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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:

1. Whether the purchaser has a better right than the creditor? Whether the bond should be reinstated?

2. Whether the expenses for the execution sale should be deducted from the proceeds thereof?

HELD:

1. 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.

2. 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.