G.R. No. 184068 - Guy vs. Guy

On February 10, 1975, private respondent Rosario T. Alzul purchased, on installment under Contract to Sell No. 867 from B.E. San Diego, Inc., four lots in Aurora Subdivision, Maysilo, Malabon (then Rizal, now Metro Manila) with a total area of approximately 1,275 sq. m.
The purchase was at P100.00 per sq. m. with a downpayment of P12,750.00 and monthly installments of P1,249.50 plus interest at 12% per annum, culminating in a total price of P237,660.00.

Rosario Alzul assigned her rights under the original contract to petitioner Wilson P. Yu through a “Conditional Deed of Assignment and Transfer of Rights” dated July 25, 1977.
Following the assignment, B.E. San Diego, Inc. cancelled the contract to sell originally in favor of Rosario Alzul and issued a new Contract to Sell No. 867 in favor of the petitioner, covering the same lots.

On August 25, 1980, Rosario Alzul filed a suit against petitioner Wilson P. Yu seeking rescission of the conditional deed on the ground that the petitioner failed or refused to pay the remaining balance specified therein.
The trial court ruled in favor of Rosario Alzul, and this decision was affirmed by the Court of Appeals. The rescission case eventually became final and executory after the Supreme Court dismissed the petition for review on May 8, 1989.

During the pendency of the rescission suit, on September 30, 1985, Rosario Alzul caused the annotation of a Notice of Lis Pendens on the original copy of the certificate of title on file with the Register of Deeds.
This notice served as a public announcement of ongoing litigation involving the subject property.

On February 17, 1989, B.E. San Diego, Inc. notified petitioner Wilson P. Yu that Contract to Sell No. 867 had been “declared rescinded and cancelled.”
On April 28, 1989, the same corporation sold the four lots by way of a Deed of Absolute Sale to private respondent-spouses Carlos and Sandra Ventura.
The Ventura spouses, upon receiving their owner’s duplicate certificates of title (which did not bear the lis pendens annotation), were surprised and later filed an action for Quieting of Title, cancellation of the annotation, and damages.
Although the trial court ruled in favor of the Ventura spouses, the Court of Appeals (10th Division) reversed the decision, declaring the titles issued to the spouses “null and void” and reinstating title in favor of B.E. San Diego, Inc. with the lis pendens annotation intact.
The appellate decision was challenged by petitioner Wilson P. Yu through a petition to nullify the Court of Appeals’ ruling and affirm the trial court’s decision.

Petitioner and the Ventura spouses argued that the lis pendens was not effectively binding since the annotation appeared only on the original copy of the certificate of title on file with the Register of Deeds, and not on the owner’s duplicate in their possession.
Petitioner contended that purchasers in good faith, who rely solely on the owner’s duplicate certificate, should not be bound by a notice not visibly recorded on that document.
It was also argued that B.E. San Diego, Inc., not being a party to the rescission suit, should not be held bound by its outcome and thus was not precluded from selling the property.

Whether the annotation of a Notice of Lis Pendens on the original copy of the certificate of title, even though it is not reproduced on the owner’s duplicate, constitutes sufficient constructive notice to bind subsequent purchasers.
Whether the sale of the property to the Ventura spouses, who acquired their title in good faith based on the owner’s duplicate certificate, is valid despite the existence of the lis pendens annotation on the original certificate on file.
Whether B.E. San Diego, Inc. is bound by the rescission suit’s decision, notwithstanding its non-party status in that suit.
Whether the petitioner's arguments regarding the absence of the lis pendens annotation on the owner’s duplicate and the resulting lack of notice are persuasive enough to nullify the appellate decision.