Republic of the Philippines

Court of Appeals
Cebu City

SPECIAL TWENTIETH DIVISION

JAIME B. YAP, CA-G.R. CV No. 07288

Plaintiff-Appellant,
Members:

-versus- *INGLES,J., Chairperson,

LAGURA-YAP, &
QUIROZ, JJ.
PENTAX HARDWARE, INC., and
SHERIFF IV EL CID R. CABALLES (in
his official capacity), Promulgated:
Defendants-Appellees. March 30, 2021

DECISION

LAGURA-YAP, J.:

For resolution is an appeal of the Order 1 dated December

27, 2012 of the Regional Trial Court (RTC), Branch 12 of Cebu
City in Civil Case No. CEB-38487 for injunction with prayer
for issuance of a temporary restraining order and nullification
of auction sale.

The Antecedent Facts

Defendant-appellee Pentax Hardware Inc., filed a suit for

collection of sum of money against SVC Tudtud Construction
and Development Corporation (“SVC Corporation”). The case
was raffled to the RTC, Branch 57 of Cebu City, docketed as
Civil Case No. CEB-24717.

On September 13, 2010, the trial court rendered a

Decision2 against SVC Corp, the fallo of which reads:

“For all the foregoing, the court finds the Defendant to

pay the Plaintiff the following sums:
*PerOffice Order No. 13-21-GTI dated March 29, 2021.
1Records, pp. 115-120.
2Records, pp. 25-29.
CA-G.R. CV No. 07288 2 of 11
Decision

1) P1,860,126.35 at 12% interest annually starting July

21, 1998 until fully paid and in case defendant still fails to
pay, the amount shall be satisfied through the enforcement
of plaintiff's lien over the Villa Illuminada, Townhomes, being
the furnisher or supplier of materials used in the
construction of defendant's townhouse project;

2) P80,000.00 as attorney's fees and P20,000.00 for

litigation expenses.

SO ORDERED.”

Consequently, a Writ of Execution was issued on August

14, 2011. Thereafter, Sheriff El Cid Caballes (defendant-
appellee) issued a Notice of Attachment/Levy Upon Realties3
against the nine real properties located in Barrio Agus,
Lapulapu City, registered in the name of SVC Corporation.

However, it appeared that Jaime Yap (plaintiff-appellant)

was also a creditor of SVC Corp. He filed a case for violation of
Batas Pambansa Bilang (BP 22) against Silvestre Tudtud, the
owner of SVC Corporation, after several checks (worth
Php5,000,000) he issued were dishonored by the bank. While
the criminal case was pending, plaintiff-appellant and
Silvestre Tudtud executed a Compromise Agreement4 in
February 2006, whereby Silvestre Tudtud agreed to transfer
ownership of his real properties to plaintiff-appellant in
exchange for the latter's desistance in the criminal case.

As mentioned in the Compromise Agreement, plaintiff-

appellant and SVC Corp executed a Deed of Dacion En Pago.5
The Transfer Certificates of Title covering the properties were
delivered to plaintiff-appellant. As mentioned in the Deed of
Dacion En Pago, the properties covered by TCT Nos. 36790,
36791, 36792, 36793, 36794 and 36795 were transferred to
plaintiff-appellant. However, the properties covered by TCT
Nos. 36791, 36792, 36793 and 36794 6 were among the
properties included in the Notice of Attachment/Levy issued
by sheriff El Cid Caballes.

3Records, pp. 35-37.

4Records, pp. 43-44.
5Records, pp. 45-48.
6Records, pp. 51-58.
CA-G.R. CV No. 07288 3 of 11
Decision

On February 16, 2012, plaintiff-appellant filed a

Petition/Complaint7 for injunction with prayer for the issuance
of a Temporary Restraining Order against defendant-appellee.
The case was raffled to the RTC, Branch 12, Cebu City,
docketed as Civil Case No. CEB-38487. Plaintiff-appellant
sought the nullification of the public auction on the ground
that he was the rightful owner of the properties that were
erroneously attached and included in the said auction.

On February 22, 2012, the presiding judge of the RTC,

Branch 12 issued an Order, holding the public auction of the
subject properties in abeyance while the main case remained
pending before the court.

The Assailed Order

On December 27, 2012, the RTC, Branch 12, Cebu City,

issued the challenged Order denying the petition:

“WHEREFORE, the prayer of plaintiff for the issuance

of a writ of injunction to enjoin herein defendants from
proceeding with the auction sale of the subject properties is
hereby DENIED. Without costs.

SO ORDERED.”

Plaintiff-appellant moved for the reconsideration of the

above Order but it was denied in the Order dated August 12,
2013.

Hence, the present appeal anchored on the following

grounds:8

A. THE REGIONAL TRIAL COURT COMMITED

GRAVE ERROR WHEN IT DENIED THE ISSUANCE OF A
WRIT OF INJUNCTION TO ENJOIN HEREIN DEFENDANT-
APPELLEE FROM PROCEEDING WITH THE AUCTION SALE
OF THE SUBJECT PROPERTIES NOTWITHSTANDING THE
FACT THAT THE SAME ARE NOT OWNED BY SVC TUDTUD
CONSTRUCTION & DEVELOPMENT CORPORATION.

7Records, pp. 2-13.

8Rollo, pp. 23-24.
CA-G.R. CV No. 07288 4 of 11
Decision

1. IT IS WELL-SETTLED THAT THE SHERIFF HAS

NO AUTHORITY TO ATTACH THE PROPERTY OF ANY
PERSON UNDER EXECUTION, EXCEPT THAT OF THE
JUDGMENT DEBTOR, WHICH IN THIS CASE IS NOT
HEREIN PLAINTIFF-APPELLANT, JAIME B. YAP.

2. THE EXISTENCE OF THE INSTANT CASE AND

THE DEFENDANT'S PARTICIPATION CONSTITUTE
REGISTRATION. THUS, NO VALID AUCTION SALE
CAN BE HAD WHEN THE PARTIES KNOW THAT IT IS
HEREIN PLAINTIFF-APPELLANT WHO OWNS THE
SUBJECT PROPERTIES.

B. THE REGIONAL TRIAL COURT COMMITTED

GRAVE ERROR WHEN IT INCLUDED THE SUBJECT
PROPERTIES IN THE ATTACHMENT/LEVY UPON REAL
PROPERTIES ALBEIT THE SAME ALREADY EXCEEDED
THE JUDGMENT DEBT IN FAVOR OF HEREIN
DEFENDANT-APPELEE, PENTAX.

C. THE REGIONAL TRIAL COURT COMMITTED

GRAVE ERROR WHEN IT FAILED TO RECOGNIZE THE
FACT THAT ACTUAL DELIVERY OF THE TITLE AND
PHYSICAL DELIVERY OF THE LOTS EFFECTIVELY
TRANSFERRED OWNERSHIP TO HEREIN PLAINTIFF-
APPELLANT.

D. THE REGIONAL TRIAL COURT COMMITTED

GRAVE ERROR WHEN IT DISREGARDED THE SETTLED
RULE THAT A THIRD-PARTY CLAIMANT, SUCH AS HEREIN
PLAINTIFF-APPELLANT, IS ENTITLED TO ASK FOR AN
INJUNCTIVE RELIEF EVEN FROM A DIFFERENT COURT.

Firstly, plaintiff-appellant argues that the trial court

erred in refusing to issue a writ of injunction. He claims that
the subject properties had already been transferred to him by
SVC Corporation, and as such, the properties can no longer be
subject to levy or attachment. In addition, the Compromise
Agreement and Deed of Dacion En Pago should be held
subsisting because there was no proof that they were
rescinded by the parties. Citing case law, 9 plaintiff-appellant
contends that a purchaser of real property at an execution
shall only acquires the right or title of the judgment debtor.

9Conrado Potenciano v. Napoleon Dineros, G.R. No. L-7614, May 31, 1955.
CA-G.R. CV No. 07288 5 of 11
Decision

While plaintiff-appellant admits that he did not register

the Compromise Agreement and Deed of Dacion En Pago with
the Register of Deeds, he claims that he is now the owner of
the subject properties because the certificates of title had
already been delivered to him. He contends that the delivery of
the certificates of title effectively transferred ownership of the
subject properties in his name.

Plaintiff-appellant further argues that the sheriff had no

authority to attach property not belonging to the judgment
debtor. As SVC Corporation was no longer the owner of the
property subject on the auction sale, then the attachment of
the property was erroneous. Plaintiff-appellant also points out
that SVC Corporation's judgment liability was only
Php1,860,126.35, which is way below the total value of the
subject properties. Thus, there was no need to include the
subject properties in the public auction.

Moreover, plaintiff-appellant posits that the existence of

the present case and Pentax Incorporated's participation
constitute registration. According to plaintiff-appellant, the
auction sale involving the subject properties was not valid
because defendant-appellee had knowledge that he was the
actual owner of the said properties.

Last. Plaintiff-appellant stresses that he had the right to

ask for a writ of injunction from the trial court to restrain the
execution sale of a judgment rendered by another court. The
settled rule is that a third-party claimant can seek for
injunctive relief from a different co-equal court to restrain the
sale of his attached property not belonging to the judgment
debtor. Based on the foregoing arguments, plaintiff-appellant
prays that the assailed Order be set aside and that a writ of
injunction be issued to enjoin defendant-appellee from
proceeding with the auction sale.

Defendant-appellee filed its Appellee's Brief10 to refute the

arguments raised by plaintiff-appellant. Essentially,
defendant-appellee argues that the trial court acted correctly

10Rollo, pp. 57-75.

CA-G.R. CV No. 07288 6 of 11
Decision

in denying his complaint for injunction as he is not entitled

thereto.

OUR RULING

The appeal lacks merit.

The principal question in this case is which between the

two transactions is superior: a prior unregistered sale or a
subsequent levy on execution?

All the issues raised in this appeal are closely intertwined

with this matter. As such, We will discuss this issue first
because its resolution will ultimately determine the resolution
of the case at bench.

A subsequent levy on
execution prevails over a
prior unregistered sale.

Here, there is no doubt that the Compromise Agreement

and Deed of Dacion En Pago was executed between plaintiff-
appellant and SVC Corporation before the levy on execution.
However, there is likewise no dispute that the said
instruments were never registered with the Register of Deeds.
Meanwhile, defendant-appellee was able to secure a favorable
Judgment in a collection case against SVC Corporation.
Consequently, a levy on execution was made against the
properties covered by the Compromise Agreement and Deed of
Dacion En Pago.

The parties are now contesting which of the foregoing

transactions should be given preferential right. On one hand,
plaintiff-appellant submits that the prior sale of the subject
properties in his favor is valid. Thus, the said properties
cannot be subject to a levy on execution as the properties are
no longer owned by SVC Corporation, the judgment debtor. On
the other hand, defendant-appellee counters that the
subsequent levy on attachment is superior because the
Compromise Agreement and Deed of Dacion En Pago were not
registered, and hence, not binding on third persons.
CA-G.R. CV No. 07288 7 of 11
Decision

We find for defendant-appellee. Based on established

jurisprudence, a levy on execution takes precedence over a
prior unregistered sale. The case of Valdevieso v. Damalerio11
is instructive on this point:

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
execution issued on the judgment, or until the judgment is
satisfied, or the attachment discharged or vacated in some
manner provided by law.

While the sale of the subject properties between plaintiff-

appellant and SVC Corporation is valid between them, such
sale will not bind third persons because it was not registered
with the Register of Deeds. Section 5112 of Presidential Decree
(P.D.) No. 1529 (The Property Registration Decree) expressly
provides that the registration of the deed is the operative act to
bind or affect the land insofar as third persons are concerned.
The fact that the certificates of title were delivered to plaintiff-
appellant is of no moment. What is crucial is that the said
Compromise Agreement and Deed of Dacion En Pago were not
11G.R. No. 133303 : February 17, 2005.
12Section 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.
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.
CA-G.R. CV No. 07288 8 of 11
Decision

registered with the Registry of Deeds at the time the levy on

execution was made.

On another note, plaintiff-appellant argues that the

existence of the present case for injunction and defendant-
appellee's participation herein are tantamount to registration
as the latter clearly had knowledge that he (plaintiff-appellant)
is the owner of the properties subject of the levy on execution.
He contends that where a 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 argument is absurd.

It must be emphasized that the instant case for

injunction was merely an offshoot of the levy on execution
relative to the collection case filed by defendant-appellee
against SVC Corporation. Thus, plaintiff-appellant cannot
claim that defendant-appellee had any knowledge that the
subject properties had already been transferred to him at the
time of the levy because defendant-appellee is not privy to the
said transaction. Additionally, the record is bereft of any
evidence showing that defendant-appellee had actual or
implied knowledge of the private transaction executed between
plaintiff-appellant and SVC Corporation.

Hence, We agree with the following observation made by

the RTC:13

“In this case, plaintiff averred that the filing of the

instant case against Pentax and its participation therein
constitutes notice to Pentax of the claim or right of plaintiff
to the subject properties. Clearly, Pentax has no knowledge
of the prior existing interest of the plaintiff at the time of the
attachment. There is no special relationship between Pentax
and plaintiff sufficient to charge the former with an implied
knowledge of the state of the latter's properties. Neither is
there any evidence of knowledge on the part of Pentax of any
third-party interest in the subject properties at the time of
the attachment. Unlike in the sale of real property, an
attaching creditor is not expected to inspect the property
13Records, p. 119.
CA-G.R. CV No. 07288 9 of 11
Decision

being attached, as it is the sheriff who does the actual act of

attaching the property.”

Withal, it must be emphasized that if a property levied by

virtue of a writ of execution is claimed by a third person who is
not the judgment obligor, Section 16 14 of Rule 39 of the 1997
Rules of Civil Procedure provides for the remedy of such third
party claimant.

Such remedy is discussed in detail in Power Sector

Assets And Liabilities Management Corporation (PSALM) v.
Maunlad Homes Inc.15. Under the Section 16, Rule 39, the
third-party claimant may execute an affidavit of his title or
right to the possession of the property levied, and serve the
same to the officer making the levy and a copy thereof to the
judgment creditor. This remedy is known as terceria. The
officer shall not be bound to keep the property, unless the
judgment creditor files a bond approved by the court to
indemnify the third-party claimant in a sum not less than the
value of the property levied on. An action for damages may be
brought against the officer within one hundred twenty (120)
days from the date of the filing of the bond. The same section
also provides that a third-party claimant may file a proper
action to vindicate his claim to the levied property. The proper
action mentioned in Section 16 would have for its object the
recovery of ownership or possession of the property seized by
the sheriff, as well as damages resulting from the allegedly
wrongful seizure and detention thereof despite the third party
claim. It may be brought against the sheriff and such other
parties as may be alleged to have colluded with him in the
14Section 16. Proceedings where property claimed by third person. — If the property levied on is claimed by any person
other than the judgment obligor 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 the same upon the officer making the levy and
copy thereof, stating the grounds of such right or tittle, and a serves the same upon the officer making the levy and a
copy thereof upon the judgment obligee, the officer shall not be bound to keep the property, unless such judgment
obligee, on demand of the officer, files a bond approved by the court to indemnity the third-party claimant in a sum not
less than the value of the property levied on. In case of disagreement as to such value, the same shall be determined by
the court issuing the writ of execution. 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 officer shall not be liable for damages for the taking or keeping of the property, to any third-party claimant if such
bond is filed. Nothing herein contained shall prevent such claimant or any third person from vindicating his claim to the
property in a separate action, or prevent the judgment obligee from claiming damages in the same or a separate action
against a third-party claimant who filed a frivolous or plainly spurious claim.
When the writ of execution 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 or levying officer is sued for damages as a result of the
levy, 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 such funds as may be appropriated for the purpose. (17a)
15G.R. No. 215933, February 8, 2017.
CA-G.R. CV No. 07288 10 of 11
Decision

supposedly wrongful execution proceedings, such as the

judgment creditor himself. If instituted by a stranger to the
suit in which execution has issued, such proper action should
be a totally separate and distinct action from the former suit.

It is evident that plaintiff-appellant failed to comply with

the remedies available to him under Section 16. Instead, he
filed a case for injunction before the RTC, Branch 12 of Cebu
City to restrain the public auction relative to a Judgment
rendered by the RTC, Branch 57. This cannot be permitted.
The doctrine of judicial stability or non-interference in the
regular orders or judgments of a co-equal court is an
elementary principle in the administration of justice: no court
can interfere by injunction with the judgments or orders of
another court of concurrent jurisdiction having the power to
grant the relief sought by the injunction. The rationale for the
rule is founded on the concept of jurisdiction: a court that
acquires jurisdiction over the case and renders judgment
therein has jurisdiction over its judgment, to the exclusion of
all other coordinate courts, for its execution and over all its
incidents, and to control, in furtherance of justice, the conduct
of ministerial officers acting in connection with this
judgment.16

We brush aside plaintiff-appellant's assertion that there

was no need to include the subject properties in the public
auction because the value of the said properties exceeds the
judgment liability in the collection case. This matter should be
raised in the collection case, and not in the present case for
injunction.

WHEREFORE, the appeal is DENIED. The Order dated

December 27, 2012 of the Regional Trial Court (RTC), Branch
12 of Cebu City in Civil Case No. CEB-38487 is AFFIRMED.

SO ORDERED.

ORIGINAL SIGNED
MARILYN B. LAGURA-YAP
Associate Justice

16Atty. Cabili v. Judge Balindong,A.M. No. RTJ-10-2225, September 6, 2011 (formerly A.M. OCA I.P.I. No. 09-3182-RTJ).
CA-G.R. CV No. 07288 11 of 11
Decision

WE CONCUR:

GABRIEL T. INGLES ROBERTO P. QUIROZ

Associate Justice Associate Justice

CERTIFICATION

Pursuant to Article VIII, Section 13 of the Constitution, it

is hereby certified that the conclusions in the above decision
were reached in consultation before the case was assigned to
the writer of the opinion of the Court.

GABRIEL T. INGLES
Associate Justice
Chairperson, Special Twentieth Division