GR 104769; (September, 2001) (Digest)
G.R. No. 104769 & G.R. No. 135016; September 10, 2001
AFP MUTUAL BENEFIT ASSOCIATION, INC., petitioner, vs. COURT OF APPEALS, SOLID HOMES, INC., INVESTCO, INC., and REGISTER OF DEEDS OF MARIKINA, respondents. SOLID HOMES, INC., petitioner, vs. INVESTCO, INC., substituted by ARMED FORCES OF THE PHILIPPINES MUTUAL BENEFIT ASSOCIATION, INC., respondent.
FACTS
Investco, Inc. entered into a 1976 contract to sell with Solid Homes, Inc. involving parcels of land. Solid Homes defaulted, leading Investco to extrajudicially rescind the contract. Investco subsequently sold the properties to AFP Mutual Benefit Association, Inc. (AFPMBAI) via an absolute deed of sale. AFPMBAI paid the full price, and new titles were issued in its name. Solid Homes, however, had earlier filed a collection case (Civil Case No. 40615) against Investco and sought to annotate a notice of lis pendens on the original titles, which were then still in the names of Investco’s predecessors. The annotation was made only in pencil and was described as provisional.
ISSUE
The core issue is whether AFPMBAI is a purchaser in good faith and for value, and consequently, whether the notice of lis pendens was validly annotated to affect AFPMBAI’s titles.
RULING
The Supreme Court denied Solid Homes’ motion for reconsideration and upheld AFPMBAI as a purchaser in good faith and for value. The legal logic rests on two pillars: the invalidity of the lis pendens annotation and the nature of the underlying action. First, a notice of lis pendens is proper only in actions that directly affect title to, possession of, or an interest in specific real property. The Court found that Civil Case No. 40615 was essentially an action for collection of a sum of money and damages, which does not directly involve the title or possession of the subject land. Therefore, it was not a proper subject for a lis pendens annotation.
Second, even assuming the action was proper, the purported annotation was invalid. The Court ruled that provisional pencil markings do not constitute the proper annotation required by law. The Torrens system demands certainty and indefeasibility of title. AFPMBAI, as a buyer, had the right to rely on the clean certificates of title presented by Investco, free from any valid encumbrance. It was not obligated to look beyond the face of the title. Since there was no valid lis pendens, AFPMBAI cannot be considered a transferee pendente lite. Its purchase was made in good faith, for valuable consideration, and without notice of any adverse claim. The contractual relationship was strictly between Investco as the absolute seller and AFPMBAI as the buyer, separate from the prior rescinded contract to sell with Solid Homes.