GR 36965; (March, 1933) (2) (Digest)
G.R. No. 36965 ; March 31, 1933
THE PHILIPPINE NATIONAL BANK, plaintiff-appellant, vs. MATIAS ATILES, ET AL., defendants-appellees.
G.R. No. 36966 ; March 31, 1933
ALFONSO SEVERINO, plaintiff-appellee, vs. THE PHILIPPINE NATIONAL BANK ET AL., defendants. THE PHILIPPINE NATIONAL BANK, appellant.
FACTS
Spouses Matias Atiles and Magdalena Sison mortgaged two lots to the Philippine National Bank (PNB) in 1918 to secure a loan. The mortgage was duly registered and annotated on the certificates of title. In 1926, Arcadio Y. Salva obtained a writ of attachment against the same lots in a separate civil case. The sheriff presented a notice of this attachment to the Register of Deeds, but the defendant Atiles was not notified. Later in 1926, the spouses executed another mortgage on the same lots in favor of PNB. Subsequently, the lots were sold at a sheriff’s auction to satisfy Salva’s judgment, and Alfonso Severino purchased them. The certificate of sale stated the sale was subject to PNB’s mortgage liens. PNB filed an action to foreclose its mortgages and have its credit declared superior. Severino filed a separate action to be declared sole owner of the lots, free from PNB’s mortgage liens.
ISSUE
Whether the writ of attachment obtained by Salva was valid and effective against the lots, and consequently, whether PNB’s mortgage credits are superior to the rights acquired by Severino from the sheriff’s sale.
RULING
The Supreme Court reversed the trial court’s decision. The writ of attachment was ineffectual because the defendant was not notified, as required by law. Since the attachment produced no legal effect, the subsequent mortgage by PNB was not prejudiced by it. Furthermore, Severino was not an innocent purchaser because the mortgages were annotated on the titles, and the certificate of sale expressly stated the sale was subject to PNB’s liens. Therefore, PNB’s mortgage credits are superior. The Court ordered the spouses to pay their loan obligations to PNB and, in case of default, authorized the foreclosure and sale of the mortgaged lots. Severino’s complaint was dismissed.
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