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.  
 

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.