Case Digest: PHILIPPINE LONG DISTANCE TELEPHONE COMPANY v. LAURO LEVISTE, et al.

PHILIPPINE LONG DISTANCE TELEPHONE COMPANY v. LAURO LEVISTE, et al.

477 SCRA 634 (2005)

Once a notice of lis pendens has been duly registered, any cancellation or issuance of title over the land involved as well as any subsequent transaction affecting the same would have to be subject to the outcome of the suit.

El Dorado Plantation sold a parcel of land with an area of approximately 1,825 hectares in Occidental Mindoro to Fernando O. Carrascoso, Jr. within a period of three (3) years. In the meantime, Carrascoso and the Philippine Long Distance Telephone Company (PLDT), executed an Agreement to Buy and Sell whereby the former agreed to sell 1,000 hectares of the property to the latter.

In view of Carrascoso‘s failure to pay the balance of the purchase price, Lauro Leviste, a stockholder and member of the Board wants a rescission of the sale. Thus, Jose P. Leviste, as President, sent a letter to Carrascoso informing him that, El Dorado was seeking the rescission with damages before the Court of First Instance (CFI). Lauro and El Dorado also caused to be annotated a Notice of Lis Pendens.

Carrascoso alleged that he was given an extension to pay the balance and El Dorado committed a gross misrepresentation when it warranted that the property was not being cultivated by any tenant to take it out of the coverage of the Land Reform Code. Two years after their agreement to Buy and Sell, Carrascoso and PLDT forged a Deed of Absolute Sale over the 1,000 hectare portion of the property. PLDT alleged that it is a purchaser in good faith and for value.

The CFI dismissed the complaint on the ground of prematurity. The Court of Appeals (CA) reversed the decision of the CFI granting the rescission of El Dorado. Hence, this petition for review.

ISSUES:

Whether or not the Court of Appeals erred in holding that PLDT took the right, interest and title to the farm subject to the notice of lis pendens

HELD:

Once a notice of lis pendens has been duly registered, any cancellation or issuance of title over the land involved as well as any subsequent transaction affecting the same would have to be subject to the outcome of the suit. In other words, a purchaser who buys registered land with full notice of the fact that it is in litigation between the vendor and a third party stands in the shoes of his vendor and his title is subject to the incidents and result of the pending litigation.

Notice of lis pendens has been conceived and, more often than not, availed of, to protect the real rights of the registrant while the case involving such rights is pending resolution or decision. With the notice of lis pendens duly recorded, and while it remains uncancelled, the registrant could rest secure that he would not lose the property or any part of it during the litigation.

The filing of a notice of lis pendens in effect (1) keeps the subject matter of litigation within the power of the court until the entry of the final judgment so as to prevent the defeat of the latter by successive alienations; and (2) binds a purchaser of the land subject of the litigation to the judgment or decree that will be promulgated thereon whether such a purchaser is a bona fide purchaser or not; but (3) does not create a non-existent right or lien.

The doctrine of lis pendens is founded upon reason of public policy and necessity, the purpose of which is to keep the subject matter of the litigation within the power of the court until the judgment or decree shall have been entered; otherwise by successive alienations pending the litigation, its judgment or decree shall be rendered abortive and impossible of execution. The doctrine of lis pendens is based on considerations of public policy and convenience, which forbid a litigant to give rights to others, pending the litigation, so as to affect the proceedings of the court then progressing to enforce those rights, the rule being necessary to the administration of justice in order that decisions in pending suits may be binding and may be given full effect, by keeping the subject matter in controversy within the power of the court until final adjudication, that there may be an end to litigation, and to preserve the property that the purpose of the pending suit may not be defeated by successive alienations and transfers of title.

PLDT cannot shield itself from the notice of lis pendens because all that it had at the time of its inscription was an Agreement to Buy and Sell with Carrascoso, which in effect is a mere contract to sell that did not pass to it the ownership of the property. PLDT’s possession at the time the notice of lis pendens was registered not being a legal possession based on ownership but a mere possession in fact and the Agreement to Buy and Sell under which it supposedly took possession not being registered, it is not protected from an adverse judgment that may be rendered in the case subject of the notice of lis pendens.