MALAYAN INSURANCE COMPANY vs.

DIANA ALIBUDBUD
April 20, 2016 G.R. No. 209011 Reyes, J
Provisions/Concepts/Doctrines and How Applied to the Case

FACTS
Alibudbud was employed by Malayan on July 5, 2004 as Senior Vice President (SVP) for its Sales
Department.

As SVP, she was issued a 2004 Honda Civic sedan bearing plate no. XPR 822 under Malayan's Car
Financing Plan conditioned on the following stipulations:
(1) she must continuously stay and serve Malayan for at least three full years from the date of
the availment of the Car Financing Plan; and
(2) that in case of resignation, retirement or termination before the three-year period, she
shall pay in full 100% share of Malayan and the outstanding balance of his/her share of the
cost of the motor vehicle.

Relatively, Alibudbud also executed a Promissory Note and a Deed of Chattel Mortgage in favor of
Malayan wherein it was expressly stated that: (See additional notes)

On July 18, 2005, Alibudbud was dismissed from Malayan due to redundancy. In view thereof,
Malayan demanded that she surrender the possession of the car to the company. Alibudbud sternly
refused to do so.

On September 21, 2005, Malayan instituted a Complaint for replevin (civil action for the recovery
of personal property) and/or sum of money before the Regional Trial Court (RTC) of Manila and
prayed for the seizure of the car from Alibudbud, or that she be ordered to pay P552,599.93
representing the principal obligation plus late payment charges and P138,149.98 as attorney's fees,
should said car be no longer in running and presentable condition when its return be rendered
impossible.

On October 12, 2005, Alibudbud, in turn, filed a complaint for illegal dismissal against Malayan
before the Labor Arbiter (LA) wherein she prayed for her reinstatement.

On January 30, 2006, Alibudbud filed a Motion to Suspend Proceedings to reiterate her prayer to
defer the proceedings, asseverating that the labor case she filed presents a prejudicial question to the
instant case. She explained that the resolution of the labor case will determine her rights and
obligations, as well as that of Malayan.

– RTC Denied the motion – MR denied. The RTC pointed out that the issue raised in the civil action
is completely separable with the issue raised in the labor case.

LA – complaint for illegal dismissal was dismissed. Held that the redundancy she suffered resulted
from a valid re-organization program undertaken by Malayan in view of the downturn in the latter's
sales. It further ruled that Alibudbud failed to establish any violation or arbitrary action exerted upon
her by Malayan, which merely exercised its management prerogative when it terminated her
services.
RTC – granted the complaint for replevin of Malayan.

CA – Set aside decision of trial court. RTC has no jurisdiction to take cognizance over the replevin
action because of the "employer-employee" relations between the parties which Malayan never
denied. Certainly, Alibudbud could not have availed of the benefits of the Car Financing Plan if she
was not employed by Malayan.
ISSUE/S (relevant to the syllabus)
W/N RTC has no jurisdiction over the replevin case because “employer-employee” relationship
between Alibudbud and Malayan exist? – NO
RULING (include how the law was applied)
NO. RTC correctly took cognizance of the action for replevin contrary to the pronouncement of the
CA.

"Replevin is an action whereby the owner or person entitled to repossession of goods or chattels may
recover those goods or chattels from one who has wrongfully distrained or taken, or who wrongfully
detains such goods or chattels. It is designed to permit one having right to possession to recover
property in specie from one who has wrongfully taken or detained the property. The term may refer
either to the action itself, for the recovery of personalty, or to the provisional remedy traditionally
associated with it, by which possession of the property may be obtained by the plaintiff and retained
during the pendency of the action."

In reversing the trial court's ruling, the CA declared that "[Alibudbud] could not have availed of the
Car Financing Plan if she was not an employee of [Malayan]. The status of being an employee and
officer of [Alibudbud] in [Malayan] was, therefore, one of the pre-condition before she could avail of
the benefits of the Car Financing Plan. Such being the case, there is no doubt that [Alibudbud's]
availing of the Car Financing Plan being offered by [Malayan] was necessarily and intimately
connected with or related to her employment in the aforesaid Company."

It should be noted, however, that the present action involves the parties' relationship as debtor
and creditor, not their "employer-employee" relationship.

Malayan's demand for Alibudbud to pay the 50% company equity over the car or, to surrender its
possession, is civil in nature. The trial court's ruling also aptly noted the Promissory Note and Deed of
Chattel Mortgage voluntarily signed by Alibudbud to secure her financial obligation to avail of the car
being offered under Malayan's Car Financing Plan.

Clearly, the issue in the replevin action is separate and distinct from the illegal dismissal case. The
Court further considers it justified for Malayan to refuse to accept her offer to settle her car
obligation for not being in accordance with the Promissory Note and Deed of Chattel Mortgage she
executed. Even the illegal dismissal case she heavily relied upon in moving for the suspension of the
replevin action was settled in favor of Malayan which was merely found to have validly exercised its
management prerogative in order to improve its company sales.

As consistently held, "[t]he characterization of an employee's services as superfluous or no longer

DISPOSITIVE
WHEREFORE, in view of the foregoing, the Decision dated May 15, 2013 and Resolution dated
September 6, 2013 of the Court of Appeals in CAG.R. CV No. 92940 are REVERSED and SET ASIDE. The
Decision dated November 28, 2008 of the Regional Trial Court of Manila, Branch 27, in Civil Case No.
05-113528 is, accordingly, REINSTATED.
ADDITIONAL NOTES
Promissory Note and a Deed of Chattel Mortgage:
(1) the loan of P360,000.00 shall be payable in 60 equal monthly installments at the rate of P7,299.50
each, commencing on August 15, 2004 and every succeeding month thereafter until fully paid;
(2) Alibudbud shall refund Malayan an amount equivalent to its 50% equity share in the motor
vehicle, or P360,000.00 if she leaves Malayan within three years from the availment of the subject
vehicle;
(3) should Alibudbud resign, retire or otherwise be terminated or separated from Malayan's employ,
any remaining unpaid balance on the principal obligation shall immediately fall due and demandable
upon her who shall remit the same to Malayan within five days from effectivity of such
separation/termination;
(4) Malayan is authorized to apply to the payment of outstanding obligation of Alibudbud any such
amounts of money that may be due her from the company;
(5) interests on all amounts outstanding as of the date when all Alibudbud's obligations are treated
immediately due and payable, shall be compounded every 30 days until said obligations are fully paid;
(6) Alibudbud shall pay a penalty at the rate of 16% per annum on all amounts due and unpaid;
(7) in case Alibudbud fails to pay any installment, or any interest, or the whole amount remaining
unpaid which has immediately become due and payable upon her separation from the Malayan, the
mortgage on the property may be foreclosed by Malayan, or it may take other legal action to enforce
collection of the obligation;
(8) upon default, Alibudbud shall deliver the possession of the subject vehicle to Malayan at its
principal place of business; and
(9) should Alibudbud fail or refuse to deliver the possession of the mortgaged property to Malayan,
thereby compelling it to institute an action for delivery, Alibudbud shall pay Malayan attorney's fees
of 25% of the principal due and unpaid, and all expenses and cost incurred in relation therewith
including the premium of the bond obtained for the writ of possession.