GR 119577; (August, 1996) (Digest)
G.R. No. 119577 August 28, 1996
FIRST INTEGRATED BONDING & INSURANCE CO., INC., petitioner, vs. COURT OF APPEALS and PILIPINAS BANK, respondents.
FACTS
Petitioner First Integrated Bonding & Insurance Co., Inc. (FIBICI) posted a counterbond for Olympia International, Inc. (OII) in Civil Case No. 39519, leading to the lifting of a writ of attachment and the cancellation of a Notice of Levy on Execution (Entry No. 49260) annotated on OII’s condominium certificates of title on December 1, 1981. Subsequently, on March 18, 1982, respondent Pilipinas Bank caused the annotation of a Notice of Levy on Execution (Entry No. 53789) on the same titles pursuant to its own case against OII (Civil Case No. 45005). This annotation was, however, a clerical error as the writ issued was for attachment, not execution. Later, on December 28, 1983, the sheriff in the original case (No. 39519) levied upon and sold the same condominium units at public auction to FIBICI to satisfy the judgment, despite the prior lifting of the attachment.
ISSUE
Whether the sheriff’s sale of the condominium units to FIBICI is valid and confers a superior right over the subsequent levy by Pilipinas Bank.
RULING
Yes. The Supreme Court ruled in favor of FIBICI. The legal logic centers on the doctrine that a levy on execution duly registered takes preference over a prior unregistered interest, and this preference retroacts to the date of the levy. The original Notice of Levy on Execution (Entry No. 49260) in Civil Case No. 39519, annotated on October 29, 1981, was a valid encumbrance that created a lien in favor of the judgment creditor. The subsequent order of November 25, 1981, which lifted the writ of attachment and directed the sheriff to lift “all levies,” referred only to the levy on attachment, not the levy on execution. Therefore, the cancellation of Entry No. 49260 on December 1, 1981, was void and inoperative. Consequently, the levy on execution from 1981 remained effective and superior. When the sheriff later conducted the auction sale in 1983, it was a legitimate enforcement of that existing levy. Pilipinas Bank’s erroneously annotated levy in 1982, even if corrected, was subsequent and thus inferior to FIBICI’s rights stemming from the 1981 levy. The Court modified the appealed decisions, declaring FIBICI’s right as auction buyer superior and deleting the awards against it.