PHILIPPINE VETERANS BANK V. MONILLAS (CIVIL)

Issue: Whether the prior registered mortgage and the already concluded foreclosure proceedings should prevail over the subsequent annotation of the notices of lis pendens on the lot titles.

Petition is meritorious.

The Court rules that the prior registered mortgage of PVB and the foreclosed proceedings already conducted prevail over respondent's subsequent annotation of the notices of lis pendens on the titles to the property. Settled is the doctrine that a prior registration of a lien creates a preference; hence, the subsequent annotation of an adverse claim cannot defeat the rights of the mortgagee or the purchaser at the auction sale whose rights were derived from a prior mortgage validly registered. A contrary rule will make a prior registration of a mortgage or any lien nugatory or meaningless.

The Court also notes that PVB is an innocent mortgagee for value. When the lots were mortgaged to it by Ireneo, the titles thereto were in the latter's name, and they showed neither vice nor infirmity. In accepting the mortgage, petitioner was not required to make any further investigation of the titles to the properties being given as security and could rely entirely on what is stated in the aforesaid titles.

The public interest in upholding the indefeasibility of a certificate of title as evidence of the lawful ownership of the land or of any encumbrance thereon, protects a buyer or mortgagee, who, in good faith, relied upon what appears on the face of the certificate of title.

Off-repeated is the rule that the foreclosure ale retroacts to the date of the registration of the mortgage. Thus, it no longer matters that the annotation of the sheriff's certificate of sale and the affidavit of consolidation of ownership was made subsequent to the annotation of the notices of lis pendens.