Jalandoni v. Philippine National Bank
REITERATIONFacts
The Antecedents: On March 31, 1959, a judgment was rendered ordering Eduardo Jalandoni to pay the Philippine National Bank (PNB) P63,297.53 plus interest and attorney's fees. Within five years from the entry of judgment, on March 9, 1964, the sheriff levied upon Lot No. 657-C, which was annotated on the Transfer Certificate of Title. No execution sale was conducted by PNB to satisfy the judgment. Procedural History: On April 22, 1974, Jalandoni filed a petition to cancel the levy due to prescription, which was opposed by PNB. The lower court directed Jalandoni to seek a quashal of the writ of execution from the Manila court. Subsequently, Jalandoni filed an action to quiet title or cancel the embargo, arguing the levy had become inefficacious after more than ten years without an execution sale. The trial court dismissed the complaint. The Petition: The heirs of Jalandoni appealed the trial court's decision to the Supreme Court, arguing that the levy could not be enforced after the expiration of the ten-year period for enforcing the judgment.
Issue(s)
Whether a property levied upon within five years from the entry of judgment can be sold at an execution sale after the expiration of the ten-year period for enforcing the judgment. Whether the levy on execution annotated on the title had become inefficacious and constituted a cloud on the title.
Ruling
The Supreme Court reversed and set aside the trial court's decision. It directed the register of deeds of Silay City to cancel the "Notice of Embargo" annotated on Jalandoni's title.
Ratio Decidendi
On the issue of whether a property levied upon within five years from the entry of judgment can be sold at an execution sale after the expiration of the ten-year period for enforcing the judgment: The Court held that the trial court erred in not applying the ruling in Ansaldo vs. Fidelity and Surety Co. of the P.I., which is on all fours with the present case. The Court reiterated the rule that a valid execution issued and levy made within the five-year period after entry of the judgment may be enforced by sale of the property levied upon thereafter, provided the sale is made within ten years after the entry of the judgment. The levy is the essential act by which property is set apart for satisfaction of the judgment, but the execution is accomplished by levy and sale. The Court clarified that the dictum in Southern California Lumber Co. vs. Hotel Co., stating that the sale may be held "irrespective of the time when it may be sold," does not mean that the execution sale could be held beyond the ten-year period for enforcing the judgment. The negligence of PNB's employees in not requiring the sheriff to sell the land at public auction within the prescribed period was binding on the bank. The law aids the diligent, not those who sleep on their rights, and the statute of limitations serves as a punishment for those who do not look after their interests and as reassurance to those who believe their creditors have waived their rights. On the issue of whether the levy on execution annotated on the title had become inefficacious and constituted a cloud on the title: The Court found that the "notice of embargo" annotated in 1964 on Jalandoni's title was no longer enforceable and had become a cloud upon his title. Following the rule in the Ansaldo case, Jalandoni and his heirs had a good cause of action under Article 476 of the Civil Code for the removal of that encumbrance. Furthermore, Article 478 of the Civil Code provides for an action to quiet title or remove a cloud when an obligation has been extinguished or barred by extinctive prescription. A court of equity will remove a cloud cast upon title by a lien that has become barred by laches or the statute of limitations, including liens acquired by virtue of judgments or levies of execution that have become barred by limitations or delay in enforcement.
Main Doctrine
A levy on execution made within the five-year period for enforcing a judgment does not extend the ten-year prescriptive period for enforcing the judgment itself. The execution sale must be held within the ten-year period from the entry of judgment, otherwise, the levy becomes ineffective and constitutes a cloud on the title.