Caviles vs. Bautista

The Court held that in involuntary registration, entry of the notice in the primary entry book is sufficient registration to constitute notice to all persons, and an execution sale retroacts to the date of the levy of attachment. Because the petitioners' attachment was entered in the day book prior to the respondents' acquisition of the property, the petitioners' right pursuant to the execution sale is anterior and superior to the respondents' right under the subsequent deed of sale, notwithstanding the respondents' status as innocent purchasers for value and the absence of annotation on the title due to the register of deeds' negligence.

Spouses Alendry and Flora Caviles, Jr. filed a collection suit against Renato Plata and secured a writ of preliminary attachment over Plata's real property. The deputy sheriff issued a notice of attachment, which was entered in the Register of Deeds' primary entry book on October 6, 1982. The Register of Deeds, however, failed to annotate the attachment on Plata's Transfer Certificate of Title (TCT) No. S-33634. On October 18, 1982, Plata sold the property to Spouses Evelyn and Ramon Bautista. The Bautistas verified the title with the Register of Deeds and found it unencumbered; Plata's title was cancelled, and TCT No. 57006 was issued in the Bautistas' name. After obtaining a favorable judgment, the Cavileses levied the property on execution and purchased it at an execution sale on March 30, 1987. When the Cavileses sought to annotate the certificate of sale, they discovered the property had been transferred to the Bautistas.

• The Attachment: On September 22, 1982, petitioners filed a collection suit against Plata and applied for a writ of preliminary attachment. The CFI issued the writ on September 24, 1982. On October 4, 1982, the deputy sheriff issued a Notice of Attachment over Plata's property covered by TCT No. S-33634. The notice was entered in the Register of Deeds' Primary Entry Book on October 6, 1982.
• The Sale to Respondents: On October 18, 1982, Plata sold the property to respondents. Respondents relied on Plata's duplicate title and verified the original with the Register of Deeds; both were free from any annotation of the attachment because the Register of Deeds had failed to inscribe it. Plata's title was cancelled, and TCT No. 57006 was issued in respondents' name.
• The Execution Sale: Petitioners obtained a favorable judgment on September 30, 1983. Unaware of the sale to respondents, petitioners levied the property on execution on February 21, 1984, referencing the cancelled TCT No. S-33634. On March 30, 1987, the property was sold on execution to petitioners.
• Belated Discovery and Annotation: When petitioners sought to annotate the certificate of sale, they discovered the title had been transferred to respondents. The certificate of sale was entered in the Day Book on April 2, 1987. The notice of attachment was belatedly inscribed on the cancelled certificate on November 22, 1983 (but made to appear annotated on October 6, 1982), and later annotated on respondents' TCT No. 57006.
• Action to Compel Surrender: After respondents refused to surrender their owner's duplicate copy of TCT No. 57006, petitioners initiated proceedings in the RTC under Section 107 of PD 1529 to compel surrender and cancel the title.

• Petitioners argued that their interest—consisting of a notice of attachment entered in the Day Book, levy on execution, execution sale, and final deed of sale—should prevail over respondents' interest, which derived from a subsequent sale and new title issued free of encumbrances.
• Petitioners contended that entry of an involuntary lien in the primary entry book constitutes sufficient notice to all persons, notwithstanding the lack of annotation on the certificate of title.
• Petitioners maintained that neither party was negligent, but because their attachment was entered in the Day Book earlier than respondents' sale, their right should be preferred under the principle of "first in time, stronger in right."

• Respondents countered that as innocent purchasers for value, they had the right to rely solely on what appeared on the certificate of title and were not obligated to go beyond it.
• Respondents argued that the ruling in Levin vs. Bass—which held that entry in the day book is sufficient notice for involuntary liens—was obiter dictum and inapplicable.
• Respondents asserted that petitioners' negligence in failing to ensure the annotation of the attachment on the title caused the conflict, and thus petitioners should bear the consequence of the unannotated encumbrance.

• Procedural Issues: N/A
• Substantive Issues:
  • Whether an entry of a notice of attachment in the primary entry book, without annotation on the certificate of title due to the register of deeds' omission, constitutes sufficient registration and notice to subsequent purchasers.
  • Which interest prevails: that of a party whose notice of attachment was first entered in the primary entry book but not annotated on the title, or that of a subsequent innocent purchaser for value who relied on a clean title.

• Procedural: N/A
• Substantive:
  • The Court ruled that in involuntary registration (such as attachment, levy on execution, or lis pendens), entry in the day book or primary entry book is sufficient notice to all persons of such adverse claim. The duty to annotate the notice on the original certificate of title belongs to the register of deeds. A party who delivers the notice and pays the corresponding fees has a right to presume the official will perform this duty regularly; thus, the lack of annotation does not invalidate the registration as against the attaching creditor.
  • The Court held that an execution sale retroacts to the date of the levy of the lien of attachment. Because petitioners' attachment was entered in the primary entry book on October 6, 1982, prior to respondents' sale on October 18, 1982, the execution sale in favor of petitioners retroacted to October 6, 1982. Under Article 1544 of the Civil Code, the ownership of immovable property belongs to the person acquiring it who in good faith first recorded it in the Registry of Property. Petitioners' earlier registration gave them superiority and preference over respondents, notwithstanding the latter's good faith.

• Involuntary Registration; Entry in Day Book as Sufficient Notice — In involuntary registration such as attachment, levy upon execution, and lis pendens, entry thereof in the day book or primary entry book is a sufficient notice to all persons of such adverse claim. While the notice should be annotated on the original certificate of title, this is an official duty of the register of deeds which may be presumed to have been regularly performed. Entry alone produces the effect of registration so long as the registrant has complied with all requirements and nothing remains but a duty incumbent solely on the register of deeds.
• Retroactivity of Execution Sale — An auction or execution sale retroacts to the date of levy of the lien of attachment. The rights of the purchaser at the execution sale relate back to, and are anchored on, the date of the initial levy or attachment.
• Innocent Purchaser for Value — A person who deals with property registered under the Torrens system need not go beyond the title but only has to rely on it, being charged with notice only of such burdens and claims as are annotated thereon. However, this doctrine does not defeat the right of a party who first recorded an involuntary lien in the primary entry book, where both parties are in parity of good faith and without negligence.

• "In involuntary registration, such as an attachment, levy upon execution, lis pendens and the like, it has been held that entry thereof in the day book is a sufficient notice to all persons of such adverse claim."
• "current doctrine thus seems to be that entry alone produces the effect of registration, whether the transaction entered is a voluntary or involuntary one, so long as the registrant has complied with all that is required of him for purposes of entry and annotation, and nothing more remains to be done but a duty incumbent solely on the register of deeds."
• "We have also consistently ruled that an auction or execution sale retroacts to the date of levy of the lien of attachment."

• DBP vs. Acting Register of Deeds of Nueva Ecija, 162 SCRA 450 (1988) — Followed. Cited for the doctrine that entry alone produces the effect of registration so long as the registrant has done all that is required, and the only remaining step is the duty of the register of deeds.
• Levin vs. Bass, 91 Phil. 419 (1952) — Followed. Rejected the Court of Appeals' characterization of its ruling on day book entry as obiter dictum; applied its holding that entry in the day book is sufficient notice for involuntary claims.
• Sandoval vs. Court of Appeals, 260 SCRA 283 (1996) — Followed. Cited for the principle that a Torrens title purchaser is charged with notice only of annotated burdens, acknowledging respondents' good faith.
• Director of Lands vs. Abad, 61 Phil. 479 (1935) — Followed. Cited for the proposition that a party who delivers a notice of attachment and pays the fees may presume the register of deeds will perform their duty properly.
• Oliva vs. Court of Appeals, 166 SCRA 632 (1988) — Followed. Cited for the rule that an execution sale retroacts to the date of levy of the lien of attachment.

• Article 1544, Civil Code of the Philippines — Governs double sales. Applied to determine that ownership of immovable property belongs to the person acquiring it who in good faith first recorded it in the Registry of Property. The Court used this provision to adjudge the petitioners' earlier recording in the day book as conferring superior rights over the respondents' subsequent recording.
• Section 107, Presidential Decree No. 1529 (Property Registration Decree) — Provides for actions to compel the surrender of the owner's duplicate certificate of title for annotation. Petitioners invoked this provision to initiate the proceedings below for the annotation of the certificate of sale and cancellation of respondents' title.

Bellosillo, Mendoza, Buena, and De Leon, Jr.