G.R. No. 78059 - De Leon vs. Esguerra

The case involves petitioner Leonora Obana challenging a decision of the Court of Appeals which set aside a trial court decision.
The trial court had dismissed Obana’s complaint and ordered her to pay P5,000.00 as attorney’s fees with costs to respondent Rafael G. Suntay.
The petition is a review on certiorari of the aforementioned decision and involves multiple previous proceedings that interconnect.

In the guardianship case (Sp. Proc. No. C-00565) before the Juvenile and Domestic Relations Court of Quezon City, defendant-appellant Rafael G. Suntay, acting as counsel for Liberty H. Dizon and her minor children (both surnamed Torio), filed an “Explanation and Motion” requesting approval of attorney’s fees.
The defunct Juvenile and Domestic Relations Court (JDRC) of Quezon City, on May 9, 1972, issued an order authorizing the collection of P5,000.00 from the ward’s guardianship estate, thereby splitting the originally required fee of P10,000.00 between the parties.

On November 9, 1972, Atty. Suntay initiated Civil Case No. 4238-M before the CFI of Bulacan to recover his unpaid attorney’s fees, alleging that repeated demands for payment from his former clients had failed.
In connection with this collection suit, Suntay moved for attachment of a parcel of land (covered by TCT No. 173792) belonging to Liberty H. Dizon and the minors, as the remedy for non-payment.
Subsequent developments included:

The issuance of a Writ of Attachment on December 1, 1972, with corresponding notations on the title, highlighting the levy for P10,000.00.
The failure of the sheriff to personally serve summonses due to the defendants’ change of address, resulting in service by publication after a court order on February 12, 1973.

A certificate of sale was later issued in favor of Atty. Suntay following the sheriff’s sale, ultimately transferring the property to petitioner Obana through a Deed of Absolute Sale dated May 16, 1973.
Further, a Sheriff’s Final Deed of Sale was executed in favor of Atty. Suntay, with corresponding annotations on the title (now TCT No. 191059) owned by Obana.

To stop the registration of the subject land in Atty. Suntay’s name, Obana filed an action on August 28, 1978 for annulment of the judgment rendered in Civil Case No. 4238-M.
In a separate proceeding (No. LRC 750) before the CFI of Quezon City, Atty. Suntay sought cancellation of TCT No. 191059.
The trial court in the annulment case ruled that:

Summons by publication did not satisfy the due process requirements for personal actions.
The attachment and subsequent levy made by the sheriff were invalid, as no personal service had been effected at the property’s address.
The attachment did not convert the action into an in rem or quasi in rem proceeding.

The appellate court, however, dismissed Obana’s complaint on the ground that she was neither a proper defendant nor a party in interest in the original collection case, hence invoking the principle of res judicata.

SP-C-00565 – the guardianship case awarding attorney’s fees.
CC 4238-M – the collection suit for attorney’s fees, resulting in a default judgment.
Civil Case No. 5418-M – the annulment of judgment case contesting the validity of the collection case.
LRC 750 – the petition for cancellation of the transfer certificate (TCT No. 191059).

The controversy centers around the fact that although Obana was not directly a party in the collection suit, the property she purchased was attached and later sold without her being notified, thereby affecting her interests.

She was unjustly affected since the property was subject to attachment and sale without being a formal party to the underlying collection action.
The procedural irregularities, including defective service (via publication) and improper attachment, rendered the subsequent sale and canceling of titles void.
The decision invoking res judicata (based on the LRC 750 order) was erroneous, as it disregarded the rights of an innocent third-party purchaser.

Obana contends that the unjust enrichment of Atty. Suntay (obtaining a million-peso property for a P10,000.00 fee) mandated correction through equitable relief.

Whether petitioner Obana, who purchased the property subject to attachment, has standing as a party in interest despite not being a formal defendant in Civil Case No. 4238-M.
Whether her rights were infringed by the execution of a sale conducted without her notice.

Whether the service by publication, in lieu of personal service, was valid under constitutional and procedural due process requirements.
Whether the conversion of an action in personam into a proceeding resembling an in rem or quasi in rem action via attachment was permissible under Rule 57 of the Rules of Court.

Whether the application of the cancellation order in LRC 750, and hence the res judicata effect, was appropriate given the irregularities in the prior proceedings.
Whether the judgment in Civil Case No. 4238-M can be considered final and binding even though the procedural defects (notably in service and attachment) were evident.

Whether equity demands that the owner of the property (Obana) not be compelled to satisfy an attorney’s fee claim that arose from defective proceedings.
How the interplay between procedural defects and the effect of attachment and execution sale impacts substantive property rights.