G.R. No. L-7614 - Potenciano vs. Dineros

On November 3, 1944, the deceased Conrado Potenciano (substituted by his heirs) purchased a parcel of land and house from Gregorio Alcabao, as evidenced by a deed of sale.
On November 4, 1944, the plaintiff presented both the deed of sale and the owner’s certificate of title to the Register of Deeds of Greater Manila for registration.

The deed was duly entered into the day book, and the necessary fees (P72.50) were paid, as shown by the official receipt.
A clerical error occurred: the clerk copied the certificate of title number incorrectly—recording it as TCT No. 28436 instead of the actual number 18433.
Despite this error, it was clear that the property sold corresponded to TCT No. 28438, with the description on the deed and title tallying in every respect.

Due to the bombing of Manila, the original documents were lost or destroyed, and no certificate of title was ever issued to the plaintiff.

In April 1946, the defendant initiated a suit against Gregorio Alcabao and his son for damages, which resulted in a judgment in the defendant’s favor.
A writ of attachment was issued against the property—still registered in Alcabao’s name—prior to the judgment.
Conrado Potenciano filed a third party claim to assert his rights in the attached property, explaining the discrepancy in title numbers and reinforcing that the property description was consistent with the deed and TCT No. 28438.
Both his third party claim at the time of attachment and his claim during the subsequent execution sale were denied by the court.

Upon the attachment of the property, the sheriff directed defendant Dineros to post a bond if he wished the property to be released from the attachment.

Although Dineros initially posted a bond, he later secured a court order directing the sheriff to return it and to disregard Potenciano’s third party claim on the ground that Potenciano’s right was questioned since the property was allegedly not the one he had purchased.

The property was sold at a public auction to satisfy the judgment rendered in favor of Dineros against Alcabao.

Dineros submitted the highest bid, and on February 10, 1951, the sheriff issued him a certificate of sale.
Two days later, this sale was noted on the corresponding certificate of title.

The trial record and the legal framework pointed out that under Section 56 of the Land Registration Act, a deed duly notarized, filed, and entered into the day book (with requisite fees paid) is regarded as registered immediately.
Precedents such as Levin vs. Bass support that an innocent purchaser for value becomes the registered owner once the deed is lodged in the day book and the owner’s duplicate certificate is surrendered.
It was undisputed that the judgment debtor (Alcabao) had, prior to the attachment and execution sale, already deeded and registered the property to another person, effectively conveying title.

Conrado Potenciano attempted twice to have the proceedings annulled through certiorari, but both petitions were denied by the Court.
The court noted that while Potenciano did not appeal the disapproval of his third party claim, the proper remedy in such circumstances would be a separate reivindicatory action or a complaint for damages against the bond filed.
The evidence established that by the time of the execution sale Dineros had constructive notice of Potenciano’s third party claim.

Whether the registration of a deed in the day book—even with a clerical error in the certificate number—is sufficient to convey the title and rights to the purchaser.
Whether, as a purchaser at an execution sale, Dineros acquired only the rights and interests that the judgment debtor possessed at the time of the sale, particularly since the debtor had already conveyed and registered the property to a third party.
Whether Potenciano’s third party claim, though disapproved by the lower court, could have barred the auction sale or be revived through appropriate legal actions.