DAGUPAN TRADING COMPANY, PETITIONER, VS. RUSTICO MACAM, RESPONDENT.

Appeal taken by
the Dagupan Trading Company from the decision of the
Court of Appeals affirming the one rendered by the Court of First Instance of
Pangasinan in Civil Case No. 13772, dismissing its
complaint.

On September 4, 1958, appellant
commenced the action mentioned above against appellee
Rustico Macam, praying that
it be declared that it be declared owner of one-eighth portion of the land
described in paragraph 2 of the complaint; that a partition of the whole
property be made; that appellee be ordered to pay it
the amount of P500.00 a year as damages from 1958 until said portion is
delivered, plus attorney’s fees and costs.

Answering the complaint, appellee alleged, in the main, that Sammy Maron’s share in the property described in the complaint, as
well as that of all his coheirs, had been acquired by purchase by appellee since June 19 and September 21, 1955, before the
issuance of the original certificate of title in their name; that at the time
levy in execution was made on Sammy Maron’s share
therein, the latter had no longer any right or interest in said property; that
appellant and its predecessor in interest were cognizant of the facts already
mentioned; that since the sales made in his favor, he had enjoyed uninterrupted
possession of the property and introduced considerable improvements therein.
Appellee likewise sought to recover damages by way of
counterclaim.

After trial upon the issue thus
joined, the court rendered Judgment dismissing the complaint, which, on appeal,
was affirmed by the Court of Appeals.

The facts of the case are not
disputed.

In the year 1955, Sammy Maron and his seven brothers
sisters were pro-indiviso owners of a parcel of
unregistered land located in barrio Parayao,
Municipality of Binmaley, Pangasinan. While their application for registration of said
land under Act No. 496 was pending, they executed, on June 19 and September 21,
1955, two deeds conveying the property to appellee,
who thereafter took possession thereof and proceeded to
introduce substantial improvements therein. One month later,
that is on October 14, 1955, Original Certificate of Title No. 6942
covering the land was issued in the name of the Marons
free from all liens and encumbrances.

On August 4, 1956, by virtue of a
final judgment rendered in Civil Case No. 42216 of the Municipal Court of Manila
against Sammy Maron in favor of the Manila Trading and
Supply Company, levy was made upon whatever interest he had in the
aforementioned property, and thereafter said interest was sold at public auction
to the judgment creditor. The corresponding notice of levy, certificate of sale
and the sheriff a certificate of final sale in favor of the Manila Trading and
Supply Co.—because nobody exercised the right of redemption—were duly
registered. On March 1, 1958, the latter sold all its rights and title in the
property to appellant.

The question before us now is:
Who has the better right as between appellant Dagupan
Trading Company, on the one band, and appellee Rustico Macam, on the other, to
the one-eighth share of Sammy Maron in the property
mentioned heretofore?

If the property covered by the
conflicting sales were unregistered land, Macam
Would undoubtedly have the better right in view of the fact that his claim is
based on a prior sale coupled with public, exclusive and continuous possession
thereof as owner. On the other hand, were the land involved in the conflicting
transactions duly registered land, We would be inclined to hold that
appellant has the better right because, as we have consistently held, in case of
conveyance of registered real estate, the registration of the deed of sale is
the operative act that gives validity to the transfer. This would be fatal to
appellee’s claim, the deeds of sale executed in his
favor by the Marons not having been registered, while
the levy in execution and the provisional certificate of sale as well as the
final deed of sale in favor of appellant were registered. Consequently, this
registered conveyance must prevail although posterior to the one executed in
favor of appellee, and appellant must be deemed to
have acquired such right, title and interest as appeared on certificate of title
issued in favor of Sammy Maron, subject to no lien,
encumbrance or burden not noted thereon. (Anderson & Co.,
vs. Garcia 64 Phil. 506; Reynes et al., vs. Barrera,
et al., 68 Phil. 656; Banco National, etc. vs. Camus, 70 Phil. 289).

The present case, however, does
not fall within either situation. Here the sale in favor of appellee was executed before the land subject matter
thereof was registered, while the conflicting sale in favor of appellant was
executed after the same property had been registered. We can not,
therefore, decide the case in the light of whatever adjudicated cases there are
covering the two situations mentioned in the preceding paragraph. It is our
considered view that what should determine the issue are the provisions of the
last paragraph of Section 35, Rule 39 of the Rules of Court, to the effect that
upon the execution and delivery of the final certificate of sale in favor of the
purchaser of land sold in an execution sale, such purchaser “shall be
substituted to and acquire all the right, title, interest and claim of the
judgment debtor to the property as of the time of the levy”. Now we ask: What
was the interest and claim of Sammy Maron on the
one-eight portion of the property inherited by him and his co-heirs, at the time
of the levy? The answer must necessarily be that he had none, because for a
considerable time prior to the levy, his interest had already been conveyed to
appellee, “fully and irretrievably”—as the Court of
Appeals held. Consequently, subsequent levy made on the property for the purpose
of satisfying the judgment rendered against Sammy Maron in favor of the Manila Trading Company was void and of
no effect. (Buson vs. Licauco 13 Phil. 357-358; Landig
vs. U. S. Commercial Company, 89 Phil. 638). Needless to say, the
unregistered sale and the consequent conveyance of title and ownership in favor
of appellee could not have been cancelled and rendered
of no effect upon the subsequent issuance of the Torrens title over the entire
parcel of land. We can not, therefore, but agree with the following statement
contained in the appealed decision.

“* * *. Separate and apart from
this, however, we believe that in the inevitable conflict between a right of
ownership already fixed and established under the Civil Law and/or the Spanish
Mortgage Law—which cannot be affected by any subsequent levy or attachment or
execution—and a new law or system which would make possible the overthrowing of
such ownership on admittedly artificial and technical grounds, the former must
be upheld and applied.”

But to the above considerations
must be added the important circumstance that, as already stated before, upon
the execution of the deed of sale in his favor by Sammy Maron, appellee took possession of
the tend conveyed as owner thereof, and introduced considerable improvements
therein. To deprive him now of the same by sheer force of technicality would be
against both justice and equity.

In view of all the foregoing, the
decision appealed from is affirmed, with costs.

Bengzon, C. J., Bautista Angelo,
Barrera, Regala, Makalintal,
Bengzon, J.P. and Zaldivar, JJ.,
concur.