GR 37054; (December, 1932) (Digest)
March 10, 2026GR 37524; (December, 1932) (Digest)
March 10, 2026G.R. No. 41284. November 28, 1934.
LEVY HERMANOS, INC., plaintiff-appellant, vs. ILDEFONSO RAMIREZ and JOSE CASIMIRO, the latter in his capacity as Sheriff ex-officio of the City of Manila, defendants-appellees.
FACTS
Plaintiff Levy Hermanos, Inc. sold a Packard automobile to Gregorio Olegario on installment, secured by a duly registered chattel mortgage. Defendant Ildefonso Ramirez obtained a money judgment against Olegario in another case and caused the sheriff to levy upon and sell the same automobile at public auction. Levy Hermanos filed a third-party claim with the sheriff, but Ramirez filed an indemnity bond, and the sheriff proceeded with the sale. Levy Hermanos then sued Ramirez and the sheriff for damages, alleging it was still owed a balance on the car. Defendants demurred to the complaint, arguing it stated no cause of action. The trial court sustained the demurrer and dismissed the complaint. Levy Hermanos appealed.
ISSUE
Whether the mortgagor’s (Olegario’s) interest in a mortgaged chattel is subject to execution, thereby making the sheriff’s levy and sale valid and barring the mortgagee’s (Levy Hermanos’s) action for damages against the judgment creditor and sheriff.
RULING
Yes. The Supreme Court affirmed the dismissal. Under the Chattel Mortgage Law (Act No. 1508), a chattel mortgage is a conditional sale, with legal title passing to the mortgagee. However, the mortgagor retains an equitable interest, specifically the right of redemption. Section 450 of the Code of Civil Procedure provides that “any interest” of the judgment debtor is subject to execution. Therefore, the mortgagor’s right to redeem the chattel is an attachable interest. The levy and sale by the sheriff were legal, as they transferred only Olegario’s right of redemption to the purchaser. Since the sale did not impair the mortgagee’s title or right to the unpaid balance, the complaint against the judgment creditor and sheriff for damages failed to state a cause of action. The mortgagee’s remedy is to pursue the mortgagor for the debt or to assert its claim against the proceeds of the execution sale if properly applied.
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