GR 34401; (September, 1931) (Digest)
G.R. No. 34401; September 24, 1931
DEE HAO KIM, plaintiff-appellee, vs. LEON BUSIANG and JOSE SY YOK PENG, assignee of the Involuntary Insolvency of Leon Busiang (alias Sun Bio), defendants-appellants.
G.R. No. 34402; September 24, 1931
DEE HAO KIM, plaintiff-appellee, vs. MENZI & CO., INC., and THE SHERIFF OF THE CITY OF MANILA, defendants-appellants.
FACTS
In G.R. No. 34401, plaintiff Dee Hao Kim, as assignee of a chattel mortgage executed by Leon Busiang on his store merchandise, sued Busiang and the assignee of his insolvency (Jose Sy Yok Peng) to recover P55,000, alleging the mortgaged goods were disposed of without his consent. The assignee defended that the mortgage and its assignment were void for lack of consideration and fraud but presented no evidence. In G.R. No. 34402, Dee Hao Kim sued Menzi & Co., Inc. and the Sheriff of Manila to recover P5,000 (the value of attached goods), claiming a preferred right as assignee of the same chattel mortgage. Menzi & Co., a judgment creditor of Busiang, attacked the mortgage’s validity, arguing a stipulation allowing the mortgagor to sell and replace mortgaged goods violated the Chattel Mortgage Law (Act No. 1508) and that the attached goods were not covered by the mortgage.
ISSUE
1. Is a stipulation in a chattel mortgage authorizing the mortgagor to sell the mortgaged goods and replace them with similar goods thereafter acquired valid?
2. Were the goods attached by Menzi & Co. included in the chattels covered by the mortgage?
RULING
1. Yes. The Supreme Court, citing Torres vs. Limjap, held that such a stipulation in a chattel mortgage is valid and binding.
2. Yes. The Court affirmed the trial court’s finding, supported by a preponderance of evidence, that the attached goods were included among the chattels covered by the mortgage.
The consolidated judgment was affirmed. In G.R. No. 34401, the insolvency assignee was ordered to pay Dee Hao Kim. In G.R. No. 34402, Menzi & Co., Inc. was ordered to pay Dee Hao Kim the proceeds from the sale of the attached goods; the Sheriff was absolved.
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