GR 40279; (November, 1934) (Digest)
G.R. No. 40279 ; November 14, 1934
ANTONIO DE LA RIVA, plaintiff-appellant, vs. AH KEE, JOSE BUCOY, provincial sheriff of Zamboanga, and THE PHILIPPINE NATIONAL BANK, defendants-appellants.
FACTS
The Panabutan Lumber & Plantation Co., Inc. executed a chattel mortgage on certain properties in favor of the Philippine National Bank (PNB). Ah Kee obtained a judgment against Panabutan. The provincial sheriff attached Panabutan’s properties not included in PNB’s mortgage, but the attachment was dissolved when Ah Kee failed to deposit the execution expenses. PNB subsequently foreclosed the chattel mortgage and purchased all mortgaged properties at auction. In a separate case (No. 1683), the chattel mortgage was declared null and void as to the real properties included therein. Later, through a stipulation by its unauthorized attorney, PNB agreed to exclude all houses and buildings from the mortgage. PNB then sold all properties it acquired at the foreclosure sale to Antonio de la Riva. Ah Kee caused a second writ of execution, and the sheriff attached the same properties (those excluded from or not included in the mortgage). De la Riva filed a third-party claim. Ah Kee again failed to file the required indemnity bond, leading to the dissolution of the attachment. De la Riva sued to assert his ownership.
ISSUE
1. Whether PNB and its subsequent purchaser, De la Riva, acquired rights to the real properties that were excluded from or not included in the chattel mortgage, which was declared null and void as to those properties.
2. Whether De la Riva is entitled to indemnity from PNB upon his eviction from said properties.
RULING
1. No. A mortgage creditor who purchases real properties at a foreclosure sale under a chattel mortgage later declared null and void as to those properties acquires no right to them. Consequently, a subsequent purchaser from such creditor also acquires no right to those excluded properties.
2. Yes. The subsequent purchaser (De la Riva) is entitled to be indemnified by his vendor (PNB) for the value of the properties from which he is evicted due to the vendor’s lack of title. The Court modified the trial court’s judgment, ordering PNB to pay De la Riva the sum of P2,500 with legal interest from the filing of the complaint. De la Riva was absolved from Ah Kee’s cross-complaint. The sheriff was absolved from the complaint.
AI Generated by Armztrong.