Sum of money with writ of attachment and replevin - G.R. No. 171569

G.R. No. 171569

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Excerpts:

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Indeed, the unnotarized Chattel Mortgage executed by Juniat, for and in behalf of Wingyan and Winwood, in favor of petitioner does not bind Nonwoven.[50] However, it must be pointed out that petitioner’s primary cause of action is for a sum of money with prayer for the issuance of ex-parte writs of attachment and replevin against Juniat, Winwood, Wingyan, and the person in possession of the motorized sewing machines and equipment.[51] Thus, the fact that the Chattel Mortgage executed in favor of petitioner was not notarized does not affect petitioner’s cause of action. Petitioner only needed to show that the loan of Juniat, Wingyan and Winwood remains unpaid and that it is entitled to the issuance of the writs prayed for. Considering that writs of attachment and replevin were issued by the RTC,[52] Nonwoven had to prove that it has a better right of possession or ownership over the attached properties. This it failed to do.

A perusal of the Agreement dated May 9, 1992 clearly shows that the sewing machines, snap machines and boilers were pledged to Nonwoven by Juniat to guarantee his obligation. However, under Article 2096 of the Civil Code, “[a] pledge shall not take effect against third persons if a description of the thing pledged and the date of the pledge do not appear in a public instrument.” Hence, just like the chattel mortgage executed in favor of petitioner, the pledge executed by Juniat in favor of Nonwoven cannot bind petitioner.

Neither can we sustain the finding of the CA that: “The machineries were ceded to THIRD PARTY NONWOVEN by way ofdacion en pago, a contract later entered into by WINWOOD/WINGYAN and THIRD PARTY NONWOVEN.”[53] As aptly pointed out by petitioner, no evidence was presented by Nonwoven to show that the attached properties were subsequently sold to it by way of a dacion en pago. Also, there is nothing in the Agreement dated May 9, 1992 to indicate that the motorized sewing machines, snap machines and boilers were ceded to Nonwoven as payment for the Wingyan’s and Winwood’s obligation. It bears stressing that there can be no transfer of ownership if the delivery of the property to the creditor is by way of security.[54] In fact, in case of doubt as to whether a transaction is one of pledge or dacion en pago, the presumption is that it is a pledge as this involves a lesser transmission of rights and interests.[55]

In view of the foregoing, we are constrained to reverse the ruling of the CA. Nonwoven is not entitled to the proceeds of the sale of the attached properties because it failed to show that it has a better title over the same.

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