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G.R. No. 102377 July 5, 1996 ALFREDO SAJONAS and CONCHITA SAJONAS, petitioners, vs. THE COURT OF APPEALS, DOMINGO A. PILARES, SHERIFF ROBERTO GARCIA OF QUEZON CITY and REGISTER OF DEEDS OF MARIKINA, respondents.

TORRES, JR., J.:p A word or group of words conveys intentions. When used truncatedly, its meaning disappears and breeds conflict. Thus, it is written -- "By thy words shalt thou be justified, and by thy words shalt thou be condemned." (Matthew, 12:37) Construing the new words of a statute separately is the raison d'etre of this appeal. Essentially, the case before us is for cancellation of the inscription of a Notice of Levy on Execu- tion from a certificate of Title covering a parcel of real property. The inscription was caused to be made by the private respondent on Transfer Certificate of Title No. N-79073 of the Register of Deeds of Marikina, issued in the name of the spouses Ernesto B. Uychocde and Lucita Jarin, and was later carried over to and annotated on Transfer Certificate of Title No. N-109417 of the same registry, issued in the name of the spouses Alfredo Sajonas and Conchita H. Sajonas, who purchased the parcel of land from the Uychocdes, and are now the petitioners in this case. The facts are not disputed, and are hereby reproduced as follows:

On September 22, 1983, the spouses Ernesto Uychocde and Lucita Jarin agreed to sell a parcel of residential land located in Antipolo, Rizal to the spouses Alfredo Sajonas and Conchita R. Sa- jonas on installment basis as evidenced by a Contract to Sell dated September 22, 1983. The property was registered in the names of the Uychocde spouses under TCT No. N-79073 of the Register of Deeds of Marikina, Rizal. On August 27, 1984, the Sajonas couple caused the annota- tion of an adverse claim based on the said Contract to Sell on the title of the subject property, which was inscribed as Entry No. 116017. Upon full payment of the purchase price, the Uy- chocdes executed a Deed of Sale involving the property in question in favor of the Sajonas cou- ple on September 4, 1984. The deed of absolute sale was registered almost a year after, or on August 28, 1985. Meanwhile, it appears that Domingo Pilares (defendant-appellant) filed Civil Case No. Q-28850 for collection of sum of money against Ernesto Uychocde. On June 25, 1980, a Compromise Agreement was entered into by the parties in the said case under which Ernesto Uychocde ac- knowledged his monetary obligation to Domingo Pilares amounting to P27,800 and agreed to pay the same in. two years from June 25, 1980. When Uychocde failed to comply with his undertaking in the compromise agreement, defendant-appellant Pilares move d for the issu- ance of a writ of execution to enforce the decision based on the compromise agreement, which the court granted in its order dated August 3, 1982. Accordingly, a writ of execution was issued on August 12, 1982 by the CFI of Quezon City where the civil case was pending. Pursuant to the order of execution dated August 3, 1982, a notice of levy on execution was issued on February 12, 1985, On February 12, 1985, defendant sheriff Roberto Garcia of Quezon City presented said notice of levy on execution before the Register of Deeds of Marikina and the same was an- notated at the back of TCT No. 79073 as Entry No. 123283. When the deed of absolute sale dated September 4, 1984 was registered on August 28, 1985, TCT No. N-79073 was cancelled and in lieu thereof, TCT No. N-109417 was issued in the name of the Sajonas couple. The notice of levy on execution annotated by defendant sheriff was car- ried over to the new title. On October 21, 1985, the Sajonas couple filed a Third Party Claim with the sheriff of Quezon city, hence the auction sale of the subject property did not push through as scheduled. On January 10, 1986, the Sajonas spouses demanded the cancellation of the notice of levy on

execution upon defendant-appellant Pilares, through a letter to their lawyer, Atty. Melchor Flores. Despite said demand, defendant-appellant Pilares refused to cause the cancellation of

said annotation. In view thereof, plaintiffs-appellees filed this complaint dated January 11, 1986 on February 5, 1986.1 The Sajonases filed their complaint2 in the Regional Trial Court of Rizal, Branch 71, against Dom- ingo Pilares, the judgment creditor of the Uychocdes. The relevant portion of the complaint al- leges:

7. That at the time the notice of levy was annotated by the defendant, the Uychocde spouses,

debtors of the defendant, have already transferred, conveyed and assigned all their title, rights

and interests to the plaintiffs and there was no more title, rights or interests therein which the defendant could levy upon;

8. That the annotation of the levy on execution which was carried over to the title of said plain-

tiffs is illegal and invalid and was made in utter bad faith, in view of the existence of the Ad- verse Claim annotated by the plaintiffs on the corresponding title of the Uychocde spouses;

9. That a demand was made by the plaintiffs upon the defendant Domingo A. Pilares, to cause

the cancellation of the said notice of levy but the latter, without justifiable reason and with the sole purpose of harassing and embarrassing the plaintiffs ignored and refused plaintiffs' de- mand;

10. That in view of the neglect, failure and refusal of the defendant to cause the cancellation of

the notice of levy on execution, the plaintiffs were compelled to litigate and engage the services of the undersigned counsel, to protect their rights and interests, for which they agreed to pay attorney's fees in the amount of P10,000 and appearance fees of P500 per day in court.3 Pilares filed his answer with compulsory counterclaim4 on March 8, 1986, raising special and af- firmative defenses, the relevant portions of which are as follows:

10. Plaintiff has no cause of action against herein defendants;

11. Assuming without however admitting that they filed an adverse claim against the property

covered by TCT No. 79073 registered under the name of spouses Ernesto Uychocde on August 27, 1984, the same ceases to have any legal force and effect (30) days thereafter pursuant to Section 70 of P.D. 1529; 12 The Notice of Levy annotated at the back of TCT No. 79073 being effected pursuant to the Writ of Execution dated August 31, 1982, duly issued by the CFI (now RTC) of Quezon proceed-

ing from a decision rendered in Civil Case No. 28859 in favor of herein defendant against Ernes- to Uychocde, is undoubtedly proper and appropriate because the property is registered in the name of the judgment debtor and is not among those exempted from execution;

13. Assuming without admitting that the property subject matter of this case was in fact sold by

the registered owner in favor of the herein plaintiffs, the sale is the null and void (sic) and with- out any legal force and effect because it was done in fraud of a judgment creditor, the defend- ant Pilares.5 Pilares likewise sought moral and exemplary damages in a counterclaim against the Sajonas spouses. The parties appeared at pre-trial proceedings on January 21, 1987,6 after which, trial on the merits ensued. The trial court rendered its decision on February 15, 1989.7 It found in favor of the Sajonas cou- ple, and ordered the cancellation of the Notice of Levy from Transfer Certificate of Title No. N-

109417.

The court a quo stated, thus:

After going over the evidence presented by the parties, the court finds that although the title of the subject matter of the Notice of Levy on Execution was still in the name of the Spouses Uy- chocde when the same was annotated on the said title, an earlier Affidavit of Adverse of claim was annotated on the same title by the plaintiffs who earlier bought said property from the Uy-

chocdes.

It is a well settled rule in this jurisdiction (Guidote vs. Maravilla, 48 Phil. 442) that actual notice of an adverse claim is equivalent to registration and the subsequent registration of the Notice of Levy could not have any legal effect in any respect on account of prior inscription of the ad- verse claim annotated on the title of the Uychocdes.

xxx xxx xxx

On the issue of whether or not plaintiffs are buyers in good faith of the property of the spouses Uychocde even notwithstanding the claim of the defendant that said sale executed by the spouses was made in fraud of creditors, the Court finds that the evidence in this instance is bare of any indication that said plaintiffs as purchasers had notice beforehand of the claim of the defendant over said property or that the same is involved in a litigation between said spouses and the defendant. Good faith is the opposite of fraud and bad faith, and the existence of any bad faith must be established by competent proof.8 (Cai vs. Henson, 51 Phil 606)

xxx xxx xxx

In view of the foregoing, the Court renders judgment in favor of the plaintiffs and against the defendant Pilares, as follows:

1. Ordering the cancellation of the Notice of Levy on Execution annotated on Transfer Certifi-

cate of Title No. N-109417.

2. Ordering said defendant to pay the amount of P5,000 as attorney's fees.

3. Dismissing the Counterclaim interposed by said defendant.

Said defendant is likewise ordered to pay the costs. Dissatisfied, Pilares appealed to the Court of Appeals", assigning errors on the part of the lower court. The appellate court reversed the lower court's decision, and upheld the annotation of the levy on execution on the certificate of title, thus:

WHEREFORE, the decision of the lower court dated February 15, 1989 is reversed and set aside and this complaint is dismissed. Costs against the plaintiffs-appellees. 10 The Sajonas couple are now before us, on a Petition for Review on Certiorari, 11 praying inter

alia to set aside the Court of Appeals' decision, and to reinstate that of the Regional Trial Court Private respondent filed his Comment 12 on March 5, 1992, after which, the parties were or- dered to file their respective Memoranda. Private respondent complied thereto on April 27, 1994 13, while petitioners were able to submit their Memorandum on September 29, 1992. 14 Petitioner assigns the following as errors of the appellate court, to wit:

I

THE LOWER COURT ERRED IN HOLDING THAT THE RULE ON THE 30-DAY PERIOD FOR ADVERSE

CLAIM UNDER SECTION 70 OF P.D. NO. 1529 IS ABSOLUTE INASMUCH AS IT FAILED TO READ OR CONSTRUE THE PROVISION IN ITS ENTIRETY AND TO RECONCILE THE APPARENT INCONSIS- TENCY WITHIN THE PROVISION IN ORDER TO GIVE EFFECT TO IT AS A WHOLE.

II

THE LOWER COURT ERRED IN INTERPRETING SECTION 70 OF P.D. NO. 1529 IN SUCH WISE ON THE GROUND THAT IT VIOLATES PETITIONERS' SUBSTANTIAL RIGHT TO DUE PROCESS. Primarily, we are being asked to ascertain who among the parties in suit has a better right over the property in question. The petitioners derive their claim from the right of ownership arising from a perfected contract of absolute sale between them and the registered owners of the property, such right being attested to by the notice of adverse claim 15 annotated on TCT No. N-79073 as early as August 27, 1984. Private respondent on the other hand, claims the right to levy on the property, and have it sold on execution to satisfy his judgment credit, arising from Civil Case No. Q-28850 16 against the Uychocdes, from whose title, petitioners derived their own.

Concededly, annotation of an adverse claim is a measure designed to protect the interest of a person over a piece of real property where the registration of such interest or right not other- wise provided for by the Land Registration Act or Act 496 (now P.D. 1529 or the Property Regis- tration Decree), and serves a warning to third parties dealing with said property that someone is claiming an interest on the same or a better right than that of the registered owner thereof. Such notice is registered by filing a sworn statement with the Register of Deeds of the province where the property is located, setting forth the basis of the claimed right together with other dates pertinent thereto. 17

The registration of an adverse claim is expressly recognized under Section 70 of P.D. No. 1529. * Noting the changes made in the terminology of the provisions of the law, private respondent in- terpreted this to mean that a Notice of Adverse Claim remains effective only for a period of 30 days from its annotation, and does not automatically lose its force afterwards. Private respond- ent further maintains that the notice of adverse claim was annotated on August 27, 1984, hence, it will be effective only up to September 26, 1984, after which it will no longer have any binding force and effect pursuant to Section 70 of P.D. No. 1529. Thus, the sale in favor of the petitioners by the Uychocdes was made in order to defraud their creditor (Pilares), as the same was executed subsequent to their having defaulted in the payment of their obligation based on

a

agreement. 18 The respondent appellate court upheld private respondents' theory when it ruled:

The above staled conclusion of the lower court is based on the premise that the adverse claim filed by plaintiffs-appellees is still effective despite the lapse of 30 days from the date of regis- tration. However, under the provisions of Section 70 of P.D. 1529, an adverse claim shall be ef- fective only for a period of 30 days from the date of its registration. The provision of this Decree is clear and specific.

xxx xxx xxx It should be noted that the adverse claim provision in Section 110 of the Land Registration Act (Act 496) does not provide for a period of effectivity of the annotation of an adverse claim. P.D. No. 1529, however, now specifically provides for only 30 days. If the intention of the law was for the adverse claim to remain effective until cancelled by petition of the interested party, then the aforecited provision in P.D. No. 1529 stating the period of effectivity would not have been inserted in the law. Since the adverse claim was annotated On August 27, 1984, it was effective only until Septem- ber 26, 1984. Hence, when the defendant sheriff annotated the notice of levy on execution on February 12, 1985, said adverse claim was already ineffective. It cannot be said that actual or prior knowledge of the existence of the adverse claim on the Uychocdes' title is equivalent to registration inasmuch as the adverse claim was already ineffective when the notice of levy on execution was annotated. Thus, the act of defendant sheriff in annotating the notice of levy on execution was proper and justified. The appellate court relied on the rule of statutory construction that Section 70 is specific and unambiguous and hence, needs no interpretation nor construction. 19 Perforce, the appellate court stated, the provision was clear enough to warrant immediate enforcement, and no inter- pretation was needed to give it force and effect. A fortiori, an adverse claim shall be effective only for a period of thirty (30) days from the date of its registration, after which it shall be with- out force and effect. Continuing, the court further stated; clearly, the issue now has been reduced to one of preference -- which should be preferred between the notice of levy on execution and the deed of absolute sate. The Deed of Absolute Sale was executed on September 4, 1984, but was registered only on August 28, 1985, while the notice of levy on execution was annotated six (6) months prior to the registration of the sale on

compromise

February 12, 1985. In the case of Landig vs. U.S. Commercial Co., 89 Phil. 638 Commere it was held that where a sale is recorded later than an attachment, although the former is of an earlier date, the sale must give way to the attachment on the ground that the act of registration is the operative act to affect the land. A similar ruling was restated in Campillo vs. Court of Appeals (129 SCRA 513). xxx xxx xxx The reason for these rulings may be found in Section 51 of P.D. 1529, otherwise known as the Property Registration Decree, which provides as follows:

Sec. 1. Conveyance and other dealings by the registered owner. -- An owner of registered land may convey, mortgage, lease, charge, otherwise deal with the same in accordance with existing laws. He may use such forms of deeds, mortgages, leases or other voluntary instruments as are sufficient in law. But no deed, mortgage, lease or other voluntary instrument, except a will pur- porting to convey or affect registered land shall take effect as a conveyance or bind the land, but shall operate only as a contract between the parties and as evidence of authority to the Register Deeds to make of registration. The act of registration shall be the operative act to convey or affect the land in so far as third persons are concerned and in all cases under the Decree, the registration shall be made in the office of the Register of Deeds for the province or city where the land lies. (Emphasis supplied by the lower court.) Under the Torrens system, registration is the operative act which gives validity to the transfer or creates a lien upon the land. A person dealing with registered land is not required to go be- hind the register to determine the condition of the property. He is only charged with notice of the burdens on the property which are noted on the face of the register or certificate of ti- tle. 20 Although we have relied on the foregoing rule, in many cases coming before us, the same, how- ever, does not fit in the case at bar. While it is the act of registration which is the operative act which conveys or affects the land insofar as third persons are concerned, it is likewise true, that the subsequent sale of property covered by a Certificate of Title cannot prevail over an adverse claim, duly sworn to and annotated on the certificate of title previous to the sale. 21 While it is true that under the provisions of the Property Registration Decree, deeds of conveyance of property registered under the system, or any interest therein only take effect as a conveyance to bind the land upon its registration, and that a purchaser is not required to explore further than what the Torrens title, upon its face, indicates in quest for any hidden defect or inchoate right that may subsequently defeat his right thereto, nonetheless, this rule is not absolute. Thus, one who buys from the registered owner need not have to look behind the certificate of title, he is, nevertheless, bound by the liens and encumbrances annotated thereon. One who buys without checking the vendor's title takes all the risks and losses consequent to such fail-

ure.22

In PNB vs. Court of Appeals, we held that "the subsequent sale of the property to the De Castro spouses cannot prevail over the adverse claim of Perez, which was inscribed on the bank' s cer- tificate of title on October 6, 1958. That should have put said spouses on notice, and they can claim no better legal right over and above that of Perez. The TCT issued in the spouses' names on July, 1959 also carried the said annotation of adverse claim. Consequently, they are not enti- tled to any interest on the price they paid for the property. 23 Then again, in Gardner vs. Court of Appeals, we said that "the statement of respondent court in its resolution of reversal that 'until the validity of an adverse claim is determined judicially, it cannot be considered a flaw in the vendor's title' contradicts the very object of adverse claims. As stated earlier, the annotation of an adverse claim is a measure designed to protect the inter- est of a person over a piece of real property, and serves as a notice and warning to third parties

dealing with said property that someone is claiming an interest on the same or has a better right than the registered owner thereof. A subsequent sale cannot prevail over the adverse claim which was previously annotated in the certificate of title over the property. 24 The question may be posed, was the adverse claim inscribed in the Transfer Certificate of Title No. N-109417 still in force when private respondent caused the notice of levy on execution to be registered and annotated in the said title, considering that more than thirty days had already lapsed since it was annotated? This is a decisive factor in the resolution of this instant case. If the adverse claim was still in effect, then respondents are charged with knowledge of pre-ex- isting interest over the subject property, and thus, petitioners are entitled to the cancellation of the notice of levy attached to the certificate of title. For a definitive answer to this query, we refer to the law itself. Section 110 of Act 496 or the Land Registration Act reads:

Sec. 110. Whoever claims any part or interest in registered lands adverse to the registered own- er, arising subsequent to the date of the original registration, may, if no other provision is made in this Act for registering the same, make a statement in writing setting forth fully his alleged right or interest, and how or under whom acquired, and a reference to the volume and page of the certificate of title of the registered owner, and a description of the land in which the right or interest is claimed. The statement shall be signed and sworn to, and shall state the adverse claimant's residence, and designate a place at which all notices may be served upon him. The statement shall be enti- tled to registration as an adverse claim, and the court, upon a petition of any party in interest, shall grant a speedy hearing upon the question of the validity of such adverse claim and shall enter such decree therein as justice and equity may require. If the claim is adjudged to be inva- lid, the registration shall be cancelled. If in any case, the court after notice and hearing shall find that a claim thus registered was frivolous or vexatious, it may tax the adverse claimant double or treble the costs in its discretion." The validity of the above-mentioned rules on adverse claims has to be reexamined in the light of the changes introduced by P.D. 1529, which provides:

Sec . 70 Adverse Claim -- Whoever claims any part or interest in registered land adverse to the registered owner, arising subsequent to the date of the original registration, may, if no other provision is made in this decree for registering the same, make a statement in writing setting forth fully his alleged right or interest, and how or under whom acquired, a reference to the number of certificate of title of the registered owner, the name of the registered owner, and a description of the land in which the right or interest is claimed. The statement shall be signed and sworn to, and shall state the adverse claimant's residence, and a place at which all notices may be served upon him. This statement shall be entitled to registration as an adverse claim on the certificate of title. The adverse claim shall be effective for a period of thirty days from the date of registration. After the lapse of said period, the anno- tation of adverse claim may be cancelled upon filing of a verified petition therefor by the party in-interest: Provided, however, that after cancellation, no second adverse claim based on the same ground shall be registered by the same claimant. Before the lapse of thirty days aforesaid, any party in interest may file a petition in the Court of First Instance where the land is situated for the cancellation the adverse claim, and the court shall grant a speedy hearing upon the question of the validity of such adverse claim, and shall render judgment as may be just and equitable. If the adverse claim is adjudged to be invalid, the registration thereof shall be ordered cancelled. If, in any case, the court, after notice and hearing shall find that the adverse claim thus registered was frivolous, it may fine the claimant in an amount not less than one thousand pesos, nor more than five thousand pesos, in its dis-

cretion. Before the lapse of thirty days, the claimant may withdraw his adverse claim by filing with the Register of Deeds a sworn petition to that effect. (Emphasis ours). In construing the law aforesaid, care should be taken that every part thereof be given effect and a construction that could render a provision inoperative should be avoided, and inconsis- tent provisions should be reconciled whenever possible as parts of a harmonious whole. 25 For taken in solitude, a word or phrase might easily convey a meaning quite different from the one actually intended and evident when a word or phrase is considered with those with which it is associated." 26 In ascertaining the period of effectivity of an inscription of adverse claim, we

must read the law in its entirety. Sentence three, paragraph two of Section 70 of P.D. 1529 pro-

vides:

The adverse claim shall be effective for a period of thirty days from the date of registration." At first blush, the provision in question would seem to restrict the effectivity of the adverse claim to thirty days. But the above provision cannot and should not be treated separately, but should be read in relation to the sentence following, which reads:

After the lapse of said period, the annotation of adverse claim may be cancelled upon filing of a verified petition therefor by the party in interest.

If the rationale of the law was for the adverse claim to ipso facto lose force and effect after the lapse of thirty days, then it would not have been necessary to include the foregoing caveat to

clarify and complete the rule. For then, no adverse claim need be cancelled. If it has been auto- matically terminated by mere lapse of time, the law would not have required the party in inter- est to do a useless act.

A statute's clauses and phrases must not be taken separately, but in its relation to the statute's

totality. Each statute must, in fact, be construed as to harmonize it with the pre-existing body of laws. Unless clearly repugnant, provisions of statutes must be reconciled. The printed pages of the published Act, its history, origin, and its purposes may be examined by the courts in their construction. 27 An eminent authority on the subject matter states the rule candidly:

A statute is passed as a whole and not in parts sections, and is animated by one general pur-

pose and intent. Consequently, each part or section should be construed in connection with every other part section so as to produce a harmonious whole. It is not proper to confine its in- tention to the one section construed. It is always an unsafe way of construing a statute or con- tract to divide it by a process of etymological dissection, into separate words, and then apply to each, thus separated from the context, some particular meaning to be attached to any word or phrase usually to be ascertained from the as context. 28 Construing the provision as a whole would reconcile the apparent inconsistency between the portions of the law such that the provision on cancellation of adverse claim by verified petition would serve to qualify the provision on the effectivity period. The law, taken together, simply

means that the cancellation of the adverse claim is still necessary to render it ineffective, other- wise, the inscription will remain annotated and shall continue as a lien upon the property. For if the adverse claim has already ceased to be effective upon the lapse of said period, its cancella- tion is no longer necessary and the process of cancellation would be a useless ceremony. 29

It should be noted that the law employs the phrase "may be cancelled", which obviously indi-

cates, as inherent in its decision making power, that the court may or not order the cancellation of an adverse claim, nothwitstanding such provision limiting the effectivity of an adverse claim for thirty days from the date of registration. The court cannot be bound by such period as it would be inconsistent with the very authority vested in it. A fortiori, the limitation on the period of effectivity is immaterial in determining the validity or invalidity of an adverse claim which is the principal issue to be decided in the court hearing. It will therefore depend upon the evi- dence at a proper hearing for the court to determine whether it will order the cancellation of the adverse claim or not. 30

To interpret the effectivity period of the adverse claim as absolute and without qualification limited to thirty days defeats the very purpose for which the statute provides for the remedy of an inscription of adverse claim, as the annotation of an adverse claim is a measure designed to protect the interest of a person over a piece of real property where the registration of such in- terest or right is not otherwise provided for by the Land Registration Act or Act 496 (now P.D. 1529 or the Property Registration Decree), and serves as a warning to third parties dealing with said property that someone is claiming an interest or the same or a better right than the regis- tered owner thereof. 31 The reason why the law provides for a hearing where the validity of the adverse claim is to be threshed out is to afford the adverse claimant an opportunity to be heard, providing a venue where the propriety of his claimed interest can be established or revoked, all for the purpose of determining at last the existence of any encumbrance on the title arising from such adverse claim. This is in line with the provision immediately following:

Provided, however, that after cancellation, no second adverse claim shall be registered by the same claimant. Should the adverse claimant fail to sustain his interest in the property, the adverse claimant will be precluded from registering a second adverse claim based on the same ground. It was held that "validity or efficaciousness of the claim may only be determined by the Court upon petition by an interested party, in which event, the Court shall. order the immediate hear- ing thereof and make the proper adjudication a justice and equity may warrant. And it is only when such claim is found unmeritorious that the registration of the adverse claim may be can- celled, thereby protecting the interest of the adverse claimant and giving notice and warning to third parties". 32 In sum, the disputed inscription of an adverse claim on the Transfer Certificate of Title No. N- 79073 was still in effect on February 12, 1985 when Quezon City Sheriff Roberto Garcia anno- tated the notice of levy on execution thereto. Consequently, he is charged with knowledge that the property sought to be levied upon the execution was encumbered by an interest the same as or better than that of the registered owner thereof. Such notice of levy cannot prevail over the existing adverse claim inscribed on the certificate of title in favor of the petitioners. This can be deduced from the pertinent provision of the Rules of Court, to wit:

Sec. 16. Effect of levy on execution as to third persons -- The levy on execution shall create a lien in favor of the judgment creditor over the right, title and interest of the judgment debtor in such property at the time of the levy, subject to liens or encumbrances then existing. (Emphasis supplied) To hold otherwise would be to deprive petitioners of their property, who waited a long time to complete payments on their property, convinced that their interest was amply protected by the inscribed adverse claim. As lucidly observed by the trial court in the challenged decision:

True, the foregoing section provides that an adverse claim shall be effective for a period of thirty days from the date of registration. Does this mean however, that the plaintiffs thereby lost their right over the property in question? Stated in another, did the lapse of the thirty day period automatically nullify the contract to sell between the plaintiffs and the Uychocdes there- by depriving the former of their vested right over the property? It is respectfully submitted that it did not. 33 As to whether or not the petitioners are buyers in good faith of the subject property, the same should be made to rest on the findings of the trial court. As pointedly observed by the appellate court, "there is no question that plaintiffs-appellees were not aware of the pending case filed by Pilares against Uychocde at the time of the sale of the property by the latter in their favor. This was clearly elicited from the testimony of Conchita Sajonas, wife of plaintiff, during cross-

examination on April 21, 1988". 34 ATTY. REYES.

Q Madam Witness, when Engr. Uychocde and his wife offered to you and your husband the

property subject matter of this case, they showed you the owner's transfer certificate, is it not?

HON. COURT OF APPEALS, SPOUSES CHRISTOPHER and MA. ANGELICA BARRAMEDA, and SPOUSES ANTONIO and MARIDEL CALINGO, respondents. D E C I S I O N

PUNO, J.:

A

Yes, sir.

This is a petition for review of the decision of the Court of Appeals dated September 7, 1999 in

Q

That was shown to you the very first time that this lot was offered to you for sale?

CA-G.R. CV No. 48772 and its resolution dated March 31, 2000. The Court of Appeals reversed

A

Yes.

the decision of the Regional Trial Court of Makati in Civil Case No. 92-3524.

Q

After you were shown a copy of the title and after you were informed that they are desirous

The facts show that herein respondent Spouses Antonio and Maridel Calingo (respondents Cal-

in

selling the same, did you and your husband decide to buy the same?

ingo) were the registered owners of a house and lot located at No. 7903 Redwood Street, Mar-

A

No, we did not decide right after seeing the title. Of course, we

celo Green Village, Parañaque, Metro Manila. The property was mortgaged to the Development

Q

No, you just answer my question. You did not immediately decide?

Bank of the Philippines, which mortgage was later absorbed by the Home Mutual Development

A

Yes.

Fund (HMDF) or Pag-ibig.

Q

When did you finally decide to buy the same?

On April 27, 1992, respondents Calingo and respondent Spouses Christopher and Ma. Angelica

A

After seeing the site and after verifying from the Register of Deeds in Marikina that it is free

Barrameda (respondents Barrameda) entered into a contract of sale with assumption of mort-

from encumbrances, that was the time we decided.

gage where the former sold to the latter the property in question and the latter assumed to pay

Q How soon after you were offered this lot did you verify the exact location and the genuine-

ness of the title, as soon after this was offered to you?

A I think it' s one week after they were offered. 35

A purchaser in good faith and for value is one who buys property of another without notice that

some other person has a right to or interest in such property and pays a full and fair price for the same, at the time of such purchase, or before he has notice of the claims or interest of some other person in the property.36 Good faith consists in an honest intention to abstain from taking an unconscientious advantage of another, 3 7 Thus, the claim of the private respondent that the sale executed by the spouses was made in fraud of creditors has no basis in fact, there being no evidence that the petitioners had any knowledge or notice of the debt of the Uy- chocdes in favor of the private respondent, nor of any claim by the latter over the Uychocdes' properties or that the same was involved in any litigation between said spouses and the private respondent. While it may be stated that good faith is presumed, conversely, bad faith must be established by competent proof by the party alleging the same. Sans such proof, the petitioners are deemed to be purchasers in good faith, and their interest in the subject property must not

be

disturbed.

At

any rate, the Land Registration Act (Property Registration Decree) guarantees to every pur-

chaser of registered land in good faith that they can take and hold the same free from any and all prior claims, liens an encumbrances except those set forth on the Certificate of Title and those expressly mentioned in the ACT as having been reserved against it. Otherwise, the effi- cacy of the conclusiveness of the Certificate of Title which the Torrens system seeks to insure would be futile and nugatory. 38 ACCORDINGLY, the assailed decision of the respondent Court of Appeals dated October 17, 1991 is hereby REVERSED and SET ASIDE. The decision of the Regional Trial Court dated Febru- ary 15, 1989 finding for the cancellation of the notice of levy on execution from Transfer Certifi- cate of Title No. N-109417 is hereby REINSTATED. The inscription of the notice of levy On execution on TCT No. N-109417 is hereby CANCELLED. Costs against private respondent. SO ORDERED.

G.R. No. 142687

SPOUSES FRANCISCO and BERNARDINA RODRIGUEZ, petitioners, vs.

July 20, 2006

the outstanding loan balance to the Development Bank of the Philippines. 1 Respondents Barra- meda issued two checks in the amounts of P150,000.00 and P528,539.76, for which respond-

ents Calingo issued a receipt dated April 24, 1992. 2 In a letter dated April 23, 1992, respondent Antonio S. Calingo informed HMDF/Pag-ibig about the sale of the property with assumption of mortgage. Said letter, however, together with an

affidavit by respondents Calingo, was served upon HMDF/Pag-ibig on October 2, 1992. 3 On May 29, 1992, respondents Barrameda filed with the Register of Deeds of Parañaque an affi- davit of adverse claim on the property. The adverse claim was inscribed at the back of the cer-

tificate of title as Entry No. 3439. 4 On June 1, 1992, respondent Ma. Angelica Paez-Barrameda wrote HMDF, Mortgage and Loans Division informing the office that they have purchased the subject property from the Calingo spouses and that they filed a notice of adverse claim with the Register of Deeds of Parañaque. They also sought assistance from said office as regards the procedure for the full settlement of

the loan arrearages and the transfer of the property in their names. Respondents Barrameda moved into the property on June 2, 1992. On July 13, 1992, a notice of levy with attachment on real property by virtue of a writ of execu- tion was annotated at the back of the certificate of title of the property in question. The writ of execution was issued by Judge Salvador Abad Santos, Regional Trial Court of Makati, Branch 65 in connection with Civil Case No. 88-2159 involving a claim by herein petitioners, Spouses Fran- cisco and Bernardina Rodriguez, against respondents Calingo. Judge Abad Santos issued the

writ in favor of petitioners Rodriguez. 6 On July 21, 1992, petitioners’ counsel, Atty. Nelson A. Loyola, sent a letter to respondents Bar- rameda inquiring about the basis of their occupation of the property in question. On August 21, 1992, respondents Barrameda remitted to respondents Calingo the amount of P364,992.07 to complete the payment of the agreed purchase price. Respondents Calingo ac- knowledged receipt of said amount and waived all their rights to the property in favor of the Barrameda spouses. They also guaranteed that the property was clear and free from any liens

and encumbrances, except the real estate mortgage assumed by respondents Barrameda. 7 On October 7, 1992, respondents Barrameda executed a joint affidavit stating that they are the owners of the property in question by virtue of a deed of sale with assumption of mortgage; that they registered an affidavit of adverse claim with the Register of Deeds of Parañaque; that

5

the Sheriff of the Regional Trial Court, Branch 65, Makati, Sheriff Manuel C. Dolor, levied said property despite their adverse claim; and that they have acquired the property long before the levy was made, and therefore, said levy was illegal. They served a copy of the affidavit on peti- tioners’ counsel, Atty. Loyola, who made a reply thereto on October 15, 1992. In his letter to Christopher Barrameda dated October 15, 1992, Atty. Loyola pointed out that the alleged deed of sale with assumption of mortgage was not registered with the Register of Deeds and that the records of the HMDF show that the property is owned by the Calingo spouses. He urged the Barrameda spouses to confer with the petitioners to amicably settle the

controversy. 8 On November 9, 1992, respondents Barrameda found a Notice of Sheriff’s Sale posted on their front gate, announcing the auction sale of their house and lot on December 3, 1992 at 10:00 in

the morning. 9 On November 20, 1992, pursuant to Rule 39, Section 17 of the Revised Rules of Court, respond- ents Barrameda served a Notice of Third Party Claim upon Sheriff Manuel C. Dolor, accompa- nied by their affidavit of title. On December 2, 1992, respondents Barrameda filed with the Regional Trial Court of Makati a petition for quieting of title with prayer for preliminary injunction. The petition prayed, among others, that the execution sale of the property be enjoined, the notice of levy and attachment inscribed on the certificate of title be cancelled, and that respondents Barrameda be declared

the lawful and sole owners of the property in question. 10 The trial court ruled in favor of herein petitioners and dismissed respondents Barrameda’s peti- tion for quieting of title. It ruled that the annotation of respondents Barrameda’s adverse claim at the back of the certificate of title was insufficient to establish their claim over the property. It said that respondents Barrameda, as buyers of the property, should have registered the title in their names. Furthermore, respondents Barrameda’s adverse claim had lost its efficacy after the lapse of thirty days in accordance with the provisions of the Land Registration Act. The trial court also found that there was collusion between respondents Barrameda and respondents Calingo to transfer the property to defraud third parties who may have a claim against the Cal-

ingos. 11 The Court of Appeals, however, reversed the decision of the trial court. Citing the ruling in Sajo-

nas v. Court of Appeals, 12 the appellate court held that respondents Barrameda’s adverse claim inscribed on the certificate of title was still effective at the time the property was levied on exe- cution. It said:

Therefore, the disputed inscription of adverse claim on TCT No. 83612/57286 was still in effect on July 13, 1992 when the Rodriguezes caused the annotation of the notice of levy on execution thereto. Consequently, they are charged with knowledge that the property sought to be levied upon on execution was encumbered by an interest the same as or better than that of the regis- tered owner thereof. Such notice of levy cannot prevail over the existing adverse claim in- scribed on the certificate of title in favor of the Barramedas. xxx The court held, therefore, that the notice of levy could not prevail over respondents Barrame- da’s adverse claim. Petitioners moved for a reconsideration of the appellate court’s ruling, but the motion was de- nied. Hence, this petition. Petitioners essentially argue that the remedy of a petition for quieting of ti- tle was not available to respondents Barrameda as they did not have a valid title to the prop- erty in question; that the affidavit of adverse claim inscribed by respondents Barrameda at the back of the certificate of title was not sufficient to establish their claim to the property; and

there was collusion between respondents Barrameda and respondents Calingo. The principal issue that needs to be resolved in this case is whether respondents Barrameda’s adverse claim on the property should prevail over the levy on execution issued by another court in satisfaction of a judgment against respondents Calingo. We hold that it cannot. Respondents Barrameda anchor their claim on the property on the deed of sale with assump- tion of mortgage executed by them and respondents Calingo on April 27, 1992. The Property

Registration Decree 13 requires that such document be registered with the Register of Deeds in order to be binding on third persons. The law provides:

Sec. 51. Conveyance and other dealings by registered owner. An owner of registered land may convey, mortgage, lease, charge or otherwise deal with the same in accordance with existing laws. He may use such forms of deeds, mortgages, leases or other voluntary instruments as are sufficient in law. But no deed, mortgage, lease, or other voluntary instrument, except a will purporting to convey or affect registered land shall take effect as a conveyance or bind the land, but shall operate only as a contract between the parties and as evidence of authority to the Register of Deeds to make registration. The act of registration shall be the operative act to convey or affect the land insofar as third persons are concerned, and in all cases under this Decree, the registration shall be made in the office of the Register of Deeds for the province or city where the land lies. (emphasis supplied) It is admitted in this case that the deed of sale with assumption of mortgage was not registered, but instead, respondents Barrameda filed an affidavit of adverse claim with the Register of Deeds. The question now is whether the adverse claim is sufficient to bind third parties such as herein petitioners.

In L.P. Leviste and Company, Inc. v. Noblejas, 14 we explained when an inscription of an adverse claim is sufficient to affect third parties, thus:

The basis of respondent Villanueva’s adverse claim was an agreement to sell executed in her fa- vor by Garcia Realty. An agreement to sell is a voluntary instrument as it is a wilful act of the registered owner. As such voluntary instrument, Section 50 of Act No. 496 [now Presidential De- cree No. 1529] expressly provides that the act of registration shall be the operative act to con- vey and affect the land. And Section 55 of the same Act requires the presentation of the own- er’s duplicate certificate of title for the registration of any deed or voluntary instrument. As the agreement to sell involves an interest less than an estate in fee simple, the same should have been registered by filing it with the Register of Deeds who, in turn, makes a brief memorandum thereof upon the original and owner’s duplicate certificate of title. The reason for requiring the production of the owner’s duplicate certificate in the registration of a voluntary instrument is that, being a wilful act of the registered owner, it is to be presumed that he is interested in registering the instrument and would willingly surrender, present or produce his duplicate cer- tificate of title to the Register of Deeds in order to accomplish such registration. However, where the owner refuses to surrender the duplicate certificate for the annotation of the vol- untary instrument, the grantee may file with the Register of Deeds a statement setting forth his adverse claim, as provided for in Section 110 of Act No. 496. In such a case, the annotation of the instrument upon the entry book is sufficient to affect the real estate to which it relates, although Section 72 of Act No. 496 imposes upon the Register of Deeds the duty to require the production by the [r]egistered owner of his duplicate certificate for the inscription of the ad- verse claim. The annotation of an adverse claim is a measure designed to protect the interest of a person over a piece of real property where the registration of such interest or right is not otherwise provided for by the Land Registration Act, and serves as a notice and warning to third parties dealing with said property that someone is claiming an interest on the same or a

better right than the registered owner thereof. (emphases supplied) In the case at bar, the reason given for the non-registration of the deed of sale with assumption of mortgage was that the owner’s duplicate copy of the certificate of title was in the possession of HMDF. It was not shown, however, that either respondents Barrameda or respondents Calin- go exerted any effort to retrieve the owner’s duplicate copy from the HMDF for the purpose of registering the deed of sale with assumption of mortgage. In fact, the parties did not even seek to obtain the consent of, much less inform, the HMDF of the sale of the property. This, despite the provision in the contract of mortgage prohibiting the mortgagor (respondents Calingo) from

selling or disposing the property without the written consent of the mortgagee. 15 Respondents Calingo, as party to the contract of mortgage, are charged with the knowledge of such provision and are bound to comply therewith. Apparently, there was haste in disposing the property that respondents Calingo informed HMDF of the sale only on October 2, 1992 when they served a copy of their letter to said office regarding the transfer of the property to respondents Barra- meda. There was no reason for the parties’ failure to seek the approval of the HMDF to the sale as it appears from the letter of respondent Angelica Paez-Barrameda to HMDF that they were ready to pay in full the balance of the loan plus interest. What is more suspect is that the judg- ment against respondents Calingo ordering them to pay the petitioners the sum of P1,159,355.90 was rendered on January 28, 1992, before the sale of the property on April 27, 1992. We also find it unsettling that respondents Barrameda, without any reservation or in- quiry, readily remitted to respondents Calingo the full payment for the property on August 21, 1992 despite knowledge of the levy on execution over the property in July of the same year. Any prudent buyer of real property, before parting with his money, is expected to first ensure that the title to the property he is about to purchase is clear and free from any liabilities and that the sellers have the proper authority to deal on the property. Again, we stress that the annotation of an adverse claim is a measure designed to protect the interest of a person over a piece of property where the registration of such interest or right is not otherwise provided for by the law on registration of real property. Section 70 of Presiden- tial Decree No. 1529 is clear:

Sec. 70. Adverse claim. Whoever claims any part or interest in registered land adverse to the registered owner, arising subsequent to the date of the original registration, may, if no other provision is made in this Decree for registering the same, make a statement in writing setting forth his alleged right or interest, and how or under whom acquired, a reference to the number of the certificate of title of the registered owner, the name of the registered owner, and a de- scription of the land in which the right or interest is claimed. xxx The deed of sale with assumption of mortgage executed by respondents Calingo and Barrame- da is a registrable instrument. In order to bind third parties, it must be registered with the Of- fice of the Register of Deeds. It was not shown in this case that there was justifiable reason why the deed could not be registered. Hence, the remedy of adverse claim cannot substitute for registration. IN VIEW WHEREOF, the petition is GRANTED. The assailed decision and resolution of the Court of Appeals are SET ASIDE and the decision of the Regional Trial Court, Makati in Civil Case No. 92-3524 is REINSTATED. No cost. SO ORDERED.

G.R. No. 187824 : November 17, 2010 FILINVEST DEVELOPMENT CORPORATION, Petitioner, v. GOLDEN HAVEN MEMORIAL PARK, INC., Respondent.

G.R. No. 188265 : November 17, 2010 GOLDEN HAVEN MEMORIAL PARK, INC., Petitioner, v. FILINVEST DEVELOPMENT CORPORA- TION, Respondent. DECISION

ABAD, J.:

These cases are about which of two real estate developers, both buyers of the same lands, acted in good faith and has a better title to the same. The Facts and the Case Petronila Yap (Yap), Victoriano and Policarpio Vivar (the Vivars), Benjamin Cruz (Cruz), Juan Aquino (Aquino), Gideon Corpuz (Corpuz), and Francisco Sobremesana (Sobremesana), and some other relatives inherited a parcel of land in Las Piñas City covered by Transfer Certificate of Title (TCT) 67462 RT-1. Subsequently, the heirs had the land divided into 13 lots and, in a ju- dicial partition, the court distributed four of the lots as follows: a) Lots 1 and 12 to Aquino; b) Lot 2 to Corpuz and Sobremesana; and (c) Lot 6 to Yap, Cruz, and the Vivars. The other lots were distributed to the other heirs. On March 6, 1989 Yap, acting for herself and for Cruz and the Vivars, executed an agreement to sell Lot 6 in favor of Golden Haven Memorial Park, Inc. (GHM), payable in three installments. On July 31, 1989 another heir, Aquino, acting for himself and for Corpuz and Sobremesana, also executed an agreement to sell Lots 1, 2, and 12 in favor of GHM, payable in the same manner. In both instances, GHM paid the first installment upon execution of the contract. On August 4, 1989 GHM caused to be annotated a Notice of Adverse Claim on TCT 67462 RT-1. On September 20, 1989 the sellers of the four lots wrote GHM that they were still working on the titling of the lots in their names and wanted to know if GHM was still interested in proceed- ing with their agreements. GHM replied in the affirmative on September 21, 1989 and said that it was just waiting for the sellers’ titles so it can pay the second installments. Sometime in August of 1989, Filinvest Development Corporation (Filinvest) applied for the transfer in its name of the titles over Lots 2, 4, and 5 but the Las Piñas Register of Deeds de- clined its application. Upon inquiry, Filinvest learned that Lot 8, a lot belonging to some other heir or heirs and covered by the same mother title, had been sold to Household Development Corporation (HDC), a sister company of GHM, and HDC held the owner’s duplicate copy of that title. Filinvest immediately filed against HDC a petition for the surrender and cancellation of the co-owners’ duplicate copy of TCT 67462 RT-1. Filinvest alleged that it bought Lots 1, 2, 6, and 12 of the property from their respective owners as evidenced by three deeds of absolute sale in its favor dated September 10, November 18, and December 29, 1989 and that Filinvest was enti- tled to the registrations of such sales. On January 14, 1991 GHM filed against the sellers and Filinvest a complaint for the annulment of the deeds of sale issued in the latter’s favor before the Regional Trial Court (RTC) of Las Piñas City in Civil Case 91-098. On March 16, 2006 the RTC rendered a decision after trial, declaring the contracts to sell executed by some of the heirs in GHM’s favor valid and enforceable and the sale in favor of Filinvest null and void. Only Filinvest appealed among the defendants. On November 25, 2008 the Court of Appeals (CA) affirmed the RTC decision with respect to the validity of the contract to sell Lot 6 in GHM’s favor. But the CA declared the contracts to sell Lots 1, 2, and 12 in GHM’s favor void and the sale of the same lots in favor of Filinvest valid. Both parties filed their petitions for review before this Court, Filinvest in G.R. 187824, and GHM in G.R. 188265. The Issue Presented The issue presented in these cases is whether or not the contracts to sell that the sellers exe- cuted in GHM’s favor covering the same lots sold to Filinvest are valid and enforceable.

The Court’s Ruling To prove good faith, the rule is that the buyer of registered land needs only show that he relied on the title that covers the property. But this is true only when, at the time of the sale, the buyer was unaware of any adverse claim to the property.[1] Otherwise, the law requires the buyer to exercise a higher degree of diligence before proceeding with his purchase. He must ex- amine not only the certificate of title, but also the seller’s right and capacity to transfer any in- terest in the property.[2] In such a situation, the buyer must show that he exercised reasonable precaution by inquiring beyond the four corners of the title.[3] Failing in these, he may be deemed a buyer in bad faith.[4]cralaw Here, Filinvest was on notice that GHM had caused to be annotated on TCT 67462 RT-1, the mother title, as early as August 4, 1989 a notice of adverse claim covering Lot 6. This notwith- standing, Filinvest still proceeded to buy Lots 1, 2, 6, and 12 on September 10, November 18, and December 29, 1989. Filinvest of course contends that, although the title carried a notice of adverse claim, that no- tice was only with respect to seller Yap’s interest in Lot 6 and it did not affect Lots 1, 2, 12, and the remaining interests in Lot 6. The Court disagrees. The annotation of an adverse claim is intended to protect the claimant’s interest in the prop- erty. The notice is a warning to third parties dealing with the property that someone claims an interest in it or asserts a better right than the registered owner.[5] Such notice constitutes, by operation of law, notice to the whole world.[6] Here, although the notice of adverse claim per- tained to only one lot and Filinvest wanted to acquire interest in some other lots under the same title, the notice served as warning to it that one of the owners was engaged in double sell- ing. What is more, upon inquiry with the Register of Deeds of Las Piñas, Filinvest also learned that the heirs of Andres Aldana sold Lot 8 to HDC and turned over the co-owner’s duplicate copy of TCT 67462 RT-1 to that company which had since then kept the title. Filinvest (referred to be- low as FDC) admits this fact in its petition,[7] thus:chanroblesvirtuallawlibrary Sometime in August 1989, FDC applied with the Register of Deeds of Las Piñas for the transfer and registration of Lots 2, 4, and 5 in its name and surrendered the co-owners duplicate copy of TCT No. (67462) RT-1 given to it by the Vivar family, but the Register of Deeds of Las Piñas City refused to do the transfer of title in the name of FDC and instead demanded from FDC to sur- render as well the other co-owner's duplicate copy of TCT No. (67462) RT-1 which was issued to the heirs of Andres Aldana. Upon further inquiry, FDC came to know that the heirs of Andres Al- dana sold Lot 8 and delivered their co-owner's duplicate copy of TCT No. (67462) RT-1 to House- hold Development Corporation, a sister company of respondent GHMPI. FDC made representa- tions to Household Development Corporation for the surrender of said co-owner's duplicate copy of TCT No. (67462) RT-1 to the Register of Deeds of Las Piñas City, but Household Develop- ment Corporation refused to do so. Filinvest’s knowledge that GHM, a competitor, had bought Lot 6 in which Filinvest was inter- ested, that GHM had annotated an adverse claim to that Lot 6, and that GHM had physical pos- session of the title, should have put Filinvest on its toes regarding the prospects it faced if it bought the other lots covered by the title in question. Filinvest should have investigated the true status of Lots 1, 2, 6, and 12 by asking GHM the size and shape of its interest in the lands covered by the same title, especially since both companies were engaged in the business of de- veloping lands. One who has knowledge of facts which should have put him upon such inquiry and investigation cannot claim that he has acquired title to the property in good faith as against the true owner of the land or of an interest in it.[8]cralaw The Court upholds the validity of the contracts between GHM and its sellers. As the trial court aptly observed, GHM entered into valid contracts with its sellers but the latter simply and know-

ingly refused without just cause to honor their obligations. The sellers apparently had a sudden change of heart when they found out that Filinvest was willing to pay more. As to the award of exemplary damages, the Court sustains the CA ruling. This species of dam- ages is allowed only in addition to moral damages such that exemplary damages cannot be awarded unless the claimant first establishes a clear right to moral damages.[9] Here, since GHM failed to prove that it is entitled to moral damages, the RTC’s award of exemplary dam- ages had no basis. But the grant of attorney’s fees is proper. As the RTC noted, this case has been pending since 1991, or for 19 years now. GHM was forced to litigate and incur expenses in order to protect its rights and interests. WHEREFORE, the Court GRANTS the petition in G.R. 188265 and DISMISSES the petition in G.R. 187824. The Court likewise REVERSES and SETS ASIDE the decision of the Court of Appeals dated November 25, 2008 in CA-G.R. CV 89448, and REINSTATES the decision of the Regional Trial Court in Civil Case 91-098 dated March 16, 2006 with the MODIFICATION that the award of exemplary damages is DELETED. SO ORDERED.

[GR. No. 166536 : February 04, 2010]

FLOR MARTINEZ, REPRESENTED BY MACARIO MARTINEZ, AUTHORIZED REPRESENTATIVE AND ATTORNEY-IN-FACT, PETITIONER, VS. ERNESTO G. GARCIA AND EDILBERTO M. BRUA, RE- SPONDENTS.

D E C I S I O N

PERALTA, J.:

Before us is a special civil action for certiorari under Rule 65 of the Rules of Court to annul and

set aside the Decision [1] dated August 12, 2004 and the Resolution [2] dated November 18, 2004 of the Court of Appeals (CA) in CA-G.R. CV No. 61591, which reversed and set aside the Deci-

sion [3] dated April 15, 1998 and Order [4] dated August 11, 1998 of the Regional Trial Court (RTC)

of

Pasig,

Branch

267,

in

Special

Civil

Action

No.

574.

The

factual

antecedents

are

as

follows:

Respondent Edilberto Brua was the registered owner of a parcel of land located in Manda- luyong, Rizal, covered by Transfer Certificate of Title (TCT) No. 346026 of the Registry of Deeds of Rizal, which is the subject matter of this case. The property was first mortgaged to the Gov- ernment Service Insurance System (GSIS), and such mortgage was annotated at the back of TCT

No. 346026 as Entry No. 91370, inscribed on June 5, 1974. [5] On February 5, 1980, respondent Brua obtained a loan from his brother-in-law, respondent Ernesto Garcia, in the amount of One Hundred Fifty Thousand Pesos (P150,000.00) and, to secure the payment of said loan, respond- ent Brua mortgaged the subject prbperty to respondent Garcia, as evidenced by a Deed of Real

Estate Mortgage [6] executed in respondent Garcia's favor. Since the title to the subject property was in the possession of the GSIS and respondent Garcia could not register the Deed of Real Es-

tate Mortgage, he then executed an Affidavit of Adverse Claim [7] and registered it with the

Registry of Deeds of Rizal on June 23, 1980 as Entry No. 49853/T-346026, [8] which remained un-

canceled

time.

up

to

this

Sometime in October 1991, respondent Brua requested respondent Garcia to pay the former's

loan with the GSIS, so that the title to the subject property would be released to the latter. Re- spondent Garcia then paid GSIS the amount of P400,000.00 and, thus, the title to the subject

him.

property

was

released

to

On October 22, 1991, a Deed of Absolute Sale [9] was executed between respondents Garcia and Brua over the subject property, where respondent Brua sold the property in the amount of P705,000.00. In the same deed, it was stated that the subject property was only a partial pay- ment of respondent Brua's mortgage indebtedness to respondent Garcia, which he could no longer redeem from the latter. Respondent Garcia then registered the Deed of Sale with the

Registry of Deeds of Rizal on October 24 1991, and a new TCT No. 5204 [10] was issued in the names of respondent Garcia and his wife. However, the annotations at the back of the previous title were carried over to the new title, to wit: Entry No. 56837, a Notice of Levy on Attachment

and/or Levy inscribed on January 8, 1981; [11] Entry No. 2881 showing a Notice of Levy on Execu-

tion in favor of petitioner Flor Martinez, which was inscribed on July 11, 1988; [12] Entry No. 3706, which was a Certificate of Sale in favor of petitioner inscribed on September 2,

1988; [13] Entry No. 72854, which was a Notice of Levy on Execution in favor of Pilipinas Bank in-

scribed on December 8, 1981; [14] and Entry No. 16611 inscribed on October 24, 1991, which

was the cancellation of respondent Brua's mortgage with GSIS. [15]

It appeared that the annotations found at the back of the title of the subject property in favor of petitioner, i.e., Notice of Levy on Attachment and/or Levy, Notice of Levy on Execution, and Certificate of Sale, were all made in connection with petitioner's action for Collection of Sum of Money, which she filed against respondent Brua at the RTC of Makati City, Branch 60, docketed as Civil Case No. 39633. In that case, a decision was rendered in favor of petitioner, where the RTC ordered respondent Bma to pay the former the amount of P244,594.10, representing the value of the dishonored checks plus 12% interest per annum as damages and the premium paid by petitioner for the attachment bond. The decision became final and executory as respondent Brua failed to appeal the same, and a notice of levy on execution was issued. A public auction was subsequently conducted, where the subject property was awarded to petitioner as the sole bidder in the amount of P10,000.00, and a Certificate of Sale was issued in her favor.

The annotation of Pilipinas Bank's Notice of Levy on Execution annotated as Entry No. 72854 on the title of the subject property was by virtue of a civil case filed by Filipinas Manufacturers Bank, now known as Pilipinas Bank, against respondent Brua.

On February 9, 1994, respondents Garcia and Brua filed with the RTC of Pasig, Branch 267, an Action to Quiet Title, initially against petitioner due to the encumbrances/liens annotated on re- spondent Garcia's new title. They contended that these encumbrances/liens were registered subsequent to the annotation of respondent Garcia's adverse claim made in 1980, and prayed that these be canceled. Subsequently, the complaint was amended to include Pilipinas Bank as an additional defendant. Petitioner and Pilipinas Bank filed their respective Answers thereto.

Trial

thereafter

ensued.

On April 15, 1998, the RTC rendered its decision dismissing respondent Garcia's action for quiet-

reads:

ing

of

title,

the

dispositive

portion

of

which

WHEREFORE, PREMISES CONSIDERED, the instant complaint is hereby dismissed for lack of mer- it and judgment is hereby rendered in favor of defendants Flor Martinez and Pilipinas Bank as against plaintiffs Ernesto Garcia and Edilberto Brua who are further directed to pay both de- fendants attorney's fees in the amount of P50,000.00 each.

Accordingly, the judicial inscriptions particularly, Entry No. 3706/T-346026, annotation of certifi- cate of sale and Entry No. 72854/T-346026 are held to be valid, subsisting liens which do not

constitute a cloud on Transfer Certificate of Title No. 5204. [16]

In so ruling, the RTC found that the adverse claim which respondent Garcia caused to be anno- tated on the previous title of the subject property, i.e, TCT No. 346026, on June 23, 1980 was predicated on his interest as a mortgagee of a loan of PI 50,000.00, which he extended to re- spondent Brua; that respondent Garcia's adverse interest was merely that of a second mortga- gee, as he was not yet the purchaser of the subject property as of said date; that when the judi- cial liens, i.e., Notice of Levy on Attachment and/or Levy and Notice of Levy on Execution, were caused to be registered by petitioner on respondent Brua's title on January 8, 1981 and July 8, 1998, respectively, by virtue of petitioner being adjudged judgment creditor by Branch 60 of RTC Makati, respondent Garcia's claim became inferior to that of petitioner. The RTC said that respondent Garcia's inaction to preserve his adverse claim as a second mortgagee, which was inscribed on June 23, 1980, and his sudden decision to redeem and purchase the subject prop- erty from the GSIS in October 1991 -- when petitioner's Notice of Levy on Attachment and/or Levy, Notice of Levy on Execution and Certificate of Sale were already inscribed at the back of respondent Brua's title -- showed bad faith on the part of respondent Garcia; that respondent Brua did not even testify or participate in the case, except when he was impleaded as a plaintiff in the case. The RTC did not give credit to respondent Garcia's claim that he and respondent Brua had no prior knowledge of the occurrence of a public auction and the consequent annota- tion of the certificate of sale, and found respondent: Garcia to be a buyer in bad faith of the

subject

property.

The RTC also ruled that the Notice of Levy on Execution, which was annotated on December 8, 1981 as Entry No. 72854 on respondent Brua's title arising from Civil'Case No. 7262 entitled "Pi- lipinas Bank v. Edilberto Brua" was a valid levy on the subject property in favor of Pilipinas Bank. The levy could not be canceled, as this would impair the interest of the bank which had been decided upon by a co-equal court. The RTC found that the sale between respondents appeared to be tainted with bad faith, which constrained petitioner and Pilipinas Bank from engaging the services of lawyers; thus, the award of attorney's fees in the latter's favor.

Respondents'

motion

for

reconsideration

was

denied

by

the

RTC

on

August

11,

1998.

Respondents filed their appeal with the CA. However, respondent Brua failed to file his appel- lant's brief; thus, his appeal was considered abandoned and dismissed. Petitioner and Pilipinas

briefs.

Bank

filed

their

respective

appellees'

On August 12, 2004, the CA reversed and set aside the RTC decision, the dispositive portion of

reads:

which

WHEREFORE, the appealed Decision dated April 15, 1998 is REVERSED and SET ASIDE. Granting the instant appeal, Entry No. 72854 (Notice of Levy on Execution in favor of Pilipinas Bank), En- try No. 2881 (Notice of Levy on Execution in favor of Flor Martinez) and Entry No. 3706 (Certifi- cate of Sale in favor of Flor Martinez) inscribed in TCT No. 346026 and carried over to TCT No.

5204,

The CA said that a subsequent sale of property covered by a certificate of title cannot prevail over an adverse claim, duly sworn to and annotated on the certificate of title previous to the sale; that while one who buys a property from the registered owner need not have to look be- hind the title, he is nevertheless bound by the liens and encumbrances annotated thereon; and, thus, one who buys without checking the vendor's title takes all the risks and losses consequent to such failure. The CA found that in order to protect his interest, respondent Garcia executed an Affidavit of Adverse Claim on June 23, 1980, annotated it on the title of the subject property under Entry No. 49853 and it has remained uncanceled up to this time; that such adverse claim was registered prior to the inscription of the Certificate of Sale in favor of petitioner under En- try No. 3706 and Pilipinas Bank's Notice of Levy on Execution under Entry No. 72854; that the prior registration of respondent Garcia's adverse claim effectively gave petitioner and Pilipinas Bank notice of the former's right to the subject property and, thus, petitioner was deemed to have knowledge of respondent Garcia's claim and could not be considered as a buyer in good faith at the time she purchased the subject property in the public auction; that petitioner could not claim that she was a purchaser in good faith, since respondent Garcia's adverse claim was entered on June 23, 1980, eight years ahead of petitioner's Certificate of Sale on September 2, 1988; that when the Notice of Levy on Execution in favor of Pilipinas Bank was annotated on re- spondent Brua's title, the sheriff who caused the annotation was charged with knowledge that the property sought to be levied upon on execution was encumbered by an interest, which was the same if not better than that of the registered owner thereof; and that such notice of levy could not prevail over the existing adverse claim of respondent Garcia inscribed on the title as can be deduced from Section 12, Rule 39 of the Rules of Court.

CANCELLED. [17]

are

hereby

The CA found that the RTC erred in concluding that respondent Garcia was a purchaser in bad faith, since his adverse claim was entered in respondent Brua's title in 1980, and respondent Garcia could not have foretold at the time he caused such annotation of adverse claim that peti- tioner would purchase the same property eight years thereafter; and that while good faith is presumed, bad faith must be established by competent proof by the party alleging the same; and, thus, in the absence of respondent Garcia's bad faith, he is deemed to be a purchaser in good faith, and his interest in the property must not be disturbed.

The CA also found that a Notice of Adverse Claim remains valid even after the lapse of 30 days,

as provided for in Sec, 70 of Presidential Decree No. (PD) 1529 pursuant to our ruling in Sajonas v. CA; that since no petition was filed by petitioner for the cancellation of respondent Garcia's Notice of Adverse Claim, the adverse claim subsisted and his rights over the subject property

upheld.

must

consequently

be

Petitioner's motion for reconsideration was denied by the CA in a Resolution dated November

2004.

18,

Petitioner is now before us via a petition for certiorari under Rule 65, i alleging grave abuse of

discretion amounting to lack or excess of jurisdiction committed by the CA in issuing its assailed

resolution.

decision

and

Petitioner contends that respondent Garcia's adverse claim is nothing but a notice that he has an interest adverse to that of respondent Brua to the extent of PI 50,000.00, which was the amount of the loan secured by a Deed of Real Estate Mortgage executed by respondent Brua in favor of respondent Garcia; that the adverse claim cannot be said to be superior to a final sale conducted by the sheriff by authority of the court pursuant to a judgment that has attained fi- nality; that Sajonas v. CA, on which the CA anchored its decision, differs from this case, since the adverse claim made in the title by therein petitioner Sajonas was by virtue of a contract to

sell; that unlike in this case, respondent Garcia caused the annotation of his adverse claim as a mortgagee of respondent Brua in the amount of P150,000.00 in 1980; and respondent Garcia's payment of the GSIS loan in 1991, upon the request of respondent Brua, was presumably for the reason that respondent Brua could no longer discharge the GSIS obligation; and to avoid the foreclosure of the property by the GSIS, respondent Brua asked Garcia to redeem it; that re- spondent Garcia's adverse claim in 1980 was not as a vendee of the property like in Sajo-

nas, but

mortgagee.

merely

as

a

Petitioner admits' that respondent Garcia, as a mortgagee on the basis of which an adverse claim was inscribed on the title of the subject property, is protected by Sec. 12, Rule 39 of the Rules of Court; and, thus, petitioner knows that she is obliged as a vendee in the public sale to pay liens and encumbrances then existing at the time of the sale on September 2, 1988, which necessarily included the adverse claim of respondent Garcia in the amount of P150,000.00.

In his Comment, respondent Garcia claims that the petition faces outright dismissal, since the

appropriate remedy of the petitioner should have been a petition for review under Rule 45 which had already lapsed; that when the CA reversed the RTC decision, such action did not con- stitute grave abuse of discretion since it had legal basis; that any lien or adverse claim earlier in- scribed prevails over those liens or adverse claims inscribed subsequent thereto.

Respondent Brua did not file his comment. Thus, we dispensed with the filing of the same in a

Resolution

2006.

dated

June

19,

Petitioner filed her Reply, arguing that a petition for certiorari may be availed of where appeal

is

ineffectual.

inadequate

and

The parties submitted their respective memoranda as required in Our Resolution dated August

30,

2006.

We

dismiss

the

petition.

Petitioner should have filed a petition for review under Rule 45 of the Rules of Court instead of

a petition for certiorari under Rule 65, since she is assailing the CA decision and resolution

which are final judgments. Rule 45 clearly provides that decisions, final orders or resolutions of the CA in any case, i.e., regardless of the nature of the action or proceedings involved, may be appealed to us by filing a petition for review, which is just a continuation of the appellate proc-

ess over the original case. [18] And the petition for review must be filed within fifteen (15) days

from notice of the judgment or final order or resolution appealed from, or of the denial of peti- tioner's motion for a new trial or reconsideration filed in due time after notice of the judg-

ment. [19]

In this case, petitioner received a copy of the CA Resolution denying her motion for reconsidera-

tion on November 24, 2004; and, thus, under Rule 45, she has 15 days from receipt of such res-

olution, or until December 9, 2004, to file a petition for review. However, petitioner did not file

a petition for review; instead, she filed a petition for certiorari under Rule 65 on January 24,

2005.

[20] Hence, the CA decision and resolution have already attained finality, and petitioner

has

lost

her

right

to

appeal.

A petition for certiorari under Rule 65 is proper if a tribunal, a board or an officer exercising ju-

dicial or quasi-judicial functions has acted without or in excess of jurisdiction or with grave abuse of discretion amounting to lack or excess of jurisdiction and there is no appeal, or any

plain, speedy and adequate remedy in the ordinary course of law. [21] In this case, petitioner had the remedy of appeal, and it was the speedy and adequate remedy in the ordinary course of law. Thus, a special civil action for certiorari cannot be used as a substitute for an appeal that the petitioner has already lost. Certiorari cannot be allowed when a party to a case fails to ap- peal a judgment to the proper forum despite the availability of that remedy, certiorari not

being a substitute for a lost appeal. [22] Certiorari will not be a cure for failure to timely file a pe-

on certiorari under Rule 45. [23]

tition

for

review

While there are instances where the extraordinary remedy of certiorari may be resorted to de- spite the availability of an appeal, the long line of decisions denying the special civil action for certiorari, either before appeal was availed of or in instances where the appeal period had

lapsed, far outnumber the instances where certiorari was given due course. [24] The few signifi- cant exceptions are: (1) when public welfare and the advancement of public policy dictate; (2) when the broader interests of justice so require; (3) when the writs issued are null; (4) when

the questioned order amounts to an oppressive exercise of judicial authority, [25] which we find to be not present in this case. Notably, petitioner did not even fail to advance an explanation why appeal was not availed of, nor was there any showing that the issue raised in the petition for certiorari could not be raised on appeal. Concomitant to a liberal application of the rules of procedure should be an effort on the part of the party invoking liberality to adequately explain

rules. [26]

his

failure

to

abide

by

the

In fact, the argument raised by petitioner, i.e., that the Court of Appeals had no legal authority

to vary the findings of the trial court and substitute its own conclusion, which were patently contrary to the trial court's findings, and conclusion, relates to the wisdom and soundness of the assailed CA decision and resolution. Where the issue or question involved affects the wis- dom or legal soundness of the decision - not the jurisdiction of the court to render said decision

- the same is beyond the province of a special civil action for certiorari. [27] Erroneous findings and conclusions do not render the appellate' court vulnerable to the corrective writ of certior- ari, for where the court has jurisdiction over the case, even if its findings are not correct, these would, at the most, constitute errors of law and not abuse of discretion correctible by certior-

ari. [28] For if every error committed by the trial court or quasi-judicial agency were to be the proper subject of review by certiorari, then trial-would never end, and the dockets of appellate

courts

measure. [29]

would

be

clogged

beyond

Even if we consider this petition for certiorari under Rule 65, it must be shown that the CA com- mitted grave abuse of discretion equivalent to lack or excess of jurisdiction, and not mere er-

rors of judgment, for the petition to be granted. [30] As we said, certiorari is not a remedy for er- rors of judgment, which are correctible by appeal. By grave abuse of discretion is meant such capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction, and mere

abuse of discretion is not enough — it must be grave. [31]

Petitioner contends that the adverse claim of respondent Garcia inscribed on the title of the

subject property is but a notice that the latter has an interest adverse to respondent Brua's ti- tle, to the extent of P150,000.00 secured by a real estate mortgage, and such adverse claim can- not be considered superior to that of a final sale conducted by the sheriff by virtue of a court

judgment

that

has

attained

finality.

Sec.

12,

Rule

39

of

the

Rules

of

Court

provides:

SEC. 12. Effect of levy on execution as to third persons. - The levy on execution shall create a lien in favor of the judgment obligee over the right, title and interest of the judgment obligor in such property at the time of the levy, subject to liens and encumbrances then existing.

Clearly, the levy does not make the judgment creditor the owner of the property levied upon.

He merely obtains a lien. [32] Such levy on execution is subject and subordinate to all valid claims and liens existing against the property at the time the execution lien attached, such as real es-

mortgages. [33]

tate

Respondent Garcia's adverse claim, which refers to the deed of mortgage executed by respond- ent Brua in his favor, was annotated on respondent Brua's title registered with the Registry of Deeds of Rizal on June 23, 1980 as Entry No. 49853. The adverse claim was already existing when the Notice of Levy on Execution, as well as the Certificate of Sale in favor of petitioner, was inscribed on July 11, 1988 and September 2, 1988, respectively; and, hence, the adverse claim is sufficient to constitute constructive notice to petitioner regarding the subject property. When petitioner registered her Notice of Levy on Execution on the title of the subject property, she was charged with the knowledge that the subject property sought to be levied upon on exe- cution was encumbered by an interest the same as or better than that of the registered owner

thereof. [34] Thus, no grave abuse of discretion was committed by the CA when it held that the notice of levy and subsequent sale of the subject property could not prevail over respondent Garcia's existing adverse claim inscribed on respondent Brua's certificate of title.

The annotation of an adverse claim is a measure designed to protect the interest of a person over a piece of real property, where the registration of such interest or right is not otherwise provided for by the Land Registration Act or Act No. 496 (now RD. No. 1529 or the Property

Registration Decree), and serves a warning to third parties dealing with said property that someone is claiming an interest on the same or a better right than that of the registered owner

thereof. [35]

Petitioner cannot be considered as a buyer in good faith. A purchaser in good faith and for val- ue is one who buys the property of another without notice that some other person has a right to or interest in such property and pays a frill and fair price for the same at the time of such purchase, or before he has notice of the claims or interest of some other person in the prop-

erty. [36] Here, petitioner admitted on cross-examination that when she registered her notice of attachment in 1981 and the levy on execution on July 11, 1988, she already saw respondent

Garcia's adverse claim inscribed on respondent Brua's title on June 23, 1980. [37]

Petitioner claims that Sajonas v. CA [38] is not applicable, since the adverse claim registered on the title of the subject property made by the Sajonases in 1984 was by virtue of a contract to sell, so that when the full purchase price was eventually paid on September 4, 1984, a deed of sale of the property was subsequently executed and registered in the Registry of Deeds of Mari- kina on August 28, 1985; that when the respondent therein registered his notice levy on execu- tion on February 12, 1985, such notice of levy could not have precedence over the adverse claim, because there was no more property to levy upon. In this case, however, respondent Garcia caused the annotation of his adverse claim only as a mortgagee of respondent Brua in the amount of P150,000.00 in 1980. The subsequent deed of sale was executed in 1991 be- tween respondents Garcia and Brua after the former paid the latter's loan from with the GSIS. When a new title was issued in respondent Garcia's name, the notice of levy on execution and

the certificate of sale were already annotated on the title of the subject property; and, thus, the sale in favor of respondent Garcia could not prevail over the previous auction sale in peti-

tioner's

favor.

We

are

not

impressed.

The issue posed in Sajonas was whether the adverse claim inscribed on TCT No. N-190417 was still in force when private respondent therein caused the annotation of the notice of levy on ex- ecution on the title; if the adverse claim was still in effect, then respondent therein was charged with the knowledge of pre-existing interest over the subject property and, thus, the Sajonases were entitled to the cancellation of the notice of levy inscribed on the title.

We ruled in Sajonas that the inscription of the adverse claim on the title of the subject property was still in effect on February 12, 1985, when the sheriff annotated the notice of levy on execu- tion in favor of respondent therein; that respondent therein was charged with knowledge that the subject property sought to be levied upon on execution was encumbered by an interest the same as or better than that of the registered owner thereof. We then said that such notice of

levy could not prevail over the existing adverse claim inscribed on the certificate of title in favor

Sajonases.

of

the

As in that case, the adverse claim of respondent Garcia based on the Deed of Mortgage exe- cuted by respondent Brua over the subject land in the former's favor was existing when the No- tice of Levy on Execution was inscribed in favor of petitioner. Although the deed of sale be-

tween respondents Brua and Garcia was done after the notice of levy on execution and certifi- cate of sale were inscribed on the title, it was clearly stated in the deed that the subject prop- erty was only a partial payment for respondent Brua's mortgage indebtedness to respondent Garcia, which the former could no longer redeem from the latter. Thus, the sale of the subject property by respondent Brua to respondent Garcia was by reason of respondent Brua's prior loan from respondent Garcia, which was secured by a mortgage on the subject property; and this mortgage was registered and already existing on the title of the subject property when the

Notice of Levy on Execution and Certificate of Sale in favor of petitioner were inscribed thereon. Thus, petitioner's claim over the subject property must yield to the earlier encumbrance regis-

Garcia.

tered

by

respondent

WHEREFORE, the petition is DISMISSED. The Decision dated August 12, 2004 and Resolution dated November 18, 2004 of the Court of Appeals in CA-G.R. CV No. 61591 are AFFIRMED.

SO ORDERED.

[G.R. NO. 141256 July 15, 2005] ESTANISLAO PADILLA, JR., Petitioner, v. PHILIPPINE PRODUCERS' COOPERATIVE MARKETING ASSOCIATION, INC., Respondent. D E C I S I O N

CORONA, J.:

In implementing the involuntary transfer of title of real property levied and sold on execution, is it enough for the executing party to file a motion with the court which rendered judgment, or does he need to file a separate action with the Regional Trial Court?chanroblesvirtualawlibrary

This is a Petition for Review on Certiorari 1 from a decision

of the Court of Appeals in CA-G.R. CV No. 53085, 2 and its resolution denying reconsidera-

tion, 3 both of which affirmed the orders of the Regional Trial Court of Bacolod City, Branch 51. 4

The undisputed facts of the case follow. 5 Petitioner and his wife are the registered owners of the following real properties: Lot Nos. 2904-A (covered by TCT No. T-36090), 2312-C-5 (covered by TCT No. T-3849), and 2654 (cov- ered by TCT No. T-8053), all situated in Bago City. Respondent is a marketing cooperative which had a money claim against petitioner. On April 24, 1987, respondent filed a civil case against petitioner for collection of a sum of mon-

ey in the Regional Trial Court of Bacolod City. 6 Despite receipt of summons on May 18, 1987,

petitioner (then defendant) opted not to file an answer. 7 On March 3, 1988, respondent (then plaintiff) moved to have petitioner-defendant declared in default, which the trial court granted

on April 15, 1988. 8 Respondent presented its evidence on October 9, 1989. 9 On November 28,

1989, the trial court rendered a decision in respondent's favor. 10 Petitioner was furnished a copy of this decision by mail on November 29, 1989 but, because of his failure to claim it, the

copy was returned. 11 On May 31, 1990, the Court issued a writ of execution. On June 4, 1990, the three lots (Lot 2904-A, Lot 2312-C-5 and Lot 2654), all of the Bago Cadastre and registered in petitioner's name, were levied by virtue of that writ. On July 4, 1990, sheriff Renato T. Arimas auctioned off

the lots to satisfy the judgment, with respondent as the only bidder. On July 10, 1990, ex-officio provincial sheriff and clerk of court Antonio Arbis executed a certificate of sale in favor of re-

spondent. On August 13, 1990, the certificate of sale was recorded in the Register of Deeds. 12 When petitioner failed to exercise his right of redemption within the 12-month period allowed by law, the court, on motion of respondent, ordered on February 5, 1992 the issuance of a writ of possession for the sheriff to cause the delivery of the physical possession of the properties in

favor of respondent. 13 On May 17, 1995, respondent filed a motion to direct the Register of Deeds to issue new titles over the properties in its name, alleging that the Register of Deeds (RD) of Bago City would not issue new titles (in respondent's name) unless the owner's copies were first surrendered to him. Respondent countered that such surrender was impossible because this was an involun-

tary sale and the owner's copies were with petitioner. 14 On July 3, 1995, the trial court issued an order granting the motion. In a subsequent order dated August 8, 1995, it denied petitioner's motion for reconsideration. Petitioner appealed. Four years later, the Court of Appeals rendered the assailed decision affirming the order of the trial court. Petitioner contends that respondent's motion for the RD to cancel the existing certificates of ti- tle and issue new ones in its name was in fact a real action and that the motion was procedur-

ally infirm because respondent did not furnish him a copy. 15 He also claims that under Section 6 of Rule 39 of the 1997 Rules of Civil Procedure, the execution of the judgment was barred by prescription, given that the motion was filed more than 5 years after the writ of execution was

issued on March 23, 1990. 16 He also argues that respondent failed to follow the correct proce- dure for the cancellation of a certificate of title and the issuance of a new one, which is con-

tained in Section 107 of PD 1529. 17

In its comment, 18 respondent claims that the motion dated May 15, 1995 to direct the RD to is- sue new certificates of title was but a continuation of the series of events that began with the decision in its favor on November 28, 1989, and from there, the auction of the properties and the issuance of a certificate of sale in 1990. The two principal issues for consideration are:

(1) whether or not respondent's right to have new titles issued in its name is now barred by pre- scription and (2) whether or not the motion in question is the proper remedy for cancelling petitioner's certif- icates of title and new ones issued in its name. On the first issue, we rule that the respondent's right to petition the court for the issuance of new certificates of title has not yet prescribed.

In Heirs of Blancaflor v. Court of Appeals, 19 Sarmiento Trading Corporation, predecessor-in-in- terest of the private respondent Greater Manila Equipment Marketing Corporation, secured a writ of execution in 1968 by virtue of which it levied real property belonging to petitioners' predecessor-in-interest, Blancaflor. When the property was auctioned, Sarmiento Trading bid successfully and, in 1970, after the lapse of the one-year redemption period, consolidated its ownership over the lot. Sarmiento Trading then filed a petition with the Court of First Instance to order the cancellation of Blancaflor's title and the issuance of a new one in its name. In 1972, Sarmiento Trading sold the lot to private respondent which, at the time, went by the name Sarmiento Distributors Cor- poration.

In 1988, the Deputy Register of Deeds of Iloilo wrote to Blancaflor requesting him to surrender his owner's duplicate copy of the TCT. Blancaflor did not comply and the RD refused to issue a new title. On May 25, 1989, private respondent filed a petition in the Regional Trial Court pray- ing that the petitioners be ordered to surrender the owner's duplicate copy of the title. The pe- titioners refused, claiming that respondent's cause of action had already prescribed. Ruling oth- erwise, we stated:

It is settled that execution is enforced by the fact of levy and sale. The result of such execution sale with Sarmiento Trading Corporation as the highest bidder was that title to Lot No. 22 of TCT No. 14749 vested immediately in the purchaser subject only to the judgment debtor's right to repurchase. Therefore, upon Sarmiento Trading Corporation's purchase of Lot No. 22 cov- ered by TCT No. 14749 at the auction sale, private respondent's successor-in-interest had ac- quired a right over said title. The right acquired by the purchaser at an execution sale is inchoate and does not become abso- lute until after the expiration of the redemption period without the right of redemption having been exercised. But inchoate though it be, it is like any other right, entitled to protection and must be respected until extinguished by redemption. Gaudencio Blancaflor was not able to re- deem his property after the expiration of the redemption period, which was 12 months after the entry or annotation of the certificate of sale made on the back of TCT No. 14749. Conse- quently, he had been divested of all his rights to the property. (Underscoring ours)

In this case, the rule being invoked by petitioner 20 states:

SEC. 6. Execution by motion or by independent action. A final and executory judgment or order may be executed on motion within five (5) years from the date of its entry. After the lapse of such time, and before it is barred by the statute of limitations, a judgment may be enforced by action. The revived judgment may also be enforced by motion within five (5) years from the date of its entry and thereafter by action before it is barred by the statute of limitations. As should be evident from Blancaflor, petitioner Padilla's reliance on Section 6 of Rule 39 of the 1997 Revised Rules of Civil Procedure is misplaced. The fact of levy and sale constitutes execu- tion, and not the action for the issuance of a new title. Here, because the levy and sale of the properties took place in June and July of 1990, respectively, or less than a year after the deci- sion became final and executory, the respondent clearly exercised its rights in timely fashion. In addition, petitioner himself admits his failure to redeem the properties within the one-year

period by adopting the facts stated in the Court of Appeals' decision. 21 There is thus no doubt he had been divested of his ownership of the contested lots. Respondent's position hinges on petitioner's failure to redeem the properties 12 months after the certificate of sale was recorded in the Register of Deeds on August 13, 1990. There is no un- certainty about respondent's having become the new lawful owner of the lots in question by virtue of the levy and the execution sale. On the other hand, the issue of whether to acquire new titles by mere motion or through a sep- arate petition is an entirely different matter. Petitioner is correct in assailing as improper respondent's filing of a mere motion for the cancel- lation of the old TCTs and the issuance of new ones as a result of petitioner's refusal to surren- der his owner's duplicate TCTs. Indeed, this called for a separate cadastral action initiated via petition.

Section 107 of PD 1529, 22 formerly Section 111 of Act 496, 23 provides:

Sec. 107. Surrender of withheld duplicate certificates. Where it is necessary to issue a new cer- tificate of title pursuant to any involuntary instrument which divests the title of the registered owner against his consent or where a voluntary instrument cannot be registered by reason of

the refusal or failure of the holder to surrender the owner's duplicate certificate of title, the party in interest may file a petition in court to compel the surrender of the same to the Register of Deeds. The court, after hearing, may order the registered owner or any person withholding the duplicate certificate to surrender the same, and direct the entry of a new certificate or memorandum upon such surrender. If the person withholding the duplicate certificate is not amenable to the process of the court, or if for any reason the outstanding owner's duplicate certificate cannot be delivered, the court may order the annulment of the same as well as the issuance of a new certificate of title in lieu thereof. Such new certificate and all duplicates thereof shall contain a memorandum of the annulment of the outstanding duplicate. Respondent alleges that it resorted to filing the contested motion because it could not obtain new certificates of title, considering that petitioner refused to surrender his owner's duplicate TCTs. This contention is incorrect. The proper course of action was to file a petition in court, rather than merely move, for the issuance of new titles. This was the procedure followed in Blancaflor by Sarmiento Trading which was in more or less the same situation as the respond-

ent in this case:

Petitioners' reliance on prescription and laches is unavailing in this instance. It was proper for Sarmiento Trading Corporation to file a petition with the Court of First Instance of Iloilo, act- ing as a cadastral court, for the cancellation of TCT No. 14749 in the name of Gaudencio Blanca- flor and the issuance of another in its name. This is a procedure provided for under Section 78 of Act No. 496 and Section 75 of PD No. 1529' Section 78 of Act 496 reads:

Sec. 78. Upon the expiration of the time, if any allowed by law for redemption after registered land has been sold on any execution, or taken or sold for the enforcement of any lien of any de- scription, the person claiming under the execution or under any deed or other instrument made in the course of the proceedings to levy such execution or enforce any lien, may petition the court for the entry of a new certificate to him, and the application may be granted: Pro- vided, however, That every new certificate entered under this section shall contain a memoran- dum of the nature of the proceeding on which it is based: Provided, further, That at any time prior to the entry of a new certificate the registered owner may pursue all his lawful remedies to impeach or annul proceedings under execution or to enforce liens of any description. Section 75 of PD 1529 provides:

Sec. 75. Application for new certificate upon expiration of redemption period. 'Upon the expira- tion of the time, if any, allowed by law for redemption after the registered land has been sold on execution, or taken or sold for the enforcement of a lien of any description, except a mort- gage lien, the purchaser at such sale or anyone claiming under him may petition the court for the entry of a new certificate to him. Before the entry of a new certificate of title, the registered owner may pursue all legal and equi- table remedies to impeach or annul such proceedings. It is clear that PD 1529 provides the solution to respondent's quandary. The reasons behind the law make a lot of sense; it provides due process to a registered landowner (in this case the peti- tioner) and prevents the fraudulent or mistaken conveyance of land, the value of which may ex- ceed the judgment obligation. Petitioner contends that only his interest in the subject lots, and not that of his wife who was not a party to the suit, should have been subjected to execution, and he should have had the opportunity to prove as much. While we certainly will not condone any attempt by petitioner to frustrate the ends of justice― the only way to describe his refusal to surrender his owner's duplicates of the certifi- cates of title despite the final and executory judgment against him ― respondent, on the oth- er hand, cannot simply disregard proper procedure for the issuance to it of new certificates of

24

title. There was a law on the matter and respondent should have followed it. In any event, respondent can still file the proper petition with the cadastral court for the issu- ance of new titles in its name. WHEREFORE, the instant petition is hereby GRANTED. The decision of the Court of Appeals in CA-G.R. CV No. 53085 is hereby REVERSED. The order of the Regional Trial Court of Bacolod City ordering the Register of Deeds of Bago City to issue new certificates of title in favor of respond- ent is ANULLED. SO ORDERED.

G.R. No. 185620

RUBEN C. REYES, Petitioner, vs. TANG SOAT ING (JOANNA TANG) and ANDO G. SY, Respondents. D E C I S I O N

PEREZ, J.:

Challenged in this petition for review on certiorari under Rule 45 of the Rules of Court is the De-

cision 1 of the Court of Appeals in CA-G.R. SP No. 96913 annulling and setting aside the Or-

ders 2 of the Regional Trial Court (RTC), Branch 7, Malolos, Bulacan which denied respondents Tang Soat Ing’s (Joanna Tang’s) and Ando Sy’s Opposition (To MFR Farm, Inc.’s Motion dated 25 April 2006) and Motion (To declare void the sale of the property covered by TCT No. 198753) dated May 23, 2006. The controversy arose from a complaint for Enforcement of Easement and Damages with Pray- er for Preliminary Injunction and Restraining Order filed by MFR Farms, Inc. (MFR) against re- spondents docketed as Civil Case No. 1245-M. MFR complained of respondents’ commercial

and industrial use of their property covered by Transfer Certificate of Title (TCT) No. T-198753, and sought the enforcement of the encumbrance contained in their title. MFR likewise asked for the payment of damages suffered by its pig farm resulting from respondents’ illegal use of their property. After trial, the RTC granted MFR’s complaint and specifically held that:

x x x [Respondents] have defied the clear undertaking stated in the title to the subject property

to limit the use thereof to purposes not commercial or industrial in character. x x x [U]sing the

land as a chemical processing site and as a storage facility for chemicals is devoting it to indus- trial purposes, which is not allowed under the subsisting encumbrance on the property.

x x x [R]elief is owing to [MFR], but the grant thereof is rendered all the more imperative in light of the manifestly injurious effects which the business of [respondents] is causing to the neigh- boring estate, if not to the entire locality. x x x By more than mere preponderance of evidence has it been established that the gaseous by-products of the chemical manufacturing process are outright pollutants which cause direct and manifest harm to humans and animals alike, not to mention other living things.

x x x x

WHEREFORE, judgment is hereby rendered: (a) ordering [respondents] to desist from the fur- ther conduct of industrial or commercial activities on the parcel of land covered by TCT No. T- 198753 of the Registry of Deeds of Bulacan, particularly the manufacture and storage of chemi- cals thereat, including the construction of buildings intended for purposes prohibited by the ti- tle to the property; (b) making permanent the injunctions issued by this Court’s orders of May 3, 1982 and December 7, 1983; (c) ordering [respondents] to pay [MFR] actual damages in the

December 14, 2011

amount of Six hundred Thirty-Nine Thousand Six hundred Fifty (₱639,650.00) Pesos, with legal

(b)

The Bulletin Board of the Church of San Jose del Monte, Bulacan;

rate of Twelve (12%) percent interest from the filing of the complaint on January 15, 1982, until

(c)

The Bulletin Board of the Chapel of Gaya-gaya, San Jose del Monte, Bulacan;

the same is fully paid; (d) ordering [respondents] to pay [MFR] exemplary damages in the

(d)

The Bulletin Board of the main entrance of the Provincial Capitol Building of Malolos, Bula-

amount One Hundred Thousand (₱100,000.00) Pesos by way of example of correction for the

can; and

public good; (e) ordering [respondents] to pay MFR attorney’s fees in the amount of One Hun-

(e)

The Posting Board of the Office of the Ex-Officio Sheriff located at the back of the Bulwagan

dred Thousand (₱100,000.00) Pesos and to pay the costs of suit. 3 On appeal by respondents docketed as CA G.R. CV No. 37808, the Court of Appeals affirmed with modification the ruling of the RTC: the Court of Appeals reduced the rate of interest to six

percent (6%) and deleted the award of exemplary damages and attorney’s fees. 4

MFR and respondents filed separate appeals by certiorari 5 to this Court questioning the appel- late court’s ruling. Unfortunately for the parties, we dismissed both appeals for "late payment

of legal fees and late filing of the petition." 6 By December 1, 1997, the decision of the Court of Appeals in CA G.R. CV No. 37808 became final and executory, and was recorded in the Book of

Entries of Judgment. 7

On September 28, 1998, upon motion of MFR, the RTC issued a Writ of Execution. 8 Pursuant thereto, the Branch Clerk of Court commanded the Sheriff of RTC, Branch 7, Malolos, Bulacan, Mr. Leovino Legaspi (Sheriff Legaspi), to execute the Decision dated September 12, 1991 as

modified by the Court of Appeals. 9 Sheriff Legaspi was likewise ordered to accomplish a return

of the proceedings taken thereon in accordance with Section 14, Rule 39 of the Rules of Court.

On January 4, 1999, Sheriff Legaspi submitted a Sheriff’s Report manifesting:

That on October 2, 1998[,] the undersigned was in receipt of the Writ of Execution issued by Hon. Danilo A. Manalastas for service thereof; That on October 9, 1998[,] the undersigned served copy of the Writ of Execution and copy of the Notice dated October 9, 1998 to [respondent] Tang Soat Ing giving him five (5) days to com- ply [with] his obligations under the Writ of Execution, thru Rodolfo Mendez, caretaker of the [respondents], at Tungkong Mangga, San Jose del Monte, Bulacan. The undersigned inquired from the said caretaker about the personal properties of Tang Soat Ing but he was told that Tang Soat Ing has no more properties and the factory located in the compound is being leased to other people; That on December 10, 1998[,] the undersigned went back to Tang Soat Ing at Tungkong Man- gga, Sa Jose del Monte, Bulacan but said person was not there and also Rodolfo Mendez was not around because he was in Manila; That on December 28, 1998[,] the undersigned went back to Tungkong Mangga, San Jose del Monte, Bulacan and talked to the caretaker[,] Rodolfo Mendez[,] and asked him what hap- pened to the papers he gave to [respondent] Tang Soat Ing. The caretaker said that [respond- ent Tang Soat Ing] called his lawyer and informed [the latter] about the papers he received. The

caretaker also told the undersigned that he [did] not know what the lawyer said. 10

A few days thereafter, on January 7, 1999, Sheriff Legaspi presented the Writ of Execution and

the Notice of Levy on Execution of Real Property 11 covering TCT No. T-198753 to the Register of Deeds of Bulacan Province.

On February 4, 1999, the Notice of Levy was inscribed on TCT No. T-198753. 12

On May 7, 1999, Sheriff Legaspi issued a Notice of Sale on Execution of Real Property 13 which he likewise posted on the following places:

(a) The Bulletin Board of Municipal Hall of San Jose del Monte, Bulacan;

ng Katarungan Building, Malolos, Bulacan. 14 On June 12, 19 & 26, 1999, the Notice of Sale on Execution of Real Property was published in

The Times Newsweekly. 15 On July 19, 1999, at the public auction of the subject property covered by TCT No. T-198753, MFR was declared as the highest bidder. On even date, Sheriff Legaspi issued a Certificate of

Sale 16 which was registered with the Register of Deeds of Bulacan Province. After more than five (5) years, on September 17, 2004, with respondents failing to exercise

their right of redemption, MFR filed a Motion 17 asking the RTC to issue an order directing the Register of Deeds of Bulacan Province to cancel TCT No. T-198753 in the name of respondents,

and issue a new certificate of title in the name of MFR.

On September 28, 2004, the RTC denied the Motion holding that a mere motion is not sufficient

for the cancellation of a certificate of title. The RTC ruled that under Section 107 18 of Presiden- tial Decree No. 1529, the Property Registration Decree, a petition and a hearing are required for the issuance of a new certificate of title.

On December 1, 2004, MFR filed a Petition 19 in the same case, under the same docket number, Civil Case No. 1245-M, before the same execution court. In this new petition, MFR impleaded the Register of Deeds as additional defendant and prayed for the same reliefs as those prayed for in their previous motion with an additional prayer for the issuance of an order directing re- spondents to immediately surrender the Owner’s Duplicate Copy of TCT No. T-198753. On three separate occasions, December 9, 2004 and February 8 and 17, 2005, respondents, through their counsel of record, Atty. T. J. Sumawang (Atty. Sumawang), received a copy of the

Petition. 20 Respondents failed to file an Answer or any responsive pleading to MFR’s Petition. Conse- quently, MFR moved to declare respondents in default. The Motion to Declare Respondents in Default was served on Atty. Sumawang on June 11, 2005. The RTC granted MFR’s Motion to Declare Respondents in Default: thereafter, MFR presented evidence ex-parte. During presentation of evidence ex-parte, MFR filed a Motion for Substitution of Party Peti- tioner attaching thereto a Deed of Transfer of Interest declaring petitioner Ruben C. Reyes’ (Reyes) acquisition of MFR’s rights over the subject property. On January 2, 2006, the RTC is- sued an Order granting this latest motion: MFR was substituted by Reyes as party-petitioner. In an Order dated January 10, 2006, the RTC granted the Petition, thus:

WHEREFORE, finding merit in the instant petition, the same is hereby granted. Accordingly, de- fendant/private respondent Tang Soat Ing (Joanna Tang) is hereby directed to surrender to the Court her duplicate owner’s copy of TCT No. T-198753 within thirty (30) days from receipt of this Order. In [the event said] defendant/private respondent fails to surrender such owner’s du-

plicate copy as directed hereinabove, the Register of Deeds of Bulacan is hereby directed to cancel TCT No. T-198753 and issue in lieu thereof a new owner’s duplicate certificate of title in the name of Ruben C. Reyes, who has substituted [MFR] by virtue of a Deed of Transfer of Inter-

est and pursuant to the order of this court dated January 02, 2006. 21 Copies of the Order were separately served on Atty. Sumawang, Atty. Anacleto Diaz (Reyes’

counsel) and the Register of Deeds of Bulacan Province on January 20 and February 2, 2006, re-

spectively. 22 However, service thereof to respondents’ counsel was returned and rendered im-

possible. Apparently, Atty. Sumawang had already died in December 2005. 23 On April 27, 2006, Reyes filed another Motion praying that the Register of Deeds of Bulacan Province be directed to cancel TCT No. T-198753 in the name of respondents and to issue a new one in his (Reyes’) name. On May 19, 2006, new counsel for respondents entered its appearance. Forthwith, on May 23, 2006, respondents, through their new counsel, filed the previously adverted to Opposition and

Motion, 24 opposing Reyes’ April 27, 2006 Motion and moving to declare void the sale of the subject property. After an exchange of pleadings from the parties, the RTC issued the Order denying respondents’ Opposition and Motion for lack of merit. The RTC ruled that, "Section 107 of PD 1529 does not categorically state that the petition x x x should be in the form of a separate, distinct and origi- nal action to be filed in another court, as otherwise it will create a situation in which the final judgment of a court, and its enforcement, may be subject to a review of, or even reversal by an-

other court of co-equal jurisdiction." 25 As regards the motion to declare void the execution sale of the subject property covered by TCT No. T-198753, the RTC noted that "there was substantial compliance with the requirements of [Section 15, Rule 39 of the Rules of Court evidenced] in the Sheriff’s Report dated January 4, 1999, as well as the publication and posting requirements,

extant in the records of this case." 26 In conclusion, the RTC ruled that respondents are es- topped from questioning the proceedings, after keeping silent thereon for a long time, despite notice thereof. Respondents filed a Motion for Reconsideration which the RTC denied in its Order dated Octo- ber 20, 2006. Gaining no reprieve from the RTC, respondents filed a petition for certiorari before the Court of Appeals seeking to: (1) nullify the trial court’s twin Orders dated July 17, 2006 and October 20, 2006, respectively; and (2) declare void the execution proceedings relating to the sale of the subject property and the cancellation of TCT No. T-198753. In yet another turn of events, the appellate court annulled and set aside the July 17, 2006 and October 20, 2006 Orders of the RTC:

WHEREFORE, the Petition is GRANTED and the Orders issued on July 17 and October 20, 2006 are ANNULLED and SET ASIDE. The public auction sale of the property held on July 19, 1999 is declared invald and the Certificate of Sale issued by Sheriff Leovino G. Legaspi on July 19, 1999 in favor of [petitioner Reyes, substituting MFR] covering the parcel of land embraced in Transfer

Certificate of Title No. T-198753 is likewise declared null and void. 27 Aggrieved, Reyes filed a Motion for Reconsideration which resulted in another exchange of

pleadings between the parties. On December 9, 2008, the Court of Appeals denied the motion. Hence, this impasse with the following issues for our resolution:

1. Whether the execution sale of the subject property covered by TCT No. T-198753 is void;

2. Proceeding from the validity of the execution sale and the consolidation of Reyes’ ownership

over the subject property, whether Section 107 of Presidential Decree No. 1529 contemplates the filing of a separate cadastral case before the RTC acting as a land registration court. The petition is partially impressed with merit. In declaring void the execution sale, the appellate court noted that petitioner did not strictly

comply with the requirements of Section 15, Rule 39 of the Rules of Court. The Court of Appeals

relied on our holding in Villaceran v. Beltejar, 28 an administrative case finding therein respond-

ent Sheriff guilty of simple neglect of duty for failure to strictly comply with the rules on execu- tion sale. The Court of Appeals ruled that the deficiencies in the notice of execution sale were substantial and of such nature as to prevent the court from applying the presumption of regu- larity in the performance of official functions by Sheriff Legaspi at the time of the execution sale. On this score, the Court of Appeals pointed out that it was incumbent upon Reyes’ part to prove that the requirements of the law on execution sale have been fully complied with. We disagree. Contrary to the Court of Appeal’s holding, the burden of evidence to prove lack of compliance with Section 15, Rule 39 of the Rules of Court rests on the party claiming lack thereof i.e., re- spondents.

In Venzon v. Spouses Juan, 29 we declared that the judgment debtor, as herein respondents, al-

leging lack of compliance with the posting and publication requirements of the auction sale in accordance with the rules, is behooved to prove such allegation. We held, thus:

x x x. Whoever asserts a right dependent for its existence upon a negative, must establish the

truth of the negative by a preponderance of the evidence. This must be the rule, or it must fol- low that rights, of which a negative forms an essential element, may be enforced without proof. Thus, whenever the [party’s] right depends upon the truth of a negative, upon him is cast the onus probandi, except in cases where the matter is peculiarly within the knowledge of the ad- verse party.

It was error, therefore, for the trial court to hold that:

Defendants did not present evidence to rebut the "no notice" allegation of the plaintiff. Although in the defendant spouses’ pre-trial brief, there is that general allegation that the auc- tion sale was made in accordance with law, however, there is no showing in the record that the requirements with respect to publication/posting of notices were complied with by the defend- ants. Deliberating on the absence of notice, the fact that the plaintiff did not come to know that Lot 12 was being subjected to an auction sale proves two things: one, that no notice was posted in the place where the property is located [and, two, that] there was no auction sale that took place on March 30, Further, the defendants, particularly defendant sheriff, who is the most competent person to testify that a written notice of sale was made and posted in accordance with law, was not pre- sented to the witness stand. Neither was a document presented like Sheriff’s Certificate of Post- ing to attest to the fact that a written notice of sale was posted before the property was alleg-

edly sold at public auction. In fact, the record is silent as (to) where the auction sale was con- ducted. By ruling in the foregoing manner, the trial court incorrectly shifted the plaintiff’s burden of proof to the defendants. It is true that the fact of posting and publication of the notices is a matter "peculiarly within the knowledge" of the Deputy Sheriff. However, the trial court did not acquire jurisdiction over him, as he was not served with summons. At the time of the filing of the complaint, he was "no longer connected" with the Caloocan RTC, Branch 126, which issued the writ of execution. Hence, he could not testify in his own behalf.

x x x [T]he duty imposed by Section [18] (c) is reposed upon the sheriff, who is charged with the enforcement of the writ. Respondent spouses had a right to presume that he had regularly per- formed his duty. It was not incumbent upon them to present him as a witness for, in the ab- sence of the sheriff, the burden to prove lack of posting and publication remained with peti-

tioner. 30 (Emphasis supplied) Respondents made no attempt to meet this burden of evidence, simply maintaining lack of no- tice of the entire proceedings (execution and issuance of a new title over the subject property)

before the trial court. We cannot subscribe to respondents’ belated posturing. The disputable presumption that offi-

cial duty has been regularly performed was not overcome by respondents. 31 The documents on record lead us to the inevitable conclusion that respondents had constructive, if not actual, no- tice of the execution proceedings from the issuance of the Writ of Execution, the levy on the

subject property, 32 its subjection to execution sale, up to and until the proceedings in the RTC relating to the issuance of a new certificate of title over the subject property. Certainly, re- spondents are precluded from feigning ignorance of MFR (substituted by Reyes) staking a claim thereon. There was substantial compliance with Section 15, Rule 39 of the Rules of Court: the documents in support thereof, i.e., the Certificate of Posting issued by Sheriff Legaspi and the Affidavit of

Publication executed by the publisher of The Times Newsweekly, appear to be in order. 33 In this case, the purpose of giving notice through posting and publication under Section 15(c) of the same rule—to let the public know of the sale to the end that the best price or a better bid may be made possible to minimize prejudice to the judgment debtor—was realized. Another thing militates against respondents’ claim of lack of knowledge of the encumbrance on their property—the separate registrations of: (1) the Notice of Levy on TCT No. T-198753; (2) the Certificate of Sale. In this jurisdiction, we adhere to the doctrine that registration in a public registry works as con-

structive notice to the whole world. 34 Section 51 of Act No. 496, as amended by Section 52 of Presidential Decree No. 1529, provides:

SECTION 52. Constructive notice upon registration.—Every conveyance, mortgage, lease, lien, attachment, order, judgment, instrument or entry affecting registered land shall, if registered, filed or entered in the Office of the Register of Deeds for the province or city where the land to which it relates lies, be constructive notice to all persons from the time of such registering, fil- ing, or entering. And, quite undeniably, respondents had constructive notice that their property is subject of ex- ecution proceedings arising from their judgment debt and in danger of forfeiture to their judg- ment creditor. Respondents consistently flouted the judgment in Civil Case No. 1245-M, as amended by the Decision of the Court of Appeals in CA G.R. CV No. 37808, which became final and executory on December 1, 1997, by their utter failure to respond to the processes of the RTC in the execution proceedings despite their receipt of notice at each stage thereof. At the very least, respond- ents’ attack on the validity of the execution proceedings, culminating in the execution sale of the subject property, is barred by laches. Laches is the failure or neglect, for an unreasonable and unexplained length of time, to do that which by exercising due diligence could or should have been done earlier; it is negligence or omission to assert a right within a reasonable time, warranting a presumption that the party en-

titled to assert it either has abandoned it or declined to assert it. 35 Laches thus operates as a

bar in equity. 36 We hearken to the time-honored rule anchored on public policy:

[R]elief will be denied to a litigant whose claim or demand has become "stale," or who has ac- quiesced for an unreasonable length of time, or who has not been vigilant or who has slept on his rights either by negligence, folly or inattention. In other words, public policy requires, for peace of society, the discouragement of claims grown stale for non-assertion; thus laches is an impediment to the assertion or enforcement of a right which has become, under the circum-

stances, inequitable or unfair to permit. 37 (Emphasis supplied) The records bear out that as of October 9, 1998, and on two occasions thereafter, December 10 & 28, 1998, Sheriff Legaspi served a copy of the Writ of Execution on respondents, and followed up thereon. With no action forthcoming from respondents, who are ostensibly evading pay- ment of their judgment debt, the Sheriff correctly levied on the subject property. For more than five (5) years from the execution sale thereof, with respondents not exercising their right of re- demption, up to the filing of a Motion, and subsequently, a Petition for the issuance of a new certificate of title over the property in Reyes’ name, respondents made no effort to settle their judgment debt, much less, to ascertain the status of the execution proceedings against them and the levy on, and consequent sale of, their property. Truly significant is the fact that eight (8) years had lapsed, from the time respondents received a copy of the Writ of Execution in Octo- ber 1998 until they, through their new counsel, filed the Opposition and Motion in May 2006, before respondents were prodded into action. We find obvious respondents’ brazen ploy to forestall and thwart the execution of a final and executory judgment against them. The death of their counsel, Atty. Sumawang, and their en- gagement of a new one, does not minimize the hard fact that respondents had notice of, not only the execution proceedings, but also, the proceedings on the issuance of a new title over the subject property. Yet, respondents did not act on any of these notices which were duly re- ceived by Atty. Sumawang. Respondents’ Motion to nullify the execution proceedings, from the levy on the subject property and sale thereof, is an afterthought, a last-ditch effort to evade payment of their judgment debt. Their claim of ignorance of the execution proceedings flies in the face of the documents on record. This bare-faced claim cannot trump the disputable pre-

sumption that a person takes ordinary care of his concerns. 38 Consequently, respondents are estopped and barred from assailing the execution proceedings before the RTC. Time and again, we have held that once a judgment becomes final and executory, the prevailing party should not be denied the fruits of his victory by some subterfuge devised by the losing

party. 39 We completely agree with the RTC’s disquisition, thus:

Finally, after [MFR] had filed the petition in question pursuant to and in compliance with the or- der of this court dated September 28, 2004, to which no answer or any responsive pleading was filed by respondents or thru their lawyer, as the latter was certainly notified of the proceedings in said petition, respondents cannot now assail said proceedings after keeping silent thereon for a long time, and if indeed there was neglect on the part of their lawyer in informing them of or in taking part in said proceedings, such negligence of their counsel binds them as client. There is likewise an evident lack of prudence and due diligence on the part of the respondents by their failure to inform this court of the withdrawal of their former counsel for a long period of time, and they cannot now, by feigning ignorance of the proceedings had in the petition in question, assail the same thru a new counsel. In other words, respondents cannot be allowed to keep silent on or refuse to participate in proceedings that they know were taking place in connection with a final judgment rendered against them and then suddenly, after said proceed- ings were long terminated, come to court to question the same through a new counsel. The re- spondents are clearly in estoppel. Also, the court finds no practical purpose and benefit in sus- taining the theory posited by respondents which, aside from the reasons advanced earlier, will have no other effect than to further unduly delay the execution of a judgment that had long ac-

quired finality. 40 x x x x Respondents are clearly estopped from assailing the proceedings in question by their failure or refusal to participate therein despite their or their counsel’s knowledge thereof, and it would

be unjust for the plaintiff to allow respondents to put in issue the validity of said proceedings at this late stage, thru another counsel, as they are bound by the action or inaction of their former

counsel. 41

The Court of Appeal’s reliance on Villaceran v. Beltejar 42 is misplaced. Villaceran is an adminis- trative case finding the Sheriff guilty of simple neglect of duty for failure to strictly comply with the rules on execution sale. We held therein that there was no substantial compliance by the Sheriff with Section 15(c), Rule 39 of the Rules of Court. Our declaration that "[n]o reason exists not to apply the principle in the extrajudicial foreclosure sales of real property (statutory re- quirements of posting and publication must be strictly complied with since non-compliance could constitute a jurisdictional defect that would invalidate the sale) to execution sales of real

property under Rule 39 of the Rules of Court" 43 is an obiter which should not be definitive of the facts obtaining herein. The facts of this case demonstrate respondents’ stubborn refusal to comply with the judgment against them by claiming lack of notice of the execution proceedings. We reiterate that this claim is belied by the evidence on record and cannot invalidate the enforcement and execution of a final and executory judgment of this Court. On the whole, respondents’ silence and inac- tion for eight (8) years from the time the subject property was validly levied upon by the RTC, bars them from claiming invalidity of the execution proceedings. Notwithstanding the validity of the execution sale and Reyes’ consolidation of ownership over the subject property upon the lapse of the redemption period, we hold that Section 107 of Presidential Decree No. 1529 contemplates the filing of a separate and original action before the RTC, acting as a land registration court.1avvphi1 Reyes argues that to require him to "file his petition in another court would unduly divest the RTC of its jurisdiction to enforce its final and executory decision." Reyes invokes our ruling in

Natalia Realty, Inc. v. Court of Appeals 44 where we declared that "jurisdiction of the court to ex- ecute its judgment continues even after the judgment has become final for the purpose of en-

forcement of judgment." 45 Reyes’ reasoning is off tangent. Natalia is inapplicable because the execution proceedings in this case have been completed and was terminated upon the execution sale of the subject property. Reyes already consolidated ownership over the subject property; as owner, he has a right to have the same registered in his name. This transfer of title to the subject property in Reyes’ name is no longer part of the execution proceedings: the fact of levy and sale constitutes

execution, not so is the action for the issuance of a new title. 46 Indeed, the subsequent filing of a separate and original action for the titling of the subject prop- erty in Reyes’ name, no longer involves the execution of the judgment in Civil Case No. 1245-M. Section 107 of the Property Registration Decree falls under PETITIONS AND ACTIONS AFTER ORIGINAL REGISTRATION, Chapter X thereof. The provision reads:

SECTION 107. Surrender of withhold duplicate certificates. – Where it is necessary to issue a new certificate of title pursuant to any involuntary instrument which divests the title of the reg- istered owner against his consent or where a voluntary instrument cannot be registered by rea- son of the refusal or failure of the holder to surrender the owner's duplicate certificate of title, the party in interest may file a petition in court to compel surrender of the same to the Register of Deeds. The court, after hearing, may order the registered owner or any person withholding the duplicate certificate to surrender the same, and direct the entry of a new certificate or memorandum upon such surrender. If the person withholding the duplicate certificate is not amenable to the process of the court, or if not any reason the outstanding owner's duplicate

certificate cannot be delivered, the court may order the annulment of the same as well as the issuance of a new certificate of title in lieu thereof. Such new certificate and all duplicates thereof shall contain a memorandum of the annulment of the outstanding duplicate. That a succeeding registration of property in another’s name, after its original registration, con- templates a separate original action is reinforced by our ruling in Padilla v. Philippine Producers’

Cooperative Marketing Association, Inc. 47 Answering the question: "In implementing the invol- untary transfer of title of real property levied and sold on execution, is it enough for the execut- ing party to file a motion with the court which rendered judgment, or does he need to file a separate action with the Regional Trial Court," we unequivocally declared, thus:

Petitioner is correct in assailing as improper respondent’s filing of a mere motion for the cancel- lation of the old TCTs and the issuance of new ones as a result of petitioner’s refusal to surren- der his owner’s duplicate TCTs. Indeed, this called for a separate cadastral action initiated via petition. Section 107 of PD 1529, formerly Section 111 of Act 496, provides:

x x x x Respondent alleges that it resorted to filing the contested motion because it could not obtain new certificates of title, considering that petitioner refused to surrender his owner’s duplicate TCTs. This contention is incorrect. The proper course of action was to file a petition in court, rather than merely move, for the issuance of new titles. This was the procedure followed in Blancaflor by Sarmiento Trading which was in more or less the same situation as the respond- ent in this case:

Petitioners reliance on prescription and laches is unavailing in this instance. It was proper for Sarmiento Trading Corporation to file a petition with the Court of First Instance of Iloilo, act- ing as a cadastral court, for the cancellation of TCT No. 14749 in the name of Gaudencio Blanca- flor and the issuance of another in its name. This is a procedure provided for under Section 78 of Act No. 496 and Section 75 of PD No. Section 78 of Act 496 reads:

Sec. 78. Upon the expiration of the time, if any allowed by law for redemption after registered land has been sold on any execution, or taken or sold for the enforcement of any lien of any de- scription, the person claiming under the execution or under any deed or other instrument made in the course of the proceedings to levy such execution or enforce any lien, may petition the court for the entry of a new certificate to him, and the application may be granted: Pro- vided, however, That every new certificate entered under this section shall contain a memoran- dum of the nature of the proceeding on which it is based: Provided, further, That at any time prior to the entry of a new certificate the registered owner may pursue all his lawful remedies to impeach or annul proceedings under execution or to enforce liens of any description. Section 75 of PD 1529 provides:

Sec. 75. Application for new certificate upon expiration of redemption period. ─ Upon the expira- tion of the time, if any, allowed by law for redemption after the registered land has been sold on execution, or taken or sold for the enforcement of a lien of any description, except a mort- gage lien, the purchaser at such sale or anyone claiming under him may petition the court for the entry of a new certificate to him. Before the entry of a new certificate of title, the registered owner may pursue all legal and equi- table remedies to impeach or annul such proceedings. It is clear that PD 1529 provides the solution to respondent’s quandary.1avvphi1 The reasons behind the law make a lot of sense; it provides due process to a registered landowner (in this case the petitioner) and prevents the fraudulent or mistaken conveyance of land, the value of which may exceed the judgment obligation. x x x.

While we certainly will not condone any attempt by petitioner to frustrate the ends of justice − the only way to describe his refusal to surrender his owner’s duplicates of the certificates of ti- tle despite the final and executory judgment against him − respondent, on the other hand, can- not simply disregard proper procedure for the issuance to it of new certificates of title. There was a law on the matter and respondent should have followed it. In any event, respondent can still file the proper petition with the cadastral court for the issu-

ance of new titles in its name. 48 (Emphasis supplied). Plainly, Reyes must institute a separate cadastral action initiated via petition. WHEREFORE, the petition is PARTLY GRANTED. The Decision of the Court of Appeals in CA G.R. SP No. 96913 annulling and setting aside the Orders dated July 17, 2006 and October 20, 2006

issued by the Regional Trial Court, Branch 7, Malolos, Bulacan in Civil Case No. 1245-M is MODI- FIED:

1.

The public auction sale of the subject property covered by TCT No. T-198753 on July 19, 1999

is

declared VALID;

2.

The Certificate of Sale issued by Sheriff Leovino Legaspi on July 19, 1999 in favor of MFR

Farms, Inc. (substituted by petitioner Ruben C. Reyes) covering the parcel of land embraced in Transfer Certificate of Title No. T-198753 is likewise declared VALID; and

3.

Reyes) is DISMISSED without prejudice to re-filing as a separate original action pursuant to Sec- tion 107 of Presidential Decree No. 1529. SO ORDERED.

The Petition 49 dated October 29, 2004 filed by MFR Farms, Inc. (substituted by Ruben C.

THIRD DIVISION

[G.R. No. 136283. February 29, 2000.]

VIEWMASTER CONSTRUCTION CORPORATION, Petitioner, v. HON. REYNALDO Y. MAULIT in his official capacity as of the Land Registration Authority; and EDGARDO CASTRO, acting regis- ter of deeds of Las Piñas, Metro Manila, Respondents.

D E C I S I O N

PANGANIBAN, J.:

A notice of lis pendens may be registered when an action or a proceeding directly affects the ti-

tle to the land or the buildings thereon; or the possession, the use or the occupation thereof. Hence, the registration of such notice should be allowed if the litigation involves the enforce- ment of an agreement for the co-development of a parcel of land.chanrobles virtuallawlibrary

Statement

of

the

Case

Before us is a Petition for Review on Certiorari 1 assailing the February 27, 1998 Decision 2 of the Court of Appeals (CA) 3 in CA-GR SP No. 39649 and its November 12, 1998 Resolution 4 de- nying reconsideration. The assailed Decision affirmed the Resolution 5 of the Land Registration

Authority

(LRA)

in

Consulta

No.

2381,

which

ruled

as

follows:jgc:chanrobles.com.ph

"PREMISES CONSIDERED, this Authority is of the considered view and so holds that the Notice

of

Lis

Pendens

subject

of

this

consulta

is

not

registrable." 6

 

The Facts

 

The

undisputed

facts

were

summarized

by

the

Court

of

Appeals

as

follows:jgc:chanro-

bles.com.ph

"The subject property is known as the Las Piñas property registered in the name of Peltan De- velopment Inc. (now State Properties Corporation) covered by Transfer Certificate of Title No. (S-17992) 12473-A situated in Barrio Tindig na Manga, Las Piñas, Rizal.

"The Chiong/Roxas family collectively owns and controls State Investment Trust, Inc. (formerly State Investment House, Inc.) and is the major shareholder of the following corporations, namely: State Land Investment Corporation, Philippine Development and Industrial Corporation

and

Development.

Stronghold

Realty

"Sometime in 1995, the said family decided to give control and ownership over the said corpo- rations to only one member of the family, through the process of bidding among the family members/stockholders of the said companies. It was agreed that the bidder who acquires 51% or more of the said companies shall be deemed the winner.chanrobles.com : virtuallawlibrary

"Defendant Allen Roxas, one of the stockholders of State Investment Trust, Inc. applied for a

loan with First Metro Investment, Inc. (First Metro for brevity) in the amount of P36,500,000.00

bidding.

in

order

to

participate

in

the

"First Metro granted Allen Roxas’ application without collateral provided, however, that he pro- cure a guarantor/surety/solidary co-debtor to secure the payment of the said loan.

"Petitioner Viewmaster agreed to act as guarantor for the aforementioned loan in considera-

tion for its participation in a Joint Venture Project to co-develop the real estate assets of State

Inc.

Investment

Trust,

"After a series of negotiations, petitioner Viewmaster and defendant Allen Roxas agreed that should the latter prevail and win in the bidding, he shall sell to petitioner fifty (50%) of the total eventual acquisitions of shares of stock in the State Investment Trust, Inc., at a purchase price equivalent to the successful bid price per share plus an additional ten percent (10%) per share.

"As a result of the loans granted by First Metro in consideration of and upon the guaranty of pe- titioner Viewmaster, defendant Allen Roxas, eventually gained control and ownership of State

Investment

Inc.

Trust,

"However, notwithstanding the lapse of two (2) years since defendant Allen Roxas became the controlling stockholder of State Investment Trust, Inc., he failed to take the necessary action to implement the Joint Venture Project with petitioner Viewmaster to co-develop the subject

properties.

"Thus, petitioner’s counsel wrote defendant Allen Roxas, reiterating petitioner’s demand to comply with the agreement to co-develop the Las Piñas Property and to set in operation all the necessary steps towards the realization of the said project.

"On September 8, 1995, petitioner Viewmaster filed a Complaint for Specific Performance, En- forcement of Implied Trust and Damages against State Investment Trust, Inc. Northeast Land Development, Inc., State Properties Corporation (formerly Peltan Development, Inc.) and de-

fendant Allen Roxas, in his capacity as Vice-Chairman of State Investment Trust, Inc., and Chair- man of Northeast Land Development, Inc., State Properties Corporation, which was docketed as

Civil

virtual lawlibrary

Case

No.

65277.chanrobles

"On September 11,1995, petitioner Viewmaster filed a Notice of Lis Pendens with the Register

of Deeds of Quezon City and Las Piñas for the annotation of a Notice of Lis Pendens on Transfer Certificate of Title No. (S-17992) 12473-A, registered in the name of Peltan Development, Inc.

(now

Corporation).

State

Properties

"In a letter dated September 15, 1995, the respondent Register of Deeds of Las Piñas denied

the request for annotation of the Notice of Lis Pendens on the following grounds:chanrob1es

library

virtual

1aw

1. the request for annotation and the complaint [do] not contain an adequate description of the

Issues

Petitioner submits for the consideration of the Court the following issues:chanrob1es virtual 1aw library

"I

Whether or not the petitioner failed to adequately describe the subject property in its com- plaint and in the notice of lis pendens

II

Whether or not the Las Piñas property is directly involved in Civil Case No. 65277. 9

The Court’s Ruling

subject

 

property;

The Petition is meritorious.

2.

petitioner’s

action

only

has

an

incidental

effect

on

the

property

in

question.

First Issue:chanrob1es virtual 1aw library

"On September 20, 1995, petitioner filed an appeal to the respondent Land Registration Author-

2381.

ity,

which

was

docketed

as

Consulta

No.

"On December 14, 1995, the Respondent Land Registration Authority issued the assailed Reso- lution holding that the petitioner’s ‘Notice of Lis Pendens’ was not registrable." 7

Ruling of the Court of Appeals

In affirming the ruling of the LRA, the Court of Appeals held that petitioner failed to adequately describe the subject property in the Complaint and in the application for the registration of a notice of lis pendens. The CA noted that while Transfer Certificate of Title No. (S-17992) 12473-

A indicated six parcels of land, petitioner’s application mentioned only one parcel.

Moreover, the CA also ruled that a notice of lis pendens may be registered only when an action directly affects the title to or possession of the real property. In the present case, the proceed- ings instituted by petitioner affected the title or possession incidentally only, not directly.

Hence,

this

Petition.

8

Description of Property

Petitioner contends that the absence of property’s technical description in either the notice of lis pendens or the Complaint is not a sufficient ground for rejecting its application, because a copy of TCT No. (S-17992) 12473-A specifically describing the property was attached to and made an integral part of both documents.

On the other hand, respondents argue that petitioner failed to provide an accurate description of the Las Piñas property, which was merely referred to as a "parcel of land."cralaw virtua1aw library

The notice of lis pendens described the property as follows:jgc:chanrobles.com.ph

"A parcel of land situated in the Barrio of Tindig na Manga, Municipality of Las Piñas, Province

One Hundred Sixty Seven (786,167) square meters, more or less."cralaw virtua1aw library

of Rizal

By itself, the above does not adequately describe the subject property, pursuant to Section 14 of Rule 13 of the Rules of Court and Section 76 of Presidential Decree (PD) No. 1529. It does not distinguish the said property from other properties similarly located in the Barrio of Tindig na Manga, Municipality of Las Piñas, Province of Rizal. Indeed, by the above description alone, it would be impossible to identify the property.chanrobles.com : virtual law library

In the paragraph directly preceding the description quoted above, however, petitioner specifi- cally stated that the property referred to in the notice of lis pendens was the same parcel of land covered by TCT No. (S-17992) 12473-A:jgc:chanrobles.com.ph

"Please be notified that on 08 September 1995, the [p]laintiff in the above-entitled case filed an action against the above-named [d]efendants for specific performance, enforcement of an im- plied trust and damages, now pending in the Regional Trial Court of Pasig, Branch 166, which action involves a parcel of land covered by Transfer Certificate Title (TCT) No. (S-17992) 12473- A, registered in the name of Peltan Development Incorporated which changed its corporate name to State Properties Corporation, one of the [d]efendants in the aforesaid case. The said parcel of land is more particularly described as follows:chanrob1es virtual 1aw library

‘A parcel of land situated in the Barrio of Tindig na Manga, Municipality of Las Piñas, Province of

Rizal

containing an area of Seven Hundred Eighty Six Thousand One Hundred Sixty Seven (786,167) square meters, more or less.’

"Request is therefore made [for] your good office to record this notice of pendency of the aforementioned action in TCT No. (S-17992) 12473-A for all legal purposes." 10

As earlier noted, a copy of the TCT was attached to and made an integral part of both docu- ments. Consequently, the notice of lis pendens submitted for registration, taken as a whole, leaves no doubt as to the identity of the property, the technical description of which appears on the attached TCT. We stress that the main purpose of the requirement that the notice should contain a technical description of the property is to ensure that the same can be distin- guished and readily identified. In this case, we agree with petitioner that there was substantial compliance with this requirement.chanrobles.com : virtual law library

Second Issue:chanrob1es virtual 1aw library

Property Directly Involved

In upholding the LRA, the Court of Appeals held that "the doctrine of lis pendens has no applica- tion to a proceeding in which the only object sought is the recovery of [a] money judgment, though the title [to] or right or possession [of] a property may be incidentally affected. It is thus essential that the property be directly affected where the relief sought in the action or suit in- cludes the recovery of possession, or the enforcement [thereof], or an adjudication between the conflicting claims of title, possession or right of possession to specific property, or requiring its transfer or sale." 11

On the other hand, petitioner contends that the civil case subject of the notice of lis pendens di- rectly involved the land in question, because it prayed for the enforcement of a prior agree- ment between herein petitioner and Defendant Allen Roxas to co-develop the latter’s property.

We agree with the petitioner. A notice of lis pendens, which literally means "pending suit," may involve actions that deal not only with the title or possession of a property, but even with the use or occupation thereof. Thus, Section 76 of PD 1529 reads:jgc:chanrobles.com.ph

"SECTION 76. Notice of lis pendens. — No action to recover possession of real estate, or to

quite title thereto, or to remove clouds upon the title thereof, or for partition, or other pro- ceedings of any kind in court directly affecting the title to land or the use or occupation thereof or the buildings thereon, and no judgment, and no proceeding to vacate or reverse any judg- ment, shall have any effect upon registered land as against persons other than the parties thereto, unless a memorandum or notice stating the institution of such action or proceeding and the court wherein the same is pending, as well as the date of the institution thereof, to- gether with a reference to the number of the certificate of title, and an adequate description of the land affected and the registered owner thereof, shall have been filed and registered." chan- robles.com : law library

In Magdalena Homeowners Association, Inc. v. Court of Appeals, 12 the Court did not confine the availability of lis pendens to cases involving the title to or possession or real property. Thus, it held:jgc:chanrobles.com.ph

"According to Section 24, Rule 14 13 of the Rules of Court and Section 76 of Presidential Decree No. 1529, a notice of lis pendens in the following cases, viz.:chanrob1es virtual 1aw library

a) An action to recover possession of real estate;

b) An action to quite title thereto;

c) An action to remove clouds thereon;

d) An action for partition; and

e) Any other proceedings of any kind in Court directly affecting the title to the land or the use or occupation thereof or the buildings thereon."cralaw virtua1aw library

In Villanueva v. Court of Appeals, 14 this Court further declared that the rule of lis pendens ap-

plied to suits brought "to establish an equitable estate, interest, or right in specific real property

." Thus, this Court observed that the

or to enforce any lien, charge, or encumbrance against it

said notice pertained to the following:jgc:chanrobles.com.ph

all suits or actions which directly affect real property and not only those which involve the question of title, but also those which are brought to establish an equitable estate, interest, or right, in specific real property or to enforce any lien, charge, or encumbrance against it, there being in some cases a lis pendens, although at the commencement of the suit there is no present vested interest, claim, or lien in or on the property which it seeks to charge. It has also been held to apply in the case of a proceeding to declare an absolute deed of mortgage, or to redeem from a foreclosure sale, or to establish a trust, or to suits for the settlement and adjust- ment of partnership interests." chanroblesvirtual|awlibrary

In the present case, petitioner’s Complaint docketed as Civil Case No. 65277 clearly warrants the registration of a notice of lis pendens. The Complaint prayed for the following re- liefs:jgc:chanrobles.com.ph

"1. Render judgment ordering the Defendant Allen Roxas to sell fifty percent (50%) of his share- holdings in Defendant State Investment to Plaintiff at the price equivalent to the successful bid price per share and directing Defendants to co-develop with the Plaintiff the subject real prop-

erties;

2. Render judgment ordering the Defendant Allen Roxas to:chanrob1es virtual 1aw library

a. Pay the Plaintiff the amount of at least Twenty Million Pesos (P20,000,000.00) and/or such other amounts as may be proven during the course of the trial, by way of actual damages;

b. Pay the Plaintiff the amount of the at least One Million Pesos (P1,000,000.00), by way of mo- ral damages;

c. pay the Plaintiff the amount of at least One Million Pesos (P1,000,000.00), by way of exem- plary damages;

d. Pay the Plaintiff the amount of Two Hundred Fifty Thousand Pesos (P250,000.00) by way of attorney’s fees; and

e. Pay expenses of litigation and costs of suit." 15

Undeniably, the prayer that Defendant Allen Roxas be ordered to sell 50 percent of his share- holdings in State Investment does not directly involve title to the property and is therefore not a proper subject of a notice of lis pendens. Neither do the various amounts of damages prayed for justify such annotation.

We disagree, however, with the Court of Appeals and the respondents that the prayer for the co-development of the land was merely incidental to the sale of shares of defendant com- pany.chanrobles virtual lawlibrary

The Complaint shows that the loan obtained by Allen Roxas (one of the defendants in civil case) from First Metro was guaranteed by petitioner for two distinct considerations: (a) to enable it to purchase 50 percent of the stocks that the said defendant may acquire in State Investment and (b) to co-develop with the defendants the Quezon City and the Las Piñas properties of the corporation. In other words, the co-development of the said properties is a separate undertak- ing that did not arise from petitioner’s acquisition of the defendant’s shares in the corporation. To repeat, the co-development is not merely auxiliary or incidental to the purchase of the shares; it is a distinct considerations for Viewmaster’s guaranty. 16

Hence, by virtue of the allege agreement with Allen Roxas, petitioner has a direct — not merely incidental — interest in the Las Piñas property. Contrary to respondent’s contention, 17 the ac- tion involves not only the collection of a money judgment, but also the enforcement of peti- tioner’s right to co-develop and use the property.

The Court must stress that the purpose of lis pendens is (1) to protect the rights of the party causing the registration thereof 18 and (2) to advise third persons who purchase or contract on the subject property that they do so at their peril and subject to the result of the pending litiga- tion. 19 One who deals with property subject of a notice of lis pendens cannot acquire better rights than those of his predecessors-in-interest. 20 In Tanchoco v. Aquino, 21 the Court held:jgc:chanrobles.com.ph

". — The doctrine of lis pendens is founded upon reason of public policy and necessity, the

purpose of which is to keep the subject matter of the litigation within the power of the court until the judgment or decree shall have been entered; otherwise, by successive alienations pending the litigation, its judgment or decree shall be rendered abortive and impossible of exe-

cution. Purchasers pendente lite of the property subject of the litigation after the notice of lis pendens is inscribed in the Office of the Register of Deeds are bound by the judgment against

their predecessors

."cralaw virtua1aw library

Without a notice of lis pendens, a third party who acquires the property after relying only on the Certificate of Title would be deemed a purchaser in good faith. Against such third party, the supposed rights of petitioner cannot be enforced, because the former is not bound by the prop- erty owner’s undertakings not annotated in the TCT. 22

Likewise, there exists the possibility that the res of the civil case would leave the control of the court and render ineffectual a judgment therein. Indeed, according to petitioner, it was not even informed when Allen Roxas exchanged the Quezon City property for shares of stock in Northeast Land Development, Inc. 23 Hence, it maintains that there is a clear risk that the same thing would be done with the Las Piñas property.chanrobles virtual lawlibrary

In this light, the CA ruling left unprotected petitioner’s claim of co-development over the Las Piñas property. Hence, until the conflicting rights and interests are threshed out in the civil case pending before the RTC, it will be in the best interest of the parties and the public at large that a notice of the suit be given to the whole world.

The Court is not here saying that petitioner is entitled to the reliefs prayed for in its Complaint pending in the RTC. Verily, there is no requirement that the right to or the interest in the prop- erty subject of a lis pendens be proven by the applicant. The Rule merely requires that an affir- mative relief be claimed. 24 A notation of lis pendens neither affects the merits of a case nor creates a right or a lien. 25 It merely protects the applicant’s rights, which will be determined during the trial.chanrobles.com : law library

WHEREFORE, the Petition is hereby GRANTED and the assailed Decision of the Court of Appeals REVERSED and SET ASIDE. The Las Piñas Register of Deeds is directed to cause the annotation of lis pendens in TCT No. (S-17992) 12473-A. No costs.chanrobles.com.ph : red

SO ORDERED.

G. R. No. 148568 - March 20, 2003 ATLANTIC ERECTORS, INC., Petitioner, vs. HERBAL COVE REALTY CORPORATION, respondent. PANGANIBAN, J.:

The pendency of a simple collection suit arising from the alleged nonpayment of construction services, materials, unrealized income and damages does not justify the annotation of a notice of lis pendens on the title to a property where construction has been done. Statement of the Case

Before the Court is a Petition for Review on Certiorari 1 under Rule 45 of the Rules of Court,

challenging the May 30, 2000 Decision 2 of the Court of Appeals (CA) in CA-GR SP No. 56432. The

dispositive portion of the Decision is reproduced as follows:

x

x x - x x x - x x x

"WHEREFORE, the petition is granted and the assailed November 4, 1998 and October 22, 1999 orders annulled and set aside. The July 30, 1998 order of respondent judge is reinstated grant-

ing the cancellation of the notices of lis pendens subject of this petition." 3

In its July 21, 2001 Resolution, 4 the CA denied petitioner's Motion for Reconsideration. The Facts The factual antecedents of the case are summarized by the CA in this wise:

"On June 20, 1996, [respondent] and [petitioner] entered into a Construction Contract whereby the former agreed to construct four (4) units of [townhouses] designated as 16-A, 16-B, 17-A and 17-B and one (1) single detached unit for an original contract price of P15,726,745.19 which was late[r] adjusted to P16,726,745.19 as a result of additional works. The contract period is 180 days commencing [on] July 7, 1996 and to terminate on January 7, 1997. [Petitioner] claimed that the said period was not followed due to reasons attributable to [respondent], namely: suspension orders, additional works, force majeure, and unjustifiable acts of omission or delay on the part of said [respondent]. [Respondent], however, denied such claim and in- stead pointed to [petitioner] as having exceeded the 180 day contract period aggravated by de- fective workmanship and utilization of materials which are not in compliance with specifica- tions.

x x x - x x x - x x x "On November 21, 1997, [petitioner] filed a complaint for sum of money with damages (Civil Case No. 97-2707) with the Regional Trial Court of Makati entitled 'Atlantic Erectors, Incorpo- rated vs. Herbal Cove Realty Corp. and Ernest C. Escal[e]r'. This case was raffled to Branch 137, x

x x Judge Santiago J. Ranada presiding. In said initiatory pleading, [petitioner] AEI asked for the following reliefs:

'AFTER DUE NOTICE AND HEARING, to order x x x defendant to:

1. Pay plaintiff the sum of P4,854,229.94 for the unpaid construction services already rendered;

2. To x x x pay plaintiff the sum of P1,595,551.00 for the construction materials, equipment and

tools of plaintiff held by defendant;

3. To x x x pay plaintiff the sum of P2,250,000.00 for the [loss] x x x of expected income from

the construction project;

4. [T]o x x x pay plaintiff the sum of P800,000.00 for the cost of income by way of rental from

the equipment of plaintiff held by defendants;

5. To x x x pay plaintiff the sum of P5,000,000.00 for moral damages;

6. To x x x pay plaintiff the sum of P5,000,000.00 for exemplary damages;

7. To x x x pay plaintiff the sum equivalent of 25% of the total money claim plus P200,000.00 ac-

ceptance fee and P2,500.00 per court appearance;

8. To x x x pay the cost of suit.'

"On the same day of November 21, 1997, [petitioner] filed a notice of lis pendens for annota- tion of the pendency of Civil Case No. 97-707 on titles TCTs nos. T-30228, 30229, 30230, 30231 and 30232. When the lots covered by said titles were subsequently subdivided into 50 lots, the notices of lis pendens were carried over to the titles of the subdivided lots, i.e., Transfer Certifi- cate of Title Nos. T-36179 to T-36226 and T-36245 to T-36246 of the Register of Deeds of Tagay- tay City. "On January 30, 1998, [respondent] and x x x Ernest L. Escaler, filed a Motion to Dismiss [peti- tioner's] Complaint for lack of jurisdiction and for failure to state a cause of action. They claimed [that] the Makati RTC has no jurisdiction over the subject matter of the case because the parties' Construction Contract contained a clause requiring them to submit their dispute to arbitration.

"On March 17, 1998, [RTC Judge Ranada] dismissed the Complaint as against [respondent] for [petitioner's] failure to comply with a condition precedent to the filing of a court action which is the prior resort to arbitration and as against x x x Escaler for failure of the Complaint to state a cause of action x x x. "[Petitioner] filed a Motion for Reconsideration of the March 17, 1998 dismissal order. [Re- spondent] filed its Opposition thereto. "On April 24, 1998, [respondent] filed a Motion to Cancel Notice of Lis Pendens. It argued that the notices of lis pendens are without basis because [petitioner's] action is a purely personal ac- tion to collect a sum of money and recover damages and x x x does not directly affect title to, use or possession of real property. "In his July 30, 1998 Order, [Judge Ranada] granted [respondent's] Motion to Cancel Notice of Lis Pendens x x x:

"[Petitioner] filed a Motion for Reconsideration of the aforesaid July 30, 1998 Order to which [respondent] filed an Opposition. "In a November 4, 1998 Order, [Judge Ranada,] while finding no merit in the grounds raised by [petitioner] in its Motion for Reconsideration, reversed his July 30, 1998 Order and reinstated the notices of lis pendens, as follows:

'1. The Court finds no merit in plaintiff's contention that in dismissing the above-entitled case for lack of jurisdiction, and at the same time granting defendant Herbal Cove's motion to cancel notice of lis pendens, the Court [took] an inconsistent posture. The Rules provide that prior to the transmittal of the original record on appeal, the court may issue orders for the protection and preservation of the rights of the parties which do not involve any matter litigated by the ap-

peal (3rd par., Sec. 10, Rule 41). Even as it declared itself without jurisdiction, this Court still has power to act on incidents in this case, such as acting on motions for reconsideration, for correc- tion, for lifting of lis pendens, or approving appeals, etc. 'As correctly argued by defendant Herbal Cove, a notice of lis pendens serves only as a precau- tionary measure or warning to prospective buyers of a property that there is a pending litiga- tion involving the same. 'The Court notes that when it issued the Order of 30 July 1998 lifting the notice of lis pendens, there was as yet no appeal filed by plaintiff. Subsequently, on 10 September 1998, after a no- tice of appeal was filed by plaintiff on 4 September 1998, the Branch Clerk of Court was ordered by the Court to elevate the entire records of the above-entitled case to the Court of Appeals. It therefore results that the above-entitled case is still pending. After a careful consideration of all matters relevant to the lis pendens, the Court believes that justice will be better served by set- ting aside the Order of 30 July 1998.' "On November 27, 1998, [respondent] filed a Motion for Reconsideration of the November 4, 1998 Order arguing that allowing the notice of lis pendens to remain annotated on the titles would defeat, not serve, the ends of justice and that equitable considerations cannot be re- sorted to when there is an applicable provision of law.

x x x - x x x - x x x

"On October 22, 1999, [Judge Ranada] issued an order denying [respondent's] Motion for Re-

consideration of the November 4, 1998 Order for lack of sufficient merit." 5 Thereafter, Respondent Herbal Cove filed with the CA a Petition for Certiorari. Ruling of the Court of Appeals Setting aside the Orders of the RTC dated November 4, 1998 and October 22, 1999, the CA rein-

stated the former's July 30, 1998 Order 6 granting Herbal Cove's Motion to Cancel the Notice of Lis Pendens. According to the appellate court, the re-annotation of those notices was improp-

er for want of any legal basis. It specifically cited Section 76 of Presidential Decree No. 1529 (the Property Registration Decree). The decree provides that the registration of such notices is allowed only when court proceedings directly affect the title to, or the use or the occupation of, the land or any building thereon. The CA opined that the Complaint filed by petitioner in Civil Case No. 97-2707 was intended purely to collect a sum of money and to recover damages. The appellate court ruled that the Complaint did not aver any ownership claim to the subject land or any right of possession over the buildings constructed thereon. It further declared that absent any claim on the title to the buildings or on the possession thereof, the notices of lis pendens had no leg to stand on. Likewise, the CA held that Judge Ranada should have maintained the notice cancellations, which he had directed in his July 30, 1998 Order. Those notices were no longer necessary to protect the rights of petitioner, inasmuch as it could have procured protective relief from the Construction Industry Arbitral Commission (CIAC), where provisional remedies were available. The CA also mentioned petitioner's admission that there was already a pending case before the CIAC, which in fact rendered a decision on March 11, 1999. The appellate court further explained that the re-annotation of the Notice of Lis Pendens was no longer warranted after the court a quo had ruled that the latter had no jurisdiction over the case. The former held that the rationale behind the principle of lis pendens -- to keep the sub- ject matter of the litigation within the power of the court until the entry of final judgment -- was no longer applicable. The reason for such inapplicability was that the Makati RTC already declared that it had no jurisdiction or power over the subject matter of the case. Finally, the CA opined that petitioner's Complaint had not alleged or claimed, as basis for the continued annotation of the Notice of Lis Pendens, the lien of contractors and laborers under Article 2242 of the New Civil Code. Moreover, petitioner had not even referred to any lien of whatever nature. Verily, the CA ruled that the failure to allege and claim the contractor's lien did not warrant the continued annotation on the property titles of Respondent Herbal Cove.

Hence, this Petition. 7

The Issues Petitioner raises the following issues for our consideration:

"I. Whether or not money claims representing cost of materials [for] and labor [on] the houses constructed on a property [are] a proper lien for annotation of lis pendens on the property ti- tle[.] "II. Whether or not the trial court[,] after having declared itself without jurisdiction to try the

case[,] may still decide on [the] substantial issue of the case." 8 This Court's Ruling

The Petition has no merit.

First Issue:

Proper Basis for a Notice of Lis Pendens Petitioner avers that its money claim on the cost of labor and materials for the townhouses it constructed on the respondent's land is a proper lien that justifies the annotation of a notice of lis pendens on the land titles. According to petitioner, the money claim constitutes a lien that can be enforced to secure payment for the said obligations. It argues that, to preserve the al- leged improvement it had made on the subject land, such annotation on the property titles of respondent is necessary. On the other hand, Respondent Herbal Cove argues that the annotation is bereft of any factual

or legal basis, because petitioner's Complaint 9 does not directly affect the title to the property, or the use or the possession thereof. It also claims that petitioner's Complaint did not assert

ownership of the property or any right to possess it. Moreover, respondent attacks as baseless the annotation of the Notice of Lis Pendens through the enforcement of a contractor's lien under Article 2242 of the Civil Code. It points out that the said provision applies only to cases in which there are several creditors carrying on a legal action against an insolvent debtor. As a general rule, the only instances in which a notice of lis pendens may be availed of are as fol- lows: (a) an action to recover possession of real estate; (b) an action for partition; and (c) any other court proceedings that directly affect the title to the land or the building thereon or the

use or the occupation thereof. 10 Additionally, this Court has held that resorting to lis pendens is not necessarily confined to cases that involve title to or possession of real property. This anno- tation also applies to suits seeking to establish a right to, or an equitable estate or interest in, a

specific real property; or to enforce a lien, a charge or an encumbrance against it. 11 Apparently, petitioner proceeds on the premise that its money claim involves the enforcement of a lien. Since the money claim is for the nonpayment of materials and labor used in the con- struction of townhouses, the lien referred to would have to be that provided under Article 2242 of the Civil Code. This provision describes a contractor's lien over an immovable property as fol- lows:

"Art. 2242. With reference to specific immovable property and real rights of the debtor, the fol- lowing claims, mortgages and liens shall be preferred, and shall constitute an encumbrance on the immovable or real right:

x x x - x x x - x x x "(3) Claims of laborers, masons, mechanics and other workmen, as well as of architects, engi- neers and contractors, engaged in the construction, reconstruction or repair of buildings, canals or other works, upon said buildings, canals or other works; "(4) Claims of furnishers of materials used in the construction, reconstruction, or repair of build- ings, canals or other works, upon said buildings, canals or other works[.]" (Emphasis supplied) However, a careful examination of petitioner's Complaint, as well as the reliefs it seeks, reveals that no such lien or interest over the property was ever alleged. The Complaint merely asked for the payment of construction services and materials plus damages, without mentioning -- much less asserting -- a lien or an encumbrance over the property. Verily, it was a purely per- sonal action and a simple collection case. It did not contain any material averment of any en- forceable right, interest or lien in connection with the subject property. As it is, petitioner's money claim cannot be characterized as an action that involves the enforce- ment of a lien or an encumbrance, one that would thus warrant the annotation of the Notice of Lis Pendens. Indeed, the nature of an action is determined by the allegations of the com-

plaint. 12 Even assuming that petitioner had sufficiently alleged such lien or encumbrance in its Com- plaint, the annotation of the Notice of Lis Pendens would still be unjustified, because a com- plaint for collection and damages is not the proper mode for the enforcement of a contractor's lien.

In J.L. Bernardo Construction v. Court of Appeals, 13 the Court explained the concept of a con- tractor's lien under Article 2242 of the Civil Code and the proper mode for its enforcement as follows:

"Articles 2241 and 2242 of the Civil Code enumerates certain credits which enjoy preference with respect to specific personal or real property of the debtor. Specifically, the contractor's lien claimed by the petitioners is granted under the third paragraph of Article 2242 which provides that the claims of contractors engaged in the construction, reconstruction or repair of buildings or other works shall be preferred with respect to the specific building or other immovable prop-

erty constructed. "However, Article 2242 finds application when there is a concurrence of credits, i.e., when the same specific property of the debtor is subjected to the claims of several creditors and the value of such property of the debtor is insufficient to pay in full all the creditors. In such a situation, the question of preference will arise, that is, there will be a need to determine which of the creditors will be paid ahead of the others. Fundamental tenets of due process will dictate that this statutory lien should then only be enforced in the context of some kind of a proceeding where the claims of all the preferred creditors may be bindingly adjudicated, such as insolvency

proceedings." 14 (Emphasis supplied) Clearly then, neither Article 2242 of the Civil Code nor the enforcement of the lien thereunder is applicable here, because petitioner's Complaint failed to satisfy the foregoing requirements. Nowhere does it show that respondent's property was subject to the claims of other creditors or was insufficient to pay for all concurring debts. Moreover, the Complaint did not pertain to insolvency proceedings or to any other action in which the adjudication of claims of preferred creditors could be ascertained. Another factor negates the argument of petitioner that its money claim involves the enforce- ment of a lien or the assertion of title to or possession of the subject property: the fact that it filed its action with the RTC of Makati, which is undisputedly bereft of any jurisdiction over re- spondent's property in Tagaytay City. Certainly, actions affecting title to or possession of real property or the assertion of any interest therein should be commenced and tried in the proper court that has jurisdiction over the area, where the real property involved or a portion thereof is

situated. 15 If petitioner really intended to assert its claim or enforce its supposed lien, interest or right over respondent's subject properties, it would have instituted the proper proceedings or filed a real action with the RTC of Tagaytay City, which clearly had jurisdiction over those

properties. 16 Narciso Peña, a leading authority on the subject of land titles and registration, gives an explicit exposition on the inapplicability of the doctrine of lis pendens to certain actions and proceed- ings that specifically include money claims. He explains in this wise:

"By express provision of law, the doctrine of lis pendens does not apply to attachments, levies of execution, or to proceedings for the probate of wills, or for administration of the estate of deceased persons in the Court of First Instance. Also, it is held generally that the doctrine of lis pendens has no application to a proceeding in which the only object sought is the recovery of a money judgment, though the title or right of possession to property be incidentally affected. It is essential that the property be directly affected, as where the relief sought in the action or suit includes the recovery of possession, or the enforcement of a lien, or an adjudication between conflicting claims of title, possession, or the right of possession to specific property, or requiring

its transfer or sale" 17 (Emphasis supplied) Peña adds that even if a party initially avails itself of a notice of lis pendens upon the filing of a case in court, such notice is rendered nugatory if the case turns out to be a purely personal ac- tion. We quote him as follows:

"It may be possible also that the case when commenced may justify a resort to lis pendens, but during the progress thereof, it develops to be purely a personal action for damages or other-

wise. In such event, the notice of lis pendens has become functus officio." 18 (Emphasis supplied) Thus, when a complaint or an action is determined by the courts to be in personam, the ration- ale for or purpose of the notice of lis pendens ceases to exist. To be sure, this Court has ex- pressly and categorically declared that the annotation of a notice of lis pendens on titles to

properties is not proper in cases wherein the proceedings instituted are actions in personam. Second Issue:

Jurisdiction of the Trial Court Petitioner argues that the RTC had no jurisdiction to issue the Order canceling the Notice of Lis Pendens as well as the Order reinstating it. Supposedly, since both Orders were issued by the trial court without jurisdiction, the annotation made by the Register of Deeds of Tagaytay City must remain in force. Petitioner avers that the trial court finally declared that the latter had no jurisdiction over the case on July 27, 1998, in an Order denying the former's Motion for Reconsideration of the March 17, 1998 Order dismissing the Complaint. Petitioner insists that the subsequent July 30, 1998 Order cancelling the subject Notice of Lis Pendens is void, because it was issued by a court that had no more jurisdiction over the case. Rule 41 of the 1997 Rules on Civil Procedure, which governs appeals from regional trial courts, expressly provides that RTCs lose jurisdiction over a case when an appeal is filed. The rule reads thus:

"SEC. 9. Perfection of appeal; effect thereof. -- A party's appeal by notice of appeal is deemed perfected as to him upon the filing of the notice of appeal in due time. x x x - x x x - x x x "In appeals by notice of appeal, the court loses jurisdiction over the case upon the perfection of the appeals filed in due time and the expiration of the time to appeal of the other parties." (Em- phasis supplied) On the basis of the foregoing rule, the trial court lost jurisdiction over the case only on August

31, 1998, when petitioner filed its Notice of Appeal. 20 Thus, any order issued by the RTC prior to that date should be considered valid, because the court still had jurisdiction over the case. Accordingly, it still had the authority or jurisdiction to issue the July 30, 1998 Order canceling the Notice of Lis Pendens. On the other hand, the November 4, 1998 Order that set aside the Ju- ly 30, 1998 Order and reinstated that Notice should be considered without force and effect, be- cause it was issued by the trial court after it had already lost jurisdiction. In any case, even if we were to adopt petitioner's theory that both the July 30, 1998 and the No- vember 4, 1998 Orders were void for having been issued without jurisdiction, the annotation is still improper for lack of factual and legal bases. As discussed previously, erroneously misplaced is the reliance of petitioner on the premise that its money claim is an action for the enforcement of a contractor's lien. Verily, the annotation of the Notice of Lis Pendens on the subject property titles should not have been made in the first place. The Complaint filed before the Makati RTC -- for the collection of a sum of money and for damages -- did not provide sufficient legal basis for such annotation. Finally, petitioner vehemently insists that the trial court had no jurisdiction to cancel the Notice.

Yet, the former filed before the CA an appeal, docketed as CA-GR CV No. 65647, 21 questioning the RTC's dismissal of the Complaint for lack of jurisdiction. Moreover, it must be remembered that it was petitioner which had initially invoked the jurisdiction of the trial court when the for- mer sought a judgment for the recovery of money and damages against respondent. Yet again, it was also petitioner which assailed that same jurisdiction for issuing an order unfavorable to the former's cause. Indeed, parties cannot invoke the jurisdiction of a court to secure affirma- tive relief, then repudiate or question that same jurisdiction after obtaining or failing to obtain

such relief. 22 WHEREFORE, the Petition is hereby DENIED and the assailed Decision AFFIRMED. Costs against petitioner.

19

SO ORDERED.

G.R. No. 189477, February 26, 2014 HOMEOWNERS SAVINGS AND LOAN BANK, Petitioner-Appellant, v. ASUNCION P. FELONIA AND LYDIA C. DE GUZMAN, REPRESENTED BY MARIBEL FRIAS, Respondents-Appellees.

MARIE MICHELLE P. DELGADO, REGISTER OF DEEDS OF LAS PIÑAS CITY AND RHANDOLFO B. AMANSEC, IN HIS CAPACITY AS CLERK OF COURT EX-OFFICIO SHERIFF, OFFICE OF THE CLERK OF COURT, LAS PIÑAS CITY, Respondents-Defendants.

D E C I S I O N

PEREZ, J.:

Assailed in this Petition for Review on Certiorari is the Decision 1 and Resolution 2 of the Court of

Appeals (CA), in CA-G.R. CV No. 87540, which affirmed with modifications, the Decision 3 of the Regional Trial Court (RTC), reinstating the title of respondents Asuncion Felonia (Felonia) and Lydia de Guzman (De Guzman) and cancelling the title of Marie Michelle Delgado (Delgado).

The facts as culled from the records are as follows:chanRoblesVirtualawlibrary

Felonia and De Guzman were the registered owners of a parcel of land consisting of 532 square meters with a five-bedroom house, covered by Transfer of Certificate of Title (TCT) No. T-402 is- sued by the register of deeds of Las Piñas City.

Sometime in June 1990, Felonia and De Guzman mortgaged the property to Delgado to secure the loan in the amount of P1,655,000.00. However, instead of a real estate mortgage, the par-

ties executed a Deed of Absolute Sale with an Option to Repurchase. 4 crallawlibrary

On 20 December 1991, Felonia and De Guzman filed an action for Reformation of Contract (Ref- ormation case), docketed as Civil Case No. 91-59654, before the RTC of Manila. On the findings that it is “very apparent that the transaction had between the parties is one of a mortgage and

not a deed of sale with right to repurchase,” 5 the RTC, on 21 March 1995 rendered a judgment favorable to Felonia and De Guzman. Thus:chanRoblesVirtualawlibrary WHEREFORE, judgment is hereby rendered directing the [Felonia and De Guzman] and the [Del- gado] to execute a deed of mortgage over the property in question taking into account the pay- ments made and the imposition of the legal interests on the principal loan.

On the other hand, the counterclaim is hereby dismissed for lack of merit.

No pronouncements as to attorney’s fees and damages in both instances as the parties must

bear their respective expenses incident to this suit. 6 crallawlibrary Aggrieved, Delgado elevated the case to the CA where it was docketed as CA-G.R. CV No. 49317. The CA affirmed the trial court decision. On 16 October 2000, the CA decision became fi-

nal and executory. 7 crallawlibrary

Inspite of the pendency of the Reformation case in which she was the defendant, Delgado filed a “Petition for Consolidation of Ownership of Property Sold with an Option to Repurchase and Issuance of a New Certificate of Title” (Consolidation case) in the RTC of Las Piñas, on 20 June

1994. 8 After an ex-parte hearing, the RTC ordered the issuance of a new title under Delgado’s name, thus:chanRoblesVirtualawlibrary WHEREFORE, judgment is rendered-

1st Declaring [DELGADO] as absolute owner of the subject parcel of land covered by Transfer Certificate of Title No. T-402 of the Register of Deeds of Las Piñas, Metro Manila;

2ndOrdering the Register of Deeds of Las Piñas, Metro Manila to cancel Transfer Certificate of Title No. T-402 and issue in lieu thereof a new certificate of title and owner’s duplicate copy

thereof in the name of [DELGADO]. 9 crallawlibrary

By virtue of the RTC decision, Delgado transferred the title to her name. Hence, TCT No. T-402, registered in the names of Felonia and De Guzman, was canceled and TCT No. 44848 in the name of Delgado, was issued.

Aggrieved, Felonia and De Guzman elevated the case to the CA through a Petition for Annul-

ment of Judgment. 10 crallawlibrary

Meanwhile, on 2 June 1995, Delgado mortgaged the subject property to Homeowners Savings and Loan Bank (HSLB) using her newly registered title. Three (3) days later, or on 5 June 1995, HSLB caused the annotation of the mortgage.

On 14 September 1995, Felonia and De Guzman caused the annotation of a Notice of Lis Pen- dens on Delgado’s title, TCT No. 44848. The Notice states:chanRoblesVirtualawlibrary Entry No. 8219/T-44848 - NOTICE OF LIS PENDENS - filed by Atty. Humberto A. Jambora, Coun- sel for the Plaintiff, that a case been commenced in the RTC, Branch 38, Manila, entitled ASUN- CION P. FELONIA and LYDIA DE GUZMAN thru VERONICA P. BELMONTE, as Atty-in-fact (Plain- tiffs) v.s. MARIE MICHELLE DELGADO defendant in Civil Case No. 91-59654 for Reformation of Instrument. Copy on file in this Registry. Date of Instrument - Sept. 11, 1995

Date of Inscription - Sept. 14, 1995 at 9:55 a.m. 11 crallawlibrary On 20 November1997, HSLB foreclosed the subject property and later consolidated ownership in its favor, causing the issuance of a new title in its name, TCT No. 64668.

On 27 October 2000, the CA annulled and set aside the decision of the RTC, Las Piñas City in the Consolidation case. The decision of the CA, declaring Felonia and De Guzman as the absolute owners of the subject property and ordering the cancellation of Delgado’s title, became final

and executory on 1 December 2000. 12 Thus:chanRoblesVirtualawlibrary WHEREFORE, the petition is GRANTED and the subject judgment of the court a quo is AN-

NULLED and SET ASIDE. 13 crallawlibrary On 29 April 2003, Felonia and De Guzman, represented by Maribel Frias (Frias), claiming to be

the absolute owners of the subject property, instituted the instant complaint against Delgado, HSLB, Register of Deeds of Las Piñas City and Rhandolfo B. Amansec before the RTC of Las Piñas City for Nullity of Mortgage and Foreclosure Sale, Annulment of Titles of Delgado and HSLB, and finally, Reconveyance of Possession and Ownership of the subject property in their favor.

As defendant, 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 the Reformation case. HSLB also claimed that it should not be bound by the decisions of the CA in the Reformation and Consolidation cases because it was not a party therein. Finally, HSLB as- serted that it was a mortgagee in good faith because the mortgage between Delgado and HSLB was annotated on the title on 5 June 1995, whereas the Notice of Lis Pendens was annotated only on 14 September 1995.

After trial, the RTC ruled in favor of Felonia and De Guzman as the absolute owners of the sub- ject property. The dispositive portion of the RTC decision reads:chanRoblesVirtualawlibrary WHEREFORE, premises considered, the Court hereby finds for the [Felonia and De Guzman] with references to the decision of the Court of Appeals in CA-G.R. CV No. 49317 and CA-G.R. SP No. 43711 as THESE TWO DECISIONS CANNOT BE IGNORED and against [Delgado] and [HSLB], Register of Deeds of Las Piñas City ordering the (sic) as follows:chanRoblesVirtualawlibrary

1st The Register of Deeds of Las Piñas City to cancel Transfer Certificate of Title Nos. 44848 and T-64668 as null and void and reinstating Transfer Certificate of Title No. T-402 which shall contain a memorandum of the fact and shall in all respect be entitled to like faith and credit as the original certificate of title and shall, thereafter be regarded as such for all intents and purposes under the law;

2ndDeclaring the Mortgage Sheriff’s Sale and the Certificate of Sale issued in favor of HSLB null and void, without prejudice to whatever rights the said Bank may have against [Delgado];

3rd Ordering [Delgado] to pay [Felonia and De Guzman] the amount of PHP500,000.00 for com- pensatory damages;

4th Ordering [Delgado] to pay [Felonia and De Guzman] the amount of PHP500,000.00 for exemplary damages;

5th Ordering [Delgado] to pay [Felonia and De Guzman] the amount of PHP500,000.00 for mo- ral damages;

6th Ordering [Delgado] to pay 20% of the total obligations as and by way of attorney’s fees;

7th Ordering [Delgado] to pay cost of suit. 14 On appeal, the CA affirmed with modifications the trial court decision. The dispositive portion

reads:chanRoblesVirtualawlibrary

WHEREFORE, in the light of the foregoing, the decision appealed from is AFFIRMED with the MODIFICATIONS that the awards of actual damages and attorney’s fees are DELETED, moral and exemplary damages are REDUCED to P50,000.00 each, and Delgado is ordered to pay the

appellees

Hence,

of

the

appealed

Decision

damages. 15 crallawlibrary petition.

P25,000.00

as

nominal

this

Notably, HSLB does not question the affirmance by the CA of the trial court’s ruling that TCT No. 44848, the certificate of title of its mortgagor-vendor, and TCT No. 64668, the certificate of title that was secured by virtue of the Sheriff’s sale in its favor, should be cancelled “as null and void” and that TCT No. T-402 in the name of Felonia and De Guzman should be reinstated.

Recognizing the validity of TCT No. T-402 restored in the name of Felonia and De Guzman, peti- tioners pray that the decision of the CA be modified “to the effect that the mortgage lien in fa- vor of petitioner HSLB annotated as entry No. 4708-12 on TCT No. 44848 be [ordered] carried

over on TCT No. T-402 after it is reinstated in the name of [Felonia and De Guzman].” 16 crallawli- brary

Proceeding from the ruling of the CA that it is a mortgagee in good faith, HSLB argues that a de- nial of its prayer would run counter to jurisprudence giving protection to a mortgagee in good

policy.

faith

by

reason

of

public

We cannot grant the prayer of petitioner. The priorly registered mortgage lien of HSLB is now worthless.

Arguably, HSLB was initially a mortgagee in good faith. In Bank of Commerce v. San Pablo,

Jr., 17 the doctrine of mortgagee in good faith was explained:chanRoblesVirtualawlibrary There is, however, a situation where, despite the fact that the mortgagor is not the 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 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 buyers or mortgagees, are not required to go beyond what

appears on the face of the title. The public interest in upholding indefeasibility of a certificate of title, as 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 the certificate

title.

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 faulted in relying on the face of Delgado’s title. The records indicate that Delgado was at the time of the mortgage in possession of the subject property and Delgado’s title did not contain any annotation that would arouse HSLB’s suspicion. HSLB, as a mortgagee, had a right to rely in good faith on Delga- do’s title, and in the absence of any sign that might arouse suspicion, HSLB had no obligation to undertake further investigation. As held by this Court in Cebu International Finance Corp. v.

of

CA: 18 crallawlibrary The prevailing jurisprudence is that a mortgagee has a right to rely in good faith on the certifi- cate of title of the mortgagor of the property given as security and in the absence of any sign that might arouse suspicion, has no obligation to undertake further investigation. Hence, even

if the mortgagor is not the rightful owner of, or does not have a valid title to, the mortgaged property, the mortgagee or transferee in good faith is nonetheless entitled to protection.

However, the rights of the parties to the present case are defined not by the determination of whether or not HSLB is a mortgagee in good faith, but of whether or not HSLB is a purchaser in

good

purchaser.

is

faith.

And,

HSLB

not

such

a

A purchaser in good faith is defined as one who buys a property without notice that some other

person has a right to, or interest in, the property and pays full and fair price at the time of pur-

chase or before he has notice of the claim or interest of other persons in the property. 19 crallaw- library

When a prospective buyer is faced with facts and circumstances as to arouse his suspicion, he must take precautionary steps to qualify as a purchaser in good faith. In Spouses Mathay v.

CA, 20 we determined the duty of a prospective buyer:chanRoblesVirtualawlibrary Although it is a recognized principle that a person dealing on a registered land need not go be- yond its certificate of title, it is also a firmly settled rule that where there are circumstances which would put a party on guard and prompt him to investigate or inspect the property being sold to him, such as the presence of occupants/tenants thereon, it is of course, expected from

the purchaser of a valued piece of land to inquire first into the status or nature of possession of the occupants, i.e., whether or not the occupants possess the land en concepto de dueño, in the concept of the owner. As is the common practice in the real estate industry, an ocular inspec- tion of the premises involved is a safeguard a cautious and prudent purchaser usually takes. Should he find out that the land he intends to buy is occupied by anybody else other than the seller who, as in this case, is not in actual possession, it would then be incumbent upon the pur- chaser to verify the extent of the occupant’s possessory rights. The failure of a prospective 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.

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 Pendens. However, at the time HSLB purchased the subject property, the Notice of Lis Pendens was already annotated on

title. 21 crallawlibrary

the

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 a real property is in litigation, serving as a warning that anyone who acquires an interest over the property does so at his/her

own risk, or that he/she gambles on the result of the litigation over the property. 22 It is a warn- ing to prospective buyers to take precautions and investigate the pending litigation.

The purpose of a notice of lis pendens is to protect the rights of the registrant while the case is pending resolution or decision. With the notice of lis pendens duly recorded and remaining un- cancelled, the registrant could rest secure that he/she will not lose the property or any part

litigation.

thereof

during

The doctrine of lis pendens is founded upon reason of public policy and necessity, the purpose of which is to keep the subject matter of the litigation within the Court’s jurisdiction until the judgment or the decree have been entered; otherwise, by successive alienations pending the

litigation, its judgment or decree shall be rendered abortive and impossible of execution. 23 cral-

lawlibrary

Indeed, at the time HSLB bought the subject property, HSLB had actual knowledge of the anno- tated Notice of Lis Pendens. Instead of heeding the same, HSLB 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. As correctly found by the CA, “the notice of lis pen- dens 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 concern- ing the same property and thus, the title issued in its favor was subject to the outcome of said

litigation.” 24 crallawlibrary

This ruling is in accord with Rehabilitation Finance Corp. v. Morales, 25 which underscored the

significance of a lis pendens, then defined in Sec. 24, Rule 7 now Sec. 14 of Rule 13 in relation to

a mortgage priorly annotated on the title covering the property. Thus:chanRoblesVirtualawli-

brary

The notice of lis pendens in question was annotated on the back of the certificate of title as a necessary incident of the civil action to recover the ownership of the property affected by it. The mortgage executed in favor of petitioner corporation was annotated on the same title prior to the annotation of the notice of lis pendens; but when petitioner bought the property as the highest bidder at the auction sale made as an aftermath of the foreclosure of the mortgage, the title already bore the notice of lis pendens. Held: While the notice of lis pendens cannot affect petitioner’s right as mortgagee, because the same was annotated subsequent to the mortgage,

yet the said notice affects its right as purchaser because notice of lis pendens simply means that

a certain property is involved in a litigation and serves as a notice to the whole world that one

who buys the same does so at his own risk. 26 crallawlibrary The subject of the lis pendens on the title of HSLB’s vendor, Delgado, is the “Reformation case” filed against Delgado by the herein respondents. The case was decided with finality by the CA in favor of herein respondents. The contract of sale in favor of Delgado was ordered reformed in- to a contract of mortgage. By final decision of the CA, HSLB’s vendor, Delgado, is not the prop- erty owner but only a mortgagee. As it turned out, Delgado could not have constituted a valid mortgage on the property. That the mortgagor be the absolute owner of the thing mortgaged is

an essential requisite of a contract of mortgage. Article 2085 (2) of the Civil Code specifically

so:chanRoblesVirtualawlibrary

Art. 2085. The following requisites are essential to the contracts of pledge and mortgage:chan-

RoblesVirtualawlibrary

says

x

x

x

x

(2) That the pledgor or mortagagor be the absolute owner of the thing pledged or mortgaged.

Succinctly, for a valid mortgage to exist, ownership of the property is an essential requi-

site. 27 crallawlibrary

Reyes v. De Leon 28 cited the case of Philippine National Bank v. Rocha 29 where it was pro- nounced that “a mortgage of real property executed by one who is not an owner thereof at the

time of the execution of the mortgage is without legal existence.” Such that, according to DBP

v. Prudential Bank, 30 there being no valid mortgage, there could also be no valid foreclosure or

sale.

valid

auction

We go back to Bank of Commerce v. San Pablo, Jr. 31 where the doctrine of mortgagee in good faith, upon which petitioner relies, was clarified as “based on the rule that all persons dealing with property covered by the Torrens Certificate of Title, as buyers or mortgagees, are not re- quired to go beyond what appears on the face of the title. In turn, the rule is based on “x x x public interest in upholding the indefeasibility of a certificate of title, as evidence of lawful own-

ership of the land or of any encumbrance thereon.” 32 crallawlibrary

Insofar as the HSLB is concerned, there is no longer any public interest in upholding the indefea- sibility of the certificate of title of its mortgagor, Delgado. Such title has been nullified in a deci- sion that had become final and executory. Its own title, derived from the foreclosure of Delga- do’s mortgage in its favor, has likewise been nullified in the very same decision that restored the certificate of title in respondents’ name. There is absolutely no reason that can support the prayer of HSLB to have its mortgage lien carried over and into the restored certificate of title of respondents.

WHEREFORE, the Petition is DENIED. The Decision of the Court of Appeals in CA-G.R. CV No.

87540

is AFFIRMED.

SO

ORDERED.

G.R. No. 168655

July 2, 2010

J. CASIM CONSTRUCTION SUPPLIES, INC., Petitioner, vs. REGISTRAR OF DEEDS OF LAS PIÑAS, Respondent. INTESTATE ESTATE OF BRUNEO F. CASIM, (Purported) Intervenor. D E C I S I O N

PERALTA, J.:

This is a petition for review under Rule 45 of the Rules of Court, taken directly on a pure ques-

tion of law from the April 14, 2005 Resolution 1 and June 24, 2005 Order 2 issued by the Regional

Trial Court (RTC) of Las Piñas City, Branch 253 in Civil Case No. LP-04-0071 3 one for cancella- tion of notice of lis pendens. The assailed Resolution dismissed for lack of jurisdiction the peti- tion filed by J. Casim Construction Supplies Inc. for cancellation of notice of lis pendens anno- tated on its certificate of title, whereas the assailed Order denied reconsideration. The facts follow.

Petitioner, represented herein by Rogelio C. Casim, is a duly organized domestic corporation 4 in

whose name Transfer Certificate of Title (TCT) No. 49936, 5 covering a 10,715-square meter land was registered. Sometime in 1982, petitioner acquired the covered property by virtue of a Deed

of Absolute Sale 6 and as a result the mother title, TCT No. 30459 was cancelled and TCT No.

49936 was issued in its stead. 7

On March 22, 2004, petitioner filed with the RTC of Las Piñas City, Branch 253 an original peti- tion for the cancellation of the notice of lis pendens, as well as of all the other entries of invol- untary encumbrances annotated on the original copy of TCT No. 49936. Invoking the inherent power of the trial court to grant relief according to the petition, petitioner prayed that the no- tice of lis pendens as well as all the other annotations on the said title be cancelled. Petitioner claimed that its owner's duplicate copy of the TCT was clean at the time of its delivery and that it was surprised to learn later on that the original copy of its TCT, on file with the Register of Deeds, contained several entries which all signified that the covered property had been sub-

jected to various claims. The subject notice of lis pendens is one of such entries. 8 The notations appearing on the title's memorandum of encumbrances are as follows:

Entry No. 81-8334/T-30459 - ADVERSE CLAIM - In an affidavit duly subscribed and sworn to, BRUNO F. CASIM claims, among other things, that he has the right and interest over the prop- erty described herein in accordance with Doc. No. 336; Page No. 69; Book No. 1; s. of 1981 of Not. Pub. of Makati, M.M., Romarie G. Villonco, dated August 4, 1981. Date of inscription - Aug. 5, 1981 - 2:55 p.m. (Sgd) VICTORIANO S. TORRES, Actg. Reg. of Deeds Entry No. 82-4676/T-49936 - CANCELLATION OF ADVERSE CLAIM inscribed hereon under Entry No. 81-8334/T-30459 in accordance with Doc. No. 247; Page 50; Book No. CXLI; s. of 1982 of Not. Pub. of Pasay City, M.M., Julian G. Tubig, dated April 21, 1982. Date of inscription - April 21, 1982 - 8:40 a.m. (Sgd) VICTORIANO S. TORRES, Actg. Reg. of Deeds Entry No. 82-4678/T-49936 - AFFIDAVIT - In accordance with the affidavit duly executed by the herein registered owners, this title is hereby cancelled and in lieu thereof TCT No. 49936/T-228 has been issued in accordance with Doc. No. 249; Page No. 80; Book No. CXLI; s. of 1982 of Not. Pub. of Pasay City, M.M., Julian G. Tubig, dated April 21, 1982. Date of inscription - April 21, 1982 - 8:44 a.m. (Sgd) VICTORIANO S. TORRES, Actg. Reg. of Deeds Entry No. 81-12423/T-30459 - NOTICE OF LIS PENDENS: By virtue of the notice of Lis Pendens presented and filed by CESAR P. MANALAYSAY, counsel for the plaintiff, notice is hereby given that a petition for review has been commenced and now pending in the Court of First Instance of Rizal, Branch XXIX, Pasay, M.M, in Civil Case No. LP-9438-P, BRUNEO F. CASIM, Plaintiff, vs. SPS. JESUS A. CASIM & MARGARITA CHAVEZ and Sps. Urbano Nobleza and Cristita J. Nobleza, and Filomena C. Antonio, Defendants, involving the property described herein. Date of the instrument - Sept. 17, 1981 Date of the inscription - Sept. 18, 1981 - 3:55 p.m.

(Sgd) VICTORIANO S. TORRES, Actg. Reg. of Deeds 9 To justify the cancellation, petitioner alleged that the notice of lis pendens, in particular, was a forgery judging from the inconsistencies in the inscriber's signature as well as from the fact that the notice was entered non-chronologically, that is, the date thereof is much earlier than that of the preceding entry. In this regard, it noted the lack of any transaction record on file with the

Register of Deeds that would support the notice of lis pendens annotation. 10 Petitioner also stated that while Section 59 of Presidential Decree (P.D.) No. 1529 requires the carry-over of subsisting encumbrances in the new issuances of TCTs, petitioner's duplicate copy of the title did not contain any such carry-over, which means that it was an innocent purchaser for value, especially since it was never a party to the civil case referred to in the notice of lis pendens. Lastly, it alludes to the indefeasibility of its title despite the fact that the mother title,

TCT No. 30459, might have suffered from certain defects and constraints. 11

The Intestate Estate of Bruneo F. Casim, representing Bruneo F. Casim, intervened in the instant

case and filed a Comment/Opposition 12 in which it maintained that the RTC of Las Piñas did not have jurisdiction over the present action, because the matter of canceling a notice of lis pen- dens lies within the jurisdiction of the court before which the main action referred to in the no- tice is pending. In this regard, it emphasized that the case referred to in the said notice had al- ready attained finality as the Supreme Court had issued an entry of judgment therein and that

the RTC of Makati City had ordered execution in that case. 13 It cited the lack of legal basis for the petition in that nothing in the allegations hints at any of the legal grounds for the cancella-

tion of notice of lis pendens. 14 And, as opposed to petitioner's claim that there was no carry- over of encumbrances made in TCT No. 49936 from the mother title TCT No. 30459, the latter would show that it also had the same inscriptions as those found in TCT No. 49936 only that they were entered in the original copy on file with the Register of Deeds. Also, as per Certifica-

tion 15 issued by the Register of Deeds, petitioner's claim of lack of transaction record could not stand, because the said certification stated merely that the corresponding transaction record could no longer be retrieved and might, therefore, be considered as either lost or destroyed. On April 14, 2005, the trial court, ruling that it did not have jurisdiction over the action, resolved to dismiss the petition and declared that the action must have been filed before the same court and in the same action in relation to which the annotation of the notice of lis pendens had been sought. Anent the allegation that the entries in the TCT were forged, the trial court pointed out that not only did petitioner resort to the wrong forum to determine the existence of forgery, but also that forgery could not be presumed merely from the alleged non-chronological entries in the TCT but instead must be positively proved. In this connection, the trial court noted peti- tioner's failure to name exactly who had committed the forgery, as well as the lack of evidence

on which the allegation could be based. 16 The petition was disposed of as follows:

IN VIEW OF THE FOREGOING, the instant petition is hereby DISMISSED.

SO ORDERED. 17

Petitioner moved for reconsideration, 18 but it was denied in the trial court's June 24, 2005 Or-

der. 19 Now, raising the purely legal question of whether the RTC of Las Piñas City, Branch 253 has ju- risdiction in an original action to cancel the notice of lis pendens annotated on the subject title as an incident in a previous case, petitioner, in this present petition, ascribes error to the trial court in dismissing its petition for cancellation. An action for cancellation of notice of lis pen- dens, petitioner believes, is not always ancillary to an existing main action because a trial court has the inherent power to cause such cancellation, especially in this case that petitioner was

never a party to the litigation to which the notice of lis pendens relates. 20 Petitioner further posits that the trial court has committed an error in declining to rule on the allegation of for- gery, especially since there is no transaction record on file with the Register of Deeds relative to said entries. It likewise points out that granting the notice of lis pendens has been properly an- notated on the title, the fact that its owner's duplicate title is clean suggests that it was never a

party to the civil case referred to in the notice. 21 Finally, petitioner posits that TCT No. 49936 is indefeasible and holds it free from any liens and encumbrances which its mother title, TCT No.

30459, might have suffered. 22 The Intestate Estate of Bruneo F. Casim (intervenor), in its Comment on the present petition, re- iterates that the court a quo does not have jurisdiction to order the cancellation of the subject

notice of lis pendens because it is only the court exercising jurisdiction over the property which may order the same that is, the court having jurisdiction over the main action in relation to which the registration of the notice has been sought. Also, it notes that even on the assumption that the trial court had such jurisdiction, the petition for cancellation still has no legal basis as petitioner failed to establish the grounds therefor. Also, the subject notice of lis pendens was validly carried over to TCT No. 49936 from the mother title, TCT No. 30459.

its Reply, 23 petitioner, in a semantic slur, dealt primarily with the supposed inconsistencies in

In

intervenor's arguments. Yet the core of its contention is that the non-chronological annotation

of the notice stands to be the best evidence of forgery. From this, it advances the notion that

forgery of the notice of lis pendens suffices as a ground for the cancellation thereof which may be availed of in an independent action by the aggrieved party. The petition is utterly unmeritorious. Lis pendens which literally means pending suit refers to the jurisdiction, power or control which a court acquires over the property involved in a suit, pending the continuance of the ac-

tion, and until final judgment. 24 Founded upon public policy and necessity, lis pendens is in- tended to keep the properties in litigation within the power of the court until the litigation is terminated, and to prevent the defeat of the judgment or decree by subsequent aliena-

tion. 25 Its notice is an announcement to the whole world that a particular property is in litiga- tion and serves as a warning that one who acquires an interest over said property does so at his

own risk, or that he gambles on the result of the litigation over said property. 26

A notice of lis pendens, once duly registered, may be cancelled by the trial court before which

the action involving the property is pending. This power is said to be inherent in the trial court

and is exercised only under express provisions of law. 27 Accordingly, Section 14, Rule 13 of the

1997 Rules of Civil Procedure authorizes the trial court to cancel a notice of lis pendens where it

is

properly shown that the purpose of its annotation is for molesting the adverse party, or that

it

is not 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 exceptional circumstan- ces, such as: where such circumstances are imputable to the party who caused the annotation; where the litigation was unduly prolonged to the prejudice of the other party because of sev- eral continuances procured by petitioner; where the case which is the basis for the lis pen- dens notation was dismissed for non prosequitur on the part of the plaintiff; or where judgment was rendered against the party who caused such a notation. In such instances, said notice is

deemed ipso facto cancelled. 28

In theorizing that the RTC of Las Piñas City, Branch 253 has the inherent power to cancel the no-

tice of lis pendens that was incidentally registered in relation to Civil Case No. 2137, a case which had been decided by the RTC of Makati City, Branch 62 and affirmed by the Supreme Court on appeal, petitioner advocates that the cancellation of such a notice is not always ancil- lary to a main action. The argument fails. From the available records, it appears that the subject notice of lis pendens had been recorded

at

the instance of Bruneo F. Casim (Bruneo) in relation to Civil Case No. 2137 29 one for annul-

ment of sale and recovery of real property which he filed before the RTC of Makati City, Branch 62 against the spouses Jesus and Margarita Casim, predecessors-in-interest and stock- holders of petitioner corporation. That case involved the property subject of the present case, then covered by TCT No. 30459. At the close of the trial on the merits therein, the RTC of Maka-

ti

rendered a decision adverse to Bruneo and dismissed the complaint for lack of merit. 30 Ag-

grieved, Bruneo lodged an appeal with the Court of Appeals, docketed as CA-G.R. CV No. 54204,

which reversed and set aside the trial court's decision. 31 Expectedly, the spouses Jesus and Mar- garita Casim elevated the case to the Supreme Court, docketed as G.R. No. 151957, but their

appeal was dismissed for being filed out of time. 32

A

necessary incident of registering a notice of lis pendens is that the property covered thereby

is

effectively placed, until the litigation attains finality, under the power and control of the court

having jurisdiction over the case to which the notice relates. 33 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. 34 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 inher-

ent as the same is merely ancillary to the main action. 35 1avvphi1

Thus, in Vda. de Kilayko v. Judge Tengco, 36 Heirs of Maria Marasigan v. Intermediate Appellate

Court 37 and Tanchoco v. Aquino, 38 it was held that the precautionary notice of lis pendens may be ordered cancelled at any time by the court having jurisdiction over the main action inasmuch

as the same is merely an incident to the said action. The pronouncement in Heirs of Eugenio Lo-

pez, Sr. v. Enriquez, citing Magdalena Homeowners Association, Inc. v. Court of Appeals, 39 is equally instructive The notice of lis pendens x x x is ordinarily recorded without the intervention of the court where the action is pending. The notice is but an incident in an action, an extrajudicial one, to be sure. It does not affect the merits thereof. It is intended merely to constructively advise, or warn, all people who deal with the property that they so deal with it at their own risk, and whatever rights they may acquire in the property in any voluntary transaction are subject to the results of the action, and may well be inferior and subordinate to those which may be finally de- termined and laid down therein. The cancellation of such a precautionary notice is therefore al- so a mere incident in the action, and may be ordered by the Court having jurisdiction of it at

any given time. x x x 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 no-

tice. But even so, the petition could no longer be expected to pursue before the proper forum inas- much 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 ex- ists substantial and genuine claims against the parties relative to the main case subject of the

notice of lis pendens. 41 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 ap- peal, the notice has already been rendered functus officio. The rights of the parties, as well as of their successors-in-interest, petitioner included, in relation to the subject property, are hence to be decided according the said final decision. To be sure, petitioner is not altogether precluded from pursuing a specific remedy, only that

the suitable course of action legally available is not judicial but rather administrative. Section 77

of P.D. No. 1529 provides the appropriate measure to have a notice of lis pendens cancelled out

40

from the title, that is by presenting to the Register of Deeds, after finality of the judgment ren- dered in the main action, a certificate executed by the clerk of court before which the main ac- tion was pending to the effect that the case has already been finally decided by the court, stat- ing the manner of the disposal thereof. Section 77 materially states:

SEC. 77. Cancellation of lis pendens. - Before final judgment, a notice of lis pendens may be can- celled upon order of the court, after proper showing that the notice is for the purpose of mo- lesting the adverse party, or that it is not necessary to protect the rights of the party who caused it to be registered. It may also be cancelled by the Register of Deeds upon verified peti- tion of the party who caused the registration thereof. At any time after final judgment in favor of the defendant, or other disposition of the action such as to terminate finally all rights of the plaintiff in and to the land and/or buildings involved, in any case in which a memorandum or notice of lis pendens has been registered as provided in the preceding section, the notice of lis pendens shall be deemed cancelled upon the registra- tion of a certificate of the clerk of court in which the action or proceeding was pending stating

the manner of disposal thereof. 42 Lastly, petitioner tends to make an issue out of the fact that while the original TCT on file with the Register of Deeds does contain the annotations and notice referred to in this petition, its owner's duplicate copy of the title nevertheless does not reflect the same non-chronological in- scriptions. From this, petitioner submits its puerile argument that the said annotations appear- ing on the original copy of the TCT are all a forgery, and goes on to assert the indefeasibility of its Torrens title as well as its supposed status as an innocent purchaser for value in good faith. Yet we decline to rule on these assumptions principally because they raise matters that call for factual determination which certainly are beyond the competence of the Court to dispose of in this petition. All told, we find that the RTC of Las Piñas City, Branch 253 has committed no reversible error in issuing the assailed Resolution and Order dismissing for lack of jurisdiction the petition for can- cellation of notice of lis pendens filed by petitioner, and in denying reconsideration. WHEREFORE, the petition is DENIED. The April 14, 2005 Resolution and the June 24, 2005 Order issued by the Regional Trial Court of Las Piñas City, Branch 253, in Civil Case No. LP-04-0071, are hereby AFFIRMED. SO ORDERED.

G.R. No. 170172

ARLYN* PINEDA, Petitioner, vs. JULIE C. ARCALAS, Respondent.

D E C I S I O N

CHICO-NAZARIO, J.:

This is a Special Civil Action for Certiorari under Rule 65 of the Rules of Court, assailing the Reso-

lution 1 dated 25 January 2005, rendered by the Court of Appeals in C.A. G.R. CV No. 82872, dis- missing the appeal filed by petitioner Arlyn Pineda (Pineda) for failure to file her appellant’s

brief. Under the assailed Resolution, the Order 2 promulgated by Branch 27 of the Regional Trial Court of Santa Cruz, Laguna (Laguna RTC), on 2 February 2004, granting the petition of respond- ent Julie Arcalas (Arcalas) for the cancellation of the Affidavit of Adverse Claim annotated at the back of Transfer Certificate of Title (TCT) No. T-52319 under Entry No. 324094, became final.

November 23, 2007

The subject property consists of three parcels of land, which are described as Lot No. 3762-D with an area of 42,958 square meters, Lot No. 3762-E with an area of 4,436 square meters, and Lot No. 3762-F with an area of 2,606 square meters, the total area of which consists of 50,000 square meters. These three lots are portions of Lot No. 3762, registered in the name of Spouses Mauro Lateo and Encarnacion Evangelista (spouses Lateo) under TCT No. T-52319, with a total area of 74,708 square meters, located at Barrios Duhat and Labuin, Santa Cruz, Laguna. A cer- tain Victoria Tolentino bought the said property from the Spouses Lateo. Sometime later, Civil Case No. Q-96-27884, for Sum of Money, was instituted by Arcalas against Victoria Tolentino. This case stemmed from an indebtedness evidenced by a promissory note and four post-dated

checks later dishonored, which Victoria Tolentino owed Arcalas. 3 On 9 September 1997, Branch 93 of the Quezon City RTC, rendered judgment in favor of Arcalas

and against Victoria Tolentino. 4

On 15 December 1997, Pineda bought the subject property from Victoria L. Tolentino. 5 Pineda alleged that upon payment of the purchase price, she took possession of the subject property by allowing a tenant, Rodrigo Bautista to cultivate the same. However, Pineda failed to register

the subject property under her name. To execute the judgment, the Quezon City RTC levied upon the subject property and the Notice of Levy on Alias Writ of Execution dated 12 January 1999 was annotated as Entry No. 315074, in

relation to Entry No. 319362, at the back of TCT No. T-52319. 7 Asserting ownership of the subject property, Pineda filed with the Deputy Sheriff of the Quezon City RTC an Affidavit of Title and Third Party Claim. Arcalas filed a motion to set aside Pineda’s Affidavit of Title and Third Party Claim, which on 3 November 1999, the Quezon City RTC granted, to wit:

[Arcalas] showed that her levies on the properties were duly registered while the alleged Deed of Absolute Sale between the defendant Victoria L. Tolentino and Analyn G. Pineda was not. The levies being superior to the sale claimed by Ms. Pineda, the court rules to quash and set aside her Affidavit of Title and Third Party Claim. ACCORDINGLY, the motion is granted. The Affidavit of Title and Third-Party Claim is set aside to

allow completion of execution proceedings. 8

On 2 February 2000, after the finality 9 of the Order of the Quezon City RTC quashing Pineda’s third-party claim, Pineda filed with the Office of the Register of Deeds of Laguna another Affida- vit of Third Party Claim and caused the inscription of a notice of adverse claim at the back of

TCT No. T-52319 under Entry No. 324094. 10 On 3 February 2000, Arcalas and Leonardo Byron P. Perez, Jr. purchased Lot No. 3762 at an auc- tion sale conducted by the Deputy Sheriff of Quezon City. The sale was evidenced by a Sheriff’s Certificate of Sale issued on the same day and registered as Entry No. 324225 at the back of TCT

No. T-52319. 11 Arcalas then filed an action for the cancellation of the entry of Pineda’s adverse claim before the Laguna RTC. The Laguna RTC ordered the cancellation of the Notice of Adverse Claim anno- tated as Entry No. 324094 at the back of TCT No. 52319 on the ground of res judicata:

The court order emanating from Branch 91 of the Regional Trial Court of Quezon City having be- come final and executory and no relief therefrom having been filed by [Pineda], the said order granting the [Arcalas’s] "Motion to Set Aside Affidavit of Title and 3rd Party Claim" should be given due course and the corresponding annotation at the back of TCT No. T-52319 as Entry No.

324094 dated February 2, 2000 should be expunged accordingly. 12

6

Pineda appealed the Order of the Laguna RTC before the Court of Appeals under Rule 44 of the

Rules of Court. In a Resolution dated 25 January 2005, 13 the appellate court dismissed the ap- peal and considered it abandoned when Pineda failed to file her appellant’s brief. Pineda filed a Motion for Reconsideration, wherein it was plainly stated that Pineda’s counsel

overlooked the period within which he should file the appellant’s brief. 14 The said motion was denied in a Resolution dated 26 May 2005. Pineda filed a Second Motion for Reconsideration,

which was denied on 7 October 2005. 15 No appellant’s brief was attached to either motion for reconsideration.

Hence, the present Petition raising the following issues: 16

I.

WHETHER THE LEVY ON ALIAS WRIT OF EXECUTION ISSUED BY THE REGIONAL TRIAL COURT OF QUEZON CITY IN CIVIL CASE NO. Q-96-27884 MAY EXEMPT THE PORTION BOUGHT BY [PINEDA] FROM VICTORIA TOLENTINO; [and]

II.

WHETHER THE POSSESSION OF [PINEDA] OF THE 5 HECTARES PORTION OF LOT 3762 IS AL- READY EQUIVALENT TO A TITLE DESPITE THE ABSENCE OF REGISTRATION. This petition must be dismissed. The Court of Appeals properly dismissed the case for Pineda’s failure to file an appellant’s brief.

This is in accordance with Section 7 of Rule 44 of the Rules of Court, which imposes upon the appellant the duty to file an appellant’s brief in ordinary appealed cases before the Court of Ap- peals, thus:

Section 7. Appellant’s brief.—It shall be the duty of the appellant to file with the court, within forty-five (45) days from receipt of the notice of the clerk that all the evidence, oral and docu- mentary, are attached to the record, seven (7) copies of his legibly typewritten, mimeographed or printed brief, with proof of service of two (2) copies thereof upon the appellee. In special cases appealed to the Court of Appeals, such as certiorari, prohibition, mandamus, quo warranto and habeas corpus cases, a memorandum of appeal must be filed in place of an appellant’s brief as provided in Section 10 of Rule 44 of the Rules of Court Section 10. Time of filing memoranda in special cases.—In certiorari, prohibition, mandamus, quo warranto and habeas corpus cases, the parties shall file, in lieu of briefs, their respective memoranda within a non-extendible period of thirty (30) days from receipt of the notice issued by the clerk that all the evidence, oral and documentary, is already attached to the record. The failure of the appellant to file his memorandum within the period therefor may be a ground for dismissal of the appeal. Non-filing of an appellant’s brief or a memorandum of appeal is one of the explicitly recognized grounds of dismissal of the appeal in Section 1 of Rule 50 of the Rules of Court:

Section 1. Grounds for dismissal of appeal. - An appeal may be dismissed by the Court of Ap- peals, on its own motion or on that of the appellee, on the following grounds:

x x x x (e) Failure of the appellant to serve and file the required number of copies of his brief or memo- randum within the time provided by these Rules; This Court provided the rationale for requiring an appellant’s brief in Enriquez v. Court of Ap-

peals 17 :

[T]he appellant’s brief is mandatory for the assignment of errors is vital to the decision of the appeal on the merits. This is because on appeal only errors specifically assigned and properly ar- gued in the brief or memorandum will be considered, except those affecting jurisdiction over the subject matter as well as plain and clerical errors. Otherwise stated, an appellate court has