Facts:

The case involves Mariano B. Arroyo, the Provincial Sheriff of Iloilo, as the plaintiff and appellee against Maria Corazon Yu de Sane, Jose M. Po Pauco, and Po Suy Liong as defendants and appellants, alongside the Philippine National Bank as a defendant and appellee. The dispute arose from a complex series of transactions regarding the lorchas, China and Cuylim, which were owned by the Lim Ponzo Navigation Co. In 1918, the owner mortgaged these vessels to Jose M. Po Pauco for a loan of P20,000, and the mortgage was duly registered with the Iloilo Register of Deeds two days later. Subsequently, Po Pauco acquired a loan of P50,000 from the Philippine National Bank, for which he created a mortgage on the same lorchas on November 28, 1919, with this transaction also duly registered.

By December 6, 1928, Maria Corazon Yu de Sane had secured a judgment against the Lim Ponzo Navigation Co. leading her to a writ of attachment against the lorchas, which was recorded two days before the

...

Facts:

Background of the Case

• The case arose when Mariano B. Arroyo, Provincial Sheriff of Iloilo, instituted an action to compel conflicting claimants to interplead over the lorchas China and Cuylim.
• Various parties including Maria Corazon Yu de Sane, Jose M. Po Pauco, Po Suy Liong (and his company Ti Liong & Co.), and the Philippine National Bank became involved through answers, complaints, and counterclaims.

Chronology and Mortgage Details

• On November 6, 1918, the lorchas were mortgaged by the Lim Ponzo Navigation Co. to Jose M. Po Pauco to secure a loan of P20,000.
• Two days later, this mortgage was registered in the office of the register of deeds of Iloilo.
• On November 28, 1919, Po Pauco executed another mortgage in favor of the Philippine National Bank, covering his rights and interests in the lorchas, registered the following day.
• Subsequently, Po Pauco’s credit with the bank increased, culminating in a sum that reached P131,994.95 with accrued interest and stipulated fees.
• Despite these registrations in the register of deeds, the chattel mortgage was not recorded in the office of the collector of customs of Iloilo until March 5, 1929, due to doubts regarding the applicability of Act No. 3324.

Attachment, Execution, and Interpleading

• Maria Corazon Yu de Sane secured a judgment against the Lim Ponzo Navigation Co. for P7,179.65, and consequently, a writ of attachment and an execution were obtained.
• The writ of execution, dated December 6, 1928, led to the levying of an attachment on the lorchas which had been secured earlier on December 4, 1928.
• The execution was affected subject to prior liens on the vessels, namely the mortgage interests of Po Pauco transferred to the Philippine National Bank.
• Evidence through various exhibits (Exhibits A through I) established the chain of title, mortgage registrations, attachments, and the subsequent execution proceedings.

Misconduct and Procedural Irregularities

• Evidence showed that after issuing a notice on December 28/29, 1928, the provincial sheriff dissolved the attachment and delivered the vessels to Po Pauco without the court’s authority.
• This action was done contrary to the status of the case wherein the complaint for interpleading, filed on December 17, 1928, was still pending before the court.
• The sheriff’s unilateral disposal of the vessels not only exceeded his authority but also exposed him to full responsibility for his actions.

Cross-Claims and Debt Establishment

• The Philippine National Bank filed a cross-complaint asserting that Po Pauco was indebted to it for P131,994.95 inclusive of interest and attorney’s fees—later reduced from 10% to 5%.
• The mortgage securing the debt involved the same lorchas, already due and demandable at the time of the cross-complaint.
• The court ordered that if Po Pauco failed to satisfy the debt within three months, the mortgaged property would be sold by public auction, with any deficiency to be recovered against his other properties.

Appeals and Subsequent Proceedings

• Two separate appeals were taken: one by Maria Corazon Yu de Sane, challenging the priorities concerning the lorchas vis-à-vis the Philippine National Bank; and another by Po Pauco and Po Suy Liong focusing on the foreclosure procedures.
• The trial court’s decision and subsequent findings addressed the propriety of mortgage registration, the legality of execution and attachment procedures, and the proper distribution of rights among the parties.

Issue:

Validity of Mortgage and Registration

• Whether the mortgage executed in favor of Po Pauco and its subsequent transfer to the Philippine National Bank remain valid despite being recorded in the register of deeds but only later recorded in the customs office.
• The effect of the delayed registration at the customs office and the justification provided by the collector in light of Act No. 3324.

Legality of the Sheriff’s Actions

• Whether the provincial sheriff acted within his authority when he dissolved the attachment on the lorchas and delivered them to Po Pauco without further court authorization.
• The admissibility of such unilateral action considering the existence of a pending complaint for interpleading and the proper procedural steps.

Priority and Rights over the Lorchas

• Determination of the priority between the mortgagee (the Philippine National Bank) and the execution creditor (Maria Corazon Yu de Sane) concerning rights over the lorchas.
• Whether the execution, which was effected prior to the registration of the mortgage in the customs office, confers a superior right over the unrecorded mortgage.

Procedural Regularity in Foreclosure

• Whether proper notice and opportunity to be heard were given to Po Pauco in the foreclosure process of the mortgage executed by the Philippine National Bank.
• The implications of the lack of summons or opportunity for defense in the foreclosure proceedings on the jurisdiction and validity of the foreclosure order.

Cross-Complaint and Debt Recovery

• The legitimacy of the cross-complaint by the Philippine National Bank against Po Pauco and the determination of the debt including interest and attorney’s fees.
• Whether the procedures followed in establishing and enforcing the cross-debt were consistent with due process and statutory requirements.

Ruling:

• (Subscriber-Only)

Ratio:

• (Subscriber-Only)

Doctrine:

• (Subscriber-Only)