Spouses Lim v. Vera Cruz
REITERATIONFacts
The Antecedents: Respondent Pepito M. Vera Cruz filed a complaint for quieting of title, annulment, and damages against petitioners Spouses Henry G. Lim and Rosario T. Lim. Respondent alleged possession of a 200 square meter portion of Lot 4204 since 1960, which he claimed to have purchased from one of the co-owners. Petitioners, claiming ownership of the entire lot under TCT No. T-16375, filed an ejectment case against respondent. Respondent discovered that petitioners' title was allegedly obtained in bad faith, fraud, and/or clever machination. Procedural History: Respondent caused the annotation of a notice of lis pendens on TCT No. T-16375. Petitioners filed a motion to cancel the notice, arguing it was for molestation and unnecessary. The trial court, on July 22, 1998, ordered the cancellation of the notice of lis pendens upon the posting of an indemnity bond by petitioners in the amount of P2,000,000.00. Respondent's motion for reconsideration was denied. The Petition: Petitioners filed a petition for review on certiorari assailing the Court of Appeals' decision which set aside the trial court's order cancelling the notice of lis pendens. The Court of Appeals held that the trial court committed grave abuse of discretion.
Issue(s)
Whether the Court of Appeals erred in holding that the trial court committed grave abuse of discretion in cancelling the notice of lis pendens. Whether the notice of lis pendens was registered solely to molest the adverse party or was unnecessary to protect the respondent's rights. Whether the trial court erred in cancelling the notice of lis pendens upon the posting of an indemnity bond.
Ruling
The petition is DENIED. The assailed Decision of the Court of Appeals is AFFIRMED. Costs against petitioners.
Ratio Decidendi
On the issue of whether the Court of Appeals erred in holding that the trial court committed grave abuse of discretion in cancelling the notice of lis pendens: The Supreme Court affirmed the Court of Appeals' finding. The Court reiterated that a notice of lis pendens serves to warn third persons that the property is subject to litigation and that any purchase or encumbrance is at their own risk. Its purpose is to protect the real rights of the party causing its registration and to keep the property within the power of the court until the litigation is terminated, preventing the defeat of any judgment. The Court found that the trial court's conclusion that the notice of lis pendens was tantamount to an unlawful dispossession and restriction of petitioners' right of dominion over the entire lot was an erroneous conclusion. The notice only covers the specific 200 square meter portion claimed by the respondent, not the entire 5,432 square meter property. On the issue of whether the notice of lis pendens was registered solely to molest the adverse party or was unnecessary to protect the respondent's rights: The Supreme Court found no indication in the records that the notice of lis pendens was for the purpose of molesting the petitioners or that it was unnecessary to protect the respondent's rights. The Court emphasized that for the annotation of a notice of lis pendens, there is no requirement for the party seeking annotation to prove ownership or that the land belongs to him. Even an unregistered deed of sale is sufficient basis for annotation, and such annotation does not constitute a collateral attack on the certificate of title. The notice merely signifies that the property is in dispute and is subject to the outcome of the litigation. On the issue of whether the trial court erred in cancelling the notice of lis pendens upon the posting of an indemnity bond: The Supreme Court held that the trial court erred in cancelling the notice of lis pendens upon the posting of an indemnity bond. The Court cited the principle that the doctrine of lis pendens is founded on public policy and necessity to preserve the status quo and prevent the defeat of judgments. The law does not authorize a judge to cancel a notice of lis pendens pending litigation upon the mere filing of a sufficient bond. The posting of a bond cannot substitute for the notice of lis pendens, as it would render the purpose of the notice meaningless. Furthermore, the Court noted that the respondent lost the ejectment suit, but this did not affect the notice of lis pendens filed in the separate case for quieting of title, as the notice was registered in the latter case to protect his claimed right over the 200 square meter portion.
Main Doctrine
A notice of lis pendens 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 posting of an indemnity bond does not authorize the cancellation of a notice of lis pendens pending litigation.