G.R. No. 130389 ; February 11, 2008
THE PHILIPPINE COTTON CORPORATION, petitioner-appellant, vs. NARAINDAS GAGOOMAL and ENGRACIO ANG, respondents-appellees, CHINA BANKING CORPORATION, intervenor-appellee.

FACTS

Petitioner Philippine Cotton Corporation filed a collection case against Pacific Mills, Inc. and obtained a writ of preliminary attachment, which was annotated on Pacific Mills’ titles in 1983. Meanwhile, respondents Naraindas Gagoomal and Engracio Ang had purchased the subject properties from Pacific Mills on installment in 1979. In 1988, a fire destroyed the Quezon City Registry of Deeds, including the original titles. Pacific Mills subsequently obtained administratively reconstituted titles in 1992, which did not carry over the annotation of petitioner’s preliminary attachment but instead reflected the sale to and full payment by respondents. New, clean titles were then issued to respondents.
Upon learning of the reconstitution, petitioner requested the Register of Deeds to re-annotate the notice of levy and annotate a subsequent Supreme Court decision in its favor against Pacific Mills on the new titles issued to respondents. The Register of Deeds made the annotations, prompting respondents to file a petition for cancellation of these annotations before the Regional Trial Court (RTC).

ISSUE

Whether the Register of Deeds of Quezon City had the authority to re-annotate the notice of levy and annotate the Supreme Court decision on the titles of respondents, who were already registered owners, following an administrative reconstitution of the original certificates of title.

RULING

The Supreme Court ruled that the Register of Deeds had no authority to make the annotations. The legal logic is anchored on the nature of a writ of preliminary attachment and the indefeasibility of a Torrens title. A preliminary attachment is a provisional remedy that merely creates a lien in favor of the attaching creditor over the property of the defendant. Critically, this lien attaches only to the interest of the defendant in the property at the time of levy. Here, at the time of the original annotation in 1983, Pacific Mills was still the registered owner. However, by the time of the reconstitution and the issuance of new titles in 1992, respondents had already become the absolute owners, having fully paid for the properties. The reconstituted titles correctly reflected this reality. Consequently, Pacific Mills no longer had any interest in the properties to which petitioner’s lien could attach. The Register of Deeds is not a ministerial officer who must annotate all presented documents; he has the duty to refuse registration when it appears the person against whom the process is issued is no longer the registered owner. Therefore, the annotations were improperly made on the titles of innocent third parties (respondents) and were correctly ordered deleted by the lower courts. The ruling protects the integrity of the Torrens system by ensuring that liens cannot burden the property beyond the interest of the debtor.