Armed Forces and Police Mutual Benefit Association, Inc. vs. Santiago

The entry of a notice of levy on attachment in the primary entry book of the Registry of Deeds constitutes constructive notice to all persons and binds the land, prevailing over a prior unregistered sale subsequently registered.

Petitioner obtained a notice of levy on attachment over properties of EBR Realty Corporation in Civil Case No. Q-92-11198. The levy was presented for registration on September 14, 1994, and entered in the Primary Entry Book, but was not annotated on the original Transfer Certificate of Title (TCT) No. PT-79252 because the Registry of Deeds could not locate the original title due to office disarray. Six days later, a Deed of Absolute Sale dated February 24, 1994, executed by EBR Realty Corporation in favor of respondent, was presented for registration. The Register of Deeds issued TCT No. PT-94912 to respondent without noting the prior levy entry. Upon discovering the error, the Register of Deeds requested respondent to surrender her title for annotation, which respondent refused, prompting the Register of Deeds to seek guidance via a consulta.

• Levy on Attachment: On September 12, 1994, a notice of levy on attachment was issued against EBR Realty Corporation in favor of petitioner. It was presented for registration on September 14, 1994, and entered in the Primary Entry Book as Entry No. PT-1305.
• Non-annotation of Levy: The examining employee kept the notice of levy because the original copy of TCT No. PT-79252 was unavailable, hoping to annotate it once the title was found.
• Subsequent Sale and Registration: On September 20, 1994, a Deed of Absolute Sale dated February 24, 1994, between EBR Realty Corporation and respondent was presented for registration (Entry No. PT-1653). The same employee failed to notice that the title subject of the sale was the same title subject to the prior levy entry.
• Issuance of New Title: The Register of Deeds issued TCT No. PT-94912 to respondent. The Register of Deeds was only informed of the prior levy after acting on the deed of sale.
• Refusal to Surrender Title: The Register of Deeds requested respondent to surrender her documents for correction, but respondent refused, attributing the confusion to the Registry.
• Consulta: The Register of Deeds filed a manifestation in the trial court and a consulta with the LRA regarding the propriety of annotating the notice of levy on the new title.

• Priority of Involuntary Registration: Petitioner argued that the notice of levy, registered in the primary entry book before the deed of sale, already bound the land subject to TCT No. PT-94912.
• Bad Faith of Respondent: Petitioner maintained that respondent was not an innocent purchaser for value due to actual and constructive knowledge of the levy.
• Nature of Annotation: Petitioner contended that annotating the levy does not constitute an alteration, amendment, or revocation of TCT No. PT-94912.
• Prejudice from Registry Error: Petitioner asserted that requiring a court order before annotating the attachment lien penalized petitioner for the irregularities committed by the Pasig Registry of Deeds.

• Status as Purchaser in Good Faith: Respondent countered that she was a buyer in good faith for value, as the property was sold to her on February 24, 1994, prior to the inscription of the levy on September 14, 1994.
• Levying Property of a Non-Party: Respondent argued that annotating the levy on her title would effectively levy property not owned by any defendant in the main civil case.
• Judicial Determination Required: Respondent maintained that declaring her a purchaser in bad faith required a judicial determination, as the LRA and Register of Deeds lacked jurisdiction to rule on good faith via a mere consulta.

• Annotability of Levy: Whether the notice of levy on attachment may be annotated on TCT No. PT-94912.
• Necessity of Bad Faith Declaration: Whether a declaration from the court that respondent is a purchaser in bad faith is necessary before the notice of levy on attachment may be annotated on TCT No. PT-94912.
• Necessity of Court Order: Whether a court order is necessary in order that the notice of levy on attachment may be annotated on TCT No. PT-94912.

• Annotability of Levy: The notice of levy may be annotated. In involuntary registration, entry in the day book is sufficient notice to all persons of the adverse claim. Under Sections 51 and 52 of P.D. No. 1529, the act of registration is the operative act to affect the land, and registration creates constructive notice. The earlier registration of the levy takes precedence over the subsequent registration of the prior sale.
• Necessity of Bad Faith Declaration: A judicial declaration of bad faith is unnecessary. Under the rule of notice, a purchaser is presumed to have examined every instrument of record affecting the title, and this presumption is irrebuttable. The purchaser is charged with notice of every fact shown by the record. The failure to annotate the levy on the original title due to the Registry's error does not prejudice petitioner, as the attachment was already perfected upon entry and payment of fees.
• Necessity of Court Order: A court order is necessary, but only to compel the surrender of the owner's duplicate certificate. Under Section 71 of P.D. No. 1529, if the owner neglects or refuses to surrender the duplicate certificate after notice, the Register of Deeds must report the matter to the court, which will order the owner to produce the certificate. The Register of Deeds' functions are ministerial and cannot compel surrender without judicial intervention.

• Involuntary Registration — Distinguished from voluntary registration, involuntary registration (such as attachment, levy upon execution, or lis pendens) requires only entry in the day book to constitute sufficient notice to all persons of the adverse claim. The entry in the primary entry book produces all the effects of registration, even if not yet annotated on the certificate of title.
• Irrebuttable Presumption of Notice from Public Records — A purchaser is presumed to have examined every instrument of record affecting the title and is charged with notice of every fact that an examination of the record would have disclosed. This presumption cannot be overcome by proof of innocence or good faith, as the rule of notice from public records is absolute.
• Operative Act of Registration — Under Section 51 of P.D. No. 1529, the act of registration is the operative act to convey or affect the land insofar as third persons are concerned. The preference created by a levy on attachment is not diminished by the subsequent registration of a prior sale.

• "In involuntary registration, such as an attachment, levy upon execution, lis pendens and the like, entry thereof in the day book is a sufficient notice to all persons of such adverse claim."
• "The act of registration shall be the operative act to convey or affect the land insofar as third persons are concerned, and in all cases under this Decree, the registration shall be made in the office of the Register of Deeds for the province or city where the land lies."
• "Under the rule of notice, it is presumed that the purchaser has examined every instrument of record affecting the title. Such presumption is irrebuttable. He is charged with notice of every fact shown by the record and is presumed to know every fact which an examination of the record would have disclosed. This presumption cannot be overcome by proof of innocence or good faith."

• Levin v. Bass, 91 Phil. 420 (1952) — Followed. Established the distinction between voluntary and involuntary registration, holding that entry in the day book for involuntary liens is sufficient notice.
• Du v. Stronghold Insurance Co., Inc., G.R. No. 156580, June 14, 2004 — Followed. Cited for the proposition that the preference created by a levy on attachment is not diminished by the subsequent registration of a prior sale.
• Sumaya v. Intermediate Appellate Court, G.R. Nos. 68843-44, September 2, 1991 — Followed. Cited for the rule that the presumption of notice from public records is irrebuttable and cannot be defeated by proof of want of knowledge.
• In re: Consulta of Vicente J. Francisco on behalf of Cabantug, 67 Phil. 222 — Cited by the Court of Appeals but implicitly rejected by the Supreme Court's ruling that a full judicial declaration of bad faith is unnecessary for annotation, as the irrebuttable presumption of notice applies.

• Section 51, Presidential Decree No. 1529 (Property Registration Decree) — Applied to establish that the act of registration is the operative act to convey or affect the land insofar as third persons are concerned, giving precedence to the earlier registered levy.
• Section 52, Presidential Decree No. 1529 — Applied to provide that registration creates constructive notice to all persons from the time of such registering, filing, or entering.
• Section 71, Presidential Decree No. 1529 — Applied to dictate the procedure when an owner refuses to surrender the duplicate certificate for the annotation of an involuntary lien, requiring the Register of Deeds to report the matter to the court to compel production.

Consuelo Ynares-Santiago, Ma. Alicia Austria-Martinez, Minita V. Chico-Nazario, Ruben T. Reyes.