PHILIPPINE NATIONAL BANK, PLAINTIFF AND APPELLEE, VS. LUZON SURETY COMPANY, INC., DEFENDANT AND APPELLANT.

This is an appeal from a judgment of the Court of First Instance of Nueva
Ecija “declaring that the Philippine National Bank had acquired absolute
ownership of the rights, interests, and participation of the spouses Paulino
Candelaria and Dionisia Tecson in the parcels of land covered by Transfer
Certificate of Title No. T-6241 now Transfer Certificate of Title No. T-12343
and Transfer Certificate of Title No. T-6242 now Transfer Certificate of Title
No. T-12344; declaring that the defendant Luzon Surety Company acquired nothing
by virtue of the final bill of sale executed in its favor by the Provincial
Sheriff, Exhibits 6 and 7, except the right of redemption which had been lost;
ordering the cancellation of the notice of attachment, Entry No. 15019 NT-6364
in favor of the Luzon Surety Company on Transfer Certificate of Title No.
NT-12343, as well as the certificate of sale in favor of the Luzon Surety
Company, Entry No. 32264, NT-6241, and the notice of attachment and certificate
of sale on Transfer Certificate of Title No. NT-12344, Entries Nos. 15019,
NT-3664, and No. 32264, No. NT-6241; and finally declaring the rights of the
Philippine National Bank to the said properties free from any claim, lien or
incumbrances in favor of the Luzon Surety Company. With costs against the
defendant.” From this judgment, the defendant Luzon Surety Company appealed to
this Court purely on questions of law.

Inasmuch as the questions of fact as found by the trial court are not
disputed, we will quote hereunder the pertinent portion necessary for the
decision of this case:

“In Civil Case No. 7647 of the Court of First Instance of Manila, entitled,
‘Philippine National Bank us. Paulino Candelaria, et al., the Philippine
National Bank attached the rights, interest, and participation of Paulino
Candelaria and Dionisia Tecson in the parcels of land covered by Transfer
Certificates of Titles Nos. 21035 and 21045 of the Register of Deeds of Nueva
Eeija, Exhibit B. The writ of attachment which is dated March 25, 1949 was
registered and annotated in Certificate of Title No. 21035, Exhibit F, and No.
21045, Exhibit G, on March 25, 1949. Transfer Certificates of Title No. 21035,
Exhibit F, was cancelled by Transfer Certificate of Title No, NT-6241, Exhibit
H, which in turn was cancelled by Transfer Certificate of Title No. NT-12343,
Exhibit J. Transfer Certificate of Title No. NT-6242, Exhibit I, which in turn
was cancelled by Transfer Certificate of Title No. NT-12344. Exhibit K. All
these certificates of title carry the attachment in favor of the Philippine
National Bank. On Octoher 13, 1950, Paulino Candelaria and Dionisia Tecson
assigned and conveyed to the Philippine National Bank several parcels of land,
among which were those covered by Transfer Certificates of Title No. 21035 and
21045 in consideration of the judgment rendered against them in Civil Case No.
7647. This deed of assignment had not been registered or annotated in the
certificate of title. Pursuant to the judgment in Civil Case No. 7647, several
parcels of land, including the parcels of land in question then covered by
Transfer Certificates of Title No. N-6241 and NT-6242, were sold at public
auction in which the Philippine National Bank was the highest bidder, and the
Provincial Sheriff ex-officio executed a certificate of sale in favor of the
Philippine National Bank dated April 1, 1952, Exhibit D. This certificate of
sale was registered and annotated on Transfer Certificates of Title No. NT-12343
and NT-12344 on December 24, 1954.

“In Civil Case No. 5633 of the Court of First Instance of Manila, entitled,
Rafael Viola vs. Ricardo Linsangan, et al., the rights, interest, and
participation of the spouses Paulino Candelaria and Dionisia Tecson in the
parcels covered by T.C.T. Nos. 21035 and 21045 were attached by the Luzon Surety
Company. The writ of attachment, Exhibit 2-A, was registered and annotated on
certificate of title on April 5, 1949. By virtue of the judgment rendered in the
same Civil Case No. 5633, the properties of Paulino Candelaria, including his
rights, participation, and interests in the lands now in question, covered by
Transfer Certificates of Title Nos. 12343 and 12344, were sold at public
auction, in which the Luzon Surety Company was the highest bidder. The
provincial Sheriff of the Province of Nueva Ecija executed a certificate of sale
in favor of the Luzon Surety Company on October 10, 1951, Exhibit 5, which was
registered on the same date. Paulino Candelaria and his wife having failed to
redeem the property within the period prescribed by law, the Provincial Sheriff
executed the final bill of sale on November 29, 1952, Exhibit 6, in favor of the
Luzon Surety Company.

“Various incidents took place in Cadastral Case No. 51, G.L.R.O. Record No.
1045, with respect to the conflicting claims of the Philippine National Bank and
the Luzon Surety Company over the parcels of land covered by Transfer
Certificates of Title Nos. 12343 and 12344. The Court, being of the opinion that
the controversy between the parties involved a contentious litigation, did not
resolve the preference of the parties, but ordered the registration and
annotation of the final bill of sale executed by the Provincial Sheriff in favor
of the Philippine National Bank and the Luzon Surety Company. The Philippine
National Bank registered the final bill of sale in its favor, but no action was
taken by the Luzon Surety Company.” (Decision, Record on Appeal, pp.
38-41).

The several errors assigned by appellant in its brief consist in substance in
that the trial court failed to hold (1)that the deed of assignment, Exhibit 15,
operated as a complete payment and satisfaction of the judgment rendered in
favor of the Philippine National Bank by the Court of First Instance of Manila
in Civil Case No. 7647; (2) that said satisfaction of judgment served to
extinguish or dissolve the writ of attachment issued in favor of said bank; (3)
that the execution sale in favor of said bank was null and void since the
judgment sought to be executed had already been paid or satisfied; and (4) that
appellant is the absolute owner of the parcels of land in question by virtue of
the final bill of sale issued in its favor in Civil Case No. 5633.

There is no dispute that the writ of preliminary attachment in favor of
appellee in Civil Case No. 7647 of the Court of First Instance of Manila has
preference over the writ of preliminary attachment in favor of appellant issued
in Civil Case No. 5633, since appellee’s writ was registered prior to the
registration of the attachment in favor of appellant. There is also no dispute,
as admitted by appellant, that a sale by virtue of an attachment retroacts to
the date of the registration of the writ of attachment, and that the preference
of the attachment creditor is determined, not by the date of the execution sale,
but by the date of the registration of the writ. With this premise, it would
appear that appellee has acquired a valid and preferential title to the lands in
question by virtue of the final bill of sale executed in its favor by the
sheriff as a result of the auction sale held in Civil Case No. 7647. Since
appellant was merely a redemptioner who stepped into the shoes of the judgment
debtors in Civil Case No. 5633 and has failed to exercise the right of
redemption within the period prescribed by law, its right, if any, to the
properties in question has become forfeited.

It is claimed however that after judgment was rendered in favor of appellee
in Civil Case No. 7647 on September 12, 1950, the judgment debtors Paulino
Candelaria and Dionisia Tecson made on October 30, 1950 an assignment of all
their rights and interests over the parcels of land in question in satisfaction
of the judgment rendered in favor of appellee and that said assignment has the
effect of dissolving the writ of attachment issued in favor of appellee. And if
we are to hold, it is contended, that the assignment thus made has the effect of
dissolving the writ in favor of appellee, it follows that the writ issued in
favor of appellant became prior and preferential and the sale made in its favor
as a consequence thereof valid and absolute.

While it is true that a deed of assignment was made in favor of appellee by
its judgment debtors allegedly in satisfaction of the judgment rendered in its
favor, it appears however that the deed was never registered in the registry of
property and as such it has not ripened into a conveyance in contemplation of
law. The assignment failed to bind the land. And since the purpose of the
assignment is the transfer of the ownership of the land in payment of the amount
of the judgment which amounted to P63,737.53 and the conveyance did not
materialize because of failure of registration, it would be incongruous to hold
that that assignment in contemplation of law operated to dissolve the writ of
attachment issued in favor of appellee. The best proof that appellee never
intended to consider such an assignment as a full satisfaction of the judgment
in its favor is the fact that it took steps to enforce its judgment through an
auction sale where it bought the property as the highest bidder and was given a
final bill of sale by the sheriff.

Moreover, there is no incompatibility between the deed of assignment and the
writ of attachment issued in favor of appellee, for the two can co-exist. The
first is merely. one of the means by which appellee may avail of to insure the
transfer of the lands subject of the writ in satisfaction of the judgment
without in any way relinquishing the priority it has acquired over them by
virtue of the writ,whereas the second is a precautionary measure taken to assent
its rights over the land against third persons. Ordinarily, a deed of assignment
may bind the assignee with regard to the land even if the deed is not
registered, but not so when the right of a third party is involved (Section 50,
Act 496). This is the situation herein obtained. Because of a conflicting right
asserted by appellant, appellee deemed it best to carry out its writ of
execution to the extent allowed by law so that it may derive the full benefit
that the law grants to a prior lien holder. Under the law and equity, therefore,
it is clear that the prior lien of appellee over the lands has not been lost
with the execution of the deed of assignment Exhibit 15. Wherefore, the decision
appealed from is affirmed, with costs against appellant.

Paras, C.J, Bengzon, Montemayor, Labrador, Endencia, and Felix,
JJ., concur.

Reyes, A., and Concepcion, JJ., concur in the result.

 

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CONCURRING

REYES, J. B. L., J.,

I concur for the reason that the deed of assignment in favor of the Bank not
having been registered, the same did not, and could not, prejudice or favor
strangers to the agreement. The rule, I understand, is that res inter alias acta
aliis neque nocet neque prodest.