THIRD
DIVISION
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RURAL BANK OF STA. BARBARA
[PANGASINAN], INC.,
Petitioner, - versus
- THE Respondent. |
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G.R. No. 130223 Present: CARPIO
MORALES,* J., CHICO-NAZARIO,** Acting Chairperson, VELASCO,
JR., NACHURA, and
PERALTA, JJ. Promulgated: August 19, 2009 |
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CHICO-NAZARIO, J.:
This is a Petition for
Review on Certiorari under Rule 45 of
the Rules of Court seeking to set aside the Decision[1]
dated 29 July 1997 of the Court of Appeals in CA-G.R. SP No. 41042 affirming
the Orders dated 9 October 1995 and 27 February 1996 of the Regional Trial
Court (RTC), Branch 43, of Dagupan City, in Civil Case No. D-10583.
Spouses Tomas and Maria
Soliven (spouses Soliven) were the registered owners, under Transfer
Certificate of Title (TCT) No. T-125213, of a parcel of land located in
Barangay Maninding, Sta. Barbara, Pangasinan (subject property). On
In the meantime, on
In an Order dated
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 P338,000.00 upon filing of
[petitioner’s] bond in the amount of P100,000.00.[2]
Upon the filing by
petitioner of the required bond, the RTC issued the Writ of Attachment on
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
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
On
The Court of Appeals
docketed the Petition for Certiorari
as CA-G.R. SP No. 41042. On
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
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
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 P42,500.00 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 P8,5000.00; 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 Appeals[7]:
[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
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.
x x x x
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
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.
Was there, at the time of
the attachment, knowledge on the part of petitioner Rural Bank of the interest
of respondent Manila Mission on the subject property?
If the allegation of
respondent Manila Mission anent the building of the chapel even before the
issuance of the writ of attachment is true, this case would be similar to Ruiz where the vendee of the subject
property was able to introduce improvements.
However, respondent Manila Mission presented no evidence of the building
of the chapel other than its bare allegation thereof. More importantly, even assuming for the sake
of argument that the chapel was indeed being built at the time of the
attachment of the property, we cannot simply apply Ruiz and conclude that this confirms knowledge of a previous
conveyance of the property at that time.
In Ruiz, the attaching party
was the wife of the vendor of the subject property, whom she sued for
support. It was thus very probable that
she knew of the sale of the property to the vendee therein, considering that
the vendee had already introduced improvements thereon. In the case at bar, there is no special
relationship between petitioner Rural Bank and the spouses Soliven sufficient
to charge the former with an implied knowledge of the state of the latter’s
properties. Unlike in the sale of real
property, an attaching creditor is not expected to inspect the property being
attached, as it is the sheriff who does the actual act of attaching the
property.
Neither did respondent
Manila Mission present any evidence of knowledge on the part of petitioner
Rural Bank of the prior existing interest of the former at the time of the
attachment. Respondent Manila Mission
merely argues that there was a tacit recognition on the part of petitioner
Rural Bank of the construction of the chapel when the latter did not deny this
allegation in its Opposition to the Motion to Discharge Property from
Attachment.
The Motion, however,
merely mentions the construction of the chapel and does not charge petitioner
Rural Bank with knowledge of the construction.
There was, therefore, nothing to deny on the part of petitioner Rural
Bank, as the mere existence of such construction at that time would not affect
the right of petitioner Rural Bank to its lien over the subject property. Also, the mention in the Motion of the construction
of the chapel would have the effect of being a notice of an adverse third-party
claim only at the time of such Motion.
Since such notice, which was deemed in Ruiz as constructive registration of the sale, was effected only after the attachment of the subject
property, it could not affect the validity of the attachment lien.
In sum, our decisions in Ruiz v. Court of Appeals and Valdevieso v. Damalerio oblige us to
rule that the duly registered levy on attachment by petitioner Rural Bank takes
preference over the prior but then unregistered sale of respondent Manila
Mission. There was likewise no evidence
of knowledge on the part of petitioner Rural Bank of any third-party interest in
the subject property at the time of the attachment. We are, therefore, constrained to grant the
instant Petition for Review and nullify the Orders of the RTC discharging the
subject property from attachment.
Nevertheless, respondent
Manila Mission would not be left without remedy. It could file a counter-bond pursuant to
Section 12, Rule 57[11]
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
SO
ORDERED.
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MINITA V. CHICO-NAZARIOAssociate Justice Acting Chairperson |
WE
CONCUR:
Associate Justice
PRESBITERO J.
VELASCO, JR.
Associate Justice |
ANTONIO EDUARDO B. NACHURA Associate Justice |
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DIOSDADO M. PERALTAAssociate
Justice |
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ATTESTATION
I attest that the conclusions in the above
Decision were reached in consultation before the case was assigned to the
writer of the opinion of the Court’s Division.
MINITA V. CHICO-NAZARIO
Associate Justice
Acting
Chairperson, Third Division
CERTIFICATION
Pursuant to Section 13, Article VIII
of the Constitution, and the Division Chairperson’s Attestation, it is hereby
certified that the conclusions in the above Decision were reached in
consultation before the case was assigned to the writer of the opinion of the
Court’s Division.
REYNATO S.
PUNO
Chief Justice
* Per
Special Order No. 679 dated
** Per
Special Order No. 681 dated
[1] Penned by Associate Justice Ricardo P. Galvez with Associate Justices Gloria C. Paras and B.A. Adefuin-de la Cruz, concurring; rollo, pp. 40-46.
[2] Rollo, p. 47.
[3]
[4]
[5] Rule 19, Section 1 of the Rules of Court provides:
SECTION 1. Who may intervene.—A
person who has a legal interest in the matter in litigation, or in the
success of either of the parties, or an interest against both, or 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 may,
with leave of court, be allowed to intervene in the action. The court shall
consider whether or not the intervention will unduly delay or prejudice the
adjudication of the rights of the original parties, and whether or not the
intervenor’s rights may be fully protected in a separate proceeding.
[6] Coronel v. Desierto, 448 Phil. 894, 902-903 (2003).
[7] 414 Phil. 311, 323 (2001).
[8] 492 Phil. 51 (2005).
[9]
[10] Ruiz, Sr. v. Court of Appeals, supra note 7 at 323-324.
[11] SEC. 12. Discharge
of attachment upon giving counter-bond.—After a writ of attachment
has been enforced, the party whose property has been attached, or the person
appearing on his behalf, may move for the discharge of the attachment wholly or
in part on the security given. The court
shall, after due notice and hearing, order the discharge of the attachment if
the movant makes a cash deposit, or files a counter-bond executed to the
attaching party with the clerk of the court where the application is made, in
an amount equal to that fixed by the court in the order of attachment,
exclusive of costs. But if the
attachment is sought to be discharged with respect to a particular property,
the counter-bond shall be equal to the value of that property as determined by
the court. In either case, the cash deposit or the counter-bond shall secure
the payment of any judgment that the attaching party may recover in the action. A notice of the deposit shall forthwith be
served on the attaching party. Upon the
discharge of an attachment in accordance with the provisions of this section,
the property attached, or the proceeds of any sale thereof, shall be delivered
to the party making the deposit or giving the counter-bond, or to the person
appearing on his behalf, the deposit or counter-bond aforesaid standing in
place of the property so released. Should such counter-bond for any reason be
found to be or become insufficient, and the party furnishing the same fail to
file an additional counter-bond, the attaching party may apply for a new order
of attachment.