G.R. No. 70623 and G.R. No. L-48630, June 30, 1987
ST. DOMINIC CORPORATION, petitioner, vs. THE INTERMEDIATE APPELLATE COURT, HON. RICARDO P. TENSUAN, RTC BRANCH LXXXIII, QUEZON CITY, FRANCISCA B. BUSTAMANTE, FLAVIANO BUSTAMANTE, CARLOS ROBES, ADALIA FRANCISCO and AURORA FRANCISCO, respondents. / FLAVIANO BUSTAMANTE and FRANCISCA B. BUSTAMANTE, petitioners, vs. HON. ULPIANO SARMIENTO, as Presiding Judge of the Court of First Instance of Rizal, Branch IX, sitting in Quezon City, RODOLFO ESPINELI, personally and as “Special Sheriff” appointed by respondent Judge Sarmiento, AURORA B. FRANCISCO, and ST. DOMINIC CORPORATION, respondents.

FACTS

These consolidated petitions involve a disputed lot. In Civil Case No. Q-11895, the Bustamante spouses intervened, claiming an interest in the property, and caused a notice of lis pendens to be annotated on the title (TCT No. 84387) of the registered owners, the Robes spouses. Meanwhile, the mortgagee bank foreclosed on the property due to the Robes spouses’ default. At the public auction in 1974, Aurora Francisco purchased the property. After the redemption period lapsed, a new title (TCT No. 217192) was issued to Aurora Francisco in 1976, but the notice of lis pendens was not carried over. Aurora then obtained a writ of possession and later sold the property to St. Dominic Corporation, which received a clean title (TCT No. 222337).
Subsequently, the trial court in Civil Case No. Q-11895 rendered a decision nullifying the original award and sale of the lot and directing the National Housing Authority to process the Bustamante spouses’ application to purchase it. When the Bustamantes sought execution of this judgment, the trial court (Judge Tensuan) issued a writ but qualified that it could not be enforced against St. Dominic Corporation. The Bustamantes challenged this qualification before the Intermediate Appellate Court (IAC), which set aside the trial court’s orders, effectively ruling that the writ should be enforced against St. Dominic.

ISSUE

The core issue is whether the final judgment in Civil Case No. Q-11895, which favored the Bustamante spouses, can be enforced against St. Dominic Corporation, a subsequent purchaser of the property whose title was cleansed of the earlier lis pendens annotation.

RULING

The Supreme Court ruled in favor of St. Dominic Corporation. The legal logic hinges on the nature of a notice of lis pendens and the concept of a purchaser in good faith. A notice of lis pendens serves as a warning that the property is involved in litigation, and any subsequent purchaser is bound by the outcome of that suit. However, this effect is contingent on the proper annotation of the notice on the certificate of title. In this case, the notice of lis pendens was annotated only on the title of the Robes spouses (TCT No. 84387). When that title was cancelled upon the issuance of a new title (TCT No. 217192) to Aurora Francisco after the foreclosure sale, the notice was not transcribed. Consequently, the new title issued to Aurora, and later to St. Dominic, was free from the lis pendens encumbrance.
St. Dominic Corporation, having purchased the property from Aurora Francisco based on a clean title