G.R. No. 46141 - Parsons Hardware Co., Inc. vs. Court of Appeals

On December 20, 1930, the spouses Antonino Improgo and Fructuosa Casamayor sold parcels of land covered by Transfer Certificate of Title No. 7276 to respondents Dioscoro Villahermosa and his wife Rosario Improgo.
The deed of sale was presented for registration on October 22, 1932, before the register of deeds.
Although the sale was recorded in the entry book, no new certificate was issued because the vendees failed to present the vendor’s certificate of title—a failure attributed to circumstances beyond their control.

On January 31, 1931, the Manila Overland Sales Co., Inc.—the predecessor in interest of petitioner Parsons Hardware Co., Inc.—filed an action against the Improgo spouses to recover P2,899.37.
After trial, a judgment was rendered for the plaintiff, which led to the issuance of a writ of execution on February 3, 1932.
As a result, the parcels of land were initially levied upon.
On April 4, 1932, respondents Villahermosa and his wife filed a third-party claim based on their absolute deed of sale, which resulted in the discharge of the levy.

Acting as the successor in interest of the original judgment creditor, the petitioner applied for an alias writ of execution following the discharged levy.
Consequently, the properties were re-levied on September 27, 1934.
Although the respondents again filed a third-party claim, the filing of a bond by the petitioner allowed the sheriff to proceed with the levy and the subsequent public sale of the properties.
On January 13, 1936, an absolute deed of sale was executed in favor of the petitioner, and this deed was registered on February 12, 1936.

The respondents brought suit seeking recovery of the properties, asserting that their prior purchase (December 20, 1930) should give them priority over the petitioner’s subsequent judicial sale.
The trial court rendered judgment in favor of the respondents, and this decision was affirmed by the Court of Appeals.
The petitioner raised the issue on a writ of certiorari, challenging the priority of the prior unregistered sale against the subsequent levy.

Whether the absolute deed of sale executed on December 20, 1930, in favor of the respondents—despite not being duly registered—should take priority over the subsequent levy effected on September 27, 1934, in favor of the petitioner.

Whether the creditor’s actual knowledge of the respondents’ prior purchase (evidenced by the verified third-party claim) is legally equivalent to the formal registration of the purchase for purposes of establishing priority.