G.R. No. L-19890 May 21, 1969
SOSTENES CAMPILLO, plaintiff-appellee, vs. PHILIPPINE NATIONAL BANK and THE REGISTER OF DEEDS OF PASAY CITY, defendants, PHILIPPINE NATIONAL BANK, defendant-appellant.

FACTS

Plaintiff-appellee Sostenes Campillo obtained a final and executory judgment against Justiniano D. Quirino in Civil Case No. 35447 based on a compromise agreement. After partial satisfaction from the sale of Quirino’s personal properties, an alias writ of execution was issued. On March 16, 1960, the Sheriff of Pasay City attached and levied upon Quirino’s rights in a parcel of land covered by T.C.T. No. 236-A in Quirino’s name, which had a mortgage encumbrance in favor of defendant-appellant Philippine National Bank (PNB) duly annotated on the title. The levy was registered on the same date. Despite a third-party claim filed by PNB on April 5, 1960, the execution sale proceeded on April 8, 1960, with Campillo as the highest bidder, who assumed the mortgage. The certificate of sale was registered on April 12, 1960. Campillo requested PNB to inform him of the exact mortgage balance to pay it off, but PNB refused, claiming it already owned the property by virtue of an extra-judicial foreclosure sale it conducted on December 17, 1958. However, this foreclosure sale was registered only on April 21, 1960. After the one-year redemption period expired, the Sheriff executed a final deed of sale in favor of Campillo on April 13, 1961. The court later ordered the Register of Deeds to cancel T.C.T. No. 236-A and issue a new title in Campillo’s name, but the Register of Deeds refused, citing the lack of the owner’s duplicate certificate held by PNB. Subsequently, on July 6, 1961, the Register of Deeds cancelled T.C.T. No. 236-A and issued T.C.T. No. 8067 in favor of PNB without notice to Campillo. Campillo filed the present action.

ISSUE

The primary issue is whether the execution sale of the mortgaged property in favor of Campillo on April 8, 1960, or the earlier extra-judicial foreclosure sale in favor of PNB on December 17, 1958, has priority and legal effect against third parties, considering their respective dates of registration.

RULING

The Supreme Court affirmed the decision of the Court of First Instance of Manila. It held that the execution sale in favor of Campillo had priority. The Court ruled that a sale of real estate, whether by private transaction, foreclosure, or execution, becomes legally effective against third parties only from the date of its registration under Section 50 of Act No. 496 (the Land Registration Act). The levy in execution by Campillo was registered on March 16, 1960, and the certificate of sheriff’s sale was registered on April 12, 1960. In contrast, PNB’s extra-judicial foreclosure sale, although conducted earlier on December 17, 1958, was registered only on April 21, 1960. Therefore, on March 16, 1960, when the property was attached and levied upon, the official records still showed Quirino as the owner, subject only to the duly annotated mortgage. Consequently, the execution sale validly transferred Quirino’s rights in the property to Campillo, subject to the mortgage encumbrance. The Court declared Campillo the owner of the property covered by T.C.T. No. 8067, ordered the Register of Deeds to cancel that title and issue a new one in Campillo’s name subject to PNB’s mortgage, and ordered PNB to pay attorney’s fees and costs.