G.R. No. L-25546 April 22, 1974
EVA ARANETA SERRA, petitioner, vs. HON. JESUS S. RODRIGUEZ, Judge of the Court of First Instance of Iloilo, MANUEL LORING, JR., MILAGROS L. LORING, and THE PROVINCIAL SHERIFF OF ILOILO, respondents.

FACTS

Private respondents, the Loring spouses, filed a complaint for recovery of a sum of money against spouses Enrique and Maria Ordoñez. They obtained a writ of preliminary attachment, and on September 14, 1965, the sheriff levied on the Ordoñez spouses’ real and personal properties. Subsequently, on September 30, 1965, debtor Maria Ordoñez, acting alone without her husband’s consent, executed a chattel mortgage over the same attached personal properties in favor of petitioner Eva Araneta Serra to secure a loan. This mortgage was registered on October 1, 1965.
On November 2, 1965, petitioner Serra filed a third-party claim over the attached personal properties with the provincial sheriff based on her chattel mortgage. The sheriff required the Loring spouses to post an indemnity bond. The Loring spouses moved to disapprove the third-party claim, arguing a chattel mortgagee lacks the title or right of possession required by the Rules of Court to sustain such a claim. The respondent judge granted their motion and issued an order dated December 27, 1965, directing the re-attachment of the properties, prompting Serra’s petition for certiorari.

ISSUE

Whether a chattel mortgagee has a sufficient interest in the mortgaged property to file a valid third-party claim against a writ of attachment levied thereon by a judgment creditor.

RULING

The Supreme Court denied the petition and affirmed the lower court’s order. The legal logic is anchored on the nature of a chattel mortgage and the specific requirements for a third-party claim under the Rules of Court. Section 14, Rule 57 of the Revised Rules of Court mandates that a third-party claimant must establish title to the property or a right to its possession. A chattel mortgage, as definitively redefined under Article 2140 of the New Civil Code, is merely a security for an obligation and does not transfer title to the mortgagee. Crucially, the mortgagee is not entitled to possession of the mortgaged chattels; if possession is delivered, the contract is converted into a pledge.
Therefore, petitioner, as a mere chattel mortgagee, possessed neither legal title nor a right to immediate possession of the properties at the time of the attachment. Consequently, her third-party claim was improperly filed and could not defeat the attachment. The Court further noted that the proper remedies for such a claimant are to file a separate action to assert ownership, to claim damages against the attachment bond, or to seek intervention in the main case—none of which were pursued correctly here. The decision also cast doubt on the chattel mortgage’s validity, as it was executed by the wife alone over conjugal property without the husband’s consent and after the properties had already been levied upon, potentially making it rescissible as a fraudulent conveyance.