GR 148568; (March, 2003) (Digest)
G.R. No. 148568; March 20, 2003
ATLANTIC ERECTORS, INC., petitioner, vs. HERBAL COVE REALTY CORPORATION, respondent.
FACTS
Petitioner Atlantic Erectors, Inc. and respondent Herbal Cove Realty Corporation entered into a construction contract for townhouses and a detached unit. A dispute arose, with petitioner alleging non-payment and respondent alleging defective workmanship and delays. Petitioner filed a complaint for sum of money and damages in the Makati RTC, seeking payment for unpaid construction services, materials, unrealized income, and various damages. On the same day, petitioner caused the annotation of a notice of lis pendens on the titles covering the project site.
The RTC dismissed the complaint for failure to comply with the contract’s arbitration clause. Respondent subsequently moved to cancel the notice of lis pendens. The RTC initially granted the cancellation but later reversed itself and reinstated the notice, prompting respondent to file a petition for certiorari with the Court of Appeals.
ISSUE
Whether the annotation of a notice of lis pendens on the subject properties was proper.
RULING
No. The Supreme Court affirmed the Court of Appeals’ decision ordering the cancellation of the notice of lis pendens. The Court explained that a notice of lis pendens is proper only in an action that directly affects title to, possession of, or any interest in the real property. The test is whether the action is one in rem or quasi in rem, not one in personam.
Petitioner’s complaint was a simple collection suit for a sum of money and damages arising from breach of contract. It was a purely personal action seeking a judgment compelling respondent to pay a sum of money. The action did not seek to establish any right, lien, or equity in the specific properties themselves. The fact that the construction was performed on the land did not convert the personal obligation for payment into a real action affecting the land’s title. The reliefs sought—payment for services, materials, and damages—could be satisfied from any of respondent’s assets, not exclusively from the levied properties. Therefore, the pending suit did not justify the encumbrance of the property titles through lis pendens, as it posed no direct claim over the real property itself.