NORTHERN MOTORS VS.

COQUIA
G.R. No. L-40018 December 15, 1975

Facts:
Manila Yellow Taxicab, executed a chattel mortgage over several taxicabs in favor
of Northern Motors. TROPICAL is a judgment creditor of Yellow Taxicab who
assigned the judgment to ONG. On December 12 1974, Sheriff then levied upon 20
taxicabs, 8 of which are security for the chattel mortgage. Northern Motors filed an
intervention on December 18, 1974; however, the levied taxicabs were sold the
same day at 2pm although agreement shows that it should have happened at 4pm.
Indemnity bond was posted by TROPICAL, but the bond was cancelled after the sale
without notice to Northern Motors. The petitioner now seek reconsideration also on
the reinstatement of the bond.

A second levy was made upon 35 taxicabs, 7 of which are mortgaged to Northern
Motors.

This is a motion for reconsideration in the SC decision pronouncing that the

Mortgagee has a better right than the judgment debtor over the taxicabs.

The taxies were levied and sold at an auction sale. Ong argues admits that the
mortgagee has a better right that the judgment creditor, but argues that the
purchaser from the auction sale must have a right superior to that of the
mortgagee. The auction sale proceeded and the purchasers were of unknown
addresses, hence the 8 taxicabs cannot be recovered. The proceeds of the auction
were in contest and the sheriff is deducting the expenses of the execution sale from
the proceeds.

Issue/s:
Whether the expenses for the execution sale should be deducted from the proceeds
thereof?
Whether the purchaser has a better right than the creditor?
Whether the bond should be reinstated?

Held:
1st: No, it was already established that the levy on the property was illegal, it is
therefore improper to deduct the expenses of an illegal auction from the proceeds
thereof. The mortgagee can only able to collect the proceeds from the auction sale
because the purchasers are of unknown addresses. The full proceeds of the sale are
due to the mortgagee without any unreasonable and illegal deductions.

2nd: No, the purchaser of the auction sale merely steps in the shoes of the
judgment creditor as they have been aware of the claim of the mortgagee. The
mortgagee has a better right to the possession of the taxicabs, however, since the
addresses of the purchasers are unknown, the proceeds of the sale must be
delivered to the mortgagee.
3rd: Yes, the bond should be reinstated, as it is to serve as indemnity for damages
in cases that the sold taxicabs cannot be recovered. Proceedings in the lower court
would be an exercise in futility if the bond will not be reinstated.