On 14 August 1996, petitioner filed a third-party claim in Civil Case No.
5748 to discharge or annul
SECOND DIVISION
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.
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 Appeals10and Santos v. Bayhon,11 it held that the levy of the property by virtue of
attachment is lawful only when the levied property indubitably belongs to the defendant. Applying
the rulings in the cited cases, it opined that although defendant Lorenzo Uy remained the
registered owner of the property attached, yet the fact was that he was no longer the owner
thereof as it was already sold earlier to petitioner, hence, the writ of attachment was
unlawful.1awphi1.nét
Respondents sought reconsideration thereof which was denied by the trial court in a resolution
dated 03 January 1997.12
From the unfavorable resolution of the trial court in the third-party claim, respondents appealed to
the Court of Appeals. The appellate court reversed the resolution and by judgment promulgated
on 25 September 1997, it declared that an attachment or levy of execution, though posterior to the
sale, but if registered before the sale is registered, takes precedence over the sale.13 The writ of
attachment in favor of the respondents, being recorded ahead of the sale to petitioner, will
therefore take precedence.
Petitioner moved for reconsideration but this was denied by the Court of Appeals in its Resolution
of 10 February 1998.14
Hence, this Petition for Review on Certiorari.
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.l^vvphi1.net Manliguez is
similar to Santos, except that the former involved buildings and improvements on a piece of land.
To stress, in both cited cases, the registration of the sale, if any, of the subject properties was
never in issue.1awphi1.nét
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.

THIRD DIVISION
October 11, 2017
G.R. No. 207938
EVY CONSTRUCTION AND DEVELOPMENT CORPORATION, Petitioner
vs.
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 Resolution3of 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).1âwphi1 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. 134890.5This annotation was by virtue of the Writ of Preliminary Attachment issued by Branch
46, Regional Trial Court, San Fernando, Parnpanga 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
₱745,700.00 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 ofTCT 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 Resolution22dated 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 ₱745,700.00
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 party is ordered to do or
refrain from doing a certain act."32 It may be filed as a main action before the trial court 33 or as a
provisional remedy in the main action.34 Bacolod 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 in-eparable 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 H[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 perforn1ance 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.1âwphi1 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 issued1 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.1âwphi1 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.1âwphi1The 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"77to withdraw, "notwithstanding the considerable costs and expenses [it]
already incurred."78This 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."79 In 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 the 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.
 Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
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 Decision1dated 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?
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.

If the allegation of respondent Manila Mission anent the building of the chapel even before the SO ORDERED.
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.
 Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
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. 566835 (for RT-55703), 566846 (for RT-55702),
566857 (for RT-55704) and 566868 (for RT-55705).
On February 8, 1993, petitioner wrote the Registry of Deeds of Quezon City requesting for the
annotation of the notice of levy, and, subsequently, the annotation of a favorable decision of this
Court rendered on August 3, 1992, on the new TCTs issued to respondents.
On February 10, 1993, Samuel C. Cleofe, the Quezon City Register of Deeds, informed
respondents that the letter-request for re-annotation of notice of levy had been entered in the
Primary Entry Book 574/Volume 24, and asked them to surrender their owners’ duplicate copies of
TCT Nos. 56683 to 56686.9
Immediately upon receipt of the said letter, respondents verified the original 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.
 Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
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 Code 22should 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,28citing 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 prevent 30 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.1âwphi1The 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.
 Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 185604 June 13, 2013
REPUBLIC OF THE PHILIPPINES, Petitioner,
vs.
EDWARD M. CAMACHO, Respondent.
DECISION
VILLARAMA, JR., J.:
Before this Court is a petition1 for review on certiorari under Rule 45 of the 1997 Rules of Civil
Procedure, as amended, seeking the reversal of the Decision2 of the Court of Appeals (CA) in CA-
G.R. CV No. 87390, which affirmed the Decision3 of the Regional Trial Court (RTC) of Villasis,
Pangasinan, Branch 50 in Land Registration Case No. V -0016.
The facts follow.
On March 6, 2003, respondent Edward M. Camacho filed a petition 4 denominated as "Re: Petition
for Reconstitution of the Original Title of O.C.T. No. (not legible) and Issuance of Owner's
Duplicate Copy" before the RTC.
In support thereof, respondent alleged that the Original Certificate of Title5 (OCT) sought to be
reconstituted and whose number is no longer legible due to wear and tear, is covered by Decree
No. 444263, Case No. 3732, Record No. 221416 issued in the name of Spouses Nicasio Lapitan
and Ana Doliente (Spouses Lapitan) of Alcala, Pangasinan. Respondent also alleged that the
owner’s duplicate copy of the OCT is in his possession and that he is the owner of the two parcels
of land covered by the aforementioned OCT by virtue of a Deed of Extra-Judicial Partition with
Absolute Sale7 (the Deed) executed on December 26, 2002 by the heirs of Spouses Lapitan in his
favor. Said OCT covers two parcels of land located in San Juan, Alcala, Pangasinan, (Lot No. 1)
and Namulatan,8Bautista, Pangasinan (Lot No. 2) with the following technical descriptions:
A parcel of land (Lot No. 1, plan Psu- 53673), situated in the Barrio of San Juan, Municipality of
Alcala. Bounded on the NE. by property of Benito Ferrer; on the S. by an irrigation ditch and
property of Marcelo Monegas; and on the W. by Lot No. 2. Beginning at a point marked "1" on
plan, being S. 0 deg. 53’ W., 3830.91 m. from B. L. L. M. No. 1, Alcala; thence S. 87 deg. 22’ W.,
44.91 m. to point "2"; thence N. 5 deg. 25’ W., 214.83 m. to point "3"; thence S. 17 deg. 06’ E.,
221.61 m. to the point of beginning; containing an area of four thousand eight hundred and
eighteen square meters (4,818), more or less. All points referred to are indicated on the plan and
on the ground are marked by old P. L. S. concrete monuments; bearings true; declination 0 deg.
40’ E.; date of survey, April 19-21, 1926; and
A parcel of land (Lot No. 2, plan Psu-53673), situated in the Barrio of Namulatan, Municipality of
Bautista. Bounded on the N. by properties of Hipolito Sarmiento and Ciriaco Dauz; on the E. by
Lot No.1; and on the SW. by property of Nicasio Lapitan vs. Felix Bacolor. Beginning at a point
marked "1" on plan, being S. 2 deg. 40’ W., 3625.25 m. from B. L. L. M. No. 1, Alcala; thence N.
80 deg. 47’ E., 3.50 m. to point "2"; thence N. 86 deg. 53’ E., 40.64 m. to point "3"; thence S. 5
deg. 25’ E., 214.83 m. to point "4"; thence N. 16 deg. 57’ W., 220.69 m. to the point of beginning;
containing an area of four thousand seven hundred and fortyfour square meters (4,744), more or
less. All points referred to are indicated on the plan and on the ground are marked by old P. L. S.
concrete monuments; bearings true; declination 0 deg. 40’ E.; date of survey April 19-21, 1926.9
Respondent attached to his petition photocopies of the Deed; the OCT; Tax Declaration No.
485810; a Certification11dated January 13, 2003 issued by the Office of the Register of Deeds of
Lingayen, Pangasinan stating that the file copy of the OCT could not be found and is considered
lost and beyond recovery; and Decree No. 444263.12
Upon a Show-Cause Order13 of the RTC, respondent filed an Amended Petition14 dated May 21,
2003, alleging that the subject properties bear no encumbrance; that there are no improvements
therein; that there are no other occupants thereof aside from respondent; and that there are no
deeds or instruments affecting the same that had been presented for registration. He further
alleged that "the land in issue is bounded on the North by the land covered by Plan Psu-53673; on
the North by the properties of Hipolito Sarmiento and Cipriano Dauz,15 residents of Anulid, Alcala,
Pangasinan; on the West by Lot No. 3; and on the Southwest by the properties of Nicasio Lapitan
vs. Felix Bacolor who are also residents of Anulid, Alcala, Pangasinan."16 Respodent intimated
that he desires to have the office/file copy of the OCT reconstituted based on the Technical
Description provided by the Chief of the General Land Registration Office and thereafter, to be
issued a second owner’s duplicate copy in lieu of the old one.
On May 30, 2003, the RTC issued an Order17 finding the respondent’s petition sufficient in form
and substance and setting the same for hearing on September 29, 2003. The said Order is herein
faithfully reproduced as follows:
ORDER
In a verified petition, petitioner Edward Camacho, as vendee of the parcels of land located in San
Juan, Alcala, Pangasinan, and Namulatan, Bautista, Pangasinan, covered by Decree No. 444263,
Case No. 3732, G.L.R.O. No. 22141, formerly issued in the names of spouses Nicasio Lapitan
and Ana Doliente, of Alcala, Pangasinan, under an Original Certificate of Title the number of which
is not legible due to wear and tear, seeks an order directing the proper authorities and the
Registrar of Deeds, Lingayen, Pangasinan, to reconstitute the office file copy of said Original
Certificate of Title based on the technical description thereof and to issue a second owner’s
duplicate copy of the same in lieu of the old one.
Being sufficient in form and substance, the petition is set for hearing on September 29, 2003, at
8:30 in the morning, before this Court, on which date, time and place, all interested persons are
enjoined to appear and show cause why the same should not be granted.
Let this order be published twice in successive issues of the Official Gazette at the expense of the
petitioner.
Likewise, let copies of this Order and of the Amended Petition be posted in conspicuous places in
the Provincial Capitol and the Registry of Deeds, both in Lingayen, Pangasinan, the Municipal
Halls of Alcala and Bautista, Pangasinan, and the Barangay Halls of San Juan, Alcala,
Pangasinan and Namulatan, Bautista, Pangasinan, and the Office of the Solicitor General, Manila.
Finally, furnish copies of this Order, by registered mail, at the expense of the petitioner, to the
following:
1. Hipolito Sarmiento;
2. Cipriano Dauz;
3. Nicasio Lapitan; and
4. Felix Bacolor.
all of Brgy. Anulid, Alcala, Pangasinan.
SO ORDERED.18
Thereafter, copies of the said order were posted on seven bulletin boards: at the Pangasinan
Provincial Capitol Building, at the Alcala and Bautista Municipal Buildings, at the San Juan and
Namulatan Barangay Halls, at the office of the Register of Deeds in Lingayen, Pangasinan and at
the RTC.19 The order was also published twice in the Official Gazette: on August 18, 2003
(Volume 99, Number 33, Page 5206), and on August 25, 2003 (Volume 99, Number 34, Page
5376).20
21
However, on January 22, 2004, respondent filed his second Amended Petition averring that "the
land in issue is bounded on the North by the land of Ricardo Acosta, a resident of Laoac, Alcala,
Pangasinan; on the South by the property of Greg Viray,22 a resident of Laoac, Alcala,
Pangasinan; on the West by the land of Roque Lanuza,23 a resident of Laoac, Alcala, Pangasinan;
and on the East by the lot of Juan Cabuan,24 a resident of Laoac, Alcala, Pangasinan."25 On March
4, 2004, respondent filed a Motion26 with Leave of Court to admit his second Amended Petition,
which the RTC granted in its Order27 dated March 4, 2004, directing therein that the persons
mentioned in the second Amended Petition be notified by registered mail.
During the hearing, the following witnesses were presented: (1) respondent 28 who, among others,
presented the original owner’s duplicate copy of the OCT before the RTC; 29 (2) the tenant of the
adjoining lot (Western portion) Roque Lanuza who testified that he tilled the adjoining lots, that he
has personal knowledge that respondent bought said lots from the heirs of the Spouses Lapitan,
and that he was present when the lots were surveyed;30 (3) adjoining owners Gregorio Viray31 and
Ricardo Acosta32 who testified that they were notified of the proceedings and interposed no
objection to the petition; and (4) Arthur David (Mr. David), Records Custodian of the Register of
Deeds of Lingayen, Pangasinan who testified that Atty. Rufino Moreno, Jr., Registrar of Deeds
had issued the Certification that the OCT subject of the petition can no longer be found in the
Office of the Register of Deeds.33 In his subsequent testimony, Mr. David reported to the RTC that
the name of Nicasio Lapitan cannot be located in the Index Cards of titles as some are missing
and destroyed. Upon questioning, Mr. David testified that the number of the OCT sought to be
reconstituted may be referred to in the decree issued in the name of Nicasio Lapitan which
allegedly could be found in the Land Registration Authority (LRA).34
On May 23, 2005, the LRA rendered a Report35 addressed to the RTC which pertinently stated, to
wit:
(1) The present amended petition seeks the reconstitution of Original Certificate of Title
No. (not legible), allegedly lost or destroyed and supposedly covering Lot Nos. 1 and 2 of
plan Psu-53673, situated in the Barrio of San Juan, Municipality of Alcala and Barrio of
Namulatan, Municipality of Bautista, respectively, Province of Pangasinan, on the basis of
the owner’s duplicate thereof, a reproduction of which, duly certified by Atty. Stela Marie
Q. Gandia-Asuncion, Clerk of Court VI, was submitted to this Authority;
(2) Our records show that Decree No. 444263 was issued on July 18, 1931 covering Lot
Nos. 1 and 2 of plan Psu-53673, in Cadastral Case No. 3732, GLRO Record No. 22141 in
favor of the Spouses Nicasio Lapitan and Ana Doliente;
(3) The technical descriptions of Lot Nos. 1 and 2 of plan Psu-53673, appearing on the
reproduction of Original Certificate of Title No. (not legible) were found correct after
examination and due computation and when plotted in the Municipal Index Sheet No.
451/1027, do not appear to overlap previously plotted/decreed properties in the area.
The government prosecutor deputized by the Office of the Solicitor General (OSG) 36 participated
in the trial of the case but did not present controverting evidence.37
On March 9, 2006, the RTC rendered the assailed Decision,38 the dispositive portion of which
reads:
WHEREFORE, the Court, finding the documentary as well as the parole (sic) evidence adduced to
be adequate and sufficiently persuasive to warrant the reconstitution of the Original Certificate of
Title covered by Decree No. 444263, Cadastral Case No. 3732, GLRO Record No. 22141, and
pursuant to Section 110, PD No. 1529 and Sections 2 (d) and 15 of RA No. 26, hereby directs the
Register of Deeds at Lingayen, Pangasinan, to reconstitute said original certificate of title on the
basis of the decree of registration thereof, without prejudice to the annotation of any subsisting
rights or interests not duly noted in these proceedings, if any, and the right of the Administrator,
Land Registration Authority, as provided for in Sec. 16, Land Registration Commission (now
NALTDRA) Circular No. 35, dated June 13, 1983, and to issue a new owner's duplicate copy
thereof.
SO ORDERED.39
On April 4, 2006, petitioner Republic of the Philippines, through the OSG, filed a Motion for
Reconsideration40 which was denied by the RTC in its Resolution41 dated May 24, 2006 for lack of
merit. The RTC opined that while the number of the OCT is not legible, a close examination of the
entries therein reveals that it is an authentic OCT per the LRA’s findings. Moreover, the RTC held
that respondent complied with Section 2 of Republic Act (R.A.) No. 26 42considering that the
reconstitution in this case is based on the owner’s duplicate copy of the OCT.
Petitioner appealed to the CA.43 By Decision44 dated July 31, 2008, the CA affirmed the RTC’s
findings and ruling, holding that respondent’s petition is governed by Section 10 of R.A. No. 26
since the reconstitution proceedings is based on the owner’s duplicate copy of the OCT itself. The
CA, invoking this Court’s ruling in Puzon v. Sta. Lucia Realty and Development, Inc., 45 concluded
that notice to the owners of the adjoining lots is not required. Moreover, the CA opined that Decree
No. 444263 issued on July 18, 1931 covering Lot Nos. 1 and 2 in the name of Spouses Lapitan
exists in the Record Book of the LRA as stated in the LRA’s Report. The CA ratiocinated that the
LRA’s Report on said Decree tallies with the subject OCT leading to no other conclusion than that
these documents cover the same subject lots. Petitioner filed its Motion for
Reconsideration46 which the CA, however, denied in its Resolution47 dated November 20, 2008.
Hence, this petition based on the following grounds, to wit:
1. THE COURT OF APPEALS ERRED WHEN IT RULED THAT THE TRIAL COURT
CORRECTLY GRANTED THE PETITION FOR RECONSTITUTION EVEN IF THE
ORIGINAL CERTIFICATE OFTITLE NUMBER IS NOT LEGIBLE; and
2. THE COURT OF APPEALS ERRED WHEN IT RULED THAT THE TRIAL COURT
CORRECTLY GRANTED THE PRAYER FOR THE ISSUANCE OF A SECOND
OWNER’S DUPLICATE.48
Petitioner through the OSG avers that respondent does not have any basis for reconstitution
because the OCT per se is of doubtful existence, as respondent himself does not know its
number. According to the OSG, this fact alone negates the merits of the petition for reconstitution
as held by this Court in Tahanan Development Corporation v. Court of Appeals, et al.49 Moreover,
the OSG highlights that the Deed, the tax declaration for the year 2003, and the Register of Deeds
Certification all indicated that the number of the OCT is not legible. The OSG also stresses that
nowhere in the records did the LRA acknowledge that it has on file the original copy of Decree No.
444263 from which the alleged OCT was issued and that said Decree did not at all establish the
existence and previous issuance of the OCT sought to be reconstituted. The OSG notes that the
RTC erred, as found in the dispositive portion of its decision, in basing the reconstitution of the
OCT under Section 2(d) of R.A. No. 26. Finally, the OSG submits that respondent cannot seek the
issuance of the second owner’s duplicate of the OCT because he himself alleged in his own
petition that he is in possession of the same owner’s duplicate certificate.50
On the other hand, respondent counters that the OSG’s reliance in Tahanan and Republic of the
Phils. v. Intermediate Appellate Court,51 is unavailing. He argues that in Tahanan, the petitioner
therein merely relied on documents other than the owner’s duplicate copy of the certificate of title,
while in Republic, this Court ruled that reconstitution cannot be based on statutes which do not
confer title over the property. Respondent claims that in these aforementioned cases, petitioners
therein do not have other sources to support their respective petitions for reconstitution while in
this case the owner’s duplicate copy of the OCT sought to be reconstituted truly exists albeit its
number is not legible. Respondent submits that the documentary as well as the parol evidence he
adduced are adequate to warrant the reconstitution of the OCT as it is covered by Decree No.
444263. Respondent also submits that since there is a valid title in this case, there is legal basis
for the issuance of the owner’s duplicate copy of the reconstituted title.52
Notwithstanding the numerous contentions raised by both parties, this Court finds that the
fundamental issue to be resolved in this case is whether the RTC properly acquired and was
invested with jurisdiction in the first place to hear and decide Land Registration Case No. V-0016
in the light of the strict and mandatory provisions of R.A. No. 26.
We resolve the sole issue in the negative.
Section 11053 of Presidential Decree No. 1529, otherwise known as the Property Registration
Decree, as amended by R.A. No. 6732,54 allows the reconstitution of lost or destroyed original
Torrens title either judicially, in accordance with the special procedure laid down in R.A. No. 26, or
administratively, in accordance with the provisions of R.A. No. 6732.55
As the case set before this Court is one for judicial reconstitution, we limit the discussion to the
pertinent law, which is R.A. No. 26, and the applicable jurisprudence.
The nature of the proceeding for reconstitution of a certificate of title under R.A. No. 26 denotes a
restoration of the instrument, which is supposed to have been lost or destroyed, in its original form
and condition. The purpose of such a proceeding is merely to have the certificate of title
reproduced, after proper proceedings, in the same form it was in when its loss or destruction
occurred. The same R.A. No. 26 specifies the requisites to be met for the trial court to acquire
jurisdiction over a petition for reconstitution of a certificate of title. Failure to comply with any of
these jurisdictional requirements for a petition for reconstitution renders the proceedings null and
void. Thus, in obtaining a new title in lieu of the lost or destroyed one, R.A. No. 26 laid down
procedures which must be strictly followed in view of the danger that reconstitution could be the
source of anomalous titles or unscrupulously availed of as an easy substitute for original
registration of title proceedings.56
It bears reiterating that respondent’s quest for judicial reconstitution in this case is anchored on the
owner’s duplicate copy of said OCT – a source for reconstitution of title provided under Section 2
(a) of R.A. No. 26, which provides in full as follows:
SEC. 2. Original certificates of title shall be reconstituted from such of the sources hereunder
enumerated as may be available, in the following order:
a. The owner’s duplicate of the certificate of title;
b. The co-owner’s, mortgagee’s, or lessee’s duplicate of the certificate of title;
 c. A certified copy of the certificate of title, previously issued by the register of deeds or by
a legal custodian thereof;
d. An authenticated copy of the decree of registration or patent, as the case may be,
pursuant to which the original certificate of title was issued;
e. A document, on file in the registry of deeds, by which the property, the description of
which is given in said document, is mortgaged, leased or encumbered, or an
authenticated copy of said document showing that its original had been registered; and
f. Any other document which, in the judgment of the court, is sufficient and proper basis
for reconstituting the lost or destroyed certificate of title. (Emphasis supplied.)
In this aspect, the CA was correct in invoking our ruling in Puzon v. Sta. Lucia Realty and
Development, Inc.,57 that notices to owners of adjoining lots and actual occupants of the subject
property are not mandatory and jurisdictional in a petition for judicial reconstitution of destroyed
certificate of title when the source for such reconstitution is the owner’s duplicate copy thereof
since the publication, posting and notice requirements for such a petition are governed by Section
10 in relation to Section 9 of R.A. No. 26. Section 10 provides:
SEC. 10. Nothing hereinbefore provided shall prevent any registered owner or person in interest
from filing the petition mentioned in section five of this Act directly with the proper Court of First
Instance, based on sources enumerated in sections 2(a), 2(b), 3(a), 3(b), and/or 4(a) of this Act:
Provided, however, That the court shall cause a notice of the petition, before hearing and granting
the same, to be published in the manner stated in section nine hereof: And, provided, further, That
certificates of title reconstituted pursuant to this section shall not be subject to the encumbrance
referred to in section seven of this Act. (Emphasis supplied.)
Correlatively, the pertinent provisions of Section 9 on the publication, posting and the contents of
the notice of the Petition for Reconstitution clearly mandate:
SEC. 9. x x x Thereupon, the court shall cause a notice of the petition to be published, at the
expense of the petitioner, twice in successive issues of the Official Gazette, and to be posted on
the main entrance of the provincial building and of the municipal building of the municipality or city
in which the land lies, at least thirty days prior to the date of hearing, and after hearing, shall
determine the petition and render such judgment as justice and equity may require. The notice
shall specify, among other things, the number of the certificate of title, the name of the registered
owner, the names of the interested parties appearing in the reconstituted certificate of title, the
location of the property, and the date on which all persons having an interest in the property must
appear and file such claim as they may have. x x x (Emphasis supplied.)
In sum, Section 10, in relation to Section 9, requires that 30 days before the date of hearing, (1) a
notice be published in two successive issues of the Official Gazette at the expense of the
petitioner, and that (2) such notice be posted at the main entrances of the provincial building and
of the municipal hall where the property is located. The notice shall state the following: (1) the
number of the certificate of title, (2) the name of the registered owner, (3) the names of the
interested parties appearing in the reconstituted certificate of title, (4) the location of the property,
and (5) the date on which all persons having an interest in the property, must appear and file such
claims as they may have.58
Verily, while the CA invoked the appropriate provisions of R.A. No. 26, it failed, however, to take
note that Section 9 thereof mandatorily requires that the notice shall specify, among other things,
the number of the certificate of title and the names of the interested parties appearing in the
reconstituted certificate of title. In this case, the RTC failed to indicate these jurisdictional facts in
the notice.
First. The Notice of Hearing issued and published does not align with the in rem character of the
reconstitution proceedings and the mandatory nature of the requirements under R.A. No.
26.59 There is a mortal insufficiency in the publication when the missing title was merely identified
as "OCT No. (not legible)" which is non-compliant with Section 9 of R.A. No. 26.
Moreover, while the LRA confirmed the issuance of Decree No. 444263 in its Report, it perplexes
this Court that the LRA failed to state that an OCT was actually issued and mention the number of
the OCT sought to be reconstituted. In Republic of the Phils. v. El Gobierno De Las Islas
Filipinas,60 this Court denied the petition for reconstitution of title despite the existence of a decree:
We also find insufficient the index of decree showing that Decree No. 365835 was issued for Lot
No. 1499, as a basis for reconstitution. We noticed that the name of the applicant as well as the
date of the issuance of such decree was illegible. While Decree No. 365835 existed in the Record
Book of Cadastral Lots in the Land Registration Authority as stated in the Report submitted by it,
however, the same report did not state the number of the original certificate of title, which is not
sufficient evidence in support of the petition for reconstitution. The deed of extrajudicial declaration
of heirs with sale executed by Aguinaldo and Restituto Tumulak Perez and respondent on
February 12, 1979 did not also mention the number of the original certificate of title but only Tax
Declaration No. 00393. As we held in Tahanan Development Corp. vs. Court of Appeals, the
absence of any document, private or official, mentioning the number of the certificate of title and
the date when the certificate of title was issued, does not warrant the granting of such petition.
(Emphasis supplied.)
Second. Respondent and the RTC overlooked that there are two parcels of land in this case. It is
glaring that respondent had to amend his petition for reconstitution twice in order to state therein
the names of the adjoining owners. Most importantly, the Notice of Hearing issued by the RTC
failed to state the names of interested parties appearing in the OCT sought to be reconstituted,
particularly the adjoining owners to Lot No. 1, namely, Benito Ferrer and Marcelo Monegas. While
it is true that notices need not be sent to the adjoining owners in this case since this is not required
under Sections 9 and 10 of R.A. No. 26 as enunciated in our ruling in Puzon, it is imperative,
however, that the notice should specify the names of said interested parties so named in the title
sought to be reconstituted. No less than Section 9 of R.A. No. 26 mandates it.
Well-entrenched in this jurisdiction that where the words of a statute are clear, plain, and free from
ambiguity, it must be given its literal meaning and applied without attempted interpretation. Verba
legis non est recedendum. From the words of a statute there should be no departure. 61 In view of
these lapses, the RTC did not acquire jurisdiction to proceed with the case since the mandatory
manner or mode of obtaining jurisdiction as prescribed by R.A. No. 26 had not been strictly
followed, thereby rendering the proceedings utterly null and void.62 As such, while petitioner
overlooked these jurisdictional infirmities and failed to incorporate them as additional issues in its
own petition, this Court has sufficient authority to pass upon and resolve the same since they
affect jurisdiction.63

Apropos is our ruling in Castillo v. Republic64 where we held that:

We cannot simply dismiss these defects as "technical." Liberal construction of the Rules of Court
does not apply to land registration cases. Indeed, to further underscore the mandatory character
of these jurisdictional requirements, the Rules of Court do not apply to land registration cases. In
all cases where the authority of the courts to proceed is conferred by a statute, and when the
manner of obtaining jurisdiction is prescribed by a statute, the mode of proceeding is mandatory,
and must be strictly complied with, or the proceeding will be utterly void. When the trial court lacks
jurisdiction to take cognizance of a case, it lacks authority over the whole case and all its aspects.
All the proceedings before the trial court, including its order granting the petition for reconstitution,
are void for lack of jurisdiction.65

WHEREFORE, the petition for review on certiorari is GRANTED. The Decision dated July 31,
2008 of the Court of Appeals in CA-G.R. CV No. 87390 is REVERSED and SET ASIDE. The
petition for reconstitution docketed as LRC No. V-0016, RTC, Villasis, Pangasinan, Branch 50, is
DISMISSED.

No pronouncement as to costs.

SO ORDERED.
 foregoing uses, the transfer of the TCTs and the Certificates of Land Ownership (CLOAs) in
Carmona Realty's name, and the release waiver and quitclaim executed by complainants and/or
order of dismissal of pending cases involving any of the lands constituting the Malitlit Estate. 10 The
parties also agreed to make the same effective unless Carmona Realty withdraws from it by
reason of force majeure or fails to make the escrow deposits within the period specified therein, in
which case the MOA shall be considered automatically null and void.11

On March 28, 2003, the MOA was annotated12 on TCT No. CLO-763, pursuant to the Sworn
Statement to Request for Annotation13 executed by petitioner and the Secretary's
Certificate14 issued by Marianito R. Atienza, Carmona Realty's Corporate Secretary. Thus, Entry
FIRST DIVISION
Nos. 626131-626134 (the subject entries) were made on TCT No. CLO-763:
July 5, 2016
Entry No. 626131. Secretary's Certificate

G.R. No. 213568

No. 626132. Letter;

ALICIA P. LOGARTA, Petitioner,

No. 626133. Sworn Statement to Request Annotation of Memorandum of
vs
Agreement. Executed by Alicia P. Logarta on 26 March 2003, ratified before Notary Public
CATALINO M. MANGAHIS, Respondent.
Anthony B. Escobar, as per Doc. No. 499, Page No. 100, Book No. 1, Series of 2003.
DECISION
No. 626134. Memorandum of Agreement. Executed by and between Victor Peña and Carmona
Realty and Development Corporation on 23 January 2001, ratified before Notary Public Ma. Loreto
PERLAS-BERNABE, J.: U. Navarro, as per Doc. No. 68, Page No. 14, Book No. XVIII, Series of 2001, filed in Env. No.
CLO-213.
Before the Court is a petition for review on certiorari1assailing the Decision2 dated December 13,
2013 and the Resolution3 dated June 27, 2014 of the Court of Appeals (CA) in CA-G.R. CV No. Date of instrument : March 26, 2003
98819, which affirmed the Order4dated June 27, 2011 and the Amended Order5 dated December
29, 2011 of the Regional Trial Court of Biñan, Laguna, Branch 25 (RTC) in LRC Case No. B-4122,
Date of inscription : March 28, 2003 at 1 :05 p.m.
directing the cancellation of Entry No. 626131, Entry No. 626132, Entry No. 626133, and Entry No.
626134 on Transfer Certificate of Title (TCT) No. CLO-763.
On August 8, 2008, respondent filed a petition15 to cancel the subject entries on the ground that
the MOA was a private document that had no legal effect because the Notary Public before whom
The Facts
it was acknowledged was not commissioned as such in the City of Manila for the year 2001. In the
same petition, respondent also sought the revocation of Zamora's authority to sell the subject
Respondent Catalino M. Mangahis (respondent) is the registered owner of a parcel of land in property.16
Barangay Malitlit, Sta. Rosa, Laguna, with an area of 28,889 square meters, and covered by TCT
No. CLO-763 (subject property).6 He authorized a certain Venancio Zamora (Zamora) to sell the
In opposition,17 petitioner contended that the MOA was duly notarized in Makati City where the
subject property, who, in turn, delegated his authority to Victor Peña (Peña).7
Notary Public, Atty. Loreto Navarro, was commissioned.18 She also maintained that Peña had the
authority to enter into the MOA at the time it was executed, considering that respondent expressed
On January 23, 2001, Peña entered into a Memorandum of Agreement8 (MOA) with Carmona his intention to revoke the same only in the petition.19
Realty and Development Corporation (Carmona Realty), represented by petitioner Alicia P.
Logarta (petitioner), for the sale to Carmona Realty of contiguous parcels of land in Malitlit, Sta.
During the trial, respondent's brother and authorized20 representative, Emiliano M. Mangahis,
Rosa, Laguna (Malitlit Estate) which included the subject property. The Malitlit Estate had a total
asserted that the subject entries should be cancelled because the purpose for which they were
area of 1,194,427 square meters and Carmona Realty agreed to deposit in escrow the total
made is no longer present since petitioner did nothing to enforce the MOA. 21 On the other hand,
consideration of P1,476,834,000.00 within thirty (30) days from the execution of the MOA.9 The
petitioner argued that she is not the proper party to the case as she merely acted as
release of the escrow deposits was subject to Peña's submission of a number of documents,
representative of Carmona Realty in the MOA.22
among others, the order of conversion from the Department of Agrarian Reform (DAR) allowing
the use of the Malitlit Estate for residential, industrial, commercial, or a combination of the
The RTC Ruling
In an Order23 dated June 27, 2011, the RTC granted the petition and ordered the cancellation of
the subject entries. It found that the subject entries are adverse claims which ceased to be
effective 30 days after registration and should, therefore, be cancelled, pursuant to Section 70 of
Presidential Decree No. (PD) 1529,24 otherwise known as the "Property Registration Decree,"
which states:
Section 70. Adverse claim. Whoever claims any part or interest in registered land adverse to the
registered owner, arising subsequent to the date of the original registration, may, if no other
provision is made in this Decree for registering the same, make a statement in writing setting
forth fully his alleged right or interest, and how or under whom acquired, a reference to the number
of the certificate of title of the registered owner, the name of the registered owner, and a
description of the land in which the right or interest is claimed.
The statement shall be signed and sworn to, and shall state the adverse claimant's residence, and
a place at which all notices may be served upon him. This statement shall be entitled to
registration as an adverse claim on the certificate of title. The adverse claim shall be effective for
a period of thirty days from the date of registration. After the lapse of said period, the
annotation of adverse claim may be cancelled upon filing of a verified petition therefor by
the party in interest: Provided, however, that after cancellation, no second adverse claim based on
the same ground shall be registered by the same claimant.
x x x x (Emphases supplied)
The RTC also remarked that the MOA no longer has any force and effect, considering that
Carmona Realty failed to make the escrow deposits stipulated therein which rendered the same
automatically null and void.25 It further explained that petitioner has other remedies which she can
pursue if Peña failed to comply with his obligations under the MOA. In any case, however, the
adverse claim cannot be inscribed on TCT No. CLO-763 forever.26
Dissatisfied, petitioner moved for reconsideration,27 arguing that the subject entries do not
constitute an adverse claim but a voluntary dealing which is governed by Section 54 of PD
1529.28 She also contended that the RTC erred in declaring that the MOA no longer had any force
and effect, considering that there was no such allegation in respondent's petition and no evidence
to such effect was presented during trial.29
In an Amended Order30 dated December 29, 2011, the RTC denied petitioner’s motion for
reconsideration and reiterated its directive to cancel the subject entries. Aggrieved, petitioner
appealed to the CA.31
The CA Ruling
In a Decision32 dated December 13, 2013, the CA dismissed petitioner's appeal and affirmed the
RTC ruling.1âwphi1 It agreed with the trial court that the subject entries are akin to an annotation
of adverse claim which is a measure designed to protect the interest of a person over a piece of
real property and governed by Section 70 of PD 1529.33The CA reiterated the RTC's observation
that the MOA no longer had any force and effect, absent any showing that Carmona Realty had
made the escrow deposits stipulated therein or that there was a mutual agreement between the
parties to extend its effectivity.34
Petitioner moved for reconsideration,35 which was, however, denied by the CA in its
Resolution36 dated June 27, 2014; hence, the present petition.
The Issue Before the Court
The sole issue for the Court's resolution is whether or not the CA and the RTC erred in ordering
the cancellation of the subject entries.
The Court's Ruling
The Court finds the petition meritorious.
An adverse claim is a type of involuntary dealing37designed to protect the interest of a person over
a piece of real property by apprising third persons that there is a controversy over the ownership of
the land.38 It seeks to preserve and protect the right of the adverse claimant during the pendency
of the controversy,39 where registration of such interest or right is not otherwise provided for by
the Property Registration Decree.40 An adverse claim serves as a notice to third persons that any
transaction regarding the disputed land is subject to the outcome of the dispute.41Section 70 of PD
1529 states:
Section 70. Adverse claim. Whoever claims any part or interest in registered land adverse to the
registered owner, arising subsequent to the date of the original registration, may, if no other
provision is made in this Decree for registering the same, make a statement in writing setting
forth fully his alleged right or interest, and how or under whom acquired, a reference to the number
of the certificate of title of the registered owner, the name of the registered owner, and a
description of the land in which the right or interest is claimed.
The statement shall be signed and sworn to, and shall state the adverse claimant's residence, and
a place at which all notices may be served upon him. This statement shall be entitled to
registration as an adverse claim on the certificate of title. The adverse claim shall be effective for
a period of thirty days from the date of registration. After the lapse of said period, the
annotation of adverse claim may be cancelled upon filing of a verified petition therefor by
the party in interest: Provided, however, that after cancellation, no second adverse claim based on
the same ground shall be registered by the same claimant.
Before the lapse of thirty days aforesaid, any party in interest may file a petition in the Court of
First Instance where the land is situated for the cancellation of the adverse claim, and the court
shall grant a speedy hearing upon the question of the validity of such adverse claim, and shall
render judgment as may be just and equitable. If the adverse claim is adjudged to be invalid, the
registration thereof shall be ordered cancelled. If, in any case, the court, after notice and hearing,
shall find that the adverse claim thus registered was frivolous, it may fine the claimant in an
amount not less than one thousand pesos nor more than five thousand pesos, in his discretion.
Before the lapse of thirty days, the claimant may withdraw his adverse claim by filing with the
Register of Deeds a sworn petition to that effect. (Emphases supplied)
Thus, before a notice of adverse claim is registered, it must be shown that there is no other
provision in law for the registration of the claimant's alleged right in the property. 42 In Register of
Deeds of Quezon City v. Nicandro,43the Court held that where the basis of the adverse claim was
a perfected contract of sale which is specifically governed by Section 57 of the Land Registration
Act, or Act No. 496, the filing of an adverse claim was held ineffective for the purpose of protecting
the vendee's right.44 Similarly, in L.P. Leviste & Company, Inc. v. Noblejas,45 the Court
emphasized that if the basis of the adverse claim is a perfected contract of sale, the proper
procedure is to register the vendee's right as prescribed by Sections 5146 and 5247 of PD 1529,
and not under Section 70 which is ineffective for the purpose of protecting the vendee' s right
since it does not have the effect of a conveyance.48
In the case at hand, a cursory perusal of the MOA49 shows that it is essentially a conditional sale
where Carmona Realty's payment is subject to the submission of certain documents by Peña,
respondent's authorized representative. Its relevant provisions state:
WITNESSETH, That:
xxxx
WHEREAS, the FIRST PARTY represents, that subject to the payment of an agreed
compensation to the CLOA holders/ARB[s], the Land Bank, and the National Irrigation Authority,
FIRST PARTY is willing and able to have all titles, rights, interests and claims, transferred, ceded,
conveyed, assigned or waived in favor of the SECOND PARTY who has accepted the offer to sell
and has agreed to acquire and purchase the property, subject to the terms and conditions set forth
under this Agreement.
xxxx
III
ESCROW DEPOSIT OF PURCHASE PRICE
3.1 Within thirty (30) days from the execution of this Memorandum of Agreement, the SECOND
PARTY or its assignee or nominee shall deposit in escrow with a bank or financial institution which
is mutually acceptable to the Parties, the total amount of x x x. Said amount shall be subject to
release by the escrow agent/bank and/or withdrawal in favor of the Parties specified in Section II
above, upon presentation of the documents specified herein below, and as set forth in the Escrow
instructions given by both parties to the Escrow agent/bank.
3.2. To the FIRST PARTY:
All releases of the amounts under escrow in favor of the FIRST PARTY of the full amount of x x x,
shall be subject to the submission by the FIRST PARTY of the following documents:
1) Order of Conversion x x x
xxxx
IV
TRANSFER OF TITLE TO THE SECOND PARTY
4.1. The SECOND PARTY shall be entitled to have the subject CLOAs-TCTs cancelled and in lieu
of the same, new TCTs shall be issued in the name of the SECOND PARTY or its assignee free
from any liens or encumbrances as provided herein,
xxxx
VI
EFFECTIVITY OF THIS AGREEMENT
This Agreement shall take effect upon execution hereof and shall continue in force unless the
SECOND PARTY withdraws from this Agreement by reason of force majeure or it fails to make the
escrow deposits within the period as specified herein, in which event, this Agreement shall be
considered automatically null and void, unless extended by mutual agreement of the parties.50
It is settled that in a deed of conditional sale, ownership is transferred after the full payment of the
installments of the purchase price or the fulfillment of the condition and the execution of a
definite or absolute deed of sale.51Verily, the efficacy or obligatory force of the vendor's
obligation to transfer title in a conditional sale is subordinated to the happening of a future and
uncertain event, such that if the suspensive condition does not take place, the parties would stand
as if the conditional obligation had never existed.52 Given the foregoing, the MOA is essentially a
dealing affecting less than the ownership of the subject property that is governed by Section 54 of
PD 1529, to wit:
Section 54. Dealings less than ownership, how registered. No new certificate shall be entered or
issued pursuant to any instrument which does not divest the ownership or title from the owner or
from the transferee of the registered owners. All interests in registered land less than ownership
shall be registered by filing with the Register of Deeds the instrument which creates or transfers or
claims such interests and by a brief memorandum thereof made by the Register of Deeds upon
the certificate of title, and signed by him. A similar memorandum shall also be made on the
owner's duplicate. The cancellation or extinguishment of such interests shall be registered
in the same manner. (Emphasis supplied)
Moreover, being a conditional sale, the MOA is a voluntary instrument which, as a rule, must be - should have been applied. Accordingly, the RTC and the CA should have dismissed the petition
registered as such and not as an adverse claim. In Philippine Charity Sweepstakes Office v. New for cancellation of the subject entries for being the wrong remedy.
Dagupan Metro Gas Corporation,53the Court explained that:
WHEREFORE, the petition is GRANTED. The Decision dated December 13, 2013 and the
Apart from the foregoing, the more important consideration was the improper resort to an adverse Resolution dated June 27, 2014 of the Court of Appeals in CA-G.R. CV No. 98819, which affirmed
claim. In L.P. Leviste & Co. v. Noblejas, this Court emphasized that the availability of the special the Order dated June 27, 2011 and the Amended Order dated December 29, 2011 of the Regional
remedy of an adverse claim is subject to the absence of any other statutory provision for the Trial Court of Bifian, Laguna, Branch 25 in LRC Case No. B-4122 are hereby SET ASIDE. The
registration of the claimant's alleged right or interest in the property. That if the claimant's Petition to cancel Entry No. 626131, Entry No. 626132, Entry No. 626133, and Entry No. 626134
interest is based on a perfected contract of sale or any voluntary instrument executed by on Transfer Certificate of Title No. CL0-763 filed by respondent Catalino M. Mangahis
the registered owner of the land, the procedure that should be followed is that prescribed is DISMISSED.
under Section 51 in relation to Section 52 of P.D. No. 1529. Specifically, the owner's duplicate
certificate must be presented to the Register of Deeds for the inscription of the corresponding SO ORDERED.
memorandum thereon and in the entry day book. It is only when the owner refuses or fails to
surrender the duplicate certificate for annotation that a statement setting forth an adverse
claim may be filed with the Register of Deeds. Otherwise, the adverse claim filed will not have
the effect of a conveyance of any right or interest on the disputed property that could prejudice the
rights that have been subsequently acquired by third persons.

What transpired in Gabin is similar to that in Leviste. In Gabin, the basis of the claim on the
property is a deed of absolute sale. In Leviste, what is involved is a contract to sell. Both are
voluntary instruments that should have been registered in accordance with Sections 51 and 52 of
P.D. No. 1529 as there was no showing of an inability to present the owner's duplicate of title.

It is patent that the contrary appears in this case. Indeed, New Dagupan's claim over the subject
property is based on a conditional sale, which is likewise a voluntary instrument. However,
New Dagupan's use of the adverse claim to protect its rights is far from being incongruent in view
of the undisputed fact that Peralta failed to surrender the owner's duplicate of TCT No. 52135
despite demands.54 (Emphases supplied; citations omitted.)

Thus, the prevailing rule is that voluntary instruments such as contracts of sale, contracts to sell,
and conditional sales are registered by presenting the owner's duplicate copy of the title for
annotation, pursuant to Sections 51 to 53 of PD 1529.55 The reason for requiring the production of
the owner's duplicate certificate in the registration of a voluntary instrument is that, being a willful
act of the registered owner, it is to be presumed that he is interested in registering the instrument
and would willingly surrender, present or produce his duplicate certificate of title to the Register of
Deeds in order to accomplish such registration.56 The exception to this rule is when the registered
owner refuses or fails to surrender his duplicate copy of the title, in which case the claimant may
file with the Register of Deeds a statement setting forth his adverse claim.57

In the case at hand, there was no showing that respondent refused or failed to present the owner's
duplicate of TCT No. CL0-763, which would have prompted Carmona Realty to cause the
annotation of the MOA as an adverse claim instead of a voluntary dealing. On this score,
therefore, the RTC and the CA erred in ordering the cancellation of the subject entries on the
strength of Section 70 of PD 1529 which authorizes regional trial courts to cancel adverse claims
after the lapse of thirty (30) days from registration. Being a voluntary dealing affecting less than
the ownership of the subject property, Section 54 of PD 1529 - which states that the cancellation
of annotations involving interests less than ownership is within the power of the Register of Deeds

SECOND DIVISION
G.R. No. 142687 July 20, 2006
SPOUSES FRANCISCO and BERNARDINA RODRIGUEZ, petitioners,
vs.
HON. COURT OF APPEALS, SPOUSES CHRISTOPHER and MA. ANGELICA BARRAMEDA,
and SPOUSES ANTONIO and MARIDEL CALINGO, respondents.
DECISION
PUNO, J.:
This is a petition for review of the decision of the Court of Appeals dated September 7, 1999 in
CA-G.R. CV No. 48772 and its resolution dated March 31, 2000. The Court of Appeals reversed
the decision of the Regional Trial Court of Makati in Civil Case No. 92-3524.
The facts show that herein respondent Spouses Antonio and Maridel Calingo (respondents
Calingo) were the registered owners of a house and lot located at No. 7903 Redwood Street,
Marcelo Green Village, Parañaque, Metro Manila. The property was mortgaged to the
Development Bank of the Philippines, which mortgage was later absorbed by the Home Mutual
Development Fund (HMDF) or Pag-ibig.
On April 27, 1992, respondents Calingo and respondent Spouses Christopher and Ma. Angelica
Barrameda (respondents Barrameda) entered into a contract of sale with assumption of mortgage
where the former sold to the latter the property in question and the latter assumed to pay the
outstanding loan balance to the Development Bank of the Philippines.1 Respondents Barrameda
issued two checks in the amounts of P150,000.00 and P528,539.76, for which respondents
Calingo issued a receipt dated April 24, 1992.2
In a letter dated April 23, 1992, respondent Antonio S. Calingo informed HMDF/Pag-ibig about the
sale of the property with assumption of mortgage. Said letter, however, together with an affidavit
by respondents Calingo, was served upon HMDF/Pag-ibig on October 2, 1992.3
On May 29, 1992, respondents Barrameda filed with the Register of Deeds of Parañaque an
affidavit of adverse claim on the property. The adverse claim was inscribed at the back of the
certificate of title as Entry No. 3439.4
On June 1, 1992, respondent Ma. Angelica Paez-Barrameda wrote HMDF, Mortgage and Loans
Division informing the office that they have purchased the subject property from the Calingo
spouses and that they filed a notice of adverse claim with the Register of Deeds of Parañaque.
They also sought assistance from said office as regards the procedure for the full settlement of the
loan arrearages and the transfer of the property in their names.5
Respondents Barrameda moved into the property on June 2, 1992.
On July 13, 1992, a notice of levy with attachment on real property by virtue of a writ of execution
was annotated at the back of the certificate of title of the property in question. The writ of
execution was issued by Judge Salvador Abad Santos, Regional Trial Court of Makati, Branch 65
in connection with Civil Case No. 88-2159 involving a claim by herein petitioners, Spouses
Francisco and Bernardina Rodriguez, against respondents Calingo. Judge Abad Santos issued
the writ in favor of petitioners Rodriguez.6
On July 21, 1992, petitioners’ counsel, Atty. Nelson A. Loyola, sent a letter to respondents
Barrameda inquiring about the basis of their occupation of the property in question.
On August 21, 1992, respondents Barrameda remitted to respondents Calingo the amount
of P364,992.07 to complete the payment of the agreed purchase price. Respondents Calingo
acknowledged receipt of said amount and waived all their rights to the property in favor of the
Barrameda spouses. They also guaranteed that the property was clear and free from any liens
and encumbrances, except the real estate mortgage assumed by respondents Barrameda.7
On October 7, 1992, respondents Barrameda executed a joint affidavit stating that they are the
owners of the property in question by virtue of a deed of sale with assumption of mortgage; that
they registered an affidavit of adverse claim with the Register of Deeds of Parañaque; that the
Sheriff of the Regional Trial Court, Branch 65, Makati, Sheriff Manuel C. Dolor, levied said
property despite their adverse claim; and that they have acquired the property long before the levy
was made, and therefore, said levy was illegal. They served a copy of the affidavit on petitioners’
counsel, Atty. Loyola, who made a reply thereto on October 15, 1992.
In his letter to Christopher Barrameda dated October 15, 1992, Atty. Loyola pointed out that the
alleged deed of sale with assumption of mortgage was not registered with the Register of Deeds
and that the records of the HMDF show that the property is owned by the Calingo spouses. He
urged the Barrameda spouses to confer with the petitioners to amicably settle the controversy.8
On November 9, 1992, respondents Barrameda found a Notice of Sheriff’s Sale posted on their
front gate, announcing the auction sale of their house and lot on December 3, 1992 at 10:00 in the
morning.9
On November 20, 1992, pursuant to Rule 39, Section 17 of the Revised Rules of Court,
respondents Barrameda served a Notice of Third Party Claim upon Sheriff Manuel C. Dolor,
accompanied by their affidavit of title.
On December 2, 1992, respondents Barrameda filed with the Regional Trial Court of Makati a
petition for quieting of title with prayer for preliminary injunction. The petition prayed, among
others, that the execution sale of the property be enjoined, the notice of levy and attachment
inscribed on the certificate of title be cancelled, and that respondents Barrameda be declared the
lawful and sole owners of the property in question.10
The trial court ruled in favor of herein petitioners and dismissed respondents Barrameda’s petition
for quieting of title. It ruled that the annotation of respondents Barrameda’s adverse claim at the
back of the certificate of title was insufficient to establish their claim over the property. It said that
respondents Barrameda, as buyers of the property, should have registered the title in their names.
Furthermore, respondents Barrameda’s adverse claim had lost its efficacy after the lapse of thirty
days in accordance with the provisions of the Land Registration Act. The trial court also found that
there was collusion between respondents Barrameda and respondents Calingo to transfer the
property to defraud third parties who may have a claim against the Calingos.11
The Court of Appeals, however, reversed the decision of the trial court. Citing the ruling
in Sajonas v. Court of Appeals,12 the appellate court held that respondents Barrameda’s adverse
claim inscribed on the certificate of title was still effective at the time the property was levied on
execution. It said:
Therefore, the disputed inscription of adverse claim on TCT No. 83612/57286 was still in
effect on July 13, 1992 when the Rodriguezes caused the annotation of the notice of levy
on execution thereto. Consequently, they are charged with knowledge that the property
sought to be levied upon on execution was encumbered by an interest the same as or
better than that of the registered owner thereof. Such notice of levy cannot prevail over
the existing adverse claim inscribed on the certificate of title in favor of the Barramedas.
xxx
The court held, therefore, that the notice of levy could not prevail over respondents Barrameda’s
adverse claim.
Petitioners moved for a reconsideration of the appellate court’s ruling, but the motion was denied.
Hence, this petition. Petitioners essentially argue that the remedy of a petition for quieting of title
was not available to respondents Barrameda as they did not have a valid title to the property in
question; that the affidavit of adverse claim inscribed by respondents Barrameda at the back of the
certificate of title was not sufficient to establish their claim to the property; and there was collusion
between respondents Barrameda and respondents Calingo.
The principal issue that needs to be resolved in this case is whether respondents Barrameda’s
adverse claim on the property should prevail over the levy on execution issued by another court in
satisfaction of a judgment against respondents Calingo.
We hold that it cannot.
Respondents Barrameda anchor their claim on the property on the deed of sale with assumption
of mortgage executed by them and respondents Calingo on April 27, 1992. The Property
Registration Decree13 requires that such document be registered with the Register of Deeds in
order to be binding on third persons. The law 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.
(emphasis supplied)
It is admitted in this case that the deed of sale with assumption of mortgage was not registered,
but instead, respondents Barrameda filed an affidavit of adverse claim with the Register of Deeds.
The question now is whether the adverse claim is sufficient to bind third parties such as herein
petitioners.
In L.P. Leviste and Company, Inc. v. Noblejas,14 we explained when an inscription of an
adverse claim is sufficient to affect third parties, thus:
The basis of respondent Villanueva’s adverse claim was an agreement to sell executed in
her favor by Garcia Realty. An agreement to sell is a voluntary instrument as it is a wilful
act of the registered owner. As such voluntary instrument, Section 50 of Act No. 496 [now
Presidential Decree No. 1529] expressly provides that the act of registration shall be the
operative act to convey and affect the land. And Section 55 of the same Act requires the
presentation of the owner’s duplicate certificate of title for the registration of any deed or
voluntary instrument. As the agreement to sell involves an interest less than an estate in
fee simple, the same should have been registered by filing it with the Register of Deeds
who, in turn, makes a brief memorandum thereof upon the original and owner’s duplicate
certificate of title. The reason for requiring the production of the owner’s duplicate
certificate in the registration of a voluntary instrument is that, being a wilful act of the
registered owner, it is to be presumed that he is interested in registering the instrument
and would willingly surrender, present or produce his duplicate certificate of title to the
Register of Deeds in order to accomplish such registration. However, where the owner
refuses to surrender the duplicate certificate for the annotation of the voluntary
instrument, the grantee may file with the Register of Deeds a statement setting
forth his adverse claim, as provided for in Section 110 of Act No. 496. In such a
case, the annotation of the instrument upon the entry book is sufficient to affect the real
estate to which it relates, although Section 72 of Act No. 496 imposes upon the Register
of Deeds the duty to require the production by the [r]egistered owner of his duplicate
certificate for the inscription of the adverse claim. The annotation of an adverse claim
 is a measure designed to protect the interest of a person over a piece of real
property where the registration of such interest or right is not otherwise provided
for by the Land Registration Act, and serves as a notice and warning to third
parties dealing with said property that someone is claiming an interest on the same
or a better right than the registered owner thereof. (emphases supplied)
IN VIEW WHEREOF, the petition is GRANTED. The assailed decision and resolution of the Court
of Appeals are SET ASIDE and the decision of the Regional Trial Court, Makati in Civil Case No.
92-3524 is REINSTATED. No cost.
SO ORDERED.

In the case at bar, the reason given for the non-registration of the deed of sale with assumption of
mortgage was that the owner’s duplicate copy of the certificate of title was in the possession of
HMDF. It was not shown, however, that either respondents Barrameda or respondents Calingo
exerted any effort to retrieve the owner’s duplicate copy from the HMDF for the purpose of
registering the deed of sale with assumption of mortgage. In fact, the parties did not even seek to
obtain the consent of, much less inform, the HMDF of the sale of the property. This, despite the
provision in the contract of mortgage prohibiting the mortgagor (respondents Calingo) from selling
or disposing the property without the written consent of the mortgagee.15 Respondents Calingo,
as party to the contract of mortgage, are charged with the knowledge of such provision and are
bound to comply therewith. Apparently, there was haste in disposing the property that respondents
Calingo informed HMDF of the sale only on October 2, 1992 when they served a copy of their
letter to said office regarding the transfer of the property to respondents Barrameda. There was no
reason for the parties’ failure to seek the approval of the HMDF to the sale as it appears from the
letter of respondent Angelica Paez-Barrameda to HMDF that they were ready to pay in full the
balance of the loan plus interest. What is more suspect is that the judgment against respondents
Calingo ordering them to pay the petitioners the sum of P1,159,355.90 was rendered on January
28, 1992, before the sale of the property on April 27, 1992. We also find it unsettling that
respondents Barrameda, without any reservation or inquiry, readily remitted to respondents
Calingo the full payment for the property on August 21, 1992 despite knowledge of the levy on
execution over the property in July of the same year. Any prudent buyer of real property, before
parting with his money, is expected to first ensure that the title to the property he is about to
purchase is clear and free from any liabilities and that the sellers have the proper authority to deal
on the property.

Again, we stress that the annotation of an adverse claim is a measure designed to protect the
interest of a person over a piece of property where the registration of such interest or right is
not otherwise provided for by the law on registration of real property. Section 70 of
Presidential Decree No. 1529 is clear:

Sec. 70. Adverse claim. Whoever claims any part or interest in registered land adverse
to the registered owner, arising subsequent to the date of the original registration, may, if
no other provision is made in this Decree for registering the same, make a
statement in writing setting forth his alleged right or interest, and how or under whom
acquired, a reference to the number of the certificate of title of the registered owner, the
name of the registered owner, and a description of the land in which the right or interest is
claimed. xxx

The deed of sale with assumption of mortgage executed by respondents Calingo and Barrameda
is a registrable instrument. In order to bind third parties, it must be registered with the Office of the
Register of Deeds. It was not shown in this case that there was justifiable reason why the deed
could not be registered. Hence, the remedy of adverse claim cannot substitute for registration.