Title
Jalandoni vs. Philippine National Bank
Case
G.R. No. L-47579
Decision Date
Oct 9, 1981
Jalandoni's heirs won as PNB's levy expired after 10 years; Supreme Court canceled the stale embargo, upholding judgment enforcement limits.
court ruling
properties levied upon
execution
A

Case Summary (G.R. No. L-47579)

Facts and Procedural History

On March 31, 1959, the Court of First Instance of Manila rendered judgment in Civil Case No. 38393, ordering Eduardo Jalandoni to pay the Philippine National Bank P63,297.53, with daily interest of P12.57 from March 6, 1959 until fully paid, and an attorney’s fee equivalent to ten percent of the total amount due, plus costs. The judgment became final and executory.

Within five years from entry of the judgment, an alias writ of execution was implemented on March 9, 1964. Acting under that writ, the sheriff of Silay City levied upon Lot No. 657-C, then covered by TCT No. T-1827. The levy was annotated on the title by means of a recorded “Entry No. 2041—Notice of Embargo,” specifying that the rights, interests, and participations of Eduardo Jalandoni in relation to Civil Case No. 38393 were subjected to “levy on execution.” Later, in 1969, the title was replaced by TCT No. T-3202.

The Bank took no steps to have the levied property sold at public auction to satisfy the judgment. More than ten years after the levy, on April 22, 1974, Jalandoni filed, in the land registration proceeding LRC Cadastral Record No. 86 for Lot No. 657-C, a petition seeking cancellation of the levy on the ground of prescription. The Bank opposed the petition. In an order dated October 31, 1974, the trial court directed Jalandoni to seek quashal of the writ of execution in the Manila court on the ground of prescription and thereafter to refile the petition in the lower court. The order also invoked the procedural limitation under section 112 of Act No. 496, observing that relief thereunder required unanimity among the parties or the absence of adverse claim or serious objection by an interested party.

On May 20, 1975, Jalandoni instituted Civil Case No. 685 in the same court, seeking to quiet title and for cancellation of the notice of embargo. He argued that although more than ten years had passed since the levy, no execution sale had been held, and thus the levy had become inefficacious and a cloud on his title. The Bank answered. After pre-trial and submission of memoranda, the trial court rendered a decision dated June 15, 1977 dismissing the complaint. The heirs appealed to the Supreme Court under Republic Act No. 5440.

Issues Raised

The appeal required determination of whether, after the statutory ten-year period for enforcing a judgment by action had elapsed, the creditor could still enforce the judgment through sale of property previously levied upon, where the levy had been effected within five years from the entry of judgment but no public execution sale had taken place within the ten-year period.

The Parties’ Contentions

The heirs of Jalandoni maintained that the levy could no longer be enforced because the execution sale had not been conducted within the ten-year period during which the judgment remained enforceable by action. They relied on Ansaldo vs. Fidelity and Surety Co. of the P.I., 88 Phil. 547 (1951), where the Court held that properties levied upon by execution must be sold in public auction within the ten-year period during which the judgment could be enforced by action. They reasoned that execution is accomplished not by levy alone, but by levy and sale, and hence the lapse of the ten-year period rendered the annotated levy stale and removable.

The Bank and the trial court took the opposite view. They accepted that the levy had been made within five years from entry of judgment but argued that an execution sale could still occur beyond ten years, so long as the levy itself was made within the period allowed by the rules for issuing execution and making levy. They invoked the dictum that section 6 of Rule 39 limits only the time within which a writ of execution may be issued to enforce a judgment and does not fix the time when the sheriff must hold the public sale after levy. They relied on Del Rosario vs. Yatco, L-18735 (December 29, 1966), 18 SCRA 1263, and on a rationale associated with Southern Cal. Lumber Co. vs. Hotel Co. to the effect that levy is the essential act setting apart property for satisfaction, while the defendant’s interest becomes limited to application to the judgment, irrespective of when the sale may be scheduled.

Legal Basis and Reasoning

The Court began with the governing prescriptive framework. An action upon a judgment must be brought within ten years from when the right of action accrues (Art. 1144, Civil Code). The Court then referenced the clarification in the Rules of Court: Rule 39, Sec. 6 provides that a judgment may be executed on motion within five years from its entry or from when it becomes final and executory, and that after lapse of that period and before the judgment is barred by the statute of limitations, it may still be enforced by action.

In support of their position, the heirs invoked Ansaldo, which required that properties levied upon must be sold in public auction within the ten-year period during which the judgment can be enforced by action. The Court treated Ansaldo as factually and legally aligned with the present controversy. In Ansaldo, a writ and notice of levy were issued and annotated, but no further step occurred until the debtor’s heir sought cancellation after more than fourteen years. The lower court granted cancellation on the ground of prescription, and the Court affirmed. The Court emphasized that although Government of the Philippines vs. Echaus had earlier stated that if there is a valid levy within the period prescribed by law, the execution sale may be enforced thereafter, the execution sale in Echaus occurred within ten years from entry of judgment.

Turning to Del Rosario, the Court examined it as a case where a judgment creditor similarly failed to conduct an execution sale after levy. The Court noted that in Del Rosario, the judgment creditor had been ordered to take steps to sell the levied land within sixty days, and importantly, the execution sale directed by the trial court would occur within the ten-year prescriptive period for enforcing the judgment. Thus, the Court held that the dictum cited by the Bank did not authorize holding an execution sale after the ten-year period had already elapsed. It distinguished the meaning of “irrespective of the time when it may be sold” as referring to the time after a levy when the writ remains effective, not a suspension of the ten-year limitation governing the enforceability of the judgment itself. The Court reasoned that while levy is essential to set apart property and place it in the custody of the law, it does not allow the creditor to preserve enforceability of the judgment indefinitely where no sale occurs within the prescriptive period.

The Court then expressly rejected the trial court’s failure to apply Ansaldo. It held that the Bank’s employees were negligent because they did not require the sheriff to sell the levied land at public auction. The Court ruled that the Bank was bound by its employees’ negligence and that the doctrine that “the law helps the diligent and vigilant, not those who sleep on their rights” applied. It underscored the purpose of prescription as a statute of limitations that protects against stale claims, punishes neglect, and provides reassurance that rights may have been waived, thereby ensuring economic stability and certainty of rights.

Finally, the Court concluded that the “Notice of E

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