GR 93640; (January, 1994) (Digest)
G.R. No. 93640 January 7, 1994
TAY CHUN SUY, petitioner, vs. COURT OF APPEALS AND DEVELOPMENT BANK OF THE PHILIPPINES, respondents.
FACTS
Sta. Clara Lumber Co., Inc. (SCLC) obtained a loan from the Development Bank of the Philippines (DBP) and mortgaged the vessel MV Sta. Clara I as security. Upon SCLC’s default, DBP extrajudicially foreclosed the mortgage, and the vessel was sold to DBP at a public auction on August 18, 1982. DBP did not register the mortgage, foreclosure, or auction sale with the Philippine Coast Guard. Later, DBP entered into a Lease/Purchase Agreement with Sta. Clara Housing Industries, Inc. (SCHI) for the vessel. In July 1986, petitioner Tay Chun Suy caused the levy and attachment of the same vessel to satisfy a judgment against SCLC. Despite being verbally informed by SCHI’s counsel that the vessel was already owned by DBP due to the prior foreclosure sale, Deputy Sheriff Manases M. Reyes, Jr. proceeded with the execution sale and awarded the vessel to Tay Chun Suy. DBP filed a complaint to annul this execution sale. The trial court declared DBP the lawful owner and nullified the sheriff’s auction sale. The Court of Appeals affirmed this decision.
ISSUE
As between the buyer of a vessel at a prior extrajudicial foreclosure (DBP) and the buyer at a subsequent auction sale (Tay Chun Suy), both buyers failing to register their transactions, who has a better right of dominion over the vessel?
RULING
The Supreme Court dismissed the petition, affirming the Court of Appeals. DBP, as the buyer at the prior extrajudicial foreclosure sale, has a better right. The Court upheld the factual findings of the lower courts that the sheriff’s auction sale was irregular and conducted with undue haste to benefit Tay Chun Suy. The failure of DBP to register its acquisition did not invalidate its ownership, as registration is not a mode of acquiring ownership but merely a means of confirming it. The prior sale to DBP vested ownership in it, and the subsequent sale to Tay Chun Suy, who was aware of the prior claim, could not convey any title.