ALBERTA B. CABRAL and RENATO CABRAL, plaintiffs-appellees, vs.

TEODORA EVANGELISTA, and JUAN

N. EVANGELISTA, defendants-appellants, and GEORGE L. TUNAYA, defendant.
G.R. No. L-26860
July 30, 1969

FACTS

George Tunaya and the Cabral spouses contracted a loan with chattel mortgage on Mr. Tunaya's piano
and electric stove. The chattel mortgage was duly registered.
Mr. Tunaya also had a loan with the Evangelista spouses on which he defaulted. Final money judgment
was made and the Evangelista spouses levied on the personal properties of Mr. Tunaya including those
under the chattel mortgage. These properties were sold in a public auction.
Mr. Tunaya also wasn't able to pay the Cabral spouses. The Cabrals filed a complaint and prayed for
judgment that Tunaya and the Evangelista spouses be held solidarily liable on the amount of the
promissory note, or to deliver the properties subject of the chattel mortgage.

ISSUES

1. WON the Cabral spouses are guilty of prescription or laches?

2. WON the purchase of the mortgaged chattels with a certificate of sale gave the appellant a
superior right over the mortgagee.

RULING

1. WON the Cabral spouses are guilty of prescription or laches?

The Supreme Court ruled that the obligation have not yet prescribed. According to Article 1140 of the
Civil Code, the prescriptive period for recovery of movables for foreclosure purposes such as in the
present case is eight years. In the case at bar, the mortgagee filed an action after eight months from the
mortgagor's default. Therefore, there is no prescription. Also, the mortgagee cannot be held liable for
laches because they filed their action promptly after they had been advised by their debtor, defendant
Tunaya, of the public auction sale.

2. WON the purchase of the mortgaged chattels with a certificate of sale gave the appellant a
superior right over the mortgagee.

The Supreme Court ruled that the right of those who so acquire said properties should not and cannot
be superior to that of the creditor who has in his favor an instrument of mortgage executed with the
formalities of the law, in good faith, and without the least indication of fraud. In the case of Ong Liong
Tiak vs. Luneta Motor Co., the plaintiff purchased an automobile with knowledge of a mortgage lien
attached to such property. The Supreme Court ruled that the purchaser holds no better right than which
the vendor then had thus the purchaser is exposed to the risk of the outcome of mortgage lien. In the
case at bar, the chattel mortgage was duly registered in Chattel Mortgage Register of Rizal province thus
it is presumed that the purchaser has knowledge of the mortgage lien. Therefore, the right of the
Evangelista spouses cannot be superior than that of the Cabral spouses.
Moreover, Rule 39, section 16 of the Revised Rules of Court states that levy on execution shall create a
lien in favor of the judgment creditor over the right, title and interest of the judgment debtor in such
property at the time of the levy, subject to liens or incumbrances then existing."