Chua v. Gutierrez
REITERATIONFacts
The Antecedents: Petitioners, Spouses Jose and Margarita Chua, claim to have purchased Townhouse Unit 320 from Benito Chua on July 20, 1994, evidenced by an unregistered Deed of Absolute Sale. The sale was registered on January 5, 1995, resulting in the cancellation of TCT No. 127330 and the issuance of TCT No. 134590 in their name. However, on November 11, 1994, respondent Tan Tek Sing filed a collection suit against Benito Chua, and a writ of preliminary attachment was issued. On November 18, 1994, a notice of levy on attachment was inscribed on TCT No. 127330, which was still in Benito Chua's name at the time. This notice of levy was carried over to TCT No. 134590. Procedural History: The Regional Trial Court (RTC) initially excluded Townhouse Unit 320 from attachment in its decision dated April 26, 1995. However, the Court of Appeals (CA) modified this in its February 18, 1999 decision, making the unit subject to the writ of attachment. Petitioners' appeal to the Supreme Court (SC) was dismissed. Subsequently, the RTC granted respondent's motion for execution. Petitioners' motion to quash the writ of execution was denied by the RTC on August 5, 2003, and their motion for reconsideration was denied on December 3, 2003. Petitioners then filed a petition for certiorari with the CA, which was denied on February 7, 2006, and their motion for reconsideration was denied on April 17, 2006. Hence, the present petition. The Petition: Petitioners seek to set aside the CA's decision and resolution, arguing that the execution of judgment should only extend to properties unquestionably belonging to the judgment debtor, and that Townhouse Unit 320 was already sold to them prior to the institution of the suit.
Issue(s)
Whether a registered writ of attachment is superior to a prior unregistered deed of sale. Whether the Court of Appeals gravely erred in not considering that the power of the court in the execution of judgment extends only to properties unquestionably belonging to the judgment debtor.
Ruling
The petition is denied. The February 7, 2006 Decision and April 17, 2006 Resolution of the Court of Appeals are affirmed.
Ratio Decidendi
On the issue of whether a registered writ of attachment is superior to a prior unregistered deed of sale: The Supreme Court held that the preference given to a duly registered levy on attachment over a prior unregistered sale is well-settled. This is because, under Section 51 of Presidential Decree (PD) No. 1529, the act of registration is the operative act that conveys or affects the land insofar as third persons are concerned. In this case, the writ of attachment was inscribed on November 18, 1994, while the Deed of Absolute Sale was only registered on January 5, 1995. Therefore, the registered attachment lien is superior to the unregistered sale. The Court reiterated the principle that an attachment is a proceeding in rem, and the attaching creditor acquires a specific lien on the attached property. This lien continues until the debt is paid or the attachment is discharged. The preference created by the levy on attachment is not diminished even by the subsequent registration of a prior sale because the registration of the attachment serves as notice to the whole world. Petitioners, by purchasing registered land, stood in the shoes of their vendor and their title became subject to the incidents of the pending litigation. The Court emphasized that constructive notice through registration is paramount, and any claim of good faith or innocence cannot overcome the irrefutable presumption that a purchaser has examined every instrument on record affecting the title. The exception where knowledge of an unregistered sale is equivalent to registration was not proven by petitioners, as there was no evidentiary proof that respondent had knowledge of the sale prior to the institution of the proceedings. On the issue of whether the Court of Appeals gravely erred in not considering that the power of the court in the execution of judgment extends only to properties unquestionably belonging to the judgment debtor: The Court found this argument to be without merit. While it is true that execution generally applies only to the judgment debtor's properties, the property in question, Townhouse Unit 320, was subject to a duly registered writ of attachment at the time it was levied. The registration of the attachment created a real lien on the property. Consequently, petitioners acquired ownership of the land subject to this prior registered lien. The Court also noted that the finality of the CA Decision in CA-G.R. CV No. 49959, which made the townhouse subject to attachment, was established when this Court dismissed petitioners' appeal in G.R. No. 147339. Allowing petitioners to raise the same issue again would be iniquitous. Therefore, the execution of judgment properly extended to the property because it was validly subjected to attachment prior to its registration by the petitioners.
Main Doctrine
A duly registered writ of attachment has preference over a prior unregistered deed of sale because registration is the operative act that conveys or affects the land insofar as third persons are concerned. The preference created by the levy on attachment is not diminished even by the subsequent registration of the prior sale.