Radiowealth Finance Co

Radiowealth Finance Co. vs.
Palileo
197 SCRA 245
May 1991
FACTS:
In April 1970, defendant spouses Enrique Castro and Herminio R. Castro (spouse Castro) sold
to herein respondent Manuelito Palileo a parcel of unregistered coconut land in Surigao del
Norte. The sale is evidenced by a notarized Deed of Absolute Sale, but the deed was not
registered in the Registry of Property for unregistered lands in the province of Surigao del
Norte. Since the execution of the deed of sale, Palileo who was then employed in Lianga,
Surigao del Sur, exercised acts of ownership over the land through his mother Rafaela
Palileo, as administratrix or overseer. Manuelito Palileo has continuously paid the real estate
taxes on said land from 1971 until the present.
In November 1976, the CFI of Manila rendered a judgment was rendered against defendant
Enrique T. Castro to pay herein petitioner Radiowealth Finance Company (Radiowealth), the
sum of P22,350.35 with interest rate of 16% per annum from November 2, 1975 until fully
paid, and upon the finality of the judgment, a writ of execution was issued. The Provincial
Sheriff Marietta E. Eviota, through defendant Deputy Provincial Sheriff Leopoldo Risma,
levied upon and finally sold at public auction the subject land that defendant Enrique Castro
had sold to Palileo in 1970. The said Provincial Sheriff executed a certificate of sale was by
the in favor of Radiowealth as the only bidder, and upon expiration of the redemption period,
she also executed a deed of final sale. Both documents were registered with the Registry of
Deeds.
Learning of what happened to the land, Palileo filed an action for recovery of the subject
property. The court a quo rendered a decision in favor of Palileo, which the Court of Appeals
affirmed.
ISSUE:
Who is the rightful owner of the subject property?
COURT RULING:
The Supreme Court likewise affirmed the appellate courts decision on this case. There is no
doubt that had the subject property been a registered land, this case would have been
decided in favor of Radiowealth since it was the company that had its claim first recorded in
the Registry of Deeds for it is the act of registration that operates to convey and affect
registered land. Therefore, a bonafide purchaser of a registered land at an execution sale
acquires a good title as against a prior transferee, if such transfer was unrecorded.
However, a different set of rules applies in the case at bar which deals with a parcel of
unregistered land. Under Act No. 3344, registration of instruments affecting unregistered
lands is "without prejudice to a third party with a better right." The aforequoted phrase has
been held by the Supreme Court to mean that the mere registration of a sale in one's favor
does not give him any right over the land if the vendor was not anymore the owner of the
land having previously sold the same to somebody else even if the earlier sale was
unrecorded. Applying this principle, the Court of Appeals correctly held that the execution
sale of the unregistered land in favor of petitioner is of no effect because the land no longer
belonged to the judgment debtor as of the time of the said execution sale.
CARUMBA vs. CA
G.R. No. L-27587
February 18, 1970
FACTS: In 1955, the spouses Amado Canuto and Nemesia Ibasco, by virtue of a Deed of
Sale of Unregistered Land with Covenants of Warranty sold a parcel of land located in
Camarines Sur, to the spouses Amado Carumba and Benita Canuto, The referred deed of
sale was never registered in the Office of the RD of Camarines Sur, and the Notary was not
then an authorized notary public in the place.
In 1957, a complaint for a sum or money was filed by Balbuena against Amado Canuto and
Nemesia Ibasco before the Justice of the Peace Court. A decision was rendered in favor of
Balbuena and against the defendants.
In 1968, the ex-officio Sheriff issued a Definite Deed of Sale of the property now in question
in favor of Balbuena, which instrument of sale was registered before the Office of the RD.
The CFI, finding that after execution of the document Carumba had taken possession of the
land, and planted thereon:
1 declared him to be the owner of the property under a consummated sale;
2 held void the execution levy made by the sheriff, pursuant to a judgment against
Carumbas vendor, Amado Canuto;
3 and nullified the sale in favor of the judgment creditor, Balbuena.
The CA, without altering the findings of fact made by the court of origin, declared that there
having been a double sale of the land subject of the suit Balbuenas title was superior to that
of his adversary under Article 1544 of the Civil Code of the Philippines, since the execution
sale had been properly registered in good faith and the sale to Carumba was not recorded.
ISSUE: Who has the superior title to the land
HELD: CARUMBA
CA reversed. CFI affirmed.
The SC disagrees with the CA. While under the invoked Article 1544 registration in good faith
prevails over possession in the event of a double sale by the vendor of the same piece of
land to different vendees, said article is of no application to the case at bar, even if
Balbuena, the later vendee, was ignorant of the prior sale made by his judgment debtor in
favor of petitioner Carumba. The reason is that the purchaser of unregistered land at a
sheriffs execution sale only steps into the shoes of the judgment debtor, and merely
acquires the latters interest in the property sold as of the time the property was levied
upon. This is specifically provided by section 35 of Rule 39 of the Revised Rules of Court, the
second paragraph of said section.
While the time of the levy does not clearly appear, it could not have been made prior to
1957, when the decision against the former owners of the land was rendered in favor of
Balbuena. But the deed of sale in favor of Canuto had been executed two years before, in
1955, and while only embodied in a private document, the same, coupled with the fact that
the buyer (petitioner Carumba) had taken possession of the unregistered land sold, sufficed
to vest ownership on the said buyer. When the levy was made by the Sheriff, therefore, the
judgment debtor no longer had dominical interest nor any real right over the land that could
pass to the purchaser at the execution sale. Hence, the latter must yield the land to
petitioner Carumba.
Said rule is different in case of lands covered by Torrens titles, where the prior sale is neither
recorded nor known to the execution purchaser prior to the levy; but the land here in
question is admittedly not registered under Act No. 496.

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