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The defendant therefore cannot now be permitted to

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Unformatted text preview: lure of petitioner to prosecute the case against them. It also dismissed the case against private respondent for failure of petitioner to show any legal basis for said respondent's liability. The court held that Reyes (private respondent) is merely ancillary debtor in this case. Defendant spouses being the principal debtors, there is no cause of action against Reyes. The vehicle must be returned to him. CA DECISION CA affirmed the trial court. It held that the vehicle was taken from possession of Reyes who is a third person with respect to the chattel mortgage contract between the petitioner and defendant spouses. ISSUE WON petitioner can seize the vehicle in the possession of third party, Reyes. WON petitioner is entitled to possess such property. HELD NO 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. Art. 1898 – Effect of Unratified Acts Done By Agent In Excess of His Authority – Void (Unenforceable) PNB v. Welsh Fairchild, 44 Phil 780 (1923) VILLAFUERTE Doctrine: It is manifest upon the simplest principles of...
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