GR 116220; (December, 2000) (Digest)
G.R. No. 116220 , December 6, 2000
SPOUSES ROY PO LAM and JOSEFA ONG PO LAM, Petitioners, vs. COURT OF APPEALS and FELIX LIM now JOSE LEE, Respondents.
FACTS
The case involves prime commercial lots in Legaspi City. Felix Lim filed a complaint in 1964 to annul their sale by his brother to Legaspi Avenue Hardware Company (LAHCO), annotating a notice of lis pendens on the titles. The trial court later ruled in favor of LAHCO and ordered the cancellation of the lis pendens. During the pendency of Lim’s appeal, LAHCO sold the lots to the spouses Roy and Josefa Po Lam in 1970. The Po Lams subsequently secured the cancellation of the remaining lis pendens annotation in 1974 and obtained new titles in their names. The Court of Appeals eventually issued a 1981 resolution recognizing a right of redemption in favor of Felix Lim. Lim later assigned his rights to Jose Lee, who then sought to enforce this resolution against the Po Lams, leading to multiple actions including a complaint for reconveyance.
ISSUE
Whether the petitioners, Spouses Po Lam, are transferees pendente lite (purchasers during litigation) in bad faith, bound by the outcome of the prior litigation, and thus obligated to reconvey the properties.
RULING
The Supreme Court granted the motion for reconsideration, ruling that the Po Lam spouses are purchasers in good faith. The legal logic centers on the effect of cancelling a notice of lis pendens. The doctrine of lis pendens, which binds a purchaser of property involved in litigation from the time of filing the notice, is founded on public policy. However, once a court orders the cancellation of such notice and it is duly cancelled, its binding effect terminates. Here, the trial court ordered the cancellation, and the Po Lams legally effected it in 1974. Consequently, from that point, they were no longer deemed to have constructive notice of the pending litigation. To hold them bound by the notice after its cancellation would render the court’s cancellation order meaningless and violate the legal principle that the law does not require a useless act. Furthermore, the doctrine of lis pendens, being harsh, must be strictly construed. Extending its effect beyond cancellation is unwarranted. Finally, Lim’s claim is barred by laches, as he waited an unreasonable period—seven years after the cancellations and issuance of new titles—before actively asserting his rights against the Po Lams. Thus, their titles are declared valid.