defendant would not be disposed of, alienated or encumbered in any manner during the pendency
of the petition, the Motion for the Issuance of a Restraining Order and Application for a Writ of
Preliminary Injunction is hereby considered moot and academic.
FIRST DIVISION
Date of Instrument — October 2, 1996
Date of Inscription — March 17, 1997 — 11:21 a.m. 8 (Emphasis supplied.)
[G.R. No. 175303. April 11, 2012.]
Sometime in March 1997, Evelyn obtained a loan of P500,000.00 from petitioner Pacific Ace Finance Ltd. (PAFIN). 9 To
secure the loan, Evelyn executed on August 25, 1998 a real estate mortgage (REM) 10 in favor of PAFIN over the Parañaque
PACIFIC ACE FINANCE LTD. (PAFIN), petitioner, vs. EIJI * YANAGISAWA, respondent. townhouse unit covered by TCT No. 99791. The instrument was submitted to the Register of Deeds of Parañaque City for annotation
on the same date. 11 ADHcTE
At the time of the mortgage, Eiji's appeal in the nullity of marriage case was pending before the CA. 12 The Makati RTC
DEL CASTILLO, J p: had dissolved Eiji and Evelyn's marriage, 13 and had ordered the liquidation of their registered properties, including the Parañaque
townhouse unit, with its proceeds to be divided between the parties. 14 The Decision of the Makati RTC did not lift or dissolve its
October 2, 1996 Order on Evelyn's commitment not to dispose of or encumber the properties registered in her name.
An undertaking not to dispose of a property pending litigation, made in open court and embodied in a court order, and
duly annotated on the title of the said property, creates a right in favor of the person relying thereon. The latter may seek the annulment
Eiji learned of the REM upon its annotation on TCT No. 99791. Deeming the mortgage as a violation of the Makati RTC's
of actions that are done in violation of such undertaking.
October 2, 1996 Order, Eiji filed a complaint for the annulment of REM (annulment of mortgage case) against Evelyn and
PAFIN. 15 The complaint, docketed as Civil Case No. 98-0431, was raffled to Branch 258 of the Regional Trial Court of Parañaque
Before us is a Petition for Review 1 of the August 1, 2006 Decision 2 of the Court of Appeals (CA) in CA-G.R. CV No.
City (Parañaque RTC).
78944, which held:
WHEREFORE, the Decision dated April 20, 2003 of the RTC, Branch 258, Parañaque City, is
For its defense, PAFIN denied prior knowledge of the October 2, 1996 Order against Evelyn. It admitted, however, that
hereby ANNULLED and SET ASIDE and a new one entered annulling the Real Estate Mortgage executed on August 25, it did not conduct any verification of the title with the Registry of Deeds of Parañaque City "because . . . Evelyn was a good, friendly
1998 in favor of defendant Pacific Ace Finance Ltd. and trusted neighbor." 16 PAFIN maintained that Eiji has no personality to seek the annulment of the REM because a foreign national
cannot own real properties located within the Philippines. 17
SO ORDERED. 3
Evelyn also denied having knowledge of the October 2, 1996 Order. 18 Evelyn asserted that she paid for the property
Factual Antecedents with her own funds 19 and that she has exclusive ownership thereof. 20
Respondent Eiji Yanagisawa (Eiji), a Japanese national, and Evelyn F. Castañeda (Evelyn), a Filipina, contracted Parañaque Regional Trial Court Decision 21
marriage on July 12, 1989 in the City Hall of Manila. 4
The Parañaque RTC determined that the only issue before it is "whether . . . [Eiji] has a cause of action against the
On August 23, 1995, Evelyn purchased a 152 square-meter townhouse unit located at Bo. Sto. Niño, Parañaque, Metro defendants and . . . is entitled to the reliefs prayed for despite the fact that he is not the registered owner of the property being a
Manila (Parañaque townhouse unit). 5 The Registry of Deeds for Parañaque issued Transfer Certificate of Title (TCT) No. 99791 to Japanese national." 22
"Evelyn P. Castañeda, Filipino, married to Ejie Yanagisawa, Japanese citizen[,] both of legal age." 6 ACHEaI
The Parañaque RTC explained that Eiji, as a foreign national, cannot possibly own the mortgaged property. Without
In 1996, Eiji filed a complaint for the declaration of nullity of his marriage with Evelyn on the ground of bigamy (nullity of ownership, or any other law or contract binding the defendants to him, Eiji has no cause of action that may be asserted against
marriage case). The complaint, docketed as Civil Case No. 96-776, was raffled to Branch 149 of the Regional Trial Court of Makati them. 23 Thus, the Parañaque RTC dismissed Eiji's complaint: ADScCE
(Makati RTC). During the pendency of the case, Eiji filed a Motion for the Issuance of a Restraining Order against Evelyn and an
Application for a Writ of a Preliminary Injunction. He asked that Evelyn be enjoined from disposing or encumbering all of the properties WHEREFORE, premises considered, for failure of the plaintiff to state a cause of action
registered in her name. against defendants, EVELYN CASTAÑEDA YANAGISAWA and Pacific Ace Finance Ltd. (PAFIN), this
case is DISMISSED.
At the hearing on the said motion, Evelyn and her lawyer voluntarily undertook not to dispose of the properties registered
in her name during the pendency of the case, thus rendering Eiji's application and motion moot. On the basis of said commitment, The counterclaim and cross-claim are likewise DISMISSED.
the Makati RTC rendered the following Order dated October 2, 1996:
SO ORDERED. 24
ORDER
Eiji appealed the trial court's decision arguing that the trial court erred in holding that his inability to own real estate
In view of the commitment made in open court by Atty. Lupo Leyva, counsel for the property in the Philippines deprives him of all interest in the mortgaged property, which was bought with his money. He added that
defendant [Evelyn], together with his client, the defendant in this case, that the properties registered in the Makati RTC has even recognized his contribution in the purchase of the property by its declaration that he is entitled to half of the
the name of the defendant would not be disposed of, alienated or encumbered in any manner during the proceeds that would be obtained from its sale.
pendency of this petition, the Motion for the Issuance of a Restraining Order and Application for a Writ of
a Preliminary Injunction scheduled today is hereby considered moot and academic. Eiji also emphasized that Evelyn had made a commitment to him and to the Makati RTC that she would not dispose of,
alienate, or encumber the properties registered in her name while the case was pending. This commitment incapacitates Evelyn from
SO ORDERED. 7 (Emphasis supplied.) entering into the REM contract.
The above Order was annotated on the title of the Parañaque townhouse unit or TCT No. 99791, thus: Court of Appeals Decision 25
Entry No. 8729 — Order — issued by Hon. Josefina Guevara Salonga, Judge, RTC, Branch The CA found merit in Eiji's appeal.
149, Makati City, ordering the defendant in Civil Case No. 96-776 — entitledEiji Yanagisawa, Plaintiff-
versus-Evelyn Castañeda Yanagisawa, that the properties registered in the name of the
The CA noted that the Makati RTC ruled on Eiji's and Evelyn's ownership rights over the properties that were acquired Contrary to petitioner's stance, the CA did not make any disposition as to who between Eiji and Evelyn owns the
during their marriage, including the Parañaque townhouse unit. It was determined therein that the registered properties should be Parañaque townhouse unit. It simply ruled that the Makati RTC had acquired jurisdiction over the said question and should not have
sold at public auction and the proceeds thereof to be divided between Eiji and Evelyn. 26 been interfered with by the Parañaque RTC. The CA only clarified that it was improper for the Parañaque RTC to have reviewed the
ruling of a co-equal court. DcTSHa
Contrary to this ruling, the Parañaque RTC ruled that Eiji has no ownership rights over the Parañaque townhouse unit in
light of the constitutional prohibition on foreign ownership of lands and that the subject property is Evelyn's exclusive property. 27 The Court agrees with the CA. The issue of ownership and liquidation of properties acquired during the cohabitation of
Eiji and Evelyn has been submitted for the resolution of the Makati RTC, and is pending 41 appeal before the CA. The doctrine of
The appellate court determined that the Parañaque RTC's Decision was improper because it violated the doctrine of judicial stability or non-interference dictates that the assumption by the Makati RTC over the issue operates as an "insurmountable
non-interference. Courts of equal jurisdiction, such as regional trial courts, have no appellate jurisdiction over each other. 28 For this barrier" to the subsequent assumption by the Parañaque RTC. 42 By insisting on ruling on the same issue, the Parañaque RTC
reason, the CA annulled and set aside the Parañaque RTC's decision to dismiss Eiji's complaint. 29 HSaCcE effectively interfered with the Makati RTC's resolution of the issue and created the possibility of conflicting decisions. Cojuangco v.
Villegas 43 states: "The various branches of the [regional trial courts] of a province or city, having as they have the same or equal
The CA then proceeded to resolve Eiji's complaint. 30 The CA noted that Eiji anchored his complaint upon Evelyn's authority and exercising as they do concurrent and coordinate jurisdiction, should not, cannot and are not permitted to interfere with
violation of her commitment to the Makati RTC and to Eiji that she would not dispose of, alienate, or encumber the properties their respective cases, much less with their orders or judgments. A contrary rule would obviously lead to confusion and seriously
registered in her name, including the Parañaque townhouse unit. This commitment created a right in favor of Eiji to rely thereon and hamper the administration of justice." The matter is further explained thus:
a correlative obligation on Evelyn's part not to encumber the Parañaque townhouse unit. Since Evelyn's commitment was annotated
on TCT No. 99791, all those who deal with the said property are charged with notice of the burdens on the property and its registered It has been held that "even in cases of concurrent jurisdiction, it is, also, axiomatic that the
owner. 31 court first acquiring jurisdiction excludes the other courts."
On the basis of Evelyn's commitment and its annotation on TCT No. 99791, the CA determined that Eiji has a cause of In addition, it is a familiar principle that when a court of competent jurisdiction acquires
action to annul the REM contract. Evelyn was aware of her legal impediment to encumber and dispose of the Parañaque townhouse jurisdiction over the subject matter of a case, its authority continues, subject only to the appellate
unit. Meanwhile, PAFIN displayed a wanton disregard of ordinary prudence when it admitted not conducting any verification of the authority, until the matter is finally and completely disposed of, and that no court of co-ordinate authority
title whatsoever. The CA determined that PAFIN was a mortgagee in bad faith. 32 is at liberty to interfere with its action. This doctrine is applicable to civil cases, to criminal prosecutions,
and to courts-martial. The principle is essential to the proper and orderly administration of the laws; and
Thus, the CA annulled the REM executed by Evelyn in favor of PAFIN. while its observance might be required on the grounds of judicial comity and courtesy, it does not rest
upon such considerations exclusively, but is enforced to prevent unseemly, expensive, and dangerous
The parties to the annulled mortgage filed separate motions for reconsideration on August 22, 2006, 33 which were both conflicts of jurisdiction and of the process. 44
denied for lack of merit by the appellate court in its November 7, 2006 Resolution. 34
Petitioner maintains that it was imperative for the Parañaque RTC to rule on the ownership issue because it was essential
PAFIN filed this petition for review. for the determination of the validity of the REM. 45
Petitioner's Arguments The Court disagrees. A review of the complaint shows that Eiji did not claim ownership of the Parañaque townhouse unit
or his right to consent to the REM as his bases for seeking its annulment. Instead, Eiji invoked his right to rely on Evelyn's commitment
Petitioner seeks a reversal of the CA Decision, which allegedly affirmed the Makati RTC ruling that Eiji is a co-owner of not to dispose of or encumber the property (as confirmed in the October 2, 1996 Order of the Makati RTC), and the annotation of the
the mortgaged property. PAFIN insists that the CA sustained a violation of the constitution with its declaration that an alien can have said commitment on TCT No. 99791. ACEIac
an interest in real property located in the Philippines. 35
It was Evelyn and PAFIN that raised Eiji's incapacity to own real property as their defense to the suit. They maintained
Petitioner also seeks the reinstatement of the Parañaque RTC's Decision dated April 20, 2003 36 and prays that this that Eiji, as an alien incapacitated to own real estate in the Philippines, need not consent to the REM contract for its validity. But this
Court render a decision that Eiji cannot have ownership rights over the mortgaged property and that Evelyn enjoys exclusive argument is beside the point and is not a proper defense to the right asserted by Eiji. This defense does not negate Eiji's right to rely
ownership thereof. As the sole owner, Evelyn can validly mortgage the same to PAFIN without need of Eiji's consent. Corollarily, Eiji on the October 2, 1996 Order of the Makati RTC and to hold third persons, who deal with the registered property, to the annotations
has no cause of action to seek the REM's annulment. 37 ECAaTS entered on the title. Thus, the RTC erred in dismissing the complaint based on this defense.
Respondent's Arguments Petitioner did not question the rest of the appellate court's ruling, which held that Evelyn and PAFIN executed the REM
Respondent argues that he has an interest to have the REM annulled on two grounds: First, Evelyn made a commitment in complete disregard and violation of the October 2, 1996 Order of the Makati RTC and the annotation on TCT No. 99791. It did not
in open court that she will not encumber the Parañaque townhouse unit during the pendency of the case. Second, the Makati RTC's dispute the legal effect of the October 2, 1996 Order on Evelyn's capacity to encumber the Parañaque townhouse unit nor the CA's
decision declared that he is entitled to share in the proceeds of the Parañaque townhouse unit. 38 finding that petitioner is a mortgagee in bad faith.
Respondent also insists that petitioner is in bad faith for entering into the mortgage contract with Evelyn despite the The October 2, 1996 Order, embodying Evelyn's commitment not to dispose of or encumber the property, is akin to an
annotation on TCT No. 99791 that Evelyn committed herself not to encumber the same. 39 injunction order against the disposition or encumbrance of the property. Jurisprudence holds that all acts done in violation of a
standing injunction order are voidable as to the party enjoined and third parties who are not in good faith. 46 The party, in whose
Issues favor the injunction is issued, has a cause of action to seek the annulment of the offending actions. 47 The following is instructive:
Petitioner raises the following issues: 40 An injunction or restraining order must be obeyed while it remains in full force and effect until
1. Whether a real property in the Philippines can be part of the community property of a Filipina and her foreigner spouse; the injunction or restraining order has been set aside, vacated, or modified by the court which granted it,
2. Whether a real property registered solely in the name of the Filipina wife is paraphernal or conjugal; or until the order or decree awarding it has been reversed on appeal. The injunction must be obeyed
3. Who is entitled to the real property mentioned above when the marriage is declared void? irrespective of the ultimate validity of the order, and no matter how unreasonable and unjust the injunction
4. Whether the Parañaque RTC can rule on the issue of ownership, even as the same issue was already ruled upon by the Makati RTC and is may be in its terms. 48
pending appeal in the CA.
In view of the foregoing discussion, we find no need to discuss the other issues raised by the petitioner. SCHcaT
Our Ruling
WHEREFORE, premises considered, the Petition is DENIED for lack of merit. The August 1, 2006 Decision of the Court
The petition has no merit. of Appeals in CA-G.R. CV No. 78944 is AFFIRMED. SO ORDERED.
