On December 5, 1995 Vic bought from the spouses Larry and Lita Yu a parcel of land consisting of 10,000 square meters and covered by Transfer Certificate of Title (TCT) No. 30586. Vic did not immediately register with the Register of Deeds the Deed of Sale covering the sale, so the title remained in the name of the spouses Yu. He only declared said property for taxation purposes in his name for which Tax declaration No. 16205 was issued by the City Assessor’s Office.
On April 19, 1996, a complaint for sum of money was filed against the spouses Yu by the spouses Dario and Dina with application for the issuance of a Writ of Preliminary Attachment (Civil Case 5748). On April 23, 1996, the Trial Court issued the Writ of Attachment by virtue of which the 10,000 sq.m. land already sold to Vic but still in the name of Larry and Lita was levied. The levy was duly recorded in the Register of Deeds and annotated on TCT No. 30586.
On June 6, 1996, Vic already registered the Deed of Sale executed by spouses Yu so TCT No.30586 was already cancelled and TCT No. 74439 was issued in his name. This new TCT however carried with it the annotation of the attachment in favor of the spouses Dario and Dina. So on August 14, 1996, Vic filed a third party claim in Civil Case 5748 to discharge the attachment levied on the property covered by TCT No. 74439 on the ground that the property already belongs to him and no longer to Larry and Lita by virtue of an earlier Deed of Sale. Was Vic correct?
No. Though the subject land was deeded to Vic as early as December 5,1995, it was not until June 6, 1996 that the Deed of Sale was registered, and during the interregnum, the land was subjected to a levy on attachment. At the time of the attachment of the property on April 23, 1996, the spouses Yu were still the registered owners of the property. Under Section 51, PD 1529, the execution of the deed of sale in favor of Vic was not enough, as a succeeding step still had to be taken, which was the registration of the Deed of Sale from the spouses Yu to him. In so far as third persons are concerned, what validly transfers or conveys a person’s interest in real property is the registration of the Deed of Sale. Thus when Vic bought the property on December 5, 1995, it was, at that point no more than a private transaction between him and the spouses Yu. It needed to be registered before it could bind third parties including Dario and Dina. When the registration finally took place on June 6, 1996, it was already too late because, by then, the levy in favor of Dario and Dina, pursuant to the preliminary attachment ordered by the Court had already been annotated on the title. The levy on attachment, duly registered takes preference over a prior unregistered sale. This result is a necessary consequence of the fact that the property involved was duly covered by the Torrens System which works under the fundamental principle that registration is the operative act which gives validity to the transfer or creates a lien upon the land. This preference is not diminished since an attachment is a proceeding in rem, which means that the property attached is an indebted thing and a virtual condemnation of it to pay the owner’s debt. The lien continues until the debt is paid, or the sale is had under execution issued on the judgment, or until the judgment is satisfied or the attachment discharged or vacated in some manner provided by law (Valdevieso vs. Damalerio, G.R. 133303, February 15, 2005. 451 CSRA 664).