17, 1988, the appellate court, finding no error in the appealed judgment, affirmed the same in toto.
this petition.

12

Hence,

Before us, the petitioner reasserts that the private respondents' cause of action is not against it (the petitioner), but
against either the Rizal Consolidated Corporation, the original owner-seller of the subject rock crusher, or Gemini
Motors Sales which served as a conduit facilitator of the purchase of the said machine. The petitioner argues that it is a
financing institution engaged in quasi-banking activities, primarily the lending of money to entrepreneurs such as the
private respondents and the general public, but certainly not the leasing or selling of heavy machineries like the
subject rock crusher. The petitioner denies being the seller of the rock crusher and only admits having financed its
acquisition by the private respondents. Further, the petitioner absolves itself of any liability arising out of the lease
contract it signed with the private respondents due to the waiver of warranty made by the latter. The petitioner
likewise maintains that the private respondents being presumed to be knowledgeable about machineries, should be
held responsible for the detection of defects in the machine they had acquired, and on account of that, they are
estopped from claiming any breach of warranty. Finally, the petitioner interposed the defense of prescription, invoking
Article 1571 of the Civil Code, which provides:
Art. 1571. Actions arising from the provisions of the preceding ten articles shall be barred after six months, from the
delivery of the thing sold.

We find the petitioner's first contention untenable. While it is accepted that the petitioner is a financing institution, it is
not, however, immune from any recourse by the private respondents. Notwithstanding the testimony of private
respondent Jose Sy Bang that he did not purchase the rock crusher from the petitioner, the fact that the rock crusher
was purchased from Rizal Consolidated Corporation in the name and with the funds of the petitioner proves beyond
doubt that the ownership thereof was effectively transferred to it. It is precisely this ownership which enabled the
petitioner to enter into the "Contract of Lease of Machinery and Equipment" with the private respondents.
Be that as it may, the real intention of the parties should prevail. The nomenclature of the agreement cannot change
its true essence, i.e., a sale on installments. It is basic that a contract is what the law defines it and the parties intend it
to be, not what it is called by the parties. 13 It is apparent here thatthe intent of the parties to the subject contract is for
the so-called rentals to be the installment payments. Upon the completion of the payments, then the rock crusher,
subject matter of the contract, would become the property of the private respondents. This form of agreement has
been criticized as a lease only in name. Thus in Vda. de Jose v. Barrueco 14 we stated:
Sellers desirous of making conditional sales of their goods, but who do not wish openly to make a bargain in that form,
for one reason or another, have frequently resorted to the device of making contracts in the form of leases either with
options to the buyer to purchase for a small consideration at the end of term, provided the so-called rent has been duly
paid, or with stipulations that if the rent throughout the term is paid, title shall thereupon vest in the lessee. It is
obvious that such transactions are leases only in name. The so-called rent must necessarily be regarded as payment of
the price in installments since the due payment of the agreed amount results, by the terms of bargain, in the transfer
of title to the lessee. 15
The importance of the criticism is heightened in the light of Article 1484 of the new Civil Code which provides for the
remedies of an unpaid seller of movables on installment basis.
Article 1484. In a contract of sale of personal property the price of which is payable in installments, the vendor may
exercise any of the following remedies:
(1) Exact fulfillment of the obligation, should the vendee fail to pay;
(2) Cancel the sale, should the vendee's failure to pay cover two or more installments;
(3) Foreclose the chattel mortgage or the thing sold, if one has been constituted, should the vendee's failure to pay
cover two or more installments. In this case, he shall have no further action against the purchaser to recover any
unpaid balance of the price. Any agreement to the contrary shall be void.
Under the aforequoted provision, the seller of movables in installments, in case the buyer fails to pay two or more
installments may elect to pursue either of the following remedies: (1) exact fulfillment by the purchaser of the
obligation; (2) cancel the sale; or (3) foreclose the mortgage on the purchased property if one was constituted thereon.
It is now settled that the said remedies are alternative and not cumulative and therefore, the exercise of one bars the
exercise of the others.
Indubitably, the device contract of lease with option to buy is at times resorted to as a means to circumvent Article
1484, particularly paragraph (3) thereof.Through the set-up, the vendor, by retaining ownership over the property in
the guise of being the lessor, retains, likewise, the right to repossess the same, without going through the process of
foreclosure, in the event the vendee-lessee defaults in the payment of the installments. There arises therefore no need
to constitute a chattel mortgage over the movable sold. More important, the vendor, after repossessing the property
and, in effect, canceling the contract of sale, gets to keep all the installments-cum-rentals already paid. It is thus for
these reasons that Article 1485 of the new Civil Code provides that:
Article 1485. The preceding article shall be applied to contracts purporting to be leases of personal property with
option to buy, when the lessor has deprived the lessee of possession or enjoyment of the thing. (Emphasis ours.)
Unfortunately, even with the foregoing findings, we however fail to find any reason to hold the petitioner liable for the
rock crusher's failure to produce in accordance with its described capacity. According to the petitioner, it was the
private respondents who chose, inspected, and tested the subject machinery. It was only after they had inspected and
tested the machine, and found it to their satisfaction, that the private respondents sought financial aid from the
petitioner. These allegations of the petitioner had never been rebutted by the private respondents. In fact, they were
even admitted by the private respondents in the contract they signed. Thus:
LESSEE'S SELECTION, INSPECTION AND VERIFICATION.-The LESSEE hereby confirms and acknowledges that he has
independently inspected and verified the leased property and has selected and received the same from the Dealer of
his own choosing in good order and excellent running and operating condition and on the basis of such verification, etc.
the LESSEE has agreed to enter into this Contract." 16
Moreover, considering that between the parties, it is the private respondents, by reason of their business, who are
presumed to be more knowledgeable, if not experts, on the machinery subject of the contract, they should not
therefore be heard now to complain of any alleged deficiency of the said machinery. It is their failure or neglect to
exercise the caution and prudence of an expert, or, at least, of a prudent man, in the selection, testing, and inspection
of the rock crusher that gave rise to their difficulty and to this conflict. A well- established principle in law is that
between two parties, he, who by his negligence caused the loss, shall bear the same.
At any rate, even if the private respondents could not be adjudged as negligent, they still are precluded from imputing
any liability on the petitioner. One of the stipulations in the contract they entered into with the petitioner is an express
waiver of warranties in favor of the latter. By so signing the agreement, the private respondents absolved the petitioner
from any liability arising from any defect or deficiency of the machinery they bought. The stipulation on the machine's
production capacity being "typewritten" and that of the waiver being "printed" does not militate against the latter's
effectivity. As such, whether "a capacity of 20 to 40 tons per hour" is a condition or a description is of no moment. What
stands is that the private respondents had expressly exempted the petitioner from any warranty whatsoever.
Their Contract of Lease Of Machinery And Equipment states:

WARRANTY-LESSEE absolutely releases the lessor from any liability whatsoever as to any and all matters in relation to
warranty in accordance with the provisions hereinafter stipulated. 17
Taking into account that due to the nature of its business and its mode of providing financial assistance to clients, the
petitioner deals in goods over which it has no sufficient know-how or expertise, and the selection of a particular item is
left to the client concerned, the latter, therefore, shoulders the responsibility of protecting himself against product
defects. This is where the waiver of warranties is of paramount importance. Common sense dictates that a buyer
inspects a product before purchasing it (under the principle of caveat emptor or "buyer beware") and does not return it
for defects discovered later on, particularly if the return of the product is not covered by or stipulated in a contract or
warranty. In the case at bar, to declare the waiver as non-effective, as the lower courts did, would impair the obligation
of contracts. Certainly, the waiver in question could not be considered a mere surplusage in the contract between the
parties. Moreover, nowhere is it shown in the records of the case that the private respondent has argued for its nullity
or illegality. In any event, we find no ambiguity in the language of the waiver or the release of warranty. There is
therefore no room for any interpretation as to its effect or applicability vis-a- vis the deficient output of the rock
crusher. Suffice it to say that the private respondents have validly excused the petitioner from any warranty on the rock
crusher. Hence, they should bear the loss for any defect found therein.
WHEREFORE, the Petition is GRANTED; the Decision of the Court of Appeals dated March 17, 1988 is hereby REVERSED
AND SET ASIDE, and another one rendered DISMISSING the complaint. Costs against the private respondents.
SO ORDERED.