Du v. Stronghold Insurance Co. inc.
FACTS:
Aurora De Leon sold a parcel of land registered in her name to Luz Du under a
‘Conditional Deed of Sale’.
Aurora sold the same property to spouses Caliwag without prior notice to Luz Du. As a
result, TCT No. 2200 was issued in favor of the Caliwag spouses.
Meanwhile, Stronghold filed a civil case against the Caliwag spouses and other persons,
for allegedly defrauding Stronghold and misappropriating the company’s fund by
falsifying and simulating purchases of documentary stamps. The action was
accompanied by a prayer for a writ of preliminary attachment duly annotated at the back
of TCT No. 2200 on August 7, 1990.
Luz Du initiated an action against Aurora and the spouses Caliwag for the annulment of
the sale by De Leon in favor of the Caliwags, anchored on Deed of Conditional Sale.
On January 3, 1991, Luz Du caused the annotation of a Notice Of Lis Pendens at the
back of TCT No. 2200.
The court where the Stronghold case was filed ruled in favor of Stronghold, ordering the
spouses Caliwag jointly and severally to pay the plaintiff, among others. When the
decision became final and executory, on March 12, 1991, a notice of levy on execution
was annotated on TCT No. 2200 and the attached property was sold in a public auction.
On August 5, 1991, the certificate of sale and the final Deed of Sale in favor of
Stronghold were inscribed and annotated leading to the TCT No. 6444 in the name of
Stronghold.
Luz Du too was able to secure a favorable judgment in Civil Case No. 60319 and which
became final and executory as well. Thus, Luz Du commenced the present action to
cancel the TCT No. 6444 with damages claiming priority rights over the property by
virtue of her Notice Of Lis Pendens inscribed on January 3, 1991, and the final and
executory decision in the civil case she filed against spouses Caliwag.
According to Luz Du, despite her said notice of lis pendens annotated, Stronghold still
proceeded with the execution of the decision in the other civil case against the subject
lot and ultimately the issuance of TCT No. 6444 in its name.
The trial court ruled that Stronghold had superior rights over the property because of the
prior registration of the latter’s notice of levy on attachment on (TCT) No. 2200. For this
reason, it found no basis to nullify TCT No. 6444, which was issued in the name of
respondent after the latter had purchased the property in a public auction.
The CA affirmed the RTC Decision in toto.
ISSUE: Whether a Notice of Levy on Attachment on the property is a superior lien over that of
the unregistered right of a buyer of a property in possession pursuant to a Deed of Conditional
Sale
HELD: Yes. Preference is given to a duly registered attachment over a subsequent notice of lis
pendens, even if the beneficiary of the notice acquired the subject property before the
registration of the attachment. Under the torrens system, the auction sale of an attached realty
retroacts to the date the levy was registered. In this case of Tambao v. Suy, it has been held
that “Where a preliminary attachment in favor of ‘A’ was recorded earlier, and the private sale of
the attached property in favor of ‘B’ was executed a year later, the attachment lien has priority
over the private sale, which means that the purchaser took the property subject to such
attachment lien and to all of its consequences, one of which is the subsequent sale on
execution.”
The preference created by the levy on attachment is not diminished even by the
subsequent registration of the prior sale. In Capistrano v. PNB, if the attachment or levy of
execution, though posterior to the sale, is registered before the sale is registered, it takes a
precedence over the latter. “The rule is not altered by the fact that at the time of the execution
sale the Philippine National Bank had information that the land levied upon had already been
deeded by the judgment debtor and his wife to Capistrano. The auction sale being necessary
sequel to the levy, for this was effected precisely to carry out the sale, the purchase made by
the bank at said auction should enjoy the same legal priority that the levy had over the sale in
favour of plaintiff. In other words, the auction sale retroacts to the date of the levy. Were the rule
otherwise, the preference enjoyed by the levy of execution in a case like the present would be
meaningless and illusory.”
