The above cases were consolidated1 [By Resolution adopted on October 21, 1998, Rollo, G.R. No. 135016, p. 241.] and are thus jointly decided. The first case (G. R. No. 104769) is an appeal via certiorari taken by AFP Mutual Benefit Association, Inc. (AFP MBAI for short) from the decision of the Court of Appeals the dispositive portion of which reads as follows:

The second case (G. R. No. 135016), is an appeal via certiorari interposed by Solid Homes, Inc. (hereafter Solid Homes) from the decision of the Court of Appeals, the dispositive portion of which reads as follows:

The facts are as follows:

Prior to September 7, 1976, Investco, Inc. was the owner of six (6) parcels of raw land, located in Quezon City and Marikina (Metro Manila, now a City), registered under titles in the names of its predecessors-in-interests, Angela Perez-Staley and Antonio Perez, Jr.

On September 7, 1976, Investco, Inc. agreed to sell the six (6) parcels of land to Solid Homes for P10,211,075.00, payable in installments from July 22, 1977 to January 22, 1983. Among other terms, the parties agreed that Solid Homes would pay the amount of P100,000.00 as down payment upon execution of the contract; that Solid Homes would pay P1,942,215.00 as additional down payment on July 22, 1977, October 22, 1977, and January 22, 1978; and that Solid Homes would pay the balance of P8,188.860.00 in ten (10) semi-annual installments for a period of five (5) years, with interest at twelve (12%) percent per annum. The first installment was due on July 22, 1978. Paragraph 2 of the contract stipulates that:

The parties further agreed that Solid Homes would evict the squatters in the property or obtain a waiver from them, that it would cause the original titles to be cancelled and new ones issued in the name of Investco, Inc. and that Investco, Inc. would contribute one-half of the expenses in clearing the property of occupants, in an amount not exceeding P350,000.00. On or about March 28, 1979, the Register of Deeds of Marikina issued in favor of Investco, Inc. Transfer Certificate of Title Nos. 36518, 36680, 36681, 36682, 36683 and 36684 covering the Marikina portion of the property. The contract of sale to Solid Homes was not registered with the Registry of Deeds of Marikina nor annotated on the original titles issued in the name of Investco, Inc.

However, after paying the amount of P2,042,215.00 corresponding to the downpayment, and the amount of P4,084,430.00 representing the first four (4) semi-annual installments and a portion of the fifth installment, Solid Homes made no further payment to Investco, Inc. after February 19, 1981. The postdated checks issued by Solid homes to Investco, Inc. intended for the remaining installments were dishonored, leaving a balance of P4,300,282.91 due under the contract in Investco, Inc.’s favor.

On March 13, 1981, Investco, Inc. and its predecessors-in-interests Angela Perez-Staley and Antonio Perez, Jr. filed with the Court of First Instance of Rizal, Pasig, Branch 26 an action for specific performance and damages against Solid Homes, Inc.4 [Docketed as Civil Case No. 40615.] In the complaint, Investco, Inc. and co-plaintiffs sought to collect from Solid Homes, Inc. the sum of P4,800,282.91 representing the balance on the purchase price due under the contract, reimbursement of P350,000.00 representing Investco, Inc.’s contribution to the expenses for eviction of squatters and the further sum of P99,559.00 for science and transfer taxes, and actual and moral damages, including attorney’s fees.

On April 20, 1981, Solid Homes filed with the trial court an answer to Investco, Inc.’s complaint alleging that the purchase price under the contract was "not yet due" and that the former, in fact, exceeded the installment payments due thereon. Solid Homes prayed for dismissal of Investco, Inc.’s complaint, and interposed a counterclaim for the refund of its excess payments, moral damages in the sum of P500,000.00, and attorney’s fees of P20,000.00 "or in the sum equivalent to 10% of whatever amount is awarded in favor of defendant."5 [Petition, p. 8, Rollo, G. R. No. 104769, p. 15.]

On September 20, 1984, Solid Homes filed with the Register of Deeds of Marikina a notice of lis pendens with reference to Civil Case No. 40615 requesting that the same be annotated on the titles in Investco, Inc.’s name. On the same date, the notice of lis pendens was recorded as Entry No. 117191 of the primary Entry Book, Volume 14 of the Office of the Register of Deeds of Marikina, Metro Manila.

However, the notice of lis pendens was not actually annotated on the titles in the name of Investco, Inc.

On February 14, 1985, the trial court rendered judgment in favor of Investco, Inc. ordering solid Homes to pay plaintiffs P4,800,282.91, representing the balance of the purchase price due under the contract, with interest thereon from February 23, 1981 until paid; P99,559.00 representing science and transfer taxes advanced by Investco to Solid Homes and P250,000.00 as attorney’s fees and expenses of litigation.6 [Petition, p. 9, Rollo, G. R. No. 104769, p. 16.]

On May 27, 1985, the trial court ordered the original record transmitted to the appellate court in view of Solid Homes’ filing of a notice of appeal.7 [Docketed as CA-G.R. CV No. 13400.]

In the meantime, on April 23, 1984, Investco, Inc. offered to sell the property to AFP Mutual Benefit Association, Inc. for P27,079,767.00, subsequently reduced to P24,000,000.00, payable in installments. Investco, Inc. furnished AFP MBAI with certified true copies of the titles covering the Marikina property.

In June, 1984, AFP MBAI verified the titles with the Register of Deeds of Marikina, Metro Manila and found that copies of the titles that Investco, Inc. gave were genuine and faithful reproductions of the original titles on file with the Register of Deeds. AFP MBAI noted that there were no liens or encumbrances annotated on the titles.

Moreover, AFP MBAI, through its Real Estate Committee, made an ocular inspection of the property sometime in June and July, 1984 "to determine the nature of the property and its (metes) and bounds." During the inspection, AFP MBAI found that the Investco, Inc. property was underdeveloped raw land "which is mostly cogonal, (with) few trees and shrubs x x x and bounded on one side by the Marikina River."8 [TSN, February 23, 1990, Civil Case No. 52999, p. 16.] AFP MBAI confirmed the presence of squatter shanties numbering about twenty (20) to thirty (30). Except for a foot path used by the squatters, there was no development on the property.

After determining that the Investco property was suitable for the housing project of the Armed Forces of the Philippines and that the titles covering the same were "clean" and "genuine," AFP MBAI agreed to purchase the same from Investco, Inc. for the price of P24,000,000.00, payable in installments for a period of one (1) year.

On October 10, 1984, Investco, Inc. executed a "Deed of Absolute Sale" conveying the property to AFP MBAI for the price of P24,000,000.00, payable in installments until October 10, 1985.9 [Exhibits "5" to "5-D", RTC Record, Civil Case No. 52999, pp. 296-300.] Among other terms, Investco, Inc. warranted to AFP MBAI that "it has good and valid title over the properties subject of (the) sale and (that it ) shall hold (AFP MBAI) free from any adverse claim of whatever nature and from liens an encumbrances of third parties."10 [Exhibit "5-D", par. 2, Ibid., p. 300.]

In November, 1984, AFP MBAI again verified the records of the Register of Deeds of Marikina, Metro Manila and confirmed "(t)he absence of any lis pendens, adverse claims or any liens or encumbrance (on) the originals of the title(s) x x x." AFP MBAI also inquired from the Malacañang Legal Office, the Land Registration Commission, and the Metropolitan Trial Court of Marikina if there were cases and other problems concerning the property, but found no case involving either Investco, Inc. or the property pending with said court and offices.11 [TSN, February 23, 1990, Civil Case No. 52999, pp. 11-12; TSN, March 1, 1990, Civil Case No. 52999, pp. 9-16; Exhibits "6" and "6-A", RTC Record, Civil Case No. 52999, pp. 301-302.] AFP MBAI also obtained a certification from the Clerk of the Metropolitan Trial Court of Marikina that Investco, Inc. "has no pending case before (that) court."12 [TSN, March 1, 1990, Civil Case No. 52999, p. 12.]

In April, 1985, AFP MBAI completed its payments of the purchase price.

On April 26, 1985, the Register of Deeds of Marikina issued Transfer Certificates of Title Nos. N-104941, N-104942, N-104943, N-104944, N-104945 and N-104946 in the name of AFP MBAI. The titles issued were "clean" and contained no annotation of any lien, encumbrance, or adverse claim by a third party.

On November 28, 1985, Solid Homes commenced action13 [Civil Case No. 52999.] before the Regional Trial Court, Marikina, against the Register of Deeds, AFP MBAI and Investco, Inc. for "annotation of lis pendens and damages" with temporary restraining order and preliminary injunction. In its verified complaint, Solid Homes prayed that (a) the Register of Deeds be ordered to annotate on the titles registered in the name of Investco, Inc. the notice of lis pendens dated September 19, 1984 in relation to civil Case No. 40615, and to carry over the same to the titles in the name of AFP MBAI; (b) alternatively, to declare AFP MBAI as a buyer in bad faith, bound by the judgment to be rendered in Civil Case No. 40615; and (c) AFP MBAI and Investco, Inc. be ordered to pay Solid Homes jointly and severally, unspecified amount of actual, moral and exemplary damages, as well as attorney’ fees of P100,000.00 plus "ten (10%) percent of the total amount to be awarded to plaintiff." Solid Homes also prayed for an order to enjoin provisionally the Register of Deeds from registering any deed affecting the titles in derogation of solid Homes’ rights under the contract executed between itself and Investco, Inc.

In due time, AFP MBAI and Investco, Inc. filed with the trial court an answer to the complaint. After pre-trial and trial, on April 25, 1990, the trial court rendered decision holding that:

Aggrieved thereby, AFP MBAI appealed the decision to the Court of Appeals.15 [Docketed as CA-G. R. CV No. 27398.]

On November 29, 1992, the Court of Appeals rendered decision the dispositive portion of which is quoted in the opening paragraph of this decision.

On December 24, 1991, AFP MBAI filed with the Court of Appeals a motion for reconsideration of the decision, which Solid Homes opposed. On March 17, 1991, the Court of Appeals denied the motion.16 [Petition, Annex "C", Rollo, G. R. No. 104769, pp. 91- 92.]

Hence, this petition.17 [Petition filed on May 13, 1992, Rollo, G. R. No. 104769, pp. 8-64. On August 30, 1993, the Court gave due course to the petition, Rollo, G. R. No. 104769, p. 126.]

The issue raised is whether Solid Homes is entitled to the annotation of its notice of lis pendens on the titles of Investco, Inc. and AFP Mutual Benefit Association, Inc., in relation to Civil Case No. 40615 of the Regional Trial Court, Pasig and thereby be bound by the final judgment therein.

Basically, Solid Homes’ complaint was one for "annotation of lis pendens and other matters with prayer for restraining order and writ of preliminary injunction" against Investco, Inc. AFP MBAI and the Register of Deeds of Marikina, to cause the annotation of lis pendens in the titles of Investco, Inc. and AFP MBAI. Actually, therefore, the suit is to compel the Register of Deeds of Marikina to annotate the notice of lis pendens on the titles of AFP MBAI with a claim for damages against Investco, Inc. and AFP MBAI for depriving Solid Homes of its rights to the property as provided under the contract to buy and sell. In its verified complaint, Solid Homes alleged that "the act of defendant Register of Deeds in not causing the annotation of the lis pendens on the titles then registered in the name of defendant Investco, Inc. and in issuing titles in the name of defendant AFP Mutual Benefit Association, Inc., without carrying over the proper annotation of lis pendens are contrary to law".18 [Complaint, par. 11, RTC Record, Civil Case No. 52999, pp. 4-5.] On the basis of this allegation, it prayed for an order directing the Register of Deeds of Marikina "to cause the annotation" of the notice of lis pendens on the old and new titles.

Obviously, the Register of Deed’s obligation to annotate the notice of lis pendens is one that arises from law.19 [P. D. No. 1529, Section 76 (formerly Act No. 496, Section 79).] Hence, the action is actually one for mandamus to compel the performance of a clear legal duty.20 [Rule 65, Section 3, 1964 Revised Rules of Court.] There is no such action as one for "annotation of lis pendens," as Solid Homes sought in its complaint.

"Lis pendens is a Latin term which literally means a pending suit or a pending litigation while a notice of lis pendens is an announcement to the whole world that a particular real property is in litigation, serving as a warning that one who acquires an interest over the said property does so at his own risk, or that he gambles on the result of the litigation over the said property. It is but a signal to the intending buyer or mortgagee to take care or beware and to investigate the prospect or non-prospect of the litigation succeeding before he forks down his money."21 [People v. Regional Trial Court of Manila, 178 SCRA 299, 306-307 [1989]; Constantino v. Espiritu, 45 SCRA 557 [1972].]

A notice of lis pendens is not and can not be sought as a principal action for relief. "The notice is but an incident to an action, an extra-judicial one to be sure. It does not affect the merits thereof. It is intended merely to constructively advise, or warn, all people who deal with the property that they so deal with it at their own risk, and whatever rights they may acquire in the property in any voluntary transaction are subject to the results of the action, and may well be inferior and subordinate to those which may be finally determined and laid down therein."22 [Magdalena Homeowners Association, Inc. v. Court of Appeals, 184 SCRA 325, 330 [1990].] The notice of lis pendens--that real property is involved in an action--is ordinarily recorded without the intervention of the court where the action is pending.23 [Ibid.] As a settled rule, notice of lis pendens may be annotated only where there is an action or proceeding in court which affects title to or possession of real property.24 [Villanueva v. Court of Appeals, 281 SCRA 298, 311 [1997], citing Diño v. Court of Appeals, 213 SCRA 422 [1992].]

Under Presidential Decree No. 1529, known as the "Property Registration Decree of 1978", the Register of Deeds may deny registration of the notice of lis pendens, which denial may be appealed by the applicant en consulta (Section 10, paragraph 2) to the Commissioner of Land Registration.25 [Now Land Registration Authority.] Section 117 of P.D. No. 1529 provides:

Here, the Register of Deeds of Marikina denied the annotation of the notice of lis pendens on the ground that the complaint in Civil Case No. 40615 was for collection of a sum of money and did not involve the titles to or possession of the subject property.26 [TSN, October 20, 1989, Civil Case No. 52999, pp. 16-17. Republic v. Court of Appeals, 299 SCRA 199, 238 [1998]. See Solid Homes, Inc. v. Court of Appeals, 235 SCRA 299, 300 [1994].] If Solid Homes did not agree with the denial of the Register of Deeds, it could appeal the same en consulta to the Commissioner of Land Registration.27 [As provided under P. D. No. 1529, Section 117.] The resolution of the Commissioner may then be appealed to the Court of Appeals, which has exclusive jurisdiction to decide the same, "within the period and in the manner provided in Republic Act No. 5434."28 [Superseded by Supreme Court Circular No. 1-91, dated February 27, 1991, now governed by Rule 43, 1997 Code of Civil procedure, amended.]

In its questioned decision, the Court of Appeals held that the action filed by Investco, Inc. against Solid Homes "is not exclusively for payment of the unpaid installments on the purchase price of the subject properties and damages, but also one for rescission of the contract to sell and to buy the subject properties executed by defendant Investco, Inc. in favor of (Solid Homes) which necessarily involves delivery of possession and ownership of the same."29 [Decision, Rollo, G. R. No. 104769, pp. 82-83.]

We do not agree. This ruling conflicts with the final decision of the Supreme Court on the case.30 [Solid homes, Inc. v. Court of Appeals, supra, Note 26.] What is more, in determining the nature of plaintiff’s (Investco, Inc.) action in Civil Case No. 40615 and defendant Solid Homes’ counterclaim thereto, the Court of Appeals went beyond the allegations in the complaint and ventured into speculation and conjecture. There is nothing in Investco’s complaint in Civil Case No. 40615 that even remotely suggests that Investco, Inc. has rescinded the contract, or that it sought the rescission of the sale as an alternative remedy. Specific performance and rescission are alternative remedies which a party may not avail himself of at the same time.31 [Article 1191, Civil Code; Tolentino, Civil Code of the Philippines, Vol. 4, 1997 Reprint, p. 181.]

The nature of an action is determined by the allegations of the complaint.32 [Union Bank of the Philippines v. Court of Appeals, 290 SCRA 198, 218 [1998]; Ligon v. Court of Appeals, 294 SCRA 73, 84 [1998], citing Abad v. Court of First Instance of Pangasinan, 206 SCRA 567, 579 [1992]; Solid Homes, Inc. v. Court of Appeals, 271 SCRA 157, 164 [1997].]

Investco’s complaint was an action for collection of sums of money, damages and attorney’s fees33 [Solid Homes, Inc. v. Court of Appeals, supra, Note 26.] to recover from Solid Homes unpaid installments on the purchase price of the subject property. To emphasize, the case was an action for collection of unpaid installments on the purchase price subject real property. In such case, the annotation of a notice of lis pendens on the titles of the property was not proper as the action was in personam.34 [Minute Resolution, G. R. No. 100437, March 30, 1992 cited in Martinez, summary of 1992 Supreme Court Rulings, January to June 1992, pp. 1590-1591; Moran, Comments on the Rules of Court, Vol. I, 1995 ed. P. 577, citing Saavedra v. Martinez, 58 Phil. 767, 773 [1931]; Noblejas and Noblejas, Registration of Land Titles and Deeds, 1992 Revised Edition, p. 352, citing Biglangawa v. Constantino, 109 Phil. 168 [1960].]

Consequently, the doctrine of lis pendens is inapplicable to this case. The Register of Deeds of Marikina correctly denied the annotation of the notice of lis pendens on the titles of Investco, Inc. and the AFP MBAI.35 [Resolution, G. R. No. 100437, March 30, 1992.]

Even on the basis of Solid Homes’ counterclaim, which is disregarded in determining the nature of the action, notice of lis pendens is improper as the counterclaim was also for sums of money--alleged excess payment and for damages--not one affecting title to or possession of real property. Such counterclaim did not convert the nature of the action into a real action involving title to or possession of subject property.

The rule that "all persons dealing with property covered by Torrens Certificate of title are not required to go beyond what appears on the face of the title"36 [Vda. de Medina v. Cruz, 161 SCRA 36, 44 [1988].] applies herein with full vigor. In the absence of anything to excite suspicion, the buyer is not obligated to look beyond the certificate to investigate the titles of the seller appearing on the face of the certificate.37 [Republic v. Intermediate Appellate Court, 209 SCRA 90, 101-102 [1992].]

"Good faith is always presumed, and upon him who alleges bad faith on the part of a possessor rests the burden of proof."38 [Article 527, Civil Code; Ford Philippines, Inc. v. Court of Appeals, 267 SCRA 320, 329 [1997]; Pleasantville Development Corp. v. Court of Appeals, 253 SCRA 10, 18 [1996].] Here, Solid Homes alleged that Investco, Inc. and AFP MBAI "confederated with each other in entering into the aforementioned sale in order to deprive herein plaintiff (Solid Homes) of its rights over subject properties under the Contract to Sell and to Buy..."39 [Complaint, par. 15, RTC Record, Civil Case No. 52999, p. 5.] However, Solid Homes adduced no evidence to prove such allegation of bad faith.

The conclusion is inevitable that contrary to the holding of the Court of Appeals, AFP MBAI was a purchaser in good faith and for value, and, consequently, acquired valid and indefeasible titles to the Investco, Inc. property.

Resultantly, we find the appeal via certiorari of solid Homes40 [In G.R. No. 135016, Rollo, pp. 14-32.] without merit. Its objective was to compel AFP MBAI to execute a deed of transfer of the titles to parcels of land originally covered by the agreement to buy and sell between Solid Homes, Inc. and Investco, Inc. and for Solid Homes to pay AFP MBAI, in substitution of Investco, Inc. the amount of P4,800,282.91 with interest thereon at one per cent per month from March 22, 1982, until paid. Thus, if Solid Homes would succeed in its scheme in the case, it would unjustly enrich itself enormously, acquiring subject property now worth billions of pesos41 [With an area of 408,443 sq. m. located at Quezon City and Marikina; adjacent to Loyola Grand Villa and Capitol Hills Golf Club, acquired in 1985 by AFP MBAI for P24,000,000.00.] for the measly sum of P4,800,282.91 with interest at one per cent a month from March 22, 1982, which it was unable to pay Investco, Inc. in the first place.

Solid Homes’ claim is predicated on the assumption that AFP MBAI is a transferee pendente lite of Investco, Inc. of the subject parcels of land and bound by the result of the suit.42 [In Civil Case No.40615. This case was finally decided against Solid Homes’ claim (Solid Homes, Inc. v. Court of Appeals, supra, Note 26). Entry of Judgment was made on October 20, 1994.] Such claim is not factually or legally correct. In the absence of a valid notice of lis pendens annotated in the titles, AFP MBAI is a buyer in good faith and for value, and thus, acquired clean and valid titles to the property in question.

WHEREFORE, the Court:

(1) In G. R. No. 104769, GRANTS the petition, and SETS ASIDE the Court of Appeals’ decision in CA-G.R. CV No. 27398 and, in lieu thereof, renders judgment:

(2) In G.R. No. 135016, DENIES the petition, for lack of merit.

With costs against Solid Homes, Inc.

Davide, Jr., C.J., (Chairman), Puno, Kapunan, and Ynares-Santiago, JJ., concur.