Republic of the
Supreme Court
Baguio City
FIRST DIVISION
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PACIFIC ACE FINANCE
LTD. (PAFIN), |
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G.R. No. 175303 |
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Petitioner, |
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Present: |
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LEONARDO-DE CASTRO, |
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- versus - |
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BERSAMIN, |
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VILLARAMA, JR., JJ. |
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EIJI* YANAGISAWA, |
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Promulgated: |
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Respondent. |
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April 11, 2012 |
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D E C I S I O N
DEL CASTILLO, J.:
An
undertaking not to dispose of a property pending litigation, made in open court
and embodied in a court order, and duly annotated on the title of the said
property, creates a right in favor of the person relying thereon. The latter may seek the annulment of actions
that are done in violation of such undertaking.
Before us is a Petition for Review[1]
of the August 1, 2006 Decision[2]
of the Court of Appeals (CA) in CA-G.R. CV No. 78944, which held:
WHEREFORE, the
Decision dated April 20, 2003 of the RTC, Branch 258, Paraaque City, is hereby
ANNULLED and SET ASIDE and a new one entered annulling the Real
Estate Mortgage executed on August 25, 1998 in favor of defendant Pacific Ace
Finance Ltd.
SO ORDERED.[3]
Factual Antecedents
Respondent Eiji Yanagisawa (Eiji), a Japanese national, and Evelyn F.
Castaeda (Evelyn), a Filipina, contracted marriage on July 12, 1989 in the
City Hall of Manila.[4]
On August 23, 1995, Evelyn purchased a 152
square-meter townhouse unit located at Bo. Sto. Nio, Paraaque, Metro Manila (Paraaque
townhouse unit).[5] The Registry of Deeds for Paraaque issued
Transfer Certificate of Title (TCT) No. 99791 to Evelyn P. Castaeda,
Filipino, married to Ejie Yanagisawa, Japanese citizen[,] both of legal age.[6]
In
1996, Eiji filed a complaint for the declaration of nullity of his marriage
with Evelyn on the ground of bigamy (nullity of marriage case). The complaint, docketed as Civil Case No.
96-776, was raffled to Branch 149 of the Regional Trial Court of Makati (Makati
RTC). During the pendency of the case,
Eiji filed a Motion for the Issuance of a Restraining Order against Evelyn and
an Application for a Writ of a Preliminary Injunction. He asked that Evelyn be enjoined from disposing
or encumbering all of the properties registered in her name.
At
the hearing on the said motion, Evelyn and her lawyer voluntarily undertook not
to dispose of the properties registered in her name during the pendency of the
case, thus rendering Eijis application and motion moot. On the basis of said commitment, the Makati
RTC rendered the following Order dated October 2, 1996:
O R D
E R
In view of the commitment made in open court by
Atty. Lupo Leyva, counsel for the defendant [Evelyn], together with his
client, the defendant in this case, that the properties registered in the
name of the defendant would not be disposed of, alienated or encumbered in any
manner during the pendency of this petition, the Motion for the Issuance of a
Restraining Order and Application for a Writ of a Preliminary Injunction
scheduled today is hereby considered moot and academic.
SO ORDERED.[7] (Emphasis
supplied.)
The above Order was annotated on the title of the
Paraaque townhouse unit or TCT No. 99791, thus:
Entry No. 8729 Order
issued by Hon. Josefina Guevara Salonga, Judge, RTC, Branch 149, Makati City, ordering
the defendant in Civil Case No. 96-776 entitled Eiji Yanagisawa,
Plaintiff-versus-Evelyn Castaeda Yanagisawa, that the properties registered in
the name of the defendant would not be disposed of, alienated or encumbered
in any manner during the pendency of the petition, the Motion for the
Issuance of a Restraining Order and Application for a Writ of Preliminary
Injunction is hereby considered moot and academic.
Date of Instrument October 2, 1996
Date of Inscription March 17, 1997 11:21 a.m.[8] (Emphasis supplied.)
Sometime
in March 1997, Evelyn obtained a loan of P500,000.00 from petitioner
Pacific Ace Finance Ltd. (PAFIN).[9]
To secure the loan, Evelyn executed on August 25, 1998 a real estate mortgage
(REM)[10]
in favor of PAFIN over the Paraaque townhouse unit covered by TCT No.
99791. The instrument was submitted to
the Register of Deeds of Paraaque City for annotation on the same date.[11]
At
the time of the mortgage, Eijis appeal in the nullity of marriage case was
pending before the CA.[12] The Makati RTC had dissolved Eiji and
Evelyns marriage,[13]
and had ordered the liquidation of their registered properties, including the
Paraaque townhouse unit, with its proceeds to be divided between the parties.[14] The Decision of the Makati RTC did not lift
or dissolve its October 2, 1996 Order on Evelyns commitment not to dispose of
or encumber the properties registered in her name.
Eiji
learned of the REM upon its annotation on TCT No. 99791. Deeming the mortgage as a violation of the Makati
RTCs October 2, 1996 Order, Eiji filed a complaint for the annulment of REM (annulment
of mortgage case) against Evelyn and PAFIN.[15]
The complaint, docketed as Civil Case
No. 98-0431, was raffled to Branch 258 of the Regional Trial Court of Paraaque
City (Paraaque RTC).
For
its defense, PAFIN denied prior knowledge of the October 2, 1996 Order against
Evelyn. It admitted, however, that it
did not conduct any verification of the title with the Registry of Deeds of Paraaque
City because x x x Evelyn was a good, friendly and trusted neighbor.[16] PAFIN maintained that Eiji has no personality
to seek the annulment of the REM because a foreign national cannot own real
properties located within the Philippines.[17]
Evelyn
also denied having knowledge of the October 2, 1996 Order.[18]
Evelyn asserted that she paid for the property with her own funds[19]
and that she has exclusive ownership thereof. [20]
Paraaque Regional Trial Court Decision[21]
The
Paraaque RTC determined that the only issue before it is whether x x x [Eiji]
has a cause of action against the defendants and x x x is entitled to the
reliefs prayed for despite the fact that he is not the registered owner of the
property being a Japanese national.[22]
The
Paraaque RTC explained that Eiji, as a foreign national, cannot possibly own
the mortgaged property. Without ownership, or any other law or contract binding
the defendants to him, Eiji has no cause of action that may be asserted against
them.[23] Thus, the Paraaque RTC dismissed Eijis
complaint:
WHEREFORE, premises considered, for failure of the
plaintiff to state a cause of action against defendants, EVELYN CASTAEDA YANAGISAWA
and Pacific Ace Finance Ltd. (PAFIN), this case is DISMISSED.
The counterclaim and cross-claim are likewise DISMISSED.
SO ORDERED.[24]
Eiji
appealed the trial courts decision arguing that the trial court erred in holding that his
inability to own real estate property in the Philippines deprives him of all
interest in the mortgaged property, which was bought with his money. He added that the Makati RTC has even
recognized his contribution in the purchase of the property by its declaration
that he is entitled to half of the proceeds that would be obtained from its
sale.
Eiji
also emphasized that Evelyn had made a commitment to him and to the Makati RTC
that she would not dispose of, alienate, or encumber the properties registered
in her name while the case was pending. This commitment incapacitates Evelyn
from entering into the REM contract.
Court of Appeals Decision[25]
The
CA found merit in Eijis appeal.
The
CA noted that the Makati RTC ruled on Eijis and Evelyns ownership rights over
the properties that were acquired during their marriage, including the Paraaque
townhouse unit. It was determined
therein that the registered properties should be sold at public auction and the
proceeds thereof to be divided between Eiji and Evelyn.[26]
Contrary to this ruling, the Paraaque
RTC ruled that Eiji has no ownership rights over the Paraaque townhouse unit
in light of the constitutional prohibition on foreign ownership of lands and
that the subject property is Evelyns exclusive property.[27]
The
appellate court determined that the Paraaque RTCs Decision was improper because
it violated the doctrine of non-interference. Courts of equal jurisdiction, such as regional
trial courts, have no appellate jurisdiction over each other.[28] For this reason, the CA annulled
and set aside
the Paraaque RTCs
decision to dismiss Eijis complaint.[29]
The
CA then proceeded to resolve Eijis complaint.[30] The CA noted that Eiji anchored his complaint
upon Evelyns violation of her commitment to the Makati RTC and to Eiji that
she would not dispose of, alienate, or encumber the properties registered in
her name, including the Paraaque townhouse unit. This commitment created a right in favor of
Eiji to rely thereon and a correlative obligation on Evelyns part not to encumber
the Paraaque townhouse unit. Since
Evelyns commitment was annotated on TCT No. 99791, all those who deal with the
said property are charged with notice of the burdens on the property and its
registered owner.[31]
On
the basis of Evelyns commitment and its annotation on TCT No. 99791, the CA
determined that Eiji has a cause of action to annul the REM contract. Evelyn was aware of her legal impediment to
encumber and dispose of the Paraaque townhouse unit. Meanwhile, PAFIN displayed a wanton disregard
of ordinary prudence when it admitted not conducting any verification of the
title whatsoever. The CA determined that
PAFIN was a mortgagee in bad faith.[32]
Thus,
the CA annulled the REM executed by Evelyn in favor of PAFIN.
The parties to the annulled mortgage filed separate motions for
reconsideration on August 22, 2006,[33]
which were both denied for lack of merit by the appellate court in its November
7, 2006 Resolution.[34]
PAFIN
filed this petition for review.
Petitioners Arguments
Petitioner
seeks a reversal of the CA Decision, which allegedly affirmed the
Makati RTC ruling that Eiji is a co-owner of the
mortgaged property. PAFIN insists that
the CA sustained a violation of the constitution with its declaration that an
alien can have an interest in real property located in the Philippines.[35]
Petitioner
also seeks the reinstatement of the Paraaque RTCs Decision dated April 20,
2003[36]
and prays that this Court render a decision that Eiji cannot have ownership
rights over the mortgaged property and that Evelyn enjoys exclusive ownership
thereof. As the sole owner, Evelyn can
validly mortgage the same to PAFIN without need of Eijis consent. Corollarily, Eiji has no cause of action to
seek the REMs annulment.[37]
Respondents Arguments
Respondent argues that he has an interest to have the REM annulled on two
grounds: First, Evelyn made a commitment
in open court that she will not encumber the Paraaque townhouse unit during
the pendency of the case. Second, the Makati RTCs decision declared that he is
entitled to share in the proceeds of the Paraaque townhouse unit.[38]
Respondent
also insists that petitioner is in bad faith for entering into the mortgage
contract with Evelyn despite the annotation on TCT No. 99791 that Evelyn committed
herself not to encumber the same.[39]
Issues
Petitioner raises the following issues:[40]
1. Whether a real property in the Philippines
can be part of the community property of a Filipina and her foreigner spouse;
2. Whether a real property registered solely in
the name of the Filipina wife is paraphernal or conjugal;
3.
Who is entitled to the real property mentioned above when the marriage is
declared void?
4. Whether the Paraaque RTC can rule on the
issue of ownership, even as the same issue was already ruled upon by the Makati
RTC and is pending appeal in the CA.
Our Ruling
The petition has no merit.
Contrary
to petitioners stance, the CA did not make any disposition as to who between
Eiji and Evelyn owns the Paraaque townhouse unit. It simply ruled that the Makati RTC had acquired
jurisdiction over the said question and should not have been interfered with by
the Paraaque RTC. The CA only clarified
that it was improper for the Paraaque RTC to have reviewed the ruling of a
co-equal court.
The
Court agrees with the CA. The issue of ownership and liquidation of properties
acquired during the cohabitation of Eiji and Evelyn has been submitted for the
resolution of the Makati RTC, and is pending[41]
appeal before the CA. The doctrine of
judicial stability or non-interference dictates that the assumption by the
Makati RTC over the issue operates as an insurmountable barrier to the
subsequent assumption by the Paraaque RTC.[42] By insisting on ruling on the same issue, the
Paraaque RTC effectively interfered with the Makati RTCs resolution of the
issue and created the possibility of conflicting decisions. Cojuangco v. Villegas[43] states: The various branches of the [regional trial
courts] of a province or city, having as they have the same or equal authority
and exercising as they do concurrent and coordinate jurisdiction, should not,
cannot and are not permitted to interfere with their respective cases, much
less with their orders or judgments. A
contrary rule would obviously lead to confusion and seriously hamper the
administration of justice. The matter
is further explained thus:
It
has been held that "even in cases of concurrent jurisdiction, it is, also,
axiomatic that the court first acquiring jurisdiction excludes the other courts."
In
addition, it is a familiar principle that when a court of competent
jurisdiction acquires jurisdiction over the subject matter of a case, its
authority continues, subject only to the appellate authority, until the matter
is finally and completely disposed of, and that no court of co-ordinate
authority is at liberty to interfere with its action. This doctrine is
applicable to civil cases, to criminal prosecutions, and to courts-martial. The
principle is essential to the proper and orderly administration of the laws;
and while its observance might be required on the grounds of judicial comity
and courtesy, it does not rest upon such considerations exclusively, but is
enforced to prevent unseemly, expensive, and dangerous conflicts of jurisdiction
and of the process.[44]
Petitioner
maintains that it was imperative for the Paraaque RTC to rule on the ownership
issue because it was essential for the determination of the validity of the
REM.[45]
The
Court disagrees. A review of the
complaint shows that Eiji did not claim ownership of the Paraaque townhouse
unit or his right to consent to the REM as his bases for seeking its
annulment. Instead, Eiji invoked his
right to rely on Evelyns commitment not to dispose of or encumber the property
(as confirmed in the October 2, 1996 Order of the Makati RTC), and the
annotation of the said commitment on TCT No. 99791.
It
was Evelyn and PAFIN that raised Eijis
incapacity to own real property as their defense to the suit. They maintained that Eiji, as an alien
incapacitated to own real estate in the Philippines, need not consent to the
REM contract for its validity. But this argument
is beside the point and is not a proper defense to the right asserted by Eiji. This defense does not negate Eijis right to
rely on the October 2, 1996 Order of the Makati RTC and to hold third persons,
who deal with the registered property, to the annotations entered on the title.
Thus, the RTC erred in dismissing the
complaint based on this defense.
Petitioner did not question the rest
of the appellate courts ruling, which held that Evelyn and PAFIN executed the
REM in complete disregard and violation of the October 2, 1996 Order of the
Makati RTC and the annotation on TCT No. 99791.
It did not dispute the legal effect of the October 2, 1996 Order on
Evelyns capacity to encumber the Paraaque townhouse unit nor the CAs finding
that petitioner is a mortgagee in bad faith.
The October 2, 1996 Order, embodying
Evelyns commitment not to dispose of or encumber the property, is akin to an
injunction order against the disposition or encumbrance of the property. Jurisprudence
holds that all acts done in violation of a standing injunction order are
voidable as to the party enjoined and third parties who are not in good faith.[46] The party, in whose favor the injunction is
issued, has a cause of action to seek the annulment of the offending actions.[47] The following is instructive:
An
injunction or restraining order must be obeyed while it remains in full force
and effect until the injunction or restraining order has been set aside,
vacated, or modified by the court which granted it, or until the order or
decree awarding it has been reversed on appeal.
The injuction must be obeyed irrespective of the ultimate validity of
the order, and no matter how unreasonable and unjust the injunction may be in
its terms.[48]
In view of the foregoing discussion,
we find no need to discuss the other issues raised by the petitioner.
WHEREFORE,
premises considered, the Petition is DENIED for lack of merit. The August 1, 2006 Decision of the Court of
Appeals in CA-G.R. CV No. 78944 is AFFIRMED.
SO
ORDERED.
MARIANO C.
Associate Justice
WE
CONCUR:
RENATO C. CORONA
Chief Justice
Chairperson
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TERESITA J. LEONARDO-DE CASTRO Associate Justice |
LUCAS P. BERSAMIN Associate Justice |
MARTIN S. VILLARAMA, JR.
Associate Justice
C E R T I F I C A T I O N
Pursuant
to Section 13, Article VIII of the Constitution, it is hereby certified that
the conclusions in the above Decision had been reached in consultation before
the case was assigned to the writer of the opinion of the Courts Division.
RENATO C. CORONA
Chief Justice
[2] CA rollo, pp. 101-112.
[3] Id. at 111.
[4] Records, Vol. 2, p. 425.
[5]
[6] Id. at 470.
[7]
[8] Records, Vol. 1, p. 98.
[9] Records, Vol 2, p. 574.
[10]
[11] Id. at 601.
[12] CA Decision, p. 9; CA rollo, p. 109; Respondents Memorandum, p. 4; rollo, p. 115.
[13] The dispositive portion reads:
WHEREFORE, plaintiff having established his case against defendant by
preponderance of evidence, the marriage between plaintiff and defendant
contracted on July 12, 1989 is hereby declared VOID AB INITIO. Accordingly, the absolute community of
property existing between the parties is dissolved and in lieu thereof a
regime of complete separation of property between the parties is established in
accordance with the provisions of Chapter 6 of the Family Code, without
prejudice to the rights previously acquired by creditors. Thus, the parties are declared co-owners of
the following real estate properties, to wit:
a) a parcel of land in Paranaque,
Metro Manila covered by TCT No. 63782, registered on June 17, 1992;
b) a parcel of land in Paranaque,
Metro Manila covered by TCT No. 99791 registered on August 23, 1995;
and
c) a parcel of land in Pagbilao,
Quezon covered by TCT No. T-295343 registered on October 20, 1994.
x x x x
Accordingly, let a copy of this Decision be duly recorded in the proper
civil and property registries.
SO ORDERED. (RTC Decision in
Civil Case No. 96-776, pp. 10-11; Records, Vol. 1, pp. 108-109)
[14] The Order reads thus:
Acting on plaintiffs Motion for Reconsideration
dated February 9, 1998, which was opposed by the defendant through counsel
considering that there was no conjugal partnership obtained that existed
between plaintiff, their property relation has been governed by the rules of
co-ownership under Article 148 of the Family Code. The Court finds no cogent reason to disturb
its findings except that plaintiff being a foreigner is prohibited to own real
property in the Philippines and that the said parcel of land enumerated in the
said decision are hereby ordered sold at public auction and the proceeds to be
divided between plaintiff and defendant. (Defendant PAFINs Comment, p.
2; Records, Vol. 2, p. 447.)
[15] Records, Vol. 1, pp. 1-7.
[16] PAFINs Answer, p. 5; Records, Vol. 1, p. 141;
Direct examination of Marietta Delos Santos, TSN dated December 1, 2000, pp.
25-27; Records, Vol. 1, pp. 966-968.
[17] PAFINS Answer, p. 6; Records, Vol. 1, p.
142.
[18] Answer of Evelyn Castaneda, p. 5; Records, Vol. 1, p. 204.
[19] Direct examination of Evelyn Castaneda, TSN dated September 5,
2001, pp. 13, 17-19.
[20] Answer of Evelyn Castaneda, p. 3; Records, Vol. 1, p. 202.
[21] Records,
Vol. 3, pp. 726-732; penned by Judge Raul E. De
[22] RTC Decision,
p. 5; Records, Vol. 3, p. 730.
[23]
[24]
[25] CA rollo, pp. 101-112; penned by Associate
Justice Estela M. Perlas-Bernabe (now a Member of this Court) and concurred in
by Associate Justices Andres B. Reyes, Jr. and Hakim S. Abdulwahid.
[26] CA
Decision, p. 6; CA rollo, p. 106.
[27]
[28]
[29]
[30]
[31]
[32]
[33] CA rollo, pp. 116-122 and 123-125.
[34]
[35] Petitioners
Memorandum, p. 14; rollo, p. 101.
[36]
[37]
[38] Respondents
Memorandum, pp. 6-7; id. at 117-118.
[39]
[40] Petitioners
Memorandum, p. 12; id. at 99.
[41] Respondent
claimed in his Comment (rollo, p. 70)
and Memorandum (rollo, p. 118) that
the Decision of the Makati RTC was affirmed by the CA. He further maintained that the Decision of
the CA had already attained finality (rollo,
pp. 70 and 118). Notably, respondent did
not attach a copy of the appellate courts decision or a certification to that
effect to any of his pleadings. Thus,
the Court cannot consider these bare factual assertions in its resolution of
the instant case.
[42] Panlilio v. Salonga, G.R. No. 113087, June 27, 1994, 233 SCRA 476,
481-482.
[43] 263 Phil. 291, 297
(1990).
[44] Lee v. Presiding Judge, 229
Phil. 405, 414 (1986). Citations omitted.
[45] Petitioners
Memorandum, p.16; rollo, p. 103.
[46] Air Materiel Wing Savings and Loan
Association, Inc. v. Manay, G.R. No. 175338, October 9, 2007, 535 SCRA 356,
375-377; Lee v. Court of Appeals, 528
Phil. 1050, 1070 (2006).
[47] Air Materiel Wing Savings and Loan
Association, Inc. v. Manay, G.R. No. 175338, October 9, 2007, 535 SCRA 356,
375-377.
[48] Id. at 375.