THIRD DIVISION
ATLANTIC
ERECTORS,
INC.,
Petitioner,
G.R.
No.
148568
March 20, 2003
-versus-
HERBAL COVE REALTY
CORPORATION,
Respondent.
D E C I S I O N
PANGANIBAN,
J.:chanroblesvirtuallawlibrary
The pendency of a simple
collection suit arising from the alleged nonpayment of construction
services,
materials, unrealized income and damages does not justify the
annotation
of a notice of lis pendens on the title to a property where
construction
has been done.chanrobles virtuallaw libraryred
Statement of the
Case
Before the Court is
a Petition for Review on Certiorari[1]
under Rule 45 of the Rules of Court, challenging the May 30, 2000
Decision[2]
of the Court of Appeals (CA) in CA-GR SP No. 56432. The
dispositive
portion of the Decision is reproduced as follows:
"WHEREFORE, the
petition
is granted and the assailed November 4, 1998 and October 22, 1999
orders
annulled and set aside. The July 30, 1998 order of respondent
judge
is reinstated granting the cancellation of the notices of lis pendens
subject
of this petition."[3]
In its July 21, 2001
Resolution,[4]
the CA denied petitioner's Motion for Reconsideration.
The Facts
The factual antecedents
of the case are summarized by the CA in this wise:
"On June 20, 1996, [respondent]
and [petitioner] entered into a Construction Contract whereby the
former
agreed to construct four (4) units of [townhouses] designated as 16-A,
16-B, 17-A and 17-B and one (1) single detached unit for an original
contract
price of P15,726,745.19 which was late[r] adjusted to P16,726,745.19 as
a result of additional works. The contract period is 180 days
commencing
[on] July 7, 1996 and to terminate on January 7, 1997.
[Petitioner]
claimed that the said period was not followed due to reasons
attributable
to [respondent], namely: suspension orders, additional works, force
majeure,
and unjustifiable acts of omission or delay on the part of said
[respondent].
[Respondent], however, denied such claim and instead pointed to
[petitioner]
as having exceeded the 180 day contract period aggravated by defective
workmanship and utilization of materials which are not in compliance
with
specifications.cralaw:red
x x
x
x x
x
x x x
"On November 21, 1997,
[petitioner] filed a complaint for sum of money with damages (Civil
Case
No. 97-2707) with the Regional Trial Court of Makati entitled ‘Atlantic
Erectors, Incorporated vs. Herbal Cove Realty Corp. and Ernest C.
Escal[e]r'.
This case was raffled to Branch 137, x x x Judge Santiago J. Ranada
presiding.
In said initiatory pleading, [petitioner] AEI asked for the following
reliefs:
‘AFTER DUE NOTICE AND
HEARING, to order x x x defendant to:
1.
Pay plaintiff the sum of P4,854,229.94 for the unpaid construction
services
already rendered;chanrobles virtuallaw libraryred
2.
To x x x pay plaintiff the sum of P1,595,551.00 for the construction
materials,
equipment and tools of plaintiff held by defendant;
3.
To x x x pay plaintiff the sum of P2,250,000.00 for the [loss] x x x of
expected income from the construction project;
4.
[T]o x x x pay plaintiff the sum of P800,000.00 for the cost of income
by way of rental from the equipment of plaintiff held by defendants;
5.
To x x x pay plaintiff the sum of P5,000,000.00 for moral damages;chanrobles virtuallaw libraryred
6.
To x x x pay plaintiff the sum of P5,000,000.00 for exemplary damages;
7.
To x x x pay plaintiff the sum equivalent of 25% of the total money
claim
plus P200,000.00 acceptance fee and P2,500.00 per court appearance;
8.
To x x x pay the cost of suit.'
"On the same day of
November 21, 1997, [petitioner] filed a notice of lis pendens for
annotation
of the pendency of Civil Case No. 97-707 on titles TCTs nos. T-30228,
30229,
30230, 30231 and 30232. When the lots covered by said titles were
subsequently subdivided into 50 lots, the notices of lis pendens were
carried
over to the titles of the subdivided lots, i.e., Transfer Certificate
of
Title Nos. T-36179 to T-36226 and T-36245 to T-36246 of the Register of
Deeds of Tagaytay City.cralaw:red
"On January 30, 1998,
[respondent] and x x x Ernest L. Escaler, filed a Motion to Dismiss
[petitioner's]
Complaint for lack of jurisdiction and for failure to state a cause of
action. They claimed [that] the Makati RTC has no jurisdiction
over
the subject matter of the case because the parties' Construction
Contract
contained a clause requiring them to submit their dispute to
arbitration.cralaw:red
x x
x
x x
x
x x x
"On March 17, 1998,
[RTC Judge Ranada] dismissed the Complaint as against [respondent] for
[petitioner's] failure to comply with a condition precedent to the
filing
of a court action which is the prior resort to arbitration and as
against
x x x Escaler for failure of the Complaint to state a cause of action x
x x.cralaw:red
"[Petitioner] filed
a Motion for Reconsideration of the March 17, 1998 dismissal
order.
[Respondent] filed its Opposition thereto.cralaw:red
"On April 24, 1998,
[respondent] filed a Motion to Cancel Notice of Lis Pendens. It
argued
that the notices of lis pendens are without basis because
[petitioner's]
action is a purely personal action to collect a sum of money and
recover
damages and x x x does not directly affect title to, use or possession
of real property.cralaw:red
"In his July 30, 1998
Order, [Judge Ranada] granted [respondent's] Motion to Cancel Notice of
Lis Pendens x x x:
"[Petitioner] filed
a Motion for Reconsideration of the aforesaid July 30, 1998 Order to
which
[respondent] filed an Opposition.chanrobles virtuallaw libraryred
"In a November 4, 1998
Order, [Judge Ranada,] while finding no merit in the grounds raised by
[petitioner] in its Motion for Reconsideration, reversed his July 30,
1998
Order and reinstated the notices of lis pendens, as follows:
‘1. The Court
finds no merit in plaintiff's contention that in dismissing the
above-entitled
case for lack of jurisdiction, and at the same time granting defendant
Herbal Cove's motion to cancel notice of lis pendens, the Court [took]
an inconsistent posture. The Rules provide that prior to the
transmittal
of the original record on appeal, the court may issue orders for the
protection
and preservation of the rights of the parties which do not involve any
matter litigated by the appeal (3rd par., Sec. 10, Rule 41). Even
as it declared itself without jurisdiction, this Court still has power
to act on incidents in this case, such as acting on motions for
reconsideration,
for correction, for lifting of lis pendens, or approving appeals, etc.cralaw:red
‘As correctly argued
by defendant Herbal Cove, a notice of lis pendens serves only as a
precautionary
measure or warning to prospective buyers of a property that there is a
pending litigation involving the same.cralaw:red
‘The Court notes that
when it issued the Order of 30 July 1998 lifting the notice of lis
pendens,
there was as yet no appeal filed by plaintiff. Subsequently, on
10
September 1998, after a notice of appeal was filed by plaintiff on 4
September
1998, the Branch Clerk of Court was ordered by the Court to elevate the
entire records of the above-entitled case to the Court of
Appeals.
It therefore results that the above-entitled case is still
pending.
After a careful consideration of all matters relevant to the lis
pendens,
the Court believes that justice will be better served by setting aside
the Order of 30 July 1998.'
"On November 27, 1998,
[respondent] filed a Motion for Reconsideration of the November 4, 1998
Order arguing that allowing the notice of lis pendens to remain
annotated
on the titles would defeat, not serve, the ends of justice and that
equitable
considerations cannot be resorted to when there is an applicable
provision
of law.cralaw:red
x x
x
x x
x
x x x
"On October 22, 1999,
[Judge Ranada] issued an order denying [respondent's] Motion for
Reconsideration
of the November 4, 1998 Order for lack of sufficient merit."[5]
Thereafter, Respondent
Herbal Cove filed with the CA a Petition for Certiorari.cralaw:red
Ruling of the Court
of Appeals
Setting aside the Orders
of the RTC dated November 4, 1998 and October 22, 1999, the CA
reinstated
the former's July 30, 1998 Order[6]
granting Herbal Cove's Motion to Cancel the Notice of Lis
Pendens.
According to the appellate court, the re-annotation of those notices
was
improper for want of any legal basis. It specifically cited
Section
76 of Presidential Decree No. 1529 (the Property Registration
Decree).
The decree provides that the registration of such notices is allowed
only
when court proceedings directly affect the title to, or the use or the
occupation of, the land or any building thereon.cralaw:red
The CA opined that the
Complaint filed by petitioner in Civil Case No. 97-2707 was intended
purely
to collect a sum of money and to recover damages. The appellate
court
ruled that the Complaint did not aver any ownership claim to the
subject
land or any right of possession over the buildings constructed
thereon.
It further declared that absent any claim on the title to the buildings
or on the possession thereof, the notices of lis pendens had no leg to
stand on.cralaw:red
Likewise, the CA held
that Judge Ranada should have maintained the notice cancellations,
which
he had directed in his July 30, 1998 Order. Those notices were no
longer necessary to protect the rights of petitioner, inasmuch as it
could
have procured protective relief from the Construction Industry Arbitral
Commission (CIAC), where provisional remedies were available. The
CA also mentioned petitioner's admission that there was already a
pending
case before the CIAC, which in fact rendered a decision on March 11,
1999.chanrobles virtuallaw libraryred
The appellate court
further explained that the re-annotation of the Notice of Lis Pendens
was
no longer warranted after the court a quo had ruled that the latter had
no jurisdiction over the case. The former held that the rationale
behind the principle of lis pendens -- to keep the subject matter of
the
litigation within the power of the court until the entry of final
judgment
-- was no longer applicable. The reason for such inapplicability
was that the Makati RTC already declared that it had no jurisdiction or
power over the subject matter of the case.cralaw:red
Finally, the CA opined
that petitioner's Complaint had not alleged or claimed, as basis for
the
continued annotation of the Notice of Lis Pendens, the lien of
contractors
and laborers under Article 2242 of the New Civil Code. Moreover,
petitioner had not even referred to any lien of whatever nature.
Verily, the CA ruled that the failure to allege and claim the
contractor's
lien did not warrant the continued annotation on the property titles of
Respondent Herbal Cove.cralaw:red
Hence, this Petition.[7]
The Issues
Petitioner raises the
following issues for our consideration:
"I. Whether or
not money claims representing cost of materials [for] and labor [on]
the
houses constructed on a property [are] a proper lien for annotation of
lis pendens on the property title[.]
"II. Whether or not
the trial court[,] after having declared itself without jurisdiction to
try the case[,] may still decide on [the] substantial issue of the
case."[8]
This Court's
Ruling
The Petition has no
merit.cralaw:red
First Issue:
Proper Basis
for a Notice of Lis Pendenschanrobles virtuallaw libraryred
Petitioner avers that
its money claim on the cost of labor and materials for the townhouses
it
constructed on the respondent's land is a proper lien that justifies
the
annotation of a notice of lis pendens on the land titles.
According
to petitioner, the money claim constitutes a lien that can be enforced
to secure payment for the said obligations. It argues that, to
preserve
the alleged improvement it had made on the subject land, such
annotation
on the property titles of respondent is necessary.cralaw:red
On the other hand, Respondent
Herbal Cove argues that the annotation is bereft of any factual or
legal
basis, because petitioner's Complaint[9]
does not directly affect the title to the property, or the use or the
possession
thereof. It also claims that petitioner's Complaint did not
assert
ownership of the property or any right to possess it. Moreover,
respondent
attacks as baseless the annotation of the Notice of Lis Pendens through
the enforcement of a contractor's lien under Article 2242 of the Civil
Code. It points out that the said provision applies only to cases
in which there are several creditors carrying on a legal action against
an insolvent debtor.cralaw:red
As a general rule, the
only instances in which a notice of lis pendens may be availed of are
as
follows: (a) an action to recover possession of real estate; (b) an
action
for partition; and (c) any other court proceedings that directly affect
the title to the land or the building thereon or the use or the
occupation
thereof.[10]
Additionally, this Court has held that resorting to lis pendens is not
necessarily confined to cases that involve title to or possession of
real
property. This annotation also applies to suits seeking to
establish
a right to, or an equitable estate or interest in, a specific real
property;
or to enforce a lien, a charge or an encumbrance against it.[11]
Apparently, petitioner
proceeds on the premise that its money claim involves the enforcement
of
a lien. Since the money claim is for the nonpayment of materials
and labor used in the construction of townhouses, the lien referred to
would have to be that provided under Article 2242 of the Civil
Code.
This provision describes a contractor's lien over an immovable property
as follows:
"Art. 2242. With
reference to specific immovable property and real rights of the debtor,
the following claims, mortgages and liens shall be preferred, and shall
constitute an encumbrance on the immovable or real right:
x x
x
x x
x
x x x
"(3)
Claims of laborers, masons, mechanics and other workmen, as well as of
architects, engineers and contractors, engaged in the construction,
reconstruction
or repair of buildings, canals or other works, upon said buildings,
canals
or other works;
"(4)
Claims of furnishers of materials used in the construction,
reconstruction,
or repair of buildings, canals or other works, upon said buildings,
canals
or other works[.]" (Emphasis supplied)
However, a careful examination
of petitioner's Complaint, as well as the reliefs it seeks, reveals
that
no such lien or interest over the property was ever alleged. The
Complaint merely asked for the payment of construction services and
materials
plus damages, without mentioning -- much less asserting -- a lien or an
encumbrance over the property. Verily, it was a purely personal
action
and a simple collection case. It did not contain any material
averment
of any enforceable right, interest or lien in connection with the
subject
property.cralaw:red
As it is, petitioner's
money claim cannot be characterized as an action that involves the
enforcement
of a lien or an encumbrance, one that would thus warrant the annotation
of the Notice of Lis Pendens. Indeed, the nature of an action is
determined by the allegations of the complaint.[12]chanrobles virtuallaw libraryred
Even assuming that petitioner
had sufficiently alleged such lien or encumbrance in its Complaint, the
annotation of the Notice of Lis Pendens would still be unjustified,
because
a complaint for collection and damages is not the proper mode for the
enforcement
of a contractor's lien.cralaw:red
In J.L. Bernardo Construction
v. Court of Appeals,[13]
the Court explained the concept of a contractor's lien under Article
2242
of the Civil Code and the proper mode for its enforcement as follows:
"Articles 2241 and 2242
of the Civil Code enumerates certain credits which enjoy preference
with
respect to specific personal or real property of the debtor.
Specifically,
the contractor's lien claimed by the petitioners is granted under the
third
paragraph of Article 2242 which provides that the claims of contractors
engaged in the construction, reconstruction or repair of buildings or
other
works shall be preferred with respect to the specific building or other
immovable property constructed.cralaw:red
"However, Article 2242
finds application when there is a concurrence of credits, i.e., when
the
same specific property of the debtor is subjected to the claims of
several
creditors and the value of such property of the debtor is insufficient
to pay in full all the creditors. In such a situation, the
question
of preference will arise, that is, there will be a need to determine
which
of the creditors will be paid ahead of the others. Fundamental
tenets
of due process will dictate that this statutory lien should then only
be
enforced in the context of some kind of a proceeding where the claims
of
all the preferred creditors may be bindingly adjudicated, such as
insolvency
proceedings."[14]
(Emphasis supplied)chanrobles virtuallaw libraryred
Clearly then, neither
Article 2242 of the Civil Code nor the enforcement of the lien
thereunder
is applicable here, because petitioner's Complaint failed to satisfy
the
foregoing requirements. Nowhere does it show that respondent's
property
was subject to the claims of other creditors or was insufficient to pay
for all concurring debts. Moreover, the Complaint did not pertain
to insolvency proceedings or to any other action in which the
adjudication
of claims of preferred creditors could be ascertained.cralaw:red
Another factor negates
the argument of petitioner that its money claim involves the
enforcement
of a lien or the assertion of title to or possession of the subject
property:
the fact that it filed its action with the RTC of Makati, which is
undisputedly
bereft of any jurisdiction over respondent's property in Tagaytay
City.
Certainly, actions affecting title to or possession of real property or
the assertion of any interest therein should be commenced and tried in
the proper court that has jurisdiction over the area, where the real
property
involved or a portion thereof is situated.[15]
If petitioner really intended to assert its claim or enforce its
supposed
lien, interest or right over respondent's subject properties, it would
have instituted the proper proceedings or filed a real action with the
RTC of Tagaytay City, which clearly had jurisdiction over those
properties.[16]
Narciso Peña,
a leading authority on the subject of land titles and registration,
gives
an explicit exposition on the inapplicability of the doctrine of lis
pendens
to certain actions and proceedings that specifically include money
claims.
He explains in this wise:
"By express provision
of law, the doctrine of lis pendens does not apply to attachments,
levies
of execution, or to proceedings for the probate of wills, or for
administration
of the estate of deceased persons in the Court of First Instance.
Also, it is held generally that the doctrine of lis pendens has no
application
to a proceeding in which the only object sought is the recovery of a
money
judgment, though the title or right of possession to property be
incidentally
affected. It is essential that the property be directly affected,
as where the relief sought in the action or suit includes the recovery
of possession, or the enforcement of a lien, or an adjudication between
conflicting claims of title, possession, or the right of possession to
specific property, or requiring its transfer or sale"[17]
(Emphasis supplied)
Peña adds that
even if a party initially avails itself of a notice of lis pendens upon
the filing of a case in court, such notice is rendered nugatory if the
case turns out to be a purely personal action. We quote him as
follows:chanrobles virtuallaw libraryred
"It may be possible
also that the case when commenced may justify a resort to lis pendens,
but during the progress thereof, it develops to be purely a personal
action
for damages or otherwise. In such event, the notice of lis
pendens
has become functus officio."[18]
(Emphasis supplied)
Thus, when a complaint
or an action is determined by the courts to be in personam, the
rationale
for or purpose of the notice of lis pendens ceases to exist. To
be
sure, this Court has expressly and categorically declared that the
annotation
of a notice of lis pendens on titles to properties is not proper in
cases
wherein the proceedings instituted are actions in personam.[19]
Second Issue:
Jurisdiction of
the Trial Court
Petitioner argues that
the RTC had no jurisdiction to issue the Order canceling the Notice of
Lis Pendens as well as the Order reinstating it. Supposedly,
since
both Orders were issued by the trial court without jurisdiction, the
annotation
made by the Register of Deeds of Tagaytay City must remain in force.cralaw:red
Petitioner avers that
the trial court finally declared that the latter had no jurisdiction
over
the case on July 27, 1998, in an Order denying the former's Motion for
Reconsideration of the March 17, 1998 Order dismissing the
Complaint.
Petitioner insists that the subsequent July 30, 1998 Order cancelling
the
subject Notice of Lis Pendens is void, because it was issued by a court
that had no more jurisdiction over the case.cralaw:red
Rule 41 of the 1997
Rules on Civil Procedure, which governs appeals from regional trial
courts,
expressly provides that RTCs lose jurisdiction over a case when an
appeal
is filed. The rule reads thus:chanrobles virtuallaw libraryred
"SEC. 9. Perfection
of appeal; effect thereof. -- A party's appeal by notice of
appeal
is deemed perfected as to him upon the filing of the notice of appeal
in
due time.cralaw:red
x x
x
x x
x
x x x
"In appeals by notice
of appeal, the court loses jurisdiction over the case upon the
perfection
of the appeals filed in due time and the expiration of the time to
appeal
of the other parties." mphasis supplied)
On the basis of the
foregoing rule, the trial court lost jurisdiction over the case only on
August 31, 1998, when petitioner filed its Notice of Appeal.[20]
Thus, any order issued by the RTC prior to that date should be
considered
valid, because the court still had jurisdiction over the case.
Accordingly,
it still had the authority or jurisdiction to issue the July 30, 1998
Order
canceling the Notice of Lis Pendens. On the other hand, the
November
4, 1998 Order that set aside the July 30, 1998 Order and reinstated
that
Notice should be considered without force and effect, because it was
issued
by the trial court after it had already lost jurisdiction.cralaw:red
In any case, even if
we were to adopt petitioner's theory that both the July 30, 1998 and
the
November 4, 1998 Orders were void for having been issued without
jurisdiction,
the annotation is still improper for lack of factual and legal bases.chanrobles virtuallaw libraryred
As discussed previously,
erroneously misplaced is the reliance of petitioner on the premise that
its money claim is an action for the enforcement of a contractor's
lien.
Verily, the annotation of the Notice of Lis Pendens on the subject
property
titles should not have been made in the first place. The
Complaint
filed before the Makati RTC -- for the collection of a sum of money and
for damages -- did not provide sufficient legal basis for such
annotation.cralaw:red
Finally, petitioner
vehemently insists that the trial court had no jurisdiction to cancel
the
Notice. Yet, the former filed before the CA an appeal, docketed
as
CA-GR CV No. 65647,[21]
questioning the RTC's dismissal of the Complaint for lack of
jurisdiction.
Moreover, it must be remembered that it was petitioner which had
initially
invoked the jurisdiction of the trial court when the former sought a
judgment
for the recovery of money and damages against respondent. Yet
again,
it was also petitioner which assailed that same jurisdiction for
issuing
an order unfavorable to the former's cause. Indeed, parties
cannot
invoke the jurisdiction of a court to secure affirmative relief, then
repudiate
or question that same jurisdiction after obtaining or failing to obtain
such relief.[22]
WHEREFORE, the Petition
is hereby DENIED and the assailed Decision AFFIRMED. Costs
against
petitioner.cralaw:red
SO ORDERED.cralaw:red
Puno, J., (Chairman),
Sandoval-Gutierrez,
Corona and Carpio-Morales, JJ.,
concur.cralaw:red
____________________________
Endnotes:
[1]
Rollo, pp. 7-28.
[2]
Id., pp. 31-43. The Decision was penned by Justice Presbitero J.
Velasco Jr. and concurred in by Justices Bernardo Ll. Salas and Edgardo
P. Cruz.
[3]
Assailed CA Decision, p. 13; rollo, p. 43.
[4]
Id., pp. 46-47.chanrobles virtuallaw libraryred
[5]
Assailed CA Decision, pp. 2-7; rollo, pp. 32-37.
[6]
Rollo, p. 72.chanrobles virtuallaw libraryred
[7]
This case was deemed submitted for decision on September 12, 2002, upon
receipt by this Court of respondent's Memorandum signed by Atty.
Salvador
L. Peña of Abello Concepcion Regala & Cruz.
Petitioner's
Memorandum, signed by Atty. Benjaim A. Moraleda Jr., was received by
this
Court on August 12, 2002.
[8]
Petitioner's Memorandum, p. 9; rollo, p. 159.chanrobles virtuallaw libraryred
[9]
Rollo, pp. 53-58.chanrobles virtuallaw libraryred
[10]
Yared v. Ilarde, 337 SCRA 53, August 1, 2000.
[11]
Viewmaster Construction Corporation v. Maulit, 326 SCRA 821, February
29,
2000.
[12]
Producers Bank of the Philippines v. Bank of the Philippine Islands,
340
SCRA 87, September 8, 2000; City of Olongapo v. Stallholders of the
East
Bajac-Bajac Public Market of Olongapo City, 343 SCRA 705, October 19,
2000.
[13]
324 SCRA 24, January 31, 2000.
[14]
Id., pp. 35-36, per Gonzaga-Reyes, J.chanrobles virtuallaw libraryred
[15]
Rudolf Lietz Holdings, Inc. v. Registry of Deeds of Paranaque City, 344
SCRA 680, November 15, 2000.
[16]
§§1 and 2 of Rule 4 of the 1997 Revised Rules on Civil
Procedure
provides the proper venue for the filing of real and personal actions
as
follows:chanroblesvirtuallawlibrary
"Section
1. Venue of real actions. - Actions affecting title to or
possession
of real property, or any interest therein, shall be commenced and tried
in the proper court, which has jurisdiction over the area, wherein the
real property involved or a portion thereof, is situated.
"Forcible
entry and detainer actions shall be commenced and tried in the
municipal
trial court of the municipality or city wherein the real property
involved,
or a portion thereof, is situated.
"Section
2. Venue of personal actions. - All other actions may be
commenced
and tried where the plaintiff or any of the principal plaintiffs
resides,
or where the defendant or any of the principal defendants resides, or
in
the case of a non-resident defendant where he may be found at the
election
of the plaintiff."
[17]
1988, p. 390.
[18]
Ibid.chanrobles virtuallaw libraryred
[19]
AFP Mutual Benefit Association, Inc. v. CA, 327 SCRA 203, March 3, 2000.
[20]
Petition, p. 7; rollo, p. 13.chanrobles virtuallaw libraryred
[21]
Ibid.chanrobles virtuallaw libraryred
[22]
Province of Bulacan v. Court of Appeals, 299 SCRA 442, November 27,
1998. |