G.R. No. 237661 - Guillermo vs. Orix Metro Leasing and Fice Corp.

On October 29, 2009 and November 26, 2009, EMC Northstar Transport, Inc., represented by spouses Edwin and Margarita Cando, obtained two loans from Orix Metro Leasing and Finance Corporation.
The first loan of P6,374,328.00 was secured by a chattel mortgage on two Daewoo air‑conditioned buses; the second loan of P2,012,952.00 was secured by another Daewoo air‑conditioned bus.
In addition, the spouses personally executed a continuing surety to guarantee the punctual payment of present and future obligations under these promissory notes.

EMC Northstar defaulted on its obligations and refused to relinquish possession of the mortgaged vehicles, prompting Orix to file Civil Case No. 10‑1064 before the RTC of Makati City on October 20, 2010.
In response, Orix impleaded both EMC Northstar and Sps. Cando as defendants, seeking replevin, sum of money, and damages.
A Compromise Agreement was later reached and approved by the RTC through a Compromise Judgment dated February 9, 2012, wherein EMC Northstar and the Cando spouses admitted an outstanding obligation of P9,019,500.00 and agreed to a payment schedule using post‑dated checks.
After EMC Northstar and Sps. Cando defaulted on monthly payments (beginning September 2011), Orix moved for a Writ of Execution. The RTC issued the order on July 23, 2012, and Sheriff Mendoza executed service of the writ and related documents on August 3, 2012.

On August 17, 2012, a Notice of Levy was served on the Registry of Deeds of Quezon City, targeting a parcel of land owned by Sps. Cando (TCT No. N‑328930, 1,383 square meters).
On September 18, 2012, Christian B. Guillermo and Victorino B. Guillermo (petitioners) filed a Third‑Party Claim asserting ownership over the levied property.
Petitioners based their claim on transactions involving fuel purchases by Sps. Cando from their corporation, World Fuel Philippines, Inc., which led to an agreement wherein petitioners would purchase the property.
Sps. Cando executed a Contract of Lease (February 10, 2012–February 10, 2013) and subsequently a Deed of Absolute Sale on June 5, 2012 in favor of the petitioners, for a consideration of P3,042,600.00.
Although petitioners submitted the necessary registration documents on July 26, 2012, the new title (TCT No. 004‑2012009967) was only issued on September 3, 2012, during which the Notice of Levy remained annotated on the title.

Prior to these developments, Sps. Cando’s property had been encumbered by a real estate mortgage in favor of BPI (Real Estate Mortgage dated April 27, 2009, annotated on April 28, 2009).
When petitioners paid off the BPI loan, they stepped into BPI’s shoes and acquired a superior interest in the property.
The dispute thus centered on the effect and priority of the registered levy on execution by Orix relative to the unregistered (yet executed) sale transferring title to petitioners.

The RTC, in its Order dated December 17, 2015, granted the Third‑Party Claim and ordered the release and cancellation of the levy on the property.
Orix filed a motion for reconsideration, which was denied on March 4, 2016 by the RTC.
The Court of Appeals (CA) reversed the RTC’s decision in its Decision dated June 29, 2017, asserting that the registered levy on execution took priority, bolstered by the rule that registration is the operative act conveying property rights.
After the CA also denied petitioners’ Motion for Reconsideration dated February 19, 2018, petitioners elevated the case to the Supreme Court through a Petition for Review on Certiorari.

Whether the registered levy on execution in favor of Orix takes precedence over the prior executed but unregistered Deed of Absolute Sale transferring title to the petitioners.
Whether the principles articulated in Uy v. Spouses Medina and related jurisprudence apply when the transfer documents were submitted and duly noted in the registry prior to correction of the title.

Whether the submission and noting of the transfer documents on July 26, 2012 should be considered as effective registration despite the new title being issued only on September 3, 2012.
Whether petitioners’ rights as purchasers in good faith were constructively delivered and perfected at the time of their application for registration.

Whether the pre‑existing BPI mortgage lien, having been annotated before the levy, renders Orix’s levy subordinate to the rights now held by the petitioners.
Whether the property, at the time of execution of the levy, was still owned by Sps. Cando or had already transferred by constructive and actual delivery to petitioners.