MR HOLDINGS, LTD. v.

SHERIFF BAJAR instruments duly registered, and requested the Corporate Secretary "to
record and reflect the said mortgage and encumbrance upon the described
Villarama, Jr., J. | October 10, 2012| GR. 153478 shares so as to put third parties and the public in general on notice of the
Facts fact [and] existence of said mortgage."
 MR Holdings as assignee filed an application for extrajudicial foreclosure
 Under a "Principal Loan Agreement" and "Complementary Loan of the Chattel Mortgage. In the auction sale, the subject club shares
Agreement," Asian Development Bank (ADB), a multilateral development consisting of Marcopper’s Manila Golf Club Membership Certificates were
finance institution, agreed to extend to Marcopper Mining Corporation sold to MR Holdings as the highest bidder, and accordingly a Certificate of
(Marcopper) a loan in the aggregate amount of US$40,000,000.00 to Sale was issued to it by the Office of the Clerk of Court and Ex-Officio
finance the latter's mining project at Sta. Cruz, Marinduque. Sheriff of Makati City. It subsequently furnished the Corporate Secretary of
o To secure the loan, Marcopper executed in favor of ADB a Manila Golf Club a copy of the certificate of sale and warning the latter
"Deed of Real Estate and Chattel Mortgage" covering “not to honor or effect any transfers or transactions involving the said shares
substantially all of its (Marcopper's) properties and assets, other than the transfer of the said shares to it.
including Manila Golf & Country Club Membership Certificates.  On January 13, 1999, Sheriff Bajar issued in Civil Case No. 96-80083 a
o These mortgages were duly registered in the Register of Deeds. notice of sale on execution pending appeal which set the auction of the
 ADB and Placer Dome, Inc., a foreign corporation which owns 40% of levied membership shares of Marcopper in various clubs.
Marcopper, executed a "Support and Standby Credit Agreement" whereby o MR Holdings filed a "Manifestation and Warning" specifically
the latter. agreed to provide Marcopper with cash flow support for the addressed to Sheriff Bajar, all bidders and the general public,
payment of its obligations to ADB. informing that the subject club shares which Sheriff Bajar intended
 When Marcopper defaulted in the payment of its loan obligation, Placer to sell have already been acquired by the former at the foreclosure
Dome, in fulfillment of its undertaking under the "Support and Standby proceedings conducted by the Sheriff of Makati City.
Credit Agreement," (and presumably to preserve its international credit o Citadel Holdings, Inc. (Citadel) and Vercingetorix Corporation
standing), agreed to have its subsidiary corporation, MR Holding, Ltd., (Vercingetorix) were the highest bidders for Manila Golf Club
assume Marcopper's obligation to ADB in the amount of Membership Certificate Nos. 1412 and 1444, respectively, during
US$18,453,450.02. the public auction conducted by Sheriff Bajar on January 19, 1999
 Consequently, in an "Assignment Agreement", ADB assigned to MR pursuant to the writ of execution pending appeal issued in Civil
Holdings all its rights, interests and obligations under the principal and Case No. 96-80083
complementary loan agreements. o Manila Golf Club’s Corporate Secretary wrote MR Holdings that
o Marcopper likewise executed a "Deed of Assignment" in favor of they could not comply with their earlier request not to register any
MR Holdings. Under its provisions, Marcopper assigns, transfers, transfer of subject Membership Certificates in view of the court
cedes and conveys to MR Holdings, all of its properties, mining order "absent any further revision or amendment of that Order by
equipment and facilities. the said court or by higher courts”
 On account of its inability to meet production targets after the mine tailings  MR Holdings then filed in the RTC of Makati City a complaint for
disaster in its Marinduque project, Marcopper was sued by one of its "Reivindication of Possession/Right with Damages and Prayer for
creditors, Solidbank Corporation (Solidbank) on the foreign currency loans Preliminary Injunction and Temporary Restraining Order" against Citadel,
granted by the latter (Civil Case No. 96- 80083). Solidbank sought to collect Vercingetorix and Sheriff Bajar (Civil Case No. 99-605)
a total amount of ₱ 52,970,756.89 plus interest and charges. o It argued that as assignee of the creditor-mortgagee, it had the right
 A writ of preliminary attachment was issued by RTC Manila pursuant to to foreclose the chattel mortgage on the subject certificates upon
which Sheriff Carlos P. Bajar levied upon the properties of Marcopper such default of the Marcopper according to the terms of the loan
as personal properties consisting of club membership shares, including the agreements. Having foreclosed a preferred/superior mortgage lien,
subject Manila Golf Club shares all subordinate liens, such as the levy on attachment/execution for
 In a letter dated July 21, 1997, Marcopper formally notified the Corporate Solidbank as judgment obligee, has also been foreclosed. Thus, it
Secretary of Manila Golf Club of the assignment of mortgage under became the absolute owner of the subject certificates
  MR Holdings filed a motion for the court "to order defendant Manila Golf as the subject membership shares in a private non-stock
& Country Club to annotate the pendency of the instant case on Manila Golf corporation.
Membership Certificates and to keep the annotation until final judgment has  The denial by the RTC and CA of MR Holding’s motion to annotate lis
been rendered in the instant case." pendens on the subject club membership certificates was rather based on the
o Petitioner stated that such annotation is necessary to protect its absence of law and rules to govern the application of the remedy over
interest pending the final judgment or decision to be rendered in personal properties. No grave abuse of discretion can therefore arise from
Civil Case No. 99-605. such adverse ruling predicated on the lack of statutory basis for grant of
o RTC Makati denied the motion for lack of basis in law, stating that relief to a party
the notice of lis pendens provided in Section 76 of PD 1529  Failure to file a notice of the pendency of the action, where a statute
pertains to real properties and not shares of stock which are provides therefor as condition precedent to the action
considered chattels, and that granting the motion would constitute being lis pendens, ordinarily precludes the right to claim that the person
an undue restraint on the ownership of Citadel and Vercingetorix of acquiring interests pendente lite takes the property subject to the judgment.
the Manila Golf membership certificates o But this rule has no application where the purchaser has actual
 Meanwhile, the Court promulgated a Decision which nullified the order of notice of the pendency of the suit, or where regardless of the lis
RTC Manila in Civil Case No. 96- 80083 which granted the respondents’ pendens notice, other facts exist establishing constructive notice, or
motion for execution pending appeal where the purchaser is chargeable with notice by reason of the
filing of a lien or payment of the amount of the lien into court, or
ISSUE: W/N the lis pendens rule can apply in actions affecting title or where the property is seized by court proceedings.
possession of personal properties o Notwithstanding the absence of statutory basis in this jurisdiction
HELD: for availing of lis pendens in suits involving only personal
property, the foregoing rule may be considered when actual or
 Lis pendens, which literally means pending suit, refers to the jurisdiction, constructive notice are discernible from the records.
power or control which a court acquires over property involved in a suit,  IN THE CASE, MR Holdings as early as July 21, 1997 had formally
pending the continuance of the action, and until final judgment. Founded notified Manila Golf Club’s Corporate Secretary of the assignment of
upon public policy and necessity,lis pendensis intended (1) to keep the chattel mortgage duly registered covering the subject shares of Marcopper,
properties in litigation within the power of the court until the litigation is and further requested that the same be recorded to put third parties on notice
terminated and to prevent the defeat of the judgment or decree by of petitioner’s lien. After the chattel mortgage was extrajudicially
subsequent alienation; and (2) to announce to the whole world that a foreclosed, MR Holdings promptly notified the said officer and furnished
particular property is in litigation and serves as a warning that one who him with a copy of the Certificates of Sale issued in favor of petitioner as
acquires an interest over said property does so at his own risk, or that he the highest bidder during the public auction sale of the subject club shares.
gambles on the result of the litigation over said property o Clearly, Manila Golf Club had actual notice of MR Holding’s
 A notice of lis pendens is availed of mainly in real actions. lien/title as assignee of the recorded chattel mortgage and as
o As a general rule, these actions are: (a) an action to recover purchaser in the foreclosure sale, as well as the pendency of Civil
possession of real estate; (b) an action for partition; and (c) any Case No. 96-80083 before RTC Manila which ordered the sale on
other court proceedings that directly affect the title to the land or execution pending appeal.
the building thereon or the use or the occupation thereof. o Such actual knowledge, on the part of Manila Golf Club, of MR
o The Court has held that the annotation of lis pendens also applies Holding's interest and Civil Case No. 96-80083 involving the
to suits seeking to establish a right to, or an equitable estate or subject membership shares is deemed equivalent to
interest in, a specific real property, or to enforce a lien, a charge or registration of an encumbrance or assignment in its corporate
an encumbrance against it. books.
o In this jurisdiction, a notice of lis pendens does not apply to actions o By virtue of such registration of petitioner's lien/title and the
involving title to or any right or interest in, personal property, such pending litigation, third parties, or potential transferees pendente
lite, may therefore be charged with constructive notice of
 petitioner's lien/title over the subject shares and the pending
litigation involving the same.
 It may be that Manila Golf Club could have been directly informed only of
the pendency of Civil Case No. 96-80083 and not Civil Case No. 99- 605
between petitioner and respondents. But while Civil Case No. 96-80083 was
not the very proceeding wherein petitioner sought the lis pendens and not
the case filed by petitioner against herein respondents Citadel and
Vercingetorix (Civil Case No. 99-605), MR Holdings had filed therein
(Civil Case No. 96-80083) his Affidavit of Third-Party Claim and
Manifestation of Prior Lien, and it is the Manila RTC which ordered the sale
on execution pending appeal during
which Citadel and Vercingetorix purchased the subject Manila Golf Club
shares.
o As it turned out, said writ of execution was nullified by this Court
in G.R. No. 134049 and consequently no right was acquired by
Citadel and Vercingetorix under the void execution sale.