Lukang vs. Pagbilao Development Corporation

A purchaser of real property who acquires title during the pendency of litigation affecting the property, with actual notice of the controversy through annotated notices of lis pendens and adverse claims, takes the property subject to the outcome of the litigation and may be enjoined from taking possession where the applicants show an ostensible right and irreparable injury.

Arsenio Lukang maintained two families: with Mercedes Dee (with whom he had three children) and with Leoncia Martinez (with whom he had ten children, including Pedro). During his cohabitation with Leoncia in Quezon, several real properties were acquired and registered in the names of "Arsenio Lukang, married to Mercedes Dee, 1/2 share and Leoncia Martinez, single, 1/2 share." Following Arsenio's death in 1976, the heirs executed an extrajudicial settlement of estate, but disputes later arose regarding subsequent partitions and transfers. Certain properties were allegedly sold or donated by Simeon (son of Leoncia) to his children and to Mercedes and her children, while Leoncia and her children, claiming to be co-owners, contested these transactions and registered adverse claims and notices of lis pendens on the titles in 1989 and 1990.

• The Family and Properties: Arsenio Lukang cohabited with Leoncia Martinez from 1935 until his death in 1976, producing ten children including petitioner Pedro Lukang. During this period, they acquired several real properties in Pagbilao, Quezon, registered in the names of "Arsenio Lukang, married to Mercedes Dee, 1/2 share and Leoncia Martinez, single, 1/2 share." Arsenio had previously lived with Mercedes Dee from 1922 to 1934, with whom he had three children.
• Post-Death Transfers: Following Arsenio's death, the heirs executed an Extrajudicial Settlement of Estate. Subsequently, Mercedes and her children executed a document purporting to partition the half-share of the four original properties among themselves in 1987. Simeon, one of Leoncia's children, allegedly lost the titles to other properties, obtained new duplicates, and transferred them to his children (Benedict, Heile, and Madeleine) via donation, and sold another parcel to Mercedes, Rosalina, Leoncia, and Elpidio.
• Pending Litigation and Annotations: On September 26, 1990, Leoncia and her children filed Civil Case No. 90-124 for annulment of the extrajudicial partition and new certificates of title. Pedro Lukang registered adverse claims on February 3, 1989, and notices of lis pendens on November 6, 1989 and October 1, 1990, on the titles of the properties that would later be sold to PDC.
• Purchase by PDC: In 1993, while Civil Case No. 90-124 and Civil Case No. 89-79 (for recovery of titles) were pending, PDC purchased six of the subject properties from Simeon, Mercedes, and Rosalina. The titles issued to PDC carried over the annotations of adverse claims and lis pendens.
• Application for Injunction: Upon learning that PDC had entered the premises, destroyed structures, and commenced construction of a power plant, Pedro and the other heirs filed an application for writ of preliminary injunction with ex-parte prayer for TRO on April 23, 2008, alleging actual possession and imminent irreparable damage.

• Status as Transferee Pendent Lite: Pedro maintained that PDC's status as a transferee pendent lite was the central issue, arguing that the CA erred in ignoring that PDC purchased the properties with full knowledge of the pending litigation and annotated encumbrances.
• Right to Exclude: Petitioner argued that the CA erred in ruling that PDC, as registered owner, had the absolute right to enjoy and exclude others, contending that such right was subject to the outcome of the pending cases given the prior annotations.
• Grave Abuse of Discretion: Pedro asserted that the RTC did not commit grave abuse of discretion in granting the injunction because the right to protect the status quo was clear, there was paramount necessity to prevent irreparable injury, and the RTC did not pre-judge the main case.
• Bond Requirement: Petitioner argued that the CA erred in holding that the RTC committed grave abuse of discretion in not fixing the bond, submitting that the subsequent posting of the bond cured any procedural defect.

• Contingent Right: PDC countered that Pedro's right over the properties was not clear and unmistakable but merely contingent upon the outcome of the pending cases, and therefore not protectable by injunction.
• Registered Owner's Rights: Respondent argued that as the registered owner of the subject properties, it possessed the right to enjoy and exclude others under Articles 428 and 429 of the Civil Code, which the RTC improperly restrained.
• No Irreparable Injury: PDC maintained that there was no paramount necessity for the writ because Pedro would not suffer great and irreparable injury, and the RTC's grant of injunction effectively pre-judged the main case.
• Procedural Defect: Respondent argued that the RTC committed grave abuse of discretion in failing to fix the amount of the bond prior to issuing the writ, violating the condition sine qua non for the issuance of preliminary injunction.

• Grave Abuse of Discretion: Whether the Court of Appeals erred in finding that the Regional Trial Court committed grave abuse of discretion in granting the writ of preliminary injunction.
• Transferee Pendent Lite: Whether PDC acquired the subject properties as a transferee pendent lite, charged with notice of the pending litigation.
• Clear and Unmistakable Right: Whether the applicants demonstrated a clear and unmistakable right warranting the issuance of injunctive relief.
• Bond Requirement: Whether the failure to fix the bond amount prior to the issuance of the writ constitutes grave abuse of discretion warranting the nullification of the injunction.

• Grave Abuse of Discretion: The RTC did not commit grave abuse of discretion in granting the preliminary injunction. The grant or denial of such writ rests upon the sound discretion of the trial court, and absent manifest abuse, appellate courts must not interfere. The RTC's determination that the applicants showed an ostensible right and that irreparable injury would result from PDC's construction activities fell within its proper exercise of discretion.
• Transferee Pendent Lite: PDC acquired the properties as a transferee pendent lite. The annotations of adverse claims and notices of lis pendens in 1989 and 1990, predating PDC's 1993 purchase, served as notice to the whole world that the properties were in litigation. A purchaser with notice of pending litigation takes the property subject to the outcome of the suit, gambling on the result. PDC cannot invoke its status as registered owner to dispossess the actual possessors where it purchased with knowledge of the adverse claims.
• Clear and Unmistakable Right: The applicants established the requisites for injunction: (a) the invasion of the right sought to be protected was material and substantial; (b) the right, while not conclusively established, was clear and unmistakable as ostensible co-owners in actual possession; and (c) there was urgent and paramount necessity to prevent serious damage from PDC's construction of a power plant.
• Bond Requirement: The failure to fix the bond amount prior to issuance did not constitute grave abuse of discretion warranting nullification. While posting a bond is a condition sine qua non, the subsequent posting of a ₱1,000,000.00 bond by Pedro, which PDC never questioned before the RTC, cured any procedural defect and caused no substantial prejudice to warrant the writ's quashal.

• Requisites for Writ of Preliminary Injunction — Under Section 3, Rule 58 of the Rules of Court, a writ of preliminary injunction requires: (a) the invasion of the right sought to be protected is material and substantial; (b) the right of the complainant is clear and unmistakable; and (c) there is an urgent and paramount necessity for the writ to prevent serious damage. The right need not be conclusively established; an ostensible right to the final relief prayed for is sufficient.
• Notice of Lis Pendens — The annotation of a notice of lis pendens serves as an announcement to the whole world that a particular real property is in litigation and as a warning that those who acquire an interest in the property do so at their own risk. It preserves the property within the power of the court until litigation terminates to prevent the defeat of the judgment by subsequent alienation and binds purchasers, bona fide or otherwise, to the subsequent judgment.
• Transferee Pendent Lite — A purchaser of property during the pendency of litigation (transferee pendent lite) takes the property subject to the outcome of the litigation. Having notice of the pending controversy, the purchaser cannot claim superior rights over the parties in the original action and must await the final outcome or settle with the claimants.
• Effect of Failure to Fix Bond — While the posting of a bond is a condition sine qua non for the issuance of a writ of preliminary injunction, the failure to fix the amount prior to issuance does not invalidate the writ where the applicant subsequently posts a bond and the adverse party fails to question the sufficiency thereof, causing no substantial prejudice.

• "The annotation of an adverse claim and notice of lis pendens over the subject properties is a notice to third persons that there is a controversy over the ownership of the land and serves to preserve and protect the right of the adverse claimants during the pendency of the controversy."
• "It serves as an announcement to the whole world that a particular real property is in litigation and as a warning that those who acquire an interest in the property do so at their own risk -- they gamble on the result of the litigation over it."
• "PDC cannot invoke its being the registered owner to dispossess the present possessors for, precisely, when it brought the properties, it was charged with the knowledge that the ownership and sale of the subject properties by its predecessors-in-interest have been questioned by their co-heirs."
• "As claimed co-owners, the petitioner and the other heirs have the right to remain in possession of the subject properties pendente lite."

• Romero v. Court of Appeals, 497 Phil. 775 (2005) — Cited for the principle that notice of lis pendens binds purchasers to the subsequent judgment and warns them they acquire property at their own risk.
• Consolidated Workers Union v. Court of Industrial Relations, 137 Phil. 260 (1969) — Applied to hold that failure to fix a bond does not annul the writ where the court may subsequently order the determination of the appropriate amount.
• Almeida v. Court of Appeals, 489 Phil. 648 (2005) — Cited for the requisites of a writ of preliminary injunction under Section 3, Rule 58.

• Section 3, Rule 58, Rules of Court — Enumerates the grounds for issuance of a writ of preliminary injunction: (a) entitlement to relief consisting in restraining commission or continuance of acts; (b) commission or continuance would probably work injustice; or (c) acts are probably in violation of applicant's rights tending to render judgment ineffectual.
• Articles 428 and 429, Civil Code — Cited by the Court of Appeals regarding the rights of an owner to enjoy and exclude others; distinguished by the Supreme Court in light of the transferee pendent lite doctrine and the annotated encumbrances.
• Section 13, Article VIII, 1987 Constitution — Basis for the certification that conclusions were reached in consultation before assignment to the writer.

Presbitero J. Velasco, Jr. (Chairperson), Diosdado M. Peralta, Roberto A. Abad, Marvic Mario Victor F. Leonen