PO LAM V. CA- Notice of Lis Pendens

A buyer cannot be considered in bad faith when the notice of lis pendens was already being ordered cancelled at the time of purchase.

FACTS:

This is a ruling on the motion for reconsideration filed by the Po Lam spouses.
The case stems from a controversy regarding two lots situated in Legazpi, Albay, which the spouses purchased from Lim Kok Chiong. The lots were the subject of litigation between Lim and his brother Felix. The latter sought an action to annul the sale by Lim to Legazpi Avenue Hardware because it was alleged that Lim included his brother’s share in the lot. During the pendency of the case, Felix sought the annotation of notice of lis pendence on the TCTs of the 2 lots. The trial court found that Lim was the absolute owner of the lots and upheld the sale, also, the court ordered the cancellation of notice of lis pendence on the titles. One of the notices was cancelled but the other was not acted upon. Felix appealed, however the CA maintained the ruling of the trial court and ordered the cancellation of the other TCT.

Subsequently, Legazpi Avenue Hardware sold the lots to the spouses Po Lam, which they later leased to Jose Lee. Felix then impleaded the spoused Po Lam in the continuing civil case between him and his brother. After the expiration of his lease, Jose Lee refused to pay Po Lam and instead said he would deposit the payment to Felix. The Po Lam spouses filed an action with the trial court in Legazpi, which declared them the lawful owners of the lots. The RTC and CA sustained, but the SC through Justice Purisima reversed stating that the Po Lam spouses were vendees in bad faith because they knew of the notice of lis pendence annotated on the TCTs.

Hence this motion for reconsideration.

ISSUE:

Whether or not petitioners are buyers in good faith

HELD:

Yes. In granting the motion for reconsideration, Justice Melo wrote that even though there was notice of lis pendence on one of the titles, there was already a previous ruling by the trial court and later the CA, which upheld the validity of the sale between Lim and Legazpi Avenue Hardware, and ordering the cancellation of the TCTs. In the order of cancellation, it was recalled that Felix never moved for reinstatement of the notices. Petitioner spouses cannot be considered in bad faith because there was an existing order of cancellation annotated on the TCT. Such a view, which the SC former held, was erroneous and defied the purpose of the doctrine of lis pendence. The doctrine is based on public policy and necessity.