Title
Capistrano vs. Philippine National Bank
Case
G.R. No. L-9628
Decision Date
Aug 30, 1957
A 1946 land sale to Capistrano was unregistered; a 1950 levy by PNB took precedence upon registration, retroactively prioritizing PNB's auction sale over Capistrano's claim.
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Case Digest (G.R. No. L-9628)

Facts:

  1. Sale of Land: On July 17, 1946, spouses Fulgencio Moreno and Maria Salome sold a parcel of land (covered by TCT No. 19920) to Vicente P. Capistrano. The land was subject to a mortgage in favor of the Agricultural and Industrial Bank (later succeeded by the Rehabilitation Finance Corporation). Capistrano assumed the obligation to pay the mortgage.
  2. Registration Issue: The sale could not be registered immediately because the Rehabilitation Finance Corporation held the owner's duplicate certificate of title and refused to release it unless Capistrano also assumed a deficiency claim against Fulgencio Moreno related to a prior loan.
  3. Levy of Execution: On June 22, 1950, the land was levied upon to satisfy a judgment against Moreno in favor of the Philippine National Bank (PNB). The levy was recorded and annotated on the certificate of title.
  4. Third-Party Claim: On July 25, 1952, the Rehabilitation Finance Corporation informed PNB that the land could no longer be attached because it had already been sold to Capistrano. Despite this, the provincial sheriff proceeded with the auction after PNB posted an indemnification bond. PNB was the sole bidder, and a certificate of sale was issued and registered on November 26, 1952.
  5. Clean Title Issued: On November 16, 1953, Capistrano paid Moreno's mortgage obligation, obtained a cancellation of the mortgage, and was issued a clean title (T-16984), except for the annotation of the execution lien in favor of PNB.
  6. Lawsuit: Capistrano filed an action to cancel the execution lien and declare the execution sale void. The trial court ruled in his favor, but PNB and the provincial sheriff appealed.

Issue:

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Ruling:

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Ratio:

  1. Priority of Registration: Under the prevailing rule, if an attachment or levy of execution is registered before the sale is registered, it takes precedence over the sale, even if the sale occurred earlier. This rule ensures the effectiveness of execution liens and prevents the preference from becoming meaningless.
  2. Retroactivity of Auction Sale: The auction sale retroacts to the date of the levy, preserving the priority established by the registration of the levy. This principle prevents the preference enjoyed by the levy from being rendered illusory.
  3. Abandonment of Prior Doctrine: The Court explicitly abandoned the doctrine in Lanci vs. Yangco (52 Phil. 563), which had given precedence to the sale over the levy. The current rule, as established in Philippine National Bank vs. Camus (70 Phil. 269) and other cases, prioritizes the registration of the levy over the unregistered sale.


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