LEONORA OBAA vs. COURT OF APPEALS, RAFAEL G.

SUNTAY, REGISTER OF DEEDS OF QUEZON CITY, and the EX-

OFICIO SHERIFF OF QUEZON CITY. G.R. No. 78635 April 27, 1989

Nature: levy on execution was nullified because attached property was no longer owned by defendant Dizon when the levy on
execution was had.

FACTS:
1st caseguardianship case before JRDC QC were attorneys fees for Suntay were initially awarded
2nd case Collection caseAtty. Suntay filed a sum of money case against Liberty Dizon and her minor children to collect her
attorneys fees in the guardianship case he handled for them guardianship court authorized payment of 5K no payment
despite repeated demands.
December 1, 1972, by virtue of the Writ of Attachment issued in this collection case, a levy was made on said property,
which levy was annotated at the back of TCT No. 173792 of the Register of Deeds of Quezon City
Feb. 13, 1973: Motion for service of summons by publication sheriff failed to serve summons to Mrs. Dizon and her wards
for they no longer resided at their last known address in QC and present address cannot be ascertained; RTC granted motion
to serve summons by PUBLICATION.
MEANWHILEMay 16, 1973Sale of the disputed land between by Mrs. Dizon to Obana new TCT issued in favor of
Obana and transferred in the process the encumbrance consisting of levy in favor of Atty. Suntay
August 10, 1973 Atty. Suntay secured a favorable judgment where Dizon and her wards declared in default grant of
10K awarded Writ of execution Notice of levy on execution on August 7, 1974 (against the property, then in the name
of Obana already; house and lot he was attaching had already been sold to Obana); certificate of sale issued to Atty. Suntay
now, both certificates of sale in favor of Obana and atty. Suntay were registered in ROD
Suntay filed cancellation of Obanas TCT RTC Quezon city cancelled that of Obana favored Suntay
3rd case: OBANAto stop registration of the subject land, ObaMa filed annulment of judgment of the decision of the court
awarding 10k attorneys fees to Suntay. Grounds:
1. Decision of RTC awarding attys fees to suntay was null and void because court did not acquire jurisdiction over
Dizon and her wards, since they were not properly served with summons;
2. proceedings before sheriff were defective because it failed to comply with jurisdiction requirements on the
manner of service of notice, thus rendering the proceedings void ab initio
defense of SUNTAY:
1. When Obana bought the property and title transferred to her on July 2, 1973, she is charged with the knowledge
of the pendency of the sum of money case through the annotation at the back of the TCT
2. No extrinsic fraud committed by Suntay that may constitute ground to nullify judgment.
RTC: attachment and levy of property in the annulment case was VOID:
1. court held no jurisdiction was acquired over the persons of defendants Dizon, the action being strictly in personam and
summons by publication is insufficient;
2. no valid attachment and levy were made by sheriff as no personal service of the copy of the notice to the occupant of
the property was made.--> notice of levy not served on Obana
Atty. Suntay appealed to the CA
CA: Dismissed Obanas complaint for annulment of judgment the collection case was between Suntay on one hand and
Dizon and her children on the other. It ruled that petitioner Obaa the buyer of the lot, is not a party in interest and had
neither personality nor cause of action to ask for the annulment of the judgment in that case.

NOTE: The action was in personam recourse can be had to acquire jurisdiction attaching properties to convert such action to in rem
or quasi in rem and summons by publication may then be deemed valid and effective. However, validity of levy on execution
challenged because NOTICE OF LEVY were defective and invalid for not having been in accord to Rule 57. Notice not served on
occupant. (no notice to Obana since she was not a party to the collection case) Since attachment not valid, service by publication not
valid too.

ISSUE: WON there was valid attachment of the real property

HELD: NO. It should be noted that Section 7 of Rule 57 requires that in attaching real property a copy of the order, description, and
notice must be served on the occupant, in this case the occupant at 48 Damortiz Street, Damar Village, Quezon City.

Obana, was at the time of the levy on execution, was the occupant of said property. Notice of levy must have been made to him.

The sheriffs sale was affected without any personal notice to Liberty H. Dizon on the ground that she had moved out of her old address
and her "present address" was unknown. No notice was served on Obaa because she was not a party in the collection case. All
notices and summonses in the collection case filed on November 9, 1972 including the copy of the complaint, the original summons,
the alias summons, the notice of levy on attachment of the disputed property, the notice of levy on execution and the notice of sheriffs
sale were served through mail to defendant Dizon at 34-H Caingin Road, Cypress Village, Quezon City. As earlier stated, because the
Sheriff could not serve the complaint and the summons on Dizon who had moved out of the above address, service by publication upon
Dizon was authorized by the court in the collection case.
HOWEVER, Respondent Suntay cannot claim ignorance of the sale to petitioner Obaa as a ground for not bringing her into the picture.
As stressed by the petitioner, Liberty Dizon filed her motion for the approval of the sale of the disputed house and lot in the
guardianship case through her counsel, herein private respondent Suntay. He could not have been unaware that the house and lot he
was attaching had been sold to Obaa because the sale of the Dalmar property was authorized by the guardianship court in the case
where he was counsel for the guardian.

NOTES:
The trial court in the annulment case ruled that the attachment was void from the beginning. The action in personam which required
personal service was never converted into an action in rem where service by publication would have been valid.

The Court of Appeals reversed the trial court principally on the ground that Leonora Obaa was neither a defendant nor a party-in-
interest in the collection case.

Obana is a party in interest in the collection case Court of appeals ignored the fact that property already sold to her was attached
and then bedded out to Atty. Suntay without any notice to her. And because the notice of lis pendens in the collection case was
secured ex-parte without the defendant Dizon and petitioner Obaa who were never brought to court, having any inkling about it, the
notice was not annotated on the owner's duplicate copy of Transfer Certificate of Title No. 173792.

OTHER MATTERS:
Civil Case No. 4238-M was an action for sum of money filed by Atty. Suntay against liberty Dizon and her minor children in an
effort to collect attorney's fees in the guardianship case he handled for them. The guardianship court authorized the payment
of P5,000.00. According to the Court of Appeals, the collection case was between Suntay on one hand and Dizon and her
children on the other. It ruled that petitioner Obaa the buyer of the lot, is not a party in interest and had neither personality
nor cause of action to ask for the annulment of the judgment in that case.

This may be so, if the facts end there. However, the judgment in Civil Case No. 4238-M, while against Dizon and her children
was executed against property belonging to petitioner Obaa.

The house and lot in Quezon City which Dizon sold to Obaa for P150,000.00 was executed upon by the Sheriff to satisfy the
P10,000.00 attorney's fees in the Dizon guardianship case and another P5,000.00 awarded to Suntay for his fees in
prosecuting his own collection case. The house and lot were sold for P17,402.90 to respondent Suntay. According to the
petitioner, the Property she purchased for P150,000.00 on May 16, 1973 is now worth over Pl,000,000.00.
Considering all the foregoing circumstances, the order in LRC 750 which is based on irregular proceedings in the prior case
and which directed the cancellation of Obaa's transfer certificate of title cannot assume finality. The respondent court
committed reversible error in using it as a basis for res judicata.
There is the added factor that a land registration court in a cancellation of title case could not possibly inquire into the
controversial matters raised in the annulment of judgment case.
On the matter of impleading dizon and wards in the action for annulment of judgment in the collection case This ruling
ignores the fact that Dizon could not even be summoned in the collection case; her whereabouts are unknown: the judgment
against her was a default judgment; she has apparently no more interest whatsoever in the house and lot she sold to Obaa
and she still owes Atty. Suntay P10,000.00.

Disposition: we cannot close our eyes to the rank injustice whereby the owner of a minion peso house and lot is compelled to give up
her property to answer for a P10,000.00 attorney's fee incurred by its former owner and which the lawyer cannot apparently collect
from his own client.

Collection case, proceedings, orders, notices, WPA, levy and execution sale NULL AND VOID.
DU V. STRONGHOLD INSURANCE
G.R. No. 156580 | JUNE 14, 2004

FACTS: Sometime in January 1989, Aurora De Leon sold a parcel of land registered in her name to Luz Du under a Conditional Deed
of Sale for a down payment of P75,000.00 leaving a balance of P95,000.00.

On April 28, 1989, Aurora de Leon sold the same property to spouses Enrique and Rosita Caliwag without prior notice to Luz Du. As a
result, Transfer Certificate of Title No. 2200 was issued in favor of the Caliwag spouses.

Meanwhile, Stronghold Insurance Corp., Inc. filed a civil case against the Caliwag spouses and other persons, for allegedly
defrauding Stronghold and misappropriating the companys fund by falsifying and simulating purchases of documentary stamps. The
action was accompanied by a prayer for a writ of preliminary attachment duly annotated at the back of Transfer Certificate of Title No.
2200 on August 7, 1990.

On her part, on December 21, 1990, Luz Du initiated an action against Aurora de Leon and the spouses Caliwag for the annulment of
the sale by De Leon in favor of the Caliwags, anchored on the earlier mentioned Deed of Conditional Sale.

On January 3, 1991, Luz Du caused the annotation of a Notice Of Lis Pendens at the back of TCT No. 2200.

On February 11, 1991, the court where the Stronghold case was filed ruled in favor of Stronghold, ordering the spouses Caliwag
jointly and severally to pay the plaintiff P8,691,681.60, among others. When the decision became final and executory, on March 12,
1991, a notice of levy on execution was annotated on TCT No. 2200 and the attached property was sold in a public auction. On August
5, 1991, the certificate of sale and the final Deed of Sale in favor of Stronghold were inscribed and annotated leading to the TCT No.
6444 in the name of Stronghold.

It came to pass that on August 5, 1992, Luz Du too was able to secure a favorable judgment in Civil Case No. 60319 and which
became final and executory sometime in 1993, as well. Thus, Luz Du commenced the present action to cancel the TCT No. 6444 with
damages claiming priority rights over the property by virtue of her Notice Of Lis Pendens under Entry No. 13305 and inscribed on
January 3, 1991, and the final and executory decision in he civil case she filed against spouses Caliwag.

According to Luz Du, despite her said notice of lis pendens annotated, Stronghold still proceeded with the execution of the decision in
the other civil case against the subject lot and ultimately the issuance of Transfer Certificate of Title No. 6444 in its (Strongholds)
name.

The trial court ruled that Stronghold had superior rights over the property because of the prior registration of the latters notice of levy
on attachment on Transfer Certificate of Title (TCT) No. 2200. For this reason, it found no basis to nullify TCT No. 6444, which was
issued in the name of respondent after the latter had purchased the property in a public auction.

The CA affirmed the RTC Decision in toto and held thatnotice of levy on attachment had been registered almost 5
months before petitioners notice of lis pendens.

ISSUES:
Whether a Notice of Levy on Attachment on the property is a superior lien over that of the unregistered right of a buyer of a property
in possession pursuant to a Deed of Conditional Sale

WON the acquisition of the subject property by Respondent Stronghold was tainted with bad faith

HELD:
1) Yes. Preference is given to a duly registered attachment over a subsequent notice of lis pendens, even if the
beneficiary of the notice acquired the subject property before the registration of the attachment. Under the torrens
system, the auction sale of an attached realty retroacts to the date the levy was registered. In this case of Tambao v. Suy, 52 Phil.
237, it has been held that Where a preliminary attachment in favour of A was recorded earlier, and the private sale of the attached
property in favour of B was executed a year later, the attachment lien has priority over the private sale, which means that the
purchaser took the property subject to such attachment lien and to all of its consequences, one of which is the subsequent sale on
execution.

The preference created by the levy on attachment is not diminished even by the subsequent registration of the prior
sale. In Capistrano v. PNB, if the attachment or levy of execution, though posterior to the sale, is registered before the sale is
registered, it takes a precedence over the latter. The rule is not altered by the fact that at the time of the execution sale the Philippine
National Bank had information that the land levied upon had already been deeded by the judgment debtor and his wife to Capistrano.
The auction sale being necessary sequel to the levy, for this was effected precisely to carry out the sale, the purchase made by the
bank at said auction should enjoy the same legal priority that the levy had over the sale in favour of plaintiff. In other words, the
auction sale retroacts to the date of the levy. Were the rule otherwise, the preference enjoyed by the levy of execution in a case like
the present would be meaningless and illusory.
2) No. Good faith: Defense in registration of attachment. It is settled that a person dealing with registered property may rely on
the title and be charged with notice of only such burdens and claims as are annotated thereon. This principle applies with more force to
this case, absent any allegation or proof that Stronghold had actual knowledge of the sale to petitioner before the registration of its
attachment. Thus, the annotation of respondents notice of attachment was a registration in good faith, the kind that made its prior
right enforceable