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    (CD) MAGNA FINANCIAL SERVICES GROUP, INC. vs. Colarina - G.R. NO. 158635-December 5, 2005-YpSarmiento

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    Elias Colarina purchased a vehicle from Magna Financial Services Group through an installment plan. He defaulted on payments and surrendered the vehicle. Magna filed a complaint to foreclose on the chattel mortgage. The lower courts ruled in Magna's favor, but the Court of Appeals reversed. The issue is whether Magna still has a claim after regaining possession of the vehicle. The Supreme Court rules that once a vendor avails itself of the right to foreclose a chattel mortgage by regaining possession of the property, it can no longer pursue the purchaser for any unpaid balance. As Magna regained possession of the vehicle, it is limited to foreclosing on the property and has no further claim against

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    (CD) MAGNA FINANCIAL SERVICES GROUP, INC. vs. Colarina - G.R. NO. 158635-December 5, 2005-YpSarmiento

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    ylourah
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    Elias Colarina purchased a vehicle from Magna Financial Services Group through an installment plan. He defaulted on payments and surrendered the vehicle. Magna filed a complaint to foreclose on the chattel mortgage. The lower courts ruled in Magna's favor, but the Court of Appeals reversed. The issue is whether Magna still has a claim after regaining possession of the vehicle. The Supreme Court rules that once a vendor avails itself of the right to foreclose a chattel mortgage by regaining possession of the property, it can no longer pursue the purchaser for any unpaid balance. As Magna regained possession of the vehicle, it is limited to foreclosing on the property and has no further claim against

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    103. [CD] MAGNA FINANCIAL SERVICES GROUP, INC. vs. Colarina- G.R. NO. 158635-december 5, 2005-YpSarmiento

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    Elias Colarina purchased a vehicle from Magna Financial Services Group through an installment plan. He defaulted on payments and surrendered the vehicle. Magna filed a complaint to foreclose on the chattel mortgage. The lower courts ruled in Magna's favor, but the Court of Appeals reversed. The issue is whether Magna still has a claim after regaining possession of the vehicle. The Supreme Court rules that once a vendor avails itself of the right to foreclose a chattel mortgage by regaining possession of the property, it can no longer pursue the purchaser for any unpaid balance. As Magna regained possession of the vehicle, it is limited to foreclosing on the property and has no further claim against

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    134 views2 pages

    (CD) MAGNA FINANCIAL SERVICES GROUP, INC. vs. Colarina - G.R. NO. 158635-December 5, 2005-YpSarmiento

    Uploaded by

    ylourah
    Elias Colarina purchased a vehicle from Magna Financial Services Group through an installment plan. He defaulted on payments and surrendered the vehicle. Magna filed a complaint to foreclose on the chattel mortgage. The lower courts ruled in Magna's favor, but the Court of Appeals reversed. The issue is whether Magna still has a claim after regaining possession of the vehicle. The Supreme Court rules that once a vendor avails itself of the right to foreclose a chattel mortgage by regaining possession of the property, it can no longer pursue the purchaser for any unpaid balance. As Magna regained possession of the vehicle, it is limited to foreclosing on the property and has no further claim against

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    © All Rights Reserved
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    Download as docx, pdf, or txt
    of 2

    G.R. No.

    158635 December 9, 2005

    MAGNA FINANCIAL SERVICES GROUP, INC.


    vs.
    ELIAS COLARINA

    Facts:

    Elias Colarina bought on installment from Magna Financial Services Group, Inc., one (1) unit of Suzuki
    Multicab. After making a down payment, Colarina executed a promissory note for the balance of ₱229,284.00
    payable in thirty-six (36) equal monthly installments at ₱6,369.00 monthly and to secure payment thereof,
    Colarina executed an integrated promissory note and deed of chattel mortgage over the motor vehicle.

    Colarina failed to pay the monthly amortization beginning January 1999, accumulating an unpaid
    balance of ₱131,607.00. Despite repeated demands, he failed to make the necessary payment. On 31 October
    2000 Magna Financial Services Group, Inc. filed a Complaint for Foreclosure of Chattel Mortgage with
    Replevin. Colarina voluntarily surrendered physical possession of the vehicle to the Sheriff, Mr. Antonio
    Lozano, the aforesaid motor vehicle was turned over by the sheriff to Magna Financial Services Group, Inc.

    MTCC rendered judgment in favor of Magna Financial Services Group, Inc. ordering to pay the plaintiff
    the principal sum plus penalty charges. Colarina appealed to the Regional Trial Court (RTC) which affirmed the
    decision of the MTCC. The heirs of Colarina appealed before the CA which reversed and set aside the
    decision. A Motion for Reconsideration filed by Magna Financial Services Group, Inc. was denied by the Court
    of Appeals in a resolution, hence, this Petition for Review on Certiorari.

    Issue:

    WoN petitioner still have a claim after respondent surrender possession of the vehicle. (NO)

    Ruling:

    Article 1484, paragraph 3, provides that if the vendor has availed himself of the right to foreclose the
    chattel mortgage, "he shall have no further action against the purchaser to recover any unpaid balance of the
    purchase price. Any agreement to the contrary shall be void." In other words, in all proceedings for the
    foreclosure of chattel mortgages executed on chattels which have been sold on the installment plan, the
    mortgagee is limited to the property included in the mortgage.

    Contrary to petitioner’s claim, a contract of chattel mortgage, which is the transaction involved in the
    present case, is in the nature of a conditional sale of personal property given as a security for the payment of a
    debt, or the performance of some other obligation specified therein, the condition being that the sale shall be
    void upon the seller paying to the purchaser a sum of money or doing some other act named. If the condition is
    performed according to its terms, the mortgage and sale immediately become void, and the mortgagee is
    thereby divested of his title. On the other hand, in case of non-payment, foreclosure is one of the remedies
    available to a mortgagee by which he subjects the mortgaged property to the satisfaction of the obligation to
    secure that for which the mortgage was given. Foreclosure may be effected either judicially or extrajudicially,
    that is, by ordinary action or by foreclosure under power of sale contained in the mortgage. It may be effected
    by the usual methods, including sale of goods at public auction. Extrajudicial foreclosure, as chosen by the
    petitioner, is attained by causing the mortgaged property to be seized by the sheriff, as agent of the
    mortgagee, and have it sold at public auction in the manner prescribed by Section 14 of Act No. 1508, or the
    Chattel Mortgage Law. This rule governs extrajudicial foreclosure of chattel mortgage.

    Be that as it may, although no actual foreclosure as contemplated under the law has taken place in this
    case, since the vehicle is already in the possession of Magna Financial Services Group, Inc. and it has
    persistently and consistently avowed that it elects the remedy of foreclosure, the Court of Appeals, thus, ruled
    correctly in directing the foreclosure of the said vehicle without more.

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