Unicorp Finance v. Herma
REITERATIONFacts
The Antecedents: The case involves three parcels of land originally owned by Spouses Escalona, who sold them to TERP Construction Corporation (TERP) in 1995 and 1996. TERP conveyed these properties to Margarita Asset Pool, whose trustee was Planters Development Bank. To finance housing projects, TERP issued and sold Margarita Project Participation Certificates (MPPCs), guaranteed by Home Insurance and Guaranty Corporation (HGC). When the Margarita Asset Pool failed to pay, HGC settled claims and received the Margarita Asset Pool, including the subject properties. Subsequently, HGC was issued new titles (TCT Nos. N-247055, N-249442, and N-249441), which carried annotations of a notice of levy by Unicorp Finance Limited (Unicorp) in Civil Case No. Q-99-36998 and a notice of lis pendens in Civil Case No. Q-99-37597, both filed by Unicorp. Another annotation of a notice of levy on alias writ of execution in Civil Case No. 96-1758 (AsianBank Corp. vs. Escala Garment Manufacturing Corp., et al.) also appeared on some titles. Unicorp's claim stemmed from a foreign judgment against Spouses Escalona and others, which was recognized by the RTC QC-Branch 226. However, the Court of Appeals (CA) reversed the RTC's decision regarding the annulment of sale, upholding the validity of the sale between Spouses Escalona and TERP. This CA decision was affirmed by the Supreme Court. HGC later sold the subject properties to Herma Corporation (Herma) on an "as-is-where-is basis," and new titles were issued in Herma's name. Herma filed a petition to cancel the annotations on its titles. Procedural History: The RTC QC-Branch 223, acting as a land registration court, granted the cancellation of the notice of lis pendens but denied the cancellation of the notices of levy, ruling it lacked jurisdiction over the latter as they were issued by a court of coordinate jurisdiction. Herma appealed to the CA. The CA, in CA-G.R. CV No. 105736, granted Herma's appeal, ordering the cancellation of all notices of levy, holding that the RTC, as a land registration court, had jurisdiction and that Herma's ownership was superior to the levies because Spouses Escalona were no longer owners when the levies were made. The CA also issued a writ of injunction in CA-G.R. SP No. 155574 to prevent the public sale of the properties pending the resolution of the cancellation case. Unicorp appealed these CA decisions to the Supreme Court. The Petition: Unicorp filed two consolidated petitions for review on certiorari, assailing the CA's decisions that ordered the cancellation of the notices of levy and granted the injunction, arguing that the land registration court lacked jurisdiction to lift levies from a co-equal court, that the annotations were superior liens, and that Herma committed forum shopping.
Issue(s)
Whether the RTC QC-Branch 223, sitting as a land registration court, has jurisdiction to lift/cancel the notices of levy on attachment annotated on the subject titles by virtue of writs of attachment issued by another court of co-equal and coordinate jurisdiction. Whether the subject annotations can still be cancelled considering that they are in the nature of a superior lien and have already become immutable due to the finality of a favorable decision; and whether Herma's ownership of the subject properties is subordinate to the liens annotated on the precursor titles and carried over to said titles. Whether the sale of the subject properties to satisfy the judgment earlier rendered in Civil Case No. Q-99-36998 can be enjoined by the writ of injunction issued by the Court of Appeals. Whether Herma committed forum shopping when it filed a petition for injunction with application for TRO and/or WPI in the CA despite the pendency of its appeal from the RTC decision on the petition for cancellation of annotations.
Ruling
The Supreme Court denied both petitions for review, affirming the decisions of the Court of Appeals. The Court held that the RTC, acting as a land registration court, has jurisdiction to determine the propriety of cancelling annotations of notices of levy on attachment. It further ruled that Herma's ownership of the subject properties is superior to the annotated liens because Spouses Escalona had already sold the properties to TERP before the levies were made, and the subsequent registration of these sales in 2003 made them binding on third parties like Unicorp. The Court also found the issuance of the writ of injunction proper and that Herma did not commit forum shopping.
Ratio Decidendi
On the jurisdiction of the land registration court: The Court reiterated that under Presidential Decree No. 1529 (Property Registration Decree), the RTC, acting as a land registration court, has exclusive jurisdiction over petitions filed after original registration of title, with the power to hear and determine all questions arising from such petitions. The distinction between the RTC's general jurisdiction and its limited jurisdiction as a special court has been eliminated by PD 1529, allowing RTCs to hear and determine all questions, even contentious ones, arising from land registration matters. Therefore, the RTC QC-Branch 223 had jurisdiction to determine the propriety of cancelling the notices of levy annotated on the titles, and the CA correctly ruled to decide the matter directly rather than remanding it. On the superiority of Herma's ownership over the liens and the cancellability of annotations: The Court emphasized that money judgments can only be enforced against properties incontrovertibly belonging to the judgment obligor. In this case, Spouses Escalona had already sold the subject properties to TERP in 1995 and 1996, prior to the levies made in 1999 and 2001. Although the sale to TERP was not registered until 2003, making it binding on third persons like Unicorp only from that date, Spouses Escalona had already lost all right, title, or interest in the properties upon their absolute sale. Consequently, the properties could not be made answerable for the debts of Spouses Escalona. The registration of the sale to TERP in 2003 meant that from that point forward, Unicorp was bound by the fact that Spouses Escalona had already sold the properties, thus negating any basis for the annotations to be carried over to Herma's titles. Herma, as the successor-in-interest of HGC, derived its title from TERP, which acquired ownership before the levies were made. On the propriety of the writ of injunction: Given that Herma was established as the absolute owner of the subject properties and had a clear and unmistakable right to them, and that these properties were mistakenly levied upon to answer for the debts of Spouses Escalona, the issuance of a writ of injunction to prevent their sale was proper. Herma, as a third-party claimant, had the right to challenge the levy through a separate action to recover ownership or possession. The injunction was necessary to prevent serious damage to Herma and to uphold its constitutional right not to be deprived of its property without due process of law. The injunction was correctly made effective only until the final decision in the cancellation case. On forum shopping: The Court found no identity of parties, causes of action, or reliefs sought between the petition for cancellation of annotations (LRC Case No. R-QZN-13-01369-LR/CA-G.R. CV No. 105736) and the petition for injunction (CA-G.R. SP No. 155574). The parties were not identical as the injunction case included the Sheriff and RTC QC-Branch 226, who were not parties in the cancellation case. The reliefs sought were different: cancellation of annotations versus injunction against sale. Furthermore, the judgment in the cancellation case would not amount to res judicata in the injunction case because the latter involved the annotation of a writ of execution entered in 2018, which was not yet present when the cancellation case was filed in 2013. Therefore, Herma did not commit forum shopping.
Main Doctrine
A land registration court has jurisdiction to determine the propriety of cancelling annotations of notices of levy on attachment, and a party's ownership of property is superior to liens annotated on titles if the property was already sold prior to the levy, even if the sale was not yet registered at the time of the levy, as the registration of the sale becomes the operative act to convey or affect the land concerning third persons.