FIRST DIVISION

[G.R. No. L-32674. February 22, 1973.]

NORTHERN MOTORS, INC. , petitioner, vs. HON. AMEURFINA

MELENCIO HERRERA, Judge of the Court of First Instance of
Manila, Br. XVII, and RALPH R. TAGUBA , respondents.

Sycip, Salazar, Luna, Manalo and Feliciano for petitioner.

Manuel L. Querubin for respondents.

SYLLABUS

1. REMEDIAL LAW; PROVISIONAL REMEDIES; ACTION FOR REPLEVIN;

CHATTEL MORTGAGEE MAY MAINTAIN SUCH ACTION. — There can be no question
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 nd them. This is
irrespective of whether the mortgage contemplates a summary sale of property or
foreclosure by court action.
2. ID.; ID.; ID.; RIGHT OF MORTGAGEE TO MORTGAGED CHATTEL. — As early
as the case of Bachrach Motor Co. vs. Summers (42 Phil. 6), We explained that when
the debtor defaults, and the creditor desires to foreclose the mortgaged chattel, he
must necessarily take the mortgaged property in his hands, but when the debtor
refuses to yield the possession of the property, the creditor must institute an action,
either to effect a judicial foreclosure directly, or to secure possession as a preliminary
to the sale contemplated under Section 14 of Act No. 1508. The right of the mortgagee
to have possession of the mortgaged chattel after the condition of the mortgage is
breached must be therefore deemed to be well settled.
3. ID.; ID.; ID.; AFFIDAVITS; REQUIREMENTS. — All that is required by the
af davit contemplated in Section 2 of Rule 60 is that upon applying for an order for
replevin, the plaintiff must show that he is "the owner of the property claimed,
particularly describing it, or is entitled to the possession thereof"; that the property is
wrongfully detained by the defendant with an allegation on the cause of detention; that
the same has not been taken for any tax assessment or ne levied pursuant to law nor
seized under any execution, or an attachment against the property of such plaintiff or if
so seized that it is exempt from seizure. The af davit must also state the actual value
of the property.
4. ID.; ID.; ID.; TEST FOR SUFFICIENCY THEREOF. — In determining the
suf ciency of the application for a writ of replevin, the allegations thereof and the
recitals of the documents appended thereto and made part thereof should be
considered.
5. ID.; ID.; ID.; SUFFICIENCY THEREOF IN INSTANT CASE. — Where the
petitioner has alleged in the complaint for replevin that "it is also expressly agreed
between the parties that in case of default on the part of defendant, as mortgagor
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 therein, the mortgaged motor vehicle shall be delivered, on demands to plaintiff, as
mortgagee therein, free of all charges, and should the mortgagor not deliver the same
as aforesaid the mortgagee is authorized to take possession of said property wherever
it may be found . . ." (par. 4); that defendant Taguba "failed and refused, as he fails and
refuses, in spite of repeated demands, to pay the plaintiff P81.49 of the said
installment due 15 April 1969 and the thirteen (13) installments due 15 May 1969 thru
15 May 1970, thereby making the balance of said note, the sum of P17,659.49, and
interest from 19 June 1969 to become immediately due, payable and defaulted" (par.
6), and that "the mortgaged motor vehicle is now in Rizal in the possession of
defendants who have no legal right to the possession thereof, plaintiff having made
demand for the delivery of the said motor vehicle pursuant to the terms of the chattel
mortgage notwithstanding which demand defendants have failed and refused to do so"
(par. 7), and these allegations of the complaint were by reference made part of J.M.
Laureola's af davit, it was error for the court a quo to hold that petitioner has not
sufficiently averred its right to the possession of the property sought to be recovered.
6. ID.; ID.; ID.; FORECLOSURE BY SHERIFF NOT REQUIRED BEFORE FILING AN
ACTION FOR REPLEVIN. — There is nothing from the provisions of Section 14 of the
Chattel Mortgage Law (Act 1508) that would justify the trial court's insistence that after
default by the mortgagor and before the mortgagee can le an action to recover
possession of the mortgaged chattel, the mortgagee must rst ask the sheriff to
foreclose the mortgage, and that it is only when the mortgagor refuses to surrender the
chattel to the sheriff that the action of replevin can be instituted.
7. ID.; ID.; ID.; PROPRIETY THEREOF UPON DEFAULT OF CHATTEL
MORTGAGOR; REASON THEREFOR. — The basic reason why the creditor after default
by the mortgagor, should initiate the action in court for recovery of possession of the
subject-matter of the chattel mortgage, preliminary to an extrajudicial foreclosure
proceeding, is based upon the fact that the right is dependent on the actual default of
the principal obligor, and whether or not such fact exists, may naturally be the subject
of controversy. In case of such default and the mortgagor refuses upon demand to
surrender possession of the mortgaged chattel so that it may be sold at public auction
pursuant to Sec. 14 of Act 1508, it would certainly be an exercise in futility for the
mortgagee to rst request or direct the sheriff to "foreclose the mortgage" or take
possession of the property, before ling an action in court to recover its possession.
Such procedure is completely unnecessary not only because the sheriff initially has no
such duty or authority, but also because whenever the sheriff proceeds under Section
14 of the Chattel Mortgage Law, he becomes pro hac vice the mere agent of the
creditor. In any event, it is only upon receiving the order of the Court requiring the sheriff
to take forthwith such property into his custody, that the duty of said of cer to take
possession of the mortgaged chattel arises (Sec. 4, Rule 60, Revised Rules of Court).
8. CIVIL LAW; PACTO COMMISSORIO; ESSENCE THEREOF. — The essence of
pacto commissorio, which is prohibited by Article 2088 of the Civil Code, is that
ownership of the security will pass to the creditor by the mere default of the debtor
(Guerrero v. Ynigo, et al. 96 Phil. 37, Puig v. Sellner, et al., 45 Phil. 286, 287-288).
9. ID.; ID.; NO AUTOMATIC REVESTING OF TITLE IN INSTANT CASE. — In the
present case, the petitioner, exercising one of the options open to it under the terms of
the chattel mortgage, elected to extrajudicially foreclose the mortgage, and as a step
preliminary to such foreclosure, sought for the possession of the mortgaged car, and in
the alternative, prayed for the payment by the private respondent of the principal sum
of P17,659.49 due to it, plus interest thereon at 12% per annum from June 19, 1969
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 until fully paid, and attorney's fees. No automatic revesting of title on the creditor was
ever contemplated, for the exercise of the remedies granted to the creditor by the deed
of chattel mortgage of foreclosing the chattel mortgage or exacting the ful llment of
the obligation thru court action is by its very nature anathema to the concept of pacto
commissorio.

DECISION

ANTONIO , J : p

Original action for certiorari and mandamus to annul the Orders dated July 1,
1970 and July 28, 1970 of the Court of First Instance of Manila, Branch XVII, in its Civil
Case No. 80179, and to command respondent Judge to issue a writ of replevin. cda

On June 25, 1970, petitioner led a complaint against respondent Ralph Taguba
and another person designated as "John Doe," alleging inter alia that on February 13,
1970 Taguba executed in favor of plaintiff a promissory note, a copy of which was
attached to the complaint as "Annex A", binding himself to pay plaintiff the sum of
P18,623.75 in monthly installments as follows: P528.75 on March 15, 1969 and
P517.00 every 15th day of the month for 35 months beginning April 15, 1969 until
February 15, 1972, with 12% interest per annum on the unpaid installments, that as
security for the payment of the promissory note, defendant Taguba on the same date
executed in favor of plaintiff a chattel mortgage over a 1966 Impala sedan, which deed
of mortgage — under which it appears in effect that the said car was purchased by
defendant Taguba from plaintiff on installment basis — was duly registered in the
chattel mortgage registry of Laguna, a copy of which deed was also attached thereto
as "Annex B" that under the terms of the mortgage, upon default in the payment of any
installment or interest due, the total principal sum remaining unpaid, with accrued
interest, shall at once become due and payable and the mortgaged car shall, on
demand, be delivered by the mortgagor to the mortgagee, otherwise the mortgagee is
authorized to take possession of the car wherever it may be found and have it brought
to Manila at the expense of the mortgagor, and the mortgagee shall have the option of
(a) selling the mortgaged property, (b) cancelling the contract of sale with the
mortgagor, (c) extrajudicially foreclosing the mortgage, (d) judicially foreclosing the
mortgage, or (e) exacting ful llment of the mortgage obligation by ordinary civil action,
the mortgagee be entitled to attorney's fees equivalent to 25% of the sum due in case
attorney's services are availed of, it being agreed upon that any legal action arising from
the promissory note may be instituted in the courts of Manila; that defendant Taguba
paid only the sum of P964.26 representing the installment due March 15, 1969, and
another sum of P35.74 as interest up to June 18, 1969, but failed and refused, in spite
of repeated demands, to pay P81.49 of the installment due April 15, 1969, and the 13
installments due May 15, 1969 to May 15, 1970, thereby making the entire unpaid
balance of the promissory note in the sum of P17,659.49 due and demandable, with
interest thereon from June 19, 1969; that plaintiff has elected to avail itself of the
option of extrajudicially foreclosing the mortgage; that the mortgaged vehicle is in the
province of Rizal in the possession of defendant Taguba, who has no legal right to the
possession thereof, plaintiff having demanded the delivery to it of said vehicle, pursuant
to the terms of the chattel mortgage, but defendant Taguba failed and refused to make
such delivery; that the value of the car is P18,000.00, and said car has not been taken
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 for a tax assessment or ne pursuant to law, or seized under an execution or an
attachment against plaintiff's property; and plaintiff is ready to give a bond executed in
defendants' favor in double the value of the car, for the return thereof to defendants if it
be so adjudged, and for payment to them of such sums as they may recover from
plaintiff in the action. Plaintiff prayed that upon approval of the bond a writ of replevin
be issued for the seizure of the car wherever it may be found and for its delivery to
plaintiff, and after hearing, plaintiff be adjudged as having the rightful possession and
ownership thereof and that in default of delivery, defendants be sentenced to pay
plaintiff the sum of P17,659.49 with interest thereon at the rate of 12% per annum from
June 19, 1969, until said principal sum is fully paid, and a sum equivalent to 25% of the
amount due as and for attorney's fees and costs of collection, and the costs of suit.
Attached to the complaint is a bond for P36,000.00 and an "Af davit of Replevin"
executed by an officer of plaintiff corporation.
On July 1, 1970, an Order was issued by respondent judge denying petitioner's
prayer for a writ of replevin because the rules "require that an af davit be submitted
alleging that the plaintiff is the owner of the property claimed, or that he is entitled to its
possession"; and therefore the af davit attached to the complaint is insuf cient, for it
is clear therefrom that plaintiff "is not the owner of the motor vehicle mortgaged to it;
and it is not entitled to its possession merely because the mortgagor has failed to pay
the account guaranteed by the mortgage." LexLib

A motion for reconsideration was led by petitioner on July 10, 1970, but the
same was, in an Order dated July 23, 1970, likewise denied by respondent judge. It is
Her Honor's view that after the mortgagor has breached the chattel mortgage and
refused to deliver the mortgaged chattel to a public of cer for foreclosure sale, a
replevin suit should be instituted by the mortgagee, "but only for the purpose of
delivering the chattel to the public of cer for foreclosure sale". Respondent judge
further stated that there being no allegation that plaintiff mortgagee has asked or
directed a public of cer to foreclose the mortgage and that the mortgagor had refused
to surrender the mortgaged chattel to said public of cer, it cannot be held that either
the public of cer or the mortgagee is entitled to replevin; that the present complaint
seeks "that plaintiff be adjudged to have rightful possession" over the chattel without
quali cation 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 has a right of possession, that right is not unquali ed but is subject to
the obligation of delivering the possession of the mortgaged chattel to the public
officer for foreclosure.
We reverse the challenged orders.
1. There can be no question 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 nd them. This is irrespective of whether the mortgage
contemplates a summary sale of the property or foreclosure by court action (Podrat v.
Oberndorff 207 Cal. 457; 63 A.L.R. 1308). As early as the case of Bachrach Motor Co. v.
Summers (42 Phil. 6) We explained that when the debtor defaults, and the creditor
desires to foreclose the mortgaged chattel, he must necessarily take the mortgaged
property in his hands, but when the debtor refuses to yield the possession of the
property, the creditor must institute an action, either to effect a judicial foreclosure
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 directly, or to secure possession as a preliminary to the sale contemplated under
Section 14 of Act No. 1508. The right of the mortgagee to have possession of the
mortgaged chattel after the condition of the mortgage is breached must be therefore
deemed to be well settled.
The Rules do not require that in an action for replevin, the plaintiff should allege
that the "mortgagee has asked or directed a public of cer to foreclose the mortgage
and that the mortgagor has refused to surrender the mortgaged chattel to such public
officer."
All what is required by Section 2 of Rule 60 is that upon applying for an order for
replevin, the plaintiff must show that he is "the owner of the property claimed,
particularly describing it, or is entitled to the possession thereof"; that. the property is
wrongfully detained by the defendant with an allegation on the cause of detention; that
the same has not been taken for any tax assessment or ne levied pursuant to law nor
seized under any execution, or an attachment against the property of such plaintiff or if
so seized that it is exempt from seizure. The af davit must also state the actual value
of the property. The af davit of S. M. Laureola, Assistant to the General Manager of
Northern Motors, Inc. attached to the complaint, substantially complies with the
aforecited requirements. prLL

In determining the suf ciency of the application for writ of replevin, the
allegations thereof and the recitals of the documents appended thereto and made part
thereof should be considered. Thus it is alleged in the complaint that "it is also
expressly agreed between the parties that in case of default on the part of defendant,
as mortgagor therein, the mortgaged motor vehicle shall be delivered, on demand, to
plaintiff, as mortgagee therein, free of all charges, and should the mortgagor not deliver
the same as aforesaid, the mortgagee is authorized to take possession of said
property wherever it may be found . . ." (par. 4); that defendant Taguba "failed and
refused, as he fails and refuses, in spite of repeated demands, to pay the plaintiff
P81.49 of the said installment due 15 April 1969 and the thirteen (13) installments due
15 May 1969 thru 15 May 1970, thereby making the balance of said note, the sum of
P17,659.49, and interest from 19 June 1969, to become immediately due, payable and
defaulted" (par. 6); and that "the mortgages motor vehicle is now in Rizal in the
possession of defendants who have no legal right to the possession thereof — plaintiff
having made demand for the delivery of the said motor vehicle pursuant to the terms of
the chattel mortgage, notwithstanding which demand defendants have failed and
refused to do so" (par. 7). These allegations of the complaint were by reference made
part of J. M. Laureola's affidavit. cdrep

We nd nothing from the provisions of Section 14 of the Chattel Mortgage Law

(Act 1508) that would justify the trial court's insistence, that after default by the
mortgagor and before the mortgagee can le an action to recover possession of the
mortgaged chattel, the mortgagee must rst ask the sheriff to foreclose the mortgage
and it is only when the mortgagor refuses to surrender the chattel to the sheriff that the
action of replevin can be instituted. We clearly explained in Bachrach Motor Co. v.
Summers, supra, that, while Section 14 of Act 1508 places upon "a public of cer" the
responsibility of conducting the sale of the mortgaged chattel, there is nothing in said
statute which would authorize the of cer to seize the mortgaged property; and that for
the recovery of possession of said property, where the right is disputed, "the creditor
must proceed along the channels by action in court." The basic reason why the creditor
should initiate such action is because of the circumstances that the creditor's right of
possession of the subject-matter of the chattel mortgage, as a preliminary to an extra-
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 judicial foreclosure proceeding, is conditioned upon the fact of actual default on the
part of the principal obligor, and the existence of this fact may naturally be the subject
of controversy. In case of such default and the mortgagee refuses upon demand, to
surrender possession of the mortgaged chattel so that it may be sold at public auction
pursuant to Section 14 of Act 1508, it would certainly be an exercise in futility for the
mortgagee to rst request or direct the sheriff to "foreclose the mortgage" or take
possession of the property, before ling an action in court to recover its possession.
Such a procedure is completely unnecessary not only because the sheriff has no duty or
authority in the rst instance to seize the mortgaged property, but also because
whenever the sheriff proceeds under section 14 of the Chattel Mortgage Law, he
becomes pro hac vice the mere agent of the creditor. In any event it is only upon
receiving the order of the Court requiring the sheriff to take forthwith such property into
his custody, that the duty of said of cer to take possession of the mortgaged chattel
arises (Section 4, Rule 60, Revised Rules of Court). It was therefore error for the court a
quo to hold that petitioner has not suf ciently averred its right to the possession of the
property sought to be recovered.
2. There is also no support for the assertion that the petitioner seeks to
appropriate the property given by way of mortgage or dispose of it in a manner
violative of Article 2088 of the new Civil Code.
The essence of pacto commissorio, which is prohibited by Article 2088 of the
Civil Code, is that ownership of the security will pass to the creditor by the mere default
of the debtor (Guerrero v. Yñigo, et al., 96 Phil 37, 41-42; Puig v. Sellner, et al., 45 Phil.
286, 287-88) In the present case, the petitioner, exercising one of the options open to it
under the terms of the chattel mortgage, elected to extrajudicially foreclose the
mortgage, and as a step preliminary to such foreclosure, sought for the possession of
the mortgaged car and in the alternative, prayed for the payment by the private
respondent of the principal sum of P17,659.49 due to it, plus interest thereon at 12%
per annum from June 19, 1969 until fully paid and attorney's fees. No automatic
revesting of title on the creditor was ever contemplated, for the exercise of the
remedies granted to the creditor by the deed of chattel mortgage of foreclosing the
chattel mortgage or exacting the ful llment of the obligation thru court action is by its
very nature anathema to the concept of pacto commissorio. dctai

WHEREFORE, the writs prayed for are granted. The orders complained of are
accordingly set aside, and the court a quo is hereby ordered to issue the writ of replevin
prayed for by petitioner. Costs against private respondent.
Concepcion, C.J ., Zaldivar, Castro, Fernando, Teehankee, Barredo, Makasiar and
Esguerra, JJ ., concur.
Makalintal, J ., took no part.

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