[2]
Register of Deeds on November 20, 2007. TCT No. 168590 was issued in its
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
LTD Assignment No. 8
Evy Construction registered the Deed of Absolute Sale with the
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
Page 1 of 15
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 Resolution 22dated 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
LTD Assignment No. 8
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 court33 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
Page 2 of 15
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 arguments 45 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
LTD Assignment No. 8
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
Page 3 of 15
 (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
LTD Assignment No. 8
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.
Page 4 of 15
 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
LTD Assignment No. 8
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.
Page 5 of 15
[3]
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:
LTD Assignment No. 8
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.
Page 6 of 15
 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
LTD Assignment No. 8
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
Page 7 of 15
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
LTD Assignment No. 8
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.
Page 8 of 15
 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
LTD Assignment No. 8
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
Page 9 of 15
 Was there, at the time of the attachment, knowledge on the part of subject property at the time of the attachment. We are, therefore, constrained
petitioner Rural Bank of the interest of respondent Manila Mission on the to grant the instant Petition for Review and nullify the Orders of the RTC
subject property? discharging the subject property from attachment.

If the allegation of respondent Manila Mission anent the building of the
chapel even before the issuance of the writ of attachment is true, this case
would be similar to Ruiz where the vendee of the subject property was able to
introduce improvements. However, respondent Manila Mission presented no
evidence of the building of the chapel other than its bare allegation thereof.
More importantly, even assuming for the sake of argument that the chapel was
indeed being built at the time of the attachment of the property, we cannot
simply apply Ruiz and conclude that this confirms knowledge of a previous
conveyance of the property at that time. In Ruiz, the attaching party was the
wife of the vendor of the subject property, whom she sued for support. It was
thus very probable that she knew of the sale of the property to the vendee
therein, considering that the vendee had already introduced improvements
thereon. In the case at bar, there is no special relationship between petitioner
Rural Bank and the spouses Soliven sufficient to charge the former with an
implied knowledge of the state of the latter’s properties. Unlike in the sale of
real property, an attaching creditor is not expected to inspect the property
being attached, as it is the sheriff who does the actual act of attaching the
property.
Nevertheless, respondent Manila Mission would not be left without
remedy. It could file a counter-bond pursuant to Section 12, Rule 5711 of the
Rules of Court in order to discharge the attachment. If respondent Manila
Mission fails to do the same and the property ends up being subjected to
execution, respondent can redeem the property and seek reimbursement from
the spouses Soliven.
WHEREFORE, the instant Petition for Review on Certiorari is hereby
GRANTED. The Decision dated 29 July 1997 of the Court of Appeals in CA-
G.R. SP No. 41042 affirming the Orders of the Regional Trial Court of Dagupan
City dated 9 October 1995 and 27 February 1996 issued in Civil Case No. D-
10583 is hereby REVERSED and SET ASIDE. No pronouncement as to costs.
SO ORDERED.

Neither did respondent Manila Mission present any evidence of

knowledge on the part of petitioner Rural Bank of the prior existing interest of
the former at the time of the attachment. Respondent Manila Mission merely
argues that there was a tacit recognition on the part of petitioner Rural Bank
of the construction of the chapel when the latter did not deny this allegation in
its Opposition to the Motion to Discharge Property from Attachment.

The Motion, however, merely mentions the construction of the chapel

and does not charge petitioner Rural Bank with knowledge of the construction.
There was, therefore, nothing to deny on the part of petitioner Rural Bank, as
the mere existence of such construction at that time would not affect the right
of petitioner Rural Bank to its lien over the subject property. Also, the mention
in the Motion of the construction of the chapel would have the effect of being
a notice of an adverse third-party claim only at the time of such Motion. Since
such notice, which was deemed in Ruiz as constructive registration of the sale,
was effected only after the attachment of the subject property, it could not
affect the validity of the attachment lien.

In sum, our decisions in Ruiz v. Court of Appeals and Valdevieso v.

Damalerio oblige us to rule that the duly registered levy on attachment by
petitioner Rural Bank takes preference over the prior but then unregistered
sale of respondent Manila Mission. There was likewise no evidence of
knowledge on the part of petitioner Rural Bank of any third-party interest in the

LTD Assignment No. 8 Page 10 of 15

[5] 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
Republic of the Philippines No. 5327,10 was issued in Atty. Sabitsana’s name. Although Domingo Jr. and
SUPREME COURT Sr. paid the real estate taxes, Atty. Sabitsana also paid real property taxes in
Manila 1992, 1993, and 1999. In 1996, he introduced concrete improvements on the
property, which shortly thereafter were destroyed by a typhoon.
SECOND DIVISION
When Domingo Sr. passed away, his heirs applied for registration and
G.R. No. 181359 August 5, 2013 coverage of the lot under the Public Land Act or Commonwealth Act No. 141.
Atty. Sabitsana, in a letter11 dated August 24, 1998 addressed to the
Department of Environment and Natural Resources’ CENRO/PENRO office in
SPOUSES CLEMENCIO C. SABITSANA, JR. and MA. ROSARIO M. Naval, Biliran, opposed the application, claiming that he was the true owner of
SABITSANA, Petitioners, the lot. He asked that the application for registration be held in abeyance until
vs. the issue of conflicting ownership has been resolved.
JUANITO F. MUERTEGUI, represented by his Attorney-in-Fact
DOMINGO A. MUERTEGUI, JR., Respondent.
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
DECISION 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
DEL CASTILLO, J.: over the same, which acts thus constitute a cloud over his title. The
Complaint13 prayed, among others, that the Sabitsana Deed of Sale, the
A lawyer may not, for his own personal interest and benefit, gamble on his August 24, 1998 letter, and TD No. 5327 be declared null and void and of no
client's word, believing it at one time and disbelieving it the next. He owes his effect; that petitioners be ordered to respect and recognize Juanito’s title over
client his undivided loyalty. the lot; and that moral and exemplary damages, attorney’s fees, and litigation
expenses be awarded to him.
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. In their Answer with Counterclaim,14 petitioners asserted mainly that the sale
CV No. 79250, and its January 11, 2008 Resolution3 denying petitioner’s to Juanito is null and void absent the marital consent of Garcia’s wife, Soledad
Motion for Reconsideration.4 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
Factual Antecedents 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.
On September 2, 1981, Alberto Garcia (Garcia) executed an unnotarized Deed
of Sale5 in favor of respondent Juanito Muertegui 6 (Juanito) over a 7,500-
square meter parcel of unregistered land (the lot) located in Dalutan Island, The evidence and testimonies of the respondent’s witnesses during trial reveal
Talahid, Almeira, Biliran, Leyte del Norte covered by Tax Declaration (TD) No. that petitioner Atty. Sabitsana was the Muertegui family’s lawyer at the time
1996 issued in 1985 in Garcia’s name.7 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
Juanito’s father Domingo Muertegui, Sr. (Domingo Sr.) and brother Domingo
planted the same to coconut and ipil-ipil; and that after Domingo Sr.’s death,
Jr. took actual possession of the lot and planted thereon coconut and ipil-ipil
his wife Caseldita, succeeded him in the possession and exercise of rights
trees. They also paid the real property taxes on the lot for the years 1980 up
over the lot.
to 1998.
On the other hand, Atty. Sabitsana testified that before purchasing the lot, he
On October 17, 1991, Garcia sold the lot to the Muertegui family lawyer,
was told by a member of the Muertegui family, Carmen Muertegui Davies
petitioner Atty. Clemencio C. Sabitsana, Jr. (Atty. Sabitsana), through a

LTD Assignment No. 8 Page 11 of 15

(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 Decision 15 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
LTD Assignment No. 8
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 Code22should 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
Page 12 of 15
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
LTD Assignment No. 8
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
Page 13 of 15
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 prevent30 a cloud from being cast upon his
application for a title, respondent filed Civil Case No. B-1097 to obtain a
declaration of his rights. In this sense, the action is one for declaratory relief,
which properly falls within the jurisdiction of the RTC pursuant to Rule 63 of
the Rules.
Article 1544 of the Civil Code does not apply to sales involving unregistered
land.
Both the trial court and the CA are, however, wrong in applying Article 1544 of
the Civil Code. Both courts seem to have forgotten that the provision does not
apply to sales involving unregistered land. Suffice it to state that the issue of
the buyer’s good or bad faith is relevant only where the subject of the sale is
registered land, and the purchaser is buying the same from the registered
owner whose title to the land is clean. In such case, the purchaser who relies
LTD Assignment No. 8
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.
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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.
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.

Petitioner Atty. Sabitsana took advantage of confidential information disclosed WHEREFORE, premises considered, the Petition is DENIED. The January 25,
to him by his client, using the same to defeat him and beat him to the draw, so 2007 Decision and the January 11, 2008 Resolution of the Court of Appeals in
to speak. He rushed the sale and registration thereof ahead of his client. He CA-G.R. CV No. 79250 are AFFIRMED. Costs against petitioners.
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 SO ORDERED
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

LTD Assignment No. 8 Page 15 of 15