SALVADOR PIANSAY and CLAUDIA V. VDA. DE UY KIM v.

CONRADO DAVID and MARCOS MANGUBAT

October 30, 1964
FACTS:

David obtained a loan of P3,000 with 12% interest from

Uy Kim; to secure the payment of the same, he executed
a chattel mortgage on a house in Tondo. The chattel
mortgage was registered but later on, upon Davids failure
to pay, it was foreclosed and Uy Kim bought the house at
the public auction and thereafter sold the same to
Salvador Piansay.
Later on, Marcos Mangubat filed a complaint against
David before the CFI Manila for the collection of the loan
of P2,000. The complaint was later amended to implead
Uy Kim and Piansay praying that the auction sale and
deed of absolute sale executed by Uy Kim in favor of
Piansay be annulled.
CFI Manila ordered David to pay and annulled the chattel
mortgage. CA affirmed. David was ordered to pay and the
house was levied upon. To prevent the sale at the public
auction, Piansay and Uy Kim filed a petition for certiorari
and mandamus with preliminary injunction before the CA;
it was denied.
Subsequently, Piansay and Uy Kim instituted an action
against David and Mangubat praying that judgment be
rendered declaring Piansay as the true owner and restrain
the levy and sale to public auction. David demanded from
Piansay the payment of the rentals for the use and
occupation of the house; the latter claims it is his
property.
Mangubat, on one hand, moved to dismiss the complaint
on the ground of res adjudicata and lack of personality to
sue; it was granted. CA affirmed explaining that Uy Kim

had no right to foreclose the chattel mortgage because it

was in reality a mere contract of an unsecured loan.
Piansay assailed Mangubats right to levy execution upon
the house alleging that the same belongs to him, he
having bought it from Uy Kim who acquired it at the
auction sale.

ISSUE:
WON the chattel mortgage and sale are valid
HELD:
No.
RATIO:
Upon the theory that the chattel mortgage and sale in favor
of Uy Kim had been annulled in the original decision, as
affirmed by the CA, the fact is that said order became final
and executory upon the denial of the petition for certiorari
and mandamus. Hence, Uy Kim and Piansay are now barred
from asserting that the chattel mortgage and sale are valid.

At any rate, regardless of the validity of a contract

constituting a chattel mortgage on a house, as between the
parties to said contract, the same cannot and does not bind
third persons, who are not parties to the contract of their
privies.
As a consequence, the sale of the house in question in the
proceedings for the extrajudicial foreclosure of said chattel
mortgage, is null and void insofar as defendant Mangubat is
concerned, and did not confer upon Uy Kim, as buyer in said
sale, any dominical right in and to said house, so that she
could not have transmitted to her assignee Piansay any such
right as against Mangubat. In short, they do not have a cause
of action against Mangubat and David.