ONG LIONG TIAK, PLAINTIFF AND APPELLANT, VS. LUNETA MOTOR COMPANY AND THE SHERIFF OF MANILA, DEFENDANTS AND APPELLEES.

Ong
Liong Tiak appealed from the decision rendered by the Court of First
Instance of Manila in civil case No. 47997 of said court, overruling
and dismissing his complaint, wherein he sought an injunction against
the defendant and a judgment in his favor for damages in the sum of
P500, plus the costs.

In his brief, Ong Liong Tiak, the
appellant, makes the following enumeration of the errors alleged by him
to have been committed by the lower court in rendering its decision
appealed from, to wit:

“1. The trial court
erred in holding that the indebtedness of Jeronimo Angeles to Macondray
& Co., Inc. was also guaranteed by the chattel mortgage executed by
S. Arellano Choa Siong in favor of the Luneta Motor Co.

“2.
The trial court erred in holding that the automobile in question was
still encumbered at the time it was sold by S. Arellano Choa Siong to
the plaintiff-appellant.

“3. The trial court erred in not
finding as a fact that the chattel mortgage over the automobile in
question was extinguished upon payment of the last promissory note.

“4. The trial court erred in not holding that the automobile in
question was, at the time of the levy on execution by the defendant
sheriff, the exclusive property of the plaintiff-appellant.”

It is undisputed that about August 21, 1933, S. Arellano Choa Siong, the registered owner of Chrysler Sedan
automobile, motor No. 4253, serial No. 6524936, transferred the
ownership thereof to the plaintiff-appellant, to which effect he
endorsed his certificate of registration, Exhibit A, in favor of the
latter.

S. Arellano Choa Siong purchased said automobile
from the Luneta Motor Co. about June 11, 1931. However, instead of
paying the price thereof, which was P1,800 he executed eighteen
promissory notes for P100 each in favor of the vendor, binding himself
to redeem one after another, every month. To secure the payment of said
eighteen promissory notes and that of articles he might take from his
creditor, such as gasoline, tires, automobile accessories, etc., and to
secure also the payment of any other obligation that he might contract
with it, he constituted a mortgage on the automobile in question,
executing to that effect in favor of the Luneta Motor Co., the
instrument of mortgage, Exhibit 2, one of the clauses of which reads as
follows:

“* * * it being expressly agreed
further that this mortgage shall also serve as security for the payment
to the said mortgagee in addition to the aforesaid notes of the
purchase price or cost of any and all gasoline, tires, automobile
accessories or parts, and repairs furnished or made by the said
mortgagee at any time up to the date this mortgage is completely
satisfied as and when the same becomes due, and of any other indebtedness of the mortgagor in favor of the mortgagee incurred in any other manner whatever.” (Italics ours.)

About the months of October and November, 1932, one Jeronimo Angeles
obtained from Macondray & Co., Inc. paints and other, merchandise
of the total value of P407. For the payment of this amount, S. Arellano
Choa Siong acted as surety up to the sum of P300, having paid the sum
of P160 on account, on March 30, 1933, thereby leaving a balance
against him in the sum of P140. In this state of affairs, Macondray
& Co., Inc., assigned its credit against S. Arellano Choa Siong to
the defendant-appellee, after notice of said assignment had been served
upon said S. Arellano Choa Siong, who offered no objection thereto. On
the contrary, he paid P40 on account, shortly thereafter, thereby
leaving a balance of P100.

About April 4, 1933, S. Arellano
Choa Siong made the last payment of the eighteen promissory notes which
he had executed in favor of the defendant-appellee. However, as there
still existed in its favor a credit of P100 for the paints and other
merchandise taken by Jeronimo Angeles from Macondray & Co., Inc.,
under the personal guaranty of S. Arellano Choa Siong, which sum was
assigned to it by said Macondray & Co., Inc., without any objection
on the part of S. Arellano Choa Siong, the defendant-appellee refused
to cancel the instrument of mortgage Exhibit 2. On the contrary, it
foreclosed the mortgage constituted in its favor, causing the sheriff
to attach the above-mentioned automobile. It is for the purpose of
setting aside said attachment that the plaintiff filed his complaint in
this case, seeking what has already been set forth herein-before.

Taking into account the circumstances of the case, and particularly the
obligation assumed by S. Arellano Choa Siong, according to the terms of
the above-quoted clause of the instrument of mortgage Exhibit 2, this
court holds that the lower court committed none of the errors
attributed to it by the appellant. It was right in holding that, by
interpreting the terms of Exhibit 2, the automobile in question still
remained subject to the lien stated in said instrument, inasmuch as the
account, which S. Arellano Choa Siong accepted and bound himself to pay
for Jeronimo Angeles, had not been completely settled. Instruments of
mortgage, as said Exhibit 2, are binding, while they subsist, not only
upon the parties executing them but also upon those who later, by
purchase or otherwise, acquire the properties referred to therein. The
right of those who so acquire said properties should not and can not 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. This is all the more true in the
present case, because, when the plaintiff purchased the automobile in
question on August 22, 1933, he knew, or at least, it is presumed that
he knew, by the mere fact that the instrument of mortgage, Exhibit 2,
was registered in the office of the register of deeds of Manila, that
said automobile was subject to a mortgage lien. In purchasing it, with
full knowledge that such circumstances existed, it should be presumed
that he did so, very much willing to respect the lien existing thereon,
since he should not have expected that with the purchase, he would
acquire a better right than that which the vendor then had.

For all the foregoing considerations, finding as this court finds that
the decision appealed from is in accordance with law, the same is
hereby affirmed, with the costs to the appellant. So ordered.

Avanceña, C. J., Villa-Real, Abad Santos, Imperial, and Laurel, JJ., concur.