DY V. CA (July 08, 1991)

FACTS:

Wilfredo Dy bought a truck and tractor from Libra Finance Corporation. Both truck and tractor was also mortgage to Libra as security for a loan and as such, they took possession of it. Brother of Wilfredo, Perfecto Dy and sister Carol Dy-Seno requested Libra that they be allowed to buy the property and assume the mortgage debt. Libra agreed to the request.

Meanwhile, a collection suit was filed against Wilfredo Dy by Gelac Trading Inc. On the strength of a writ of execution, the sheriff was able to obtain the tractor on the premises of Libra. It was sold in a public auction in which Gelac Trading was the lone bidder. Gelac subsequently sold it to one of their stockholders.

The respondents claim that at the time of the execution of the deed of sale, no constructive delivery was effected since the consummation of the sale depended upon the clearance and encashment of the check which was issued in payment of the subject tractor

ISSUE:

WON the William Dy is still the owner of the tractor when it was obtained through the writ of execution.

HELD:

The tractor was not anymore in possession of William Dy when it was obtained by the sheriff because he already sold it to his brother.

William Dy has the right to sell his property even though it was mortgage because in a mortgage, the mortgagor doesn’t part with the ownership over the property. He is allowed to sell the property as long as there is consent from the mortgagee such as in this case. But even if there is no consent given, the sale would still be valid without prejudice to the criminal action against the mortgagor.

When William  Dy sold the tractor, he already transferred the ownership of it because NCC states that the ownership of the thing sold is acquired by the vendee from the moment it is delivered to him or in any other manner signing an agreement that the possession is transferred from the vendor to the vendee. In the instant case, actual delivery of the subject tractor could not be made but there was constructive delivery already upon the execution of a public instrument which in this case is a deed of sale.

The payment of the check was actually intended to extinguish the mortgage obligation.