Gomez v. Levy Hermanos, Inc.
REITERATIONFacts
The Antecedents: Spouses Marta Macalalag and Mariano Villanueva sold two parcels of land to Apolonia Gomez with the right of repurchase within three years. At the time of sale, the lands were in the process of registration under the cadastral law. Procedural History: Levy Hermanos, Inc. obtained a writ of execution in a civil case against Marta Macalalag. The two parcels of land were attached on October 25, 1932, and the attachment was recorded on the certificates of title. Apolonia Gomez filed a third-party claim, but Levy Hermanos, Inc. posted an indemnity bond, and the lands were sold at public auction to Levy Hermanos, Inc. on December 2, 1932. After the attachment and before the auction, on November 21, 1932, Apolonia Gomez caused her sale with right of repurchase to be inscribed on the certificates of title. The sheriff executed a deed of absolute sale in favor of Levy Hermanos, Inc. on December 18, 1933, after the redemption period expired. In the cadastral proceedings, Apolonia Gomez sought to cancel the attachment, which was denied. She was also ordered to surrender the certificates of title for cancellation and issuance of new ones in favor of Levy Hermanos, Inc., from which orders she did not appeal. She then filed the present action to annul the sale to Levy Hermanos, Inc. The Petition: Apolonia Gomez sought to annul the sale of the two parcels of land to Levy Hermanos, Inc.
Issue(s)
Whether the sale with the right of repurchase in favor of Apolonia Gomez enjoys preference over the sale at public auction to Levy Hermanos, Inc. Whether the inscription of the attachment on the certificates of title created a lien superior to the unregistered sale with right of repurchase.
Ruling
The Supreme Court reversed the judgment of the lower court, ruling in favor of Levy Hermanos, Inc. The Court held that the sale at public auction to Levy Hermanos, Inc. was valid and that its lien, established by the registered attachment, was superior to Apolonia Gomez's unregistered sale with right of repurchase.
Ratio Decidendi
On the preference of sales and the effect of registration: The Court held that the sale with the right of repurchase in favor of Apolonia Gomez does not enjoy preference over the sale at public auction to Levy Hermanos, Inc. The lower court erred in believing that Levy Hermanos, Inc. only acquired the right of repurchase on the day of the auction. The undisputed facts show that when Levy Hermanos, Inc. attached the parcels of land and when the attachment was noted on the certificates of title, there was no indication in the registry that Apolonia Gomez had any right over the land. Her purchase, though prior in date, was not noted on the certificates of title until after the attachment and its inscription. Therefore, in the registry, the attachment appeared as a real lien when Apolonia Gomez had her purchase recorded. The legal effect of the notation of the lien was to subject and subordinate her right as purchaser to the lien. She acquired ownership only from the date of the recording of her title, which was subsequent to the registration of the attachment, and the ownership she inscribed was limited and subject to the prior registered lien. The right of Levy Hermanos, Inc. by virtue of the registered attachment was preferred and superior to that of the plaintiff. If she wanted an absolute title, she should have paid the judgment credit or exercised her right of repurchase within the legal period after the auction. On the efficacy of judicial proceedings and prior orders: The Court also noted that Apolonia Gomez's claim was legally barred by prior judicial orders in the cadastral case. She had asked for the cancellation of the inscription in favor of Levy Hermanos, Inc., which was denied without appeal. She was also ordered to surrender the certificates of title for cancellation and issuance of new ones in favor of Levy Hermanos, Inc., and she did not appeal this order. These were final orders rendered by a competent judge with jurisdiction, and their validity was not directly impugned by the present action. Therefore, a judgment annulling the sale would be an annulment of already final orders, which is not permissible through the present action.
Main Doctrine
The registration of an attachment on the certificate of title creates a real lien on the property that is superior to a prior unregistered sale with right of repurchase, as the registry reflects the attachment as a prior encumbrance.