GR 83432; (May, 1991) (Digest)
G.R. No. 83432 ; May 20, 1991
RADIOWEALTH FINANCE COMPANY, petitioner, vs. MANUELITO S. PALILEO, respondent.
FACTS
On April 13, 1970, spouses Enrique and Herminia Castro sold a parcel of unregistered coconut land to Manuelito Palileo through a notarized Deed of Absolute Sale. Palileo exercised acts of ownership through his mother and paid real estate taxes from 1971 onward. This prior sale was not registered. Subsequently, a money judgment was rendered against Enrique Castro in favor of Radiowealth Finance Company. Upon execution, the provincial sheriff levied upon and sold the same unregistered land at public auction to Radiowealth as the highest bidder. The sheriff’s certificate of sale and subsequent deed of final sale were registered with the Registry of Deeds.
ISSUE
Between two buyers of the same unregistered land—the first buyer in an unrecorded prior sale and the second buyer at a registered execution sale—who is the rightful owner?
RULING
The Supreme Court ruled in favor of the first buyer, Manuelito Palileo. The Court distinguished the rules governing registered and unregistered lands. For lands under the Torrens system, the act of registration is the operative act that conveys ownership vis-à-vis third persons under Section 51 of P.D. No. 1529. However, for unregistered lands, the registration of instruments under Act No. 3344 is merely a notice of claim and is “without prejudice to a third party with a better right.”
The legal logic is anchored on the nature of an execution sale. Applying Section 35, Rule 39 of the Revised Rules of Court, a purchaser at an execution sale merely steps into the shoes of the judgment debtor and acquires only the right, title, and interest that the debtor had in the property as of the time of the levy. Since the judgment debtor, Enrique Castro, had already sold the land to Palileo prior to the levy, he no longer had any transferable ownership interest at that time. Consequently, the sheriff could not levy on what the debtor no longer owned, and Radiowealth acquired nothing from the execution sale. Article 1544 of the Civil Code on double sales, which prioritizes the first registrant in good faith, was held inapplicable to unregistered lands. The registration of the sheriff’s sale did not confer a superior right over the prior, albeit unrecorded, sale of the full ownership interest.