Chua v. Gutierrez (G.R. No. 172316; December 8, 2010)

CASE DIGEST: SPOUSES JOSE CHUA and MARGARITA CHUA, Petitioners, v. THE HONORABLE PEDRO GUTIERREZ, in his capacity as Presiding Judge of Branch 119, Regional Trial Court, Pasay City, PEDRO A. ABADILLA, in his capacity as Sheriff IV of Branch 119, Regional Trial Court, Pasay City, and TAN TEK SING, a.k.a. PETER TAN, Respondents. (G.R. No. 172316; December 8, 2010).

FACTS: The dispute involves Townhouse Unit 320, located at Roxas Sea Front Garden, Roxas Boulevard, Pasay City in the name of Benito Chua. Petitioners, spouses Jose and Margarita Chua, claim that Benito sold the property to them on July 20, 1994 for P2,800,000.00. Said sale, however, was only registered on January 5, 1995.

Meanwhile, on November 11, 1994, respondent Tan Tek Sing filed with the Regional Trial Court (RTC) of Pasay City, a suit for collection against Benito, among others, with a prayer for the issuance of a writ of attachment. A writ of preliminary attachment was issued by the trial court prompting the Sheriff to levy on Townhouse Unit 320. On November 18, 1994, entry number 94-3278/T-127330, a notice of levy on attachment, was inscribed in TCT No. 127330 (subject property) by the Register of Deeds of Pasay City. At the time of said inscription, TCT No. 127330 was still in the name of Benito.

Petitioners filed with the RTC of Pasay City a Motion to Exclude and Remove Writ of Attachment from Townhouse Unit 320 on the ground that the subject property was already owned by them by virtue of an unregistered Deed of Absolute Sale.

Upon registration of the sale in 1995, TCT No. 134590 was issued in petitioners name. The notice of levy on attachment, however, was carried over in the new title.

Meanwhile, the RTC rendered a Decision finding Benito liable to respondent. It, however, excluded Townhouse Unit 320 from attachment. On appeal, the RTC decision was affirmed by the CA. petitioners filed a motion for reconsideration but the same was denied. Petitioners then appealed to the SC. The SC dismissed the appeal on the ground of for failure to (a) submit a certification against forum shopping duly executed by petitioners themselves, and (2) properly verify the petition.

After the denial of petitioners appeal by this Court, respondent then moved for execution against Townhouse Unit 320. The RTC granted respondent's motion. Notwithstanding, the finality of the CA Decision in CA-G.R. CV No. 49959, petitioners, however, moved to quash the writ of execution and notice of levy on the grounds that they are not the judgment debtors and the property levied upon was already sold to them prior to the institution of the suit. The RTC denied the same. Petitioners then filed a petition for certiorari with the CA but the same was denied. Petitioners filed a motion for reconsideration but the same was denied. Hence, this petition.

ISSUE: Is a registered writ of attachment a superior lien over that of an unregistered deed of sale?HELD: Yes. The act of registration shall be the operative act to convey or affect the land insofar as third persons are concerned, and in all cases under this Decree, the registration shall be made in the office of the Register of Deeds for the province or the city where the land lies.

The preference given to a duly registered levy on attachment or execution over a prior unregistered sale is well settled in our jurisdiction. This is because registration is the operative act that binds or affects the land insofar as third persons are concerned. It is upon registration that there is notice to the whole world.

Petitioners cannot escape the fact that when they registered the Deed of Absolute Sale on January 5, 1995, a writ of attachment was already inscribed on TCT No. 127330 as early as November 18, 1994. Accordingly, when TCT No. 127330 was cancelled and TCT No. 134590 was issued in petitioners name, the notice of levy on attachment was carried over in the new title. It bears stressing that at the time of the inscription of the writ of attachment, Townhouse Unit 320 was still in the name of Benito.

In Valdevieso v. Damalerio, this Court explained that an attachment is a proceeding in rem and that the right of ownership of an individual over a sale registered after such attachment is limited and subject to the prior registered lien, to wit:

The preference created by the levy on attachment is not diminished even by the subsequent registration of the prior sale. This is so because an attachment is a proceeding in rem. It is against the particular property, enforceable against the whole world. The attaching creditor acquires a specific lien on the attached property which nothing can subsequently destroy except the very dissolution of the attachment or levy itself. Such a proceeding, in effect, means that the property attached is an indebted thing and a virtual condemnation of it to pay the owners debt. The lien continues until the debt is paid, or sale is had under execution issued on the judgment, or until the judgment is satisfied, or the attachment discharged or vacated in some manner provided by law.

Thus, in the registry, the attachment in favor of respondents appeared in the nature of a real lien when petitioner had his purchase recorded. The effect of the notation of said lien was to subject and subordinate the right of petitioner, as purchaser, to the lien. Petitioner acquired ownership of the land only from the date of the recording of his title in the register, and the right of ownership which he inscribed was not absolute but a limited right, subject to a prior registered lien of respondents, a right which is preferred and superior to that of petitioner.

The sale between petitioners and Benito was undoubtedly a valid transaction between them. However, in view of the prior levy on attachment on the same property, petitioners took the property subject to the attachment. Petitioners, in buying registered land, stood exactly in the shoes of their vendor, Benito, and their title ipso facto became subject to the incidents or results of the pending litigation between Benito and respondent. DENIED.

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