G.R. No. 218343 , November 28, 2018
Jun Miranda, Petitioner, v. Sps. Engr. Ernesto and Aida Mallari and Sps. Domiciano C. Reyes and Carmelita Pangan, Respondents.

FACTS

Spouses Mallari obtained a final money judgment against Spouses Reyes. To satisfy this judgment, a writ of execution was issued, leading to the levy and eventual public auction of a 7.3-hectare property registered under the Spouses Reyes’ name (TCT No. NT-266485). The Spouses Mallari emerged as the highest bidders, and a Certificate of Sale was issued and annotated on the title. Upon inspection, they discovered petitioner Jun Miranda in possession of the property. Miranda claimed ownership, having purchased the same property from the Spouses Reyes via a Deed of Absolute Sale executed in 1996. However, this sale was never registered, and Miranda only managed to annotate an affidavit of adverse claim on the title in December 2003—months after the levy and auction sale in favor of the Spouses Mallari. The Spouses Mallari then filed a complaint for recovery of possession against Miranda.

ISSUE

The core issue is whether Miranda, as an unregistered prior buyer, has a superior right to possession over the Spouses Mallari, who acquired the property through a registered execution sale.

RULING

The Supreme Court ruled in favor of the Spouses Mallari, affirming the lower courts’ decisions ordering Miranda to surrender possession. The legal logic hinges on the principles of registration under the Torrens system and the rules governing execution sales. The Court emphasized that a levy on execution creates a lien on the judgment debtor’s property from the date of levy. The levy on the property in April 2003 was valid because, at that time, the registered owners of record were still the Spouses Reyes. Miranda’s prior unregistered sale, while valid between the parties, did not bind third persons like the Spouses Mallari. Registration is the operative act that conveys and binds the land to a purchaser or creditor. Since Miranda failed to register his deed of sale or annotate his claim prior to the levy, his interest remained unrecorded and therefore ineffective against the Spouses Mallari, who were innocent purchasers for value in an execution sale. The execution sale and the subsequent registration of the Certificate of Sale vested in the Spouses Mallari a superior right to the property as against Miranda. The Court also rejected Miranda’s claim of being a buyer in good faith, noting his gross negligence in not registering his interest for over seven years, which directly led to the predicament. Consequently, as the party with the better right stemming from the registered execution proceedings, the Spouses Mallari are entitled to possession.