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[G.R. No. 116220. March 28, 2001]

SPS. PO LAM vs. CA.

THIRD DIVISION

Gentlemen:

Quoted hereunder, for your information, is a resolution of this Court dated MAR 28 2001.

G.R. No. 116220 (Spouses Roy Po Lam and Josefa Ong Po Lam vs. CA.)

Private respondent Jose Lee assails the resolution of the Court dated December 6, 2000 granting the motion for reconsideration filed by petitioners-spouses Po Lam, thus reversing the decision of the Court dated October 13, 1999, consequently declaring the spouses Po Lam, herein petitioners, purchasers in good faith of Lots No. 1557 and 1558.

In his motion for reconsideration, private respondent claims that petitioners acquired the property in bad faith because they had actual knowledge of the pendency of the case between Felix Lim and LAHCO. Moreover, private respondent asserts that while notice of lis pendens is founded on public policy and convenience, and not constructive or implied notice, such principle finds no application in the instant case because petitioners had actual, not constructive notice, of the pendency of the case.

The arguments of private respondent fail to impress us.

Private respondent asseverates that petitioners acquired the property in bad faith allegedly because they had actual knowledge of the pendency of the case between Felix Lim and LAHCO. As proof thereof, private respondent points to the fact that at the time Lots No. 1557 and 1558, respectively covered by TCTs No. 2580 and 2581, were purchased by petitioners, a notice of lis pendens was annotated at the back of TCT No. 2581. Private respondent claims that the annotation should have put petitioners on inquiry. Again, private respondent points to the fact that Lot No. 1558 was sold simultaneously with Lot No. 1557, thereby the annotation on Lot No. 1557 should have served as a caveat to petitioners that the property was subject of a pending litigation.

Petitioner's arguments are a mere rehash of those already passed upon by the Court in its December 6, 2000 Resolution. As stated therein, "the sole basis for finding petitioners to be purchasers in bad faith was the subsistence of the notice of lis pendens inscribed on TCT No. 2581, which covered Lot No. 1558, at the time petitioners-spouses purchased the lots in dispute. And since Lot No. 1558 was sold simultaneously with Lot No. 1557, even if the notice of lis pendens on Lot No. 1557 had already been cancelled, petitioners were held to be purchasers in bad faith even in regard to Lot No. 1557." This argument was struck down, the Court holding that petitioners-spouses could not be considered purchasers in bad faith on the basis of the notice of lis pendens since at the time of the purchase there was already a court order for the cancellation of said notice of lis pendens. "Petitioners cannot be considered as being 'aware of a flaw which invalidates their acquisition of the thing' since the alleged flaw, the notice of lis pendens, was already being ordered cancelled at the time of purchase." Moreover, the Court held that the subsequent cancellation of the notice of lis pendens annotated on TCT No. 2581 on May 20, 1974 thereby terminated the effects of such notice. We thus decreed that "with the cancellation of the notices of lis pendens on TCT No. 2580 and 2581, the effects of such notice were terminated, resulting in the Po Lam spouses not being bound thereby. In fine, they cannot be considered transferees pendente lite and purchasers in bad faith of the property."

Private respondent, focuses attention to the fact that a) petitioners-spouses consulted Atty. Rodolfo Madrid, one of the well-known lawyers in the Province of Albay, at the time they bought the lots, and b) the lots are prime commercial lots in Legazpi City, asserting that these two circumstances show that petitioners willfuly closed their eyes to a possibility of a defect in LAHCO's title and that petitioners, thereby gambled on the outcome of the litigation. Needless to say, it is hornbook doctrine that a purchaser is not required to explore beyond what the record in the Registry indicates on its face, in quest of any hidden defect or inchoate right which may subsequently defeat his right thereto (Viray v. CA, 286 SCRA 468 [1998]). As a general rule, where the certificate of title is in the name of the vendor when the land is sold, the vendee for value has the right to rely on what appears on the face of the title though, by way of exception, the vendee is required to make inquiries if there is anything in the certificate of title which indicates any cloud or vice in the ownership of the property (Heirs of Leopoldo Vencilao, Sr. v. CA, 288 SCRA 574 [1988]).

In the instant case, the fact that petitioners-spouses were assisted by able counsel and that the two lots involved are prime commercial lots do not ineluctably lead to the conclusion that they needed to further investigate the bona fides of the disputed property. Parenthetically, petitioners-spouses were not parties in the action filed by Felix Lim against LAHCO, nor did Lim's name appear in the title. Moreover, at the time of purchase, LAHCO was in possession of the property. It bears emphasizing that the only basis for holding petitioners-spouses as purchasers in bad faith was the subsistence of a notice of lis pendens on TCT No. 2581 at the time of purchase. As we stated in Pino vs. CA (198 SCRA 434 [1991]), the vendee is required to make the necessary inquiries if there is anything in the certificate of title which indicates any cloud or vice in the ownership. However, this contemplates a situation wherein there exists a flaw in the title of the vendee and the vendor had knowledge or at least ought to have known of such flaw at the time he acquired the property. As we stated in our December 6, 2000 Resolution, there was no flaw in the title of LAHCO since, at the time of purchase, the notice of lis pendens was already ordered cancelled. More importantly, the subsequent cancellation of the notice of lis pendens terminated the effects of such notice, hence petitioners-spouses could not be considered purchasers in bad faith of the property in dispute.

WHEREFORE, private respondent's motion for reconsideration is hereby DENIED, and this denial is FINAL.

SO ORDERED.

Very truly yours,

(Sgd.) JULIETA Y. CARREON

Clerk of Court

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