G.R. No. 144037 - People vs. Tudtud

Case Summary (G.R. No. 144037)

Case Background and Property Transactions

The case centers on three parcels of land located in Quezon City, initially registered under titles in the names of Spouses Escalona. These properties were sold in the mid-1990s to TERP Construction Corporation (TERP) through Deeds of Absolute Sale dated December 14, 1995, and March 19, 1996. The titles were accordingly cancelled and reissued under TERP’s name. Subsequently, TERP became part of an asset pool known as the Margarita Asset Pool, with Planters Development Bank as trustee. To finance housing projects, TERP issued Mortgage-backed securities known as Margarita Project Participation Certificates (MPPCs), which were guaranteed by Home Guaranty Corporation (HGC). Due to non-payment, HGC settled claims and acquired the properties through conveyance from the trustee, consequently being issued new titles with annotations reflecting writs of levy and notices of lis pendens related to various cases initiated by Unicorp and AsianBank.

Judicial Proceedings Prior to the Present Case

Unicorp filed suits for enforcement of a foreign judgment against Spouses Escalona and TERP, resulting in provisional levies annotated on relevant titles. The RTC Branch 226 initially declared the sale between Spouses Escalona and TERP as simulated and annulled the title issued to TERP. However, the Court of Appeals reversed this decision, upheld the sale's validity, and recognized TERP as the rightful owner. The Supreme Court denied Unicorp’s Rule 45 petition, thus settling the ownership dispute in favor of TERP. Later, Herma acquired the properties from HGC and filed before RTC-QC Branch 223 a petition to cancel the annotations of notices of levy on the titles. The RTC partially granted the petition by ordering cancellation of the notice of lis pendens but denied cancellation of the notices of levy. Herma appealed to the Court of Appeals.

The Court of Appeals’ Rulings

In CA-G.R. CV No. 105736, the Court of Appeals held that RTC Branch 223, sitting as a land registration court, had jurisdiction over the petition to cancel the notices of levy. The Court granted Herma’s appeal ordering the cancellation of all notices of levy on the titles, reasoning that at the time of levy in 1999 and 2001, the plaintiffs who were allegedly liable no longer owned the subject properties as they had been sold to TERP years prior. The CA also declared Herma’s ownership superior to the annotated liens and pointed out the expired effect of annotations that had remained unexecuted for over ten years.

In CA-G.R. SP No. 155574, the Court granted Herma’s petition for writ of injunction to prevent the public sale of the properties, citing the potential violation of Herma’s constitutional property rights and the irreparable damage such sale could cause.

Issues Before the Supreme Court

(1) Whether RTC QC-Branch 223, as a land registration court, had jurisdiction to order the cancellation of the notices of levy on titles annotated by virtue of writs issued by Branch 226, a coordinate court;
(2) Whether Herma’s ownership of the subject properties was subordinate to the annotated liens;
(3) Whether the Court of Appeals’ issuance of the writ of injunction to enjoin the sale of the properties was proper;
(4) Whether Herma committed forum shopping by filing a petition for injunction despite a pending appeal from the RTC’s decision in the cancellation of annotations case before the same appellate court.

Jurisdiction of the RTC Branch 223 as Land Registration Court

The Court clarified that the distinction between a trial court’s general jurisdiction and its limited jurisdiction when sitting as a land registration court is procedural rather than jurisdictional and may be waived. Under PD No. 1529, RTCs acting as land registration courts have exclusive, in rem jurisdiction over applications for registration and petitions affecting registered land titles, as well as authority to resolve all questions arising from such petitions. Jurisprudence has held that this jurisdiction encompasses significant issues involving the titles. Therefore, RTC QC-Branch 223 had jurisdiction over the petition to cancel the levy annotations despite the writs being issued by RTC QC-Branch 226 in separate but related cases. This arrangement promotes convenience and prevents multiplicity of suits.

Superior Ownership of Herma over Annotated Liens

The Court found that Spouses Escalona ceased to be owners of the subject properties in 1995-1996 when they sold them to TERP. Hence, the levy annotations based on writs of attachments levied during 1999 and 2001 upon titles nominally under Spouses Escalona were invalid as the properties were no longer theirs to be levied upon. Only the judgment obligor’s properties can be levied to satisfy a debt. The Court emphasized that although registration is the “operative act” to affect third persons, the unregistered sales were not intended to defraud creditors but were legitimate transfers related to housing projects. From the time of registration of these sales (2003 for Property 2 and Property 3), Unicorp became subject to the fact that Spouses Escalona no longer owned those properties. Consequently, Herma’s ownership—derived from HGC and ultimately TERP—is superior to any liens annotated on the titles. The annotations had also become unenforceable due to protracted inaction.

Legality and Appropriateness of the Writ of Injunction

Considering Herma’s established ownership and the invalidity of the annotations, the Court ruled that the Court of Appeals correctly issued the writ of injunction to stop the public sale of the properties. This was necessary to protect Herma’s constitutional right against

Case Syllabus (G.R. No. 144037)

Fact Summary

This case involves two consolidated petitions for review on certiorari under Rule 45 filed by Unicorp Finance Limited ("Unicorp") against Herma Corporation ("Herma").
The subject properties are three parcels of land in Quezon City, originally registered under TCT Nos. RT-109555, RT-2665, and RT-2666 in the names of Spouses Thelma and Margarita Escalona.
Spouses Escalona sold the subject properties to TERP Construction Corporation ("TERP") as evidenced by two Deeds of Absolute Sale dated December 14, 1995, and one Deed of Sale dated March 19, 1996, leading to the issuance of new TCTs in TERP's name.
TERP conveyed the properties to the Margarita Asset Pool, which financed projects through Margarita Project Participation Certificates ("MPPCs") guaranteed by Home Guaranty Corporation ("HGC").
Upon default in payment, HGC settled claims and acquired the Margarita Asset Pool and conveyed the subject properties, resulting in TCTs issued under HGC’s name, annotated with Notices of Levy and Lis Pendens arising from lawsuits filed by Unicorp and AsianBank.
Herma purchased the subject properties at a public sale conducted by HGC and received new TCTs.
Herma subsequently filed a petition with the RTC (Branch 223) to cancel the annotations on the TCTs prejudicial to its ownership.
The trial court partially granted the petition, canceling the Notice of Lis Pendens but denying cancellation of the Notices of Levy.
Herma appealed to the Court of Appeals ("CA"), which reversed the trial court and ordered the cancellation of all disputed annotations.
Herma also filed a petition for injunction before the CA to stop a public sale of the subject properties; the CA granted the petition and issued a writ of injunction.
Unicorp filed motions for reconsideration which were denied; hence, the matter was elevated to the Supreme Court.

Issues Presented

Whether the RTC Branch 223, sitting as a land registration court, has jurisdiction to cancel the Notices of Levy on Attachment annotated on the subject titles arising from writs issued by RTC Branch 226, a coordinate court.
Whether the liens annotated on the subject titles are superior and immutable over Herma's ownership rights to the subject properties.
Whether the CA's issuance of the writ of injunction enjoining the sale of the subject properties to satisfy a prior judgment was proper.
Whether Herma committed forum shopping by filing a petition for injunction with the CA while an appeal was pending in a different CA division on the petition to cancel annotations.

Jurisdiction of the RTC Sitting as Land Registration Court

The RTC, when sitting as a land registration court under PD 1529 (Property Registration Decree), has exclusive jurisdiction over applications for original registration, and petitions filed after original registration, including the power to hear and decide all arising questions.
The distinction between the RTC’s general jurisdiction and its limited jurisdiction as a land registration court was abolished by PD 1529 to avoid multiplicity of suits and expedite case disposition.
Accordingly, the RTC Branch 223 is properly vested with jurisdiction to cancel the Notices of Levy affecting the subject titles, even if the levies were issued by a coordinate RTC Branch 226.
Jurisdiction is a procedural matter and the exercise of jurisdictional powers by the RTC in its capacity as a land registration court does not divest other RTC branches of jurisdiction but allows the court handling the registration case to f