141 Northern Motors vs. Herrera

Northern Motors vs.
Subject: A chattel mortgage on a 1966 Impala Sedan ISSUE: WON it is necessary for an action of replevin to be institued, as
Herrera the RTC posits, that the mortgagee must first ask the sheriff to
How the case started: foreclose the mortgage and it is only when the mortgagor refuses to
 Northern Motors filed a complaint against Ralph Taguba and surrender the chattel to the sheriff where the action may be granted.
The Rules do not another person designated as "John Doe,"
require that in an  Alleging that Taguba executed in favor of Northern HELD: NO
action for replevin, Motors a promissory note which bound Taguba to pay The Rules do not require that in an action for replevin, the plaintiff
the plaintiff should NM the sum of 18,623.75 php in monthly installments. should allege that the "mortgagee has asked or directed a public
allege that the  As security for the payment of the PN, Taguba on the same officer to foreclose the mortgage and that the mortgagor has refused
"mortgagee has date executed in favor of NM a chattel mortgage over a 1966 to surrender the mortgaged chattel to such public officer."
asked or directed a Impala sedan. The registered deed of mortgage shows:
public officer to  That the said car was purchased by Taguba from NM on  What Sec. 2, Rule 60 requires is that upon applying for an order
foreclose the installment basis for replevin, the plaintiff must show that he is "the owner of
mortgage and that  That under the terms of the mortgage, upon default in the property claimed, particularly describing it, or is entitled
the mortgagor has the payment of any installment or interest due, the to the possession thereof"; + that the property is wrongfully
refused to total principal sum remaining unpaid, with accrued detained by the defendant with an allegation on the cause of
surrender the interest, shall at once become due and payable and the detention + that the same has not been taken for any tax
mortgaged chattel mortgaged car shall, on demand, be delivered by the assessment or fine levied pursuant to law nor seized under
to such public mortgagor to the mortgagee, otherwise the any execution, or an attachment against the property of such
officer." mortgagee is authorized to take possession of the plaintiff or if so seized that it is exempt from seizure + the
car whereever it may be found and have it brought affidavit must also state the actual value of the property.
to Manila at the expense of the mortgagor, and the  The affidavit of S. M. Laureola, Assistant to the General Manager of
Replevin mortgagee shall have the option of Northern Motors, Inc. attached to the complaint, substantially
An action whereby a) selling the mortgaged property, complies with the aforecited requirements.
the owner or person b) cancelling the contract of sale with the mortgagor,
entitled to c) extra judicially foreclosing the mortgage, In determining the sufficiency of the application for writ of replevin,
repossession of d) judicially foreclosing the mortgaged or the allegations and the recitals of the documents appended were also
goods or chattels may  Exacting fulfillment of the mortgage obligation by considered.
recover those goods ordinary civil action, NM be entitled to attorney’s fees  Arguments were specifically alleged in the terms and agreeement
or chattels from one equivalent to 25% of the sum due in case attorney’s (see underlined and bold)
who has wrongfully services are availed of, it being agreed upon that any
distrained or taken, legal action arising from the promissory note may be We find nothing from the provisions of Section 14 of the Chattel Mortgage
or who wrongfully instituted in the courts of Manila Law (Act 1508) that would justify the trial court's position that the
detains such goods or  That Taguba was only able to pay part of what is due mortgagee must first ask the sheriff to foreclose the mortgage and it is only
chattels. him and failed and refused several installments making when the mortgagor refuses to surrender the chattel to the sheriff where the
the entire unpaid balance of the promissory note in the action may be granted
sum of P17,659.49 due and demandable, with
accumulated interest. Persons having a special right of property in the goods the recovery
 That NM has elected to avail itself of the option of of which is sought, such as a chattel mortgagee, may maintain an
extrajudicially foreclosing the mortgage; action for replevin therefor.
 That the mortgaged vehicle is in the province of Rizal in  Where the mortgage authorizes the mortgagee to take possession
the possession of Taguba, who has no legal right to the of the property on default, he may maintain an action to recover
possession thereof, NM having demanded the delivery possession of the mortgaged chattels from the mortgagor or from
to it of said vehicle, pursuant to the terms of the any person in whose hands he may find them. This is irrespective
chattel mortgage, but Taguba failed and refused to of whether the mortgage contemplates a summary sale of the
make such delivery; property or foreclosure by court action
 Taguba prayed that upon approval of the bond that  As early as the case of Bachrach Motor Co. v. Summers, it has been
would double the value of the car as per NM’s explained that when the debtor defaults, and the creditor desires
agreement, a writ of replevin be issued for the seizure of to foreclose the mortgaged chattel, he must necessarily take the
the car wherever it may be found and for its delivery to mortgaged property in his hands, but when the debtor refuses to
NM, and after hearing, plaintiff be adjudged as having yield the possession of the property, the creditor must institute an
the rightful possession and ownership thereof and that action, either to effect a judicial foreclosure directly, or to secure
in default of delivery, will have additional fees to pay. possession as a preliminary to the sale contemplated under
Section 14 of Act No. 1508.
Attached to the complaint is a bond for P36,000.00 and an  The right of the mortgagee to have possession of the mortgaged
"Affidavit of Replevin" executed by an officer of NM corporation. chattel after the condition of the mortgage is breached must be
therefore deemed to be well settled.
CONFLICT:
An Order was issued by Judge Herrera denying NM's prayer for a
writ of replevin because the rules "require that an affidavit be WHEREFORE, the writs prayed for are granted. The orders
submitted alleging that the NM is the owner of the property complained of are accordingly set aside, and the court a quo is
claimed, or that he is entitled to its possession"; and therefore the hereby ordered to issue the writ of replevin prayed for by petitioner.
affidavit attached to the complaint is insufficient, for it is clear Costs against Taguba
therefrom that NM "is not the owner of the motor vehicle
mortgaged to it; and it is not entitled to its possession merely
because the mortgagor Taguba has failed to pay the account
guaranteed by the mortgage."
MR filed, MR was denied. Reason:

 After the mortgagor Taguba has breached the chattel
mortgage and refused to deliver the mortgaged chattel to
a public officer for foreclosure sale, a replevin suit should
be instituted by NM "but only for the purpose of delivering
the chattel to the public officer for foreclosure sale
 There being no allegation that mortgagee NM has asked or
directed a public officer to foreclose the mortgage and that
mortgagor Taguba had refused to surrender the
mortgaged chattel to said public officer, it cannot be held
that either the public officer or mortgagee NM is entitled
to replevin;
 That the present complaint seeks "that NM be adjudged to
have rightful possession" over the chattel without
qualification whatsoever which, in the practical sense, can
revest ownership in it of the repossessed chattel in
contravention of Article 2088 of the Civil Code, and that
even if the mortgagee NM has, right of possession, that
right is not unqualified but is subject to the obligation of
delivering the possession of the mortgaged chattel to the
public officer for foreclosure.

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Northern Motors vs.

MR filed, MR was denied. Reason:

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