PACIENCIA B. SALITA, PLAINTIFF AND APPELLANT, VS. EDUARDO CALLEJA, ET AL., DEFENDANTS AND APPELLEES.

This is a case for injunction^[1] filed
by plaintiff-appellant Paciencia B. Salita to prevent the sale by the Sheriff of
Manila of a house in satisfaction of a judgment for a sum of money obtained by
defendant-appellee Eduardo Calleja in another case against one Francisco
Domingo, admittedly the original owner of the said house. In this other case,
Calleja, as plaintiff therein, secured first a preliminary writ of attachment
which was levied on January 7, 1954 upon the house in question. But as the house
was constructed on a lot purchased by Domingo’s wife, Mercedes Domingo, from
Realty Investments, Inc. (represented by C. M. Hoskins & Co., Inc.) on an
installment plan, and the price thereof had not yet been paid in full and,
therefore, the certificate of title covering the land was still in the name of
the vendor, the Notice of Attachment addressed to the Register of Deeds of
Manila specifically stated that “the land on which this house stands has not yet
been fully paid for, and as per investigation and information of the plaintiff
(herein appellee Calleja), the house has not been registered under either Act
496 or the Spanish Mortgage Law. It is desired therefore, that this Notice be
registered under Act 3344.” Accordingly, the attachment was entered upon the
corresponding book, but not annotated on the certificate of title covering the
land, which did not mention any improvement.

Five months later, or on June 3, 1954, Realty Investments, Inc. conveyed the
ownership of said lot to Mercedes Domingo, with the marital consent of her
husband Francisco Domingo. However, since she still owed the company the sum of
P4,566.20 the transfer was by means of an instrument of sale with mortgage on
the lot and house and other improvements thereon, in favor of the vendor
company. On the same date, TCT No. 25957 in the name of Realty Investments, Inc.
was cancelled and, in lieu thereof, TCT No. 36372 was issued in the name of
Mercedes Domingo, with the company’s aforesaid mortgage duly annotated on the
new title. Outside of what was said in the deed of mortgage, this new title (TCT
No. 36372) likewise makes no mention whatsoever of a house or other improvement
thereon, nor of the attachment.

On February 3, 1955, Mercedes Domingo, with the marital consent of her
husband Francisco Domingo, who had knowledge of the existing attachment on the
house in question, sold both lot and house to herein plaintiff Paciencia B.
Salita, as evidenced by a deed of sale with assumption (by Salita) of the
aforementioned mortgage in favor of Realty Investments, Inc. Said instrument was
presented for registration on February 5, 1955, by virtue of which, TCT No.
36372 in the name of Mercedes Domingo was cancelled and a new title (TCT No.
38401) was issued in the name of plaintiff Salita, but with the annotation
thereon of the mortgage in favor of Realty Investments, Inc. Again, no mention
or annotation was made on said new title of the house in question, nor of the
attachment thereon.

On June 23, 1955, said lot and house were mortgaged by plaintiff Salita to
the Rehabilitation Finance Corporation (RFC) as security for a loan of
P10,000.00. Apparently, part of the proceeds of this loan was used to pay the
P4,566.20 which Mercedes Domingo still owed Realty Investments, Inc. as price of
the sale of the lot and which plaintiff Salita assumed to pay on February 3,
1955, for the company’s lien on her (Salita’s) title was cancelled on July 2,
1955. On December 16, 1955, plaintiff Salita obtained an addtional loan of
P1,000.00 from the RFC upon the same property.

Meanwhile, on February 14, 1955, Calleja obtained judgment in that other case
against Francisco Domingo, which was affirmed by the Court of Appeals on April
27, 1956. On October 13, 1956, Calleja obtained a writ of execution and required
the Sheriff to satisfy the judgment by selling the attached house in question.
Salita, thereupon, filed a third-party claim with the Sheriff claiming that the
house in question was bought by her on February 3, 1955 including the lot on
which it stands. To indemnify the Sheriff against any damage which the execution
sale of the house may cause, Calleja filed a bond of P15,000.00.

In order to prevent the execution sale of said house and lot which was
scheduled for December 27, 1956 at 10:00 A. M., plaintiff Salita filed the
instant case (Civil Case No. 31434) for Injunction and Damages against
defendants Calleja and Sheriff of Manila. On December 26, 1956, the court issued
a writ of preliminary injunction restraining defendant Sheriff of Manila from
proceeding with the execution sale.

It is the contention of plaintiff Salita that when she purchased the house
and the lot on February 3, 1955, the vendor Mercedes Domingo had a clean title
(TCT No. 36372) except for the mortgage over the said property (both land and
house) in favor of Realty Investments, Inc. which the purchaser expressly
recognized and assumed, and that upon payment of the mortgage indebtedness, she
(Salita) became the absolute owner of the entire property, free of all liens and
incumbrances.

On the other hand, defendant Calleja claims that since the certificate of
title covering the land did not mention any improvement and since the house is
real estate in nature and is not registered under Act 496 or the Spanish
Mortgage Law, the registration of his attachment on January 7, 1954 under Act
No. 3344 is effective and binding upon all subsequent claimants of said
house.

The trial court upheld defendant Callejas’s contention, dismissed plaintiff
Salita’s complaint and sentenced the latter to pay defendant P500.00 as
attorney’s fees on the latter’s counterclaim. Hence, this appeal by Salita.

We find the appeal meritorious. Act No. 3344 (Sec. 194, Rev. Adm. Code)
pursuant to which defendant Calleja’s notice of attachment was registered
expressly requires that the register book shall contain, among other things,
“the character of the contract and its conditions, the nature of each piece of
land (unregistered) and its own improvements only, and not any
other kind of real estate or properties, its situation, boundaries, area in
square meters, whether or not the boundaries of the property are visible on the
land by means of monuments or otherwise, and in the affirmative case, in what
they consist; the permanent improvements existing in the property * * *.” From
this provision, it seems clear that in order to be registerable under Act No.
3344, the instrument must refer only to unregistered land and its own
improvements only, and not any other kind of real estate or properties. The
words “own” and “only” used in the language of the law when
referring to improvements, clearly mean improvements on unregistered lands
alone. In fine, the deed cannot refer to improvements or buildings on lands
registered under the Torrens system, or under the Spanish Mortgage Law. To hold
otherwise, would result in the anomalous situation of two registrations, one
under Act 496 with respect to unimproved land, and another, under Act 3344 for
improvements subsequently introduced on the same land. Since, in the case at
bar, the attachment refers to a house erected on registered land, it is evident
that the registration thereof under Act 3344 was invalid and of no legal or
binding effect on third persons, or more particularly, on plaintiff Salita.

Furthermore, it is not disputed that in the notice of attachment of real
estate (Exh. 6-Calleja) dated January 7, 1954, it was therein stated that the
house in question was “erected upon land bought from C. M. Hoskins & Co.,
Inc. on the installment plan,” and that said house “has not been registered
under either Act 496 or the Spanish Mortgage Law.” Knowing that the land on
which the house was built was bought from C. M. Hoskins & Co., Inc.,
defendant Calleja should have investigated whether the land was duly titled and,
finding that the same was titled, as in fact it was in the name of Realty
Investments, Inc. (TCT No. 25957), he should have taken steps to perfect his
lien on said house, by filing a petition for annotation of said improvement as
well as the registration of his lien thereon, on the title of the land, pursuant
to Section 112 of Act No. 496 (Land Registration Act) which, insofar as
pertinent, provides:

“SEC. 112. * * * Any registered owner or other person in interest may at
any time apply by petition to the court, upon the ground that registered
interests of any description, whether vested, contingent, expectant, or
inchoate, have terminated and ceased; or that new interests have arisen or
been created which do not appear upon the certificate; or that any error,
omission, or mistake was made in entering a certificate or any memorandum
thereon, or any duplicate certificate; * * *.” (Italics
supplied.)

Having failed to perfect his lien on the house in question in the manner
indicated, he cannot enforce it against plaintiff Salita, purchaser in good
faith of the house and the lot on which it stands. The fact that the clean title
acquired by Salita did not mention the improvement, does not preclude the
acquisition thereof with the land described in the title. This is so, because
unless it otherwise appears on the title itself, the same includes not only the
land described therein, but also all improvements existing on said land. (Art.
2127, Civil Code; Philippine Sugar Estates Development Co. vs. Camps,
36 Phil., 85; Bischoff vs. Pomer, et al., 12 Phil., 690; Cu Unjieng e
Hijos vs. Mabalacat Sugar Co., 58 Phil., 439; see also Roxas
vs. Enriquez, 29 Phil., 31; Art. 440, Civil Code.)

Lastly, it appears that the sale made by Mercedes Domingo with the consent of
her husband Francisco Domingo to plaintiff Salita on February 3, 1955, included
both the house and lot in question. Likewise, the mortgage in favor of Realty
Investments, Inc. duly annotated on Domingo’s certificate of title and which
plaintiff Salita had assumed and later paid, included both house and lot. In
other words, plaintiff-appellant Salita actually parted with her money to
acquire the house in question, while defendant-appellee Calleja merely seeks
security for an otherwise unsecured pre-existing claim.

For all the foregoing, the decision appealed from is hereby reversed and set
aside, without prejudice to any action which defendant-appellee Calleja may take
to enforce his judgment against Francisco Domingo. The injunction previously
issued by the trial court which was dissolved after judgment for defendant
Calleja was entered below, is revived and made permanent. Without pronouncement
as to costs. So ordered.

Bengzon, C.J., Padilla, Labrador, Concepcion,
Reyes, J.B.L., Paredes, Dizon, De Leon, and Natividad, JJ.,
concur.

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^[1] Originally appealed to the Court of
Appeals, but certified to us on March 24, 1960, on the ground that it involves
only questions of law.