BA Finance Corp V Court of Appeals Case Digest

BA Finance Corporation v. Hon. Court of Appeals and Roberto M.
Reyes (CASE DIGEST)
G.R. No. 102998,
FACTS:
Spouses Manahan executed a promissory note binding themselves to pay Carmasters, Inc., P83,080.00 in
36 monthly installments. To secure payment, the Manahan spouses executed a deed of chattel mortgage
over a motor vehicle, a Ford Cortina. Carmasters later assigned the promissory note and the chattel
mortgage to petitioner BA Finance Corporation with the conformity of the Manahans. When the latter
failed to pay the installments, petitioner sent demand letters. The demands not having been heeded,
petitioner filed a complaint for replevin with damages against the spouses, as well as against a John Doe,
praying for the recovery of the vehicle with an alternative prayer for the payment of a sum of money
should the vehicle not be returned. The lower court issued a writ of replevin.
The service of summons upon the spouses Manahan was caused to be served by petitioner. The original of
the summons had the name and the signature of private respondent Roberto M. Reyes indicating that he
received a copy of the summons and the complaint. Petitioner, through its Legal Assistant, issued a
certification to the effect that it had received from Orson R. Santiago, the deputy sheriff of the RTC the
Ford Cortina seized from private respondent Roberto M. Reyes, the John Doe referred to in the complaint,
in Sorsogon, Sorsogon. Consequently, the lower court came out with an order of seizure.
A few months later, the court issued an order dismissing the caste for failure to prosecute and further
ordering the plaintiff to return the property seized with all its accessories to defendant John Doe in the
person of Roberto M. Reyes.
The order was recalled, but summons still could not be served on the Manahans. So, the trial court
dismissed the case and ordered that the vehicle be returned to Reyes. The CA affirmed.
On appeal, the CA denied petitioner’s motion for reconsideration. Hence this petition.
ISSUE:
Whether or not a mortgagee can maintain an action for replevin against any possessor of the object of a
chattel mortgage even if the latter were not a party to the mortgage.
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RULING:
No. Replevin is both a form of principal remedy and of a provisional relief. It may refer either to the
action itself, i.e., to regain the possession of personal chattels being wrongfully detained from the plaintiff
by another, or to the provisional remedy that would allow the plaintiff to retain the thing during the
pendency of the action and hold it pendente lite. The action is primarily possessory in nature and generally
determines nothing more than the right of possession. The person in possession of the property sought to
be replevied is ordinarily the proper and only necessary party defendant, and the plaintiff is not required
to so join as defendants other persons claiming a right on the property but not in possession thereof. The
Rules of Court allows an application for the immediate possession of the property but the plaintiff must
show that he has a good legal basis, i.e., a clear title thereto, for seeking such interim possession.
Where the right of the plaintiff to the possession of the specific property is so conceded or evident, the
action need only be maintained against him who so possesses the property. The court, in an earlier case
held that persons having a special right of property in the goods the recovery of which is sought, such as a
chattel mortgagee, may maintain an action for replevin therefor. Where the mortgage authorizes the
mortgagee to take possession of the property on default, he may maintain an action to recover possession
of the mortgaged chattels from the mortgagor or from any person in whose hands he may find them.
A chattel mortgagee, unlike a pledgee, need not be in, nor entitled to, the possession of the property
unless and until the mortgagor defaults and the mortgagee thereupon seeks to foreclose thereon. Since
the mortgagee’s right of possession is conditioned upon the actual fact of default which itself may be
controverted, the inclusion of other parties, like the debtor or the mortgagor himself, may be required in
order to allow a full and conclusive determination of the case. When the mortgagee seeks a replevin in
order to effect the eventual foreclosure of the mortgage, it is not only the existence of, but also the
mortgagor’s default on, the chattel mortgage that, among other things, can properly uphold the right to
replevy the property. The burden to establish a valid justification for that action lies with the plaintiff. An
adverse possessor, who is not the mortgagor, cannot just be deprived of his possession, let alone be bound
by the terms of the chattel mortgage contract, simply because the mortgagee brings up an action for
replevin.
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BA Finance Corporation v. Hon. Court of Appeals and Roberto M.

Reyes (CASE DIGEST)

G.R. No. 102998,

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C:\Users\New Earth 1\Downloads\ 2

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