G.R. No.

L-21556 October 31, 1967

PHILIPPINE SURETY and INSURANCE CO., INC., petitioner,

vs.
BEATRIZ ZABAL, respondent.

Ariston J. Oblena for petitioner.

Domingo C. Aquino for respondent.

REYES, J.B.L., J.:

In this petition for review, petitioner Philippine Surety and Insurance Company, Inc. takes exception from the ruling of the Court of
Appeals (in CA-G. R. No. 31014-R) that notice to the occupant of a real property is a prerequisite to a valid levy of execution upon that
property, and reversing the decision of the Court of First Instance of Manila (in Civil Case No. 49395).

Pursuant to a writ of execution duly issued by the Court of First Instance of Manila in favor of herein petitioner surety company to
enforce a money judgment against Amado de la Merced and Candido Fajardo, the solidary judgment-debtors in Civil Case No. 42056, the
Sheriff of Manila, on June 17, 1960, levied on all the interests and participation of Candido Fajardo in a parcel of land registered in his
name under TCT No. 21180. Notice of the levy was duly registered in the register of deeds of Manila, and annotated in the corresponding
title.

On August 28, 1961, Beatriz Zabal presented for registration a deed of sale dated August 28, 1959, whereby Candido Fajardo appeared to
have conveyed to her the parcel of land covered by TCT No. 21180. Thereupon, the Registrar of Deeds cancelled the certificate in the
name of Fajardo and issued in lieu thereof TCT No. 64730 in the name of Beatriz Zabal. But, as the notice of levy in favor of the surety
company was carried at the back of the new certificate, Zabal went to the Court of First Instance of Manila (in Civil Case No. 49395),
praying for the cancellation of the annotation, on the ground that she was already the owner of the land when it was registered, and that
the levy on the property was irregular and improper.

Therein defendants Philippine Surety & Insurance Company, the Sheriff of Manila and the Register of Deeds for Manila, set up as defense
the alleged superiority of the lien, created by the prior registration of the levy, over the sale in favor of the plaintiff. The trial court
thereafter ruled adversely against the plaintiff and ordered dismissal of the complaint.

On appeal by the plaintiff to the Court of Appeals, however, the decision of the trial court was reversed. The appellate court, ordering the
dissolution of the attachment and the cancellation of the notice of levy at the back of TCT No. 64730, said:

. . . the rule (that registration of an attachment makes it superior to a prior unregistered sale) presupposes a valid levy and
plaintiff challenges the efficacy of the levy. She testified without contradiction that she has been in occupation of the property
even prior to the sale on August 28, 1958 and particularly June 17, 1960 when the levy was made, yet she was not served a
copy of the notice of levy, order or attachment and description of the property, in violation of the requirements of Section 7(a)
of Rule 59. A proceeding by attachment being in derogation of the common law, the officer must comply with the statutes in
making the levy. Under a statute similar to Section 7(a), Rule 59, it has been held that failure to comply with such a
requirement is fatal to the validity of the levy (Schwarts vs. Cowell, 12 P. 252, 71 Cal. 306; Fountain vs. 624 Pieces Timber, 140
Fed. 381; 6 CJ p. 234 Sec. 443 nn 9 & 10). Otherwise stated, service on the occupant, if any "must appear from the return or
else the service on its face is unauthorized and invalid" (Hall vs. Stevenson, 19 Or 153, 23 P. 887, 20 Am. St. Rep. 803;
Anderson vs. Moline Plow Co., 101 Iowa 747, 69 NW 1028 cited in 4 Am. Jur. Sec. 575, p. 903). Moreover, the required notice to
the defendant debtor under Section 5 of the same Rule has been held essential to the validity of an attachment lien; so where
the return of the sheriff shows that this step was not taken, the attachment is invalid and no lien in favor of the attachment
creditor is acquired thereby (Philippine National Bank vs. Atiles, 58 Phil. 240, 253; cf. Chua Hermanos vs. Register of Deeds of
Batangas, 50 Phil. 670; 674). It results that the notice to the occupant is essential to the validity of the attachment, non-
compliance with which renders the attachment invalid and ineffective particularly to herein plaintiff who was in possession as
vendee.

Section 7 of old Rule 59 (now Sec. 7 of Revised Rule 57), prescribes the procedure or mode of effecting an attachment, thus:

Sec. 7. How various classes of real and personal property attached; duty of registrar of deeds. The property of the defendant
shall be attached by the officer executing the order of the following manner:

(a) Real property, or growing crops thereon, standing upon the records of the registrar of deeds of the province in the name of
the defendant, or not appearing at all upon such records, by filing with the registrar of deeds a copy of the order, together with
a description of the property attached, and a notice that it is attached, and by leaving a copy of such order, description, and
notice with the occupant of the property, if any there be. Where the property has been brought under the operation of the Land
Registration Act, the notice shall contain a reference to the number of the certificate of title and the volume and page in the
 registration book where the certificate is registered. The registrar must index attachments filed under this paragraph in the
names both of the plaintiff and of the defendants. (Emphasis supplied.)

To effect a levy upon a realty, the sheriff is required to do two specific things: (1) file with the register of deeds a copy of the order,
description of the attached property and notice of attachment, and (2) leave with the occupant of the property copy of the same order,
description and notice. These are prerequisites to a valid levy, non-compliance with any of which is fatal. For the weight of authority is to
the effect that a special statutory provision, respecting the manner of carrying out levy of attachment, must be strictly complied with, and
departure therefrom shall invalidate the levy.1 Thus, in Llenares vs. Valdeavella and Zoreta, 46 Phil. pp. 358, 360, 361, this Court said:

The levy of an execution is defined as the acts by which an officer sets apart or appropriates for the purpose of satisfying the
command of the writ, a part or the whole of a judgment debtor's property. In the absence of statutory provisions no special
formalities are required for a valid levy, and in regard to real property it has usually been held sufficient if the seizure of the
property is made known to the occupants thereof and endorsed on the writ. But it is otherwise where, as in this jurisdiction,
the matter is regulated by statute; there a substantial compliance with the statute is indispensable.

The statutory provisions to this case are found in sections 450 and 429 of the Code of Civil Procedure. Section 450 states that
property "may be attached on execution in like manner as upon writs of attachment." This provision while permissive in form
must, nevertheless, be regarded as mandatory. No other method of effecting the levy is prescribed and it is an old rule that
powers through the exercise of which a person may be divested of his property are always strictly construed and that the
provisions regulating the procedure in their exercise are mandatory as to the essence of the thing to be done. (Lewis'
Sutherland on Statutory Construction, 2d ed., sec. 627.)

After quoting the provisions of section 429 of Act 190, similar to that of the Rules heretofore quoted, this Court proceeded to rule:

In the present case it is admitted by the plaintiff that notice of attachment for the execution was not filed with the registrar of
deeds and that there was no copy thereof served on the defendants. It is therefore clear that the attempted levy was not made
in accordance with the provisions of the statute, and, according to the great weight of authority, a proper levy is indispensable
to a valid sale on execution. A sale unless preceded by a valid levy, is void, and the purchaser acquires no title. (Leath vs.
Deweese, 162 Ky., 227; Jarboe vs. Hall, 37 Md., 345.)

Registration of levy was also declared invalid where the Sheriff's notice did not contain a reference to the number of the certificate of title
covering the levied property, the volume and page in the registry book where the title is registered, 2 or where the notice was not
accompanied by a copy of the order of attachment. 3

The evident purpose of the law in imposing these requirements is to make the levy public and notorious, to prevent liens from attaching
secretly and by surreptitious entries and endorsements, and to enable the affected party to inquire into the date and circumstances
surrounding the creation of the encumbrance,4 as well as to give him ample opportunity to file timely claim to the property levied upon.

Since the Court of Appeals, in this case, found that no notice of the levy was given to respondent who was then in occupancy of the land
a factual finding which we cannot now review it is obvious that there was no valid levy on the land, and, therefore, its registration
in the registry of deeds and annotation in the title were also invalid and ineffective. 5 Petitioner's case is not even helped by the allegation
that Fajardo, in whose name the land was registered was duly notified of the attachment. Where notice to the occupant is required by law
for the validity, of a levy, personal service of the copy of the writ, description of the property and notice to the owner, who is not the
occupant, does not constitute compliance with the statute.6

There being no valid levy nor sale thereunder, the question of priority of rights between the parties does not really arise.

In view of the conclusion thus reached on the main issue, there is no necessity to pass upon the nature and character of the deed of sale
executed by Candido Fajardo in favor of respondent, which is also here assailed by petitioner. The issue was not raised in the Courts
below.

WHEREFORE, finding no error in the decision under review the petition is hereby dismissed, with costs against petitioner. So ordered.

Concepcion, C.J., Dizon, Makalintal, Bengzon, J.P., Zaldivar, Sanchez, Castro, Angeles and Fernando, JJ.,concur.
 FIRST DIVISION

THE PHILIPPINE COTTON G.R. No. 130389

CORPORATION,
Petitioner-Appellant,
Present:

PUNO, C.J., Chairperson,

- versus - SANDOVAL-GUTIERREZ,
CORONA,
AZCUNA, and
LEONARDO- DE CASTRO, JJ.
NARAINDAS GAGOOMAL and
ENGRACIO ANG,
Respondents-Appellees,

CHINA BANKING CORPORATION, Promulgated:

Intervenor-Appellee. February 11, 2008

x ---------------------------------------------------------------------------------------- x

DECISION

AZCUNA, J.:

This is a petition for review on certiorari[1] assailing the Decision[2] of the Court of Appeals (CA) promulgated on August 29,
1997 in CA-G.R. CV No. 50332.

The facts of record would indicate that Pacific Mills, Inc. (Pacific Mills) originally owned five parcels of land covered by
Transfer Certificates of Title (TCT) Nos. 136640, 136441, 222370 and 134249. These properties were subsequently purchased by
respondents on an installment basis from Pacific Mills on July 19, 1979.[3]

On June 23, 1983, petitioner filed a collection case against Pacific Mills before the Regional Trial Court (RTC) of Pasig, Branch
162 on the ground of alleged failure to fulfill its obligation under a contract of loan. After hearing, the trial court issued a writ of
preliminary attachment in favor of petitioner. Thereafter, on August 17, 1983, the writ of preliminary attachment was annotated on TCT
Nos. 136640, 136441, 222370 and 134249.

On December 27, 1985, the RTC of Pasig rendered a decision ordering Pacific Mills to pay its obligation under the loan
agreement plus interest, penalty charges, attorneys fees and costs of suit. On appeal, the CA affirmed the decision of the trial court. Not
satisfied with the judgment of the appellate court, Pacific Mills filed a petition for review before this Court.

During the pendency of the appeal or on June 11, 1988, the Quezon City Hall was razed by fire thereby destroying the records
of the Registry of Deeds of Quezon City, including the TCTs of Pacific Mills.

Sometime in 1992, Pacific Mills filed a petition for reconstitution of the burned TCTs through administrative reconstitution, in
accordance with Republic Act No. 6732.[4]On March 23, 1992, the Registry of Deeds of Quezon City issued to Pacific Mills the
reconstituted TCTs, namely: No. RT-55702 (for TCT No. 136640), No. RT-55704 (for TCT No. 134249), No. RT-55703 (for TCT No.
136441) and No. RT-55705 (for TCT No. 222370). However, the aforesaid alleged annotations of the preliminary attachment in favor of
petitioner were not incorporated in the reconstituted TCTs, but annotated therein was the sale made by Pacific Mills to respondents and
their payment in full. On even date, the reconstituted TCTs were cancelled in favor of the respondents. Respondents were given the
following clean TCT Nos. 56683[5] (for RT-55703), 56684[6] (for RT-55702), 56685[7] (for RT-55704) and 56686[8] (for RT-55705).

On February 8, 1993, petitioner wrote the Registry of Deeds of Quezon City requesting for the annotation of the notice of levy,
and, subsequently, the annotation of a favorable decision of this Court rendered on August 3, 1992, on the new TCTs issued to
respondents.

On February 10, 1993, Samuel C. Cleofe, the Quezon City Register of Deeds, informed respondents that the letter-request for
re-annotation of notice of levy had been entered in the Primary Entry Book 574/Volume 24, and asked them to surrender their owners
duplicate copies of TCT Nos. 56683 to 56686.[9]
 Immediately upon receipt of the said letter, respondents verified the original copies of titles in the possession of the Registry
of Deeds and discovered that the following annotations were included at the back of the titles: Request for Re-Annotation of Notice of
Levy and Letter Request for Annotation of Entry of Judgment of Supreme Court.

Thereafter, respondents filed on March 3, 1993, a Petition for the Cancellation of Annotations in Land Titles before the RTC of
Quezon City, Branch 100, docketed as Civil Case No. Q-6056(93). Later on, petitioner was impleaded as an additional respondent, while
China Banking Corporation filed a complaint-in-intervention for being a mortgagee of the real properties, together with all the
improvements thereon.

On March 29, 1995, the trial court rendered judgment in favor of respondents. The dispositive portion of the decision reads:

WHEREFORE, premises above considered, there being no justification for the Quezon City Register of
Deeds in making the annotation on petitioners original TCT Nos. 56683 (RT-55703), 56684 (RT-55702), 56685
(RT-55748) and 56686 (RT-55705), said respondent is hereby ordered to DELETE therefrom the said annotation
request for annotation and the annotated Supreme Court decision against the Pacific Mills, Inc. and to desist from
its request for petitioners to submit their owners duplicate of titles to annotate such request of the Philippine
Cotton Corporation.

There being no justiciable issue in the complaint-in-intervention, let the annotations of a mortgage
executed by petitioners on December 18, 1992 in favor of intervenor China Banking Corporation remain on
petitioners subject TCTs.

SO ORDERED.[10]

The trial court ratiocinated that:

Under the circumstances, respondent [the Registry of Deeds of Quezon City] should and could have
properly refused such request instead of immediately annotating it. In the same light, The Register of Deeds may
likewise properly refuse registration of an order attachment when it appears that the title involved is not in the
name of the defendant and there is no evidence submitted to indicate that the said defendant has any present or
future interest in the property covered by the titles. (Gotauco vs. Register of Deeds of Tayabas, 59 Phil. 756, 1934
and Geonanga vs. Hodges, 55 O.G. p. 2891, April 21, 1958). (Underscoring Supplied) [11]

Unsatisfied with the outcome of the case, petitioner filed a notice of appeal before the CA, contending that:

THE REGISTER OF DEEDS OF QUEZON CITY HAS THE AUTHORITY TO RE-ANNOTATE THE NOTICE OF LEVY AND
TO ANNOTATE THE ENTRY OF JUDGMENT OF THE SUPREME COURT ON TRANSFER CERTIFICATES OF TITLE
NOS. 56683, 56684, 56685 AND 56686, ALL ISSUED IN THE NAME OF THE PETITIONERS-APPELLEES AS A
RESULT OF AN ADMINISTRATIVE RECONSTITUTION OF TITLES. [12]

In its August 29, 1997 decision, the appellate court dismissed the appeal because the issue raised by the petitioner was a pure
question of law, over which the CA had no jurisdiction.

Hence, this petition.

Petitioner presents the following assignment of errors:

FIRST ERROR

THE LOWER COURT ERRED IN NOT SUSTAINING THE AUTHORITY OF THE QUEZON CITY REGISTER OF DEEDS TO
VALIDLY RE-ANNOTATE THE INCUMBRANCE/LIENS AND ANNOTATE THE SUPREME COURT DECISION ON THE
ADMINISTRATIVELY RECONSTITUTED TRANSFER CERTIFICATES OF TITLES (TCTs) IN FAVOR OF PETITIONER-
APPELLANT.

SECOND ERROR

THE LOWER COURT, IN CONSEQUENCE THEREOF, LIKEWISE ERRED IN ORDERING THE QUEZON CITY REGISTER
OF DEEDS TO DELETE THE ANNOTATION THAT READS: REQUEST FOR ANNOTATION AND THE ANNOTATED
SUPREME COURT DECISION AGAINST PACIFIC MILLS, INC., FROM PETITIONERS ORIGINAL TCT NOS. 96683 [sic]
(RT-55703), 56684 (RT-55702), 56685 (RT-55748) AND 56686 (RT-55705) AND TO DESIST FROM REQUESTING
RESPONDENTS/APPELLEES TO SUBMIT THEIR OWNERS DUPLICATE OF TITLES FOR ANNOTATION OF
PETITIONER PHILIPPINE COTTON CORPORATIONS REQUEST.[13]

Petitioner asserts that a cursory reading of Section 71 of Presidential Decree No. 1529 shows that it is the ministerial duty of
the Register of Deeds, in the matter of an attachment or other liens in the nature of involuntary dealing in registered land, to send notice
by mail to a registered owner requesting him to produce his duplicate certificate so that a memorandum of attachment or other lien may
be made thereon. This provision, according to petitioner, actually applies whenever a writ of attachment has been issued by a court of
competent jurisdiction after hearing on the issuance of the said writ. The notice of attachment not having been dissolved, it was
ministerial on the part of the Register of Deeds to record the notice on the TCTs he issued.

Petitioner would persuade this Court that it is the ministerial duty of the Register of Deeds to record any encumbrance or lien
on respondents existing TCTs. It cites, as proof of its supposition, Sections 10 and 71 of the Property Registration Decree (P.D. No. 1529),
which are quoted as follows:

Section 10. General functions of Registers of Deeds. The office of the Register of Deeds constitutes a
public repository of records of instruments affecting registered or unregistered lands and chattel mortgages in the
province or city wherein such office is situated.

It shall be the duty of the Register of Deeds to immediately register an instrument presented for
registration dealing with real or personal property which complies with all the requisites for registration. He shall
see to it that said instrument bears the proper documentary and science stamps and that the same are properly
cancelled. If the instrument is not registrable, he shall forthwith deny registration thereof and inform the
presentor of such denial in writing, stating the ground or reason therefor, and advising him of his right to appeal
by consulta in accordance with Section 117 of this Decree.

xxx

Section 71. Surrender of certificate in involuntary dealings. If an attachment or other lien in the nature of
involuntary dealing in registered land is registered, and the duplicate certificate is not presented at the time of
registration, the Register of Deeds, shall, within thirty-six hours thereafter, send notice by mail to the registered
owner, stating that such paper has been registered, and requesting him to send or produce his duplicate certificate
so that a memorandum of the attachment or other lien may be made thereon. If the owner neglects or refuses to
comply within a reasonable time, the Register of Deeds shall report the matter to the court, and it shall, after notice,
enter an order to the owner to produce his certificate at a time and place named therein, and may enforce the
order by suitable process. (Underscoring supplied)

The Court is not in accord with the stance of petitioner. Section 10 of P.D. No. 1529 merely involves the general functions of
the Register of Deeds, while Section 71 thereof relates to an attachment or lien in a registered land in which the duplicate certificate
was not presented at the time of the registration of the said lien or attachment.

A special law specifically deals with the procedure for the reconstitution of Torrens certificates of title lost or destroyed.
Under Section 4 of Act No. 26:[14]

Liens and other encumbrances affecting a destroyed or lost certificate of title shall be reconstituted
from such of the sources hereunder enumerated as may be available, in the following order:

(a) Annotations or memoranda appearing on the owners, co-owners, mortgagees or lessees

duplicate;

(b) Registered documents on file in the registry of deeds, or authenticated copies thereof
showing that the originals thereof had been registered; and

(c) Any other document which, in the judgment of the court, is sufficient and proper
basis for reconstituting the liens or encumbrances affecting the property covered by the lost
or destroyed certificate of title. (Underscoring supplied)

Furthermore, Sections 8 and 11 of the same Act provide for the procedure for the notation of an interest that did not appear in
the reconstituted certificate of title, mandating that a petition be filed before a court of competent jurisdiction:

Section 8. Any person whose right or interest was duly noted in the original of a certificate of title, at the
time it was lost or destroyed, but does not appear so noted on the reconstituted certificate of title, which is subject to
the reservation provided in the preceding section, may, while such reservation subsists, file a petition with the
proper Court of First Instance for the annotation of such right or interest on said reconstituted certificate of title, and
the court, after notice and hearing, shall determine the merits of the petition and render such judgment as justice
and equity may require. The petition shall state the number of the reconstituted certificate of title and the nature,
as well as a description, of the right or interest claimed. (Underscoring supplied)

xxx

Section 11. Petitions for reconstitution of registered interests, liens and other encumbrances, based on
sources enumerated in sections 4(b) and/or 4(c) of this Act, shall be filed, by the interested party, with the proper
Court of First Instance. The petition shall be accompanied with the necessary documents and shall state, among
other things, the number of the certificate of title and the nature as well as a description of the interest, lien or
encumbrance which is to be reconstituted, and the court, after publication, in the manner stated in section nine of
 this Act, and hearing shall determine the merits of the petition and render such judgment as justice and equity may
require. (Underscoring supplied)

Clearly, therefore, it is not the ministerial function of the Register of Deeds to record a right or an interest that was not duly
noted in the reconstituted certificate of title. As a matter of fact, this task is not even within the ambit of the Register of Deeds job as the
responsibility is lodged by law to the proper courts. The foregoing quoted provisions of the law leave no question nor any doubt that it is
indeed the duty of the trial court to determine the merits of the petition and render judgment as justice and equity may require.

This conclusion is bolstered by Chapter X,[15] Section 108 of P.D. No. 1529, which provides:

Sec. 108. Amendment and alteration of certificates. No erasure, alteration, or amendment shall be
made upon the registration book after the entry of a certificate of title or of a memorandum thereon and
the attestation of the same by the Register of Deeds, except by order of the proper Court of First Instance. A
registered owner or other person having an interest in registered property, or, in proper cases, the Register
of Deeds with the approval of the Commissioner of Land Registration, may apply by petition to the court
upon the ground that the registered interests of any description, whether vested, contingent, expectant
inchoate appearing on the certificate, have terminated and ceased; or that new interest not appearing upon
the certificate have arisen or been created; or that an omission or error was made in entering the
certificate or any memorandum thereon, or on any duplicate certificate; or that the name of any person on
the certificate has been changed; or that the registered owner has married, or, if registered as married, that the
marriage has been terminated and no right or interest of heirs or creditors will thereby be affected, or that a
corporation which owned registered land and has been dissolved has not yet conveyed the same within three
years after its dissolution; or upon any other reasonable ground; and the court may hear and determine the
petition after notice to all parties in interest, and may order the entry or cancellation of a new certificate, the
entry or cancellation of a memorandum upon a certificate, or grant any other relief upon such terms and
conditions, requiring security or bond if necessary, as it may consider proper: Provided, however, That this section
shall not be construed to give the court authority to reopen the judgment or decree of registration, and
that nothing shall be done or ordered by the court which shall impair the title or other interest of a
purchaser holding a certificate for value and in good faith, or his heirs and assigns, without his or their written
consent. Where the owners duplicate certificate is not presented, a similar petition may be filed as provided in the
preceding section,

All petitions or motions filed under this section as well as under any other provision of this Decree after
original registration shall be filed and entitled in the original case in which the decree or registration was entered.
(Underscoring supplied)

The courts intervention in the amendment of the registration book after the entry of a certificate of title or of a memorandum
thereon is categorically stated in the Property Registration Decree and cannot be denied by the mere allegations of petitioner. Hence, the
contentions that the Register of Deeds may validly re-annotate the incumbrance/liens and annotate the Supreme Court decision on the
administratively reconstituted transfer certificates of titles (TCTs) have no basis in law and jurisprudence.

Petitioner further submits that the issuance of the TCTs to respondents is fraudulent. It suggests that under Sections 69 and
73 of P.D. No. 1529, any person whose interest does not appear on a reconstituted title may file a request directly with the Register of
Deeds.
As correctly observed by respondents, P.D. No. 1529 principally pertains to the registration of property, while R.A. No. 26 is a
special law on the procedure for the reconstitution of Torrens certificates of title that were lost or destroyed. Specifically, Section 69[16] of
P.D. No. 1529 refers to an attachment that arose after the issuance of a certificate of title; while Section 71[17] of the same law pertains to
the registration of the order of a court of an attachment that was continued, reduced, dissolved or otherwise affected by a judgment of
the court. Undoubtedly, the foregoing provisions find no application in the present case since petitioner insists that its interest was
annotated prior to the reconstitution of the disputed certificates of title.

WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals in CA-G.R. CV No. 50332, dated August 29, 1997,
and the Decision of the Regional Trial Court of Quezon City, Branch 101, in Civil Case No. Q-6056(93),[18] are hereby AFFIRMED.

No costs.

SO ORDERED.

ADOLFO S. AZCUNA
Associate Justice

WE CONCUR: