3-involuntary Dealings-sajonas-tan.docx

[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.

Melchor R. Flores for petitioners. Padilla Law Office for private respondents.

SYLLABUS 1. CIVIL LAW; LAND REGISTRATION ACT; ANNOTATION OF ADVERSE CLAIM; PURPOSE. — 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 496 (now P.D. 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. 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. The registration of an adverse claim is expressly recognized under Section 70 of P.D. No. 1529. 2. ID.; ID.; REGISTRATION, OPERATIVE ACT WHICH GIVES VALIDITY TO TRANSFER OR CREATES A LIEN UPON THE LAND. — 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 behind 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 title. 3. ID.; ID.; ID.; SUBSEQUENT SALE CANNOT PREVAIL OVER ADVERSE CLAIM DULY ANNOTATED ON TITLE. — Although we have relied on the foregoing rule, in many cases coming before us, the same, however, 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. 4. ID.; P.D. 1529 (PROPERTY REGISTRATION DECREE); ALTHOUGH A PURCHASER IS NOT REQUIRED TO EXPLORE FURTHER THAN WHAT THE TORRENS TITLE INDICATES, HE IS BOUND BY THE LIENS AND ENCUMBRANCES ANNOTATED THEREON. — 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 failure. 5. STATUTORY CONSTRUCTION; CARE SHOULD BE TAKEN THAT EVERY PART THEREOF BE GIVEN EFFECT AND CONSTRUCTION THAT COULD RENDER A PROVISION INOPERATIVE SHOULD BE AVOIDED. — In construing the law, care should be taken that every part thereof be given effect and a construction that could render a provision inoperative should be avoided, and inconsistent provisions should be reconciled whenever possible as parts of a harmonious whole. 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. 6. ID.; STATUTE'S CLAUSES AND PHRASES MUST NOT BE TAKEN SEPARATELY BUT IN RELATION TO THE STATUTE'S TOTALITY. — 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. 7. CIVIL LAW; P.D. 1529 (PROPERTY REGISTRATION DECREE); ADVERSE CLAIM; EFFECTIVITY, NOT LIMITED TO THIRTY DAYS. — 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 provides: "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 factolose 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 automatically terminated by mere lapse of time, the law would not have required the party in interest to do a useless act. The law, taken together, simply means that the cancellation of the adverse claim is still necessary to render it ineffective, otherwise, 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 cancellation is no longer necessary and the process of cancellation would be a useless ceremony. 8. ID.; ID.; ID.; 15 DAY PERIOD, IMMATERIAL IN DETERMINING VALIDITY OR INVALIDITY OF ADVERSE CLAIM. — It should be noted that the law employs the phrase "may be cancelled" which obviously indicates, as inherent in its decision making power, that the court may or may not order the cancellation of an adverse claim, notwithstanding 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 evidence at a proper hearing for the court to determine whether it will order the cancellation of the adverse claim or not. 9. ID.; ID.; ID.; HEARING REQUIRED IN DETERMINING VALIDITY THEREOF; REASON. — 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. 10. ID.; ID.; ADVERSE CLAIM; PREVAILS OVER A NOTICE OF LEVY LATER ANNOTATED ON A TITLE. — The disputed inscription of 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 annotated the notice of levy on execution thereto. Consequently, he is 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 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 Section 16, Rule 39 of the Rules of Court. 11. REMEDIAL LAW; EVIDENCE; FINDINGS OF FACTS OF THE TRIAL COURT, GENERALLY UPHELD ON APPEAL. — 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 crossexamination on April 21, 1988." 12. CIVIL LAW; OBLIGATIONS AND CONTRACTS; SALE; PURCHASER IN GOOD FAITH AND FOR VALUE, CONSTRUED. — A purchaser in good faith and for value is one who buys property of another without notice that some other person has 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. Good faith consists in an honest intention to abstain from taking any unconscientious advantage of another. 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 Uychocdes 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. Sanssuch proof, the petitioners are deemed to be purchasers in good faith, and their interest in the subject property must not be disturbed. 13. ID.; LAND REGISTRATION ACT; EVERY PURCHASER OF REGISTERED LAND IN GOOD FAITH TAKE AND HOLD THE SAME FREE FROM ANY AND ALL PRIOR CLAIMS, LIENS AND ENCUMBRANCES EXCEPT THOSE ANNOTATED ON THE TITLE AND THOSE EXPRESSLY MENTIONED IN THE LAW. — The Land Registration Act (Property Registration Decree) guarantees to every purchaser of registered land in good faith that they can take and hold the same free from any and all prior claims, liens and encumbrances except those set forth on the Certificate of Title and those expressly mentioned in the ACT as having been preserved against it. Otherwise, the efficacy of the conclusiveness of the Certificate of Title which the Torrens system seeks to insure would be futile and nugatory.

DECISION

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 Execution 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 R. 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. Sajonas 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 annotation 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 Uychocdes executed a Deed of Sale involving the property in question in favor of the Sajonas couple 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 acknowledged 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 moved for the issuance 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 annotated 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 carried 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 defendantappellant 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 complaint 2 in the Regional Trial Court of Rizal, Branch 71, against Domingo Pilares, the judgment creditor of the Uychocdes. The relevant portion of the complaint alleges: "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 plaintiffs is illegal and invalid and was made in utter bad faith, in view of the existence of the Adverse 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' demand; 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 counterclaim 4 on March 8, 1986, raising special and affirmative defenses, the relevant portions of which are 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 City proceeding from a decision rendered in Civil Case No. 28859 in favor of herein defendant against Ernesto 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 without any legal force and effect because it was done in fraud of a judgment creditor, the defendant 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 couple, 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 Uychocde when the same was annotated on the said title, an earlier Affidavit of Adverse Claim was annotated on the same title by the plaintiffs who earlier bought said property from the Uychocdes. 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 adverse 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 Certificate 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, 9 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 ordered 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 INCONSISTENCY 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 is not otherwise provided for by the Land Registration Act or Act 496 (now P.D. 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. 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 interpreted 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 respondent 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 compromise agreement. 18 The respondent appellate court upheld private respondents' theory when it ruled: "The above stated 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 registration. However, under the provisions of Section 70 of P.D. 1529, an adverse claim shall be effective 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 September 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 interpretation 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 without 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 sale. 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 February 12, 1985. In the case of Landig vs. U.S. Commercial Co., 89 Phil 638 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: Section 51. Conveyance and other dealings by the 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 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 behind 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 title.20 Although we have relied on the foregoing rule, in many cases coming before us, the same, however, 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 failure. 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 certificate 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 entitled 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 interest 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-existing 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 owner, 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 entitled 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 invalid, 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 annotation 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 of 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 discretion. 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 inconsistent 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 provides: "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 automatically terminated by mere lapse of time, the law would not have required the party in interest 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 or sections, and is animated by one general purpose and intent. Consequently, each part or section should be construed in connection with every other part or section so as to produce a harmonious whole. It is not proper to confine its intention to the one section construed. It is always an unsafe way of construing a statute or contract

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 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, otherwise, 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 cancellation 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 indicates, as inherent in its decision making power, that the court may or may not order the cancellation of an adverse claim, notwithstanding 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 evidence 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 interest 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 registered 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 hearing thereof and make the proper adjudication as justice and equity may warrant. And it is only when such claim is found unmeritorious that the registration of the adverse claim may be cancelled, thereby protecting the interest of the adverse claimant and giving notice and warning to third parties". 32 In sum the disputed inscription of 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 annotated the notice of levy on execution thereto. Consequently, he is 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 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:

"Section 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 thereby 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? A Yes, sir. Q That was shown to you the very first time that this lot was offered to you for sale? A Yes. Q After you were shown a copy of the title and after you were informed that they are desirous in selling the same, did you and your husband decide to buy the same? A No, we did not decide right after seeing the title. Of course, we visited. . . Q No, you just answer my question. You did not immediately decide? A Yes. Q When did you finally decide to buy the same? A After seeing the site and after verifying from the Register of Deeds in Marikina that it is free from encumbrances, that was the time we decided. Q How soon after you were offered this lot did you verify the exact location and the genuineness 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 any unconscientious advantage of another. 37 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 Uychocdes 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 purchaser of registered land in good faith that they can take and hold the same free from any and all prior claims, liens and encumbrances except those set forth on the Certificate of Title and those expressly mentioned in the ACT as having been preserved against it. Otherwise, the efficacy 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 February 15, 1989 finding for the cancellation of the notice of levy on execution from Transfer Certificate of Title No. N109417 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.

XXXX [G.R. No. 142687. July 20, 2006.]

SPOUSES FRANCISCO and BERNARDINA RODRIGUEZ, petitioners, vs. HON. COURT OF APPEALS, SPOUSES CHRISTOPHER and MA. ANGELICA BARRAMEDA, and SPOUSES ANTONIO and MARIDEL CALINGO, respondents.

DECISION

PUNO, J p: This is a petition for review of the decision of the Court of Appeals dated September 7, 1999 in CA-G.R. CV No. 48772 and its resolution dated March 31, 2000. The Court of Appeals reversed the decision of the Regional Trial Court of Makati in Civil Case No. 92-3524. The facts show that herein respondent Spouses Antonio and Maridel Calingo (respondents Calingo) were the registered owners of a house and lot located at No. 7903 Redwood Street, Marcelo Green Village, Parañaque, Metro Manila. The property was mortgaged to the Development Bank of the Philippines, which mortgage was later absorbed by the Home Mutual Development Fund (HMDF) or Pag-ibig. On April 27, 1992, respondents Calingo and respondent Spouses Christopher and Ma. Angelica Barrameda (respondents Barrameda) entered into a contract of sale with assumption of mortgage where the former sold to the latter the property in question and the latter assumed to pay the outstanding loan balance to the Development Bank of the Philippines. 1Respondents Barrameda issued two checks in the amounts of P150,000.00 and P528,539.76, for which respondents 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 affidavit of adverse claim on the property. The adverse claim was inscribed at the back of the certificate 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. 5 Respondents Barrameda moved into the property on June 2, 1992. SCHTac On July 13, 1992, a notice of levy with attachment on real property by virtue of a writ of execution 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 Francisco 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 Barrameda 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 acknowledged 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 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 petitioners' 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, respondents Barrameda served a Notice of Third Party Claim upon Sheriff Manuel C. Dolor, accompanied 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 petition 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 Calingos. 11 The Court of Appeals, however, reversed the decision of the trial court. Citing the ruling in Sajonas 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 execution. 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 registered owner thereof. Such notice of levy cannot prevail over the existing adverse claim inscribed on the certificate of title in favor of the Barramedas. . . . The court held, therefore, that the notice of levy could not prevail over respondents Barrameda's adverse claim. HAEDIS Petitioners moved for a reconsideration of the appellate court's ruling, but the motion was denied. Hence, this petition. Petitioners essentially argue that the remedy of a petition for quieting of title was not available to respondents Barrameda as they did not have a valid title to the property 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 assumption 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 favor 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 Decree No. 1529] expressly provides that the act of registration shall be the operative act to convey and affect the land. And Section 55 of the same Act requires the presentation of the owner'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 certificate 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 voluntary 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 adverse 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) CDAcIT

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 Calingo 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 Barrameda. 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 judgment 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 inquiry, 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 Presidential 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 description of the land in which the right or interest is claimed. . . . The deed of sale with assumption of mortgage executed by respondents Calingo and Barrameda is a registrable instrument. In order to bind third parties, it must be registered with the Office 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. cSTHAC SO ORDERED XXXX [G.R. No. 187824. November 17, 2010.]

FILINVEST DEVELOPMENT CORPORATION, petitioner, vs. GOLDEN HAVEN MEMORIAL PARK, INC., respondent.

[G.R. No. 188265. November 17, 2010.] GOLDEN HAVEN MEMORIAL PARK, INC., petitioner, vs. FILINVEST DEVELOPMENT CORPORATION, respondent.

DECISION

ABAD, J p: 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 judicial 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 proceeding 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. TEDaAc 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 declined 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 entitled 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 executed 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 examine not only the certificate of title, but also the seller's right and capacity to transfer any interest 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 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 notwithstanding, Filinvest still proceeded to buy Lots 1, 2, 6, and 12 on September 10, November 18, and December 29, 1989. ESDHCa Filinvest of course contends that, although the title carried a notice of adverse claim, that notice 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 property. 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 pertained 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 selling. 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 below as FDC) admits this fact in its petition, 7 thus: 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 surrender as well the other co-owner's duplicate copy of TCT No. (67462) RT1 which was issued to the heirs of Andres Aldana. Upon further inquiry, FDC came to know that the heirs of Andres Aldana sold Lot 8 and delivered their co-owner's duplicate copy of TCT No. (67462) RT-1 to Household Development Corporation, a sister company of respondent GHMPI. FDC made representations 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 Development Corporation refused to do so.

Filinvest's knowledge that GHM, a competitor, had bought Lot 6 in which Filinvest was interested, that GHM had annotated an adverse claim to that Lot 6, and that GHM had physical possession 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 developing 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 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 knowingly 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. EcICSA As to the award of exemplary damages, the Court sustains the CA ruling. This species of damages 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 damages 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.

XXXX FLOR MARTINEZ, represented by MACARIO MARTINEZ, authorized representative and Attorney-in-Fact, Petitioner,

- versus -

ERNESTO G. GARCIA and EDILBERTO M. BRUA, Respondents.

G.R. No. 166536 Present: CARPIO,* J., CORONA, J., Chairperson, VELASCO, JR., NACHURA, and PERALTA, JJ. Promulgated: February 4, 2010

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DECISION

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 Decision[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 Mandaluyong, 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 Government 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, respondent Brua mortgaged the subject property 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 Estate 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 uncanceled up to this time. 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. Respondent Garcia then paid GSIS the amount of P400,000.00 and, thus, the title to the subject property was released to him. 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 payment 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 Execution in favor ofpetitioner 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 inscribed 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 Brua 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 respondent 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 quieting of title, the dispositive portion of which reads: WHEREFORE, PREMISES CONSIDERED, the instant complaint is hereby dismissed for lack of merit 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 defendants attorney's fees in the amount of P50,000.00 each.

Accordingly, the judicial inscriptions particularly, Entry No. 3706/T-346026, annotation of certificate 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 annotated 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 P150,000.00, which he extended to respondent Brua; that respondent Garcia's adverse interest was merely that of a second mortgagee, as he was not yet the purchaser of the subject property as of said date; that when the judicial 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 ofpetitioner 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 property 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 annotation 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 Pilipinas 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 appellant's brief; thus, his appeal was considered abandoned and dismissed. Petitioner and Pilipinas Bank filed their respective appellees' briefs. On August 12, 2004, the CA reversed and set aside the RTC decision, the dispositive portion of which reads: 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), Entry No. 2881 (Notice of Levy on Execution in favor of Flor Martinez) and Entry No. 3706 (Certificate of Sale in favor of Flor Martinez) inscribed in TCT No. 346026 and carried over to TCT No. 5204, are hereby CANCELLED.[17] 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 behind 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 Entry 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 respondent 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. 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 petitioner 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 must consequently be upheld. Petitioners motion for reconsideration was denied by the CA in a Resolution dated November 18, 2004. Petitioner is now before us via a petition for certiorari under Rule 65, alleging grave abuse of discretion amounting to lack or excess of jurisdiction committed by the CA in issuing its assailed decision and resolution. 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 P150,000.00, 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 finality; 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 respondent Garcia's adverse claim in 1980 was not as a vendee of the property like in Sajonas, but merely as a mortgagee. 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 constitute grave abuse of discretion since it had legal basis; that any lien or adverse claim earlier inscribed 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 dated June 19, 2006. Petitioner filed her Reply, arguing that a petition for certiorari may be availed of where appeal is inadequate and ineffectual. 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 process 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 petitioner's motion for a new trial or reconsideration filed in due time after notice of the judgment.[19] In this case, petitioner received a copy of the CA Resolution denying her motion for reconsideration on November 24, 2004; and, thus, under Rule 45, she has 15 days from receipt of such resolution, 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 forcertiorari 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 judicial 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 certioraricannot 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 appeal 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 petition for review on certiorari under Rule 45.[23] While there are instances where the extraordinary remedy of certiorari may be resorted to despite 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 significant 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 his failure to abide by the rules.[26] 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 wisdom 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 certiorari, 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 certiorari.[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 would be clogged beyond measure.[29] Even if we consider this petition for certiorari under Rule 65, it must be shown that the CA committed grave abuse of discretion equivalent to lack or excess of jurisdiction, and not mere errors of judgment, for the petition to be granted. [30] As we said, certiorari is not a remedy for errors 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 title, to the extent of P150,000.00 secured by a real estate mortgage, and such adverse claim cannot 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 estate mortgages.[33] Respondent Garcia's adverse claim, which refers to the deed of mortgage executed by respondent 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 execution 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 P.D. 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 value 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 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] 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 Marikina on August 28, 1985; that when the respondent therein registered his notice levy on execution 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 between 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 petitioner'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 execution 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 execution 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 of the Sajonases. As in that case, the adverse claim of respondent Garcia based on the Deed of Mortgage executed by respondent Brua over the subject land in the formers favor was existing when the Notice of Levy on Execution was inscribed in favor of petitioner. Although the deed of sale between respondents Brua and Garcia was done after the notice of levy on execution and certificate of sale were inscribed on the title, it was clearly stated in the deed that the subject property 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 registered by respondent Garcia.

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.

XX [G.R. No. 141256. July 15, 2005.] ESTANISLAO PADILLA, JR., petitioner, vs. PHILIPPINE PRODUCERS' COOPERATIVE MARKETING ASSOCIATION, INC., respondent.

Reyes V. Alejano for petitioner. Adoniram Pamplona for respondent.

SYLLABUS

1. CIVIL LAW; REGISTRATION; PETITIONER'S RELIANCE ON SECTION 6, RULE 39 OF THE 1997 REVISED RULES OF CIVIL PROCEDURE IS MISPLACED; THE FACT OF LEVY AND SALE CONSTITUTES EXECUTION, AND NOT THE ACTION FOR THE ISSUANCE OF A NEW TITLE. — 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 execution, 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 decision 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. There is thus no doubt he had been divested of his ownership of the contested lots. 2. ID.; ID.; PROPERTY REGISTRATION DECREE (P.D. 1529); RESPONDENT'S PROPER RECOURSE OF ACTION IS A SEPARATE CADASTRAL ACTION INITIATED VIA A PETITION IN COURT UNDER SECTION 107 OF P.D. 1529. — Petitioner is correct in assailing as improper respondent's filing of a mere motion for the cancellation of the old TCTs and the issuance of new ones as a result of petitioner's refusal to surrender his owner's duplicate TCTs. Indeed, this called for a separate cadastral action initiated via petition under Section 107 of PD 1529, formerly Section 111 ofAct 496. 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 respondent in this case. 3. ID.; ID.; ID.; P.D. 1529 OR THE "PROPERTY REGISTRATION DECREE" IS THE LAW ON THE MATTER AND RESPONDENT SHOULD HAVE FOLLOWED IT; REASONS BEHIND THE LAW. — 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 petitioner) and prevents the fraudulent or mistaken conveyance of land, the value of which may exceed 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 certificates of title despite the final and executory judgment against him — respondent, on the other hand, cannot 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 issuance of new titles in its name.

DECISION

CORONA, J p: 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? 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 reconsideration, 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 (covered by TCT No. T-8053), all situated in Bago City. Respondent is a marketing cooperative which had a money claim against petitioner. ISCaDH On April 24, 1987 respondent filed a civil case against petitioner for collection of a sum of money in the Regional Trial Court of Bacolod City. 6 Despite receipt of summons on May 8 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 1990, sheriff Renato T. Arimas auctioned off the lots to satisfy the judgment, with respondent as the only bidder. On July 10, 1990, ex-officioprovincial sheriff and clerk of court Antonio Arbis executed a certificate of sale in favor of respondent. 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 involuntary 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 title and issue new ones in its name was in fact a real action and that the motion was procedurally 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 procedure for the cancellation of a certificate of title and the issuance of a new one, which is contained 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 issue 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 prescription and (2) whether or not the motion in question is the proper remedy for cancelling petitioner's certificates of title and new ones issued in its name. cAaDCE 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 vs. Court of Appeals, 19 Sarmiento Trading Corporation, predecessor-in-interest 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-ininterest, 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 Corporation. 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 praying that the petitioners be ordered to surrender the owner's duplicate copy of the title. The petitioners refused, claiming that respondent's cause of action had already prescribed. Ruling otherwise, 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 covered by TCT No. 14749 at the auction sale, private respondent's successor-in-interest had acquired a right over said title. The right acquired by the purchaser at an execution sale is inchoate and does not become absolute 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 redeem 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. Consequently, he had been, divested of all his rights to the property. (emphasis 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 execution, 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 decision 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 uncertainty 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 separate petition is an entirely different matter. Petitioner is correct in assailing as improper respondent's filing of a mere motion for the cancellation of the old TCTs and the issuance of new ones as a result of petitioner's refusal to surrender 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 certificate 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. aHTEIA

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 inBlancaflor by Sarmiento Trading which was in more or less the same situation as the respondent in this case: 24 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, acting as a cadastral court, for the cancellation of TCT No. 14749 in the name of Gaudencio Blancaflor 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 description, 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: Provided, however, That every new certificate entered under this section shall contain a memorandum 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 expiration 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 mortgage 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 equitable 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 petitioner) and prevents the fraudulent or mistaken conveyance of land, the value of which may exceed 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. CHTAIc 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 title despite the final and executory judgment against him — respondent, on the other hand, cannot 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 issuance 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 respondent is ANULLED. ||| XXX

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

VIEWMASTER CONSTRUCTION CORPORATION, petitioner, vs. HON. REYNALDO Y. MAULIT in his official capacity as Administrator of the Land Registration Authority; and EDGARDO CASTRO, Acting Register of Deeds of Las Piñas, Metro Manila, respondents.

Puno and Puno for petitioner. The Solicitor General for respondents.

SYNOPSIS Allen Roxas is one of the stockholders of State Investment Trust, Inc. In order to gain control and ownership of the said company, Roxas applied for a loan with First Metro Investment, Inc. First Metro agreed to grant the loan provided Roxas could procure a guarantor to secure the payment of the loan. Petitioner Viewmaster agreed to act as guarantor for the loan in consideration for its participation in a joint venture project to co-develop the real estate assets of State Investment Trust, Inc. As a result of the loans granted, Roxas gained control and ownership of the State Investment Trust, Inc. However, notwithstanding the lapse of two years since becoming the controlling stockholder, Roxas failed to take the necessary action to implement the joint venture project with Viewmaster to co-develop the subject properties. His continued inaction forced Viewmaster to file a complaint for specific performance against State Investment Trust, Inc., its subsidiary companies, and Allen Roxas. In connection with this, Viewmaster filed a Notice of Lis Pendens with the Register of Deeds for the annotation of a Notice ofLis Pendens on a particular title in the name of State Properties Corporation, a subsidiary of State Investment Trust, Inc. The respondent Register of Deeds of Las Piñas denied the request. On appeal, the Court of Appeals affirmed the ruling and 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 also ruled that a notice of lis pendens can only be registered when an action directly affects the title to or possession of the real property, which is not present in this case. Petitioner's complaint clearly warranted the registration of a notice of lis pendens. HAICTD The Supreme Court ruled that the petition is meritorious. According to the Court, there was substantial compliance with the requirement that the notice of lis pendens should contain a technical description of the property since such technical description appeared on the TCT, which was attached to and was made integral part of the Complaint and the Notice itself. The Court also agreed with the petitioner that a notice of lis pendens might involve actions that deal not only with the title or possession of a property, but even with the use or occupation thereof. Petitioner's complaint clearly warranted the registration of a notice of lis pendens.

SYLLABUS 1. REMEDIAL LAW; ACTIONS; NOTICE OF LIS PENDENS; TECHNICAL DESCRIPTION OF THE SUBJECT PROPERTY, REQUIRED; PURPOSE THEREOF. — 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. The Court stresses 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 distinguished and readily identified. 2. ID.; ID.; ID.; WHEN PROPER. — 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. In Magdalena Homeowners Association, Inc. vs. Court of Appeals, 184 SCRA 325, 329-330, April 17, 1990 per Narvasa, C.J., the Court did not confine the availability of lis pendens to cases involving the title to or possession of real property. Thus, it held: "According to Section 24, Rule 14 of the Rules of Court and Section 76 of Presidential Decree No. 1529, a notice of lis pendens is proper in the following cases, viz.: a) An action to recover possession of real estate; b) An action to quiet 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." InVillanueva vs. Court of Appeals, 281 SCRA 298, this Court further declared that the rule of lis pendens applied to suits brought "to establish an equitable estate, interest, or right in specific real property or to enforce any lien, charge, or encumbrance against it . . . ." Thus, this Court observed that the said notice pertained to the following: ". . . 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 adjustment of partnership interests." 3. ID.; ID.; ID.; PURPOSE THEREOF. — The Court must stress that the purposes of lis pendens is (1) to protect the rights of the party causing the registration thereof 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 litigation. One who deals with property subject of a notice of lis pendens cannot acquire better rights than those of his predecessors-in-interest. In Tanchoco vs. Aquino, 154 SCRA 1, the Court held: ". . . . 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 execution. 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. . . . ." 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 property owner's undertakings not annotated in the TCT.

DECISION

PANGANIBAN, J p: A notice of lis pendens may be registered when an action or a proceeding directly affects the title 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 enforcement of an agreement for the co-development of a parcel of land. prcd

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 4denying reconsideration. The assailed Decision affirmed the Resolution 5 of the Land Registration Authority (LRA) in Consulta No. 2381, which ruled as follows: "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: "The subject property is known as the Las Piñas property registered in the name of Peltan Development 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 Stronghold Realty Development. "Sometime in 1995, the said family decided to give control and ownership over the said corporations 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. LLpr "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 in order to participate in the bidding. "First Metro granted Allen Roxas' application without collateral provided, however, that he procure a guarantor/surety/solidary codebtor to secure the payment of the said loan. "Petitioner Viewmaster agreed to act as guarantor for the aforementioned loan in consideration for its participation in a Joint Venture Project to co-develop the real estate assets of State Investment Trust, Inc. "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 petitioner Viewmaster, defendant Allen Roxas, eventually gained control and ownership of State Investment Trust, Inc.

"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 codevelop 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, Enforcement of Implied Trust and Damages against State Investment Trust, Inc. Northeast Land Development, Inc., State Properties Corporation (formerly Peltan Development, Inc.) and defendant Allen Roxas, in his capacity as Vice-Chairman of State Investment Trust, Inc., and Chairman of Northeast Land Development, Inc., State Properties Corporation, which was docketed as Civil Case No. 65277. cdll "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 State Properties Corporation). "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: 1. the request for annotation and the complaint [do] not contain an adequate description of the subject property; 2. petitioner's action only has an incidental effect on the property in question. "On September 20, 1995, petitioner filed an appeal to the respondent Land Registration Authority, which was docketed as Consulta No. 2381. "On December 14, 1995, the Respondent Land Registration Authority issued the assailed Resolution 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 proceedings instituted by petitioner affected the title or possession incidentally only, not directly. Hence, this Petition. 8

Issues Petitioner submits for the consideration of the Court the following issues: "I Whether or not the petitioner failed to adequately describe the subject property in its complaint 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 The Petition is meritorious.

First Issue:

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." The notice of lis pendens described the property as follows: "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." 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. LexLib In the paragraph directly preceding the description quoted above, however, petitioner specifically 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: "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 implied 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: '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. (S17992) 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 documents. 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 distinguished and readily identified. In this case, we agree with petitioner that there was substantial compliance with this requirement. LexLib

Second Issue: Property Directly Involved In upholding the LRA, the Court of Appeals held 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 [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 includes 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 directly involved the land in question, because it prayed for the enforcement of a prior agreement 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: "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 proceedings 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 judgment, 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, together 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." LibLex 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: "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.: 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." In Villanueva v. Court of Appeals, 14 this Court further declared that the rule of lis pendens applied to suits brought "to establish an equitable estate, interest, or right in specific real property or to enforce any lien, charge, or encumbrance against it . . . ." Thus, this Court observed that the said notice pertained to the following: ". . . 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 adjustment of partnership interests." cdrep

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 reliefs: "1. Render judgment ordering the Defendant Allen Roxas to sell fifty percent (50%) of his shareholdings in Defendant State Investment to Plaintiff at the price equivalent to the successful bid price per share plus an additional ten percent (10%) per share and directing Defendants to co-develop with the Plaintiff the subject real properties; 2. Render judgment ordering the Defendant Allen Roxas to: 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 moral damages; c. Pay the Plaintiff the amount of at least One Million Pesos (P1,000,000.00), by way of exemplary 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 shareholdings 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 company. cdll 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 codevelop 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 undertaking 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 action involves not only the collection of a money judgment, but also the enforcement of petitioner's right to codevelop 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 litigation. 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: " . . . 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 execution. 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 . . . ." 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 property 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. cdtai 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 property subject of a lis pendens be proven by the applicant. The Rule merely requires that an affirmative 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. LibLex 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. dctai SO ORDERED. XXXX [G.R. No. 148568. March 20, 2003.]

ATLANTIC ERECTORS, INC., petitioner, vs. HERBAL COVE REALTY CORPORATION, respondent.

Benjamin A. Moraleda, Jr. for petitioner. ACCRA Law Offices for respondent. SYNOPSIS Respondent and petitioner entered into a construction contract whereby petitioner agreed to construct several townhouse units on respondent's land for a total of almost P17M. Later, petitioner filed a complaint against respondent for sum of money with damages and notice of lis pendens annotated on respondent's land titles. Petitioner averred that its money claim on the cost of labor and materials for the townhouses it constructed on respondent's land was a proper lien that justified the annotation of a notice of lis pendens on the land titles. Careful examination of petitioner's complaint revealed no material averment of any enforceable right, interest or lien in connection with the subject property, but only payment of construction services and materials plus damages. Verily, it was a purely personal action and a simple collection case. Further, the complaint for collection and damages was not the proper mode to enforce a contractor's lien here. Neither Article 2242 of the Civil Code nor the enforcement of lien thereunder was applicable as petitioner's complaint failed to satisfy the requirements therein. Petitioner also filed its action with the RTC of Makati, which does not have jurisdiction over the property situated in Tagaytay City.

SYLLABUS 1. CIVIL LAW; LAND TITLES; NOTICE OF LIS PENDENS; WHEN PROPER. — As a general rule, the only instances in which a notice of lis pendens may be availed of are as follows: (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. 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 annotation 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. 2. ID.; ID.; ID.; NOT PROPER WHERE MONEY CLAIM DOES NOT INVOLVE ENFORCEMENT OF LIEN. — A careful examination of petitioner's Complaint, as well as the reliefs it seeks, reveals that no such lien or interest as provided in Nos. 3 & 4 of Article 2242 of the Civil Code 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 personal action and a simple collection case. It did not contain any material averment of any enforceable 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 enforcement 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 complaint. CTDHSE 3. ID.; ID.; ID.; INAPPLICABILITY TO CERTAIN ACTIONS AND PROCEEDINGS THAT SPECIFICALLY INCLUDE MONEY CLAIMS. — 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 proceedings 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" 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 action. Thus, when a complaint or an action is determined by the courts to be in personam, the rationale for or purpose of the notice of lis pendens ceases to exist. To be sure, this Court has expressly 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. 4. ID.; PREFERENCE OF CREDITS; NOT APPLICABLE ON CONTRACTOR'S LIEN IN CASE AT BAR. — Even assuming that petitioner had sufficiently alleged such lien or encumbrance in its Complaint, the annotation of the Notice of Lis Pendens would still be unjustified, because a complaint 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, the Court explained the concept of a contractor'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 property 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 ." (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.

5. REMEDIAL LAW; JURISDICTION; ACTION ASSERTING INTEREST IN REAL PROPERTY SHOULD BE COMMENCED IN PROPER COURT WHERE PROPERTY IS SITUATED. — Petitioner filed its action with the RTC of Makati, which is undisputedly bereft of any jurisdiction over respondent'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. 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. 6. ID.; ID; PARTIES CANNOT INVOKE JURISDICTION TO SECURE AFFIRMATIVE RELIEF THEN REPUDIATE THE SAME AFTER FAILING TO OBTAIN SUCH RELIEF. — 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, 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 former 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 affirmative relief, then repudiate or question that same jurisdiction after obtaining or failing to obtain such relief. 7. ID.; CIVIL PROCEDURE; APPEAL FROM RTC; PERFECTION OF APPEAL; EFFECT THEREOF; RTC LOSES JURISDICTION OVER 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. . . . "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." (Italics supplied)

DECISION

PANGANIBAN, J p: 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: "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 granting 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 instead pointed to [petitioner] as having exceeded the 180 day contract period aggravated by defective workmanship and utilization of materials which are not in compliance with specifications. xxx xxx xxx "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, Incorporated vs. Herbal Cove Realty Corp. and Ernest C. Escal[e]r.' This case was raffled to Branch 137, . . . Judge Santiago J. Ranada presiding. In said initiatory pleading, [petitioner] AEI asked for the following reliefs: 'AFTER DUE NOTICE AND HEARING, to order . . . defendant to: 1. Pay plaintiff the sum of P4,854,229.94 for the unpaid construction services already rendered; 2. To . . . pay plaintiff the sum of P1,595,551.00 for the construction materials, equipment and tools of plaintiff held by defendant; 3. To . . . pay plaintiff the sum of P2,250,000.00 for the [loss] . . . of expected income from the construction project; 4. [T]o . . . 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 . . . pay plaintiff the sum of P5,000,000.00 for moral damages; 6. To . . . pay plaintiff the sum of P5,000,000.00 for exemplary damages; 7. To . . . pay plaintiff the sum equivalent of 25% of the total money claim plus P200,000.00 acceptance fee and P2,500.00 per court appearance; 8. To . . . pay the cost of suit.' "On the same day of November 21, 1997, [petitioner] filed a notice of lis pendens for annotation 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 Certificate of Title Nos. T-36179 to T-36226 and T-36245 to T-36246 of the Register of Deeds of Tagaytay City. "On January 30, 1998, [respondent] and . . . Ernest L. Escaler, filed a Motion to Dismiss [petitioner'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. xxx xxx xxx "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 . . . Escaler for failure of the Complaint to state a cause of action . . . . "[Petitioner] filed a Motion for Reconsideration of the March 17, 1998 dismissal order. [Respondent] 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 action to collect a sum of money and recover damages and . . . 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 . . .: "[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 appeal (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 correction, 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 precautionary measure or warning to prospective buyers of a property that there is a pending litigation 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 notice 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 aboveentitled 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 setting 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 resorted to when there is an applicable provision of law. xxx xxx xxx "On October 22, 1999, [Judge Ranada] issued an order denying [respondent's] Motion for Reconsideration 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 reinstated the former's July 30, 1998 Order 6 granting Herbal Cove's Motion to Cancel the Notice ofLis Pendens. According to the appellate court, the re-annotation of those notices was improper 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 subject 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 title[.] "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 oflis 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 alleged 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 follows: (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 annotation 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 construction 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 follows: "Art. 2242. With reference to specific immovable property and real rights of the debtor, the following claims, mortgages and liens shall be preferred, and shall constitute an encumbrance on the immovable or real right: xxx xxx xxx "(3) Claims of laborers, masons, mechanics and other workmen, as well as of architects, engineers 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 buildings, canals or other works, upon said buildings, canals or other works[.]" (Italics 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 personal action and a simple collection case. It did not contain any material averment of any enforceable 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 enforcement 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 complaint. 12 Even assuming that petitioner had sufficiently alleged such lien or encumbrance in its Complaint, the annotation of the Notice of Lis Pendens would still be unjustified, because a complaint 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 contractor'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 property 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 (Italics 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 enforcement 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 respondent'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 proceedings 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 action. 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 otherwise. In such event, the notice of lis pendens has become functus officio." 18 (Italics supplied) Thus, when a complaint or an action is determined by the courts to be in personam, the rationale for or purpose of the notice of lis pendens ceases to exist. To be sure, this Court has expressly 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. 19

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. xxx xxx xxx "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." (Italics 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 July 30, 1998 Order and reinstated that Notice should be considered without force and effect, because 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 November 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 former 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 affirmative 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. CSHEAI SO ORDERED. ||| XXX

[G.R. No. 174290. January 20, 2009.] ST. MARY OF THE WOODS SCHOOL, INC. and MARCIAL P. SORIANO, petitioners, vs. OFFICE OF THE REGISTRY OF DEEDS OF MAKATI CITY and HILARIO P. SORIANO,respondents.

[G.R. No. 176116. January 20, 2009.] ST. MARY OF THE WOODS SCHOOL, INC. and MARCIAL P. SORIANO, petitioners, vs. OFFICE OF THE REGISTRY OF DEEDS OF MAKATI CITY, NATIONAL BUREAU OF INVESTIGATION, and HILARIO P. SORIANO, respondents.

DECISION

CHICO-NAZARIO, J p: Before this Court are two special civil actions for Certiorari and Prohibition under Rule 65 of the 1997 Revised Rules of Civil Procedure, which were consolidated per Resolution 1 dated 5 February 2007. AEDISC The petitioners in G.R. No. 174290, namely: St. Mary of the Woods School, Inc. (SMWSI) and Marcial P. Soriano, seek to annul and set aside on the ground of grave abuse of discretion tantamount to lack or excess of jurisdiction the Resolution 2 dated 18 August 2006 of the Court of Appeals in CA-G.R. CV No. 85561, which granted herein private respondent Hilario P. Soriano's Motion to Reinstate/Re-annotate the Notice of Lis Pendens over Transfer Certificates of Title (TCT) No. 175029, 3 220977 4 and 220978, 5 of the Registry of Deeds of Makati City, all registered in the name of herein petitioner SMWSI. The afore-named petitioners are the same petitioners in G.R. No. 176116 in which they also seek to annul and set aside, on the ground of grave abuse of discretion amounting to lack or excess of jurisdiction, the three Resolutions similarly rendered by the Court of Appeals in CA-G.R. CV No. 85561, to wit: (1) Resolution 6 dated 18 August 2006 denying petitioners' Motion to Dismiss Appeal of herein private respondent Hilario P. Soriano; (2) Resolution 7 dated 9 November 2006 denying for lack of merit petitioners' Motion for Reconsideration of the 18 August 2006 Resolution of the appellate court, as well as the supplement to the said motion; and (3) Resolution 8 dated 9 November 2006 requiring the Register of Deeds of Makati City to submit to the appellate court the original copies of the documents involved in Civil Case No. 03-954 so that they can be presented to the National Bureau of Investigation (NBI) for comparative analysis of the signatures of Tomas Q. Soriano. aDSTIC Petitioner SMWSI is an educational institution incorporated and existing by virtue of the laws of the Republic of the Philippines. It is the current registered owner of the three parcels of land (subject properties), located in Makati City and covered by TCTs No. 175029, No. 220977 and No. 220978. Petitioner Marcial P. Soriano is the President of petitioner SMWSI. Private respondent Hilario P. Soriano, on the other hand, is one of the siblings of petitioner Marcial P. Soriano. The consolidated cases presently before this Court originated from the Complaint 9 filed on 14 August 2003 by the private respondent with the Regional Trial Court (RTC) of Makati City, Branch 148, for Declaration of Nullity of Deed of Assignment, Deed of Sale and Cancellation of TCTs No. 156249, No. 156250, and No. 156251 of the Register of Deeds of Makati, Metro Manila, 10 registered in the name of Oro Development Corporation (ODC); and TCT No. 175029, registered in the name of petitioner SMWSI. Named defendants therein were the petitioners, together with ODC, Antonio P. Soriano, Aurelia P. Soriano-Hernandez, Rosario P. Soriano-Villasor, Eugenia Ma. P. Soriano-Lao and Josefina P. Soriano (hereinafter collectively referred to as petitioners, et al.). The Complaint was docketed as Civil Case No. 03-954. In his Complaint, private respondent alleged that during the marriage of his parents, Tomas Q. Soriano and Josefina P. Soriano, the couple acquired both real and personal properties, including the subject properties, which were then covered by TCTs No. 169941, 11 No. 114408, 12 and No. 114409. 13 On 10 May 1988, the Soriano couple allegedly executed 14 a Deed of Assignment 15 in favor of ODC involving the subject properties to pay for Tomas Q. Soriano's subscription of stocks in the said corporation. On 14 June 1988, Tomas Q. Soriano died 16intestate. By virtue of the said Deed of Assignment, the ownership and title over the subject properties were transferred to ODC. Consequently, TCTs No. 169941, No. 114408 and No. 114409 were cancelled and the new TCTs No. 156249, 17 No. 156250 18 and No. 156251 19 were issued in the name of ODC. Thereafter, on 26 April 1991, ODC executed 20 in favor of petitioner SMWSI a Deed of Sale 21 over the subject property covered by TCT No. 156249. By virtue of the sale, petitioner SMWSI acquired ownership and title over the particular property. Thus, TCT No. 156249 was cancelled and the new TCT No. 175209 was issued in the name of petitioner SMWSI. SHAcID Private respondent claimed that several years after his father Tomas Q. Soriano's death, he discovered that the latter's signature in the Deed of Assignment of 10 May 1988 in favor of ODC was a forgery. Being very familiar with his father's signature, private respondent compared Tomas Q. Soriano's purported signature in the Deed of Assignment of 10 May 1988 with Tomas Q. Soriano's genuine signature in another document captioned Second Amendment of Credit Agreement. 22 Private respondent also presented a Certification 23 from the Records Management and Archives Office which stated that the forged Deed of Assignment dated 10 May 1988 was not available in the files of the Office. Meanwhile, by reason of the pendency of Civil Case No. 03-954, a Notice of Lis Pendens was annotated on TCTs No. 156249, No. 156250, and No. 156251, in the name of ODC. With the subsequent cancellation of TCT No. 156249 and the issuance of TCT No. 175209 in the name of petitioner SMWSI, the Notice of Lis Pendens was carried over to the new certificate of title. In a Joint Affidavit 24 dated 18 July 1990 executed by petitioner Marcial P. Soriano, it appears that the other individual defendants in Civil Case No. 03954, and private respondent, recognized and acknowledged the validity, legality and propriety of the transfer of the subject properties from Tomas Q. Soriano to ODC. On this basis, defendants filed with the RTC a Motion to Dismiss25 Civil Case No. 03-954 on the grounds that: (1) the Complaint states no cause of action; (2) the claim set forth in the Complaint has been paid, waived, abandoned or otherwise extinguished; (3) the Complaint is barred by estoppel or laches; (4) the Complaint is barred by prescription; (5) the titles to the subject properties are incontestable and can no longer be annulled; and (6) a condition precedent for filing the claim has not been complied with, i.e., the compromise agreement failed despite earnest efforts towards that end. On 17 January 2005, the RTC issued an Order 26 dismissing the private respondent's Complaint. The RTC ratiocinated in this manner: A careful reading of the [14] August 2003 Complaint filed by [herein private respondent] Hilario P. Soriano would suffice that he indeed failed to state that he has a right over the [subject properties] and that the [herein petitioners, et al.] have the obligation to observe such right. Assuming for the sake of argument that the signature was forged, the [private respondent] did not state that he was deprived of his share in the legitime of the deceased. Thus, his right over the [subject properties which were] assigned by the deceased was not clearly defined and stated in the [C]omplaint filed. ESCcaT

xxx xxx xxx . . . . Also, the [private respondent] must comply with the provision of the Civil Code of [the] Philippines, to wit: "Article 222 27 — No suit shall be filed or maintained between members of the same family unless it should appear that earnest efforts toward a compromise have been made, but that the same have failed, subject to the limitations in Article 2035." . . . . There is no showing in the allegations in the [C]omplaint of the [private respondent] that he complied with the requirement of the law. Thus, the Court finds merit in the position of the [petitioners, et al.] xxx xxx xxx . . . . Clearly, the act of the [private respondent] in acknowledging the legality, validity and genuineness of the [D]eed of [A]ssignment in the [J]oint [A]ffidavit placed him in no better position to question the validity of the subject document. [Private respondent] never questioned the distribution of the properties among the heirs of Tomas Soriano. [Private respondent] even accepted the conveyance of a parcel of land covered by TCT No. 156253. By accepting said property as his share in the estate of his late father, [private respondent] is now deemed to have been paid or compensated because there was delivery of his share in the estate of the deceased. It can now be conclusively presumed that his share in the legitime of deceased Tomas Soriano was fully awarded to [private respondent]. He is now estopped in questioning the validity of the [D]eed of [A]ssignment by Tomas Q. Soriano in favor of [ODC]. Accordingly, all subsequent conveyances involving the subject properties can no longer be questioned by [private respondent] Hilario P. Soriano. 28 Accordingly, the RTC decreed: WHEREFORE, finding merits on the [M]otion to [D]ismiss filed by [herein petitioners, et al.] and in the prayer set forth in the [A]nswer of defendants Josefina P. Soriano and Rosario P. Soriano-Villasor, the dismissal of this case is hereby GRANTED. Accordingly, the Complaint filed by [private respondent] Hilario P. Soriano is dismissed because it asserts no cause of action and the claim or demand set forth in the [private respondent's] pleading has been waived, abandoned, or otherwise extinguished, and that a condition precedent for filing the claim has not been complied with. 29 TcSHaD

In the interim, the subject properties covered by TCTs No. 156250 and No. 156251 in the name of ODC were also transferred to petitioner SMWSI by virtue of a Deed of Sale dated 3 February 2005. TCTs No. 156250 and No. 156251 in the name of ODC were then cancelled and the new TCTs No. 220977 and No. 220978 were issued in the name of petitioner SMWSI. The Notice of Lis Pendens annotated on the cancelled TCTs was copied into the new TCTs in the name of petitioner SMWSI. Aggrieved by the RTC Order dated 17 January 2005, private respondent moved for its reconsideration, but the RTC denied the same in an Order 30 dated 26 April 2005. On 16 May 2005, petitioners, et al., filed with the RTC a Motion to Cancel Notice of Lis Pendens 31 annotated on the titles covering the subject properties, which Motion was opposed by the private respondent. The very next day, 17 May 2005, private respondent filed a Notice of Appeal stating his intention to elevate the RTC Orders dated 17 January 2005 and 26 April 2005 to the Court of Appeals. Private respondent's appeal before the Court of Appeals was docketed as CA-G.R. CV No. 85561. Meanwhile, the RTC issued its Order 32 dated 20 June 2005 granting the Motion to Cancel Notice of Lis Pendens filed by petitioners, et al., and ordering the Register of Deeds of Makati City to cancel the Notice of Lis Pendens annotated on TCTs No. 156249, No. 156250, No. 156251 in the name of ODC and TCT No. 175029 in the name of petitioner SMWSI. The RTC justified its latest Order as follows: As mentioned in the case, the notice of lis pendens can be cancelled if it is not necessary to protect the interest of the party who caused it to be recorded. In this case, the [herein private respondent's] interest should be considered on whether the notice of lis pendens should be cancelled or not. As it is the Court believes that the cancellation is proper in this case. First, the Court still has jurisdiction of the case considering that the Notice of Appeal was only filed on [17 May 2005], while the Motion to cancel Notice of Lis Pendens was filed on [16 May 2005]. Second, [private respondent] Hilario P. Soriano has no interest to be protected insofar as the subject properties are concerned because of his acknowledgment that he already received his share in the estate of Tomas Soriano. Lastly, the contention of the [private respondent] that the motion is premature is not tenable. The authority of the Court to Cancel Notice of Lis Pendensis even evident in the Comment/Opposition of the [private respondent] which states that "While it may be true that the cancellation of a notice of lis pendens may be ordered at any given time even before final judgment, . . . ." 33 aTDcAH On 4 July 2005, the petitioners, et al., filed with the RTC a Motion for Issuance of Supplement to Order Cancelling Notice of Lis Pendens 34 to clarify that TCTs No. 156249, No. 156250, and No. 156251 in the name of ODC were already cancelled and replaced with TCTs No. 175209, No. 220977, and No. 220978 all registered in the name of petitioner SMWSI in which the Notice of Lis Pendens was carried over. The private respondent, on the other hand, filed a Motion for Reconsideration of the RTC Order dated 20 June 2005 with Comment on the petitioners, et al.'s, Motion for Issuance of Supplement to the same RTC Order. On 15 July 2005, the RTC issued another Order 35 by way of supplement to its Order dated 20 June 2005, directing anew the Register of Deeds of Makati City to cancel the Notice of Lis Pendens annotated on TCTs No. 175029, No. 220977 and No. 220978 in the name of petitioner SMWSI. In a subsequent Order 36 dated 15 August 2005, the RTC denied for lack of merit private respondent's Motion for Reconsideration of the RTC Order dated 20 June 2005. On 28 September 2005, private respondent received a directive from the Court of Appeals dated 20 September 2005 requiring him to file his Appellant's Brief pursuant to his Notice of Appeal dated 17 May 2005. In compliance therewith, private respondent submitted his Appellant's Brief to the Court of Appeals with the following assignment of errors: 1. The lower court erred in dismissing the [C]omplaint on the ground that no certificate from a signature expert was attached to affirm the conclusion of the [herein private respondent] that the signature of Tomas Q. Soriano in the [D]eed of [A]ssignment was forged and on the ground that neither can the certificate issued by the Records Management and Archive Office support such allegation and that the [herein petitioners, et al.] cannot shoulder the burden caused by the Notary Public in failing to file the notarized documents, if he indeed failed. CAaDTH 2. The lower court erred in dismissing the [C]omplaint on the ground that the [private respondent] failed to state that he has a right over the subject properties and that the [petitioners, et al.] have the obligation to observe such right. 3. The lower court erred in ruling that Article 151 of the Family Code should have been complied with.

4. The lower court erred in denying [private respondent's] [M]otion for [R]econsideration despite valid and compelling arguments that warrant the reconsideration prayed for. 5. The lower court erred in granting [petitioners,et al.] [M]otion for [C]ancellation of Lis Pendens. 6. The lower court erred in dismissing the [C]omplaint on the ground that by accepting the conveyance of a parcel of land covered by TCT No. 156253 as his share in the estate of his late father, [private respondent] is now deemed to have been paid or compensated because there was delivery of his share in the estate of the deceased. 37 While CA-G.R. CV No. 85561 was still pending, and since the Notice of Lis Pendens annotated on the TCTs of the subject properties in the name of petitioner SMWSI was already cancelled per RTC Orders dated 20 June 2005 and 15 July 2005, petitioner SMWSI mortgaged the subject properties on 15 February 2006 for the amount of P8,000,000.00. On 14 March 2006, private respondent filed before the Court of Appeals a Motion to Reinstate/Re-annotate Notice of Lis Pendens on the TCTs of the subject properties given that there was yet no final judgment of dismissal of his Complaint, as its dismissal had been duly appealed. Moreover, it had not been shown that the Notice of Lis Pendens was to molest the petitioners, et al., or that the same was not necessary to protect his interests; thus, its re-annotation on the TCTs of the subject properties while the appeal was pending would be in accordance with public policy. Petitioners, et al., opposed the aforesaid Motion of private respondent. cEITCA On 17 March 2006, petitioners, et al., filed a Motion to Dismiss Appeal on the ground that "the issues in the appeal are and can only be questions of law, the appellate jurisdiction over which belongs exclusively to the Supreme Court, thus the dismissal of [private respondent's] appeal is mandatory pursuant to Supreme Court Circular No. 2-90 and Section 2, Rule 50 of the 1997 Rules of Civil procedure." 38 Thereafter, on 18 August 2006, the Court of Appeals issued a Resolution granting private respondent's Motion to Reinstate/Re-annotate Notice of Lis Pendens on the TCTs of the subject properties. The Court of Appeals ruled that although the RTC found that private respondent had no interest to be protected by the Notice of Lis Pendens, since the appellate court already acquired jurisdiction over the case, it was the latter which must ascertain the propriety of canceling the Notice of Lis Pendens upon proper motion and hearing. 39 On the same day, the Court of Appeals also issued a separate Resolution denying petitioners, et al.'s, Motion to Dismiss Appeal of private respondent. According to the appellate court, private respondent raised both questions of fact and law in his appeal; hence, the ground for the dismissal of the appeal relied upon by the petitioners, et al., was untenable. G.R. No. 174290 40 Aggrieved by the Resolution dated 18 August 2006 of the Court of Appeals granting private respondent's Motion to Reinstate/Re-annotate Notice of Lis Pendens on the subject properties, petitioners, without filing a Motion for Reconsideration, filed on 11 September 2006 before this Court the instant Petition for Certiorari under Rule 65 of the 1997 Revised Rules of Civil Procedure alleging grave abuse of discretion amounting to lack or excess of jurisdiction on the part of the appellate court in rendering the assailed Resolution. The Petition is docketed as G.R. No. 174290. Petitioners maintain that the RTC Orders canceling the Notice of Lis Pendens on the TCTs of the subject properties were valid and proper as they were issued on the basis of private respondent's lack of interest/right over the subject properties to be protected by the annotation of such Notice. Moreover, the cancellation of the Notice of Lis Pendens is authorized by Section 14, 41 Rule 13 of the 1997 Revised Rules of Civil Procedure, as well as under Section 77, 42 Presidential Decree No. 1529. 43 Hence, the reinstatement of the Notice of Lis Pendensshould not have been allowed. DcSTaC Petitioners opine that the Court of Appeals gravely abused its discretion when it ordered the re-annotation of the Notice of Lis Pendens based on the mere motion filed by private respondent, as it was violative of the proper procedures prescribed under Presidential Decree No. 1529. Grave abuse of discretion is committed when an act is 1) done contrary to the Constitution, the law or jurisprudence; or 2) executed "whimsically or arbitrarily" in a manner "so patent and so gross as to amount to an evasion of a positive duty, or to a virtual refusal to perform the duty enjoined." What constitutes grave abuse of discretion is such capricious and arbitrary exercise of judgment as that which is equivalent, in the eyes of the law, to lack of jurisdiction. 44 It does not encompass an error of law. 45

At the outset, it is significant to note that petitioners filed the instant Petition without filing a Motion for Reconsideration of the assailed Resolution. A Motion for Reconsideration of the order or resolution is a condition precedent for the filing of a Petition for Certiorari challenging the issuance of the same. 46 The general rule that the filing of a Motion for Reconsideration before resort to certiorari will lie is intended to afford the public respondent an opportunity to correct any factual or fancied error attributed to it by way of re-examination of the legal and factual aspects of the case. 47 This rule, however, is subject to certain recognized exceptions, to wit: (1) where the order or a resolution, is a patent nullity, as where the court a quo has no jurisdiction; (2) where the questions raised in the certiorari proceeding have been duly raised and passed upon in the lower court; (3) where there is an urgent necessity for the resolution of the question, and any further delay would prejudice the interests of the Government or of the petitioner or the subject matter of the action is perishable; (4) where, under the circumstances, a Motion for Reconsideration would be useless; (5) where petitioner was deprived of due process and there is extreme urgency for relief; (6) where, in a criminal case, relief from an order of arrest is urgent and the granting of such relief by the trial court is improbable; (7) where the proceedings in the lower court are a nullity for lack of due process; (8) where the proceedings were ex parte or were such that the petitioner had no opportunity to object; and (9) where the issue raised is one purely of law or where public interest is involved. 48 cEAaIS In the case at bar, petitioners aver that they dispensed with the filing of a Motion for Reconsideration of the 18 August 2006 before the Court of Appeals because of the extreme urgency of the relief prayed for, and the issues raised herein are purely of law and involve public interest, therefore, placing the instant case within the ambit of the exceptions to the general rule. Petitioners claim that at the time of filing of this Petition, private respondent was taking steps and other measures to present for registration the 18 August 2006 Resolution of the Court of Appeals to the Office of the Registry of Deeds of Makati City so as to already re-annotate the Notice of Lis Pendens on the TCTs of the subject properties, prompting petitioners to immediately file the instant Petition without seeking reconsideration of the assailed Resolution. We find that petitioners' reasons for excusing themselves from filing a Motion for Reconsideration before filing the present Petition for Certiorari are baseless and unsubstantiated. Petitioners' averment of sense of urgency in that private respondent was already taking steps and other measures to have the Notice of Lis Pendens reannotated by presenting the 18 August 2006 Resolution of the Court of Appeals to the Office of the Registry of Deeds of Makati City deserves scant consideration. Petitioners never described with particularity, much less, presented proof of the steps purportedly taken by the private respondent that would justify their immediate resort to this Court on certiorari without seeking reconsideration of the Resolution in question from the Court of Appeals. Petitioners simply made a sweeping allegation that absolutely has no basis. The records themselves are bare of any proof that would convince this Court that the private respondent indeed, took steps to have the challenged Resolution implemented. In fact, petitioners themselves, in their letter 49 dated 8 September 2006 addressed to the Office of the Registry of Deeds of Makati City, pointed out that the questioned Resolution of the Court of Appeals did not yet order the said Office to re-annotate the Notice of Lis Pendens. Petitioners explained in their letter that the 18 August 2006 Resolution granting private respondent's Motion to Reinstate/Re-annotate Notice of Lis Pendens is a mere indication that private respondent can proceed with the legal procedure leading to the actual re-annotation of the said notice. They even reminded the Register of Deeds of Makati City that even if it would be furnished with a copy of the assailed Resolution, it had no authority to reinstate/re-annotate the Notice of Lis Pendens without a proper and direct order from the appellate court. More importantly, petitioners explicitly revealed in their letter that they intended to file a Motion for Reconsideration with the

Court of Appeals, as its Resolution dated 18 August 2006 had not yet acquired finality. Why then did petitioners not proceed with filing their motion for reconsideration, and opted to immediately file the present Petition for Certiorari?CaESTA Similarly baseless is petitioners' bare assertion, without even an attempt at explaining, that the issues subject of the Petition at bar involve public interest sufficient to excuse them from filing a Motion for Reconsideration of the Resolution dated 18 August 2006. Given the foregoing, the Court dismisses the instant Petition for Certiorari for petitioners' failure to comply with a condition precedent for filing such a petition. Granting arguendo that the present special civil action for certiorari can be given due course, the Court still finds that the Court of Appeals did not commit any grave abuse of discretion in granting private respondent's Motion to Reinstate/Re-annotate Notice of Lis Pendens.

Lis pendens, which literally means pending suit, refers to the jurisdiction, power or control which a court acquires over property involved in a suit, pending the continuance of the action, and until final judgment. Founded upon public policy and necessity, lis pendens is intended (1) 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 alienation; and (2) to announce to the whole world that a particular property is in litigation and serves as a warning that one who acquires an interest over said property does so at his own risk, or that he gambles on the result of the litigation over said property. 50 A trial court has, however, the inherent power to cancel a notice of lis pendens, under the express provisions of law. 51 As provided for by Sec. 14, Rule 13 of the 1997 Rules of Civil Procedure, a notice of lis pendens may be cancelled on two grounds: (1) if the annotation was for the purpose of molesting the title of the adverse party; or (2) when the annotation is not necessary to protect the title of the party who caused it to be recorded. aSCHcA Considering that the dismissal of private respondent's Complaint by the RTC was appealed to the Court of Appeals, which Complaint refers to the properties covered by TCTs No. 175209, No. 220977, and No. 220978 that bear the annotations of lis pendens, and such properties therefore are irrefragably still the subject matter of litigation, the appellate court rightly saw the need for giving notice to the public of such a fact. The necessity becomes even more compelling considering that petitioner SMWSI had already entered into transactions with third parties involving the subject properties. On the issue of jurisdiction of the Court of Appeals to entertain the issue on the notice of lis pendens, we adhere to the Court of Appeals' ratiocination, thus: However, as the dismissal of this case by the lower court has been appealed to us, we now have jurisdiction over the case. The doctrine of lis pendens is based on consideration of public policy and convenience, under the view that once a court has taken cognizance of a controversy, it should be impossible to interfere with the consummation of the judgment by any ad interim transfer, encumbrance, or change of possession. Now that the case is pending before us on appeal, there is no certainty as to the outcome of the case. There is a need to warn the whole world that a particular property is in litigation, serving as a warning that the 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. . . . . Although the lower court made a finding that [herein private respondent] Hilario has no interest to be protected by the annotation of the notice of the pendency of the case as we now have jurisdiction over the case, we have to ascertain for ourselves the propriety of canceling the annotation of the notice of lis pendens upon proper motion and hearing. 52 There is likewise no merit in petitioners' contention that the filing by private respondent with the Court of Appeals of an appeal (where he already raised the issue of re-annotating the Notice of Lis Pendens) and, subsequently, a separate Motion to Reinstate/Re-annotate Notice of Lis Pendens is tantamount to forum shopping. ATEHDc Forum shopping is committed by a party who, having received an adverse judgment in one forum, seeks another opinion in another court, other than by appeal or the special civil action ofcertiorari. More accurately, however, forum shopping is the institution of two or more suits in different courts, either simultaneously or successively, in order to ask the courts to rule on the same or related causes and/or to grant the same or substantially the same reliefs. 53 The essence of forum-shopping is the filing of multiple suits involving the same parties for the same cause of action, either simultaneously or successively, to secure a favorable judgment. Forum-shopping is present when in the two or more cases pending, there is identity of parties, rights of action and reliefs sought. 54 In the present case, what were filed by the private respondent before the appellate court were an appeal and a motion relative to the same case. The appeal and the motion filed by the private respondent cannot be regarded as separate and distinct cases or suits. It is settled that the office of a motion is not to initiate new litigation, but to bring up a material but incidental matter arising in the progress of the case in which the motion was filed. A motion is not an independent right or remedy, but is confined to incidental matters in the progress of a cause. It relates to some question that is collateral to the main object of the action and is connected with and dependent upon the principal remedy. 55 Private respondent's Motion to Reinstate/Re-annotate Notice of Lis Pendens is, at the very least, a mere reiteration of one particular issue already raised in the appeal, and an insistence on the urgency of resolving the same ahead of the other issues. The filing of said Motion cannot be considered forum shopping and the admission thereof by the Court of Appeals did not constitute grave abuse of discretion.

Finally, petitioners futilely attempt to convince this Court that the Court of Appeals acted with grave abuse of discretion in granting private respondent's Motion to Reinstate/Re-annotate Notice of Lis Pendens in violation of the proper procedures prescribed under Presidential Decree No. 1529: Section 117. Procedure. — When the Register of Deeds is in doubt with regard to the proper step to be taken or memorandum to be made in pursuance of any deed, mortgage or other instrument presented to him for registration, or where any party in interest does not agree with the action taken by the Register of Deeds with reference to any such instrument, the question shall be submitted to the Commissioner of Land Registration by the Register of Deeds, or by the party in interest thru the Register of Deeds. Where the instrument is denied registration, the Register of Deeds shall notify the interested party in writing, setting forth the defects of the instrument or legal grounds relied upon, and advising him that if he is not agreeable to such ruling, he may, without withdrawing the documents from the Registry, elevate the matter by consulta within five days from receipt of notice of the denial of registration to the Commissioner of Land Registration. SCIacA The Register of Deeds shall make a memorandum of the pending consulta on the certificate of title which shall be canceled motu proprio by the Register of Deeds after final resolution or decision thereof, or before resolution, if withdrawn by petitioner. The Commissioner of Land Registration, considering the consulta and the records certified to him after notice to the parties and hearing, shall enter an order prescribing the step to be taken or memorandum to be made. His resolution or ruling in consultas shall be conclusive and binding upon all Registers of Deeds, provided, that the party in interest who disagrees with the final resolution, ruling or order of the Commissioner relative to consultas may appeal to the Court of Appeals within the period and in the manner provided in Republic Act No. 5434. cTECIA

It is clear that the afore-quoted procedure applies only when the instrument is already presented for registration and: (1) the Register of Deeds is in doubt with regard to the proper step to be taken or memorandum to be made in pursuance of any deed, mortgage or other instrument presented to him for registration; or (2) where any party in interest does not agree with the action taken by the Register of Deeds with reference to any such instrument; and (3) when the registration is denied. None of these situations is present in this case. There was no evidence that the 18 August 2006 Resolution of the Court of Appeals was already presented to the Register of Deeds of Makati City for the re-annotation of the Notice of Lis Pendens. There is also no showing that the Register of Deeds denied the re-annotation. G.R. No. 176116 56 Unsatisfied with the other Resolution dated 18 August 2006 of the Court of Appeals denying their Motion to Dismiss Appeal, petitioners moved for its reconsideration, but it was denied by the appellate court in a Resolution 57 dated 9 November 2006. In a separate Resolution 58 also dated 9 November 2006, the Court of Appeals ordered the Register of Deeds of Makati City to submit the original copies of the Minutes of the Meeting of the Board of Directors of ODC dated 7 May 1988, together with the Deed of Assignment dated 10 May 1988 entered into by and between Tomas Q. Soriano and ODC involving the subject properties, so that they could be referred to the NBI for comparative analysis of Tomas Q. Soriano's signatures. Following the foregoing development, petitioners filed before this Court another Petition for Certiorari under Rule 65 of the 1997 Revised Rules of Civil Procedure on 29 December 2006, docketed as G.R. No. 176116. Petitioners assert that the Court of Appeals acted with grave abuse of discretion amounting to lack or excess of jurisdiction in refusing to dismiss private respondent's appeal in its Resolutions dated 18 August 2006 and 9 November 2006, even though the appeal raised only questions of law. Petitioners argue that an appeal raising pure questions of law must be filed with the Supreme Court via Petition for Review under Rule 45 and not with the Court of Appeals. Petitioners also contend that the Resolution dated 9 November 2006 of the Court of Appeals ordering the submission of documents so that the NBI could perform a comparative analysis of Tomas Q. Soriano's signatures, was apparently for the purpose of finding out whether forgery was committed in the Deed of Assignment dated 10 May 1988. Petitioners assert that the appellate court has absolutely no original jurisdiction to rule whether Tomas Q. Soriano's signature was forged in the Deed of Assignment in question. There is no need for the Court of Appeals to have done an analytical comparison of Tomas Q. Soriano's signatures considering that the RTC made no factual finding as regards the existence or non-existence of forgery. Accordingly, the Court of Appeals has no power to inquire into the allegations of forgery made in the private respondent's Complaint, and for it to proceed to do so is grave abuse of discretion tantamount to lack or excess of jurisdiction. aEACcS The Court resolves first the issue of whether the Court of Appeals committed grave abuse of discretion amounting to lack or excess of jurisdiction in denying petitioners' Motion to Dismiss Appeal. In resolving such issue, it is necessary to determine only if private respondent's appeal to the Court of Appeals involves purely questions of law, in which case, the proper mode of appeal would be a Petition for Review on Certiorari to the Supreme Court under Rule 45 of the 1997 Revised Rules of Civil Procedure; or questions of fact or mixed questions of fact and law, in which case, the proper mode would be by ordinary appeal to the Court of Appeals under Rule 41. A question of law exists when there is doubt or controversy as to what the law is on a certain state of facts, and there is a question of fact when the doubt or difference arises as to the truth or falsehood of facts, or when the query necessarily invites calibration of the whole evidence considering mainly the credibility of witnesses, existence and relevancy of specific surrounding circumstances, their relation to one another and to the whole, and probabilities of the situation. Ordinarily, the determination of whether an appeal involves only questions of law or questions both of law and of fact is best left to the appellate court, and all doubts as to the correctness of such conclusions will be resolved in favor of the Court of Appeals. 59 Among the grounds raised by petitioners in seeking the dismissal by the RTC of private respondent's Complaint in Civil Case No. 03-954 are: (1) the Complaint stated no cause of action; 60 (2) the claim or demand set forth in the Complaint had been paid, waived, abandoned, or otherwise extinguished; 61 and (3) a condition precedent for filing the claim has not been complied with. 62 Settled is the rule that in a Motion to Dismiss based on lack of cause of action, the issue is passed upon on the basis of the allegations in the complaint, assuming them to be true. The court does not inquire into the truth of the allegations and declare them to be false; otherwise, it would be a procedural error and a denial of due process to the plaintiff. Only the statements in the complaint may be properly considered, and the court cannot take cognizance of external facts or hold preliminary hearings to ascertain their existence. To put it simply, the test for determining whether a complaint states or does not state a cause of action against the defendants is whether or not, admitting hypothetically the truth of the allegations of fact made in the complaint, the judge may validly grant the relief demanded in the complaint. 63 cEDaTS In a Motion to Dismiss based on failure to state a cause of action, there cannot be any question of fact or "doubt or difference as to the truth or falsehood of facts", simply because there are no findings of fact in the first place. What the trial court merely does is to apply the law to the facts as alleged in the complaint, assuming such allegations to be true. It follows then that any appeal therefrom could only raise questions of law or "doubt or controversy as to what the law is on a certain state of facts". Therefore, a decision dismissing a complaint based on failure to state a cause of action necessarily precludes a review of the same decision on questions of fact. One is the legal and logical opposite of the other. 64 Hence, private respondent did raise a question of law when he assigned as an error in his appeal to the Court of Appeals the RTC's alleged error in dismissing his Complaint in Civil Case No. 03-954 for failure to state a cause of action. It must be remembered, however, that the basis of the RTC Order on 17 January 2005 dismissing private respondent's Complaint was not only its failure to state a cause of action, but also the fact that the claim or demand set forth therein had been paid, waived, abandoned, or otherwise extinguished, and that the condition precedent for filing a claim had not been complied with. According to the RTC, the Complaint was dismissible on the ground that the claim or demand set forth therein had been paid, waived, abandoned, or otherwise extinguished. Private respondent, in accepting a certain parcel of land as his share in the estate of his late father Tomas Q. Soriano, was now deemed to have been paid or compensated because his share in the estate of the deceased had been delivered to him. In arriving at such a finding, the RTC necessarily made a preliminary determination of the facts in order to verify that, indeed, private respondent's claim or demand had been paid. When the private respondent assigned as error in his appeal such finding of the RTC, he raised not only a question of law, but also a question of fact.

The Court agrees in the following observation and pronouncement made by the Court of Appeals: The lower court evaluated the documents [herein private respondent] Hilario submitted to prove his claim of forgery. The lower court practically made a finding of fact that the signature of Tomas Q. Soriano in the [D]eed of [A]ssignment is a forgery when the court stated that "the signatures in the [D]eed of [A]ssignment and in the [S]econd [A]mendment of [C]redit [A]greement are the same." Whether the signature of Tomas Q. Soriano was a forgery or not should have been determined during a trial, and not merely in the resolution of a [M]otion to [D]ismiss. CcHDSA [Private respondent] Hilario likewise raised the issue of whether or not there was payment or estoppel as claimed by the [herein peititoners]. * At first glance, it could be surmised that the issue of estoppel is a question of law. However, in this case, there is a question of fact involved.

[Private respondent] Hilario comments that there is precisely a need to factually ascertain whether there has been full payment or award of his legitime, as a compulsory heir of Tomas Q. Soriano, before the court can conclude that [private respondent] Hilario is estopped from questioning the [D]eed of [A]ssignment. xxx xxx xxx As [private respondent] Hilario raised questions of fact as well as questions of law in his appeal, the ground for dismissal relied upon by the [petitioners] is not applicable in his case. 65 The rule is that the determination of whether an appeal involves only questions of law or questions of both law and fact is best left to the appellate court, and all doubts as to the correctness of such conclusions will be resolved in favor of the Court of Appeals. 66 Finally, we do not perceive any abusive exercise of power in the Resolution dated 9 November 2006 of the Court of Appeals requiring the submission of the original copies of the documents involved in Civil Case No. 03-954 to enable the NBI to perform a comparative analysis of Tomas Q. Soriano's signatures therein. It must be stressed that in its 17 January 2005 Order, the trial court expressed a finding that "in the beholder of untrained eyes, the signatures in the Deed of Assignment and in the Second Amendment of Credit Agreement are the same." 67 Considering that the trial court made a finding of fact as regards the issue of forgery and such issue was properly raised in the private respondent's appeal with the appellate court, it certainly behooves the appellate court to review the said findings. Accordingly, as the Court of Appeals has the power to inquire into the allegations of forgery made in the private respondent's Complaint, it can validly require the submission of the original copies of the documents involved in Civil Case No. 03-954 to enable the NBI to perform a comparative analysis of Tomas Q. Soriano's signatures therein. WHEREFORE, premises considered, these consolidated Petitions for Certiorari are hereby DISMISSED. SO ORDERED.

[G.R. No. 153820. October 16, 2009.]

DELFIN TAN, petitioner, vs. ERLINDA C. BENOLIRAO, ANDREW C. BENOLIRAO, ROMANO C. BENOLIRAO, DION C. BENOLIRAO, SPS. REYNALDO TANINGCO and NORMA D. BENOLIRAO, EVELYN T. MONREAL, and ANN KARINA TANINGCO, respondents.

DECISION

BRION, J p: Is an annotation made pursuant to Section 4, Rule 74 of the Rules of Court (Rules) on a certificate of title covering real property considered an encumbrance on the property? We resolve this question in the petition for review on certiorari 1 filed by Delfin Tan (Tan) to assail the decision of the Court of Appeals (CA) in CA-G.R. CV No. 52033 2 and the decision of the Regional Trial Court (RTC) 3 that commonly declared the forfeiture of his P200,000.00 down payment as proper, pursuant to the terms of his contract with the respondents. THE ANTECEDENTS The facts are not disputed. Spouses Lamberto and Erlinda Benolirao and the Spouses Reynaldo and Norma Taningco were the co-owners of a 689square meter parcel of land (property)located in Tagaytay City and covered by Transfer Certificate of Title (TCT) No. 26423. On October 6, 1992, the co-owners executed a Deed of Conditional Sale over the property in favor of Tan for the price of P1,378,000.00. The deed stated: a) An initial down-payment of TWO HUNDRED (P200,000.00) THOUSAND PESOS, Philippine Currency, upon signing of this contract; then the remaining balance of ONE MILLION ONE HUNDRED SEVENTY EIGHT THOUSAND (P1,178,000.00) PESOS, shall be payable within a period of one hundred fifty (150) days from date hereof without interest; b) That for any reason, BUYER fails to pay the remaining balance within above mentioned period, the BUYER shall have a grace period of sixty (60) days within which to make the payment, provided that there shall be an interest of 15% per annum on the balance amount due from the SELLERS; c) That should in case (sic) the BUYER fails to comply with the terms and conditions within the above stated grace period, then the SELLERS shall have the right to forfeit the down payment, and to rescind this conditional sale without need of judicial action; SCEDAI d) That in case, BUYER have complied with the terms and conditions of this contract, then the SELLERS shall execute and deliver to the BUYER the appropriate Deed of Absolute Sale; Pursuant to the Deed of Conditional Sale, Tan issued and delivered to the co-owners/vendors Metrobank Check No. 904407 for P200,000.00 as down payment for the property, for which the vendors issued a corresponding receipt. On November 6, 1992, Lamberto Benolirao died intestate. Erlinda Benolirao (his widow and one of the vendors of the property) and her children, as heirs of the deceased, executed an extrajudicial settlement of Lamberto's estate on January 20, 1993. On the basis of the extrajudicial settlement, a new certificate of title over the property, TCT No. 27335, was issued on March 26, 1993 in the names of the Spouses Reynaldo and Norma Taningco and Erlinda Benolirao and her children. Pursuant to Section 4, Rule 74 of the Rules, the following annotation was made on TCT No. 27335: . . . any liability to credirots (sic), excluded heirs and other persons having right to the property, for a period of two (2) years, with respect only to the share of Erlinda, Andrew, Romano and Dion, all surnamed Benolirao As stated in the Deed of Conditional Sale, Tan had until March 15, 1993 to pay the balance of the purchase price. By agreement of the parties, this period was extended by two months, so Tan had until May 15, 1993 to pay the balance. Tan failed to pay and asked for another extension, which the vendors again granted. Notwithstanding this second extension, Tan still failed to pay the remaining balance due on May 21, 1993. The vendors thus wrote him a letter demanding payment of the balance of the purchase price within five (5) days from notice; otherwise, they would declare the rescission of the conditional sale and the forfeiture of his down payment based on the terms of the contract. Tan refused to comply with the vendors' demand and instead wrote them a letter (dated May 28, 1993) claiming that the annotation on the title, made pursuant to Section 4, Rule 74 of the Rules, constituted an encumbrance on the property that would prevent the vendors from delivering a clean title to him. Thus, he alleged that he could no longer be required to pay the balance of the purchase price and demanded the return of his down payment. When the vendors refused to refund the down payment, Tan, through counsel, sent another demand letter to the vendors on June 18, 1993. The vendors still refused to heed Tan's demand, prompting Tan to file on June 19, 1993 a complaint with the RTC of Pasay City for specific performance against the vendors, including Andrew Benolirao, Romano Benolirao, Dion Benolirao as heirs of Lamberto Benolirao, together with Evelyn Monreal and Ann Karina Taningco (collectively, the respondents). In his complaint, Tan alleged that there was a novation of the Deed of Conditional Sale done without his consent since the annotation on the title created an encumbrance over the property. Tan prayed for the refund of the down payment and the rescission of the contract. On August 9, 1993, Tan amended his Complaint, contending that if the respondents insist on forfeiting the down payment, he would be willing to pay the balance of the purchase price provided there is reformation of the Deed of Conditional Sale. In the meantime, Tan caused the annotation on the title of a notice of lis pendens. On August 21, 1993, the respondents executed a Deed of Absolute Sale over the property in favor of Hector de Guzman (de Guzman) for the price of P689,000.00. IDTSEH Thereafter, the respondents moved for the cancellation of the notice of lis pendens on the ground that it was inappropriate since the case that Tan filed was a personal action which did not involve either title to, or possession of, real property. The RTC issued an order dated October 22, 1993 granting the respondents' motion to cancel the lis pendens annotation on the title. Meanwhile, based on the Deed of Absolute Sale in his favor, de Guzman registered the property and TCT No. 28104 was issued in his name. Tan then filed a motion to carry over the lis pendens annotation to TCT No. 28104 registered in de Guzman's name, but the RTC denied the motion. On September 8, 1995, after due proceedings, the RTC rendered judgment ruling that the respondents' forfeiture of Tan's down payment was proper in accordance with the terms and conditions of the contract between the parties. 4 The RTC ordered Tan to pay the respondents the amount of P30,000.00, plus P1,000.00 per court appearance, as attorney's fees, and to pay the cost of suit. On appeal, the CA dismissed the petition and affirmed the ruling of the trial court in toto. Hence, the present petition. THE ISSUES Tan argues that the CA erred in affirming the RTC's ruling to cancel the lis pendens annotation on TCT No. 27335. Due to the unauthorized novation of the agreement, Tan presented before the trial court two alternative remedies in his complaint — either the rescission of the contract and the return of

the down payment, or the reformation of the contract to adjust the payment period, so that Tan will pay the remaining balance of the purchase price only after the lapse of the required two-year encumbrance on the title. Tan posits that the CA erroneously disregarded the alternative remedy of reformation of contract when it affirmed the removal of the lis pendens annotation on the title. Tan further contends that the CA erred when it recognized the validity of the forfeiture of the down payment in favor of the vendors. While admitting that the Deed of Conditional Sale contained a forfeiture clause, he insists that this clause applies only if the failure to pay the balance of the purchase price was through his own fault or negligence. In the present case, Tan claims that he was justified in refusing to pay the balance price since the vendors would not have been able to comply with their obligation to deliver a "clean" title covering the property. Lastly, Tan maintains that the CA erred in ordering him to pay the respondents P30,000.00, plus P1,000.00 per court appearance as attorney's fees, since he filed the foregoing action in good faith, believing that he is in the right. The respondents, on the other hand, assert that the petition should be dismissed for raising pure questions of fact, in contravention of the provisions of Rule 45 of the Rules which provides that only questions of law can be raised in petitions for review on certiorari. THE COURT'S RULING The petition is granted.

No Memorandum

new

issues

can

be

raised

in

the

At the onset, we note that Tan raised the following additional assignment of errors in his Memorandum: (a) the CA erred in holding that the petitioner could seek reformation of the Deed of Conditional Sale only if he paid the balance of the purchase price and if the vendors refused to execute the deed of absolute sale; and (b) the CA erred in holding that the petitioner was estopped from asking for the reformation of the contract or for specific performance. aIcDCH The Court's September 27, 2004 Resolution expressly stated that "No new issues may be raised by a party in his/its Memorandum". Explaining the reason for this rule, we said that: The raising of additional issues in a memorandum before the Supreme Court is irregular, because said memorandum is supposed to be in support merely of the position taken by the party concerned in his petition, and the raising of new issues amounts to the filing of a petition beyond the reglementary period. The purpose of this rule is to provide all parties to a case a fair opportunity to be heard. No new points of law, theories, issues or arguments may be raised by a party in the Memorandum for the reason that to permit these would be offensive to the basic rules of fair play, justice and due process. 5

Tan contravened the Court's explicit instructions by raising these additional errors. Hence, we disregard them and focus instead on the issues previously raised in the petition and properly included in the Memorandum.

Petition raises a question of law Contrary to the respondents' claim, the issue raised in the present petition — defined in the opening paragraph of this Decision — is a pure question of law. Hence, the petition and the issue it presents are properly cognizable by this Court.

Lis personal actions

pendens

annotation

not

proper

in

Section 14, Rule 13 of the Rules enumerates the instances when a notice of lis pendens can be validly annotated on the title to real property: Sec. 14. Notice of lis pendens. — In an action affecting the title or the right of possession of real property, the plaintiff and the defendant, when affirmative relief is claimed in his answer, may record in the office of the registry of deeds of the province in which the property is situated a notice of the pendency of the action. Said notice shall contain the names of the parties and the object of the action or defense, and a description of the property in that province affected thereby. Only from the time of filing such notice for record shall a purchaser, or encumbrancer of the property affected thereby, be deemed to have constructive notice of the pendency of the action, and only of its pendency against the parties designated by their real names. The notice of lis pendens hereinabove mentioned may be cancelled only upon order of the court, after proper showing that the notice is for the purpose of molesting the adverse party, or that it is not necessary to protect the rights of the party who caused it to be recorded. The litigation subject of the notice of lis pendens must directly involve a specific property which is necessarily affected by the judgment. 6 Tan's complaint prayed for either the rescission or the reformation of the Deed of Conditional Sale. While the Deed does have real property for its object, we find that Tan's complaint is an in personam action, as Tan asked the court to compel the respondents to do something — either to rescind the contract and return the down payment, or to reform the contract by extending the period given to pay the remaining balance of the purchase price. Either way, Tan wants to enforce his personal rights against the respondents, not against the property subject of the Deed. As we explained in Domagas v. Jensen: 7 HCaIDS The settled rule is that the aim and object of an action determine its character. Whether a proceeding is in rem, or in personam, or quasi in rem for that matter, is determined by its nature and purpose, and by these only. A proceeding in personam is a proceeding to enforce personal rights and obligations brought against the person and is based on the jurisdiction of the person, although it may involve his right to, or the exercise of ownership of, specific property, or seek to compel him to control or dispose of it in accordance with the mandate of the court. The purpose of a proceeding in personam is to impose, through the judgment of a court, some responsibility or liability directly upon the person of the defendant. Of this character are suits to compel a defendant to specifically perform some act or actions to fasten a pecuniary liability on him. Furthermore, as will be explained in detail below, the contract between the parties was merely a contract to sell where the vendors retained title and ownership to the property until Tan had fully paid the purchase price. Since Tan had no claim of ownership or title to the property yet, he obviously had no right to ask for the annotation of a lis pendens notice on the title of the property.

Contract is a mere contract to sell A contract is what the law defines it to be, taking into consideration its essential elements, and not what the contracting parties call it. 8 Article 1485 of the Civil Code defines a contract of sale as follows: Art. 1458. By the contract of sale one of the contracting parties obligates himself to transfer the ownership and to deliver a determinate thing, and the other to pay therefor a price certain in money or its equivalent.

A contract of sale may be absolute or conditional. The very essence of a contract of sale is the transfer of ownership in exchange for a price paid or promised. 9 In contrast, a contract to sell is defined as a bilateral contract whereby the prospective seller, while expressly reserving the ownership of the property despite delivery thereof to the prospective buyer, binds himself to sell the property exclusively to the prospective buyer upon fulfillment of the condition agreed, i.e., full payment of the purchase price. 10 A contract to sell may not even be considered as a conditional contract of sale where the seller may likewise reserve title to the property subject of the sale until the fulfillment of a suspensive condition, because in a conditional contract of sale, the first element of consent is present, although it is conditioned upon the happening of a contingent event which may or may not occur. 11 In the present case, the true nature of the contract is revealed by paragraph D thereof, which states: xxx xxx xxx d) That in case, BUYER has complied with the terms and conditions of this contract, then the SELLERS shall execute and deliver to the BUYER the appropriate Deed of Absolute Sale; CDHAcI xxx xxx xxx Jurisprudence has established that where the seller promises to execute a deed of absolute sale upon the completion by the buyer of the payment of the price, the contract is only a contract to sell. 12 Thus, while the contract is denominated as a Deed of Conditional Sale, the presence of the abovequoted provision identifies the contract as being a mere contract to sell.

A Section encumbrance on the property

4,

Rule

74

annotation

is

an

While Tan admits that he refused to pay the balance of the purchase price, he claims that he had valid reason to do so — the sudden appearance of an annotation on the title pursuant to Section 4, Rule 74 of the Rules, which Tan considered an encumbrance on the property. We find Tan's argument meritorious. The annotation placed on TCT No. 27335, the new title issued to reflect the extrajudicial partition of Lamberto Benolirao's estate among his heirs, states: . . . any liability to credirots (sic), excluded heirs and other persons having right to the property, for a period of two (2) years, with respect only to the share of Erlinda, Andrew, Romano and Dion, all surnamed Benolirao [Emphasis supplied.] This annotation was placed on the title pursuant to Section 4, Rule 74 of the Rules, which reads: Sec. 4. Liability of distributees and estate. — If it shall appear at any time within two (2) years after the settlement and distribution of an estate in accordance with the provisions of either of the first two sections of this rule, that an heir or other person has been unduly deprived of his lawful participation in the estate, such heir or such other person may compel the settlement of the estate in the courts in the manner hereinafter provided for the purpose of satisfying such lawful participation. And if within the same time of two (2) years, it shall appear that there are debts outstanding against the estate which have not been paid, or that an heir or other person has been unduly deprived of his lawful participation payable in money, the court having jurisdiction of the estate may, by order for that purpose, after hearing, settle the amount of such debts or lawful participation and order how much and in what manner each distributee shall contribute in the payment thereof, and may issue execution, if circumstances require, against the bond provided in the preceding section or against the real estate belonging to the deceased, or both. Such bond and such real estate shall remain charged with a liability to creditors, heirs, or other persons for the full period of two (2) years after such distribution, notwithstanding any transfers of real estate that may have been made. [Emphasis supplied.] Senator Vicente Francisco discusses this provision in his book The Revised Rules of Court in the Philippines, 13 where he states: The provision of Section 4, Rule 74 prescribes the procedure to be followed if within two years after an extrajudicial partition or summary distribution is made, an heir or other person appears to have been deprived of his lawful participation in the estate, or some outstanding debts which have not been paid are discovered. When the lawful participation of the heir is not payable in money, because, for instance, he is entitled to a part of the real property that has been partitioned, there can be no other procedure than to cancel the partition so made and make a new division, unless, of course, the heir agrees to be paid the value of his participation with interest. But in case the lawful participation of the heir consists in his share in personal property of money left by the decedent, or in case unpaid debts are discovered within the said period of two years, the procedure is not to cancel the partition, nor to appoint an administrator to re-assemble the assets, as was allowed under the old Code, but the court, after hearing, shall fix the amount of such debts or lawful participation in proportion to or to the extent of the assets they have respectively received and, if circumstances require, it may issue execution against the real estate belonging to the decedent, or both. The present procedure is more expedient and less expensive in that it dispenses with the appointment of an administrator and does not disturb the possession enjoyed by the distributees. 14 [Emphasis supplied.] IDAaCc An annotation is placed on new certificates of title issued pursuant to the distribution and partition of a decedent's real properties to warn third persons on the possible interests of excluded heirs or unpaid creditors in these properties. The annotation, therefore, creates a legal encumbrance or lien on the real property in favor of the excluded heirs or creditors. Where a buyer purchases the real property despite the annotation, he must be ready for the possibility that the title could be subject to the rights of excluded parties. The cancellation of the sale would be the logical consequence where: (a) the annotation clearly appears on the title, warning all would-be buyers; (b) the sale unlawfully interferes with the rights of heirs; and (c) the rightful heirs bring an action to question the transfer within the two-year period provided by law.

As we held in Vda. de Francisco v. Carreon: 15 And Section 4, Rule 74 . . . expressly authorizes the court to give to every heir his lawful participation in the real estate "notwithstanding any transfers of such real estate" and to "issue execution" thereon. All this implies that, when within the amendatory period the realty has been alienated, the court in re-dividing it among the heirs has the authority to direct cancellation of such alienation in the same estate proceedings, whenever it becomes necessary to do so. To require the institution of a separate action for such annulment would run counter to the letter of the above rule and the spirit of these summary settlements. [Emphasis supplied.] Similarly, in Sps. Domingo v. Roces, 16 we said:

The foregoing rule clearly covers transfers of real property to any person, as long as the deprived heir or creditor vindicates his rights within two years from the date of the settlement and distribution of estate. Contrary to petitioners' contention, the effects of this provision are not limited to the heirs or original distributees of the estate properties, but shall affect anytransferee of the properties. [Emphasis supplied.] Indeed, in David v. Malay, 17 although the title of the property had already been registered in the name of the third party buyers, we cancelled the sale and ordered the reconveyance of the property to the estate of the deceased for proper disposal among his rightful heirs. By the time Tan's obligation to pay the balance of the purchase price arose on May 21, 1993 (on account of the extensions granted by the respondents), a new certificate of title covering the property had already been issued on March 26, 1993, which contained the encumbrance on the property; the encumbrance would remain so attached until the expiration of the two-year period. Clearly, at this time, the vendors could no longer compel Tan to pay the balance of the purchase since considering they themselves could not fulfill their obligation to transfer a clean title over the property to Tan.

Contract terminated

to

sell

is

not

rescinded

but

What then happens to the contract? We have held in numerous cases 18 that the remedy of rescission under Article 1191 cannot apply to mere contracts to sell. We explained the reason for this in Santos v. Court of Appeals, 19where we said: STaHIC [I]n a contract to sell, title remains with the vendor and does not pass on to the vendee until the purchase price is paid in full. Thus, in a contract to sell, the payment of the purchase price is a positive suspensive condition. Failure to pay the price agreed upon is not a mere breach, casual or serious, but a situation that prevents the obligation of the vendor to convey title from acquiring an obligatory force. This is entirely different from the situation in a contract of sale, where nonpayment of the price is a negative resolutory condition. The effects in law are not identical. In a contract of sale, the vendor has lost ownership of the thing sold and cannot recover it, unless the contract of sale is rescinded and set aside. In a contract to sell, however, the vendor remains the owner for as long as the vendee has not complied fully with the condition of paying the purchase price. If the vendor should eject the vendee for failure to meet the condition precedent, he is enforcing the contract and not rescinding it. . . . Article 1592 speaks of non-payment of the purchase price as a resolutory condition. It does not apply to a contract to sell. As to Article 1191, it is subordinated to the provisions of Article 1592 when applied to sales of immovable property. Neither provision is applicable [to a contract to sell]. [Emphasis supplied.] We, therefore, hold that the contract to sell was terminated when the vendors could no longer legally compel Tan to pay the balance of the purchase price as a result of the legal encumbrance which attached to the title of the property. Since Tan's refusal to pay was due to the supervening event of a legal encumbrance on the property and not through his own fault or negligence, we find and so hold that the forfeiture of Tan's down payment was clearly unwarranted.

Award of Attorney's fees As evident from our previous discussion, Tan had a valid reason for refusing to pay the balance of the purchase price for the property. Consequently, there is no basis for the award of attorney's fees in favor of the respondents. On the other hand, we award attorney's fees in favor of Tan, since he was compelled to litigate due to the respondents' refusal to return his down payment despite the fact that they could no longer comply with their obligation under the contract to sell, i.e., to convey a clean title. Given the facts of this case, we find the award of P50,000.00 as attorney's fees proper.

Monetary interest

award

is

subject

to

legal

Undoubtedly, Tan made a clear and unequivocal demand on the vendors to return his down payment as early as May 28, 1993. Pursuant to our definitive ruling in Eastern Shipping Lines, Inc. v. Court of Appeals, 20 we hold that the vendors should return the P200,000.00 down payment to Tan, subject to the legal interest of 6% per annum computed from May 28, 1993, the date of the first demand letter. Furthermore, after a judgment has become final and executory, the rate of legal interest, whether the obligation was in the form of a loan or forbearance of money or otherwise, shall be 12% per annum from such finality until its satisfaction. Accordingly, the principal obligation of P200,000.00 shall bear 6% interest from the date of first demand or from May 28, 1993. From the date the liability for the principal obligation and attorney's fees has become final and executory, an annual interest of 12% shall be imposed on these obligations until their final satisfaction, this interim period being deemed to be by then an equivalent to a forbearance of credit. aDcHIC WHEREFORE, premises considered, we hereby GRANT the petition and, accordingly, ANNUL and SET ASIDE the May 30, 2002 decision of the Court of Appeals in CA-G.R. CV No. 52033. Another judgment is rendered declaring the Deed of Conditional Sale terminated and ordering the respondents to return the P200,000.00 down payment to petitioner Delfin Tan, subject to legal interest of 6% per annum, computed from May 28, 1993. The respondents are also ordered to pay, jointly and severally, petitioner Delfin Tan the amount of P50,000.00 as and by way of attorney's fees. Once this decision becomes final and executory, respondents are ordered to pay interest at 12% per annum on the principal obligation as well as the attorney's fees, until full payment of these amounts. Costs against the respondents. SO ORDERED.