Case Digest (G.R. No. L-9628)
Facts:
The case involves Vicente P. Capistrano as the plaintiff and appellee against the Philippine National Bank and the Provincial Sheriff of Quezon as defendants and appellants. The events leading to this case began with a deed executed on July 17, 1946, wherein spouses Fulgencio Moreno and Maria Salome sold a parcel of land, described in Transfer Certificate of Title (TCT) No. 19920, to Vicente P. Capistrano. This sale was subject to an existing mortgage in favor of the Agricultural and Industrial Bank. Although Capistrano assumed the obligation to pay the mortgage, the sale could not be registered immediately because the Rehabilitation Finance Corporation, the successor of the Agricultural and Industrial Bank, held the owner's duplicate certificate of title and required Capistrano to also assume a deficiency claim against Moreno related to a prior loan for which the land was collateral.
On June 22, 1950, while the sale remained unregistered, the land was levied upon to sa...
Case Digest (G.R. No. L-9628)
Facts:
- 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.
- 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.
- 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.
- 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.
- 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.
- 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:
- (Unlock)
Ruling:
- (Unlock)
Ratio:
- 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.
- 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.
- 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.