Suntay vs. Keyser Mecantile, Inc.

Facts:
On October 1989, Eugenia Gocolay, chairperson and president of respondent Keyser Mercantile Inc
entered into a contract to sell with Bayfront Development Corp for the purchase on installment basis of
a condo unit in Bayfront Tower Condo at Malate, Manila. This unit was Unit G; the contract to sell was
not registered with the Register of Deeds of Manila. Thus the subject unit remained in the name of
Bayfront with clean title.
On July 1990, petitioner spouses Suntay also purchased several condos through a contract to sell.
Despite payment of full price however, Bayfront failed to deliver or even reimburse them so Suntay filed
an action against them in HLURB for rescission of contract, money, and damages. HLURBs decision was
to rescind their contract and their sale. Suntays applied at the RTC of manila for Bayfronts titled
properties to be levied including Unit G. These properties were then auctioned off on March 1995 with
the Spouses Suntay as highest bidder and a certificate of sale in their favor issued. The Sale between
Keyser and Bayfront was executed on November 1995, with Keyser having allegedly paid the price on
1991. Keyser registered the deed of absolute sale on February 1996 and in the process discovered the
Certificate of Sale and Notice of Levy annotated at the back of the CCT of the subject property. Still the
Register of Deeds cancelled the title of Bayfront and issued the CCT in the name of Keyser but carried
over the annotation of the Suntays.
Subsequently the Final Deed of Sale in favor on Suntays was executed on April 1996 upon the expiration
of the one year period of redemption from the earlier auction sale. CCT of Keyser was cancelled and a
new CCT was issued in the name of Spouses Suntay.
Keyser thus files a complaint for the annulment of auction sale and cancellation of notice of levy before
the HLURB. HLURB ruled in favor of Keyser. However, the HLURB decision was set aside as the HLURB
had no jurisdiction over controversies between condominium unit owners and issue of ownership,
possession or interest in the disputed unit could not be adjudicated by the HLURB due to its limited
jurisdiction.
Keyser again filed for annulment of auction in RTC of Manila. RTC rendered decision in their favor and
explained that when Suntay registered the Certificate of Sale, the condo was already registered in
Keysers name. It also held that auction was irregular due to lack of publication and notice.
CA ruled that Suntay did not acquire the subject property because at the time it was levied Bayfront
already sold the Condo unit to Keyser.
However Suntays petition is found to be meritorious. Every person dealing with a registered land may
safely rely on the correctness of the certificate of the title issued therefor and the law will in no way
oblige him to beyond the certificate to determine the condition of the property.
In this case, the subject property was registered land under the Torrens System with Bayfront as the
registered owner. At the time the Notice of Levy was annotated on January 1995 thte title had no
previous encumbarances and liens. Evidently, it was a clean title. The Certificate of Sale, pursuant to an
auction sale, was also annotated on April 1995, with Bayfront still as the registered owner.

The act of registration is the operative act to convey or affect the land insofar as third persons are
concerned. It follows that where there is nothing in the certificate of title to indicate any cloud or vice in
the ownership of the property, or any encumberance thereon, the purchaser is not required to explore
further than what the Torrens title upon its face indicates.
The Lower courts completely overlooked the significance of a levy on execution. The doctrine is well
settled that a levy on execution duly registered takes preference over a prior unregistered sale. Even if
the prior sale was subsequently registered before the sale in execution but after the levy was duly made,
the validity of the execution sale should be maintained because it retroacts to the date of the levy.
Otherwise, the preference created by the levy would be meaningless and illusory