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2000. NOTE: BOTH CA DECISION ARE IN FAVOR OF FELONIA AND DE GUZMAN AND BOTH
HOMEOWNERS SAVINGS AND LOAN BANK, Petitioner-Appellant, vs. BECAME FINAL AND EXECUTORY.
ASUNCION P. FELONIA and LYDIA C. DE GUZMAN, represented by MARIBEL
FRIAS, Respondents-Appellees. MARIE MICHELLE P. DELGADO, REGISTER THE INSTANT CASE
OF DEEDS OF LAS PINAS CITY and RHANDOLFO B. AMANSEC, in his capacity as On April 29, 2003, Felonia and De Guzman, represented by Maribel Frias (Frias),
Clerk of Court Ex-Officio Sheriff, Office of the Clerk of Court, Las Pias City, claiming to be the absolute owners of the subject property, instituted the instant
Respondents-Defendants complaint against Delgado, HSLB, Register of Deeds of Las Pias City and Rhandolfo
G.R. No. 189477 February 26, 2014 B. Amansec before the RTC of Las Pias City for Nullity of Mortgage and Foreclosure
Sale, Annulment of Titles of Delgado and HSLB, and finally, Reconveyance of
Facts: Felonia and De Guzman were the registered owners of a parcel of land (532 Possession and Ownership of the subject property in their favor.
sq.m.) with a 5-bedroom house, covered by TCT No. T-402 issued by RD of Las Pias
City. HSLB asserted that Felonia and De Guzman are barred from laches as they had slept
on their rights to timely annotate, by way of Notice of Lis Pendens, the pendency of
Sometime in June 1990, Felonia and De Guzman mortgaged the property to Delgado the REFORMATION CASE. HSLB also claimed that it should not be bound by the
to secure the loan in the amount of P1,655,000.00. However, instead of a real estate decisions of the CA in the Reformation and Consolidation cases because it was not a
mortgage, the parties executed a Deed of Absolute Sale with an Option to party therein. HSLB asserted that it was a mortgagee in good faith because the
Repurchase. mortgage between Delgado and HSLB was annotated on the title on June 5, 1995,
whereas the Notice of Lis Pendens was annotated only on September 14, 1995.
THE REFORMATION CASE
On December 20, 1990, Felonia and De Guzman filed an action for Reformation of RTC DECISION: Ruled in favor of Felonia and De Guzman as the absolute owners of
Contract (Reformation Case) before the Manila RTC. the subject property (NOTE: RTC noted the previous decisions of CA cannot be
ignored).
RTC DECISION: On March 21, 1995, RTC rendered a judgment in favor of Felonia
and De Guzman based on the findings that it is very apparent that the transaction CA DECISION: Affirmed RTC Decision but with modifications (on damages).
had between the parties is one of a mortgage and not a deed of sale with right to
repurchase. Issues:
1. Whether or not HSLB is a purchaser in good faith.
CA DECISION: Affirmed RTC Decision; decision became final and executory on
October 16, 2000. Ruling: No, it is not a purchaser in good faith.
THE CONSOLIDATION CASE Arguably, HSLB was initially a mortgagee in good faith. Citing Bank of Commerce v.
On June 20 1994, in spite of the pendency of the REFORMATION CASE in San Pablo, Jr., the Court said:
which she was the defendant , Delgado filed a "Petition for Consolidation of There is, however, a situation where, despite the fact that the mortgagor is not the
Ownership of Property Sold with an Option to Repurchase and Issuance of a New owner of the mortgaged property, his title being fraudulent, the mortgage contract
and any foreclosure sale arising there from are given effect by reason of public
Certificate of Title" (Consolidation Case) in the Las Pias RTC. policy. This is the doctrine of "the mortgagee in good faith" based on the rule that
all persons dealing with property covered by the Torrens Certificates of Title, as
RTC DECISION: ordered the issuance of a new title under Delgados name, buyers or mortgagees, are not required to go beyond what appears on the face of
proclaiming her as the absolute owner of TCT No. T-402 and ordered RD of Las Pias the title. The public interest in upholding indefeasibility of a certificate of title, as
to cancel such title and issue a new one in favor of Delgado. evidence of lawful ownership of the land or of any encumbrance thereon, protects a
buyer or mortgagee who, in good faith, relied upon what appears on the face of
Meanwhile, on June 2, 1995, Delgado mortgaged the subject property to the certificate of title.
Homeowners Savings and Loan Bank (HSLB) using her newly registered title. Three
(3) days later, or on June 5, 1995, HSLB caused the annotation of the mortgage. When the property was mortgaged to HSLB, the registered owner of the subject
property was Delgado who had in her name TCT No. 44848. Thus, HSLB cannot be
On September 14, 1995, Felonia and De Guzman caused the annotation of a faulted in relying on the face of Delgados title. The records indicate that Delgado was
Notice of Lis Pendens on Delgados title, TCT No. 44848. at the time of the mortgage in possession of the subject property and Delgados title
did not contain any annotation that would arouse HSLBs suspicion. HSLB, as a
On November 20, 1997, HSLB foreclosed the subject property and later consolidated mortgagee, had a right to rely in good faith on Delgados title, and in the absence of
ownership in its favor, causing the issuance of a new title in its name, TCT No. any sign that might arouse suspicion, HSLB had no obligation to undertake further
64668. investigation.
CA DECISION: On October 27, 2000, the CA annulled and set aside the decision However, the rights of the parties to the present case are defined not by the
of the RTC, Las Pias City in the Consolidation Case. The decision of the CA, declaring determination of whether or not HSLB is a mortgagee in good faith, but of whether or
Felonia and De Guzman as the absolute owners of the subject property and ordering not HSLB is a purchaser in good faith. It is not a purchaser in good faith.
A purchaser in good faith is defined as one who buys a property without notice right as mortgagee, because the same was annotated subsequent to the mortgage,
that some other person has a right to, or interest in, the property and pays full and yet the said notice affects its right as purchaser because notice of lis pendens
fair price at the time of purchase or before he has notice of the claim or interest of simply means that a certain property is involved in a litigation and serves as a notice
other persons in the property. When a prospective buyer is faced with facts and to the whole world that one who buys the same does so at his own risk.
circumstances as to arouse his suspicion, he must take precautionary steps to qualify
as a purchaser in good faith. The subject of the lis pendens on the title of HSLBs vendor, Delgado, is the
"Reformation Case" filed against Delgado by the respondents. The case was decided
In Spouses Mathay v. CA, SC determined the duty of a prospective buyer: with finality by the CA in favor of respondents. The contract of sale in favor of
Delgado was ordered reformed into a contract of mortgage. By final decision of the
XXX it is also a firmly settled rule that where there are circumstances which would CA, HSLBs vendor, Delgado, is not the property owner but only a mortgagee. As it
put a party on guard and prompt him to investigate or inspect the property being turned out, Delgado could not have constituted a valid mortgage on the property.
sold to him, such as the presence of occupants/tenants thereon, it is of course, Article 2085 (2) of the Civil Code states:
expected from the purchaser of a valued piece of land to inquire first into the status
or nature of possession of the occupants Should he find out that the land he
Art. 2085. The following requisites are essential to the contracts of pledge and
intends to buy is occupied by anybody else other than the seller who, as in this
mortgage:
case, is not in actual possession, it would then be incumbent upon the purchaser to
(2) That the pledgor or mortagagor be the absolute owner of the thing pledged or
verify the extent of the occupants possessory rights. The failure of a prospective
mortgaged.
buyer to take such precautionary steps would mean negligence on his part and
would thereby preclude him from claiming or invoking the rights of a purchaser in
good faith. Hence, for a valid mortgage to exist, ownership of the property is an essential
requisite.
In the case at bar, HSLB utterly failed to take the necessary precautions. At the time
the subject property was mortgaged, there was yet no annotated Notice of Lis Philippine National Bank v. Rocha (cited in Reyes v. De Leon), pronounced that "a
Pendens. However, at the time HSLB purchased the subject property, the mortgage of real property executed by one who is not an owner thereof at the time of
Notice of Lis Pendens was already annotated on the title. the execution of the mortgage is without legal existence." Such that, there being no
valid mortgage, there could also be no valid foreclosure or valid auction sale.
Lis pendens is a Latin term which literally means, "a pending suit or a pending
litigation" while a notice of lis pendens is an announcement to the whole world that We go back to Bank of Commerce v. San Pablo, Jr. (cited above) where the doctrine of
a real property is in litigation, serving as a warning that anyone who acquires an mortgagee in good faith, upon which petitioner relies, was clarified as "based on the
interest over the property does so at his/her own risk, or that he/she gambles on the rule that all persons dealing with property covered by the Torrens Certificate of Title,
result of the litigation over the property. It is a warning to prospective buyers to take as buyers or mortgagees, are not required to go beyond what appears on the face of
precautions and investigate the pending litigation. Its purpose is to protect the the title. In turn, the rule is based on "x x x public interest in upholding the
rights of the registrant while the case is pending resolution or decision so indefeasibility of a certificate of title, as evidence of lawful ownership of the land or of
that he could rest secure that he/she will not lose the property or any part any encumbrance thereon."
thereof during litigation.
Insofar as the HSLB is concerned, there is no longer any public interest in upholding
The doctrine of lis pendens is founded upon reason of public policy and necessity, the the indefeasibility of the certificate of title of its mortgagor, Delgado. Such title has
purpose of which is to keep the subject matter of the litigation within the Courts been nullified in a decision that had become final and executory. Its own title, derived
jurisdiction until the judgment or the decree have been entered. from the foreclosure of Delgado's mortgage in its favor, has likewise been nullified in
the very same decision that restored the certificate of title in respondents' name.
Indeed, at the time HSLB bought the subject property, HSLB had actual knowledge There is absolutely no reason that can support the prayer of HSLB to have its
of the annotated Notice of Lis Pendens. Instead of heeding the same, HSLB mortgage lien carried over and into the restored certificate of title of respondents.
continued with the purchase knowing the legal repercussions a notice of lis pendens
entails. HSLB took upon itself the risk that the Notice of Lis Pendens leads to. WHEREFORE, the Petition is DENIED.
As correctly found by the CA, "the notice of lis pendens was annotated on 14
September 1995, whereas the foreclosure sale, where the appellant was declared as
the highest bidder, took place sometime in 1997. There is no doubt that at the time
appellant purchased the subject property, it was aware of the pending litigation
concerning the same property and thus, the title issued in its favor was subject to the
outcome of said litigation."
To justify the cancellation, petitioner alleged that: Lis Pendens which literally means pending suit refers to the jurisdiction, power or
1. The notice of lis pendens, in particular, was a forgery judging from the control which a court acquires over the property involved in a suit, pending the
inconsistencies in the inscriber's signature as well as from the fact that the continuance of the action, and until final judgment. Founded upon public policy and
notice was entered non-chronologically, that is, the date thereof is much necessity, lis pendens is intended to keep the properties in litigation within the power
earlier than that of the preceding entry. In this regard, it noted the lack of of the court until the litigation is terminated, and to prevent the defeat of the
any transaction record on file with the Register of Deeds that would support judgment or decree by subsequent alienation. Its notice is an announcement to the
the notice of lis pendens annotation. whole world that a particular property is in litigation and serves as a warning that one
who acquires an interest over said property does so at his own risk, or that he
2. Petitioner also stated that while Section 59 of Presidential Decree (P .D.) No. gambles on the result of the litigation over said property. A notice of lis pendens,
1529 requires the carry-over of subsisting encumbrances in the new once duly registered, may be cancelled by the trial court before which the
issuances of TCTs, petitioner's duplicate copy of the title did not contain any action involving the property is pending (decision has not attained finality
such carry-over, which means that it was an innocent purchaser for value, yet). This power is said to be inherent in the trial court and is exercised
especially since it was never a party to the civil case referred to in the notice only under express provisions of law.
of lis pendens.
Accordingly, Section 14, Rule 13 of the 1997 Rules of Civil Procedure authorizes the
3. Lastly, it alludes to the indefeasibility of its title despite the fact that the trial court to cancel a notice of lis pendens where it is properly shown that the
mother title, TCT No. 30459, might have suffered from certain defects and purpose of its annotation is for molesting the adverse party, or that it is not
constraints. necessary to protect the rights of the party who caused it to be annotated. Be that as
it may, the power to cancel a notice of lis pendens is exercised only under
The Intestate Estate of Bruneo F. Casim, representing Bruneo F. Casim, intervened in exceptional circumstances, such as: where such circumstances are imputable to
the instant case and filed a Comment/Opposition in which it maintained that the RTC the party who caused the annotation; where the litigation was unduly
of Las Pias did not have jurisdiction over the present action, because the matter of prolonged to the prejudice of the other party because of several
canceling a notice of lis pendens lies within the jurisdiction of the court before which continuances procured by petitioner; where the case which is the basis for
the main action referred to in the notice is pending. In this regard, it emphasized that the lis pendens notation was dismissed for non prosequitur on the part of
the case referred to in the said notice had already attained finality as the Supreme the plaintiff; or where judgment was rendered against the party who
caused such annotation. In such instances, said notice is deemed ipso facto pending to the effect that the case has already been finally decided by the
cancelled. court, stating the manner of the disposal.
Petitioners contention in theorizing that the RTC of Las Pias City, Branch 253 has SEC. 77. Cancellation of Lis Pendens. Before final judgment, a notice of lis
the inherent power to cancel the notice of lis pendens that was incidentally registered pendens may be cancelled upon order of the court, after proper showing
in relation to Civil Case No. 2137, a case which had been decided by the RTC of that the notice is for the purpose of molesting the adverse party, or that it is
Makati City, Branch 62 and affirmed by the Supreme Court on appeal, petitioner not necessary to protect the rights of the party who caused it to be
advocates that the cancellation of such a notice is not always ancillary to a main registered. It may also be cancelled by the Register of Deeds upon verified
action. This argument fails. From the available records, it appears that the subject petition of the party who caused the registration thereof.
notice of lis pendens had been recorded at the instance of Bruneo F. Casim (Bruneo)
in relation to Civil Case No. 2137 one for annulment of sale and recovery of At any time after final judgement in favour of the defendant or other
real property which he led before the RTC of Makati City, Branch 62 against the disposition of the action such as to terminate finally all rights of the plaintiff
spouses Jesus and Margarita Casim, predecessors-in-interest and stockholders of in an to the land and/or buildings involved, in any case in which a
petitioner corporation. That case involved the property subject of the present case, memorandum or notice of lis pendens has been registered as provided in
then covered by TCT No. 30459. At the close of the trial on the merits therein, the the preceding section, the notice of lis pendens shall be deemed cancelled
RTC of Makati rendered a decision adverse to Bruneo and dismissed the complaint for upon the registration of a certificate of the clerk of court in which the action
lack of merit. Aggrieved, Bruneo lodged an appeal with the Court of Appeals, or proceeding was pending stating the manner disposal thereof.
docketed as CA-G.R. CV No. 54204, which reversed and set aside the trial court's
decision. Expectedly, the spouses Jesus and Margarita Casim elevated the case to the All told, the RTC of Las Pias City, Branch 253 has committed no reversible error in
Supreme Court, docketed as G.R. No. 151957, but their appeal was dismissed for issuing the assailed Resolution and Order dismissing for lack of jurisdiction the petition
being filed out of time. A necessary incident of registering a notice of lis pendens is for cancellation of notice of lis pendens led by petitioner, and in denying
that the property covered thereby is effectively placed, until the litigation attains reconsideration,
finality, under the power and control of the court having jurisdiction over the case to
which the notice relates. In this sense, parties dealing with the given property are
charged with the knowledge of the existence of the action and are deemed to take
the property subject to the outcome of the litigation. It is also in this sense that the
power possessed by a trial court to cancel the notice of lis pendens is said to be
inherent as the same is merely ancillary to the main action.
Clearly, the action for cancellation of the notice of lis pendens in this case must have
been filed not before the court a quo via an original action but rather, before the RTC
of Makati City, Branch 62 as an incident of the annulment case in relation to which its
registration was sought. Thus, it is the latter court that has jurisdiction over the main
case referred to in the notice and it is that same court which exercises power and
control over the real property subject of the notice. But even so, the petition could no
longer be expected to pursue before the proper forum inasmuch as the decision
rendered in the annulment case has already attained finality before both the Court of
Appeals and the Supreme Court on the appellate level, unless of course there
exists substantial and genuine claims against the parties relative to the
main case subject of the notice of lis pendens. There is none in this case. It
is thus well to note that the precautionary notice that has been registered relative to
the annulment case then pending before the RTC of Makati City, Branch 62 has
served its purpose. With the finality of the decision therein on appeal, the notice has
already been rendered functus officio. The rights of the parties, as well as of their
successors-ininterest, petitioner included, in relation to the subject property, are
hence to be decided according the said final decision.
Section 77 of P .D. No. 1529 provides the appropriate measure to have a notice of lis
pendens cancelled out from the title, that is by presenting to the Register of
Deeds, after finality of the judgment rendered in the main action, a
certificate executed by the clerk of court before which the main action was