Factual Background

On July 22, 1998, Binan Steel Corporation sued Joenas Metal Corporation and the spouses Ng Ley Huat and Leticia Dy Ng in the Regional Trial Court of Manila for collection of money and damages. The trial court issued a writ of preliminary attachment on July 24, 1998 and the sheriff levied on July 27, 1998 a lot registered in the names of the spouses Ng under TCT No. 11387, which was mortgaged to the Far East Bank and Trust Company. The spouses Ng executed a deed of sale in favor of Mylene and Myla Garcia dated June 29, 1998, but the sale was registered only on August 12, 1998 after the mortgagee’s approval; TCT No. 11387 was cancelled on August 19, 1998 and replaced by TCT No. 194226 in the names of the Garcias, with the annotation of the preliminary attachment transferred to the new title.

Trial Court Proceedings and Attachment

The Manila RTC recorded the preliminary attachment on the original title before the Garcias registered their acquisition. After the Garcias’ complaint-in-intervention in the Manila action was denied, the Manila RTC rendered a default judgment in favor of BSC on April 14, 1999, awarding P5,856,000 as actual damages, P1,000,000 as consequential damages, attorneys’ fees, and costs. Execution proceedings followed and a notice of sale of the real property was issued on June 14, 1999, scheduling a public auction.

Competing Actions and Interim Relief

While execution was pending, the Garcias filed a separate action for cancellation of the notice of levy and other reliefs before Branch 98 of the RTC, Quezon City (Civil Case No. 99-36804), and obtained a temporary restraining order enjoining the public auction. The Manila RTC, however, disregarded that TRO and directed the auction to proceed unless enjoined by the Court of Appeals or the Supreme Court. The auction was rescheduled and the Garcias then filed a petition with the Court of Appeals seeking injunctive relief against the Manila judge and sheriff; BSC moved to intervene in that petition.

Court of Appeals Proceedings

The Court of Appeals temporarily restrained the Manila respondents from proceeding with the auction on August 5, 1999. Binan Steel Corporation moved to intervene on August 16, 1999. The Court of Appeals denied BSC’s motion for intervention by resolution dated October 21, 1999 and denied reconsideration on January 31, 2000 on the ground that BSC’s rights could be protected in a separate proceeding, namely the Garcias’ cancellation case in Quezon City. Separately, the Fifteenth Division of the Court of Appeals dismissed the Garcias’ petition on February 10, 2000 for violation of the rule against forum-shopping, and denied reconsideration on May 31, 2001.

Consolidation at the Supreme Court and Interim Measures

BSC filed a special civil action for certiorari and mandamus in the Supreme Court seeking annulment of the Court of Appeals’ denial of intervention (G.R. No. 142013). The Garcias filed a petition for review on certiorari seeking reversal of the Court of Appeals’ dismissal for forum-shopping (G.R. No. 148430). The Supreme Court consolidated the two petitions on February 27, 2002. In the interim, an auction proceeded on August 7, 2001 and the property was awarded to BSC; the Supreme Court thereafter issued a TRO on August 15, 2001, but it issued an order on August 9, 2002 directing the parties to maintain the status quo as of August 6, 2002.

Issues Presented

The Court identified two pivotal issues for resolution: first, which of the parties, Binan Steel Corporation or the Garcias, had the superior right to the disputed property; and second, whether the Garcias violated the rule against forum-shopping by seeking relief in two courts based on substantially the same facts.

Parties' Contentions

Binan Steel Corporation contended that it acquired a specific lien on the property by virtue of the duly registered writ of preliminary attachment annotated on the certificate of title on July 27, 1998, and that its rights could not be prejudiced by the Garcias’ subsequently registered sale. The Garcias contended they were registered owners by virtue of their deed of sale and later registration and sought cancellation of the notice of levy and injunctive relief to prevent the execution sale.

Supreme Court Ruling (Disposition)

The Supreme Court denied both petitions and ordered that TCT No. 194226 in the names of Myla and Mylene Garcia be cancelled and a new title be issued in favor of Binan Steel Corporation. The Court lifted and set aside its earlier August 9, 2002 direction to maintain the status quo. The Court affirmed BSC’s right to ownership and possession following the execution sale, subject to the Garcias’ right to seek reimbursement from the spouses Ng.

Legal Basis and Reasoning

The Court applied the doctrine that attachment is a proceeding in rem that creates a specific lien on the attached property enforceable against the whole world once the levy is registered in the Registry of Deeds, citing Director of Lands v. Abad and subsequent authorities. The Court held that registration of the levy on July 27, 1998 gave BSC constructive notice of its lien and that the Garcias’ unregistered sale, and their subsequent registration on August 12, 1998, could not defeat a prior duly registered attachment. The Court relied on Article 1544 of the New Civil Code and on jurisprudence such as Ramos v. Court of Appeals and First Integrated Bonding & Insurance Co., Inc. v. Court of Appeals to reaffirm that a sale with assumption of mortgage requires mortgagee approval and that registration is the act that binds third persons. The Court emphasized the rule of constructive notice that presumes purchasers examine public records and that such presumption cannot be overcome by a claim of ignorance.

Forum-shopping Analysis and Consequences

The Court found that the Garcias engaged in forum-shopping by inst

Parties and Procedural Posture

Binan Steel Corporation filed a complaint for collection with damages in Branch 7, RTC Manila, and later pursued a writ of preliminary attachment.
Joenas Metal Corporation and Ng Ley Huat and Leticia Dy Ng were the named defendants in the Manila RTC civil action.
Mylene C. Garcia and Myla C. Garcia purchased the subject property from the spouses Ng and later filed separate proceedings to cancel the levy and to enjoin the execution sale.
Far East Bank and Trust Company (FEBTC), now Bank of the Philippine Islands (BPI) was the mortgagee of the subject property and approved the sale to the Garcias.
The case reached the Court of Appeals by petitions for injunctive relief and intervention, and the parties then sought relief before the Supreme Court by consolidated petitions for certiorari, mandamus, and review on certiorari.
The petitions were consolidated by the Supreme Court for resolution of the competing claims to the property and the question of forum-shopping.

Key Factual Allegations

Binan Steel Corporation filed its complaint on July 22, 1998 and obtained a Writ of Preliminary Attachment issued July 24, 1998.
The sheriff levied the attachment on the property covered by TCT No. 11387 on July 27, 1998, and the levy was annotated in the Registry of Deeds of Quezon City.
The spouses Ng executed a deed of sale to the Garcias dated June 29, 1998 which was registered only on August 12, 1998 after mortgagee approval.
TCT No. 11387 was cancelled on August 19, 1998 and TCT No. 194226 in the names of the Garcias was issued, with the earlier annotation of preliminary attachment transferred to the new title.
The Manila RTC rendered judgment by default for Binan Steel Corporation on April 14, 1999, awarding P5,856,000 as actual damages and other reliefs, followed by an execution sale notice and scheduling of a public auction.

Trial Court Proceedings

The Manila RTC, presided by Judge Enrico A. Lanzanas, issued the preliminary attachment, rendered default judgment on April 14, 1999, and directed execution sale procedures thereafter.
The trial court denied the Garcias' complaint-in-intervention in the Manila RTC for lack of merit.
The Manila RTC proceeded with execution sale scheduling despite a temporary restraining order obtained by the Garcias in a separate action before the Quezon City RTC.

Proceedings in Quezon City RTC

The Garcias filed Civil Case No. 99-36804 in Branch 98, RTC Quezon City, seeking cancellation of the notice of levy annotated on TCT No. 194226 and securing an ex parte temporary restraining order against the public auction.
The Quezon City RTC TRO enjoining the auction was disregarded by the Manila RTC which proceeded to maintain the sale unless enjoined by higher court action.

Court of Appeals Rulings

The Third Division of the Court of Appeals temporarily restrained the Manila RTC from proceeding with the auction on August 5, 1999.
The First Division of the Court of Appeals denied Binan Steel Corporation's motion to intervene on October 21, 1999 and denied reconsideration on January 31, 2000 on the ground that BSC's rights could be protected in the Quezon City cancellation proceedings.
The Fift