G.R. No. 78635 . April 27, 1989.
LEONORA OBAÑA, petitioner, vs. COURT OF APPEALS, RAFAEL G. SUNTAY, REGISTER OF DEEDS OF QUEZON CITY, and the EX-OFICIO SHERIFF OF QUEZON CITY, respondents.

FACTS

Private respondent Rafael G. Suntay, former counsel for Liberty H. Dizon and her minor wards in a guardianship proceeding, obtained a court order authorizing him to collect P5,000 in attorney’s fees from the guardianship estate. As Dizon failed to pay, Suntay filed a collection case (Civil Case No. 4238-M) in the Bulacan CFI against Dizon and the wards. He secured a writ of attachment over a Quezon City property owned by Dizon and the wards, and a notice of levy was annotated on TCT No. 173792. Summons in the collection case was served by publication after Dizon’s whereabouts became unknown. The court later declared Dizon in default and rendered a judgment awarding Suntay P10,000.
Meanwhile, on May 16, 1973, Dizon sold the levied property to petitioner Leonora Obaña. The Register of Deeds cancelled Dizon’s title and issued TCT No. 191069 to Obaña, carrying over the annotation of levy. Following the judgment in the collection case, the property was levied on execution and sold at public auction to Suntay as the highest bidder. After the redemption period, a sheriff’s final deed was issued to Suntay, who then petitioned for the cancellation of Obaña’s title. The CFI granted the petition. Obaña subsequently filed an action to annul the judgment in the Bulacan collection case, arguing the court never acquired jurisdiction over Dizon due to improper service of summons.

ISSUE

Whether the Court of Appeals erred in dismissing Obaña’s complaint and upholding the validity of the judgment in the collection case and the subsequent cancellation of her title.

RULING

Yes. The Supreme Court reversed the Court of Appeals and reinstated the trial court’s decision annulling the judgment in Civil Case No. 4238-M. The legal logic centers on jurisdiction and due process. The Bulacan CFI never acquired jurisdiction over Liberty Dizon in the collection case. Summons by publication was improper because the action was purely in personam for the collection of a sum of money; it did not involve any in rem or quasi in rem action against the property itself. Jurisdiction over the person of the defendant in such personal actions cannot be acquired through substituted service without a prior valid order for service by publication, which requires a showing that the defendant cannot be served personally or by substituted service within a reasonable time. The record failed to establish such diligent efforts to locate Dizon. Consequently, the default judgment against her was null and void for lack of jurisdiction.
Furthermore, the proceedings leading to the cancellation of Obaña’s title were flawed. The land registration court (LRC Case No. 750) that ordered the cancellation acted beyond its limited jurisdiction. A registration court cannot adjudicate controversial issues regarding the validity of a prior judgment or execution sale; its function is merely ministerial when based on a void judgment. Since the foundational judgment in the collection case was void, all subsequent proceedings, including the execution sale and the order for cancellation, were also void. Obaña, as an innocent purchaser for value whose title was derived before the execution sale, was not bound by the void judgment against her predecessor. The Court also exercised its equity jurisdiction, noting the injustice of depriving Obaña of her property for a debt incurred by its former owner.