LTD CASES - INVOLUNTARY DEALINGS
G.R. No. 181359               August 5, 2013
SPOUSES CLEMENCIO C. SABITSANA, JR. and MA. ROSARIO M.
SABITSANA, Petitioners,
vs.
JUANITO F. MUERTEGUI, represented by his Attorney-in-Fact
DOMINGO A. MUERTEGUI, JR., Respondent.
DECISION
DEL CASTILLO, J.:
A lawyer may not, for his own personal interest and benefit, gamble on his
client's word, believing it at one time and disbelieving it the next. He owes his
client his undivided loyalty.
Assailed in this Petition for Review on Certiorari1 are the January 25, 2007
Decision2 of the Court of Appeals (CA) which denied the appeal in CA-G.R. CV
No. 79250, and its January 11, 2008 Resolution3 denying petitioner’s Motion for
Reconsideration.4
Factual Antecedents
On September 2, 1981, Alberto Garcia (Garcia) executed an unnotarized Deed
of Sale5 in favor of respondent Juanito Muertegui6 (Juanito) over a 7,500-square
meter parcel of unregistered land (the lot) located in Dalutan Island, Talahid,
Almeira, Biliran, Leyte del Norte covered by Tax Declaration (TD) No. 1996
issued in 1985 in Garcia’s name.7
Juanito’s father Domingo Muertegui, Sr. (Domingo Sr.) and brother Domingo Jr.
took actual possession of the lot and planted thereon coconut and ipil-ipil trees.
They also paid the real property taxes on the lot for the years 1980 up to 1998.
On October 17, 1991, Garcia sold the lot to the Muertegui family lawyer,
petitioner Atty. Clemencio C. Sabitsana, Jr. (Atty. Sabitsana), through a
1
1
notarized deed of absolute sale.8 The sale was registered with the Register of
Deeds on February 6, 1992.9 TD No. 1996 was cancelled and a new one, TD No.
5327,10 was issued in Atty. Sabitsana’s name. Although Domingo Jr. and Sr. paid
the real estate taxes, Atty. Sabitsana also paid real property taxes in 1992,
1993, and 1999. In 1996, he introduced concrete improvements on the
property, which shortly thereafter were destroyed by a typhoon.
When Domingo Sr. passed away, his heirs applied for registration and coverage
of the lot under the Public Land Act or Commonwealth Act No. 141. Atty.
Sabitsana, in a letter11 dated August 24, 1998 addressed to the Department of
Environment and Natural Resources’ CENRO/PENRO office in Naval, Biliran,
opposed the application, claiming that he was the true owner of the lot. He
asked that the application for registration be held in abeyance until the issue of
conflicting ownership has been resolved.
On April 11, 2000, Juanito, through his attorney-in-fact Domingo Jr., filed Civil
Case No. B-109712 for quieting of title and preliminary injunction, against herein
petitioners Atty. Sabitsana and his wife, Rosario, claiming that they bought the
lot in bad faith and are exercising acts of possession and ownership over the
same, which acts thus constitute a cloud over his title. The Complaint 13 prayed,
among others, that the Sabitsana Deed of Sale, the August 24, 1998 letter, and
TD No. 5327 be declared null and void and of no effect; that petitioners be
ordered to respect and recognize Juanito’s title over the lot; and that moral and
exemplary damages, attorney’s fees, and litigation expenses be awarded to him.
In their Answer with Counterclaim,14 petitioners asserted mainly that the sale to
Juanito is null and void absent the marital consent of Garcia’s wife, Soledad
Corto (Soledad); that they acquired the property in good faith and for value;
and that the Complaint is barred by prescription and laches. They likewise
insisted that the Regional Trial Court (RTC) of Naval, Biliran did not have
jurisdiction over the case, which involved title to or interest in a parcel of land
the assessed value of which is merely ₱1,230.00.
The evidence and testimonies of the respondent’s witnesses during trial reveal
that petitioner Atty. Sabitsana was the Muertegui family’s lawyer at the time
Garcia sold the lot to Juanito, and that as such, he was consulted by the family
LTD CASES - INVOLUNTARY DEALINGS
before the sale was executed; that after the sale to Juanito, Domingo Sr.
entered into actual, public, adverse and continuous possession of the lot, and
planted the same to coconut and ipil-ipil; and that after Domingo Sr.’s death, his
wife Caseldita, succeeded him in the possession and exercise of rights over the
lot.
On the other hand, Atty. Sabitsana testified that before purchasing the lot, he
was told by a member of the Muertegui family, Carmen Muertegui Davies
(Carmen), that the Muertegui family had bought the lot, but she could not show
the document of sale; that he then conducted an investigation with the offices
of the municipal and provincial assessors; that he failed to find any document,
record, or other proof of the sale by Garcia to Juanito, and instead discovered
that the lot was still in the name of Garcia; that given the foregoing revelations,
he concluded that the Muerteguis were merely bluffing, and that they probably
did not want him to buy the property because they were interested in buying it
for themselves considering that it was adjacent to a lot which they owned; that
he then proceeded to purchase the lot from Garcia; that after purchasing the
lot, he wrote Caseldita in October 1991 to inform her of the sale; that he then
took possession of the lot and gathered ipil-ipil for firewood and harvested
coconuts and calamansi from the lot; and that he constructed a rip-rap on the
property sometime in 1996 and 1997.
Ruling of the Regional Trial Court
On October 28, 2002, the trial court issued its Decision 15 which decrees as
follows:
WHEREFORE, in view of the foregoing considerations, this Court finds in favor of
the plaintiff and against the defendants, hereby declaring the Deed of Sale
dated 2 September 1981 as valid and preferred while the Deed of Absolute Sale
dated 17 October 1991 and Tax Declaration No. 5327 in the name of Atty.
Clemencio C. Sabitsana, Jr. are VOID and of no legal effect.
The Provincial Assessor and the Municipal Assessor of Naval are directed to
cancel Tax Declaration No. 5327 as void and done in bad faith.
2
2
Further, Atty. Clemencio C. Sabitsana, Jr. is ordered to pay plaintiff Juanito
Muertigui, represented by his attorney-in-fact Domingo Muertigui, Jr. the
amounts of:
a) ₱30,000.00 as attorney’s fees;
b) ₱10,000.00 as litigation expenses; and
c) Costs.
SO ORDERED.16
The trial court held that petitioners are not buyers in good faith. Petitioner Atty.
Sabitsana was the Muertegui family’s lawyer, and was informed beforehand by
Carmen that her family had purchased the lot; thus, he knew of the sale to
Juanito. After conducting an investigation, he found out that the sale was not
registered. With this information in mind, Atty. Sabitsana went on to purchase
the same lot and raced to register the sale ahead of the Muerteguis, expecting
that his purchase and prior registration would prevail over that of his clients, the
Muerteguis. Applying Article 1544 of the Civil Code,17 the trial court declared
that even though petitioners were first to register their sale, the same was not
done in good faith. And because petitioners’ registration was not in good faith,
preference should be given to the sale in favor of Juanito, as he was the first to
take possession of the lot in good faith, and the sale to petitioners must be
declared null and void for it casts a cloud upon the Muertegui title.
Petitioners filed a Motion for Reconsideration18 but the trial court denied19 the
same.
Ruling of the Court of Appeals
Petitioners appealed to the CA20 asserting that the sale to Juanito was null and
void for lack of marital consent; that the sale to them is valid; that the lower
court erred in applying Article 1544 of the Civil Code; that the Complaint should
have been barred by prescription, laches and estoppel; that respondent had no
cause of action; that respondent was not entitled to an award of attorney’s fees
LTD CASES - INVOLUNTARY DEALINGS
and litigation expenses; and that they should be the ones awarded attorney’s
fees and litigation expenses.
The CA, through its questioned January 25, 2007 Decision,21 denied the appeal
and affirmed the trial court’s Decision in toto. It held that even though the lot
admittedly was conjugal property, the absence of Soledad’s signature and
consent to the deed did not render the sale to Juanito absolutely null and void,
but merely voidable. Since Garcia and his wife were married prior to the
effectivity of the Family Code, Article 173 of the Civil Code 22 should apply; and
under the said provision, the disposition of conjugal property without the wife’s
consent is not void, but merely voidable. In the absence of a decree annulling
the deed of sale in favor of Juanito, the same remains valid.
The CA added that the fact that the Deed of Sale in favor of Juanito was not
notarized could not affect its validity. As against the notarized deed of sale in
favor of petitioners, the CA held that the sale in favor of Juanito still prevails.
Applying Article 1544 of the Civil Code, the CA said that the determining factor
is petitioners’ good faith, or the lack of it. It held that even though petitioners
were first to register the sale in their favor, they did not do so in good faith, for
they already knew beforehand of Garcia’s prior sale to Juanito. By virtue of Atty.
Sabitsana’s professional and confidential relationship with the Muertegui family,
petitioners came to know about the prior sale to the Muerteguis and the latter’s
possession of the lot, and yet they pushed through with the second sale. Far
from acting in good faith, petitioner Atty. Sabitsana used his legal knowledge to
take advantage of his clients by registering his purchase ahead of them.
Finally, the CA declared that Juanito, as the rightful owner of the lot, possessed
the requisite cause of action to institute the suit for quieting of title and obtain
judgment in his favor, and is entitled as well to an award for attorney’s fees and
litigation expenses, which the trial court correctly held to be just and equitable
under the circumstances.
The dispositive portion of the CA Decision reads:
WHEREFORE, premises considered, the instant appeal is DENIED and the
Decision dated October 28, 2002 of the Regional Trial Court, 8th Judicial
3
3
Region, Branch 16, Naval, Biliran, is hereby AFFIRMED. Costs against
defendants-appellants.
SO ORDERED.23
Issues
Petitioners now raise the following issues for resolution:
I. THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE REGIONAL
TRIAL COURT DID NOT HAVE JURISDICTION OVER THE CASE IN VIEW OF THE
FACT THAT THE ASSESSED VALUE OF THE SUBJECT LAND WAS ONLY
₱1,230.00 (AND STATED MARKET VALUE OF ONLY ₱3,450.00).
II. THE COURT OF APPEALS ERRED IN APPLYING ART. 1544 OF THE CIVIL
CODE INSTEAD OF THE PROPERTY REGISTRATION DECREE (P.D. NO. 1529)
CONSIDERING THAT THE SUBJECT LAND WAS UNREGISTERED.
III. THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE COMPLAINT
WAS ALREADY BARRED [BY] LACHES AND THE STATUTE OF LIMITATIONS.
IV. THE COURT OF APPEALS ERRED IN AFFIRMING THE DECISION OF THE
REGIONAL TRIAL COURT ORDERING THE PETITIONERS TO PAY ATTORNEY’S
FEES AND LITIGATION EXPENSES TO THE RESPONDENT.24
Petitioners’ Arguments
Petitioners assert that the RTC of Naval, Biliran did not have jurisdiction over
the case. They argue that since the assessed value of the lot was a mere
₱1,230.00, jurisdiction over the case lies with the first level courts, pursuant to
Republic Act No. 7691,25 which expanded their exclusive original jurisdiction to
include "all civil actions which involve title to, or possession of, real property, or
any interest therein where the assessed value of the property or interest therein
does not exceed Twenty thousand pesos (₱20,000.00) or, in civil actions in
Metro Manila, where such assessed value does not exceed Fifty thousand pesos
LTD CASES - INVOLUNTARY DEALINGS
(₱50,000.00) exclusive of interest, damages of whatever kind, attorney’s fees,
litigation expenses and costs."26 Petitioners thus conclude that the Decision in
Civil Case No. B-1097 is null and void for lack of jurisdiction.
Petitioners next insist that the lot, being unregistered land, is beyond the
coverage of Article 1544 of the Civil Code, and instead, the provisions of
Presidential Decree (PD) No. 1529 should apply. This being the case, the Deed
of Sale in favor of Juanito is valid only as between him and the seller Garcia,
pursuant to Section 113 of PD 1529;27 it cannot affect petitioners who are not
parties thereto.
On the issue of estoppel, laches and prescription, petitioners insist that from the
time they informed the Muerteguis in writing about their purchase of the lot, or
in October 1991, the latter did not notify them of their prior purchase of the lot,
nor did respondent interpose any objection to the sale in their favor. It was only
in 1998 that Domingo Jr. showed to petitioners the unnotarized deed of sale.
According to petitioners, this seven-year period of silence and inaction on the
Muerteguis’ part should be taken against them and construed as neglect on
their part to assert their rights for an unreasonable length of time. As such, their
action to quiet title should be deemed barred by laches and estoppel.
Lastly, petitioners take exception to the award of attorney’s fees and litigation
expenses, claiming that since there was no bad faith on their part, such award
may not be considered just and equitable under the circumstances. Still, an
award of attorney’s fees should remain the exception rather than the rule; and
in awarding the same, there must have been an express finding of facts and law
justifying such award, a requirement that is absent in this case.
Petitioners thus pray for the reversal of the questioned CA Decision and
Resolution; the dismissal of the Complaint in Civil Case No. B-1097; the deletion
of the award of attorney’s fees and litigation expenses in respondent’s favor;
and a declaration that they are the true and rightful owners of the lot.
Respondent’s Arguments
4
4
Respondent, on the other hand, counters that a suit for quieting of title is one
whose subject matter is incapable of pecuniary estimation, and thus falls within
the jurisdiction of the RTC. He likewise insists that Article 1544 applies to the
case because there is a clear case of double sale of the same property to
different buyers, and the bottom line thereof lies in petitioners’ lack of good
faith in entering into the subsequent sale. On the issue of laches/estoppel,
respondent echoes the CA’s view that he was persistent in the exercise of his
rights over the lot, having previously filed a complaint for recovery of the lot,
which unfortunately was dismissed based on technicality.
On the issue of attorney’s fees and litigation expenses, respondent finds refuge
in Article 2208 of the Civil Code,28 citing three instances which fortify the award
in his favor – petitioners’ acts compelled him to litigate and incur expenses to
protect his interests; their gross and evident bad faith in refusing to recognize
his ownership and possession over the lot; and the justness and equitableness
of his case.
Our Ruling
The Petition must be denied.
The Regional Trial Court has jurisdiction over the suit for quieting of title.
On the question of jurisdiction, it is clear under the Rules that an action for
quieting of title may be instituted in the RTCs, regardless of the assessed value
of the real property in dispute. Under Rule 63 of the Rules of Court, 29 an action
to quiet title to real property or remove clouds therefrom may be brought in the
appropriate RTC.
It must be remembered that the suit for quieting of title was prompted by
petitioners’ August 24, 1998 letter-opposition to respondent’s application for
registration. Thus, in order to prevent30 a cloud from being cast upon his
application for a title, respondent filed Civil Case No. B-1097 to obtain a
declaration of his rights. In this sense, the action is one for declaratory relief,
which properly falls within the jurisdiction of the RTC pursuant to Rule 63 of the
Rules.
LTD CASES - INVOLUNTARY DEALINGS
Article 1544 of the Civil Code does not apply to sales involving unregistered
land.
Both the trial court and the CA are, however, wrong in applying Article 1544 of
the Civil Code. Both courts seem to have forgotten that the provision does not
apply to sales involving unregistered land. Suffice it to state that the issue of the
buyer’s good or bad faith is relevant only where the subject of the sale is
registered land, and the purchaser is buying the same from the registered
owner whose title to the land is clean. In such case, the purchaser who relies on
the clean title of the registered owner is protected if he is a purchaser in good
faith for value.31
Act No. 3344 applies to sale of unregistered lands.
What applies in this case is Act No. 3344,32 as amended, which provides for the
system of recording of transactions over unregistered real estate. Act No. 3344
expressly declares that any registration made shall be without prejudice to a
third party with a better right. The question to be resolved therefore is: who
between petitioners and respondent has a better right to the disputed lot?
Respondent has a better right to the lot.
The sale to respondent Juanito was executed on September 2, 1981 via an
unnotarized deed of sale, while the sale to petitioners was made via a notarized
document only on October 17, 1991, or ten years thereafter. Thus, Juanito who
was the first buyer has a better right to the lot, while the subsequent sale to
petitioners is null and void, because when it was made, the seller Garcia was no
longer the owner of the lot. Nemo dat quod non habet.
The fact that the sale to Juanito was not notarized does not alter anything,
since the sale between him and Garcia remains valid nonetheless. Notarization,
or the requirement of a public document under the Civil Code,33 is only for
convenience, and not for validity or enforceability.34 And because it remained
valid as between Juanito and Garcia, the latter no longer had the right to sell
the lot to petitioners, for his ownership thereof had ceased.
5
5
Nor can petitioners’ registration of their purchase have any effect on Juanito’s
rights. The mere registration of a sale in one’s favor does not give him any right
over the land if the vendor was no longer the owner of the land, having
previously sold the same to another even if the earlier sale was
unrecorded.35 Neither could it validate the purchase thereof by petitioners,
which is null and void. Registration does not vest title; it is merely the evidence
of such title. Our land registration laws do not give the holder any better title
than what he actually has.36
Specifically, we held in Radiowealth Finance Co. v. Palileo37 that:
Under Act No. 3344, registration of instruments affecting unregistered lands is
‘without prejudice to a third party with a better right.’ The aforequoted phrase
has been held by this Court to mean that the mere registration of a sale in one’s
favor does not give him any right over the land if the vendor was not anymore
the owner of the land having previously sold the same to somebody else even if
the earlier sale was unrecorded.
Petitioners’ defense of prescription, laches and estoppel are unavailing since
their claim is based on a null and void deed of sale. The fact that the Muerteguis
failed to interpose any objection to the sale in petitioners’ favor does not change
anything, nor could it give rise to a right in their favor; their purchase remains
void and ineffective as far as the Muerteguis are concerned.
The award of attorney’s fees and litigation expenses is proper because of
petitioners’ bad faith.
Petitioners’ actual and prior knowledge of the first sale to Juanito makes them
purchasers in bad faith. It also appears that petitioner Atty. Sabitsana was
remiss in his duties as counsel to the Muertegui family. Instead of advising the
Muerteguis to register their purchase as soon as possible to forestall any legal
complications that accompany unregistered sales of real property, he did exactly
the opposite: taking advantage of the situation and the information he gathered
from his inquiries and investigation, he bought the very same lot and
immediately caused the registration thereof ahead of his clients, thinking that
his purchase and prior registration would prevail. The Court cannot tolerate this
LTD CASES - INVOLUNTARY DEALINGS 6

mercenary attitude. Instead of protecting his client’s interest, Atty. Sabitsana
practically preyed on him.
Petitioner Atty. Sabitsana took advantage of confidential information disclosed
to him by his client, using the same to defeat him and beat him to the draw, so
to speak. He rushed the sale and registration thereof ahead of his client. He
may not be afforded the excuse that he nonetheless proceeded to buy the lot
because he believed or assumed that the Muerteguis were simply bluffing when
Carmen told him that they had already bought the same; this is too convenient
an excuse to be believed. As the Muertegui family lawyer, he had no right to
take a position, using information disclosed to him in confidence by his client,
that would place him in possible conflict with his duty. He may not, for his own
personal interest and benefit, gamble on his client’s word, believing it at one
time and disbelieving it the next. He owed the Muerteguis his undivided loyalty.
He had the duty to protect the client, at all hazards and costs even to himself.38
Petitioner Atty. Sabitsana is enjoined to "look at any representation situation
from the point of view that there are possible conflicts, and further to think in
terms of impaired loyalty, that is, to evaluate if his representation in any way
will impair his loyalty to a client."39
from the foregoing disquisition, it can be seen that petitioners are guilty of bad
faith in pursuing the sale of the lot despite being apprised of the prior sale in
respondent's favor. Moreover, petitioner Atty. Sabitsana has exhibited a lack of
loyalty toward his clients, the Muerteguis, and by his acts, jeopardized their
interests instead of protecting them. Over and above the trial court's and the
CA's findings, this provides further justification for the award of attorney's fees,
litigation expenses and costs in favor of the respondent.
Thus said, judgment must be rendered in favor of respondent to prevent the
petitioners' void sale from casting a cloud upon his valid title.
WHEREFORE, premises considered, the Petition is DENIED. The January 25,
2007 Decision and the January 11, 2008 Resolution of the Court of Appeals in
CA-G.R. CV No. 79250 are AFFIRMED. Costs against petitioners.
SO ORDERED.

Moreover, as the Muertegui family’s lawyer, Atty. Sabitsana was under

obligation to safeguard his client's property, and not jeopardize it. Such is his
duty as an attorney, and pursuant to his general agency.40

Even granting that Atty. Sabitsana has ceased to act as the Muertegui family's
lawyer, he still owed them his loyalty.1âwphi1 The termination of attorney-client
relation provides no justification for a lawyer to represent an interest adverse to
or in conflict with that of the former client on a matter involving confidential
information which the lawyer acquired when he was counsel. The client's
confidence once reposed should not be divested by mere expiration of
professional employment.41 This is underscored by the fact that Atty. Sabitsana
obtained information from Carmen which he used to his advantage and to the
detriment of his client.

6
LTD CASES - INVOLUNTARY DEALINGS
G.R. No. 133303 February 17, 2005
BERNARDO VALDEVIESO, petitioner,vs.CANDELARIO DAMALERIO AND
AUREA C. DAMALERIO, respondents.
CHICO-NAZARIO, J.:
Before this Court is a Petition for Review under Rule 45 of the Rules of Court,
seeking to set aside the 25 September 1997 Decision and the 10 February 1998
Resolution of the Court of Appeals in CA-G.R. SP No. 43082 entitled, "Candelario
Damalerio and Aurea Damalerio v. Honorable Antonio S. Alano, et al."1
There is no dispute as to the following facts:
On 05 December 1995, Bernardo Valdevieso (petitioner) bought from spouses
Lorenzo and Elenita Uy a parcel of land consisting of 10,000 square meters,
more or less, located at Bo. Tambler, General Santos City, and covered by
Transfer Certificate of Title (TCT) No. T-30586.2
The deed of sale was not registered, nor was the title of the land transferred to
petitioner.3
7
7
On 07 December 1995, the said property was immediately declared by
petitioner for taxation purposes as Tax Declaration No. l6205 with the City
Assessor’s Office.4
It came to pass that on 19 April 1996, spouses Candelario and Aurea Damalerio
(respondents) filed with the Regional Trial Court (RTC) of General Santos City, a
complaint for a sum of money against spouses Lorenzo and Elenita Uy docketed
as Civil Case No. 5748 with application for the issuance of a Writ of Preliminary
Attachment.5
On 23 April 1996, the trial court issued a Writ of Preliminary Attachment by
virtue of which the property, then still in the name of Lorenzo Uy but which had
already been sold to petitioner, was levied. The levy was duly recorded in the
Register of Deeds of General Santos City and annotated upon TCT No. T-
30586.6
On 06 June 1996, TCT No. T-30586 in the name of Lorenzo Uy was cancelled
and, in lieu thereof, TCT No. T-74439 was issued in the name of petitioner.7
This new TCT carried with it the attachment in favor of respondents.
On 14 August 1996, petitioner filed a third-party claim in Civil Case No. 5748 to
discharge or annul the attachment levied on the property covered by TCT No. T-
74439 on the ground that the said property belongs to him and no longer to
Lorenzo and Elenita Uy.8
LTD CASES - INVOLUNTARY DEALINGS
In a resolution dated 21 October 1996, the trial court ruled for the petitioner.9
Citing Manliguez v. Court of Appeals10 and Santos v. Bayhon,11 it held that the
levy of the property by virtue of attachment is lawful only when the levied
property indubitably belongs to the defendant. Applying the rulings in the cited
cases, it opined that although defendant Lorenzo Uy remained the registered
owner of the property attached, yet the fact was that he was no longer the
owner thereof as it was already sold earlier to petitioner, hence, the writ of
attachment was unlawful.1awphi1.nét
Respondents sought reconsideration thereof which was denied by the trial court
in a resolution dated 03 January 1997.12
From the unfavorable resolution of the trial court in the third-party claim,
respondents appealed to the Court of Appeals. The appellate court reversed the
resolution and by judgment promulgated on 25 September 1997, it declared
that an attachment or levy of execution, though posterior to the sale, but if
registered before the sale is registered, takes precedence over the sale.13 The
writ of attachment in favor of the respondents, being recorded ahead of the sale
to petitioner, will therefore take precedence.
Petitioner moved for reconsideration but this was denied by the Court of
Appeals in its Resolution of 10 February 1998.14
Hence, this Petition for Review on Certiorari.
8
8
The sole issue in this case is whether or not a registered writ of attachment on
the land is a superior lien over that of an earlier unregistered deed of sale.
Petitioner maintains that he has a superior right over the questioned property
because when the same was attached on 23 April 1996, this property was no
longer owned by spouses Uy against whom attachment was issued as it was
already sold to petitioner on 05 December 1995. The ownership thereof was
already transferred to petitioner pursuant to Article 147715 in relation to Article
149816 of the Civil Code.
Dismissing the allegation that he slept on his rights by not immediately
registering at least an adverse claim based on his deed of sale, petitioner avers
that he promptly worked out for the transfer of registration in his name. The
slight delay in the registration, he claims was not due to his fault but
attributable to the process involved in the registration of property such as the
issuance of the Department of Agrarian Reform clearance which was effected
only after compliance with several requirements.1awphi1.nét
Considering the peculiar facts and circumstances obtaining in this case,
petitioner submits it would be in accord with justice and equity to declare him as
having a superior right to the disputed property than the respondents.
Respondents maintain the contrary view. They aver that registration of a deed
of sale is the operative act which binds the land and creates a lien thereon.
Before the registration of the deed, the property is not bound insofar as third
persons are concerned. Since the writ of attachment in favor of respondents
was registered earlier than the deed of sale to petitioner, respondents were of
the belief that their registered writ of attachment on the subject property enjoys
LTD CASES - INVOLUNTARY DEALINGS
preference and priority over petitioner’s earlier unregistered deed of sale over
the same property. They also contend that Articles 1477 and 1498 of the Civil
Code as cited by petitioner are not applicable to the case because said
provisions apply only as between the parties to the deed of sale. These
provisions do not apply to, nor bind, third parties, like respondents, because
what affects or binds third parties is the registration of the instrument in the
Register of Deeds. Furthermore, respondents argue that petitioner cannot
invoke equity in his favor unless the following conditions are met: (a) the
absence of specific provision of a law on the matter; and (b) if the person who
invokes it is not guilty of delay. Both conditions have not been met, however,
since there is a law on the subject matter, i.e., Section 51 of Presidential Decree
No. 1529, and that petitioner allegedly slept on his rights by not immediately
registering an adverse claim based on his deed of sale.
We agree with the respondents.
The law applicable to the facts of this case is Section 51 of P.D. No. 1529. Said
Section provides:
Sec. 51. Conveyance and other dealings by registered owner. - An owner of
registered land may convey, mortgage, lease, charge, or otherwise deal with
the same in accordance with existing laws. He may use such forms of deeds,
mortgages, leases or other voluntary instruments as are sufficient in law. But no
deed, mortgage, lease, or other voluntary instrument, except a will purporting
to convey or affect registered land, shall take effect as a conveyance or bind the
land, but shall operate only as a contract between the parties and as evidence
of authority to the Register of Deeds to make registration.
9
9
The act of registration shall be the operative act to convey or affect the land
insofar as third persons are concerned, and in all cases under this Decree, the
registration shall be made in the office of the Register of Deeds for the province
or city where the land lies.
It is to be noted that though the subject land was deeded to petitioner as early
as 05 December 1995, it was not until 06 June 1996 that the conveyance was
registered, and, during that interregnum, the land was subjected to a levy on
attachment. It should also be observed that, at the time of the attachment of
the property on 23 April 1996, the spouses Uy were still the registered owners
of said property. Under the cited law, the execution of the deed of sale in favor
of petitioner was not enough as a succeeding step had to be taken, which was
the registration of the sale from the spouses Uy to him. Insofar as third persons
are concerned, what validly transfers or conveys a person’s interest in real
property is the registration of the deed. Thus, when petitioner bought the
property on 05 December 1995, it was, at that point, no more than a private
transaction between him and the spouses Uy. It needed to be registered before
it could bind third parties, including respondents. When the registration finally
took place on 06 June 1996, it was already too late because, by then, the levy
in favor of respondents, pursuant to the preliminary attachment ordered by the
General Santos City RTC, had already been annotated on the title.
The settled rule is that levy on attachment, duly registered, takes preference
over a prior unregistered sale.17 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.18
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
LTD CASES - INVOLUNTARY DEALINGS 10

proceeding in rem.19 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.20 Such a proceeding, in effect, means that the
property attached is an indebted thing and a virtual condemnation of it to pay
the owner’s debt.21 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.
As to petitioner’s invocation of equity, we cannot, at this instance, yield to such
principle in the presence of a law clearly applicable to the case. We reiterate
that this Court, while aware of its equity jurisdiction, is first and foremost, a
court of law.23 While equity might tilt on the side of one party, the same cannot
be enforced so as to overrule positive provisions of law in favor of the other.24
Equity cannot supplant or contravene the law.25 The rule must stand no matter
how harsh it may seem. Dura lex sed lex.

WHEREFORE, the appealed Decision of the Court of Appeals in CA-G.R. SP No.

Thus, in the registry, the attachment in favor of respondents appeared in the 43082 dated 25 September 1997, and its Resolution dated 10 February 1998,
nature of a real lien when petitioner had his purchase recorded. The effect of are hereby AFFIRMED. No costs.
the notation of said lien was to subject and subordinate the right of petitioner,
as purchaser, to the lien. Petitioner acquired ownership of the land only from
the date of the recording of his title in the register, and the right of ownership
which he inscribed was not absolute but a limited right, subject to a prior SO ORDERED.
registered lien of respondents, a right which is preferred and superior to that of
petitioner.22

Anent petitioner’s reliance on the rulings laid down in Manliguez v. Court of

Appeals and Santos v. Bayhon, we find the same to be misplaced. These cases
did not deal at all with the dilemma at hand, i.e. the question of whether or not
a registered writ of attachment on land is superior to that of an earlier
unregistered deed of sale. In Santos, what was involved were machinery and
pieces of equipment which were executed upon pursuant to the favorable ruling
of the National Labor Relations Commission. A third party claimed that the
machinery were already sold to her, but it does not appear in the facts of the
case if such sale was ever registered.l^vvphi1.net Manliguez is similar to
Santos, except that the former involved buildings and improvements on a piece
of land. To stress, in both cited cases, the registration of the sale, if any, of the
subject properties was never in issue.1awphi1.nét

10
LTD CASES - INVOLUNTARY DEALINGS 11

WHEREFORE, let a Writ of Attachment be issued against all the properties of

[Spouses Soliven] not exempt from execution or so much thereof as may be
sufficient to satisfy the [herein petitioner’s] principal claim of ₱338,000.00 upon
filing of [petitioner’s] bond in the amount of ₱100,000.00.2
G.R. No. 130223 August 19, 2009
Upon the filing by petitioner of the required bond, the RTC issued the Writ of
RURAL BANK OF STA. BARBARA [PANGASINAN], INC., Attachment on 21 May 1993. Acting on the authority of said Writ, Sheriff
Petitioner,vs.THE MANILA MISSION OF THE CHURCH OF JESUS Reynaldo C. Daray attached the subject property, which was then still covered
CHRIST OF LATTER DAY SAINTS, INC., Respondent. by TCT No. T-125213 in the name of the spouses Soliven. The Writ of
Attachment was annotated on TCT No. T-125213 on 24 May 1993. Thus, when
TCT No. T-125213 of the spouses Soliven was cancelled and TCT No. 195616 of
CHICO-NAZARIO, J.:
petitioner was issued on 28 April 1994, the annotation on the Writ of
Attachment was carried from the former to the latter.
This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court
seeking to set aside the Decision1 dated 29 July 1997 of the Court of Appeals in
While Civil Case No. D-10583 was still pending before the RTC, respondent
CA-G.R. SP No. 41042 affirming the Orders dated 9 October 1995 and 27
executed an Affidavit claiming title and ownership over the subject property,
February 1996 of the Regional Trial Court (RTC), Branch 43, of Dagupan City, in
and requested the Ex-Officio Provincial and City Sheriff to release the said
Civil Case No. D-10583.
property from attachment. The Sheriff, however, advised respondent to file a
motion directly with the RTC.
Spouses Tomas and Maria Soliven (spouses Soliven) were the registered
owners, under Transfer Certificate of Title (TCT) No. T-125213, of a parcel of
On 16 March 1995, respondent filed with the RTC, in Civil Case No. D-10583, a
land located in Barangay Maninding, Sta. Barbara, Pangasinan (subject
Motion to Release Property from Attachment, to which petitioner, in turn, filed
property). On 18 May 1992, the spouses Soliven sold the subject property to
an Opposition. After hearing, the RTC issued an Order on 9 October 1995
respondent Manila Mission of the Church of Jesus Christ of Latter Day Saints,
discharging the subject property from attachment. The RTC decreed in said
Inc. (Manila Mission). However, it was only on 28 April 1994 when TCT No. T-
Order:
125213 in the name of the spouses Soliven was cancelled, and TCT No. 195616
was issued in the name of respondent.
WHEREFORE, the Court hereby directs the Ex-Officio Provincial Sheriff of
Pangasinan and City Sheriff of Dagupan to discharge and release the subject
In the meantime, on 15 April 1993, petitioner Rural Bank of Sta. Barbara
land from attachment and orders the notice of attachment on T.C.T. No. 195616
(Pangasinan), Inc. filed with the RTC a Complaint against the spouses Soliven
of the Register of Deeds of Pangasinan be cancelled.3
for a sum of money, docketed as Civil Case No. D-10583. The Complaint of
petitioner included a prayer for the issuance of a Writ of Preliminary
Attachment. Petitioner filed a Motion for Reconsideration of the 9 October 1995 Order of the
RTC, arguing that it had a better right over the subject property and that the
filing by respondent with the RTC, in Civil Case No. D-10583, of a Motion to
In an Order dated 7 May 1993, the RTC ordered the issuance of the Writ of
Release Property from Attachment, was the improper remedy. In an Order
Attachment petitioner prayed for, to wit:

11
LTD CASES - INVOLUNTARY DEALINGS
dated 27 February 1996, the RTC denied the Motion for Reconsideration of
petitioner for lack of merit.
On 12 April 1997, petitioner filed a Petition for Certiorari with this Court, alleging
that the RTC committed grave abuse of discretion, amounting to lack or excess
of jurisdiction, in canceling the Writ of Attachment and ordering the release of
the subject property. The Petition was docketed as G.R. No. 124343. In a
Resolution dated 27 May 1997, this Court referred the case to the Court of
Appeals for appropriate action.
The Court of Appeals docketed the Petition for Certiorari as CA-G.R. SP No.
41042. On 29 July 1997, the Court of Appeals issued the assailed Decision
dismissing the Petition.
Hence, petitioner again comes before this Court via the present Petition for
Review, contending that the Court of Appeals erred in not finding grave abuse
of discretion on the part of the RTC when the latter directed the release of the
subject property from attachment. Petitioner insists that it has a better right to
the subject property considering that: (1) the attachment of the subject
property in favor of petitioner was made prior to the registration of the sale of
the same property to respondent; and (2) respondent availed itself of the wrong
remedy in filing with the RTC, in Civil Case No. D-10583, a Motion to Release
Property from Attachment. We shall discuss ahead the second ground for the
instant Petition, a matter of procedure, since its outcome will determine whether
we still need to address the first ground, on the substantive rights of the parties
to the subject property.
Propriety of the Motion to Release Property from Attachment
According to petitioner, the Motion to Release Property from Attachment filed by
respondent before the RTC, in Civil Case No. D-10583, is not the proper remedy
under Section 14, Rule 57 of the Rules of Court,4 which provides:
12
12
SEC. 14. Proceedings where property claimed by third person.—If the property
attached is claimed by any person other than the party against whom
attachment had been issued or his agent, and such person makes an affidavit of
his title thereto, or right to the possession thereof, stating the grounds of such
right or title, and serves such affidavit upon the sheriff while the latter has
possession of the attached property, and a copy thereof upon the attaching
party, the sheriff shall not be bound to keep the property under attachment,
unless the attaching party or his agent, on demand of the sheriff, shall file a
bond approved by the court to indemnify the third-party claimant in a sum not
less than the value of the property levied upon. In case of disagreement as to
such value, the same shall be decided by the court issuing the writ of
attachment. No claim for damages for the taking or keeping of the property may
be enforced against the bond unless the action therefor is filed within one
hundred twenty (120) days from the date of the filing of the bond.
The sheriff shall not be liable for damages for the taking or keeping of such
property, to any such third-party claimant, if such bond shall be filed. Nothing
herein contained shall prevent such claimant or any third person from
vindicating his claim to the property, or prevent the attaching party from
claiming damages against a third-party claimant who filed a frivolous or plainly
spurious claim, in the same or a separate action.
When the writ of attachment is issued in favor of the Republic of the Philippines,
or any officer duly representing it, the filing of such bond shall not be required,
and in case the sheriff is sued for damages as a result of the attachment, he
shall be represented by the Solicitor General, and if held liable therefor, the
actual damages adjudged by the court shall be paid by the National Treasurer
out of the funds to be appropriated for the purpose.
Petitioner argues that, pursuant to the aforequoted section, the remedy of a
third person claiming to be the owner of an attached property are limited to the
following: (1) filing with the Sheriff a third-party claim, in the form of an
affidavit, per the first paragraph of Section 14; (2) intervening in the main
action, with prior leave of court, per the second paragraph of Section 14, which
allows a third person to vindicate his/her claim to the attached property in the
"same x x x action"; and (3) filing a separate and independent action, per the
LTD CASES - INVOLUNTARY DEALINGS
second paragraph of Section 14, which allows a third person to vindicate his/her
claim to the attached property in a "separate action."
Respondent explains that it tried to pursue the first remedy, i.e., filing a third-
party claim with the Sheriff. Respondent did file an Affidavit of Title and
Ownership with the Sheriff, but said officer advised respondent to file a motion
directly with the RTC in the main case. Respondent heeded the Sheriff’s advice
by filing with the RTC, in Civil Case No. D-10583, a Motion to Release Property
from Attachment. The Court of Appeals recognized and allowed said Motion,
construing the same as an invocation by respondent of the power of control and
supervision of the RTC over its officers, which includes the Sheriff.
We agree with the Court of Appeals on this score. The filing by respondent of
the Motion to Release Property from Attachment was made on the advice of the
Sheriff upon whom respondent served its Affidavit of Title and Ownership.
Respondent should not be faulted for merely heeding the Sheriff’s advice.
Apparently, the Sheriff, instead of acting upon the third-party claim of
respondent on his own, would rather have some direction from the RTC.
Indeed, the Sheriff is an officer of the RTC and may be directed by the said
court to allow the third-party claim of respondent. Therefore, the filing of the
Motion in question can be deemed as a mere continuation of the third-party
claim of respondent, in the form of its Affidavit of Title and Ownership, served
upon the Sheriff, in accord with the first paragraph of Section 14, Rule 57 of the
Rules of Court.
Alternatively, we may also consider the Motion to Release Property from
Attachment, filed by respondent before the RTC, as a Motion for Intervention in
Civil Case No. D-10583, pursuant to the second paragraph of Section 14, Rule
56, in relation to Rule 19 of the Rules of Court. Respondent, to vindicate its
claim to the subject property, may intervene in the same case, i.e., Civil Case
No. D-10583, instituted by petitioner against the spouses Soliven, in which the
said property was attached. Respondent has the personality to intervene, as it
"is so situated as to be adversely affected by a distribution or other disposition
of property in the custody of the court or of an officer thereof."5 The RTC, in
13
13
acting upon and granting the Motion to Release Property from Attachment in its
Order dated 9 October 1995, is deemed to have allowed respondent to
intervene in Civil Case No. D-10583.
Moreover, it may do petitioner well to remember that rules of procedure are
merely tools designed to facilitate the attainment of justice. They were
conceived and promulgated to effectively aid the court in the dispensation of
justice. Courts are not slaves to or robots of technical rules, shorn of judicial
discretion. In rendering justice, courts have always been, as they ought to be,
conscientiously guided by the norm that on the balance, technicalities take a
backseat to substantive rights, and not the other way around. Thus, if the
application of the Rules would tend to frustrate rather than promote justice, it is
always within the power of the Court to suspend the rules, or except a particular
case from its operation.6 Hence, even if the Motion to Release Property from
Attachment does not strictly comply with Section 14, Rule 56 of the Rules of
Court, the RTC may still allow and act upon said Motion to render substantive
justice.
This leads us to the substantive issue in this case, on which between the two
transactions should be given priority: the previous yet unregistered sale of the
subject property by the spouses Soliven to respondent, or the subsequent but
duly annotated attachment of the same property by petitioner.
Previous yet unregistered sale versus subsequent but duly annotated
attachment
Petitioner does not dispute the allegation of respondent that the subject
property was sold by the spouses Soliven to respondent on 18 May 1992, before
petitioner instituted Civil Case No. D-10583 against the spouses Soliven on 15
April 1993; the RTC ordered the issuance of the Writ of Attachment on 7 May
1993; and the attachment of the subject property pursuant to the Writ on 27
May 1993.
LTD CASES - INVOLUNTARY DEALINGS
Neither did petitioner offer evidence to counter the following documents
presented by respondent establishing the fact of the sale of the subject property
to the latter by the spouses Soliven: (1) the notarized Deed of Sale dated 18
May 1992; (2) BPI Manager’s Check No. 010685 dated 8 May 1992 in the sum
of ₱42,500.00 to represent the tender of payment of capital gains tax; (3) BIR
Official Receipt No. 0431320 dated 18 May 1992 of BPI Check No. 010625 for
the payment of the sum of ₱8,5000.00; and (4) a letter dated 11 August 1992
of Manila Mission’s former counsel, Lim Duran & Associates, to the Revenue
District Officer, District 7, Bureau of Internal Revenue, relative to its request for
the "reconsideration/condonation" of the assessment of the capital gains tax on
its purchase of the subject property.
Petitioner, however, invokes jurisprudence wherein this Court in a number of
instances allegedly upheld a subsequent but duly annotated attachment, as
opposed to a previous yet unregistered sale of the same property. Petitioner
particularly calls our attention to the following paragraph in Ruiz, Sr. v. Court of
Appeals7:
[I]n case of a conflict between a vendee and an attaching creditor, an attaching
creditor who registers the order of attachment and the sale of the property to
him as the highest bidder acquires a valid title to the property, as against a
vendee who had previously bought the same property from the registered
owner but who failed to register his deed of sale. This is because registration is
the operative act that binds or affects the land insofar as third persons are
concerned. It is upon registration that there is notice to the whole world.
In the more recent case Valdevieso v. Damalerio,8 we have expounded on our
foregoing pronouncement in Ruiz.
On 5 December 1995, therein petitioner Bernardo Valdevieso (Valdevieso)
bought a parcel of land from spouses Lorenzo and Elenita Uy (spouses Uy), the
registered owners thereof. On 19 April 1996, therein respondents, spouses
Candelario and Aurea Damalerio (spouses Damalario), filed a Complaint against
the spouses Uy for a sum of money before the RTC of General Santos City. On
23 April 1996, the RTC issued a Writ of Preliminary Attachment by virtue of
which the subject parcel of land was levied. The levy was duly recorded in the
14
14
Register of Deeds, and annotated on the TCT of the spouses Uy over the
subject parcel of land. It was only on 6 June 1996 that the TCT in the name of
the spouses Uy was cancelled, and a new one issued in the name of Valdevieso.
As in the case at bar, the annotation on the attachment was carried over to
Valdevieso’s TCT. Valdevieso filed a third-party claim before the RTC seeking to
annul the attachment. In a resolution, the RTC ruled in Valdevieso’s favor, but
the Court of Appeals reversed said RTC resolution. On appeal, we adjudged:
The sole issue in this case is whether or not a registered writ of attachment on
the land is a superior lien over that of an earlier unregistered deed of sale.
xxxx
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 owner’s debt. The lien continues until the debt is paid, or sale is had under
LTD CASES - INVOLUNTARY DEALINGS
execution issued on the judgment, or until the judgment is satisfied, or the
attachment discharged or vacated in some manner provided by law.
Thus, in the registry, the attachment in favor of respondents appeared in the
nature of a real lien when petitioner had his purchase recorded. The effect of
the notation of said lien was to subject and subordinate the right of petitioner,
as purchaser, to the lien. Petitioner acquired ownership of the land only from
the date of the recording of his title in the register, and the right of ownership
which he inscribed was not absolute but a limited right, subject to a prior
registered lien of respondents, a right which is preferred and superior to that of
petitioner.9
It is settled, therefore, that a duly registered levy on attachment takes
preference over a prior unregistered sale.
Nonetheless, respondent argues that there is a special circumstance in the case
at bar, which should be deemed a constructive registration of the sale of the
subject property in its favor, preceding the attachment of the same property by
petitioner.
Knowledge of previous yet unregistered sale
In Ruiz, the very case cited by petitioner, we made a qualification of the general
rule that a duly annotated attachment is superior to an unregistered prior sale.
In fact, we resolved Ruiz in favor of the vendee in the unregistered prior sale,
because knowledge of the unregistered sale by the attaching creditor is deemed
equivalent to registration. We explained in Ruiz:
15
15
But where a party has knowledge of a prior existing interest which is
unregistered at that time he acquired a right to the same land, his knowledge of
that prior unregistered interest has the effect of registration as to him.
Knowledge of an unregistered sale is equivalent to registration. As held in
Fernandez v. Court of Appeals [189 SCRA 780 (1990)],
Section 50 of Act No. 496 (now Sec. 51 of P.D. 1529), provides that the
registration of the deed is the operative act to bind or affect the land insofar as
third persons are concerned. But where the party has knowledge of a prior
existing interest which is unregistered at the time he acquired a right to the
same land, his knowledge of that prior unregistered interest has the effect of
registration as to him. The torrens system cannot be used as a shield for the
commission of fraud (Gustillo v. Maravilla, 48 Phil. 442). As far as private
respondent Zenaida Angeles and her husband Justiniano are concerned, the
non-registration of the affidavit admitting their sale of a portion of 110 square
meters of the subject land to petitioners cannot be invoked as a defense
because (K)nowledge of an unregistered sale is equivalent to registration
(Winkleman v. Veluz, 43 Phil. 604).
This knowledge of the conveyance to Honorato Hong can not be denied. The
records disclose that after the sale, private respondent was able to introduce
improvements on the land such as a concrete two-door commercial building, a
concrete fence around the property, concrete floor of the whole area and G.I.
roofing. Acts of ownership and possession were exercised by the private
respondent over the land. By these overt acts, it can not therefore be gainsaid
that petitioner was not aware that private respondent had a prior existing
interest over the land.10
In the case at bar, respondent averred in its Motion to Release Property from
Attachment that the construction of a church edifice on the subject property
LTD CASES - INVOLUNTARY DEALINGS
was about to be finished at the time the Writ of Preliminary Attachment was
implemented on 24 May 1993, and that the construction of the church was
actually completed by mid-1993. Respondent asserts that since petitioner did
not deny these allegations, much less adduce evidence to the contrary, then the
latter tacitly recognized the construction of the church.
Petitioner contends, on the other hand, that respondent failed to present
evidence to prove the fact that a church had already been constructed on the
subject property by the time the said property was attached, thus, constituting
notice to petitioner of the claim or right of respondent to the same.lawph!1
Was there, at the time of the attachment, knowledge on the part of petitioner
Rural Bank of the interest of respondent Manila Mission on the subject property?
If the allegation of respondent Manila Mission anent the building of the chapel
even before the issuance of the writ of attachment is true, this case would be
similar to Ruiz where the vendee of the subject property was able to introduce
improvements. However, respondent Manila Mission presented no evidence of
the building of the chapel other than its bare allegation thereof. More
importantly, even assuming for the sake of argument that the chapel was
indeed being built at the time of the attachment of the property, we cannot
simply apply Ruiz and conclude that this confirms knowledge of a previous
conveyance of the property at that time. In Ruiz, the attaching party was the
wife of the vendor of the subject property, whom she sued for support. It was
thus very probable that she knew of the sale of the property to the vendee
therein, considering that the vendee had already introduced improvements
thereon. In the case at bar, there is no special relationship between petitioner
Rural Bank and the spouses Soliven sufficient to charge the former with an
implied knowledge of the state of the latter’s properties. Unlike in the sale of
16
16
real property, an attaching creditor is not expected to inspect the property being
attached, as it is the sheriff who does the actual act of attaching the property.
Neither did respondent Manila Mission present any evidence of knowledge on
the part of petitioner Rural Bank of the prior existing interest of the former at
the time of the attachment. Respondent Manila Mission merely argues that
there was a tacit recognition on the part of petitioner Rural Bank of the
construction of the chapel when the latter did not deny this allegation in its
Opposition to the Motion to Discharge Property from Attachment.
The Motion, however, merely mentions the construction of the chapel and does
not charge petitioner Rural Bank with knowledge of the construction. There
was, therefore, nothing to deny on the part of petitioner Rural Bank, as the
mere existence of such construction at that time would not affect the right of
petitioner Rural Bank to its lien over the subject property. Also, the mention in
the Motion of the construction of the chapel would have the effect of being a
notice of an adverse third-party claim only at the time of such Motion. Since
such notice, which was deemed in Ruiz as constructive registration of the sale,
was effected only after the attachment of the subject property, it could not
affect the validity of the attachment lien.
In sum, our decisions in Ruiz v. Court of Appeals and Valdevieso v. Damalerio
oblige us to rule that the duly registered levy on attachment by petitioner Rural
Bank takes preference over the prior but then unregistered sale of respondent
Manila Mission. There was likewise no evidence of knowledge on the part of
petitioner Rural Bank of any third-party interest in the subject property at the
time of the attachment. We are, therefore, constrained to grant the instant
Petition for Review and nullify the Orders of the RTC discharging the subject
property from attachment.
Nevertheless, respondent Manila Mission would not be left without remedy. It
could file a counter-bond pursuant to Section 12, Rule 5711 of the Rules of
LTD CASES - INVOLUNTARY DEALINGS
Court in order to discharge the attachment. If respondent Manila Mission fails to
do the same and the property ends up being subjected to execution, respondent
can redeem the property and seek reimbursement from the spouses Soliven.
WHEREFORE, the instant Petition for Review on Certiorari is hereby GRANTED.
The Decision dated 29 July 1997 of the Court of Appeals in CA-G.R. SP No.
41042 affirming the Orders of the Regional Trial Court of Dagupan City dated 9
October 1995 and 27 February 1996 issued in Civil Case No. D-10583 is hereby
REVERSED and SET ASIDE. No pronouncement as to costs.
SO ORDERED.
G.R. No. 130389 February 11, 2008
THE PHILIPPINE COTTON CORPORATION, petitioner-
appellant,vs.NARAINDAS GAGOOMAL and ENGRACIO ANG,
respondents-appellees,
CHINA BANKING CORPORATION, intervenor-appellee.
AZCUNA, J.:
This is a petition for review on certiorari1 assailing the Decision2 of the Court of
Appeals (CA) promulgated on August 29, 1997 in CA-G.R. CV No. 50332.
The facts of record would indicate that Pacific Mills, Inc. (Pacific Mills) originally
owned five parcels of land covered by Transfer Certificates of Title (TCT) Nos.
136640, 136441, 222370 and 134249. These properties were subsequently
purchased by respondents on an installment basis from Pacific Mills on July 19,
1979.3
On June 23, 1983, petitioner filed a collection case against Pacific Mills before
the Regional Trial Court (RTC) of Pasig, Branch 162 on the ground of alleged
failure to fulfill its obligation under a contract of loan. After hearing, the trial
court issued a writ of preliminary attachment in favor of petitioner. Thereafter,
17
17
on August 17, 1983, the writ of preliminary attachment was annotated on TCT
Nos. 136640, 136441, 222370 and 134249.
On December 27, 1985, the RTC of Pasig rendered a decision ordering Pacific
Mills to pay its obligation under the loan agreement plus interest, penalty
charges, attorney’s fees and costs of suit. On appeal, the CA affirmed the
decision of the trial court. Not satisfied with the judgment of the appellate court,
Pacific Mills filed a petition for review before this Court.
During the pendency of the appeal or on June 11, 1988, the Quezon City Hall
was razed by fire thereby destroying the records of the Registry of Deeds of
Quezon City, including the TCTs of Pacific Mills.
Sometime in 1992, Pacific Mills filed a petition for reconstitution of the burned
TCTs through administrative reconstitution, in accordance with Republic Act No.
6732.4 On March 23, 1992, the Registry of Deeds of Quezon City issued to
Pacific Mills the reconstituted TCTs, namely: No. RT-55702 (for TCT No.
136640), No. RT-55704 (for TCT No. 134249), No. RT-55703 (for TCT No.
136441) and No. RT-55705 (for TCT No. 222370). However, the aforesaid
alleged annotations of the preliminary attachment in favor of petitioner were not
incorporated in the reconstituted TCTs, but annotated therein was the sale
made by Pacific Mills to respondents and their payment in full. On even date,
the reconstituted TCTs were cancelled in favor of the respondents. Respondents
were given the following clean TCT Nos. 566835 (for RT-55703), 566846 (for
RT-55702), 566857 (for RT-55704) and 566868 (for RT-55705).
On February 8, 1993, petitioner wrote the Registry of Deeds of Quezon City
requesting for the annotation of the notice of levy, and, subsequently, the
annotation of a favorable decision of this Court rendered on August 3, 1992, on
the new TCTs issued to respondents.
On February 10, 1993, Samuel C. Cleofe, the Quezon City Register of Deeds,
informed respondents that the letter-request for re-annotation of notice of levy
had been entered in the Primary Entry Book 574/Volume 24, and asked them to
surrender their owners’ duplicate copies of TCT Nos. 56683 to 56686.9
Immediately upon receipt of the said letter, respondents verified the original
LTD CASES - INVOLUNTARY DEALINGS
copies of titles in the possession of the Registry of Deeds and discovered that
the following annotations were included at the back of the titles: "Request for
Re-Annotation of Notice of Levy" and "Letter Request for Annotation of Entry of
Judgment of Supreme Court."
Thereafter, respondents filed on March 3, 1993, a Petition for the Cancellation
of Annotations in Land Titles before the RTC of Quezon City, Branch 100,
docketed as Civil Case No. Q-6056(93). Later on, petitioner was impleaded as
an additional respondent, while China Banking Corporation filed a complaint-in-
intervention for being a mortgagee of the real properties, together with all the
improvements thereon.
On March 29, 1995, the trial court rendered judgment in favor of respondents.
The dispositive portion of the decision reads:
WHEREFORE, premises above considered, there being no justification for the
Quezon City Register of Deeds in making the annotation on petitioners’ original
TCT Nos. 56683 (RT-55703), 56684 (RT-55702), 56685 (RT-55748) and 56686
(RT-55705), said respondent is hereby ordered to DELETE therefrom the said
annotation "request for annotation and the annotated Supreme Court decision
against the Pacific Mills, Inc." and to desist from its request for petitioners to
submit their owners duplicate of titles to annotate such request of the Philippine
Cotton Corporation.
There being no justiciable issue in the complaint-in-intervention, let the
annotations of a mortgage executed by petitioners on December 18, 1992 in
favor of intervenor China Banking Corporation remain on petitioners’ subject
TCTs.
SO ORDERED.10
The trial court ratiocinated that:
Under the circumstances, respondent [the Registry of Deeds of Quezon City]
should and could have properly refused such request instead of immediately
annotating it. In the same light, "The Register of Deeds may likewise properly
refuse registration of an order attachment when it appears that the title
18
18
involved is not in the name of the defendant and there is no evidence submitted
to indicate that the said defendant has any present or future interest in the
property covered by the titles." (Gotauco vs. Register of Deeds of Tayabas, 59
Phil. 756, 1934 and Geonanga vs. Hodges, 55 O.G. p. 2891, April 21, 1958).
(Underscoring Supplied)11
Unsatisfied with the outcome of the case, petitioner filed a notice of appeal
before the CA, contending that:
"THE REGISTER OF DEEDS OF QUEZON CITY HAS THE AUTHORITY TO RE-
ANNOTATE THE NOTICE OF LEVY AND TO ANNOTATE THE ENTRY OF
JUDGMENT OF THE SUPREME COURT ON TRANSFER CERTIFICATES OF TITLE
NOS. 56683, 56684, 56685 AND 56686, ALL ISSUED IN THE NAME OF THE
PETITIONERS-APPELLEES AS A RESULT OF AN ADMINISTRATIVE
RECONSTITUTION OF TITLES."12
In its August 29, 1997 decision, the appellate court dismissed the appeal
because the issue raised by the petitioner was a pure question of law, over
which the CA had no jurisdiction.
Hence, this petition.
Petitioner presents the following assignment of errors:
FIRST ERROR
THE LOWER COURT ERRED IN NOT SUSTAINING THE AUTHORITY OF THE
QUEZON CITY REGISTER OF DEEDS TO VALIDLY RE-ANNOTATE THE
INCUMBRANCE/LIENS AND ANNOTATE THE SUPREME COURT DECISION ON
THE ADMINISTRATIVELY RECONSTITUTED TRANSFER CERTIFICATES OF
TITLES (TCTs) IN FAVOR OF PETITIONER-APPELLANT.
SECOND ERROR
THE LOWER COURT, IN CONSEQUENCE THEREOF, LIKEWISE ERRED IN
ORDERING THE QUEZON CITY REGISTER OF DEEDS TO DELETE THE
ANNOTATION THAT READS: "REQUEST FOR ANNOTATION AND THE
LTD CASES - INVOLUNTARY DEALINGS
ANNOTATED SUPREME COURT DECISION AGAINST PACIFIC MILLS, INC.",
FROM PETITIONERS’ ORIGINAL TCT NOS. 96683 [sic] (RT-55703), 56684 (RT-
55702), 56685 (RT-55748) AND 56686 (RT-55705) AND TO DESIST FROM
REQUESTING RESPONDENTS/APPELLEES TO SUBMIT THEIR OWNERS’
DUPLICATE OF TITLES FOR ANNOTATION OF PETITIONER PHILIPPINE
COTTON CORPORATION’S REQUEST.13
Petitioner asserts that a cursory reading of Section 71 of Presidential Decree No.
1529 shows that it is the ministerial duty of the Register of Deeds, in the matter
of an attachment or other liens in the nature of involuntary dealing in registered
land, to "send notice by mail to a registered owner requesting him to produce
his duplicate certificate so that a memorandum of attachment or other lien may
be made thereon." This provision, according to petitioner, actually applies
whenever a writ of attachment has been issued by a court of competent
jurisdiction after hearing on the issuance of the said writ. The notice of
attachment not having been dissolved, it was ministerial on the part of the
Register of Deeds to record the notice on the TCTs he issued.
Petitioner would persuade this Court that it is the ministerial duty of the Register
of Deeds to record any encumbrance or lien on respondents’ existing TCTs. It
cites, as proof of its supposition, Sections 10 and 71 of the Property Registration
Decree (P.D. No. 1529), which are quoted as follows:
Section 10. General functions of Registers of Deeds. — The office of the
Register of Deeds constitutes a public repository of records of instruments
affecting registered or unregistered lands and chattel mortgages in the province
or city wherein such office is situated.
It shall be the duty of the Register of Deeds to immediately register an
instrument presented for registration dealing with real or personal property
which complies with all the requisites for registration. He shall see to it that said
instrument bears the proper documentary and science stamps and that the
same are properly cancelled. If the instrument is not registrable, he shall
forthwith deny registration thereof and inform the presentor of such denial in
writing, stating the ground or reason therefor, and advising him of his right to
appeal by consulta in accordance with Section 117 of this Decree.
19
19
xxx
Section 71. Surrender of certificate in involuntary dealings. – If an attachment
or other lien in the nature of involuntary dealing in registered land is registered,
and the duplicate certificate is not presented at the time of registration, the
Register of Deeds, shall, within thirty-six hours thereafter, send notice by mail
to the registered owner, stating that such paper has been registered, and
requesting him to send or produce his duplicate certificate so that a
memorandum of the attachment or other lien may be made thereon. If the
owner neglects or refuses to comply within a reasonable time, the Register of
Deeds shall report the matter to the court, and it shall, after notice, enter an
order to the owner to produce his certificate at a time and place named therein,
and may enforce the order by suitable process. (Underscoring supplied)
The Court is not in accord with the stance of petitioner. Section 10 of P.D. No.
1529 merely involves the general functions of the Register of Deeds, while
Section 71 thereof relates to an attachment or lien in a registered land in which
the duplicate certificate was not presented at the time of the registration of the
said lien or attachment.
A special law specifically deals with the procedure for the reconstitution of
Torrens certificates of title lost or destroyed. Under Section 4 of Act No. 26:14
Liens and other encumbrances affecting a destroyed or lost certificate of title
shall be reconstituted from such of the sources hereunder enumerated as may
be available, in the following order:
(a) Annotations or memoranda appearing on the owner’s, co-owner’s,
mortgagee’s or lessee’s duplicate;
(b) Registered documents on file in the registry of deeds, or authenticated
copies thereof showing that the originals thereof had been registered; and
(c) Any other document which, in the judgment of the court, is sufficient and
proper basis for reconstituting the liens or encumbrances affecting the property
covered by the lost or destroyed certificate of title. (Underscoring supplied)
LTD CASES - INVOLUNTARY DEALINGS
Furthermore, Sections 8 and 11 of the same Act provide for the procedure for
the notation of an interest that did not appear in the reconstituted certificate of
title, mandating that a petition be filed before a court of competent jurisdiction:
Section 8. Any person whose right or interest was duly noted in the original of a
certificate of title, at the time it was lost or destroyed, but does not appear so
noted on the reconstituted certificate of title, which is subject to the reservation
provided in the preceding section, may, while such reservation subsists, file a
petition with the proper Court of First Instance for the annotation of such right
or interest on said reconstituted certificate of title, and the court, after notice
and hearing, shall determine the merits of the petition and render such
judgment as justice and equity may require. The petition shall state the number
of the reconstituted certificate of title and the nature, as well as a description, of
the right or interest claimed. (Underscoring supplied)
xxx
Section 11. Petitions for reconstitution of registered interests, liens and other
encumbrances, based on sources enumerated in sections 4(b) and/or 4(c) of
this Act, shall be filed, by the interested party, with the proper Court of First
Instance. The petition shall be accompanied with the necessary documents and
shall state, among other things, the number of the certificate of title and the
nature as well as a description of the interest, lien or encumbrance which is to
be reconstituted, and the court, after publication, in the manner stated in
section nine of this Act, and hearing shall determine the merits of the petition
and render such judgment as justice and equity may require. (Underscoring
supplied)
Clearly, therefore, it is not the ministerial function of the Register of Deeds to
record a right or an interest that was not duly noted in the reconstituted
certificate of title. As a matter of fact, this task is not even within the ambit of
the Register of Deed’s job as the responsibility is lodged by law to the proper
courts. The foregoing quoted provisions of the law leave no question nor any
doubt that it is indeed the duty of the trial court to determine the merits of the
petition and render judgment as justice and equity may require.
This conclusion is bolstered by Chapter X,15 Section 108 of P.D. No. 1529,
20
20
which provides:
Sec. 108. Amendment and alteration of certificates. — No erasure, alteration, or
amendment shall be made upon the registration book after the entry of a
certificate of title or of a memorandum thereon and the attestation of the same
by the Register of Deeds, except by order of the proper Court of First Instance.
A registered owner or other person having an interest in registered property, or,
in proper cases, the Register of Deeds with the approval of the Commissioner of
Land Registration, may apply by petition to the court upon the ground that the
registered interests of any description, whether vested, contingent, expectant
inchoate appearing on the certificate, have terminated and ceased; or that new
interest not appearing upon the certificate have arisen or been created; or that
an omission or error was made in entering the certificate or any memorandum
thereon, or on any duplicate certificate; or that the name of any person on the
certificate has been changed; or that the registered owner has married, or, if
registered as married, that the marriage has been terminated and no right or
interest of heirs or creditors will thereby be affected, or that a corporation which
owned registered land and has been dissolved has not yet conveyed the same
within three years after its dissolution; or upon any other reasonable ground;
and the court may hear and determine the petition after notice to all parties in
interest, and may order the entry or cancellation of a new certificate, the entry
or cancellation of a memorandum upon a certificate, or grant any other relief
upon such terms and conditions, requiring security or bond if necessary, as it
may consider proper: Provided, however, That this section shall not be
construed to give the court authority to reopen the judgment or decree of
registration, and that nothing shall be done or ordered by the court which shall
impair the title or other interest of a purchaser holding a certificate for value
and in good faith, or his heirs and assigns, without his or their written consent.
Where the owner’s duplicate certificate is not presented, a similar petition may
be filed as provided in the preceding section,
All petitions or motions filed under this section as well as under any other
provision of this Decree after original registration shall be filed and entitled in
the original case in which the decree or registration was entered. (Underscoring
supplied)
The court’s intervention in the amendment of the registration book after the
LTD CASES - INVOLUNTARY DEALINGS 21

entry of a certificate of title or of a memorandum thereon is categorically stated

in the Property Registration Decree and cannot be denied by the mere
allegations of petitioner. Hence, the contentions that the Register of Deeds may
"validly re-annotate the incumbrance/liens and annotate the Supreme Court
decision on the administratively reconstituted transfer certificates of titles
(TCTs)" have no basis in law and jurisprudence.

Petitioner further submits that the issuance of the TCTs to respondents is

fraudulent. It suggests that under Sections 69 and 73 of P.D. No. 1529, any
person whose interest does not appear on a reconstituted title may file a
request directly with the Register of Deeds.

As correctly observed by respondents, P.D. No. 1529 principally pertains to the

registration of property, while R.A. No. 26 is a special law on the procedure for
the reconstitution of Torrens certificates of title that were lost or destroyed.
Specifically, Section 6916 of P.D. No. 1529 refers to an attachment that arose
after the issuance of a certificate of title; while Section 7117 of the same law
pertains to the registration of the order of a court of an attachment that was
continued, reduced, dissolved or otherwise affected by a judgment of the court.
Undoubtedly, the foregoing provisions find no application in the present case
since petitioner insists that its interest was annotated prior to the reconstitution
of the disputed certificates of title.

WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals in

CA-G.R. CV No. 50332, dated August 29, 1997, and the Decision of the Regional
Trial Court of Quezon City, Branch 101, in Civil Case No. Q-6056(93),18 are
hereby AFFIRMED.

No costs.

SO ORDERED.

21
LTD CASES - INVOLUNTARY DEALINGS
G.R. No. 207938, October 11, 2017 - EVY CONSTRUCTION AND
DEVELOPMENT CORPORATION,, Petitioner, v. VALIANT ROLL
FORMING SALES CORPORATION, Respondent.
G.R. No. 207938, October 11, 2017
EVY CONSTRUCTION AND DEVELOPMENT CORPORATION,, Petitioner,
v. VALIANT ROLL FORMING SALES CORPORATION, Respondent.
LEONEN, J.:
In every application for provisional injunctive relief, the applicant must establish
the actual and existing right sought to be protected. The applicant must also
establish the urgency of a writ's issuance to prevent grave and irreparable
injury. Failure to do so will warrant the court's denial of the application.
Moreover, the application for the issuance of a writ of preliminary injunction
may be denied in the same summary hearing as the application for the issuance
of the temporary restraining order if the applicant fails to establish requisites for
the entitlement of the writ.
This is a Petition for Review on Certiorari1 assailing the October 22, 2012
22
22
Decision2 and June 25, 2013 Resolution3 of the Court of Appeals in CA-G.R. SP
No. 112737. The assailed judgments found that the Regional Trial Court did not
gravely abuse its discretion when it denied Evy Construction and Development
Corporation's (Evy Construction) application for the issuance of a temporary
restraining order. This application sought to restrain the Register of Deeds from
compelling Evy Construction to surrender its owner's copy of Transfer Certificate
of Title (TCT) No. 168590 and from further annotating encumbrances relative to
a civil case between its predecessor-in-interest and a third party.
On September 4, 2007, Evy Construction purchased a parcel of land covered by
TCT No. 134890 in Lipa, Batangas from Linda N. Ang (Ang) and Senen T. Uyan
(Uyan). They executed a Deed of Absolute Sale, which was notarized on
September 11, 2007. At the time of the sale, no lien or encumbrance was
annotated on the title, except for a notice of adverse claim filed by Ang.4
On September 18, 2007, the Register of Deeds annotated a Notice of Levy on
Attachment on TCT No. 134890.5 This annotation was by virtue of the Writ of
Preliminary Attachment issued by Branch 46, Regional Trial Court, San
Fernando, Pampanga in Civil Case No. 13442 entitled Valiant Roll Forming Sales
Corporation v. Angeli Lumber and Hardware, Inc., and Linda Ngo Ang.6 Two (2)
other encumbrances were also annotated on the title.7
Evy Construction registered the Deed of Absolute Sale with the Register of
Deeds on November 20, 2007. TCT No. 168590 was issued in its name;
however, it contained the annotation of the prior Notice of Levy on Attachment,
as well as a Notice of Attachment/Levy upon Realty dated October 2, 2007 and
a Notice of Levy on Preliminary Attachment dated November 8, 2007.8
Subsequently, the Regional Trial Court rendered a Decision in Civil Case No.
13442 in favor of Valiant Roll Forming Sales Corporation (Valiant). A Writ of
Execution and a Notice of Levy were issued against the property covered by
TCT No. 134890.9
Evy Construction filed a Notice of Third-Party Claim in Civil Case No. 13442,
informing the court that it had already filed with the sheriff an Affidavit of
Title/Ownership on May 20, 2008, in accordance with Rule 57 of the Rules of
Court.10 Valiant posted an Indemnity Bond of P745,700.00 to answer for any
LTD CASES - INVOLUNTARY DEALINGS
damages that Evy Construction may suffer should execution of the Regional
Trial Court Decision proceed.11
By virtue of the July 18, 2008 Writ of Execution issued in Civil Case No. 13442,
the Sheriff issued a Notice of Sale on Execution of Real Property of Ang's
properties, including the property covered by TCT No. 134890.12 A Certificate of
Sale was eventually issued to Valiant as the winning bidder of the property
covered by TCT No. 134890.13
On October 29, 2009, Evy Construction filed with the Regional Trial Court of
Lipa City, Batangas its Complaint for Quieting of Title/Removal of Cloud,
Annulment of Execution Sale and Certificate of Sale, and Damages, with
application for temporary restraining order and/or preliminary injunction.14
It prayed for the issuance of a temporary restraining order and/or writ of
preliminary injunction to enjoin the Register of Deeds from compelling it to
surrender its copy of TCT No. 168590 and from annotating any further
transactions relating to Civil Case No. 13442.15
In the hearing for its application for the issuance of a temporary restraining
order, Evy Construction claimed that it would suffer great and irreparable injury
if the Register of Deeds were restrained from compelling it to surrender the
owner's duplicate copy of TCT No. 168590. It claimed that potential investors
interested in developing the property "[would] back out of their investment
plans if there [was a] cloud of doubt hovering over the title on the property."16
On November 9, 2009, the Regional Trial Court issued an Order denying the
application for the issuance of a temporary restraining order for having no legal
basis. Evy Construction's Motion for Reconsideration was likewise denied in an
Order dated December 11, 2009.17 Hence, it filed a Petition for Certiorari18
with the Court of Appeals.
On October 22, 2012, the Court of Appeals rendered its Decision.19 It held that
Evy Construction failed to sufficiently establish its right to the issuance of a
temporary restraining order.
According to the Court of Appeals, Evy Construction failed to sufficiently
23
23
establish that it would suffer grave and irreparable injury if additional recording
and annotation of further transactions, orders, or processes relating to the sale
of the property to Valiant were made on the title. It observed that the grounds
raised already touched on the merits of its Complaint, resolution of which would
amount to prejudgment of the case.20
The Court of Appeals likewise pointed out that Evy Construction could still sue
for damages if the trial court eventually finds that the sale of the property to
Valiant was invalid. It also reminded Evy Construction that it had the remedy of
proceeding against the indemnity bond posted by Valiant for any damages it
might suffer as a result of the sale.21
Evy Construction filed a Motion for Reconsideration, which was denied by the
Court of Appeals in its Resolution22 dated June 25, 2013. Hence, this Petition23
was filed.
Petitioner argues that it was denied due process when its application for
preliminary injunction was denied in the same summary proceeding as the
denial of its application for a temporary restraining order.24 Petitioner likewise
submits that it was entitled to the injunctive writ applied for since "real estate
development is an industry built on trust and public perception."25 It explains
that the doubt cast by the auction sale and its annotation to the title caused
investors to withdraw their investments from petitioner's housing development
project, despite the expenses it already incurred.26
Petitioner avers that the issuance of an injunctive writ is necessary to prevent
further damage since its "business reputation and goodwill as a real estate
developer, once tarnished and sullied, cannot be restored."27 It insists that
respondent's indemnity bond in the amount of P745,700.00 was not only
inadequate compared to petitioner's investment in the property; it was
immaterial since it would be insufficient to restore buyer and investor
confidence in the project or in petitioner's competence and reputation as a
property developer.28
On the other hand, respondent counters that the application for preliminary
injunction was never actually set for hearing or resolved by the trial court; thus,
it was misleading for petitioner to argue that it was denied due process by the
LTD CASES - INVOLUNTARY DEALINGS
trial court.29 It maintains that the Court of Appeals did not err in finding that
petitioner failed to establish the requisites for the issuance of a temporary
restraining order and that petitioner still had adequate remedies in the
indemnity bond.30 Respondent likewise reiterates the Court of Appeals' finding
that petitioner already touches on the merits of its Complaint before the trial
court, which effectively prejudges the case.31
This Court is asked to resolve the following issues:
First, whether or not petitioner Evy Construction and Development Corporation
was denied due process when its application for a writ of preliminary injunction
was denied in the same proceeding as its application for a temporary restraining
order; and
Second, whether or not the trial court committed grave abuse of discretion in
denying petitioner Evy Construction and Development Corporation's application
for injunctive relief.
I resolve the application for preliminary injunction. If no action is taken on the
Injunction is defined as "a judicial writ, process or proceeding whereby a patty
is ordered to do or refrain from doing a certain act."32 It may be filed as a main
action before the trial court33 or as a provisional remedy in the main
action.34Bacolod City Water District v. Hon. Labayen35 expounded:
The main action for injunction is distinct from the provisional or ancillary remedy
of preliminary injunction which cannot exist except only as part or an incident of
an independent action or proceeding. As a matter of course, in an action for
injunction, the auxiliary remedy of preliminary injunction, whether prohibitory or
mandatory, may issue. Under the law, the main action for injunction seeks a
judgment embodying a final injunction which is distinct from, and should not be
confused with, the provisional remedy of preliminary injunction, the sole object
of which is to preserve the status quo until the merits can be heard. A
preliminary injunction is granted at any stage of an action or proceeding prior to
the judgment or final order. It persists until it is dissolved or until the
termination of the action without the court issuing a final injunction.36
24
24
Petitioner claims that it was denied due process when "no valid hearing for the
application for preliminary injunction was ever set" by the trial court and it "was
NOT even allowed to present its summary arguments and its witness in support
of its application for a [temporary restraining order]."37
A temporary restraining order may be issued ex parte "to preserve the status
quo until the hearing of the application for preliminary injunction[,] which
cannot be issued ex parte."38 Otherwise stated, a trial court may issue a
temporary restraining order even without a prior hearing for a limited period of
72 hours "if the matter is of extreme urgency and the applicant will suffer grave
injustice and irreparable injury."39 In this instance, a summary hearing,
separate from the application of the preliminary injunction, is required only to
determine if a 72-hour temporary restraining order should be extended.40
A trial court may also issue ex parte a temporary restraining order for 20 days
"[i]f it shall appear from facts shown by affidavits or by the verified application
that great or irreparable injury would result to the applicant before the matter
can be heard on notice."41 The trial court has 20 days from its issuance to
application for preliminary injunction during this period, the temporary
restraining order is deemed to have expired.42 Notably, the Rules do not
require that a hearing on the application for preliminary injunction be conducted
during this period.
While Rule 58, Section 4(d)43 requires that the trial court conduct a summary
hearing in every application for temporary restraining order regardless of a
grant or denial, Rule 58, Section 5 requires a hearing only if an application for
preliminary injunction is granted. Thus, Section 5 states that "[n]o preliminary
injunction shall be granted without hearing and prior notice to the party or
person sought to be enjoined," Inversely stated, an application for preliminary
injunction may be denied even without the conduct of a hearing separate from
that of the summary hearing of an application for the issuance of a temporary
restraining order.
In this case, the November 9, 2009 hearing was denominated as a "hearing on
the application for temporary restraining order and preliminary injunction."44
Petitioner's counsel was allowed to present its arguments45 and its witness46
LTD CASES - INVOLUNTARY DEALINGS
but conceded that the issues before the trial court were legal in nature.47 Thus,
the trial court resolved that there was no need to present the witness, which
petitioner's counsel accepted without objection:
COURT
[T]he only issue now is purely legal, so there is no need to present your
witness.
ATTY. LIMBO
Yes[.] Your Honor.
COURT
We are submitting the Motion for Issuance of Temporary Restraining Order for
resolution.
ATTY. LIMBO
Yes, Your Honor.
COURT
Alright, submitted.48
Petitioner cannot insist on a separate hearing for the application for preliminary
injunction, considering that it accepted that its application would be submitted
for decision without the presentation of its witness. The trial court did not find
any need to conduct a further hearing on the application for preliminary
injunction since petitioner was unable to substantiate its entitlement to a
temporary restraining order. In any case, even if a separate hearing was
granted, petitioner would have presented the same arguments and evidence in
the November 9, 2009 hearing. Thus, there can be no denial of due process if
the party alleging it has already been granted an opportunity to be heard.
II.A
25
25
Under Rule 58 of the Rules of Court, a preliminary injunction "is an order
granted at any stage of an action or proceeding prior to the judgment or final
order, requiring a party or a court, agency or a person to refrain from a
particular act or acts" or an order "requir[ing] the performance of a particular
act or acts."49 It is an ancillary relief granted by the court where the main
action or proceeding is pending.50
In order to be granted the writ, it must be established:
(a)
That the applicant is entitled to the relief demanded, and the whole or part of
such relief consists in restraining the commission or continuance of the act or
acts complained of, or in requiring performance of an act or acts, either for a
limited period or perpetually;
(b)
That the commission, continuance or non-performance of the act or acts
complained of during the litigation would probably work injustice to the
applicant; or
(c)
That a party, court, agency or a person is doing, threatening, or is attempting to
do, or is procuring or suffering to be done, some act or acts probably in
violation of the rights of the applicant respecting the subject of the action or
proceeding, and tending to render the judgment ineffectual.51
The issuance of a writ of preliminary injunction is considered an "extraordinary
event," being a "strong arm of equity or a transcendent remedy."52 Thus, the
power to issue the writ "should be exercised sparingly, with utmost care, and
with great caution and deliberation.''53
An injunctive writ is granted only to applicants with "actual and existing
substantial rights"54 or rights in esse. Further, the applicant must show "that
the invasion of the right is material and substantial and that there is an urgent
and paramount necessity for the writ to prevent serious damage."55 Thus, the
writ will not issue to applicants whose rights are merely contingent or to compel
or restrain acts that do not give rise to a cause of action.56
In this case, petitioner alleges that as the registered owner of the property
LTD CASES - INVOLUNTARY DEALINGS
covered by TCT No. 168590, "[i]t has the undeniable right to the full use and
possession [of it]."57
At the time of the sale between petitioner Evy Construction, Uyan, and Ang,
TCT No. 134890 in Uyan's and Ang's names did not contain any liens or
encumbrances, except for a notice of adverse claim by Ang dated January 21,
1999. However, petitioner admitted that while the Deed of Absolute Sale was
executed on September 4, 2007, the property was only registered in its name
on November 20, 2007.58 The encumbrances in respondent's favor were
annotated on September 18, 2007, October 2, 2007, and November 8, 2007,59
or when the property was still registered under Uyan's and Ang's names.
Under the Torrens system of registration, a person who deals with the
registered owner of the property is not bound to look beyond the title for any
liens or encumbrances that have not been annotated.60 TCT No. 134890 did
not contain a notice of lis pendens that could have warned petitioner that the
property was under litigation.
The sale between petitioner Evy Construction, Uyan, and Ang was not
annotated on TCT No. 134890 at the time of its sale. A sale of property that is
not registered under the Torrens system is binding only between the buyer and
the seller and does not affect innocent third persons.61 The Regional Trial Court
could not have been faulted for ordering the annotation of the notice of levy on
attachment on TCT No. 134890 considering that when the September 18, 2007
Order was issued, the property was still in Uyan's and Ang's names.
Thus, in determining whether or not petitioner is entitled to injunctive relief, the
courts would have to pass upon the inevitable issue of which between petitioner
and respondent has the better right over the property, the very issue to be
resolved in the main case.
The facts of this case mirror that of Spouses Chua v. Hon. Gutierrez,62 where
this Court was confronted with the issue of whether or not a registered lien of
attachment is superior to that of an unregistered deed of sale. In Spouses Chua,
the property was already registered in the Spouses Chua's names when the
property was levied. Thus, they argued that, not being the judgment debtors,
the property should not have been subjected to an execution sale.
26
26
This Court found the argument unmeritorious and held:
[A] levy on attachment, duly registered, has preference over a prior
unregistered sale and, even if the prior unregistered sale is subsequently
registered before the sale on execution but after the levy is made, the validity of
the execution sale should be upheld because it retroacts to the date of levy.63
The prior levy on attachment carries over to the new certificate of title,
effectively placing the buyers in the position of their vendor under litigation.
However, Spouses Chua stated an exception in that "[k]nowledge of an
unregistered sale is equivalent to registration."64 If a party presents evidentiary
proof that the judgment creditor had knowledge of a valid sale between the
judgment debtor and an innocent third party, that knowledge would have the
effect of registration on the judgment creditor.
As in Spouses Chua, respondent's attachment liens dated September 18, 2007,
October 2, 2007, and November 8, 2007, if valid, may have been superior to
whatever right petitioner may have acquired by virtue of the Deed of Absolute
Sale, which was only registered on November 20, 2009. However, the validity of
the liens and the validity of the Deed of Absolute Sale are factual matters that
have yet to be resolved by the trial court. The trial court must also determine
whether or not respondent had prior knowledge of the sale.
Thus, no injunctive writ could be issued pending a final determination of
petitioner's actual and existing right over the property. The grant of an
injunctive writ could operate as a prejudgment of the main case.
II.B
Even assuming that there is already a final determination of petitioner's right
over the property, petitioner still failed to prove the urgent and paramount
necessity to enjoin the Register of Deeds from making further annotations on
TCT No. 168590.
Petitioner prays for the issuance of an injunctive writ to prevent grave and
LTD CASES - INVOLUNTARY DEALINGS
irreparable damage to its reputation as a real estate developer.65 Indeed,
injunctive relief could be granted to prevent grave and irreparable damage to a
business entity's goodwill and business reputation.66
Injury is considered irreparable if "there is no standard by which [its] amount
can be measured with reasonable accuracy."67 The injury must be such that its
pecuniary value cannot be estimated, and thus, cannot fairly compensate for
the loss.68 For this reason, the loss of goodwill and business reputation, being
unquantifiable would be considered as grave and irreparable damage.
In Yu v. Court of Appeals,69 this Court granted an exclusive distributor's prayer
for an injunctive writ to prevent a competitor from selling the same product on
the ground that the continued sale would "[render] illusory . . . the very
purpose for which the exclusive distributorship was conceptualized, at the
expense of the sole authorized distributor."70
In Semirara Coal Corporation v. HGL Development Corporation,71 this Court
upheld the issuance of a writ of mandatory injunction to prevent Semirara Coal
Corporation's (Semirara) continued intrusion on HGL Development Corporation's
(HGL) property. It also found that Semirara damaged HGL's business standing
when it prevented HGL from operating its cattle-grazing business on its
property, which ''[was] perceived as an inability by HGL to comply with the
demands of its customers and sow[ed] doubts in HGL's capacity to continue
doing business."72
In Philippine National Bank v. RJ Ventures Realty & Development Corporation,73
this Court affirmed the issuance of a writ of preliminary injunction to enjoin the
extrajudicial foreclosure of Rajah Broadcasting Network's radio equipment
pending the resolution of the main case questioning the mortgage. This Court
found that the foreclosure would stop the operations of Rajah Broadcasting
Network's radio stations. The loss of its listenership and the damage to its
image and reputation would not be quantifiable, and thus, would be irreparable.
However, in applications for provisional injunctive writs the applicant must also
prove the urgency of the application. The possibility of a grave and irreparable
injury must be established, at least tentatively to justify the restraint of the act
complained of.74 It is "[a]s the term itself suggests. . . temporary, subject to
27
27
the final disposition of the principal action."75 Its sole objective is "to preserve
the status quo until the merits can be heard."76
Petitioner alleges that the execution sale and the prior annotations on its title
caused ''crucial investors and buyers"77 to withdraw, "notwithstanding the
considerable costs and expenses [it] already incurred."78 This is the grave and
irreparable damage it sought to be protected from. However, the feared
"damage" was caused by the execution sale and the annotations already made
on the title. It even admits that the annotations were "impairing the progress of
[its] housing development."79In other words, petitioner failed to establish the
urgent and paramount necessity of preventing further annotations on the title.
Thus, what petitioner actually seeks is the removal of the annotations on its
title, which is precisely what it asked for in its Complaint for Quieting of
Title/Removal of Cloud, Annulment of Execution Sale and Certificate of Sale, and
Damages before the trial court. Injunctive relief would have no practical effect
considering that the purported damage it seeks to be protected from has
already been done. Therefore, its proper remedy is not the issuance of an
injunctive writ but to thresh out the merits of its Complaint before the trial
court.
In Cortez-Estrada v. Heirs of Samut,80 this Court held:
[T]he grant or denial of a writ of preliminary injunction in a pending case rests
in sound discretion of the court taking cognizance of the case since the
assessment and evaluation of evidence towards that end involve findings of
facts left to the said court for its conclusive determination.81
The court's discretion is not interfered with unless there is a showing that the
grant or denial was tainted with grave abuse of discretion.82
The trial court, in the exercise of its discretion, denied petitioner's application for
the issuance of a temporary restraining order and writ of preliminary injunction
on the ground that petitioner would still have sufficient relief in its prayer for
damages in its Complaint.83 In the event that the annotations on petitioner's
title are found by the trial court to be invalid, petitioner would have adequate
relief in the removal of the annotations and in the award of damages.
LTD CASES - INVOLUNTARY DEALINGS 28

Therefore, the trial court acted within the bounds of its discretion.

WHEREFORE, the Petition is DENIED.

SO ORDERED.

28