Heirs of Eugenio Lopez, Sr. vs. Enriquez

A notice of lis pendens cannot be registered based on a mere motion filed in a land registration case where the movants are not parties to the action; the proper remedy for a person claiming ownership of registered land under an unregistered deed of sale is an action for reconveyance in the ordinary courts.

The case arose from a dispute over two parcels of land in Marikina City originally registered in the names of Alfonso Sandoval and Roman Ozaeta, Jr. Sandoval and Ozaeta allegedly sold the lots to Eugenio Lopez, Sr. in 1970, but the sale was never recorded or presented to the land registration court while the registration proceedings were pending. Decades later, the heirs of Lopez sought to assert their claim after certificates of title were issued in the names of the original applicants.

• Original Filing: Application for registration of title filed by Alfonso Sandoval and Roman Ozaeta, Jr. before the RTC of Pasig City, Branch 152, docketed as Case No. 2858, LRC No. N-18887
• Lower Court Decision: The land registration court granted the application on 31 May 1966; decision became final and executory; certificate of finality issued 8 March 1991
• Administrative Proceedings: Petitioners filed a motion in LRC No. N-18887 on 16 July 1997 to consider a Deed of Absolute Sale; they filed another motion on 25 November 1998 to declare the decrees and titles void
• Register of Deeds Action: Denied the application to annotate a notice of lis pendens in a letter dated 15 December 1998
• Consulta to LRA: Petitioners elevated the denial to the LRA on 14 January 1999, docketed as Consulta No. 2879
• LRA Ruling: Resolution dated 21 May 1999 ruled that a notice of lis pendens based on a motion is not registrable
• CA Decision: Petition for review dismissed for lack of merit in CA-G.R. SP No. 55993, Decision dated 29 November 2000
• SC Action: Petition for review on certiorari under Rule 45 filed with the SC

Alfonso Sandoval and Roman Ozaeta, Jr. filed an application for registration of title over certain parcels of land before the Regional Trial Court of Pasig City, Branch 152, docketed as Case No. 2858, LRC No. N-18887. The land registration court issued an order of general default, and after hearings, granted the application on 31 May 1966. The decision became final and executory, and the land registration court issued a certificate of finality on 8 March 1991. Subsequently, the National Land Titles and Deeds Administration, now the Land Registration Authority, issued Decree Nos. N-217643 and N-217644 in the names of Sandoval and his wife Rosa Ruiz, and Ozaeta and his wife Ma. Salome Lao.

On 16 July 1997, petitioners Eugenio Lopez, Jr., Manolo Lopez, Oscar Lopez, and Presentacion L. Psinakis, heirs of Eugenio Lopez, Sr., filed a motion in LRC No. N-18887. The motion alleged that Sandoval and Ozaeta sold the lots subject of the application to the late Eugenio Lopez, Sr. on 23 September 1970. Petitioners prayed that the court consider the Deed of Absolute Sale over the lots executed by Sandoval and Ozaeta and their respective spouses in favor of Eugenio Lopez, Sr. Invoking Section 22 of Presidential Decree No. 1529, petitioners also prayed that the court issue the decree of registration in their names as the successors-in-interest of Eugenio Lopez, Sr. The land registration court gave due course to the motion and conducted hearings. However, the Register of Deeds of Marikina City issued the corresponding OCT Nos. O-1603 and O-1604 in favor of Sandoval and Ozaeta and their spouses only on 18 August 1998.

The decrees bore the date 20 October 1977, but petitioners discovered that the incumbent LRA Administrator, Alfredo R. Enriquez, had signed them on that date even though he only assumed office on 8 July 1998, and even before Judge Briccio C. Ygaña issued an Order on 3 July 1998. Petitioners filed another motion on 25 November 1998 to declare void Decree Nos. N-217643 and N-217644 and OCT Nos. O-1603 and O-1604, pointing out these inconsistencies. They requested the LRA to recall the decrees, but the LRA Administrator denied the request in a letter dated 1 December 1998. The letter explained that the decrees were actually prepared on 20 October 1977, forwarded to the Office of the Administrator on 8 August 1998, released on 13 August 1998, and signed sometime between those dates, not on 20 October 1997 as reflected. The LRA stated it was an oversight and clarified that the decrees were actually issued between 8 and 13 August 1998. The LRA also noted that no copy of the motion nor an order directing the office to comment thereon appeared in the records, so the motion could not have been considered. As to recall, the LRA stated it was beyond its authority since certificates of title had already been issued, unless authorized by the court.

Also on 25 November 1998, petitioners filed with the Register of Deeds of Marikina City an application to annotate a notice of lis pendens at the back of OCT Nos. O-1603 and O-1604 on the ground that they had filed with the land registration court a motion to declare the titles void. Petitioners attached a copy of the 25 November 1998 motion and the pertinent OCTs. In a letter dated 15 December 1998, the Register of Deeds denied the application, citing Section 76 of PD 1529 and stating that the application was bereft of the original petition or complaint upon which the office would base its action. The Register of Deeds advised petitioners to elevate the matter en consulta to the LRA within five days. Three days after receipt, petitioners elevated the denial in consulta to the LRA, docketed as Consulta No. 2879.

In its resolution dated 21 May 1999, the LRA ruled that a notice of lis pendens based on a motion is not registrable. Relying on Section 14, Rule 13 of the Rules of Court, the LRA stated that only a party to a case has the legal personality to file a notice of lis pendens. The LRA focused on petitioners' standing in LRC No. N-18887, declaring that they are not parties, but mere movants whose personality the court has not admitted. Since a land registration case is a proceeding in rem, an order of general default binds the whole world as a party. Based on Section 26 of PD 1529, the LRA ruled that petitioners should have filed a motion to lift the order of general default. The CA affirmed the LRA, and petitioners elevated the case to the SC.

• Petitioners argued that their motion to declare void the decrees issued by the LRA is a proper basis for filing a notice of lis pendens
• They claimed they complied with the requirements for registration of a notice of lis pendens under Section 76 of PD 1529
• Petitioners contended that by filing the 16 July 1997 motion and the land registration court giving it due course, they acquired legal standing in the registration proceedings
• They asserted that buyer Eugenio Lopez, Sr. stepped into the shoes of the sellers-applicants when the latter sold the property to him; as successors-in-interest of the buyer, petitioners argued they are not strangers to the proceedings
• Petitioners invoked Section 22 of PD 1529 and its antecedent, Section 29 of Act 496, as interpreted in Mendoza vs. Court of Appeals
• They argued that they can file the motion to declare void the decrees despite the general order of default not having been lifted

• The LRA argued that under Section 26 of PD 1529, the order of default includes petitioners; therefore, their failure to move to lift the default order did not give them standing
• The LRA contended that as long as the court does not lift the order of general default, petitioners have no legal standing to file the motion to declare void the decrees
• The LRA maintained that petitioners are deemed movants whose personality as far as the case is concerned is not yet admitted by the court
• The Office of the Solicitor General supported the LRA's position, citing Serrano vs. Palacio for the rule that a motion to lift the order of general default must first be filed before a party can intervene or oppose in a land registration case

• Procedural Issues: Whether petitioners' motion to declare void the decrees issued by the LRA is a proper basis for filing a notice of lis pendens
• Substantive Issues: Whether petitioners can file the motion to declare void the decrees issued by the land registration court in LRC Case No. N-18887 despite the fact that the court has not lifted the general order of default

• Procedural: The SC ruled that the Register of Deeds correctly denied the application for a notice of lis pendens. The SC held that petitioners failed to comply with the requirements for registration under Section 76 of PD 1529 because they are mere movants, not parties, in LRC No. N-18887. A notice of lis pendens requires a statement of the institution of an action or proceeding, and petitioners only had a motion pending, not an action. The SC emphasized that the notice must contain the names of the parties and the object of the action; petitioners were not parties to any action as contemplated by law. The SC noted that while the purpose of lis pendens is to protect the rights of the party causing registration and to advise third persons, the filing does not create a right or lien that previously did not exist.

• Substantive: The SC ruled that petitioners committed a fatal procedural error when they filed a motion in LRC No. N-18887 instead of an action for reconveyance. The proper remedy was an action for reconveyance against Sandoval, Ozaeta, and their spouses, based on Section 55 of Act No. 496, as amended by Act No. 3322. An action for reconveyance is an action in personam available to a person whose property has been wrongfully registered under the Torrens system in another's name. It is filed as an ordinary action in the ordinary courts, not with the land registration court. Reconveyance is always available as long as the property has not passed to an innocent third person for value. A notice of lis pendens may be annotated immediately upon institution of such an action.

• On the issue of the motion to lift the order of general default, the SC disagreed with the LRA and CA's observation that petitioners needed to file such a motion. The SC clarified that a motion to lift the order of general default should be filed before entry of final judgment. Since the land registration court granted the application on 31 May 1966 and issued a certificate of finality on 8 March 1991, while petitioners filed their motion only on 16 July 1997, even a motion to lift the order of general default would have been futile because it was filed out of time. The SC distinguished between movants as mere interested parties under Section 22 of PD 1529 and movants as intervenors-oppositors to land registration proceedings, holding that it is only in the latter case that a motion to lift the order of general default is required.

• Doctrine of Lis Pendens — Literally means a pending suit. It 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. The purposes are: (1) to protect the rights of the party causing the registration, 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. The filing has a two-fold effect: (1) it keeps the subject matter within the power of the court until entry of final judgment to prevent defeat of the final judgment by successive alienations; and (2) it binds a purchaser, bona fide or not, to the judgment or decree. However, the filing does not create a right or lien that previously did not exist.

• Requisites for Notice of Lis Pendens — As decreed by Section 76 of PD 1529, a notice of lis pendens should contain: (a) a statement of the institution of an action or proceeding; (b) the court where the same is pending; (c) the date of its institution; (d) a reference to the number of the certificate of title of the land; (e) an adequate description of the land affected; and (f) the name of the registered owner.

• Cases Where Notice of Lis Pendens is Proper — Per Magdalena Homeowners Association, Inc. vs. Court of Appeals: (a) an action to recover possession of real estate; (b) an action to quiet title; (c) an action to remove clouds on title; (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.

• Doctrine of Reconveyance — Reconveyance is based on Section 55 of Act No. 496, as amended by Act No. 3322, which states that in all cases of registration procured by fraud, the owner may pursue all legal and equitable remedies against the parties to such fraud, without prejudice to the rights of any innocent holder for value of a certificate of title. An action for reconveyance is an action in personam available to a person whose property has been wrongfully registered under the Torrens system in another's name. It is filed as an ordinary action in the ordinary courts of justice, not with the land registration court. Reconveyance is always available as long as the property has not passed to an innocent third person for value. A notice of lis pendens may be annotated on the certificate of title immediately upon the institution of the action.

• Effect of Order of General Default in Land Registration — Under Section 26 of PD 1529, if no person appears and answers within the time allowed, the court shall, upon motion of the applicant, order a default to be recorded. By the description in the notice "To All Whom It May Concern," all the world are made parties defendant and shall be concluded by the default order. A party declared in default loses standing in court; as a result, the party cannot appear in court, adduce evidence, be heard, or be entitled to notice, and cannot even appeal from the judgment, unless a motion to set aside the order of default is filed under the grounds provided in Section 3, Rule 9 of the 1997 Rules of Civil Procedure.

• Distinction Between Movants Under Section 22 of PD 1529 and Intervenors-Oppositors — The SC clarified that one should distinguish between movants as mere interested parties prescribed under Section 22 of PD 1529 and movants as intervenors-oppositors to the land registration proceedings. It is only in the latter case that a motion to lift the order of general default is required.

• Section 14, Rule 13, 1997 Rules of Civil Procedure — Provides for the notice of lis pendens. In an action affecting the title or right of possession of real property, the plaintiff and the defendant, when affirmative relief is claimed, may record in the office of the registry of deeds a notice of the pendency of the action. The notice shall contain the names of the parties and the object of the action or defense, and a description of the property. The SC applied this provision to hold that only a party to a case has the legal personality to file a notice of lis pendens.

• Section 76, Presidential Decree No. 1529 (Property Registration Decree) — Provides for the notice of lis pendens. No action to recover possession of real estate, or to quiet title, or to remove clouds upon the title, or for partition or other proceedings of any kind in court directly affecting the title to land or the use or occupation thereof 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. The SC applied this provision to hold that petitioners failed to comply with the requisites because they had no pending action, only a motion.

• Section 22, Presidential Decree No. 1529 — Provides for dealings with land pending original registration. After the filing of the application and before the issuance of the decree of registration, the land may still be the subject of dealings, in which case the interested party shall present to the court the pertinent instruments, and the court, after notice to the parties, shall order such land registered subject to the conveyance or encumbrance, or order that the decree of registration be issued in the name of the person to whom the property has been conveyed. The SC distinguished this provision from the situation where a party seeks to oppose the application.

• Section 26, Presidential Decree No. 1529 — Provides for the order of default and its effect. If no person appears and answers within the time allowed, the court shall, upon motion of the applicant, order a default to be recorded. By the description in the notice "To All Whom It May Concern," all the world are made parties defendant and shall be concluded by the default order. The SC cited this provision in discussing the effect of the general default order on petitioners.

• Section 55, Act No. 496, as amended by Act No. 3322 — Provides that in all cases of registration procured by fraud, the owner may pursue all legal and equitable remedies against the parties to such fraud, without prejudice to the rights of any innocent holder for value of a certificate of title. The SC cited this provision as the basis for an action for reconveyance.

• Section 3, Rule 9, 1997 Rules of Civil Procedure — Provides the grounds for setting aside an order of default. The SC mentioned this in the context of the effect of a default order.

• Section 6, Rule 1, 1997 Rules of Civil Procedure — Provides that the Rules shall be liberally construed to secure a just, speedy, and inexpensive disposition of every action and proceeding. The SC acknowledged the tension between this objective and the strict requirements for a notice of lis pendens.

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