G.R. No.

L-9451 March 29, 1957 The vehicle was seized by the sheriff of Manila on August
4, 1952 and was later sold at public auction. The Court of
OLAF N. BORLOUGH, petitioner, First Instance rendered judgment in favor of Borlough,
vs. and against plaintiff, ordering the latter to pay Borlough
FORTUNE ENTERPRISES, INC. and THE the sum of P4,000, with interest at 6 per cent per annum,
HONORABLE COURT OF APPEALS (2nd from the date of the seizure of the car on August 4, 1952,
DIVISION), respondents. and in addition thereto, attorney's fees in the sum of
P1,000.
Arturo M. del Rosario and Alfredo G. Fernando for
petitioner. Upon appeal to the Court of Appeals, this court rendered
Laurel & Salonga for respondents. judgment ordering that Emil B. Fajardo pay Borlough
P4,000 plus attorney's fees and that plaintiff pay to
LABRADOR, J.: Borlough any amount received by it in excess of its
credits and judicial expenses. The reason for the
Appeal by certiorari against a judgment of the Court of modification of the judgment is that the mortgage was
Appeals, Second Division. The facts of the case have superior, being prior in point of time, to whatever rights
been briefly stated as follows: may have been acquired by Borlough by reason of his
possession and by the registration of his title in the Motor
On March 8, 1952, the United Car Exchange sold to the Vehicle Office.
Fortune Enterprises, Inc., the following described car —
The question involved in the appeal in this case is one of
Make: Chevrolet (1947); Plate No. 34-1465 law and may be stated thus: As between a prior mortgage
Type : Sedan; Motor No. EAA- executed over a motor vehicle, registered under the
Chattel Mortgage Law only, without annotation thereof in
20834 (Exhibit D).
the Motor Vehicles Office, and a subsequent registration
of the vehicle in the Motor Vehicles Office accompanied
The same car was sold by the Fortune Enterprises, Inc.
by actual possession of the motor vehicle, which should
to one Salvador Aguinaldo, and for not having paid it in
prevail. While the question can be resolved by the
full, the latter executed on the same date a promissory
general principles found in the Civil Code and expressly
note in the amount of P2,400 payable in 20 installments
stated in Article 559, there is no need resorting thereto
including interest thereon at 12 per cent per annum, the
(the general principles) in view of the express provisions
last of which installments fell due on January 9, 1953
of the Revised Motor Vehicles Law, which expressly and
(Exhibit "A").
specifically regulate the registration, sale or transfer and
mortgage of motor vehicles. The following provisions of
To secure the payment of this note, Aguinaldo executed said law may help decide the legal question now under
a deed of chattel mortgage over said car. The deed was consideration:
duly registered in the office of the Register of Deeds of
Manila at 1:12 p.m. on March 11, 1952 (Exhibit "B"). As
SEC. 5 (c) Reports of motor vehicle sales. — On the
the buyer-mortgagor defaulted in the payment of the
first day of each month, every dealer in motor vehicles
installments due, counsel for Fortune Enterprises Inc.
shall furnish the Chief of the Motor Vehicles Office a
addressed a letter on May 16, 1952 (Exhibit "C"),
true report showing the name and address of each
requesting him to make the necessary payment and to
purchase of a motor vehicle during the previous month
keep his account up to date, to that no court action
and the manufacturer's serial number and motor
would be resorted to.
number; a brief description of the vehicle, and such
other information as the Chief of the Motor Vehicles
It further appears that the above-described car found its Office may require.
way again into the United Car Exchange which sold the
same in cash for P4,000 to one O. N. Borlough on April
SEC. 5 (e) Report of mortgages. — Whenever any
6, 1952. Accordingly, he registered it on the following
owner hypothecates or mortgage any motor vehicle as
day with the Motor Vehicles Office. (Decision, Court of
surety for a debt or other obligation, the creditor or
Appeal.).
person in whose favor the mortgage is made shall,
within seven days, notify the Chief of the Motor Vehicles
It also appears from the record that defendant 0. N. Office in writing to the effect, stating the registration
Borlough took possession of the vehicle from the time he number of the motor vehicle, date of mortgage, names
purchased it, On July 10, 1952, Fortune Enterprises, Inc. and addresses of both parties, and such other
brought action against Salvador Aguinaldo to recover the information as the Chief of the Motor Vehicles Office
balance of the purchase price. Borlough filed a third-party may require. This notice shall be signed jointly by the
complaint, claiming the vehicle. Thereupon, Fortune parties to the mortgage.
Enterprises, Inc. amended its complaint, including
Borlough as a defendant and alleging that he was in
On termination, cancellation or foreclosure of the
connivance with Salvador Aguinaldo and was unlawfully
mortgage, a similar written notice signed by both
hiding and concealing the vehicle in order to evade
parties, shall be forwarded to the Chief of the Motor
seizure by judicial process. Borlough answered alleging
Vehicles Office by the owner.
that he was in legal possession thereof, having
purchased it in good faith and for the full price of P4,000,
and that he had a certificate of registration of the vehicle These notice shall be filed by the Chief of the Motor
issued by the Motor Vehicles Office, and he prayed for Vehicles Office in the motor records, and in the absence
the dismissal of the complaint, the return of the vehicle of more specific information, shall be deemed evidence
of the true status of ownership of the motor vehicle.
and for damages against the plaintiff.
(Revised Motor Vehicles Law.)
It is to be noted that under section 4 (b) of the Revised purchaser from the transferor, who is enabled by such
Motor Vehicles Law the Chief of the Motor Vehicles failure of compliance to retain the indicia of ownership,
Office is required to enter or record, among other things, such as a subsequent purchaser in good faith, or a
transfers of motor vehicles "with a view of making and purchaser from a conditional buyer in possession; and
keeping the same and each all of them as accessible as the lien of a chattel mortgage given by the buyer to
possible to and for persons and officers properly secure a purchase money loan never becomes
interested in the same," and to "issue such reasonable effective in such case as against an innocent
regulations governing the search and examination of the purchaser. (60 Corpus Juris Secundum, p. 171.)
documents and records . . . as will be consistent with their
availability to the public and their safe and secure One holding a lien on a motor vehicle, in so far as he
prevention." can reasonably do so, must protect himself and others
thereafter dealing in good faith by complying and
Two recording laws are here being invoked, one by each requiring compliance with the provisions of the laws
contending party — the Chattel Mortgage Law (Act No. concerning certificates of title to motor vehicles, such as
1508), by the mortgagor and the Revised Motor Vehicles statutes providing for the notation of liens or claims
Law (Act No. 3992), by a purchaser in possession. What against the motor vehicle certificate of title or
effect did the passenger of the Revised Motor Vehicles manufacturer's certificate, or for the issuance to the
Law have on the previous enactment? mortgagee of a new certificate of ownership. Where the
lien holder has satisfied himself that the existence of the
The Revised Motor Vehicles Law is a special legislation lien is recited in the certificate of title, he has done all
enacted to "amend and compile the laws relative to motor that the law contemplates that he should do, and there
vehicles," whereas the Chattel Mortgage Law is a is notice to the public of the existing lien, which
general law covering mortgages of all kinds of personal continues valid until the record shows that it has been
property. The former is the latest attempt to assemble satisfied and a new certificate issued on legal authority,
and compile the motor vehicle laws of the Philippines, all even through another certificate which does not
the earlier laws on the subject having been found to be disclose the lien is procured as the result of false
very deficient in form as well as in substance (Villar and statements made in the application therefore, and the
De Vega, Revised Motor Vehicles Law, p. 1); it had been vehicle is purchased by a bona fide purchaser.
designed primarily to control the registration and
operation of motor vehicles (section 2, Act No. 3992). The holder of a lien who is derelict in his duty to comply
and require compliance with the statutory provisions
Counsel for petitioner contends that the passage of the acts at his own peril, and must suffer the consequence
Revised Motor Vehicles Law had the effect of repealing of his own negligence; and accordingly, he is not
the Chattel Mortgage Law, as regards registration of entitled to the lien as against a subsequent innocent
motor vehicles and of the recording of transaction purchaser filed as provided by other chattel mortgage
affecting the same. We do not believe that it could have statutes. The rule is otherwise, however, as against
been the intention of the legislature to bring about such a claimants not occupying the position of innocent
repeal. In the first place, the provisions of the Revised purchaser, such as a judgment creditor, or one
Motor Vehicles Law on registration are not inconsistent acquiring title with actual notice of an unregistered lien,
with does of the Chattel Mortgage Law. In the second and the statutes do not protect a purchaser holding
place, implied repeals are not favored; implied repeals under registered title if a link in the title is forgery.
are permitted only in cases of clear and positive Moreover, such statute will not impair vested rights of a
inconsistency. The first paragraph of section 5 indicates mortgage under a chattel mortgage duly recorded. (60
that the provisions of the Revised Motor Vehicles Law C.J.S., pp. 181-182.)
regarding registration and recording of mortgage are not
incompatible with a mortgage under the Chattel The above authorities leave no room for doubt that
Mortgage Law. The section merely requires report to the purchaser O. N. Borlough's right to the vehicle as against
Motor Vehicles Office of a mortgage; it does not state that the previous and prior mortgage Fortune Enterprises,
the registration of the mortgage under the Chattel Inc., which failed to record its lien in accordance with the
Mortgage Law is to be dispensed with. We have, Revised Motor Vehicles Law, should be upheld.
therefore, an additional requirements in the Revised
Motor Vehicles Law, aside from the registration of a For the foregoing consideration, the judgment of the
chattel mortgage, which is to report a mortgage to the Court of Appeals is hereby reversed and that of the Court
Motor Vehicles Office, if the subject of the mortgage is a of First Instance affirmed, with costs against respondent.
motor vehicle; the report merely supplements or
complements the registration. Paras, C.J., Bengzon, Padilla, Reyes, A., Bautista
Angelo, Concepcion, Reyes, J.B.L., and Endencia,
The recording provisions of the Revised Motor Vehicles JJ., concur.
Law, therefore, are merely complementary to those of the
Chattel Mortgage Law. A mortgage in order to affect third
persons should not only be registered in the Chattel
Mortgage Registry, but the same should also be recorded
in the motor Vehicles Office as required by section 5 (e)
of the Revised Motor Vehicles Law. And the failure of the
respondent mortgage to report the mortgage executed in
its favor had the effect of making said mortgage
ineffective against Borlough, who had his purchase
registered in the said Motor Vehicles Office.

On failure to comply with the statute, the transferee's