Friday, January 9, 2009

Radiowealth Finance Co. vs. Palileo

Radiowealth Finance Co. vs. Palileo
197 SCRA 245
May 1991


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.


Who is the rightful owner of the subject property?


The Supreme Court likewise affirmed the appellate court’s 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.