Facts:

The cases of AFP Mutual Benefit Association, Inc. (AFP MBAI) versus the Court of Appeals, Solid Homes, Inc., Investco, Inc., and the Register of Deeds of Marikina (G.R. No. 104769) and Solid Homes, Inc. versus Investco, Inc., substituted by AFP MBAI (G.R. No. 135016), were consolidated and decided jointly by the Supreme Court on March 3, 2000. The events leading to this litigation began on September 7, 1976, when Investco, Inc. agreed to sell six parcels of raw land in Quezon City and Marikina to Solid Homes for P10,211,075. Payment was to be completed in installments with specific conditions outlined regarding defaults. Solid Homes made an initial down payment and several subsequent payments, but ceased payments after February 19, 1981, accumulating a balance of P4,300,282.91.

On March 13, 1981, Investco, Inc. filed a complaint for specific performance and damages against Solid Homes, seeking recovery of the remaining balance, along with costs related to eviction and taxes. Sol

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Facts:

Background of the Concatenated Cases

• The consolidated cases involve G.R. Nos. 104769 and 135016 where AFP Mutual Benefit Association, Inc. (AFP MBAI), Solid Homes, Inc., Investco, Inc., and the Register of Deeds of Marikina are the principal parties.
• In G.R. No. 104769, AFP MBAI appealed a Court of Appeals decision that modified damage awards and other orders, while in G.R. No. 135016 Solid Homes appealed a decision affirming a Regional Trial Court order.

The Transfer and Sale of Property

• Prior to September 7, 1976, Investco, Inc. owned six parcels of raw land located in Quezon City and Marikina, registered in the names of Angela Perez-Staley and Antonio Perez, Jr.
• On September 7, 1976, Investco, Inc. agreed to sell the six parcels to Solid Homes for P10,211,075.00 with a structured payment plan which included:
• An initial down payment of P100,000.00 upon executing the contract;
• An additional down payment of P1,942,215.00 in three installments; and
• The balance of P8,188,860.00 payable in ten semi-annual installments over five years with 12% per annum interest.
• A grace period provision stated that failure to pay any installment would attract interest at 1% per month up to two months and, if still unpaid, the entire balance would become demandable.

Subsequent Litigation Involving Solid Homes

• After paying partial amounts (including the down payment and several installments), Solid Homes defaulted by ceasing payments after February 19, 1981, leaving a balance of P4,300,282.91 due.
• On March 13, 1981, Investco, Inc. and its predecessors filed an action for specific performance and damages in the Court of First Instance of Rizal, Pasig, seeking collection of the unpaid sum, reimbursement of eviction expenses (P350,000.00), and additional charges including science and transfer taxes plus damages.
• Solid Homes filed an answer asserting that the purchase price was “not yet due,” alleging overpayments, and counterclaimed for a refund, moral damages (P500,000.00), and attorney’s fees.

Filing of Notice of Lis Pendens and Related Proceedings

• On September 20, 1984, Solid Homes filed a notice of lis pendens with the Register of Deeds of Marikina referring to Civil Case No. 40615, which was recorded but not annotated on Investco’s titles.
• The trial court in Pasig rendered a decision on February 14, 1985, ordering payments by Solid Homes to Investco, Inc. including the balance due and additional fees, which Solid Homes subsequently appealed.

The Involvement of AFP MBAI in the Property Transaction

• In April 1984, Investco, Inc. proposed the sale of the property to AFP MBAI at a discounted price, and AFP MBAI verified the authenticity of the titles with the Register of Deeds, confirming that the titles were “clean” with no liens or adverse annotations.
• AFP MBAI, after conducting an ocular inspection in June–July 1984 which revealed an underdeveloped property with squatter shanties, agreed to acquire the property for P24,000,000.00 with payment in installments.
• On October 10, 1984, Investco, Inc. executed a “Deed of Absolute Sale” to convey the property to AFP MBAI, accompanied by a warranty of a good and valid title free from third-party claims.
• AFP MBAI completed its payment in April 1985, and the Register of Deeds subsequently issued new, “clean” Transfer Certificates of Title in its name.

The Lawsuit for Annotation of Lis Pendens

• On November 28, 1985, Solid Homes commenced an action against the Register of Deeds, AFP MBAI, and Investco, Inc. seeking:
• The annotation of its previously recorded notice of lis pendens on Investco’s and AFP MBAI’s titles;
• A declaration that AFP MBAI was a buyer in bad faith, thus binding it to the judgment in Civil Case No. 40615; and
• Damages including actual, moral, exemplary damages and attorney’s fees.
• The trial court later ordered, among other things, the annotation of the lis pendens, declared AFP MBAI as a buyer in bad faith, and imposed several monetary awards against the parties.
• AFP MBAI appealed the trial court decision to the Court of Appeals, which eventually rendered a decision reversing parts of the trial court’s order and denying the petition in G.R. No. 135016 on merits.

The Nature and Controversy of the Lis Pendens Issue

• Central to the dispute was the question of whether Solid Homes was entitled to have its notice of lis pendens annotated on the titles of Investco, Inc. and AFP MBAI, thus affecting their rights derived from the contract for sale.
• The Register of Deeds denied the annotation on the ground that the underlying complaint in Civil Case No. 40615 was for collection of money and did not involve title or possession issues.
• Solid Homes’ suit is characterized as an attempt to invoke a mandatory annotation of lis pendens, essentially turning a procedural warning into a substantive claim over property rights.

Issue:

Whether Solid Homes is entitled to the annotation of its notice of lis pendens on the titles registered in the names of Investco, Inc. and AFP MBAI in relation to Civil Case No. 40615.

• Is the action of annotating lis pendens proper when the underlying action is essentially for the collection of unpaid sums and damages?
• Does the nature of Solid Homes’ claim transform the suit into one that affects title or possession of the property?

Whether the Register of Deeds of Marikina is compelled by law to annotate a notice of lis pendens when the complaint underlying the notice does not directly involve title or possession disputes.

• Does the legal duty to annotate a lis pendens apply even if the action is in personam (involving contractual monetary obligations) rather than real action (affecting title)?

• Whether AFP MBAI, as a purchaser in good faith who verified the absence of adverse claims on the titles, can be declared a buyer in bad faith and be bound by the outcome of the pending litigation in Civil Case No. 40615.

Ruling:

• (Subscriber-Only)

Ratio:

• (Subscriber-Only)

Doctrine:

• (Subscriber-Only)