FACTS:
1. Petitioner Perfecto Dy and Wilfredo Dy are brothers.
Wilfredo Dy purchased a truck and a farm tractor through financing extended by
Libra Finance and Investment Corporation (Libra). Both truck and tractor were
mortgaged to Libra as security for the loan. The petitioner wanted to buy the
tractor from his brother so he wrote a letter to Libra requesting that he be
allowed to purchase from Wilfredo Dy the said tractor and assume the mortgage
debt of the latter. – approved by Libra thru its manager Ares.
2. Wilfredo executed a DAS in favor of Perfecto over the
tractor in question. At this time, the subject tractor was in the possession of
Libra Finance due to Wilfredo Dy's failure to pay the amortizations.
3. Despite the offer of full payment by the petitioner to
Libra for the tractor, the immediate release could not be effected because
Wilfredo had obtained financing not only for said tractor but also for a truck
and Libra insisted on full payment for both.
4. The petitioner was able to convince his sister, Carol
Dy-Seno, to purchase the truck so that full payment could be made for both. A PNB check was issued in the amount of P22k
in favor of Libra, thus settling in full the indebtedness of Wilfredo with the
financing firm. Payment having been effected through an out-of-town check,
Libra insisted that it be cleared first before Libra could release the chattels
in question.
5. Meanwhile, in another civil case, an alias writ of
executionwas issued and the provincial
sheriff was able to seize and levy on the tractor which was in the premises of
Libra in Carmen, Cebu. The tractor was subsequently sold at public auction
where Gelac Trading was the lone bidder. Later, Gelac sold the tractor to one
of its stockholders, Antonio Gonzales.
6. It was only when the check was cleared on January 17,
1980 that the petitioner learned about GELAC having already taken custody of
the subject tractor. Consequently, the petitioner filed an action to recover
the subject tractor against GELAC Trading with the Regional Trial Court of Cebu
City.
ISSUE:
Whether at the time of the execution of the deed of sale, no constructive
delivery was effected since the consummation of the sale depended upon the
clearance and encashment of the check which was issued in payment of the
subject tractor.
HELD/RATIO:
NO. There was constructive delivery. The rule is settled that the chattel
mortgagor continues to be the owner of the property, and therefore, has the
power to alienate the same; however, he is obliged under pain of penal
liability, to secure the written consent of the mortgagee. Thus, the
instruments of mortgage are binding, while they subsist, not only upon the
parties executing them but also upon those who later, by purchase or otherwise,
acquire the properties referred to therein. The absence of the written consent
of the mortgagee to the sale of the mortgaged property in favor of a third
person, therefore, affects not the validity of the sale but only the penal
liability of the mortgagor under the RPC and the binding effect of such sale on
the mortgagee under the Deed of Chattel Mortgage.
While
it is true that Wilfredo Dy was not in actual possession and control of the
subject tractor, his right of ownership was not divested from him upon his
default. Neither could it be said that Libra was the owner of the subject
tractor because the mortgagee can not become the owner of or convert and
appropriate to himself the property mortgaged. Said property continues to
belong to the mortgagor. The only remedy given to the mortgagee is to have said
property sold at public auction and the proceeds of the sale applied to the
payment of the obligation secured by the mortgagee. There is no showing that
Libra Finance has already foreclosed the mortgage and that it was the new owner
of the subject tractor. Undeniably, Libra gave its consent to the sale of the
subject tractor to the petitioner. It was aware of the transfer of rights to
the petitioner.
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