Du vs. Ortile

A notice of lis pendens may be annotated on a Torrens certificate of title only if the registered owner is a party or is impleaded as a party to the pending action directly affecting the titled property, even though Section 76 of PD 1529 and Section 19, Rule 13 of the Rules do not expressly say so, because the annotation directly affects the owner's rights, creates a cloud on title, and implicates due process.

Deanna Du and Primarosa B. Cuison entered into a memorandum of agreement with Malayan Savings and Mortgage Bank for the sale of a parcel of land at No. 2161 Taft Avenue, Malate, Manila, covered by TCT No. 194618, which Malayan Bank had purchased through a foreclosure sale. Ronald A. Ortile is sued in his capacity as Deputy Administrator of the Land Registration Authority and Register of Deeds of Manila. The dispute is governed by the Property Registration Decree (PD 1529), particularly Sections 76 and 77 on notice and cancellation of lis pendens, and Section 19, Rule 13 of the Rules of Court.

On June 25, 2008, Malayan Savings and Mortgage Bank purchased through a foreclosure sale a parcel of land at No. 2161 Taft Avenue, Malate, Manila, covered by Transfer Certificate of Title (TCT) No. 194618. Malayan Bank thereafter entered into a memorandum of agreement (MOA) with Deanna Du and Primarosa B. Cuison, under which Malayan Bank agreed to sell the property for P20,500,000.00. Pursuant to the MOA, Du paid P11,000,000.00 as downpayment, while Malayan Bank warranted that the property would be free from all liens and encumbrances by August 15, 2008.

Malayan Bank incurred delays in performing its undertaking. Du sent a letter dated November 5, 2012 demanding that Malayan Bank fulfill its commitment, but Malayan Bank still failed. On September 4, 2013, Malayan Bank informed Du that it could not fulfill its undertaking to free the property from all liens and encumbrances because Melissa Tuason-Principe, heir of former owner Pacita Tuason-Principe, had filed an action for annulment of the foreclosure sale. Malayan Bank advised Du that it would return all amounts paid, including interest, pursuant to the MOA. When Melissa Principe successfully redeemed the property, Malayan Bank reiterated its intention to rescind the MOA, which Du rejected. Melissa Principe reacquired the property through a compromise agreement with Malayan Bank approved by the Regional Trial Court of Manila, Branch 17.

Du filed a petition for annulment of judgment against Malayan Bank, George J. Martinez, and Melissa Principe before the Court of Appeals, docketed as CA-G.R. SP No. 141881. Thereafter, Du filed a notice of lis pendens before the Register of Deeds of Manila. On September 18, 2015, the Register of Deeds denied registration of the notice on the ground that the registered owners of the property were not impleaded as parties in the petition. Du appealed by consulta to the Land Registration Authority. Ronald A. Ortile, in his capacity as Deputy Administrator of the LRA and Register of Deeds, denied the appeal in a Resolution dated June 6, 2018 in Consulta No. 002-2015-000017. Aside from Du's failure to implead the registered owners, Ortile opined that a notice of lis pendens cannot be registered when the object of the proceeding is for the recovery of money.

The Court of Appeals found that despite Du's claim that Pacita Tuason and Pacita T. Principe are the same person, no evidence was presented to prove the same. It also found that Du's assertion that Melissa Principe is the sole heir of Pacita Tuason and Pacita T. Principe remained unsubstantiated. These factual findings were material to the Supreme Court's resolution of Du's Rule 45 petition.

• No Express Impleading Requirement: Du argued that nowhere in Section 76 of PD 1529 is it required that the registered owner be impleaded as a party before a notice of lis pendens can be annotated; the notice is merely an extrajudicial incident to constructively advise or warn all persons dealing with the property of the pendency of a case affecting title.
• Voluntad Precedent: Du cited Voluntad vs. Spouses Dizon, where the Court considered and allowed annotation of a notice of lis pendens even if the registered owners were not parties to the subject litigation.
• Identity of Registered Owners and Heirship: Du insisted she substantiated that the registered owners "Pacita Tuason and Pacita T. Principe" appearing in the TCT are one and the same person, and that Melissa Principe is the sole heir of the registered owner. She claimed Melissa Principe admitted in the Complaint in Civil Case No. 13-130263 that Pacita Tuason Principe had passed away and that Melissa, as sole heir, filed the Complaint to protect her mother's interests; Melissa also alleged that she and her late mother executed a real estate mortgage over the subject property to secure a P4,500,000.00 promissory note in favor of Malayan Bank.
• Ver-Reyes Precedent: Du argued, citing Ver-Reyes vs. Court of Appeals, et al., that annotation of a notice of lis pendens should be allowed even if the registered owner is not a party to the pending annulment case because Pacita Tuason Principe, the registered owner, was the predecessor-in-interest of Melissa Principe, who is a party to that case.
• No Prejudice to Registered Owner: Du argued that assuming Melissa Principe is not the absolute owner, this has no bearing on the annotation because a notice of lis pendens has no legal effect that would cause a lien or encumbrance on the property and will not prejudice the registered owner; it is merely a tool to apprise unknowing parties of the property's situation.

• Impleading Registered Owner: Whether the Court of Appeals erred in ruling that in the annotation of the notice of lis pendens, the registered owner should be impleaded as a party.
• Identity and Heirship: Whether the Court of Appeals erred in holding that there was no proof that the registered owners are one and the same person and that Melissa Principe is the sole heir of the registered owner.

• Impleading Registered Owner: No. Section 76 of PD 1529 and Section 19, Rule 13 of the Rules impliedly require the registered owner to be a party or impleaded as a party to the pending case; the Court of Appeals correctly ruled that Pacita Tuason and Pacita T. Principe should first be impleaded.
• Identity and Heirship: No. The Court of Appeals' findings that no evidence proved Pacita Tuason and Pacita T. Principe are the same person and that Melissa Principe is the sole heir remained unsubstantiated; Rule 45 limits review to legal questions and no additional proof was presented.

• Impleading Registered Owner: The analysis began with Sections 76 and 77 of PD 1529 and Section 19, Rule 13. A notice of lis pendens is proper in (1) an action to recover possession of real estate; (2) an action to quiet title or remove clouds; (3) an action for partition; and (4) other proceedings directly affecting title, use, occupation, or possession of land or buildings. Under Villanueva vs. Court of Appeals, annotation requires: (1) the property must be of such character as to be subject to the rule; (2) the court must have jurisdiction over the person and the res; and (3) the property or res must be sufficiently described in the pleadings. Section 76 and Section 19 do not expressly require the registered owner to be a party. However, they impliedly require it, based on the nature of the action and the first Villanueva requisite. Because lis pendens is available only in actions directly affecting title, and the registered owner is the person appearing on the certificate of title, the owner must be a party or impleaded. Four reasons were given. First, the Torrens system protects the registered owner first and foremost; the claim is aimed directly against the realty, and annotation directly impacts ownership rights. Second, annotation necessarily creates a cloud on the certificate of title under Article 476 of the Civil Code, and the owner must have an opportunity to protect a clean title, especially because the property is in limbo and disposal is affected. Third, cancellation under Section 77 of PD 1529 and Section 19, Rule 13 requires a court order; if the owner is not a party, he or she may not even know of the annotation because lis pendens is not considered a lien and may be annotated without presentation of the duplicate certificate under Section 71 of PD 1529. The owner would then have to intervene or file a separate case, incurring expense and delay. Fourth, notifying the owner prevents fraud and allows the owner to controvert unfounded adverse claims. Ver-Reyes vs. Court of Appeals, et al. was also relied on for the principle that justice and fair play and due process require the registered owner to be made a party. The inconvenience or burden may not be slight because a court order is needed for cancellation. Thus, the Court of Appeals correctly ruled that Pacita Tuason and Pacita T. Principe should first be impleaded.
• Identity and Heirship: Du's reliance on Ver-Reyes and Voluntad was rejected. The Court of Appeals found no evidence that Pacita Tuason and Pacita T. Principe are the same person, and no evidence that Melissa Principe is the sole heir of the registered owner. These factual findings were binding because a Rule 45 petition may raise only legal questions, and Du presented no additional proof. Voluntad vs. Spouses Dizon was distinguished. In Voluntad, the registered owners Carmen and Maria Voluntad were not parties, but the persons who applied for annotation were their successors-in-interest; the property had already passed to those successors even though the certificate of title remained in the names of Carmen and Maria; the successors had mortgaged half of the property and sought to exercise their right of redemption after foreclosure. The annotation was sought by the very successors-in-interest to protect their right of redemption and prevent a subsequent transferee from claiming to be an innocent purchaser for value. In Du's case, the facts were incomparable: there was no proof of identity or heirship, and Du was not shown to be the successor-in-interest of the registered owners. Therefore, Voluntad and the portion of Ver-Reyes reiterating Voluntad did not apply. It was added that had Du complied with the requirement to implead the registered owners, the case would not have dragged for six years.

• Notice of Lis Pendens — Nature, Purpose, and Effect — A notice of lis pendens is a Latin term meaning a pending suit. It warns all persons that the title to certain property is in litigation and that purchasers do so at their own risk; it protects the real rights of the party causing registration; it is an extrajudicial incident; it does not affect the merits nor create a right or lien; and cancellation is also an incident. In this case, these principles were recognized, but the Court held that annotation nevertheless directly affects the registered owner and creates a cloud, so the owner must be impleaded.
• Implied Requisite of Impleading the Registered Owner — Under Section 76 of PD 1529 and Section 19, Rule 13 of the Rules, although no express requirement appears, the registered owner must be a party or impleaded as a party to the pending action directly affecting the titled property. This was inferred from the nature of lis pendens actions and the first Villanueva requisite. Applied: the Court of Appeals correctly required Pacita Tuason and Pacita T. Principe to be impleaded before annotation.
• Requisites for Annotation under Villanueva — (1) the property must be of such character as to be subject to the rule; (2) the court must have jurisdiction over the person and the res; and (3) the property or res must be sufficiently described in the pleadings. Applied: the first requisite supported the impleading requirement because only actions directly affecting title are covered.
• Voluntad Exception / Successor-in-Interest Rule — Annotation may be allowed despite non-impleading of the registered owner where the applicant is the successor-in-interest of the registered owner and the property has already passed to the applicant, making impleading the registered owner superfluous. Applied: not applicable because Du failed to prove identity or heirship, and the Voluntad applicants were themselves the successors-in-interest.
• Rule 45 Limitation to Legal Questions — A petition for review on certiorari under Rule 45 may raise only legal questions; factual findings of the Court of Appeals are binding absent additional proof. Applied: the Court refused to disturb the findings on identity and heirship.

• "However, the Court takes the view that Section 76 of PD 1529 and Section 19, Rule 13 of the Rules impliedly require the registered owner to be a party or be impleaded as a party to such pending case." — This states the ratio decidendi: the Court inferred an impleading requirement despite the absence of express language.
• "Since a cloud on the title is created when a notice of lis pendens is annotated, the registered owner should be given the opportunity to be able to protect his/her clean, or unblemished certificate of title." — This explains one core rationale: annotation burdens the Torrens title and triggers the owner's right to protect it.
• "The facts obtaining in Voluntad are incomparable to the facts of the instant case. Thus, Voluntad and the portion in Ver-Reyes reiterating Voluntad find no application in the present case." — This distinguishes petitioner's main precedents and confines the Voluntad exception.
• "The Court is bound by the findings of the CA inasmuch as only legal questions may be raised in a Rule 45 petition for review." — This supports the denial of the second issue on the factual findings of identity and heirship.

• Villanueva vs. Court of Appeals, 346 Phil. 289 (1997) — Cited for the requisites to annotate a notice of lis pendens; the first requisite was used to infer that the registered owner must be a party.
• Voluntad vs. Spouses Dizon, 372 Phil. 82 (1999) — Cited by petitioner; distinguished. The Court held it inapplicable because the successors-in-interest themselves applied for annotation and the property had passed to them.
• Ver-Reyes vs. Court of Appeals, et al., 585 Phil. 503 (2008) — Relied on for the principle that due process and justice and fair play require the registered owner to be impleaded; its reiteration of Voluntad was distinguished.
• Spouses Lim vs. Vera Cruz, 408 Phil. 503 (2001) — Cited for the meaning, nature, purpose, and effect of lis pendens.
• Magdalena Homeowners Association, Inc. vs. Court of Appeals, 263 Phil. 235 (1990) — Cited for lis pendens as an extrajudicial incident and cancellation as an incident.
• Viewmaster Construction Corp. vs. Maulit, 383 Phil. 729 (2000) — Cited for the rule that there is no requirement to prove a right or interest; annotation neither affects the merits nor creates a right or lien.
• Tanchoco vs. Aquino — Cited for the public policy foundation of lis pendens and the binding effect on purchasers pendente lite; no citation appears in the provided text.

• Section 76, Presidential Decree No. 1529 (Property Registration Decree) — Governs notice of lis pendens. It provides that no action directly affecting title, use, occupation, or buildings shall affect registered land as against persons other than the parties unless a notice is filed and registered. The Court held that it impliedly requires the registered owner to be a party or impleaded.
• Section 77, Presidential Decree No. 1529 — Governs cancellation of lis pendens before final judgment upon court order, by the Register of Deeds upon verified petition, or after final judgment upon registration of a clerk's certificate. The Court cited it to show that the registered owner needs party status to timely cancel the notice.
• Section 19, Rule 13, 2019 Proposed Amendments to the 1997 Rules of Civil Procedure — Governs notice of lis pendens in actions affecting title or right of possession. It states that the notice may be cancelled only upon court order after proper showing. The Court held that it impliedly requires the registered owner to be a party or impleaded.
• Article 476, Civil Code — Defines a cloud on title. The Court cited it to support the conclusion that annotation of a notice of lis pendens creates a cloud on the registered owner's certificate of title.
• Section 71, Presidential Decree No. 1529 — Requires the Register of Deeds to notify the registered owner when an attachment or other involuntary dealing is registered without the duplicate certificate. The Court cited it to explain that because lis pendens is not considered a lien, it may be annotated without the duplicate certificate, so the owner may not be aware of it.
• Rule 45, Rules of Court — Governs petitions for review on certiorari. The Court applied the rule that only legal questions may be raised, making the Court of Appeals' factual findings binding.

Inting, Gaerlan, Dimaampao, and Singh, JJ., concur.