SUNTAY v. KEYSER MERCANTILE

  

SPOUSES CARLOS J. SUNTAY and ROSARIO R. SUNTAY v. KEYSER MERCANTILE, INC.

G.R. No. 208462 |  December 10, 2014

 

FACTS

On October 20, 1989, Eugenia Gocolay, chairperson and president of respondent Keyser Mercantile, Inc. (Keyser), entered into a contract to sell with Bayfront Development Corporation (Baxfront) for the purchase on installment basis of a condominium unit (Unit G, 163.59 sq with the privilege to use 2 parking slots covered by Condominium Certificate of Title (CCT) No. 15802) in Bayfront Tower Condominium located at A. Mabini Street, Malate, Manila. This Contract to Sell was not registered with the ROD of Manila. Thus, the subject unit remained in the name of Bayfront with a clean title.

On July 7, 1990, petitioner Sps. Suntay also purchased several condominium units on the 4th floor of Bayfront Tower Condominium through another contract to sell. Despite payment of the full purchase price, however, Bayfront failed to deliver the condominium units. When Bayfront failed to reimburse the full purchase price, Sps. Suntay filed an action against it before the Housing and Land Use Regulatory Board (HLURB) for violation of PD No. 957 and PD No. 1344, rescission of contract, sum of money, and damages.

In its decision, the HLURB rescinded the Contract to Sell between Bayfront and Spouses Suntay and ordered Bayfront to pay Spouses Suntay the total amount of 2,752,068.60 as purchase price with interest. Consequently, on November 16, 1994, the HLURB issued a writ of execution.

Upon the application of Spouses Suntay, the Sheriffs of the RTC of Manila levied Bayfront’s titled properties, including Unit G and the two parking slots. Considering that CCT No. 15802 was still registered under Bayfront with a clean title, the sheriffs deemed it proper to be levied. The levy on execution was duly recorded in the ROD Manila. The auction sale was conducted on February 23, 1995, and Sps. Suntay were the highest bidder, and a Certificate of Sale was issued. This was duly annotated at the back of the CCT. Meanwhile, the Deed of Absolute Sale between Bayfront and Keyser involving the subject property was finally executed on November 9, 1995. The latter allegedly paid the full purchase price sometime in 1991. When Keyser was about to register the said deed of absolute sale in February 1996, it discovered the Notice of Levy and the Certificate of Sale annotated at the back of the CCT in favor of Spouses Suntay. Nevertheless, the ROD cancelled the title of Bayfront and issued CCT No. 26474 in the name of Keyser but carried over the annotation of the Suntays.

Subsequently, the sheriff’s Final Deed of Sale was executed on April 16, 1996 in favor of the Suntays upon the expiration of the 1 year period of redemption from the earlier auction sale. CCT No. 26474 of Keyser was cancelled and, thereafter, CCT No. 34250-A was issued in the name of Sps. Suntay.

Keyser then filed a complaint for annulment of auction sale and cancellation of notice of levy before the HLURB. In its decision, the HLURB ruled in favor of Keyser. Sps. Suntay appealed the decision to the Office of the Presidentand later to the CA but both affirmed the HLURB judgment.

On appeal before this Court, however, the HLURB decision was set aside. In its September 23, 2005 Decision, the Court ruled that the HLURB had no jurisdiction over controversies between condominium unit owners and the issue of ownership, possession or interest in the disputed condominium units could not be adjudicated by the HLURB due to its limited jurisdiction under PD No. 957 and PD No. 1344.

Undaunted, on March 24, 2006, Keyser filed before the RTC of Manila a new complaint for annulment of auction sale, writ of execution, declaration of nullity of title, and reconveyance of property with damages against Spouses Suntay. RTC rendered in favor of Keyser. It explained that when Spouses Suntay registered the Certificate of Sale, the condominium unit was already registered in the name of Keyser. It also held that the auction sale was irregular due to lack of posting and publication of notices.

Sps. Suntay elevated the decision to the CA. The CA denied the appeal as it found that Sps. Suntay did not acquire the subject property because at the time it was levied, Bayfront had already sold the condominium unit to Keyser. Sps. Suntay filed a motion for reconsideration, but it was denied.

Hence, this petition. In its Statement of Issues, Sps. Suntay argue that the CA erred in not applying Section 52 of P.D. No. 1529 and Article 1544 of the New Civil Code. Their right as purchasers in a public action should havebeen preferred because their right acquired thereunder retroacts to the date of registration of the Notice of Levy on January 18, 1995 and the subsequent auction sale on February 23, 1995. They claim that their right over the subject property is superior over that of Keyser because they purchased the subject property in a legitimate auction sale prior to Keyser’s registration of the deed of absolute sale.

ISSUE: Whether or not levy on execution is superior to the subsequent registration of the deed of absolute sale.

RULING:

Yes, a levy on execution is superior to the subsequent registration of the deed of absolute sale.

The doctrine is well settled that a levy on execution duly registered takes preference over a prior unregistered sale. Even if the prior sale was subsequently registered before the sale in execution but after the levy was duly made, the validity of the execution sale should be maintained because it retroacts to the date of the levy. Otherwise, the preference created by the levy would be meaningless and illusory.

In this case, the contract to sell between Keyser and Bayfront was executed on October 20, 1989, but the deed of absolute sale was only made on November 9, 1995 and registered on March 12, 1996. The Notice of Levy in favor of Spouses Suntay was registered on January 18, 1995, while the Certificate of Sale on April 7, 1995, both dates clearly ahead of Keyser’s registration of its Deed of Absolute Sale. Evidently, applying the doctrine of primus tempore, potior jure(first in time, stronger in right), Spouses Suntay have a better right than Keyser. In the case of Uy v. Spouses Medina, the Court wrote:

Considering that the sale was not registered earlier, the right of petitioner over the land became subordinate and subject to the preference created over the earlier annotated levy in favor of Swift. The levy of execution registered and annotated on September 1, 1998 takes precedence over the sale of the land to petitioner on February 16, 1997, despite the subsequent registration on September 14, 1998 of the prior sale. Such preference in favor of the levy on execution retroacts to the date of levy for to hold otherwise will render the preference nugatory and meaningless.

x x x

The settled rule is that levy on attachment, duly registered, takes preference over a prior unregistered sale. This result is a necessary consequence of the fact that the property involved was duly covered by the Torrens system which works under the fundamental principle that registration is the operative act which gives validity to the transfer or creates a lien upon the land. 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 owner’s 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.

 

WHEREFORE, the petition is GRANTED. The September 7, 2012 Decision and the August 8, 2013 Resolution of the Court of Appeals (CA) in CA-G.R. CV No. 94677 are REVERSED and SET ASIDE. Accordingly, the Court hereby declares the auction sale as valid and binding on Keyser Mercantile, Inc. and all other subsequent registrants.