G.R. No. L-40018 March 21, 1975
NORTHERN MOTORS, INC., petitioner, vs. THE HONORABLE JORGE R. COQUIA, Executive Judge of the Court of First Instance of Manila, HONESTO ONG, THE SHERIFF OF MANILA, DOMINADOR Q. CACPAL, The Acting Executive Sheriff of Manila, and/or his duly authorized deputy sheriff or representative, respondents. FILINVEST CREDIT CORPORATION, intervenor.

FACTS

Petitioner Northern Motors, Inc. sold 200 cars to Manila Yellow Taxicab Co., Inc. on installment with chattel mortgages. The mortgage on 172 units was assigned to intervenor Filinvest Credit Corporation. To satisfy a judgment in a separate case against the taxicab company, the sheriff levied on 20 of these cars. Petitioner and intervenor filed third-party claims. The judgment creditor posted an indemnity bond, and the sheriff proceeded with the auction sale. Subsequently, the respondent Judge cancelled the indemnity bond, effectively quashing the third-party claims, and denied motions for reconsideration. The sheriff then levied on an additional 35 units. Petitioner and intervenor again filed third-party claims and initiated separate replevin actions to recover the vehicles, also seeking to stop the execution sales.

ISSUE

Whether the respondent Judge committed grave abuse of discretion in denying the third-party claims of petitioner and intervenor, who are chattel mortgagees.

RULING

No. The Supreme Court held that the respondent Judge did not act with grave abuse of discretion. The denial of a third-party claim in execution proceedings is not a proper subject for certiorari. Under Section 17, Rule 39 of the Revised Rules of Court, a third-party claimant’s remedy, when their claim is defeated by the filing of an indemnity bond by the judgment creditor, is not to appeal or seek certiorari against the court’s order, but to file a separate and independent action to vindicate their claim to the property or to file a complaint for damages against the posted bond. The Court cited Serra vs. Rodriguez, which explicitly states that neither an appeal nor a petition for certiorari is the proper remedy from the denial of a third-party claim. The rule reserves to the claimant the right to vindicate their claim by a proper action, which petitioner and intervenor had already done by filing replevin suits. Furthermore, a chattel mortgage lien follows the property, so any buyer at the execution sale acquires it subject to such encumbrance. The issues regarding ownership or possession should be threshed out in those ordinary actions, not in the instant certiorari proceeding. The petition was denied and the temporary restraining order dissolved.