Uy vs. Medina G.R. No. 172541 August 8, 2010 MENDOZA, J.

: FACTS: Spouses Francisco and Natividad Medina executed in favor of petitioner Jay Hidalgo Uy a Deed of Conditional Sale over a parcel of land. Subsequently Medinas executed a deed of absolute sale over the same parcel of land in favor of the petitioner in view of the full payment of the agreed selling price. Meanwhile, respondent Swift Foods, Inc. filed an action for sum of money against the Medinas before the Regional Trial Court which rendered a judgment in its favor. Eventually, a writ of execution was issued on August 13, 1998. Thereafter respondent Sheriff Antonio Managuelod came out with the corresponding Amended Sheriffs Notice of Levy and Auction Sale. After the annotation, petitioner presented the deed of absolute sale earlier executed by the Medinas in his favor, with the Register of Deeds. Consequently, the TCT in the name of the Medinas was cancelled and another TCT was issued in the name of Jay Hidalgo Uy. Per regulation, the annotation of the levy of execution was carried over in the new title as an encumbrance. ISSUE: Whether or not the levy on execution is superior to the subsequent registration of a deed of sale. RULING: The settled rule is that levy on attachment, duly registered, takes preference over a prior unregistered sale. This result is a necessary consequence of the fact that the property involved was duly covered by the Torrens system which works under the fundamental principle that registration is the operative act which gives validity to the transfer or creates a lien upon the land. The preference created by the levy on attachment is not diminished even by the subsequent registration of the prior sale. This is so because an attachment is a proceeding in rem. It is against the particular property, enforceable against the whole world. The attaching creditor acquires a specific lien on the attached property which nothing can subsequently destroy except the very dissolution of the attachment or levy itself. Such a proceeding, in effect, means that the property attached is an indebted thing and a virtual condemnation of it to pay the owners debt. The lien continues until the debt is paid, or sale is had under execution issued on the judgment, or until the judgment is satisfied, or the attachment discharged or vacated in some manner provided by law.

Cruz v. Bancom Finance Corporation G.R. No. 147788 19 March 2002 PANGANIBAN, J.: FACTS: Norma Sulit offered to purchase an agricultural land owned by brothers Rev. Fr. Edilberto Cruz and Simplicio Cruz. The asking price was P700,000, but Sulit only had P25,000, which Fr. Cruz accepted as earnest money. Sulit failed to pay the balance. Sulit succeeded in having Cruz execute a document of sale of the land in favor of Sanchez for P150,000. Pursuant to the sale, Sulit was able to transfer the title of the land in her name. Evidence show that aside from the P150,000, Sanchez undertook to pay the brothers the amount of P655,000, representing the balance of the actual price of the land. Later, in a Special Agreement, Sulit assumed Sanchezs obligation to pay said amount. Unbeknownst to the Cruz brothers, Sulit managed to obtain a loan from Bancom secured by a mortgage over the land. Upon failure on the part of Sulit to pay the balance, the Cruz brothers filed this complaint for reconveyance of the land. Meanwhile, Sulit defaulted in her payment to the bank so her mortgage was foreclosed. Bancom was declared the highest bidder and was issued a certificate of title over the land. ISSUE: Whether or not Bancom was a mortgagee in good faith. RULING: NO. Respondent, being a financial institution, cannot claim good faith considering that neither it nor the alleged mortgagee bank was in possession of the lots prior and after the foreclosure sale. Had respondent conducted an ocular inspection of the premises, this being the standard practice in the real estate industry, it would have discovered that the land is occupied by petitioner. The failure of respondent to take such precautionary steps is considered negligence on its part and would thereby preclude the defense of good faith.

Deluao vs. Casteel 29 SCRA 368 December 24, 1968 CASTRO, J.: FACTS: Casteel was the original occupant and applicant since before the last World War. He wanted to preclude subsequent applicants from entering and spreading themselves within the area applied for by him, by expanding his occupation thereof by the construction of dikes and the cultivation of marketable fishes. Thus, he borrowed money from the Deluaos to finance needed improvements for the fishpond, and was compelled by force of this circumstance to enter into the contract of partnership to divide the fishpond after the award. This, however, was all that the appellee spouses did. The appellant single-handedly opposed rival applicants who occupied portions of the fishpond area, and relentlessly pursued his claim to the said area up to the Office of the DANR Secretary, until it was finally awarded to him. ISSUE: Whether or not the agreement between Casteel and Deluao to acquire the fishpond in question resulted in a trust by operation of law RULING: A trust is the right, enforceable in equity, to the beneficial enjoyment of property the legal title to which is in another. However, since we held as illegal the second part of the contract of partnership between the parties to divide the fishpond between them after the award, a fortiori, no rights or obligations could have arisen therefrom. Inescapably, no trust could have resulted because trust is founded on equity and can never result from an act violative of the law. In the case at bar, the parties did not agree to purchase the fishpond, and even if they did, such is prohibited by law, a fishpond of the public domain not being susceptible of private ownership.