BINAN STEEL CORP VS CA

FACTS:
Bian Steel Corporation (BSC) filed a complaint against Joenas
Metal Corporation and spouses Ng Ley Huat and Leticia Dy Ng
(the spouses Ng) for collection of a sum of money with
damages.
The trial court] issued a Writ of Preliminary Attachment after
BSC filed an attachment bond. Pursuant thereto, the sheriff
Manuelito P. Viloria, levied on the property registered in the
names of the spouses Ng and covered by TCT No. 11387 of
the Registry of Deeds. This property under preliminary
attachment was in fact mortgaged to the Far East Bank and
Trust Company (FEBTC), now Bank of the Philippine Islands
(BPI).
In the meantime, defendant-spouses Ng sold the property to
petitioners and Myla Garcia by means of a deed of sale. Said
transaction was registered only about a month-and-a-half later,
after the mortgagee FEBTC gave its approval to the sale. TCT
No. 11387 in the name of the spouses Ng was cancelled and,
in lieu thereof, TCT No. 194226 in the names of Mylene and
Myla Garcia was issued.
The Garcias filed a complaint-in-intervention alleging that they
were the registered owners of the property covered by TCT No.
194226 which was the subject of BSCs writ of preliminary
attachment. Said complaint-in-intervention was denied by the
trial court for lack of merit.
The trial court rendered judgment by default in favor of BSC. A
Notice of Sale of Execution on Real Property was issued by
respondent sheriff Rufo J. Bernardo. It scheduled the public
auction of the property.
A year after the public auction, before this Court an urgent exparte motion for the issuance of an order maintaining
the status quo ante. They wanted to prevent the consolidation
of the title and possession by BSC until such time as the rights
and interests of both shall have been determined and resolved.

ISSUES:
(1)

who, between BSC and the Garcias, has a better

right to the disputed property

RULING:
We rule therefore that the execution sale in favor of BSC was
superior to the sale of the same property by the Ngs to the
Garcias.

When the Garcias bought the property, it was, at that

point, no more than a private transaction between them and
the Ngs. It needed to be registered before it could become
binding on all third parties, including BSC. It turned out that the
Garcias registered it only, after FEBTC (now BPI) approved the
sale. It was too late by then because, the levy in favor of BSC,
pursuant to the preliminary attachment, had already been
annotated on the original title on file with the Registry of
Deeds. This registration of levy (or notice, in laymans
language) now became binding on the whole world, including
the Garcias. The rights which had already accrued in favor of
BSC by virtue of the levy on attachment over the property were
never adversely affected by the unregistered transfer from the
spouses Ng to the Garcias.
Pertinent to the matter at hand is Article 1544 of the
New Civil Code which provides:
If the same thing should have been sold to different vendees, x x
x should it be immovable property, the ownership shall belong to
the person acquiring it who in good faith first recorded it in the
Registry of Property. x x x
Because of the principle of constructive notice to the
whole world, one who deals with registered property which is
the subject of an annotated levy on attachment cannot invoke
the rights of a purchaser in good faith. As between two
purchasers, the one who registers the sale in his favor has a
preferred right over the other who has not registered his title
even if the latter is in actual possession of the immovable
property. And, as between two purchasers who both registered
the respective sales in their favor, the one who registered his
sale ahead of the other would have better rights than the other
who registered later.
Applying said provision of the law and settled
jurisprudence to the instant case, when the disputed property
was consequently sold on execution to BSC, this auction sale
retroacted to the date of inscription of BSC's notice of
attachment. The earlier registration thus gave BSC superior
and preferential rights over the attached property as against
the Garcias who registered their purchase of the property at a
later date. Notably, the Garcias were not purchasers for value
in view of the fact that they acquired the property in payment of
the loan earlier obtained from them by the Spouses Ng.
All told, the purchaser of a property subject to an
attachment legally and validly levied thereon is merely
subrogated to the rights of the vendor and acquires the
property subject to the rights of the attachment creditor. An
attaching creditor who registers the order of attachment and
the sale by public auction of the property to him as the highest
bidder acquires a superior title to the property as against a
vendee who previously bought the same property from the
registered owner but who failed to register his deed of sale.
Petitioners Garcias failed to show that BSC acted in bad
faith which would have impelled this Court to rule otherwise.

Based on the conduct of the petitioner and private respondent

and even the terminology of the second option to purchase, we
rule that the intent and agreement between them was
undoubtedly one of equitable mortgage and not of sale.
The evidence of record indicates that the parties' real
transaction or contract over the subject property was not one of
sale but, rather, one of loan secured, by a mortgage thereon is
unavoidably inferrable from the following facts of record, to
(herein petitioner's) possession of the subject property, which
started in 1975 yet, continued and remained even after the
alleged sale; (herein private respondent) executed an option to
purchase in favor (herein petitioner) as early as two days
before (herein private respondent) supposedly acquired
ownership of the property; the said option was renewed
several times and the price was increased with each renewal);
and, the Deed of Absolute Sale of April 4, 1988 was registered
and the property transferred in the name of (private
respondent) only on May 10, 1989, Indeed, if it were true, as it
would have the Court believe, that (private respondent) was so
appreciative of (petitioner's) alleged facilitation of the subject
property's sale to it, it is quite strange why (private respondent)
some two days before such supposed sale would have been
minded and inclined to execute an option to purchase allowing
(petitioner) to acquire the property the very same property it
was still hoping to acquire at the time. Certainly, what is more
likely and thus credible is that, if (private respondent) was
indeed thankful that it was able to purchase the property, it
would not given (petitioner) any option to purchase at all.
Should Petitioner Be Ejected?
LAO VS CA
FACTS:
Private Respondent Better Homes Realty and Housing
Corporation anchored its right in the ejectment suit on a
contract of sale in which petitioner (through their family
corporation) transferred the title of the property in question.
Petitioner contends, however that their transaction was not an
absolute sale, but an equitable mortgage.
ISSUE:

Whether or not private respondent had acquired

ownership over the property in question.

Whether or not petitioner should be ejected from the

premises in question

RULING:
Absolute Sale or Equitable Mortgage?

We answer in the negative. An action for unlawful detainer is

grounded on Section 1, Rule 70 of the Rules of Court which
provides that:
. . . a landlord, vendor, vendee, or other
person against whom the possession of any
land or building is unlawfully withheld after
the expiration or termination of the right to
hold possession, by virtue of any contract,
express
or
implied,
or
the
legal
representatives or assigns of any such
landlord, vendor, vendee, or other person,
may, at any time within one (1) year after
such unlawful deprivation or withholding of
possession, bring an action in the proper
inferior court against the person or persons
unlawfully withholding or depriving of
possession, or any person or persons
claiming under them, for the restitution of
such possession, together with damages
and costs . . . .
Based on the previous discussion, there was no sale of the
disputed property. Hence, it still belongs to petitioner's family
corporation, N. Domingo Realty & Development Corporation.
Private respondent, being a mere mortgagee, has no right to
eject petitioner. Private respondent, as a creditor and

mortgagee, " . . . cannot appropriate the things given by way of

pledge or mortgage, or dispose of them. Any stipulation to the
contrary is null and void."