G.R. No. 156580; June 14, 2004
LUZ DU, petitioner, vs. STRONGHOLD INSURANCE CO., INC., respondent.

FACTS

Aurora de Leon sold a property to petitioner Luz Du under a Conditional Deed of Sale in January 1989. Subsequently, on April 28, 1989, de Leon sold the same property to spouses Enrique and Rosita Caliwag, who obtained a new title. Respondent Stronghold Insurance Co., Inc. later filed a civil case against the Caliwag spouses for fraud and misappropriation, with a prayer for a writ of preliminary attachment. This attachment was duly annotated on the Caliwags’ title on August 7, 1990.
On December 21, 1990, Luz Du filed a separate case to annul the sale to the Caliwags, based on her prior conditional sale. She caused the annotation of a notice of lis pendens on the same title on January 3, 1991. Stronghold secured a favorable judgment, and after it became final, a notice of levy on execution was annotated on March 12, 1991. The property was sold at public auction to Stronghold, and a new title was issued in its name. Luz Du also later obtained a favorable judgment in her annulment case.

ISSUE

Whether a duly registered notice of levy on attachment enjoys priority over a subsequent notice of lis pendens, thereby vesting superior rights in the attaching creditor who purchases the property at the execution sale.

RULING

The Supreme Court ruled in favor of respondent Stronghold, affirming the superiority of its registered attachment lien. The legal logic is anchored on the principle of priority under the Torrens system, where a registered lien or encumbrance takes precedence over a later-registered claim. The writ of attachment, annotated on August 7, 1990, created a specific and effective lien on the property from that date, constituting constructive notice to all subsequent claimants, including Luz Du whose lis pendens was registered months later on January 3, 1991.
Crucially, the Court applied the doctrine of retroactivity. The auction sale, being a necessary consequence of the levy, retroacts to the date of the registration of the attachment. Therefore, Stronghold is deemed to have acquired its rights from the date of the attachment annotation, which was prior to Du’s lis pendens. This rule prevents the preference created by the attachment from being rendered meaningless. Consequently, Stronghold was a purchaser in good faith, as it acquired the property at a time when the title showed no prior adverse claim from Du, whose interest was unregistered at the time of the attachment. The subsequent lis pendens did not defeat the earlier-perfected attachment lien.