In Armed Forces and Police Mutual Benefit Association, Inc. v. Ines Bolos Santiago, the Supreme Court addressed the priority of registered attachment liens on real property when a sale occurs after the lien is recorded. The Court held that a notice of levy on attachment, once entered in the registry of deeds, takes precedence over subsequent transfers of the property, even if the sale occurred before the registration of the attachment. This ruling reinforces the principle that registration serves as constructive notice to all, including potential buyers, ensuring the security of attachment liens.

The Race to Register: When Does an Attachment Trump a Prior Sale?

This case began when the Armed Forces and Police Mutual Benefit Association, Inc. (AFP MBAI) sought to enforce a levy on attachment against the property of EBR Realty Corporation. AFP MBAI had a notice of levy on attachment registered in the primary entry book of the Registry of Deeds of Pasig City on September 14, 1994. However, before the annotation of this levy on the title itself, Ines Bolos Santiago presented a deed of absolute sale, dated February 24, 1994, for the same property. The Registry of Deeds, unaware of the prior notice of levy, issued a new title in Santiago’s name. When the error was discovered, the Registry requested Santiago to surrender her title for correction, which she refused.

The central legal question revolved around whether the notice of levy on attachment, despite not being annotated on the title, had priority over the subsequent sale to Santiago. The Land Registration Authority (LRA) initially ruled that the notice of levy could not be annotated on Santiago’s title without a court order. The Court of Appeals affirmed this decision, stating that annotating the levy would be tantamount to prematurely declaring Santiago a buyer in bad faith.

The Supreme Court, however, reversed the appellate court’s decision. The Court emphasized the distinction between voluntary and involuntary registration. Voluntary registration, such as a sale, requires the surrender of the owner’s duplicate certificate and payment of registration fees within a specified period to be effective. Involuntary registration, like an attachment, becomes effective upon entry in the day book or primary entry book of the Registry of Deeds.

The Court cited Sections 51 and 52 of the Property Registration Decree (Presidential Decree [P.D.] 1529), which state:

SEC. 51. Conveyance and other dealings by registered owner. – The act of registration shall be the operative act to convey or affect the land insofar as third persons are concerned.

SEC. 52. Constructive notice upon registration. – Every conveyance, mortgage, lease, lien, attachment, order, judgment, instrument or entry affecting registered land shall, if registered, filed or entered in the office of the Register of Deeds for the province or city where the land to which it relates lies, be constructive notice to all persons from the time of such registering, filing or entering.

Building on this principle, the Supreme Court underscored that the act of registration serves as constructive notice to all persons. The registration of the notice of levy on attachment on September 14, 1994, was deemed sufficient notice to Santiago, regardless of the earlier date of the deed of sale. Therefore, Santiago could not be considered an innocent purchaser for value. According to the Court:

Under the rule of notice, it is presumed that the purchaser has examined every instrument of record affecting the title. Such presumption is irrebuttable. He is charged with notice of every fact shown by the record and is presumed to know every fact shown by the record and to know every fact which an examination of the record would have disclosed.

The Court also clarified the role of the Register of Deeds in cases of involuntary dealings. Section 71 of P.D. 1529 outlines the procedure when an attachment or other lien is registered, and the duplicate certificate is not presented. The Register of Deeds must notify the registered owner and request the surrender of the duplicate certificate. If the owner refuses, the Register of Deeds must report the matter to the court to compel the surrender.

FAQs

What was the key issue in this case?	The central issue was determining the priority between a registered notice of levy on attachment and a subsequent sale of the same property. The court clarified that a registered attachment takes precedence.
What is a notice of levy on attachment?	A notice of levy on attachment is a legal document that informs the public that a specific property has been attached to satisfy a debt or judgment. It is filed with the Registry of Deeds.
What does it mean to be an “innocent purchaser for value”?	An innocent purchaser for value is someone who buys property without knowledge of any defects or claims against the title. They must also pay a fair price.
Why was the date of the deed of sale (February 24, 1994) not controlling?	While the deed of sale predated the notice of levy, the Supreme Court emphasized that registration is the operative act that affects third parties. The attachment was registered first.
What is constructive notice, and how does it apply in this case?	Constructive notice means that once a document is registered, everyone is presumed to know about it, regardless of whether they actually do. Registration of the attachment provided constructive notice to Santiago.
What is the difference between voluntary and involuntary registration?	Voluntary registration (e.g., sale) requires the owner to actively participate and surrender the title. Involuntary registration (e.g., attachment) does not depend on the owner’s cooperation.
What is the role of the Register of Deeds in these situations?	The Register of Deeds is responsible for recording documents related to land ownership. If the owner refuses to surrender the title for annotation of an involuntary lien, they must seek a court order.
What did the Supreme Court order in this case?	The Court ordered the Register of Deeds of Pasig City to annotate the notice of levy on attachment on the original title. It also ordered Santiago to surrender her owner’s duplicate title for proper annotation.

In conclusion, Armed Forces and Police Mutual Benefit Association, Inc. v. Ines Bolos Santiago reaffirms the critical importance of timely registration in protecting property rights. The decision reinforces the principle that a prior registered attachment lien takes precedence over subsequent transfers, safeguarding the rights of creditors.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: ARMED FORCES AND POLICE MUTUAL BENEFIT ASSOCIATION, INC. VS. INES BOLOS SANTIAGO, G.R. No. 147559, June 27, 2008