Does a prior unregistered sale of land prevail over a subsequent levy on execution thereon? The answer to the question would depend mainly on whether the land at the time of the levy was registered or not.
To illustrate: P filed a sum of money case against D. During the pendency of the case, D sold his parcel of unregistered land in favor of X in an unregistered deed of sale. X took possession of the land. Subsequently, the court rendered judgment in favor of P which became final and executory. The court issued a writ of execution, and levy on execution on the land was effected by registering the writ of execution with the register of deeds.1 At the execution sale, the land was bought by P and the certificate of sale was registered. D did not redeem the land within the one-year period. Who between P and X has a better right to the land?
X would have a better right to the land. Under Section 33, Rule 39 of the Rules of Court, “[u]pon the expiration of the right of redemption, the purchaser … shall be substituted to and acquire all the rights … of the judgment obligor to the property as of the time of the levy.” The purchaser P did not acquire any right over the land because at the time of the levy, the judgment obligor D no longer had any right over the land, having sold and delivered it earlier to X.2 It is well-settled that a sheriff can levy only upon property belonging to the judgment obligor.
What if the land sold by D to X was covered by a certificate of title in D’s name although the sale was not registered? Would that change the result? Yes, it would. The purchaser P would then have a better right to the land. The prevailing doctrine, as laid down in Philippine National Bank v. Camus, 70 Phil. 289 (1940), is that a registered levy on execution over registered land prevails over a prior unregistered sale or encumbrance.3 The Camus holding abandoned the doctrine in Lanci v. Yangco, 52 Phil. 563 (1928), which purports to give effect to all liens and encumbrances existing prior to the execution sale of a property registered under the Torrens system, even if such liens and encumbrances were not noted on the certificate of title. Camus was followed in numerous cases promulgated by the Court.4
The Camus holding is supported by Section 51 of the Property Registration Decree (P.D. No. 1529) which provides that registration shall be the operative act to convey or affect the land insofar as third persons are concerned. Section 51 of P.D. No. 1529 complements Article 709 of the Civil Code which states that “[t]he titles of ownership, or of other rights over immovable property, which are not duly inscribed or annotated in the Registry of Property shall not prejudice third persons.” Since the deed of sale by D in favor of X was not registered, it did not convey or affect the land insofar as P was concerned. This is true even if the sale to X is later registered prior to the execution sale but after the levy on execution. The reason is that the levy on execution creates a lien in favor of the judgment obligee in the property at the time of the levy, not at the time of the execution sale.5
In the purchase of registered land under levy on execution, the provisions of Section 33, Rule 39 of the Rules of Court cannot overturn Section 51 of P.D. No. 1529,6 as well as Article 709 of the Civil Code. Procedural rules cannot diminish, modify, or increase substantive rights.7
A minority of cases, invoking Section 33 of Rule 39, hold that a prior unregistered sale or encumbrance prevails over a registered levy even in the case of registered land, in effect hewing to the Lanci doctrine.8 It is opined that these cases should be treated as pro hac vice and not as controlling doctrine. These cases cannot overturn the Camus doctrine, which remains the controlling case law. No doctrine or principle of law laid down by the Supreme Court in a decision rendered en banc or in division may be modified or reversed except by the Court sitting en banc.9 Furthermore, Section 33 of Rule 39, which is a procedural rule, cannot diminish or modify the substantive rights conferred by Article 709 of the Civil Code and Section 51 of the Property Registration Decree.
From a policy consideration, the Camus doctrine is also more persuasive. The caveat emptor stance of Section 33 of Rule 39 would discourage if not altogether deter the public from buying at execution sales making it harder for judgment obligees to dispose of the levied property. Moreover, the vendee in an unregistered sale has no one to blame but himself for failing to register the property so as to serve adequate notice and warning to third persons of his interest thereon.
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- Note that voluntary and involuntary dealings over unregistered land may be registered pursuant to Section 113 of the Property Registration Decree (P.D. No. 1529). ↩︎
- Alzate v. Phil. National Bank, 20 SCRA 422, 426 (1967); cited in 2 MORAN 336-337; Carumba v. Court of Appeals, 31 SCRA 558 (1970); Radiowealth Finance Co. v. Palileo, 197 SCRA 245 (1991). ↩︎
- See Hernandez v. Salas, 69 Phil. 744, 748 (1940; res.). ↩︎
- E.g., Uy v. Medina, 627 SCRA 245 (2010); Suntay v. Keyser Mercantile Inc., 744 SCRA 645 (2014). The cases that follow Camus are cited in Uy. ↩︎
- Section 12, Rule 39, Rules of Court. ↩︎
- Radiowealth Finance Co. v. Palileo, 197 SCRA 245 [1991]. ↩︎
- Section 5(5), Article VIII, Constitution. ↩︎
- E.g., Miranda v. Mallari, 887 SCRA 387 (2018); Go v. Colet, G.R. No. 244681, 29 March 2023; Unicorp Finance Ltd. v. Herma Corp., G.R. No. 240316, 26 April 2023. Miranda would draw a somewhat tenuous distinction that the prior unregistered sale would prevail if ownership had been transferred to the prior vendee. In any event, Miranda took pains to emphasize that the holding therein was premised on the fact that the case involved an accion publiciana and thus no conclusive determination of ownership was made by the Court. ↩︎
- Section 4(3), Article VIII, Constitution. ↩︎
