G.R. No. L-29352 - Ramos vs. Central Bank of the Philippines

The case involves appeals from orders issued by the Court of First Instance of Occidental Negros acting as the land registration court in two related cadastral cases.
The petitioners, Capitol Subdivision, Inc. and Montelibano Subdivisions, sought the cancellation of a notice of lis pendens annotated on the certificates of title covering two parcels of land (Lot No. 21 and Lot No. 28) registered under the Torrens System.
The oppositors, Alfredo Lopez Montelibano and Concepcion Montelibano Hojilla, interposed appeals against the orders granting the petitioners’ motion to cancel the lis pendens.

The petitioners alleged that Lot No. 21, part of subdivision plan No. Psd-12392 and constituting a portion of Lot No. 77 of the Silay Cadastre, was sold by the registered owners, Alfredo Montelibano and Alejandro M. Montelibano (who held title to the land), to Corazon J. Lacson.
Prior to the sale, in August 1947, the vendors had mortgaged the property with the Philippine National Bank, Bacolod Branch, to secure a loan. This mortgage was properly noted on the back of the title under entry No. 4999.

On 24 September 1954, the vendee, Corazon J. Lacson, paid the full purchase price, and on the same day, the vendors executed the deed of sale in her favor.
On 29 January 1957, the bank, acting as mortgagee, executed a deed of release of the mortgage on the parcel.

On 12 March 1957, as a result of an action initiated by Alfredo L. Montelibano and Concepcion Montelibano Hojilla in civil case No. 4274, a notice of lis pendens was annotated on the certificate of title (TCT No. T-5979) covering Lot No. 21, along with other properties of the registered owner.

The petitioners requested that the Register of Deeds cancel the lis pendens affecting Lot No. 21 and issue a clean transfer certificate of title in favor of Corazon J. Lacson.
On 10 May 1957, an order (dated 27 April 1957) was entered by the Court, granting the petitioners' motion.
Subsequent motions for reconsideration and objections were filed by the oppositors and the petitioners, respectively, with the Court ultimately denying the oppositors' motion on 11 November 1957, prompting the appeal.

On 6 May 1957, the petitioners filed a motion claiming that Lot No. 28, also part of the same subdivision plan and registered under TCT No. T-5986, had been sold by the registered owners to Marcelino Lalantakan on an installment basis.
The sale was executed on 29 June 1936 when the vendee paid the full purchase price, and the deed of sale was executed on that same day.
This parcel, along with other real properties of the petitioners, had been part of a mortgage transaction to secure a loan of P81,900 from the Philippine National Bank, and the corresponding mortgage was released on 17 January 1957.

Similarly to the first case, the notice of lis pendens was annotated on the certificate of title due to the pending action in civil case No. 4274.
The petitioners sought cancellation of the lis pendens from the title to secure a clean title for the vendee, Marcelino Lalantakan.

On 14 November 1957, under the supervision of Hon. Jose S. de la Cruz, an order granting the petitioners' motion to cancel the lis pendens was rendered.
The oppositors subsequently appealed the Court’s order in both cases.

For Lot No. 21, the deed of sale executed on 24 September 1954 was registered on 9 May 1957 (entry No. 48590), after the lis pendens had been noted.
For Lot No. 28, however, the deed of sale was never registered.
Despite the sales to Corazon J. Lacson and Marcelino Lalantakan, the parcels remained registered in the names of Alfredo Montelibano and Alejandro M. Montelibano.
The petitioners’ brief referenced a civil complaint praying for partition and damages, with detailed alternative reliefs aimed at adjusting the property rights among the parties.
The case underscored that within the Torrens System, the act of registration is the essential operative act for transferring title and affecting the property rights.

Whether the cancellation of the notice of lis pendens annotated on the certificates of title for the unregistered sales to the vendees (Corazon J. Lacson and Marcelino Lalantakan) is permissible given that the sales occurred prior to the annotation.

Does the fact that the vendees were innocent purchasers who acquired the property before the lis pendens was noted entitle them to have the annotation cancelled?

Whether an unrecorded sale, although binding between the parties, can affect third-party rights under the Torrens System.

Can an unrecorded sale override the effect of a subsequent annotation of lis pendens, especially when the title still remains in the names of the registered owners?

Whether the order to cancel the lis pendens should prevail given that if judgment is rendered in favor of the plaintiffs in the underlying civil action, the unrecorded sales would be subordinate to the judgment.