G.R. No. 175303 - Pacific Ace Fice, Ltd. vs. Yanagisawa

Respondent Eiji Yanagisawa, a Japanese national, and Evelyn F. Castaneda, a Filipina, contracted marriage on July 12, 1989 at the Manila City Hall.
The couple’s marital relation later became the basis for disputes regarding their real estate properties.

On August 23, 1995, Evelyn purchased a 152-square-meter townhouse unit located at Bo. Sto. Niño, Parañaque, Metro Manila.
The property was registered in Evelyn’s name, as recorded in Transfer Certificate of Title (TCT) No. 99791 issued by the Registry of Deeds for Parañaque.

In 1996, Eiji filed a complaint to annul the marriage on grounds of bigamy, which was docketed as Civil Case No. 96-776 at the Makati RTC.
During this pendency, Eiji sought a restraining order and a writ of preliminary injunction to prohibit Evelyn from disposing or encumbering properties registered in her name.
At the hearing, Evelyn, through her counsel, voluntarily undertook in open court not to dispose of, alienate, or encumber her properties during the pendency of the case.
Based on the commitment, the Makati RTC issued an Order on October 2, 1996, rendering the motion for the restraining order and preliminary injunction moot.
The Order was subsequently annotated on TCT No. 99791, thereby serving as constructive notice to all subsequent dealings with the property.

In March 1997, Evelyn obtained a loan of P500,000.00 from Pacific Ace Finance Ltd. (PAFIN).
To secure the loan, Evelyn executed a real estate mortgage (REM) on August 25, 1998 over the Parañaque townhouse unit.
The REM was likewise submitted for annotation on TCT No. 99791.
At the time the mortgage was executed, Eiji’s appeal in the nullity case was pending before the Court of Appeals (CA).

Eiji discovered the REM upon its annotation and argued that it violated the October 2, 1996 restraining order.
Consequently, Eiji filed a complaint for the annulment of the REM (Civil Case No. 98-0431) before the Parañaque RTC.
In its defense, PAFIN denied knowledge of Evelyn’s prior commitment and claimed that it did not verify the title because Evelyn was regarded as “a good, friendly and trusted neighbor.”
PAFIN also maintained that as a foreign national, Eiji lacked the legal capacity to have an interest in the property, thereby precluding him from seeking the annulment.

The Parañaque RTC dismissed Eiji’s complaint, holding that, as a foreigner, he could not assert a cause of action regarding a property registered solely in Evelyn’s name.
Upon appeal, the Court of Appeals (CA) found merit in Eiji’s argument.

The CA noted that the Makati RTC had already ruled on the issue of ownership and had ordered the liquidation of the properties amidst the family dispute.
It held that the restraining order was valid and its annotation on TCT No. 99791 created a right for Eiji to rely upon.
The CA emphasized that the Parañaque RTC improperly interfered with the ruling of a co-equal court (Makati RTC), thereby violating the doctrine of non-interference.

The CA annulled the REM and characterized PAFIN as a mortgagee in bad faith.
Separate motions for reconsideration filed by the parties were denied, leading to the affirmation of the annulment of the REM.

That the CA erroneously declared that an alien could have an interest in real property in the Philippines.
That the Parañaque RTC’s decision should have been reinstated, asserting that Evelyn held exclusive ownership and could mortgage the property validly.

PAFIN asserted that Eiji’s alleged contribution toward the purchase of the property and the subsequent Makati RTC rulings did not obligate Evelyn to restrain the disposition of the property.

Whether it was proper for the Parañaque RTC to rule on the issue of ownership and the validity of the REM, despite the Makati RTC having earlier acquired jurisdiction over related matters.
Whether the interference of the Parañaque RTC contravened the doctrine of non-interference among courts of equal jurisdiction.

Whether Evelyn’s open court undertaking—annotated on the property title—created an enforceable right for Eiji to demand that the property not be encumbered.
Whether actions taken in violation of such a judicial order (i.e., the execution of the REM) were voidable.

Whether a mortgage executed in violation of a standing injunction or restraining order is voidable.
Whether Eiji, as a foreign national, despite lacking ownership rights under the Constitution, nevertheless possessed a cause of action stemming from Evelyn’s judicial commitment.

Whether PAFIN’s failure to verify the property’s title status constituted bad faith, especially in light of the annotated restraint.