Case Digest on Obligations and Contracts: Sales - Attachment of Real Estate with Unregistered Sale - Bernardo Valdevieso vs. Candelario Damalerio, et al. G.R. No. 133303

Bernardo Valdevieso vs. Candelario Damalerio, et al. 

G.R. No. 133303, February 17, 2005

Facts: 

Sometime in 1995, Lorenzo and Elenita Uy sold to petitioner a parcel of land. The property was covered by a TCT in the names of the Uy spouses but the deed of sale to petitioner was not registered. Neither was title to the land transferred to  petitioner immediately but the latter declared the property for taxation purposes. 

Sometime in 1996, spouses Damalerio filed with the RTC a complaint for sum of money against the Uy spouses, with application for the issuance of a writ of preliminary attachment, which the trial court issued, by virtue of which the property sold to petitioner that was still in the names of the Uy  spouses was levied. The levy was recorded in the Registry of Deeds and annotated at the back of the TCT.

Later, a new TCT was issued in the name of the petitioner, cancelling the previous TCT. The attachment annotated at the back of the title remained in the new title. 

Now petitioner filed a third-party claim to discharge or annul the attachment levied on the property on the ground that it belonged to him and not to the Uy spouses. The trial court ruled that the levy of the property by virtue of an attachment is lawful only when the levied property belongs to the defendant. When it was elevated to the CA, it declared that an attachment or levy of execution, though posterior to the sale, if registered before such sale, takes precedence over the sale. 

Ruling:

CA decision and resolution affirmed. 

What validly transfers or conveys a persons interest in real property is the registration of the deed

Though the subject land was deeded to petitioner as early as December 1995, it was not until June 1996 that the conveyance was registered, and, during that interregnum, the land was subjected to a levy on attachment. It should also be observed that, at the time of the attachment of the property on April 1996, the spouses Uy were still the registered owners of said property. The execution of the deed of sale in favor of petitioner was not enough as a succeeding step had to be taken, which was the registration of the sale from the spouses Uy to him. Insofar as third persons are concerned, what validly transfers or conveys a persons interest in real property is the registration of the deed. Thus, when petitioner bought the property on December 1995, it was, at that point, no more than a private transaction between him and the spouses Uy. It needed to be registered before it could bind third parties, including respondents. When the registration finally took place on June 1996, it was already too late because, by then, the levy in favor of respondents, pursuant to the preliminary attachment had already been annotated on the title.

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.