UP Law BGC Eve 2024 Rural Bank v.

Manila Mission
Civil Procedure Post-Judgment Remedies  Execution, satisfaction and
effect of judgments (Rule 39)
SUMMARY
Spouses Soliven sold the land to Manila Mission. Before the
deed of sale was even registered, a Writ of Attachment was
issued by RTC in favor of Rural Bank. Manila Mission filed a
Motion to Release Property from Attachment. This was denied
by the RTC and CA. Rural Bank argues that, as an attaching
creditor, it has a better right over the property than the vendee
who bought the land but did not register the sale. SC ruled in
favor of Rural Bank.
2009 Chico-Nazario
DOCTRINE
Rule 57, Sec. 14 provides the remedies of a third person
claiming to be the owner of an attached property. It may either
be by (1) filing with the sheriff a third-party claim, in the form of
an affidavit, (2) intervening in the main action, with prior leave of
court, which allows a third person to vindicate his/her claim to
the attached property in the same action, or (3) filing a separate
and independent action, which allows a third person to vindicate
his/her claim to the attached property in a separate action.

Filing a Motion to Release Property from Attachment may be

considered as a compliance of Rule 57.

Levy on attachment, duly registered, takes preference over a

prior unregistered sale.

FACTS

 Spouses Soliven are registered owners of a parcel of land. On 1992, Spouses Soliven sold the land to Manila Mission. However,
it was only on 1994 when the TCT under Soliven was canceled and new TCT issued to Manila Mission.
 RTC
o In the meantime (in 1993), Rural Bank filed a complaint against Soliven for sum of money including the prayer for
issuance of a Writ of Preliminary Attachment.
o RTC issued a Writ of Attachment against the property. This was annotated to the TCT of Soliven, which was carried over
to the new TCT of Manila Mission.
o While this case was pending, Manila Mission requested the sheriff to release the said property, by filing an Affidavit of
Title and Ownership, but the sheriff advised Manila Mission to file a motion directly with RTC.
o Manila Mission then filed a Motion to Release Property from Attachment.
o RTC discharged the property from attachment.
o Rural Bank filed MR arguing that it had better right over the property, and that the motion filed by Manila Mission was an
improper remedy.
o RTC denied Rural Bank’s MR.
 CA
o Rural Bank filed petition for certiorari with the SC alleging RTC’s grave abuse of discretion. But this was referred to CA.
o CA dismissed Rural Bank’s petition.
 SC
o Rural Bank filed petition for review with SC:
 (1) It insists that it has a better right to the subject property than Manila Mission. The attachment of the property
was made prior to the registration of the sale to Manila Mission. Citing Ruiz v. CA, an attaching creditor
acquires a valid title as against a vendee who previously brought the property but failed to register his deed of
sale.
 (2) Manila Mission availed itself of the wrong remedy, pursuant to Rule 57, Sec. 14, ROC providing the proper 3
remedies
o Manila Mission argues:
 Manila Mission tried to pursue the first remedy of Rule 57, Sec. 14, i.e., filing a third-party claim with the sheriff,
by filing an Affidavit of Title and Ownership, but the sheriff advised to file a motion to RTC directly. The CA
recognized this motion as an invocation of Manila Mission of the power of control and supervision of RTC over
the sheriff.

RATIO

W/N the filing of Motion to Release Property from Attachment is the appropriate remedy?

YES. THE FILING OF THE MOTION WITH RTC MAY BE CONSIDERED AS THE REMEDIES UNDER RULE 57, SEC. 14.

 Rule 57, Sec. 14 provides the remedies of a third person claiming to be the owner of an attached property:
o Filing with the sheriff a third-party claim, in the form of an affidavit
o Intervening in the main action, with prior leave of court, which allows a third person to vindicate his/her claim to the
attached property in the same action
o Filing a separate and independent action, which allows a third person to vindicate his/her claim to the attached
property in a separate action
 IN THIS CASE:
o First Remedy complied: The filing of the Motion to Release Property from Attachment can be deemed as a mere
continuation of the third-party claim of Manila Mission, in the form of its Affidavit of Title and Ownership served upon
the sheriff in accord with the first paragraph of Rule 57, Sec. 14.
o Second Remedy complied, alternatively: The Motion to Release Property from Attachment may also be considered
as a Motion for Intervention pursuant to the second paragraph, in relation to Rule 19. Manila Mission may intervene in
the same case and has the personality to intervene. When RTC allowed the motion, it is deemed to have allowed
Manila Mission to intervene.
o No strict compliance: Even if the Motion to Release Property from Attachment does not strictly comply with Sec. 14,
Rule 57, RTC may still allow and act upon said motion to render substantive justice.
 Who has the better right: the previous yet unregistered sale or the subsequent but duly annotated attachment?

SUBSEQUENT BUT DULY ANNOTATED ATTACHMENT, EXCEPT IF CREDITOR HAS PREVIOUS KNOWLEDGE OF THE SALE.

 Ruiz v. CA: 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.
 Valdevioso v. Damalerio: Levy on attachment, duly registered, takes preference over a prior unregistered sale. Registration is
the operative act which gives validity to the transfer or creates a lien upon the land.
o 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.
 EXCEPTION:
o Knoweldge of the unregistered sale by the attaching creditor is deemed equivalent to registration.
o 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.
o The Torrens system cannot be used as a shield for the commission of fraud.
 IN THIS CASE:
o Manila Mission argues that when the writ of attachment was implemented, a church was already being constructed.
Since Rural Bank did not deny these allegations, Rural Bank tacitly recognized the construction.
o Rural Bank argues that Manila Mission failed to present evidence to prove that the church was being constructed at
the time the property was attached.
o SC explained that even if the church was indeed built at the time of the attachment, this does not confirm knowledge
of previous conveyance. The Motion of Manila Mission merely mentions the construction of the church and does not
charge Rural Bank with knowledge of the construction. There was nothing to deny from the part of Rural Bank.
o Therefore, the exception does not apply.
o Rural Bank has better right over the property.

FALLO

Petition is GRANTED. Rural Bank has the right over the property.