Campillo v. Philippine National Bank
REITERATIONFacts
The Antecedents: Sostenes Campillo (appellee) obtained a judgment against Justiniano D. Quirino in Civil Case No. 35447, based on a compromise agreement. The agreement stipulated a debt of P45,837.28 plus interest, payable within six months from the judgment date. Failure to pay would result in a writ of execution. Procedural History: An initial writ of execution yielded only P1,031.55. An alias writ of execution was issued on March 15, 1960. On March 16, 1960, the Sheriff of Pasay City attached Justiniano D. Quirino's rights, title, and interest in a parcel of land covered by T.C.T. No. 236-A, which was mortgaged to the Philippine National Bank (PNB) for P13,000.00. The attachment and notice of levy were registered on the same date. The property was sold at public auction on April 8, 1960, to the judgment creditor, Sostenes Campillo, who assumed the mortgage. The certificate of sale was registered on April 12, 1960. Campillo sought to pay the mortgage but PNB refused, claiming ownership due to an extra-judicial foreclosure sale. Campillo filed the present action. The Petition: Campillo prayed to be declared the owner of the property, to have the Register of Deeds cancel the existing title and issue a new one in his favor, subject only to PNB's mortgage, and for attorney's fees and costs. The lower court ruled in favor of Campillo, ordering the cancellation of T.C.T. No. 8067 and issuance of a new title in Campillo's name, subject to PNB's mortgage, and sentencing PNB to pay attorney's fees and costs. PNB appealed.
Issue(s)
Whether the extra-judicial foreclosure sale in favor of the Philippine National Bank, which occurred prior to the execution sale, legally conveyed ownership to PNB as against the execution sale purchaser, despite the foreclosure sale being registered after the execution sale levy. Whether the levy and subsequent execution sale of the property were valid and effective.
Ruling
The appealed judgment is affirmed. The Court held that the extra-judicial foreclosure sale in favor of PNB was not legally effective against third parties until its registration. Since the levy and registration of the execution sale in favor of Campillo occurred prior to the registration of PNB's foreclosure sale, the property was validly attached and sold as the property of the judgment debtor, Justiniano D. Quirino.
Ratio Decidendi
On the validity and effectivity of the levy and execution sale: The Court reiterated the settled principle that a sale of real estate, whether private, foreclosure, or execution sale, becomes legally effective against third parties only from the date of its registration, pursuant to Section 50 of Act 496. In this case, the levy on execution in favor of appellee Campillo was registered on March 16, 1960, and the certificate of sale was registered on April 12, 1960. The extra-judicial foreclosure sale in favor of appellant PNB, though dated December 17, 1958, was registered only on April 21, 1960. Therefore, at the time of the levy and registration of the execution sale, the property stood in the official records as belonging to Justiniano D. Quirino, making the levy and sale legally valid and effective against PNB. The Court emphasized that the execution sale transferred to Campillo all the rights, interest, and participation of Quirino in the property at that time, subject only to the encumbrance duly registered and annotated on the title. The Court cited Ramirez vs. Causin, Capistrano vs. Philippine National Bank, Vargas vs. Tancioco, and Philippine Executive Commission vs. Abadilla to support this principle regarding the effect of registration against third parties. On the legal effect of the unregistered foreclosure sale: The Court found PNB's main contention that it had already acquired absolute ownership through the extra-judicial foreclosure sale to be untenable because the sale was not registered prior to the levy and registration of the execution sale. The Court explained that while the foreclosure sale occurred on December 17, 1958, its legal effect against third parties, including the execution creditor Campillo, only commenced upon its registration on April 21, 1960. This date was subsequent to the registration of the levy on March 16, 1960, and the execution sale on April 12, 1960. Consequently, when the Sheriff attached and levied upon the property on March 16, 1960, it was legally considered the property of Justiniano D. Quirino in the records, and thus, it was subject to execution. The Court concluded that the execution sale was valid and that Campillo acquired Quirino's rights to the property, subject to the existing mortgage.
Main Doctrine
A sale of real estate, whether made as a result of a private transaction or of a foreclosure or execution sale, becomes legally effective against third parties only from the date of its registration. Consequently, property levied upon and sold in an execution sale, which was registered prior to the registration of a prior foreclosure sale, is considered validly attached and sold as the property of the judgment debtor.