G.R. No.

133303 February 17, 2005

BERNARDO VALDEVIESO, petitioner,
vs.
CANDELARIO DAMALERIO AND AUREA C. DAMALERIO, respondents.
DECISION
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
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
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.
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.
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 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.
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 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.
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.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.
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.
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. 43082 dated 25
September 1997, and its Resolution dated 10 February 1998, are hereby AFFIRMED. No costs.
SO ORDERED.
G.R. No. 207938, October 11, 2017
EVY CONSTRUCTION AND DEVELOPMENT CORPORATION,, Petitioner, v. VALIANT ROLL
FORMING SALES CORPORATION, Respondent.
DECISION
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 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 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 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 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
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
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 resolve the application for preliminary injunction. If no action is
taken on the 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 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
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 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.
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 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 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. Therefore, the trial court acted within the bounds of its discretion.
WHEREFORE, the Petition is DENIED.
SO ORDERED.

G.R. No. 130223 August 19, 2009

RURAL BANK OF STA. BARBARA [PANGASINAN], INC., Petitioner,
vs.
THE MANILA MISSION OF THE CHURCH OF JESUS CHRIST OF LATTER DAY SAINTS,
INC., Respondent.
DECISION
CHICO-NAZARIO, J.:
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 CA-G.R. SP No. 41042 affirming
the Orders dated 9 October 1995 and 27 February 1996 of the Regional Trial Court (RTC),
Branch 43, of Dagupan City, in Civil Case No. D-10583.
Spouses Tomas and Maria Soliven (spouses Soliven) were the registered owners, under Transfer
Certificate of Title (TCT) No. T-125213, of a parcel of land located in Barangay Maninding, Sta.
Barbara, Pangasinan (subject property). On 18 May 1992, the spouses Soliven sold the subject
property to respondent Manila Mission of the Church of Jesus Christ of Latter Day Saints, Inc.
(Manila Mission). However, it was only on 28 April 1994 when TCT No. T-125213 in the name of
the spouses Soliven was cancelled, and TCT No. 195616 was issued in the name of respondent.
In the meantime, on 15 April 1993, petitioner Rural Bank of Sta. Barbara (Pangasinan), Inc. filed
with the RTC a Complaint against the spouses Soliven 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.
In an Order dated 7 May 1993, the RTC ordered the issuance of the Writ of Attachment
petitioner prayed for, to wit:
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
Upon the filing by petitioner of the required bond, the RTC issued the Writ of Attachment on 21
May 1993. Acting on the authority of said Writ, Sheriff Reynaldo C. Daray attached the subject
property, which was then still covered 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 petitioner was issued
on 28 April 1994, the annotation on the Writ of Attachment was carried from the former to the
latter.
While Civil Case No. D-10583 was still pending before the RTC, respondent executed an
Affidavit claiming title and ownership over the subject property, and requested the Ex-Officio
Provincial and City Sheriff to release the said property from attachment. The Sheriff, however,
advised respondent to file a motion directly with the RTC.
On 16 March 1995, respondent filed with the RTC, in Civil Case No. D-10583, a Motion to
Release Property from Attachment, to which petitioner, in turn, filed an Opposition. After
hearing, the RTC issued an Order on 9 October 1995 discharging the subject property from
attachment. The RTC decreed in said Order:
WHEREFORE, the Court hereby directs the Ex-Officio Provincial Sheriff of Pangasinan and City
Sheriff of Dagupan to discharge and release the subject land from attachment and orders the
notice of attachment on T.C.T. No. 195616 of the Register of Deeds of Pangasinan be cancelled.3
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 Release Property from Attachment, was the
improper remedy. In an Order 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:
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 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 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.
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 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 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:
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 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 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 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.
DECISION
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, 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. 56683 5 (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 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 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 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.
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)
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, 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 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.

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 Sale 5 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 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 letter 11 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
Complaint13 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 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 Decision15 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.
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 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 Code22 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 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 (₱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
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.
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.
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 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
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.
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.