PIANSAY V. DAVID, G.R. No. L-19468, October 30, 1964

PIANSAY V. DAVID
12 SCRA 227

FACTS:
David secured a loan from Vda. De Uy Kim, and to secure the payment, he executed a chattel mortgage over a house in favor of Kim. Due to failure to pay, the CM was foreclosed and Kim was the highest bidder in the public auction. Kim then sold the house to Mangubat. The latter then filed charges against David for the collection of loan and praying that the deed of sale issued by Kim in favor of Piansay be declared null and void. The trial court held David liable to Mangubat but dismissed the complaint with regard Kim and Piansay.

Kim and Piansay then filed charges against David and Mangubat. Due to the civil case, David demanded from Piansay the payment of rentals for the use of the house, which the latter claims to be his property.

ISSUE:
W/N the chattel mortgage constituted in favor of Mrs. Uy Kim is valid.

HELD:
Regardless of the validity of a contract constituting a chattel mortgage on a house, as between the parties to the said contract, the same cannot and doesn’t bind third persons who aren’t parties to the aforementioned contract or their privies. As a consequence, the sale of the house in question in the proceedings for the sale of the house in question in the proceedings for the extrajudicial foreclosure of said chattel mortgage, is null and void insofar as Mangubat is concerned and didn’t confer upon Kim as buyer in said sale, any dominical right in and to said house.