THIRD DIVISION

[G.R. No. 201812. January 22, 2020.]

THELMA B. SIAN represented by ROMUALDO A. SIAN,

petitioner, vs. SPOUSES CAESAR A. SOMOSO AND ANITA B.
SOMOSO, the former being substituted by his surviving
son, ANTHONY VOLTAIRE B. SOMOSO, MACARIO M. DE
GUZMAN, JR., in his capacity as SHERIFF III of the Regional
Court of Panabo, Davao, Branch 4, respondents.

DECISION

CARANDANG, J : p

This Petition for Review on Certiorari 1 under Rule 45 of the Rules of

Court assails the Decision 2 dated September 30, 2011 and the Resolution 3
dated April 24, 2012 of the Court of Appeals (CA) in CA-G.R. CV No. 00812-
MIN, which partly granted respondents' appeal and denying petitioner
Thelma Sian's (petitioner) motion for reconsideration.
Facts of the Case
Sometime on March 26, 1981, Caesar A. Somoso (Somoso) filed with
the Regional Trial Court (RTC) of Tagum, Davao, Branch 3, a collection suit 4
with prayer for issuance of writ of preliminary attachment against Spouses
Iluminada (Iluminada) and Juanito Quiblatin (collectively, Sps. Quiblatin). On
May 8, 1981, the RTC granted the prayer for issuance of writ of preliminary
attachment on the properties of Sps. Quiblatin. On May 20, 1981, the
Provincial Sheriff attached the properties of Sps. Quiblatin, which included a
parcel of land covered by Transfer Certificate of Title (TCT) No. T-29793
(subject property) covering an area of 413 square meters, more or less,
issued in the name of "Iluminada Quiblatin, married to Juanito Quiblatin." On
July 14, 1981, the attachment on the subject property was annotated on TCT
No. T-29793. On September 30, 1985, the RTC decided the case in favor of
respondent, ordering Sps. Quiblatin to pay Somoso the sum of P154,000.00
with 12% interest per annum until the entire obligation is fully paid,
P5,000.00 as expenses of litigation, P20,000.00 as attorney's fees and the
costs of suit. Sps. Quiblatin failed to appeal, hence, the decision became final
and executory. On October 30, 1989, a Writ of Execution was issued. Among
the properties levied is the subject property.
Before the writ of execution could be implemented, petitioner,
represented by her husband, Romualdo Sian, filed on March 13, 1990 a
third-party claim over TCT No. T-29793. They alleged that the subject
property was sold to them by Iluminada on July 26, 1980 and the deed of
sale was duly registered with the Register of Deeds (RD) of Davao on August
18, 1981. TCT No. T-34705 5 was issued in the name of petitioner by the RD
on the same date. Petitioner prayed for the auction sale not to proceed, and
the immediate release of the subject property to her.
The RTC dismissed the third-party claim in its Order 6 dated June 6,
1990. It ruled that the levy was annotated on the subject property in the RD
on July 14, 1981 ahead of the registration of the deed of sale of the third-
party claimant on August 18, 1981. It further declared that the third-party
claim can only be taken up in a separate and independent action.
Thus, petitioner filed an action for annulment and cancellation of writ
of attachment and notice of levy, injunction, damages and attorney's fees 7
against respondents before the RTC of Panabo City, Davao del Norte, Branch
4. Petitioner alleged that she is the registered owner of the subject property
and had been in possession thereof since July 26, 1980 up to the present,
that she has been religiously paying the taxes, and had introduced
improvements. It was sometime in 1981 that she was shocked to learn that
the subject property was among those levied by the Sheriff of Davao del
Norte in connection with a collection suit. Since the levy on July 14, 1981, the
Sheriff had withheld possession of the subject property despite her third-
party claim filed in his office. Petitioner further claimed that the levy and
attachment of the subject property is without legal basis, as respondents
knew from the very beginning that she bought the land from Iluminada.
Respondents countered that TCT No. T-34705, in the name of
petitioner, is null and void, as it was obtained through machination
employed by petitioner in connivance with Iluminada, a fugitive of justice.
Respondents further claimed that the title of the subject property had been
attached long before TCT No. T-34705 was issued to petitioner. Further, the
alleged Deed of Sale dated July 26, 1980 was not annotated on TCT No. T-
29793, even when the subject property was attached on July 14, 1981. 8
On motion of respondents, the RTC issued a temporary restraining
order enjoining petitioner from constructing any building inside the subject
property. 9
Petitioner subsequently amended 10 her complaint to include the
allegation that at the time the Sheriff made a levy on the subject property,
Iluminada was not yet served with summons of the complaint in Civil Case
No. 1460, which was only served on her by publication on March 1, 1984.
Respondents specifically denied the allegation and averred that
petitioner, not being a party to said case, has no personality to assail the
proceedings therein.
RTC Ruling
After trial on the merits, the RTC rendered a Decision 11 dated May 7,
2001 dismissing petitioner's amended complaint, as well as the other claims
and counterclaims, for lack of or insufficient evidence. The RTC ruled that
petitioner's rights are subordinate to that of respondents', considering that
petitioner's title was issued subject to the attachment/levy in favor of
respondent. When the Sheriff attached the property on July 14, 1981, TCT
No. T-29793 was still registered in the name of the judgment debtor,
Iluminada Quiblatin. Although the Deed of Sale was executed on July 26,
1980, it was registered in the RD only on August 18, 1981.
Petitioner moved for reconsideration. 12 In the Order 13 dated February
16, 2006, the RTC partially reconsidered its decision by declaring petitioner
as the legal owner of the property, subject to the timely and valid
attachment/levy on the subject property by the Sheriff. As such owner, she
may well be in the material possession of the subject property, but because
of the timely and valid attachment/levy effected by the Sheriff, such
property, though owned by petitioner, was brought under custodia legis.
Respondents filed an appeal before the CA.
CA Ruling
On September 30, 2011, the CA issued a Decision 14 partly granting the
appeal by ordering petitioner to pay respondents the amount of P50,000.00
as moral damages, P25,000.00 as exemplary damages, and P30,000.00 as
attorney's fees and litigation cost. It affirmed the rest of the decision of the
RTC.
The CA ruled that the third-party claimant is not prevented from
vindicating his ownership of the attached property in an appropriate
proceeding, which in this case, was by way of reivindicatory action or a suit
for damages; that the reivindicatory action had not prescribed; and that the
sale of the subject property by Iluminada to petitioner is not fictitious. The
CA further declared that the right of respondents to the subject property is
not in the nature of ownership but a right to have the property sold in
satisfaction of their claims against Iluminada. The fact that petitioner is
declared owner does not alter the fact that the subject property may be sold
to satisfy respondents' claim. Upon the sale on execution of the property,
petitioner will then he divested of ownership of the subject property.
The CA awarded damages to respondents after considering petitioner's
suit to be frivolous. It explained that petitioner's main or essential cause of
action is to annul or declare the attachment on the subject property null and
void. Thus, when petitioner registered the sale, she was aware of the levy on
the subject property. Hence, she knew that her action to have the levy
cancelled was frivolous.
Petitioner moved for reconsideration, but it was denied in the
Resolution 15 dated April 24, 2012 of the CA.
Hence, petitioner filed this Petition for Review on Certiorari 16 under
Rule 45.
Petitioner argues that respondents are not entitled to damages for
their failure to prove the same and that she is not guilty of bad faith in
pursuing her claim over the subject property. Being the registered owner,
petitioner may not be faulted in assailing the validity of the levy by filing this
complaint. Further, the award of moral damages may be granted only if bad
faith is proven. The fact that she was able to successfully register the subject
property on August 18, 1981, although late, does not constitute bad faith,
much less a wrongful act or omission. She did so in order to protect her
interest over the land. Respondents could not deny the fact that at the time
the levy on attachment was made, petitioner was in actual possession of the
subject property. Thus, petitioner averred that there is no basis for the
award of moral damages; consequently, exemplary damages cannot be
awarded either.
In their Comment, 17 respondents maintained that petitioner was in
bad faith when she filed the complaint, considering that there is absolutely
no basis to annul the levy on the subject property. They averred that
petitioner was trying to mislead the trial court with the "simulated" deed of
sale, coupled with the false claim that petitioner was in possession of the
property. Also, respondents claimed that they do not know about petitioner's
transaction on the subject property. They claimed that petitioner could not
possibly buy the subject property on July 26, 1980, since petitioner was not
in the Philippines during the whole year of 1980.
Issue
The issue is simple: whether petitioner should pay respondents
P50,000.00 as moral damages, P25,000.00 as exemplary damages, and
P30,000.00 as attorney's fees and litigation cost for instituting a frivolous
suit against respondents.
Our Ruling
The petition is meritorious.
After a judicious study of the case, the Court finds that the CA erred in
awarding damages. Petitioner's complaint for annulment and cancellation of
writ of attachment and notice of levy is not frivolous, contrary to the CA's
conclusion. The CA explained that when petitioner registered the sale, she
was aware of the levy on the subject property, hence, she knew that her
action to have the levy cancelled was frivolous.
A frivolous action is a groundless lawsuit with little prospect of success.
18 It is often brought merely to harass, annoy, and cast groundless

suspicions on the integrity and reputation of the defendant. 19

When petitioner filed the third-party complaint, she was merely
exercising her right to litigate, claiming ownership over the subject property,
submitting as evidence the Deed of Sale dated July 26, 1980 and TCT No. T-
34705 issued in her name. Being the registered owner of the subject
property, she has a remedy under the law to assail the writ of attachment
and notice of levy. A third-party claimant or any third person may vindicate
his claim to his property wrongfully levied by filing a proper action, which is
distinct and separate from that in which the judgment is being enforced.
Such action would have for its object the recovery of the possession of the
property seized by the Sheriff, as well as damages resulting from the
allegedly wrongful seizure and detention thereof despite the third-party
claim. 20
When the third-party complaint was denied by the RTC, petitioner's
remedy was to file an independent reivindicatory action against the
judgment creditor — herein respondents. 21 In fact, this was the directive of
the RTC when it denied petitioner's third-party complaint. Hence, when
petitioner filed the complaint for annulment and cancellation of writ of
attachment and notice of levy, injunction, damages and attorney's fees, she
did not act in bad faith nor was the complaint frivolous.
The remedies of a third-party claimant under Section 16 of Rule 39 of
the Rules of Court is further explained by Justice Florenz D. Regalado in this
wise:
The remedies of a third-party claimant mentioned in Section 16,
Rule 39 of the Rules of Court, that is, a summary hearing before the
court which authorized the execution, or "terceria" or third-party
claim filed with the sheriff, or an action for damages on the bond
posted by the judgment creditor, or an independent revindicatory
action, are cumulative remedies and may be resorted to by a third-
party claimant independently of or separately from and without need
of availing of the others. If he opted to file a proper action to vindicate
his claim of ownership, he must institute an action, distinct and
separate from that in which the judgment is being enforced, with a
competent court even before or without filing a claim in the court
which issued the writ, the latter not being a condition sine qua non for
the former. This proper action would have for its object the recovery
of ownership or possession of the property seized by the Sheriff, as
well as damages against the sheriff and other persons responsible for
the illegal seizure or detention of the property. The validity of the title
of the third-party claimant shall be resolved in said action and a writ
of preliminary injunction may be issued against the sheriff. 22
When the CA held that petitioner's complaint was frivolous, it was in
effect granting the award of moral damages on the basis of Article 2219 (8)
of the Civil Code on malicious prosecution. Traditionally, the term malicious
prosecution has been associated with unfounded criminal actions.
Jurisprudence has also recognized malicious prosecution to include baseless
civil suits intended to vex and humiliate the defendant despite the absence
of a cause of action or probable cause. 23 However, it should be stressed
that the filing of an unfounded suit is not a ground for the grant of moral
damages. Otherwise, moral damages must every time be awarded in favor
of the prevailing defendant against an unsuccessful plaintiff. The law never
intended to impose a penalty on the right to litigate so that the filing of an
unfounded suit does not automatically entitle the defendant to moral
damages. 24
Besides, as the Court explained above, there was no showing that
petitioner filed the case in bad faith or that the action was vexatious and
baseless. Accordingly, since respondents are not entitled to moral damages,
neither can they be awarded with exemplary damages, so with attorney's
fees and the cost of litigation.
The rule in our jurisdiction is that exemplary damages are awarded in
addition to moral damages. 25 In the case of Mahinay v. Velasquez, Jr. , 26 the
Court pronounced:
If the court has no proof or evidence upon which the claim for
moral damages could be based, such indemnity could not be
 outrightly awarded. The same holds true with respect to the award of
exemplary damages where it must be shown that the party acted in a
wanton, oppressive or malevolent manner. Furthermore, this specie
of damages is allowed only in addition to moral damages such that no
exemplary damages can be awarded unless the claimant first
establishes his clear right to moral damages. 27
The award of attorney's fees should be deleted as well. The general
rule is that attorney's fees cannot be recovered as part of damages because
of the policy that no premium should be placed on the right to litigate. They
are not to be awarded every time a party wins a suit. The power of the court
to award attorney's fees under Article 2208 demands factual, legal, and
equitable justification. Even when a claimant is compelled to litigate with
third persons or to incur expenses to protect his rights, still attorney's fees
may not be awarded where no sufficient showing of bad faith could be
reflected in a party's persistence in a case other than an erroneous
conviction of the righteousness of his cause. 28
WHEREFORE, premises considered, the instant petition is PARTLY
GRANTED. The Decision dated September 30, 2011 and the Resolution
dated April 24, 2012 of the Court of Appeals in CA-G.R. CV No. 00812-MIN as
to the award of damages are hereby REVERSED and SET ASIDE.
SO ORDERED.
Leonen, Gesmundo, Zalameda and Gaerlan, JJ., concur.

Footnotes

1. Rollo , pp. 5-23.

2. Penned by Associate Justice Romulo V. Borja, with Associate Justices Edgardo T.

Lloren and Carmelita Salandanan Manahan, concurring; id. at 36-57.

3. Penned by Associate Justice Romulo V. Borja, with Associate Justices Edgardo T.

Lloren and Melchor Q.C. Sadang, concurring; id. at 32-34.

4. Docketed as Civil Case No. 1460.

5. Records, pp. 6-7.

6. Id. at 28-33.

7. Id. at 1-5.

8. Id. at 15-25.

9. Id. at 92.

10. Id. at 125-130.

11. Id. at 317-325.

12. Id. at 326-330.

13. Id. at 350-353.

14. Rollo , pp. 36-57.

15. Id. at 32-34.

16. Id. at 5-23.

17. Id. at 62-74.

18. BLACK'S LAW DICTIONARY, Sixth Edition, p. 668.

19. See Prieto v. Corpuz , 539 Phil. 65, 72 (2006).

20. Capa v. Court of Appeals, 533 Phil. 691, 702 (2006).

21. Florenz D. Regalado, REMEDIAL LAW COMPENDIUM, Vol. 1, 1999 Ed., pp. 443-
446.

22. Id. at 445-446, citing Sy v. Discaya , 260 Phil. 401 (1990).

23. Villanueva-Ong v. Enrile , G.R. No. 212904, November 22, 2017, 846 SCRA 376,
387-386.

24. Delos Santos v. Papa, 605 Phil. 460, 471 (2009).

25. Id. at 472.

26. 464 Phil. 146 (2004).

27. Id. at 150.

28. Spouses Timado v. Rural Bank of San Jose, Inc., 789 Phil. 453, 460 (2016).