SERVICEWIDE SPECIALISTS v.
CA
Facts:
Eleuterio Bondoc executed and delivered to Carmark Philippines a
promissory, and, in order to secure payment, a chattel mortgage was
executed in favor of Carmark Philippines over the subject motor
vehicle which was subsequently assigned in favor of Filinvest
Corporation, with the conformity of Eleuterio Bondoc. As vendor,
Bondoc executed a deed of sale with assumption of mortgage of the
balance of the account in favor of Cesar Dollente which, upon
approval by Filinvest Corporation, Cesar Dollente executed and
delivered to Filinvest a promissory note. Cesar Dollente, likewise
sold the vehicle and executed a deed of sale with assumption of
mortgage over the said vehicle for the balance of his account in favor
of Ernesto Dollente. The latter executed and delivered to Filinvest a
promissory note. This obligation was secured by a chattel mortgage
executed between Cesar and Ernesto. Subsequently, Filinvest
assigned all its rights and interests on the promissory note and
chattel mortgage to plaintiff Servicewide, with notice to Ernesto
Dollente. Because Ernesto Dollente, had defaulted in the payment of
the monthly installments, Servicewide demanded from him the
payment of the entire balance, which includes interest thereon and to
return the motor vehicle. By reason of the refusal of Ernesto Dollente
to pay the entire balance and to surrender possession of the subject
motor vehicle, Servicewide filed a case, and, upon motion, a writ of
seizure was issued and the same was implemented by the sheriff. A
counter-replevin bond having been filed, defendant Armando
Custodio, Jr. had obtained possession of the mortgaged vehicle.
Custodio obtained the motor vehicle in question by purchase from
Ernesto Dollente. The lower court ruled in favor of plaintiff. On
appeal, the CA reversed and said that the failure of summons to
Dollente, was "fatal to the entire action" Dollente being an
indispensable party to the proceedings.
Issue:
Whether an action filed by the mortgagee for replevin to effect a
foreclosure of the property covered by the chattel mortgage would
require that the mortgagor be impleaded as an indispensable party
thereto.
Ruling:
Yes. Rule 60 of the Rules of Court allows a plaintiff, in an action for
the recovery of possession of personal property, to apply for a writ of
replevin if it can be shown that he is "the owner of the property
claimed, or is entitled to the possession thereof." The plaintiff need
not be the owner so long as he is able to specify his right to the
possession of the property and his legal basis therefor.
In a suit for replevin, a clear right of possession must be established.
A foreclosure under a chattel mortgage may properly be commenced
only once there is default on the part of the mortgagor of his
obligation secured by the mortgage. The conditions essential for the
foreclosure would be to show, firstly, the existence of the chattel
mortgage and, secondly, the default of the mortgagor. These
requirements must be established since the validity of the plaintiff's
exercise of the right of foreclosure are inevitably dependent thereon.
The failure of summons upon Ernesto Dollente is said to have been
due to defendant's being no longer a resident "at the given address
as per information gathered from the present occupant of the
premises." It appears that the remedial measures provided in Rule
14 of the Rules of Court regrettably have not been properly availed
of; for instance, substitute service of summons under Section 8
thereof could have been resorted to. Without the presence of
indispensable parties to a suit or proceeding, a judgment of a court
cannot attain real finality.