Gonzales vs. Marmaine Realty Corporation

A notice of lis pendens arising from an action is properly cancelled when final judgment has been rendered with finality against the party who caused its annotation. Exhaustion of administrative remedies was excused in this instance because the propriety of cancellation involved a purely legal question requiring only interpretation and application of law, not examination of probative value or technical administrative expertise.

Spouses Ramon and Ligaya Gonzales asserted the status of agricultural tenants on landholdings owned by Marmaine Realty Corporation, represented by Mariano Manalo. Controversies involving agricultural tenancy fall within the specialized adjudicatory jurisdiction of the Department of Agrarian Reform Adjudication Board through its Provincial Agrarian Reform Adjudicators, subject to further administrative appeal within that machinery.

On October 30, 1997, Spouses Ramon and Ligaya Gonzales filed a Complaint for Recognition as Tenant with Damages and Temporary Restraining Order against Marmaine Realty Corporation before the Office of the Provincial Adjudicator, Department of Agrarian Reform Adjudication Board, Region IV. After Marmaine filed a Motion to Dismiss and thereafter a seasonable Answer with Counterclaim, trial ensued.

On January 6, 1998, the Provincial Agrarian Reform Adjudicator issued a Resolution ordering the issuance of a writ of preliminary injunction in the spouses' favor. Thereafter, on September 26, 2000, the spouses filed a Notice of Lis Pendens before the Register of Deeds of Batangas, which was annotated on the certificates of title of Marmaine's properties.

After due proceedings, the Provincial Agrarian Reform Adjudicator issued a Decision dated June 27, 2002 dismissing the spouses' complaint for lack of merit. Their motion for reconsideration was denied in an Order dated August 7, 2002. On appeal, the Department of Agrarian Reform Adjudication Board affirmed the dismissal in a Decision dated October 17, 2008, and denied reconsideration in a Resolution dated March 23, 2009. For failure to further appeal, the decision became final and executory on May 7, 2009, and Entry of Judgment was issued on January 19, 2012.

In view of that finality, Marmaine filed a Motion for Cancellation of Notice of Lis Pendens dated January 31, 2012. In an Order dated May 15, 2012, the Provincial Agrarian Reform Adjudicator initially denied the motion as premature because Civil Case No. RY2K-052 involving the same parties remained pending before the Regional Trial Court of Rosario, Batangas, Branch 87. On reconsideration, however, the Adjudicator issued an Order dated December 4, 2012 setting aside the earlier order and directing the Register of Deeds of Batangas to cancel the annotation, clarifying that cancellation pertained only to the Tenancy Case and not to the pending civil case. The spouses' motion for reconsideration was denied in a Resolution dated October 16, 2013, prompting direct resort to the Court of Appeals through a petition for review under Rule 43, which was dismissed on the procedural ground of non-exhaustion.

• Exhaustion of Administrative Remedies — Purely Legal Question: Petitioner argued that the issue raised before the CA, i.e., the propriety of the cancellation of the Notice of Lis Pendens, falls within the exception to exhaustion because it is a purely legal question whose resolution would not involve examination of the probative value presented by the litigants and must rest solely on what the law provides on the given set of circumstances.
• Resolution on the Merits: Petitioner prayed for a final resolution of the conflicting claims on the merits to prevent further delay.

• Exhaustion of Administrative Remedies: Whether the CA erred in dismissing the petition for review before it due to petitioners' failure to exhaust administrative remedies.
• Cancellation of Lis Pendens: Whether the PARAD correctly ordered the cancellation of the notice of lis pendens annotated on the certificates of title of Marmaine's properties.

• Exhaustion of Administrative Remedies: Yes. Dismissal was erroneous because the propriety of cancellation presented a purely legal question, an established exception to exhaustion requiring only interpretation and application of law.
• Cancellation of Lis Pendens: Yes. Cancellation was proper because the Tenancy Case from which the annotation stemmed had been decided with finality against the spouses who caused it, limited to that case alone.

• Exhaustion of Administrative Remedies: Before judicial intervention, all administrative processes must generally be availed of, and premature resort is fatal absent waiver or estoppel, grounded on comity, convenience, lesser expense, and speedier resolution within specialized competence. The doctrine is not absolute and does not apply where the question is purely legal, meaning doubt concerns what the law is on a certain state of facts rather than the truth or falsehood of alleged facts, requiring no technical knowledge and ultimately resting with courts. Applied here, the cancellation issue required no examination of probative value and rested solely on applicable law, so the CA's dismissal was erroneous; remand was dispensed with because the record already permitted evaluation of the merits to better serve the ends of justice.
• Cancellation of Lis Pendens: Lis pendens denotes the control acquired over property in litigation until final judgment, founded on public policy to keep the subject within the court's power and prevent defeat of judgment by subsequent alienation, with the two-fold effect of preserving the subject matter until final judgment and binding subsequent purchasers, bona fide or not, to the ensuing judgment or decree. Under Section 14, Rule 13 and case law, cancellation is allowed after proper showing of molesting purpose or lack of necessity, including exceptional circumstances imputable to the annotating party, undue prolongation to the other's prejudice, dismissal for non-prosequitur, or judgment against the annotating party. Applied here, the annotation stemmed solely from the Tenancy Case decided with finality against the spouses, so cancellation limited to that case was warranted and left Civil Case No. RY2K-052 unaffected.

• Exhaustion of Administrative Remedies — Courts must allow administrative agencies to carry out functions within their specialized competence, requiring resort to all administrative processes before judicial review; premature resort is fatal absent waiver or estoppel. The rule was applied as the starting framework, with the CA having relied on it to require appeal from the PARAD to the DARAB before Rule 43 review.
• Exception for Purely Legal Questions — Exhaustion does not apply when the question is purely legal, where doubt concerns what the law is on a given state of facts rather than the truth of alleged facts, involving no examination of probative value and no need for technical expertise, the final decision resting with courts. The exception was applied to excuse direct resort to the CA because cancellation propriety turned solely on law applied to undisputed finality.
• Lis Pendens — Nature and Effects — Lis pendens is the jurisdiction, power or control acquired over property in suit until final judgment, intended to keep the property within the court's power and warn the world that acquisition is at the acquirer's risk; its two-fold effect is (a) to keep the subject matter within the court's power until final judgment to prevent defeat by successive alienations, and (b) to bind purchasers to the subsequent judgment or decree. The definition framed analysis of why the annotation could no longer be maintained after litigation ended.
• Cancellation of Notice of Lis Pendens — Under Section 14, Rule 13 of the Rules of Court, cancellation follows proper showing of molesting purpose or lack of necessity to protect the annotating party's rights; jurisprudence adds (a) exceptional circumstances imputable to the annotating party, (b) undue prolongation prejudicing the other party, (c) dismissal for non-prosequitur, or (d) judgment against the annotating party. The fourth ground was applied to sustain cancellation after final adverse judgment against Sps. Gonzales in the Tenancy Case.

• "The doctrine of exhaustion of administrative remedies is a cornerstone of our judicial system." — States the foundational premise for requiring resort to administrative redress before judicial review, grounding the CA's initial dismissal rule.
• "There is a question of law when the doubt or difference arises as to what the law is on a certain state of facts, and not as to the truth or the falsehood of alleged facts." — Provides the canonical test for the purely-legal-question exception that excused exhaustion in this case.
• ""Lis pendens," which literally means pending suit, refers to the jurisdiction, power or control which a court acquires over a property involved in a suit, pending the continuance of the action, and until final judgment." — Defines the controlling concept and its temporal limit, supporting cancellation once litigation terminated finally.

• Universal Robina Corp. (Corn Division) vs. Laguna Lake Development Authority, 664 Phil. 754, 759-760 (2011) — Cited as authority for the rationale of exhaustion, including comity, convenience, expense, and speedier resolution within specialized competence.
• Samar II Electric Cooperative vs. Seludo, Jr., G.R. No. 173840, April 25, 2012, 671 SCRA 78, 88 — Cited for the pre-condition of availing administrative processes and the fatal effect of premature resort absent waiver or estoppel, and for the purely-legal-question exception.
• Vigilar vs. Aquino, 654 Phil. 755 (2011) — Followed for the explanation that purely legal questions involve no examination of probative value and rest finally with courts, not administrative authorities.
• Sps. Romero vs. CA, 497 Phil. 775, 784-785 (2005) — Followed for the definition, public-policy basis, warning function, and two-fold effect of notice of lis pendens.
• Fernandez vs. CA, 397 Phil. 205, 217 (2000) — Followed for the enumerated situations permitting cancellation, including judgment rendered against the party who caused the notation.

• Section 14, Rule 13, Rules of Court — Provides that a notice of lis pendens may be cancelled after proper showing that it was intended to molest the adverse party or is not necessary to protect the rights of the party who caused its recording; applied together with jurisprudence to sustain cancellation after final adverse judgment in the Tenancy Case.

Maria Lourdes P.A. Sereno, Chief Justice, Chairperson; Teresita J. Leonardo-De Castro, Associate Justice; Lucas P. Bersamin, Associate Justice; Jose Portugal Perez, Associate Justice.