Sps Po Lam vs CA

7/29/2019 Sps Po Lam vs CA

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SPOUSES ROY PO LAM and JOSEFA ONG PO LAM, Petitioners.vs.

COURT OF APPEALS and FELIX LIM now JOSE LEE, Respondents

Doctrine: While the doctrine of lis pendens is frequently spoken of as one of implied orconstructive notice, according to many authorities, the doctrine is not founded on any idea of constructive notice .The basis of the doctrine of lis pendens is public policy and convenience,under the view that once a court has taken cognizance of controversy, it should be impossible tointerface with consummation of the judgement by any ad interim transfer, encumbrance, orchange of possession.

Nature: Motion for Reconsideration of the 1999 Decision of the SC (Spouses Po Lam v. CA)

Date: 6 December 2000

Ponente: Melo, J.

Facts:

• 2 prime commercial lots (Lots 1557 & 1558) located in Legaspi’s commercial district weresold by Lim Kok Chiong to Legaspi Avenue Hardware Company (LAHCO). However, FelixLim, Lim KoK Choing’s brother, filed a complaint against LAHCO and Kok Chiong with theCFI of Albay to annul the deeds of sale on the ground that he (Felix) had inherited thelands from his foster parents. Felix then filed a notice of lis pendens over the 2 lotswith the Register of Deeds of Albay. Case against KoK Chiong was dropped, but LAHCOremained as defenant.

• Trial court declared LAHCO as absolute owner, and ordered the cancellation of the lispendens inscribed in the titles. Lis pendens in TCT 2580 (for Lot 1557) was cancelled, butlis pendens on TCT 2581 for Lot 1558 remained subsisting because LAHCO gave theowner’s duplicate copy of TCT to Continental Bank pursuant to a mortgage contract withthe latter.

• Felix appealed adverse decision to the CA. During the pendency of the appeal, however,LAHCO sold the lots to Spouses Po Lam. 4 years later, the Spouses Po Lam had thenotice of lis pendens on TCT no 2580 and 2581 cancelled . The TCTs were then

replaced with new ones.• In the meantime, Spouses Po Lam leased the building on Lot 1557 to Jose Lee for one

year. When the period of the lease was over, the spouses allowed him to stay andaccepted monthly payments. However, one day the payments stopped because Felix Limhad offered to sell to Jose Lee the property. A case for unlawful detainer was then filedagainst Lee. Felix subsequently assigned all his rights in the lots to Jose Lee, whosubstituted him.

• MeTC: the Po Lam spouses to be the lawful owners. RTC: spouses Roy Po Lam and JosefaOng Po Lam are transferees pendente lite and not purchaser in good faith. CA affirmed.

• SC (1st case, 1999): As to Lot 1558, Po Lam spouses could not be deemed buyers in goodfaith. The annotation of lis pendens on TCT No. 2581 which covers Lot 1558, served asnotice to them that the said lot is involved in a pending litigation. RULE: onewho deals with property subject of a notice of lis pendens cannot invoke the

right of a purchaser in good faith. As to Lot 1557, the notice of lis pendens of whichwas already cancelled at the time of the sale, Spouses are still not in good faith. Thereason for this is based on the circumstances, the fact that the two lots were underlitigation together and were both sold to them, and yet 1558 had a notice whilethe other had a cancelled one should have sufficiently alerted them that thetitle of 1557 was defective. Hence, not a buyer in good faith because they willfullyrefused to believe that such defect exists.

Issue: Were Spouses Po Lim were purchasers in good faith or transferees pendente lite?



Held: Purchasers in good faith.

• The sole basis of the Court for holding spouses as purchasers in bad faith is thesubsistence of the notice of lis pendens in the TCT of Lot 1558, and since 1558 was soldtogether with 1557, spouses were held in bad faith even though notice in 1557 already

cancelled.

• it must be pointed out that even if a notice of lis pendens on TCT No. 2581 (Lot No. 1558)was still subsisting at the time petitioners bought the property from LAHCO, there alsowas a court order ordering that the annotation be cancelled, as in fact, it wascancelled on May 20, 1974.

• A possessor in good faith has been defined as "one who is unaware that there exists aflaw, which invalidates his acquisition of the thing. While Spouses bought Lot 1558 fromLAHCO while a notice of lis pendens was still annotated thereon, there was also existing acourt order canceling the same. Hence, petitioners cannot be considered as being "awareof a flaw, which invalidates their acquisition of the thing "since the alleged flaw, thenotice of lis pendens, was already being ordered cancelled at the time of the purchased.On this ground alone, petitioners can already be considered buyers in good faith.

• Notice of lis pendens here in above mentioned may be cancelled only upon order of thecourt, after proper showing that the notice is for the purpose of molesting the adverseparty, or that it is not necessary to protect the right of the party who caused it to berecorded.

• Lis Pendens literally means a pending suit or a pending litigation; and the doctrine of lis pendens has been defined as the jurisdiction, power, or control which a court acquiresover property involved in a suit, pending the continuance of the action.

• A notice of lis pendens is an announcement to the whole world that a particular realproperty is in litigation, serving as a warning that one who acquires an interest over saidproperty does so at his own risk, or that he gambles on the result of the litigation over thesaid property. Any right they may thereafter acquire on the property is subject to theeventuality to the suit.

• The filing of a notice of lis pendens in effect (1) keeps the subject matter of the litigationwithin the power of the court until the entry of the final judgement so as to prevent the

defeat of the latter by successive alienation’s; and (2) binds a purchaser of the landsubject of the litigation to the judgement or decree that will be promulgated thereonwhether such a purchaser is a bona fide purchaser or not; but (3) does not create a non-existent or right or lien.

• While the doctrine of lis pendens is frequently spoken of as one of implied orconstructive notice, according to many authorities, the doctrine is not foundedon any idea of constructive notice .The basis of the doctrine of lis pendens ispublic policy and convenience, under the view that once a court has takencognizance of controversy, it should be impossible to interface withconsummation of the judgement by any ad interim transfer, encumbrance, orchange of possession.

• And since the doctrine rests on public policy, not notice, upon the cancellation of thenotice of lis pendens, the Po Lam spouses cannot then be considered as having

constructive notice of any defect in the title of LAHCO as to make them transferees pendente lite and purchasers in bad faith. To hold otherwise would render nugatory thecancellation of the notices of lis pendens inscribed on TCT No. 2581 despite itssubsequent cancellation.

• While the notice of lis pendens is duly recorded and as long as it remains uncancelled, helitigant can rest secure that he would not lose the property or any part of it duringlitigation. Conversely, cancellation of the notice of pendency terminates the effects of such notice. Therefore, with the cancellation of the notices of lis pendens on TCT No. 2580and 2580, the effects of such notice were terminated, resulting in the Po Lam spouses notbeing bound thereby. In fine, they cannot be considered transferee pendente lite and



purchasers in bad faith

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Sps Po Lam vs CA