Dela Merced v. GSIS

G.R. No. 167140 (November 23, 2011)

Col. Dela Merced's heirs won against GSIS foreclosure; SC upheld property title judicial rulings.

Facts:

This case revolves around five registered parcels of land located in the Antonio Subdivision, Pasig City, specifically Lots 6, 7, 8, and 10 of Block 2 and Lot 8 of Block 8. These lots were originally owned by Jose C. Zulueta, as evidenced by Transfer Certificate of Title (TCT) No. 26105. The Zulueta spouses mortgaged several lots, including the subject properties, to the Government Service Insurance System (GSIS), which subsequently foreclosed on the mortgage. Following the foreclosure, GSIS obtained ownership, and TCT No. 23554 was issued in its name.

Francisco Dela Merced, the predecessor of the petitioners, filed a complaint seeking to nullify the GSIS foreclosure, asserting that he was the rightful owner of the lots at the time of foreclosure. He also included Victor and Milagros Manlongat in the case, who claimed Lot 6, Block 2 through a sale from GSIS to their daughter, Elizabeth Manlongat. Dela Merced annotated a notice of lis pendens on GSIS's TCT No. 23554 to protect his interests.

After a lengthy litigation process, the Supreme Court ruled in favor of Dela Merced on September 11, 2001, nullifying the GSIS foreclosure and declaring the titles issued to GSIS and Elizabeth Manlongat void. The Court ordered the cancellation of these titles and the issuance of new titles in the name of the petitioners.

Despite the finality of the decision, execution was delayed due to objections from the Register of Deeds and GSIS. The petitioners filed a motion for a supplemental writ of execution to address these issues, which was denied by the Regional Trial Court (RTC) on February 9, 2005. The RTC's order stated that execution could only be implemented as decreed in the original decision.

Legal Issues:

  1. Can GSIS raise the issue of exemption from execution under Republic Act No. 8291 after it has been previously decided against it?
  2. Can a final and executory judgment against GSIS and the Manlongats be enforced against their successors-in-interest or holders of derivative titles?
  3. Does an order to cancel a title to a property include an order to provide technical descriptions and segregate it from its mother title?

Arguments:

  • Petitioners' Arguments:

    • The petitioners contended that the September 11, 2001 decision could be enforced against GSIS's transferees pendente lite, as they were notified of the pending litigation through the lis pendens annotation. They argued that the transferees were bound by the outcome of the litigation and that the execution should not be limited to the literal terms of the judgment.
    • They also asserted that GSIS could be compelled to provide the necessary technical descriptions for the properties to facilitate the execution of the judgment.

  • GSIS's Arguments:

    • GSIS maintained that the motion for supplemental writ of execution was improperly denied because it sought to modify a final and executory decision. They argued that the original decision did not order the cancellation of derivative titles and that including such orders would deprive the holders of these titles of their day in court.
    • GSIS reiterated its claim of exemption from execution under RA 8291, arguing that its properties and funds were protected from court processes.

Court's Decision and Legal Reasoning:

The Supreme Court ruled in favor of the petitioners, reversing the RTC's order. The Court held that GSIS could not raise the issue of exemption from execution as it had already been decided against them in a previous case. The principle of "law of the case" barred GSIS from re-litigating this issue.

The Court further established that a notice of lis pendens serves as a warning to potential buyers that the property is subject to litigation, binding them to the outcome of the case. The transferees pendente lite, having notice of the litigation, were deemed to have accepted the risk of the litigation's outcome. Therefore, the Court ruled that the execution of the judgment could extend to the transferees' titles.

Additionally, the Court clarified that the order to cancel GSIS's titles included the necessity for GSIS to provide technical descriptions of the properties to facilitate the execution. The Court emphasized that the execution of a judgment must be effective and not rendered futile by procedural technicalities.

Significant Legal Principles Established:

  1. The principle of "law of the case" prevents a party from re-litigating issues that have already been decided in prior proceedings.
  2. A notice of lis pendens binds subsequent purchasers or transferees to the outcome of the litigation, making them privies to the original parties.
  3. The execution of a judgment may include necessary actions to effectuate the judgment, even if those actions are not explicitly detailed in the dispositive portion of the decision.