A.M. No.

P-11-2888               July 27, 2011

(formerly A.M. OCA I.P.I. No. 09-3252-P)

GOLDEN SUN FINANCE CORPORATION, represented by RACHELLE L.

MARMITO, Complainant,
vs.
RICARDO R. ALBANO, Sheriff III, Metropolitan Trial Court (MeTC), Branch 62, Makati
City, Respondent.

DECISION

BRION, J.:

Ricardo R. Albano (respondent), Sheriff III, Metropolitan Trial Court (MeTC), Branch 62, Makati City,
was charged with negligence and grave misconduct by the Golden Sun Finance Corporation
(complainant), represented by Rachelle L. Marmito, the complainant’s Head Auditor.

THE COMPLAINT

In a verified letter-complaint dated September 1, 2009, the complainant alleged that on January 7,
2009, it filed a complaint for the recovery of a Honda Civic Sedan with the Regional Trial Court
(RTC), Quezon City, Branch 81, against one Lucila S. Reyes, docketed as Civil Case No. 0964026.
The subject motor vehicle, registered in the name of Reyes, was encumbered in its favor, as shown
in the Certificate of Registration issued by the Land Transportation Office.

The RTC decided in favor of the complainant and issued a writ of replevin. However, the
complainant found out that the motor vehicle had already been levied upon by the respondent by
virtue of a writ of execution issued on March 27, 2009 by the MeTC, Makati City, Branch 62, in
Criminal Case Nos. 353822-23 for violation of Batas Pambansa Bilang 22 against Reyes. It was sold
at a public auction conducted by the respondent on April 29, 2009, with the Royal Makati Credit
Resource as the highest bidder. On the same day, a Certificate of Sale was issued in favor of the
Royal Makati Credit Resource.

The complainant averred that the levy and sale of the motor vehicle by the respondent was illegal. It
claimed that the respondent was negligent when he levied upon the motor vehicle and proceeded
with the auction sale without looking into the car’s Certificate of Registration to determine whether it
was encumbered or not. The encumbrance on the motor vehicle having been made prior to the suit
filed by the Royal Makati Credit Resource, the complainant posited that its claim should have priority
over the former’s claims.

Required by the Office of the Court Administrator (OCA) to comment on the charges against
him,1 the respondent contended that he had no knowledge that the car was encumbered because
the Certificate of Registration was never shown to him. He also had no knowledge that the car was
the subject of a writ of replevin in Civil Case No. 0964026.2 Thus, the respondent asked for the
dismissal of the complaint, stressing that he had acted within the scope of his duty as sheriff when
he enforced the writ of execution.

THE OCA’S REPORT AND RECOMMENDATION

In a Memorandum Report dated November 3, 2010,3 the OCA evaluated the complaint and
submitted its findings:
The encumbrance in the instant case has been properly recorded in the Land Transportation Office
and, as attested to by the complainant, in the Register of Deeds of Rizal Province. Such record is
constructive notice of its contents and all interests, legal and equitable, included therein. This
presumption cannot be defeated by lack of notice or knowledge of what the public record contains
any more than one may be permitted to show that he was ignorant of the provisions of law. Hence,
the respondent is charged with knowledge of the duly registered encumbrance on the property he
levied.

In the case of Caja vs. Nanquil, the Court has declared that "the respondent sheriff’s act of levying
complainant’s real property despite its being mortgaged is tantamount to negligence. As an officer of
the court, he knew fully well that the property cannot be used to satisfy the judgment debt since the
mortgagee is the preferred creditor in relation to the said property."

In the instant administrative complaint, the respondent not only levied the encumbered vehicle, but
sold it in an execution sale, the proceeds of which would not satisfy the judgment debt because of
the existing encumbrance. Thus, the implementation of the writ of execution, although impressively
carried out with such celerity and promptness, had been to naught. It must be pointed out that the
recovery of the vehicle itself was the subject of Civil Case No. 0964026 filed by GSFC before the
Quezon City Regional Trial Court, Branch 81.

The OCA recommended that - (1) the complaint be redocketed as a regular administrative matter,
(2) the respondent be held administratively liable for simple neglect of duty, and (3) the respondent
be suspended without pay for one (1) month and one (1) day, with a stern warning that the
commission of the same or similar offense in the future shall be dealt with more severely.

The Court, as recommended, (a) directed that the complaint be redocketed as a regular
administrative matter, and (b) required the parties to manifest whether they were willing to submit the
case for decision based on the pleadings/records already filed and submitted.4

Both the complainant and the respondent complied, manifesting that they were submitting the case
for decision based on the pleadings/records on file.5

THE COURT’S RULING

We disagree with the OCA’s recommendation. We fail to find sufficient basis to declare the
respondent administratively liable for simple neglect of duty.

Section 9(b), Rule 39 of the Rules of Court states the manner by which judgments for money may be
satisfied by levy:

SEC. 9. Execution of judgments for money, how enforced. —

xxxx

(b) Satisfaction by levy. — If the judgment obligor cannot pay all or part of the obligation in cash,
certified bank check or other mode of payment acceptable to the judgment obligee, the officer shall
levy upon the properties of the judgment obligor of every kind and nature whatsoever which may be
disposed of for value and not otherwise exempt from execution giving the latter the option to
immediately choose which property or part thereof may be levied upon, sufficient to satisfy the
judgment. If the judgment obligor does not exercise the option, the officer shall first levy on the
personal properties, if any, and then on the real properties if the personal properties are insufficient
to answer for the judgment.

The sheriff shall sell only a sufficient portion of the personal or real property of the judgment obligor
which has been levied upon.

When there is more property of the judgment obligor than is sufficient to satisfy the judgment and
lawful fees, he must sell only so much of the personal or real property as is sufficient to satisfy the
judgment and lawful fees.

Real property, stocks, shares, debts, credits, and other personal property, or any interest in either
real or personal property, may be levied upon in like manner and with like effect as under a writ of
attachment.

In determining properties to be levied upon, the Rules require the sheriff to levy only on those
"properties of the judgment debtor" which are "not otherwise exempt from execution." For purposes
of the levy, a property is deemed to belong to the judgment debtor if he holds a beneficial interest in
such property that he can sell or otherwise dispose of for value.6 In a contract of mortgage, the
debtor retains beneficial interest over the property notwithstanding the encumbrance, since the
mortgage only serves to secure the fulfillment of the principal obligation.7 Indeed, even if the debtor
defaults, this fact does not operate to vest in the creditor the ownership of the property;8 the creditor
must still resort to foreclosure proceedings. Thus, a mortgaged property may still be levied upon by
the sheriff to satisfy the judgment debtor’s obligations, as what happened in the present case. After
ascertaining the judgment debtor’s (Reyes’) interest over the car, the respondent properly enforced
the levy thereon — an act that, to our mind, is in accordance with the Rules of Court. 1avvphi1

It was thus irrelevant for the complainant to argue that had the respondent checked the car’s
certificate of registration, the respondent would have been aware of the encumbrance. The
encumbrance, until foreclosed, will not in any way affect the judgment debtor’s rights over the
property or exempt the property from the levy. Even the pendency of the proceeding for replevin that
the complainant instituted would not serve to prevent the sheriff from levying on the car, since
Reyes’ default and the complainant’s right to foreclose still had to be settled in the proceeding.9

The OCA’s recommendation was based supposedly on our ruling in Caja v. Nanquil.10 We find,
however, that the OCA has read our ruling out of context. In that case, the Court held Sheriff Atilano
Nanquil administratively liable, not so much for levying on the property of the judgment debtor that
was already mortgaged to a third party, but for levying on the judgment debtor’s real properties
without checking if there were other personal properties that could satisfy the judgment debt.
"[Sheriff Nanquil] should have exhausted all means before going after the real property,"11 as
required under Section 9(b), Rule 39 of the Rules of Court. We also found Sheriff Nanquil liable for
levying properties of the judgment debtor far from and in excess of the value of the judgment debt.12

We emphasize that a sheriff’s duty to execute a writ is simply ministerial,13 and he is bound to

perform only those tasks stated under the Rules of Court and no more. Any interest a third party may
have on the property levied upon by the sheriff to enforce a judgment is the third party’s
responsibility to protect through the remedies provided under Rule 39 of the Rules of Court.14 Thus,
we can not hold the respondent liable on the ground that the complainant cites. If at all, the
respondent should have required, as a matter of sound established practice, the production of the
certificate of registration, but this is an altogether different matter that we do not here pass upon.
WHEREFORE, premises considered, the administrative charges for negligence and grave
misconduct against Ricardo R. Albano, Sheriff III, Metropolitan Trial Court, Branch 62, Makati City,
are DISMISSED. Costs against the complainant Golden Sun Finance Corporation.

SO ORDERED.

G.R. No. 183926               March 29, 2010

GENEROSA ALMEDA LATORRE, Petitioner,

vs.
LUIS ESTEBAN LATORRE, Respondent.

RESOLUTION

NACHURA, J.:

Before this Court is a Petition for Review on Certiorari1 under Rule 45, in relation to Rule 41, of the
Rules of Civil Procedure, assailing the decision2 of the Regional Trial Court (RTC) of Muntinlupa
City, Branch 256, dated April 29, 2008.

The facts of the case are as follows:

In October 2000, petitioner Generosa Almeda Latorre (petitioner) filed before the RTC of Muntinlupa
City a Complaint3 for Collection and Declaration of Nullity of Deed of Absolute Sale with application
for Injunction against her own son, herein respondent Luis Esteban Latorre (respondent), and one
Ifzal Ali (Ifzal).

Petitioner averred that, on September 28, 1999, respondent and Ifzal entered into a Contract of
Lease4 over a 1,244-square meter real property, situated at No. 1366 Caballero St., Dasmariñas
Village, Makati City (subject property). Under the said contract, respondent, as lessor, declared that
he was the absolute and registered owner of the subject property. Petitioner alleged that
respondent's declaration therein was erroneous because she and respondent were co-owners of the
subject property in equal shares.

Petitioner narrated that, on March 14, 1989, she and respondent executed their respective Deeds of
Donation, conveying the subject property in favor of The Porfirio D. Latorre Memorial & Fr. Luis
Esteban Latorre Foundation, Inc. (the Foundation). Thus, Transfer Certificate of Title (TCT) No.
1619635 was issued in the name of the Foundation. Subsequently, on September 2, 1994, petitioner
and respondent executed separate Deeds of Revocation of Donation and Reconveyance of the
subject property, consented to by the Foundation, through the issuance of appropriate corporate
resolutions. However, the Deeds of Revocation were not registered; hence, the subject property
remained in the name of the Foundation. Petitioner insisted, however, that respondent was fully
aware that the subject property was owned in common by both of them. To protect her rights as co-
owner, petitioner formally demanded from Ifzal the payment of her share of the rentals, which the
latter, however, refused to heed.

Moreover, petitioner averred that, on or about August 16, 2000, she discovered that respondent
caused the annotation of an adverse claim on the TCT of the subject property, claiming full
ownership over the same by virtue of a Deed of Absolute Sale6 dated March 21, 2000, allegedly
executed by petitioner in favor of respondent. Petitioner claimed that the deed was a falsified
document; that her signature thereon was forged by respondent; and that she never received ₱21
Million or any other amount as consideration for her share of the subject property. Thus, petitioner
prayed that Ifzal be enjoined from paying the rentals to respondent, and the latter from receiving said
rentals; that both Ifzal and respondent be ordered to pay petitioner her share of the rentals; and that
respondent be enjoined from asserting full ownership over the subject property and from committing
any other act in derogation of petitioner's interests therein. Petitioner also prayed for the payment of
moral and exemplary damages, litigation expenses, and costs of the suit.

Respondent immediately filed a Motion to Dismiss7 on the sole ground that the venue of the case
was improperly laid. He stressed that while the complaint was denominated as one for Collection
and Declaration of Nullity of Deed of Absolute Sale with application for Injunction, in truth the case
was a real action affecting title to and interest over the subject property. Respondent insisted that all
of petitioner's claims were anchored on her claim of ownership over one-half (½) portion of the
subject property. Since the subject property is located in Makati City, respondent argued that
petitioner should have filed the case before the RTC of Makati City and not of Muntinlupa City.

Ifzal also filed his motion to dismiss on the ground of want of jurisdiction, asserting that he was
immune from suit because he was an officer of the Asian Development Bank, an international
organization.

The RTC issued a Temporary Restraining Order dated November 6, 2000, restraining Ifzal from
paying his rentals to respondent and enjoining the latter from receiving from the former the aforesaid
rentals. The RTC also directed both Ifzal and respondent to pay petitioner her share of the rentals,
with the corresponding order against respondent not to commit any act in derogation of petitioner's
interest over the subject property.

In its Order dated January 2, 2001, the RTC denied respondent's motion to dismiss. The RTC ruled
that the nature of an action whether real or personal was determined by the allegations in the
complaint, irrespective of whether or not the plaintiff was entitled to recover upon the claims asserted
- a matter resolved only after, and as a result of, a trial. Thus, trial on the merits ensued.

Undaunted, respondent filed an Answer Ad Cautelam8 dated March 19, 2001, insisting, among
others, that the case was a real action and that the venue was improperly laid.9 Respondent narrated
that he was a former Opus Dei priest but he left the congregation in 1987 after he was maltreated by
his Spanish superiors. Respondent alleged that petitioner lived with him and his family from 1988 to
2000, and that he provided for petitioner's needs. Respondent also alleged that, for almost 20 years,
the Opus Dei divested the Latorre family of several real properties. Thus, in order to spare the
subject property from the Opus Dei, both petitioner and respondent agreed to donate it to the
Foundation. In 1994, when respondent got married and sired a son, both petitioner and respondent
decided to revoke the said donation. The Foundation consented to the revocation. However, due to
lack of funds, the title was never transferred but remained in the name of the Foundation.

Respondent asseverated that he and his wife took good care of petitioner and that they provided for
her needs, spending a substantial amount of money for these needs; that because of this, and the
fact that the rentals paid for the use of the subject property went to petitioner, both parties agreed
that petitioner would convey her share over the subject property to respondent; and that, on March
21, 2000, petitioner executed a Deed of Absolute Sale in favor of respondent.

Respondent further alleged that sometime in March to May 2000, the relationship of the parties, as
mother and son, deteriorated. Petitioner left respondent's house because he and his wife allegedly
ignored, disrespected, and insulted her.10 Respondent claimed, however, that petitioner left because
she detested his act of firing their driver.11 It was then that this case was filed against him by
petitioner.

In the meantime, in its Order dated May 15, 2003, the RTC dismissed petitioner's claim against Ifzal
because the dispute was clearly between petitioner and respondent.

On April 29, 2008, the RTC ruled in favor of respondent, disposing of the case in this wise:

While the case herein filed by the plaintiff involves recovery of possession of a real property situated
at 1366 Caballero St., Dasmariñas Village, Makati City, the same should have been filed and tried in
the Regional Trial Court of Makati City who, undoubtedly, has jurisdiction to hear the matter as
aforementioned the same being clearly a real action.

WHEREFORE, in view of the foregoing, the above-entitled case is hereby DISMISSED for want of
jurisdiction, all in pursuance to the above-cited jurisprudence and Rule 4 of the Rules of Court.

SO ORDERED.12

Aggrieved, petitioner filed her Motion for Reconsideration,13 which the RTC denied in its
Order14 dated July 24, 2008 for lack of merit.

Hence, this Petition, claiming that the RTC erred in treating the venue as jurisdiction and in treating
petitioner's complaint as a real action.

While the instant case was pending resolution before this Court, petitioner passed away on
November 14, 2009. Thus, petitioner's counsel prayed that, pending the appointment of a
representative of petitioner's estate, notices of the proceedings herein be sent to petitioner’s other
son, Father Roberto A. Latorre.15

As early as the filing of the complaint, this case had been marred by numerous procedural
infractions committed by petitioner, by respondent, and even by the RTC, all of which cannot be
disregarded by this Court.

First. Petitioner filed her complaint with the RTC of Muntinlupa City instead of the RTC of Makati
City, the latter being the proper venue in this case.

Sections 1 and 2, Rule 4 of the 1997 Rules of Civil Procedure provide an answer to the issue of
venue.16 Actions affecting title to or possession of real property or an interest therein (real actions)
shall be commenced and tried in the proper court that has territorial jurisdiction over the area where
the real property is situated. On the other hand, all other actions (personal actions) shall be
commenced and tried in the proper courts where the plaintiff or any of the principal plaintiffs resides
or where the defendant or any of the principal defendants resides.17 The action in the RTC, other
than for Collection, was for the Declaration of Nullity of the Deed of Absolute Sale involving the
subject property, which is located at No. 1366 Caballero St., Dasmariñas Village, Makati City. The
venue for such action is unquestionably the proper court of Makati City, where the real property or
part thereof lies, not the RTC of Muntinlupa City.18

In this jurisdiction, we adhere to the principle that the nature of an action is determined by the
allegations in the Complaint itself, rather than by its title or heading.19 It is also a settled rule that
what determines the venue of a case is the primary objective for the filing of the case.20 In her
Complaint, petitioner sought the nullification of the Deed of Absolute Sale on the strength of two
basic claims that (1) she did not execute the deed in favor of respondent; and (2) thus, she still
owned one half (½) of the subject property. Indubitably, petitioner's complaint is a real action
involving the recovery of the subject property on the basis of her co-ownership thereof.

Second. The RTC also committed a procedural blunder when it denied respondent's motion to
dismiss on the ground of improper venue.

The RTC insisted that trial on the merits be conducted even when it was awfully glaring that the
venue was improperly laid, as pointed out by respondent in his motion to dismiss. After trial, the RTC
eventually dismissed the case on the ground of lack of jurisdiction, even as it invoked, as
justification, the rules and jurisprudence on venue. Despite the conduct of trial, the RTC failed to
adjudicate this case on the merits.

Third. Respondent also did not do very well, procedurally. When the RTC denied his Motion to
Dismiss, respondent could have filed a petition for certiorari and/or prohibition inasmuch as the
denial of the motion was done without jurisdiction or in excess of jurisdiction or with grave abuse of
discretion amounting to lack of jurisdiction.21 However, despite this lapse, it is clear that respondent
did not waive his objections to the fact of improper venue, contrary to petitioner's assertion. Notably,
after his motion to dismiss was denied, respondent filed a Motion for Reconsideration to contest
such denial. Even in his Answer Ad Cautelam, respondent stood his ground that the case ought to
be dismissed on the basis of improper venue.

Finally, petitioner came directly to this Court on a Petition for Review on Certiorari under Rule 45, in
relation to Rule 41, of the Rules of Civil Procedure on alleged pure questions of law. In Murillo v.
Consul,22 we laid down a doctrine that was later adopted by the 1997 Revised Rules of Civil
Procedure. In that case, this Court had the occasion to clarify the three (3) modes of appeal from
decisions of the RTC, namely: (1) ordinary appeal or appeal by writ of error, where judgment was
rendered in a civil or criminal action by the RTC in the exercise of its original jurisdiction; (2) petition
for review, where judgment was rendered by the RTC in the exercise of its appellate jurisdiction; and
(3) petition for review to the Supreme Court.

The first mode of appeal, governed by Rule 41, is brought to the Court of Appeals (CA) on questions
of fact or mixed questions of fact and law. The second mode of appeal, covered by Rule 42, is
brought to the CA on questions of fact, of law, or mixed questions of fact and law. The third mode of
appeal, provided in Rule 45, is filed with the Supreme Court only on questions of law. 1avvphi1

A question of law arises when there is doubt as to what the law is on a certain state of facts, while
there is a question of fact when the doubt arises as to the truth or falsity of the alleged facts.23 Our
ruling in Velayo-Fong v. Velayo24 is instructive:

A question of law arises when there is doubt as to what the law is on a certain state of facts, while
there is a question of fact when the doubt arises as to the truth or falsity of the alleged facts. For a
question to be one of law, the same must not involve an examination of the probative value of the
evidence presented by the litigants or any of them. The resolution of the issue must rest solely on
what the law provides on the given set of circumstances. Once it is clear that the issue invites a
review of the evidence presented, the question posed is one of fact. Thus, the test of whether a
question is one of law or of fact is not the appellation given to such question by the party raising the
same; rather, it is whether the appellate court can determine the issue raised without reviewing or
evaluating the evidence, in which case, it is a question of law; otherwise it is a question of fact.25
In her Reply to respondent’s Comment,26 petitioner prayed that this Court decide the case on the
merits. To do so, however, would require the examination by this Court of the probative value of the
evidence presented,

taking into account the fact that the RTC failed to adjudicate this controversy on the merits. This,
unfortunately, we cannot do. It thus becomes exceedingly clear that the filing of the case directly with
this Court ran afoul of the doctrine of hierarchy of courts. Pursuant to this doctrine, direct resort from
the lower courts to the Supreme Court will not be entertained unless the appropriate remedy sought
cannot be obtained in the lower tribunals. This Court is a court of last resort, and must so remain if it
is to satisfactorily perform the functions assigned to it by the Constitution and by immemorial
tradition.27

Accordingly, we find no merit in the instant petition. Neither do we find any reversible error in the trial
court’s dismissal of the case ostensibly for want of jurisdiction, although the trial court obviously
meant to dismiss the case on the ground of improper venue.

WHEREFORE, the instant Petition is DENIED. No costs.

SO ORDERED.

TUMALAD V. VICENCIO

Although a building is an immovable; the parties to a contract may by agreement treat as

personal property that which by nature is a real property however they are estopped from
subsequently claiming otherwise.

FACTS:

Alberta Vicencio and Emiliano Simeon received a loan of P4, 800 from Gavino and Generosa
Tumalad. To guaranty said loan, Vicencio executed a chattel mortgage in favor of Tumalad over
their house of strong materials which stood on a land which was rented from the Madrigal &
Company, Inc. When Vicencio defaulted in paying, the house was extrajudicially foreclosed,
pursuant to their contract. It was sold to Tumalad and they instituted a Civil case in the
Municipal Court of Manila to have Vicencio vacate the house and pay rent.

The MTC decided in favor of Tumalad ordering Vicencio to vacate the house and pay rent until
they have completely vacated the house. Vicencio is questioning the legality of the chattel
mortgage on the ground that 1) the signature on it was obtained thru fraud and 2) the mortgage is
a house of strong materials which is an immovable therefore can only be the subject of a REM.
On appeal, the CFI found in favor of Tumalad, and since the Vicencio failed to deposit the rent
ordered, it issued a writ of execution, however the house was already demolished pursuant to an
order of the court in an ejectment suit against Vicencio for non-payment of rentals. Thus the case
at bar.

ISSUE:

Whether or not the chattel mortgage is void since its subject is an immovable

HELD:

NO.
Although a building is by itself an immovable property, parties to a contract may treat as
personal property that which by nature would be real property and it would be valid and good
only insofar as the contracting parties are concerned. By principle of estoppel, the owner
declaring his house to be a chattel may no longer subsequently claim otherwise.

When Vicencio executed the Chattel Mortgage, it specifically provides that the mortgagor cedes,
sells and transfers by way of Chattel mortgage. They intended to treat it as chattel therefore are
now estopped from claiming otherwise. Also the house stood on rented land which was held in
previous jurisprudence to be personalty since it was placed on the land by one who had only
temporary right over the property thus it does not become immobilized by attachment.

PRUDENTIAL BANK V. PANIS

153 SCRA 390
 

FACTS:
Spouses  Magcale  secured  a  loan  from  Prudential  Bank.    To  secure payment, they executed a real estate
mortgage over a residential building.  The mortgage included also the right to occupy the lot and the information
about the sales patent applied for by the spouses for the lot to which the building stood.  After securing the first loan,
the spouses secured another from  the  same  bank.    To  secure  payment,  another  real  estate  mortgage was
executed over the same properties.   
 
The Secretary of Agriculture then issued a Miscellaneous Sales Patent over the land which was later on mortgaged
to the bank.   
 
The spouses then failed to pay for the loan and the REM was extrajudicially foreclosed and sold in public auction
despite opposition from the spouses.  The respondent court held that the REM was null and void.
 

HELD:
A real estate mortgage can be constituted on the building  erected on the land belonging to another.
 
The  inclusion  of  building  distinct  and  separate  from  the  land  in  the  Civil Code can only mean that the
building itself is an immovable property.
 
While it is true that a mortgage of land necessarily includes in the absence of  stipulation  of  the  improvements 
thereon,  buildings,  still  a  building  in itself may be mortgaged by itself apart from the land on which it is built. 
Such a mortgage would still be considered as a REM for the building would
still be considered as immovable property even if dealt with separately and apart from the land.
 
The original mortgage on the building and right to occupancy of the land was  executed  before  the  issuance  of 
the  sales  patent  and  before  the government  was  divested  of  title  to  the  land.    Under  the  foregoing,  it  is
evident  that  the  mortgage  executed  by  private  respondent  on  his  own
building was a valid mortgage.
 
As to the second mortgage, it was done after the sales patent was issued and thus prohibits pertinent provisions of
the Public Land Act.