c October 29, 1976

PACIFIC MERCHANDISING CORPORATION, plaintiff-appellee, vs. CONSOLACION INSURANCE & SURETY CO.,

FACTS: In Civil Case No. 117811, an action to collect the sum of P2,562.88, the court rendered judgment in favor of the plaintiff and
against the defendant, ordering the latter to pay the former the sum of P2,562.88 and condemning third defendant to pay third-party
plaintiff for whatever sums or amounts thee latter paid the plaintiff on account of this judgment.

The case was elevated to the CFI of Manila. The parties submitted the following Stipulation of Facts:

On the 19th day of October, 1962, a Writ of Execution was issued by the CFI of Manila under Civil Case No. 49691, entitled  Pacific
Merchandising Corporation vs. Leo Enterprises, Inc. By virtue of such, the Sheriff levied and attached a Second Hand
AUTOMATICKET Machine and Cinema Projectors, which items were advertised for sale. The sale at public auction of the above
properties was postponed and cancelled due to the appointment of Atty. Greg V. Pajarillo as Receiver of Paris Theatre in which he
undertook the payment of the judgment rendered in favor of the plaintiff against Leo Enterprises, Inc.;

On March 1963, third-party defendant Pajarillo approached the third-party plaintiff and applied for a surety bond in the amount of
P5,000.00 to be rated in favor of the abovenamed plaintiff in order to guarantee the payment of obligations in its favor by Leo
Enterprises, Inc. The bond applied for was executed in favor of the plaintiff with third-party defendant Pajarillo as principal and third-
party plaintiff as surety. The third party defendant Pajarillo executed in favor of the third-party plaintiff an INDEMNITY
AGREEMENT, and the plaintiff received the sum of P2,000.00 leaving a balance of P2,562.88 still unpaid.

The CFI of Manila rendered judgement in Civil case No. 50201 by virtue of which Pajarillo, as said Receiver stopped making
payments to plaintiff. On October 9, 1963, plaintiff's counsel demanded from Paiarillo the payment which remain unpaid in spite of
demand. The defendant was also notified of the demand made on Pajarillo and in spite thereof, the defendant has failed and refused to
pay. When reminded by third-party plaintiff regarding his obligations in favor of the plaintiff, the third-party defendant Pajarillo
replied that he no longer was bound to pay because he had ceased to be the receiver of Paris Theatre operated by Leo Enterprises, Inc.
by virtue of the decision in Case No. 50201.

ISSUE: whether or not third party defendant-appellant Gregorio V. Pajarillo is liable to plaintiff for the unpaid amount claimed

HELD: YES. A receiver is not an agent or representative of any party to the action. He is an officer of the court exercising his
functions in the interest of neither plaintiff nor defendant, but for the common benefit of all the parties in interest. He performs
his duties "subject to the control of the Court," and every question involved in the receivership may be determined by the court taking
cognizance of the receivership proceedings. Thus, "a receiver, strictly speaking, has no right or power to make any contract binding
the property or fund in his custody or to pay out funds in his hands without the authority or approval of the court. The custody of the
receiver is the custody of the court. His acts and possession are the acts and possession of the court, and his contracts and liabilities
are, in contemplation of law, the contracts and liabilities of the court. As a necessary consequence, a receiver is subject to the
control and supervision of the court at every step in his management of the property or funds placed in his hands. ... He cannot
operate independently of the court, and cannot enter into any contract without its approval.

In the case at bar, appellant Pajarillo never secured the court's approval of either the agreement of March 11, 1963, with PMC or of his
Indemnity Agreement with the Consolacion Insurance on March 14, 1963, in consideration of the performance bond submitted by the
latter to PMC to guarantee the payment of the obligation. In order to bind the property or fund in his hands as receiver, he should have
applied for and obtained from the court authority to enter into the aforesaid contract. Unauthorized contracts of a receiver do not
bind the court in charge of receivership. They are the receiver's own contracts and are not recognized by the courts as
contracts of the receivership. Consequently, the aforesaid agreement and undertaking entered into by appellant Pajarillo not having
been approved or authorized by the receivership court should, therefore, be considered as his personal undertaking or obligation.
Certainly, if such agreements were known by the receivership court, it would not have terminated the receivership without due notice
to the judgment creditor as required by Section 8 of Rule 59 of the Rules of Court. This must be assumed because of the legal
presumption that official duty has been regularly performed. Indeed, if it were true that he entered into the agreement and undertaking
as a receiver, he should have, as such receiver, submitted to the court an account of the status of the properties in his hands including
the outstanding obligations of the receivership. Had he done so, it is reasonable to assume that the judgment creditor would have
opposed the termination of the receivership, unless its claim was paid. Having failed to perform his duty, to the prejudice of the
creditor, appellant should not be permitted to take advantage of his own wrong. The judgment creditor having been induced to enter
into the aforesaid agreement by appellant Pajarillo it was the duty of the latter to comply with is end of the bargain. He not only failed
to perform his undertaking, but now attempts to evade completely his liability. Under such circumstances, appellant is not entitled to
equitable relief. No ground for equitable relief can be found in a case where a party has not only failed to perform the conditions upon
which he alone obtained the execution of the contract, but where it is clear that he never, at any time, intended to perform them.

G.R. No. L-10658            February 14, 1918

OCEJO, PEREZ & CO., plaintiffs-appellees, vs. THE INTERNATIONAL BANKING CORPORATION, defendant-appellant.

FACTS: On March 7, 1914, Chua Teng Chong, executed and delivered to the International Banking Corporation, a promissory note
and a private document which stated that he had deposited with the bank, as security, 5,000 piculs of sugar, stored in a warehouse at
Calle Toneleros, Manila. The bank did not take possession of the sugar and made no effort to exercise any active ownership over said
merchandise until April 16, when it discovered that the amount of sugar stored was less than the 5,000 piculs in the contract.

On March 24, 1914, the plaintiff partnership entered into contract with Chua Teng Chong for the sale to him of sugar. This sugar was
brought to Manila in April, and 5,000 piculs were delivered in April 16, 1914. The sugar was stored in the buyer's warehouse at
Muelle de la Industria. Plaintiff partnership presented, for collection, its account for the purchase price of the sugar, but the buyer
refused to make payment, and up to the present time the sellers have been unable to collect the purchase price of the merchandise in
question.

Upon discovery that the sugar was less than the amount in the contract, the bank's representative went to Chua Teng Chong who
informed him that the rest of the sugar in the warehouse at Muelle de la Industria. The bank's representative immediately took
possession of the sugar therein, closing the warehouse with the bank's padlocks. The sugar seized by the bank in the Muelle de la
Industria warehouse is the same sugar which the plaintiff firm delivered to Chua Teng Chong. On the date on which the bank took
possession of the sugar the promissory note executed March 17, 1914, had fallen due and was unpaid.

After Chua Teng Chong had refused to pay the bill for the price of the sugar which the plaintiff firm presented to him, the day after its
delivery, an attempt was made by the plaintiff to recover possession of the sugar. On April 24, 1914, the plaintiff made a demand on
the bank for the delivery of the sugar, to which demand the bank refused to accede. The buyer Chua Teng Chong was then judicially
declared to be insolvent, and Francisco Chua Seco was appointed as assignee of the insolvency. On the same date, the plaintiff
partnership filed a complaint, naming the bank as defendant, alleging that said defendant was unlawfully holding some 4,711 piloness
of sugar, the property of the plaintiff firm, which the bank had received from Chua Teng Chong, and prayed for the judgment for the
possession of said sugar. The plaintiff granted replevin of personal property. Subsequently, by agreement of the parties, the sugar was
sold and the proceeds of the sale deposited in the bank, subject to the order of the court upon the final disposition of the case. A
complaint in intervention was filed by Chua Seco, in which he asserts a preferential right to the sugar, or to the proceeds of its sale,
upon the ground that the delivery of the sugar by plaintiff, by virtue of which it passed into the possession and control of Chua Teng
Chong, had the effect of transmitting the title of the pledge asserted by the bank was null and void. Upon these allegations the
interveners contends that the sugar is the property of the insolvent estate represented by him.

ISSUE: Whether or not the commencement of a replevin suit by the seller equivalent to the rescission of the sale.

HELD: NO. The bank has no interest in this matter. As its alleged contract of pledge is utterly unavailing, it is evident that the
question of procedure does not affect it.

Assuming that by reason of the nonpayment of the purchase price, the seller is entitled to elect to rescind the sale, is the rescission
effected ipso facto by such election, or is it necessary for him to bring an action of rescission? The action of replevin, the intervener
contends, is based (Code of Civil Procedure, sec. 263) upon the assumption that the plaintiff at the time of bringing the action is either
the owner of the thing which is the subject matter of the suit or entitled to its possession. But the question presented is whether, in
cases in which title has passed by delivery and in which the buyer has failed to pay the purchased price on demand, title is revested in
the seller by the mere fact that he has mentally determined to elect to rescind? In its brief the plaintiff partnership contends for the
affirmative, saying that the acts of the seller — the filing of its complaint — imply that it has made the election. But the intervener,
adopting the argument of the bank, contends that the party to whom article 1124 of the Civil Code grants the right to rescind "must
apply to the court for a decree for the rescission of the contract. . . ." (Scaevola, vol. 19, p. 673); and this conclusion is supported by
the last paragraph of the article cited. Of course, if the action of the court is necessary in order to effectuate the rescission of the sale,
such rescission does not follow ipso jure by reason of nonpayment and the determination of the seller to elect to rescind.
Consequently, the action of replevin cannot be maintained. The right to rescind a sale, established by article 1506, in no wise differs
from that which is established, in general terms, with respect to reciprocal obligations, by article 1124 in "true event that one of the
obligors fails to perform the obligation incumbent upon him." But the right so conferred is not an absolute one. The same article
provides that "the court shall decree the rescission demanded, unless there are causes which justify him in allowing a term."

Therefore, it is the judgment of the court and not the mere will of the plaintiff which produces the rescission of the sale. This being so,
the action of replevin will no lie upon the theory that the rescission has already taken place and that the seller has recovered title to the
thing sold.

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.

FACTS: On June 25, 1970, petitioner filed a complaint against respondent Ralph Taguba and another person alleging  hat on
February 13, 1970 Taguba executed in favor of plaintiff a promissory note, binding himself to pay plaintiff the sum of P18,623.75 in
monthly installments; that as security for the payment, defendant Taguba executed in favor of plaintiff a chattel mortgage over a 1966
Impala sedan, which was duly registered in the chattel mortgage registry; that under the terms of such, upon default of any installment
or interest due, the total principal sum remaining unpaid, 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 fulfillment of the obligation by ordinary civil action; that defendant Taguba paid
only the sum of P964.26 and another P35.74 as interest, but failed and refused, in spite of repeated demands, to pay the succeeding
installments, making the entire unpaid balance of the promissory note P17,659.49 due and demandable; that plaintiff has elected the
option of extrajudicially foreclosing the mortgage; that the mortgaged vehicle is 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 for a tax assessment or fine 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.

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 affidavit be submitted alleging that the plaintiff is the owner of the property claimed, or that he is entitled to its possession";
and therefore the affidavit attached to the complaint is insufficient, 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."

ISSUE: Whether or not the petitioner is entitled to replevin.

HELD: YES. 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 find 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 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
officer to foreclose the mortgage and that the mortgagor has refused to surrender the mortgaged chattel to such public officer." All
that 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 fine 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 affidavit must also state the actual value of the property. The
affidavit of S.M. Laureola, Assistant to the General Manager of Northern Motors, Inc. attached to the complaint, substantially
complies with the aforecited requirements.

In determining the sufficiency 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 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). These allegations of the complaint were by reference made part of J. M.
Laureola's affidavit.

G.R. NO. 182963, June 03, 2013

SPOUSES DEO AGNER AND MARICON AGNER, Petitioners, v. BPI FAMILY SAVINGS BANK, INC., Respondent.

FACTS: On February 15, 2001, petitioners spouses Deo Agner and Maricon Agner executed a Promissory Note with Chattel
Mortgage in favor of Citimotors, Inc. which provides that: for receiving the amount of Php834,768.00, petitioners shall pay
Php17,391.00 every 15th day of each succeeding month until fully paid; the loan is secured by a 2001 Mitsubishi Adventure Super
Sport. Citimotors, Inc. assigned all its rights, title and interests in the Promissory Note with Chattel Mortgage to ABN AMRO, which
likewise assigned the same to respondent BPI.

For failure to pay four successive installments, respondent, sent to petitioners a demand letter declaring the entire obligation as due
and demandable and requiring to pay Php576,664.04, or surrender the mortgaged vehicle immediately upon receiving the letter. As the
demand was left unheeded, respondent filed on October 4, 2002 an action for Replevin and Damages before the RTC.

A writ of replevin was issued. Despite this, the subject vehicle was not seized. Trial on the merits ensued. The RTC ruled for the
respondent. Petitioners appealed the decision to the CA, but the CA affirmed the lower court's decision and, subsequently, denied the
motion for reconsideration; hence, this petition.
ISSUE: Whether or not respondent's remedy of resorting to both actions of replevin and collection of sum of money is contrary to the
provision of Article 1484 of the Civil Code and the Elisco Tool Manufacturing Corporation v. Court of Appeals ruling.

HELD: NO. Records bear that both verbal and written demands were in fact made by respondent prior to the institution of the case
against petitioners. Even assuming, for argument's sake, that no demand letter was sent by respondent, there is really no need for it
because petitioners legally waived the necessity of notice or demand in the Promissory Note with Chattel Mortgage, which they
voluntarily and knowingly signed in favor of respondent's predecessor-in-interest.

Further, the Court even ruled in Navarro v. Escobido that prior demand is not a condition precedent to an action for a writ of
replevin, since there is nothing in Section 2, Rule 60 of the Rules of Court that requires the applicant to make a demand on the
possessor of the property before an action for a writ of replevin could be filed.

x x x The creditor's possession of the evidence of debt is proof that the debt has not been discharged by payment. A promissory note in
the hands of the creditor is a proof of indebtedness rather than proof of payment. In an action for replevin by a mortgagee, it
is prima facie evidence that the promissory note has not been paid. Likewise, an uncanceled mortgage in the possession of the
mortgagee gives rise to the presumption that the mortgage debt is unpaid.
There is no violation of Article 1484 of the Civil Code and the Court's decision in Elisco Tool Manufacturing Corporation v. Court of
Appeals.

The Court in Elisco ruled: The remedies provided for in Art. 1484 are alternative, not cumulative. The exercise of one bars the
exercise of the others. This limitation applies to contracts purporting to be leases of personal property with option to buy by virtue of
Art. 1485. The condition that the lessor has deprived the lessee of possession or enjoyment of the thing for the purpose of applying
Art. 1485 was fulfilled in this case by the filing by petitioner of the complaint for replevin to recover possession of movable property.
By virtue of the writ of seizure issued by the trial court, the deputy sheriff seized the vehicle on August 6, 1986 and thereby deprived
private respondents of its use. The car was not returned to private respondent until April 16, 1989, after two (2) years and eight (8)
months, upon issuance by the Court of Appeals of a writ of execution.

Compared with Elisco, the vehicle subject matter of this case was never recovered and delivered to respondent despite the issuance of
a writ of replevin. As there was no seizure that transpired, it cannot be said that petitioners were deprived of the use and enjoyment of
the mortgaged vehicle or that respondent pursued, commenced or concluded its actual foreclosure. The trial court, therefore, rightfully
granted the alternative prayer for sum of money, which is equivalent to the remedy of "[e]xact[ing] fulfillment of the obligation."
Certainly, there is no double recovery or unjust enrichment to speak of.