Case Summary (G.R. No. L-18173)
Factual Background
In 1959 the Solicitor General, representing the Republic, filed a petition for quo warranto against BISAYA LAND TRANSPORTATION COMPANY INC., seeking its dissolution for alleged forfeiture of franchise rights and other corporate misconduct. The corporation's officers, including MIGUEL CUENCO, were impleaded as co-respondents. MIGUEL CUENCO filed an individual answer admitting certain corporate offenses but disclaiming personal participation; he joined the prayer for dissolution and concurrently filed a cross-claim on behalf of himself as a stockholder and director and for the benefit of the corporation, seeking reimbursement from certain individual cross-respondents for sums allegedly diverted by them. On August 31, 1959 MIGUEL CUENCO caused a notice of lis pendens to be recorded with the Register of Deeds for the City of Cebu covering registered land under Transfer Certificates of Title Nos. 4293 and 3425. The corporation thereupon filed, on November 17, 1959, a petition in the original land registration records of the Court of First Instance of Cebu to cancel the annotation of the lis pendens.
Procedural History
The quo warranto petition was docketed as Special Civil Case No. 39766 in the Court of First Instance of Manila. MIGUEL CUENCO answered and asserted an eighteen-count cross-claim seeking monetary recovery for the corporation. After MIGUEL CUENCO recorded the lis pendens against the Cebu properties, the corporation moved in the CFI of Cebu for cancellation of that notation, naming MIGUEL CUENCO respondent. The CFI of Cebu, Hon. Jose S. Rodriguez presiding, heard the parties and, by decision dated September 29, 1960, ordered the cancellation of the lis pendens as irregular and unwarranted. MIGUEL CUENCO appealed that cancellation to the Supreme Court.
Issue
Whether the petition for quo warranto to dissolve BISAYA LAND TRANSPORTATION COMPANY INC., together with MIGUEL CUENCO’s cross-claim for reimbursement, sufficiently affected the title to or the right of possession of the registered real properties to justify the recording of a notice of lis pendens under Rule 14, Section 24, Rules of Court, and Section 79, Land Registration Act.
Parties' Contentions
MIGUEL CUENCO contended that the lis pendens was proper to protect corporate interests and to secure the alleged monetary claims asserted in his cross-claim which, he argued, bore upon corporate assets including the lands. The corporation maintained that neither the Solicitor General’s petition nor the cross-claim put in issue the title to or the right of possession of the properties; it asserted that the notation was irregular and was recorded without lawful basis and sought its cancellation. Appellant relied upon Register of Deeds vs. Magdalena Estate, Inc., G. R. No. L-9102, May 22, 1959, to support the propriety of the lis pendens, while the corporation distinguished that authority on its facts.
Ruling of the Court
The Court affirmed the decision of the Court of First Instance of Cebu ordering the cancellation of the lis pendens, with costs. The Court held that neither the quo warranto petition filed by the Solicitor General nor the cross-claim of MIGUEL CUENCO put in issue the title to or the right of possession of the registered lands and therefore the notation of lis pendens was not authorized under Rule 14, Section 24, Rules of Court, nor under Section 79, Land Registration Act.
Legal Basis and Reasoning
The Court explained that Section 24, Rule 14 authorizes a notice of lis pendens only in an action that affects the title to or the right of possession of real property, and that Section 79, Land Registration Act similarly limits the effect of actions upon registered land to those where a memorandum of the action is filed. The Court emphasized the remedial purpose of lis pendens as constructive notice to third persons, such as purchasers or incumbrancers, so that their transactions entered into after notation may be subject to the judgment in the pending real action. The Court found that the Solicitor General’s petition alleged corporate misconduct and sought dissolution, not a determination of ownership or possessory rights in the lands. The cross-claim sought monetary reimbursement to the corporation from certain directors and officers; it did not assert any claim by the cross-claimant or by any individual to the title or possession of the lands. The Court reasoned that the prospect that dissolution would lead to liquidation and eventual distribution of corporate assets does not convert the petition into a real action affecting title or possession; stockholders acquire rights to corporate assets only upon liquidat
...continue reading
Case Syllabus (G.R. No. L-18173)
Parties and Posture
- Bisaya Land Transportation Co., Inc. was impleaded as respondent in a quo warranto petition filed by the Solicitor General in representation of the Republic seeking dissolution of the corporation.
- Miguel Cuenco was impleaded as an individual respondent and filed an answer admitting corporate wrongdoing but disclaiming his own participation.
- Miguel Cuenco filed a cross-claim on behalf of himself as stockholder and director and for the benefit of the corporation seeking reimbursement from co-directors.
- The corporation sought cancellation of a notice of lis pendens recorded by Miguel Cuenco against two parcels of registered land in Cebu.
- The appeal to the present Court followed the decision of the Court of First Instance of Cebu canceling the lis pendens.
Key Facts
- The Solicitor General filed a petition for quo warranto in 1959 in the Court of First Instance of Manila, docketed as Special Civil Case No. 39766, alleging multiple corporate offenses and praying for dissolution and appointment of a receiver.
- The petition impleaded officers including Miguel Cuenco, Manuel Cuenco, Lourdes Cuenco, Jose P. Velez, Federico A. Reyes, and Jesus P. Velez.
- Miguel Cuenco filed a cross-claim alleging fraudulent acts by the other directors and sought monetary reimbursement to the corporation aggregating several million pesos.
- On August 31, 1959 Miguel Cuenco recorded a notice of lis pendens with the Register of Deeds of the City of Cebu against transfer certificates of title Nos. 4293 and 3425.
- On November 17, 1959 the corporation filed a petition in the Court of First Instance of Cebu to cancel the lis pendens, and the court rendered judgment on September 29, 1960 ordering cancellation.
Procedural History
- The quo warranto petition originated in the Court of First Instance of Manila as Special Civil Case No. 39766.
- The corporation sought cancellation of the lis pendens in the Court of First Instance of Cebu, where the lis pendens was ordered cancelled.
- The present appeal followed from the cancellation order and reached the Court that rendered the instant decision.
- The decision under review was authored by Makalintal, J., with concurrence by Reyes (Acting C.J.), Dizon, Bengzon, J.P., Zaldivar, Sanchez, and Angeles, JJ.
Statutory Framework
- Rule 14, Section 24, Rules of Court authorizes filing of a notice of lis pendens in an action affecting the title or right of possession of real property and provides that such notice may be cancelled only upon court order after proper showing.
- Section 79, Land Registration Act requires the registration of a memorandum of actions affecting registered land to affec