MARIA GERVACIO BLAS, ET AL., PETITIONERS, VS. HON. CECILIA MUÑOZ-PALMA, ET AL., RESPONDENTS.

This is a petition to set aside an order of respondent judge dated
July 14, 1955 directing the cancellation of the notice of lis pendens
annotated on Transfer Certificates of Title. Nos. 8401 and 13944 of the
land records of Pampanga covering two fishponds included in the
inventory of the estate of Maxima Santos Vda. de Blas.

Petitioners are the plaintiffs in Civil Case No. 4S95 of the Court
of First Instance of Rizal which they brought against Rosalina Santos
in her capacity as executrix of the estate of Maxima Santos Vda. de
Bias to recover one-half of all the properties included in the
inventory submitted by the latter in the testate proceedings of said
deceased. Pursuant to the provisions of the Rules of Court,
petitioners, through counsel, caused the annotation of a notice of lis pendens on all the certificates of title covering the properties of the estate, including Certificates of Title Nos. 8401 and 13944.

After trial, judgment was rendered in said Civil Case No. 4395
dismissing plaintiffs’ complaint. Plaintiffs reasonably appealed from
the adverse decision to the Supreme Court which was orally argued and
submitted for decision on May 8, 1959.

While the case, was pending appeal in the Court, the executrix filed a motion to cancel the notice of lis pendens
on the lands covered by Certificates of Title Nos. 8401 and 13944 on
the ground that she had sold the said lands for P138,438.00 and
P142,064.40, respectively, to pay certain estate and inheritance taxes
due on the estate of Maxima Santos Vda. de Blas.

Petitioners opposed the motion on the ground that respondent judge
had no more jurisdiction over the cases, except to deny the motion,
because according to Section 9, Rule 41, of the Rules of Court, “Upon
the filing of the notice of appeal and the approval of the appeal bond
and the record on appeal, the appeal is deemed perfected and the trial
court loses its jurisdiction over the case, except to issue orders for
the protection and preservation of the rights of the parties which do
not involve any matter litigated by the appeal, and to approve
compromises offered by the parties prior to the transmittal of the
record on appeal to the appellate court.” Petitioners also contend that
the cancellation of the notice of lis pendens, far from
preserving the rights of the parties, would destroy and extinguish the
rights; that its cancellation would remove the lands from the
jurisdiction of the trial court and would render ineffective any
judgment that may be rendered in their favor by the appellate court,
and that the payment of the estate and inheritance taxes was1premature,
because petitioners’ claim, if sustained would considerably reduce said
taxes.

Over petitioners’ opposition, respondent judge issued an order on
July 14, 1955 directing the cancellation of the notice of lis pendens
prayed for by the executrix upon the filing of a bond in favor of
petitioners in the amount of P142,000.00 subject to the approval of the
Court. Hence the present appeal.

Section 9, Rule 41, of the Rules of Court, provides:

“SEC. 9. When appeal deemed perfected; effect thereof.—Upon
the filing of the notice of appeal and the approval of the appeal bond
and the record on appeal, the appeal is deemed perfected and the trial
court loses its jurisdiction over the case, except to issue orders for
the protection and preservation of the rights of the parties which do
not involve any mater litigated by the appeal, and to approve
compromises offered by the parties prior to the transmittal of the
record on appeal to the appellate court.”

In holding that the trial court has jurisdiction to act on the petition for cancellation of lis pendens
on the two lots in question in spite of the appeal taken by petitioners
to the Supreme Court because its purpose is to protect and preserve the
rights of the parties which do not involve any matter litigated by the
appeal, the trial court made the following observation:

“It is a settled rule that in the absence of a statutory prohibition, the Court has an inherent power to cancel a notice of lis pendens
even if the action is still pending and undetermined when there are
exceptional circumstances which justify such cancellation, (Mun.
Council of Paranaque, Rizal vs. the Court of First Instance
of Rizal, et al., 70 Phil., 363; Moran’s Vol. 1, p. 134, 1957 ed.) The
situation as given above present exceptional circumstances and this
Tribunal believes that there will be no abuse of its discretion were ft
to grant the herein petition. This Court having jurisdiction over the
present Civil Action is duly bound to take judicial notice of the
proceedings held in Sp. Proc. 2524, and to assist the Probate Court in
giving full force and effect to its Orders. From the records it appears
that the two fishponds in question were sold to pay principally the
estate and inheritance taxes due to the government which totalled
P252,954.61. Non-payment of said taxes rendered the estate liable for
surcharge, monthly interest, and other penalties. As a matter of fact,
the estate had actually to pay in addition to the assessed estate tax
of P159,774.64 the sum of P7,988.48 representing 5% surcharge plus
P17,574.66 representing the 1% monthly interest. With respect to the
inheritance tax of P93,179.97, the estate has to pay in addition the
sum of P4,659.00 as penalty plus another sum of P7,454.40 representing
1% interest per month from the date of the assessment to the date of
payment. These facts clearly show that continued non-payment of said
obligations to the Government would have caused great prejudice to the
estate. Considering, therefore, that the sale of the two fishponds was
absolutely necessary for the best interest of the estate, it is
incumbent upon this Court to aid there herein defendant in the
fulfillment of her commitment that a clear and clean title will he
given to the purchasers, especially if we take into account that her
account redounds in the long run to the benefit of all those who have
claims on said estate including the plaintiffs herein.”

Petitioners disagree with the above observation for the reason that
the fact that the sale is necessary for the payment of the estate and
inheritance taxes which were assessed by the government on all the
inventoried properties is not a legal justifications to cancel the lis pendens
because the annotation of the lis pendens cannot in any manner prevent
the probate court from selling the lands in question if it believes
necessary to do so to apply the proceeds of the sale to the payment of
said taxes, but by force of law, since the properties are still in
litigation, the sale should be subject to the lis pendens. Moreover, petitioners contend, it is premature
at this stage of the appeal to pay the taxes assessed by the government
because in view of the pending litigation it cannot be definitely
ascertained what constitutes the assets of the estate that would be
subject to said taxes for, if the claim of petitioners is sustained,
the taxes would inevitably be reduced to one-half because petitioners
claim one-half of the entire estate. In other words, petitioners
contend that the appeal involves a prejudicial question whose final
resolution should be awaited before any further action can be taken on
the claim for estate and inheritance taxes.

We are inclined to uphold petitioners’ contention for indeed the
pendency of their appeal before this Court which involves their claim
of ownership over one-half of the properties of the estate would
substantially affect the volume of the estate that would be subject to
taxation for if they win the amount of the estate and inheritance taxes
would proportionately be reduced which eventually would redound to the
benefit of the estate. It is, therefore, not quite correct to say that
the immediate sale of the two fishponds as proposed by the executrix
with the sanction of the court would promote the best interest of the
estate for, as already stated, it may still result upon the final
determination of the appeal that the estate may have to pay much less
in taxes which may in effect redound to the benefit of the estate. In
this sense, it is our opinion that the action taken by the trial court
cannot be said to come within the exemption of Section 9, Rule 41 and
as such it cannot be legally justified.

Moreover, as petitioners’ claim is over one-half pro-indiviso
of all the properties involved in the special proceedings, they may
have some good sentimental reasons for opposing the disposition of the
two fishponds for which reason they want to maintain pending the
annotation of lis pendens on the titles covering them. At any
rate, the main purpose of the rule is to keep the subject matter of the
litigation within the power of the court until the litigation is over
and since the litigation is not yet terminated petitioners are entitled
to have their right respected against third persons. The reasons
advanced by the trial court are, in our opinion, not sufficient in law
to nullify this protection to which petitioners are entitled.

” ‘The effect of filing a notice of lis pendens
is to charge the stranger with notice of the particular litigation
referred to in the notice; and if the notice is effective, a third
party who acquires the property affected by the lis pendens takes subject to the eventuality of the litigation.'” ‘

“And
its purpose is to hold property within the jurisdiction and control of
the court pending determination of the controversy, thereby preventing
third persons from acquiring such interests therein as would precluded
giving effect to the judgment’ ” (Roberta Diaz y Cruz vs. Hon. Jesus Y. Perez, 103 Phil., 1023; 55 Off. Gaz. [52] 10878.)

Wherefore, petition is granted, with costs against respondent executrix.

Paras, C. J., Bengzon, Padilla, Labrador, Concepcion, Endencia, and Gutierrez David, JJ., concur.