G.R. No. 208462, December 10, 2014
SPOUSES CARLOS J. SUNTAY and ROSARIO R. SUNTAY, Petitioners, vs. KEYSER MERCANTILE, INC., Respondent.

FACTS

On October 20, 1989, respondent Keyser Mercantile, Inc. (Keyser) entered into a Contract to Sell with Bayfront Development Corporation for the purchase of Unit G and two parking slots in Bayfront Tower Condominium. This contract was not registered. On July 7, 1990, petitioner spouses Carlos and Rosario Suntay (Spouses Suntay) also purchased units from Bayfront. When Bayfront failed to deliver, the Spouses Suntay filed an action before the HLURB, which rescinded their contract and ordered Bayfront to pay them. To satisfy the judgment, sheriffs levied on Bayfront’s properties, including the subject Unit G and parking slots, as the Condominium Certificate of Title (CCT) was still in Bayfront’s name. The levy was recorded on January 18, 1995. An auction sale was held on February 23, 1995, with the Spouses Suntay as the highest bidders, and a Certificate of Sale was issued and annotated on April 7, 1995. Meanwhile, a Deed of Absolute Sale between Bayfront and Keyser was executed on November 9, 1995 (allegedly after full payment in 1991). When Keyser attempted to register this deed in February 1996, it discovered the annotations in favor of the Spouses Suntay. Nevertheless, a new CCT was issued in Keyser’s name on March 12, 1996, carrying over the Suntays’ annotations. After the redemption period expired, a sheriff’s Final Deed of Sale was executed in favor of the Spouses Suntay on April 16, 1996, and a new CCT was issued in their name. Keyser filed a complaint for annulment of the auction sale before the HLURB, which ruled in its favor, but the Supreme Court ultimately set aside the HLURB decision for lack of jurisdiction. Keyser then filed a new complaint before the RTC, which declared the auction sale null and void and ordered the reinstatement of Keyser’s title. The Court of Appeals affirmed the RTC decision.

ISSUE

The primary substantive issue, among several procedural ones raised by the petitioners, is whether the Spouses Suntay or Keyser Mercantile, Inc. have a superior right of ownership over the subject condominium unit and parking slots, considering the sequence of the contract to sell, levy on execution, auction sale, and registration of the deed of absolute sale.

RULING

The Supreme Court granted the petition and reversed the decisions of the lower courts. On the procedural issues, the Court ruled that: (1) res judicata did not apply because the prior HLURB case was dismissed for lack of jurisdiction and not adjudicated on the merits; (2) there was no forum shopping as there was no res judicata or litis pendentia; and (3) the action had not prescribed because the filing of the first HLURB case interrupted the prescriptive period.
On the substantive issue of ownership, the Court applied the principles of registration under the Property Registration Decree (P.D. No. 1529). It held that the levy on execution and the subsequent auction sale in favor of the Spouses Suntay were superior to Keyser’s claim. The levy was duly recorded on January 18, 1995, while Keyser’s Deed of Absolute Sale was registered only on March 12, 1996. Under Section 51 of P.D. No. 1529, the act of registration is the operative act that conveys and affects the land. Consequently, the Spouses Suntay’s right, stemming from the prior registered levy and certificate of sale, prevailed over Keyser’s later registered deed. The Court found that at the time of the levy, the title was still in Bayfront’s name, and the Spouses Suntay, as judgment creditors, had the right to levy on the property. The Court also noted that Keyser’s claim of prior full payment was not substantiated by clear evidence. Therefore, the Spouses Suntay were declared the lawful owners of the property. The Court denied the Spouses Suntay’s claim for damages and attorney’s fees for lack of basis.