AFP MUTUAL BENEFIT ASSOCIATION, INC., petitioner, vs.

COURT OF APPEALS,
SOLID HOMES, INC., INVESTCO, INC., and REGISTER OF DEEDS OF MARIKINA,
respondents.
FACTS:
1. Investco, Inc. was the owner of six (6) parcels of raw land, registered under titles in
the names of its predecessors-in-interests, Angela Perez-Staley and Antonio Perez, Jr.
2. Investco sold the lands to Solid Homes for 10M payable in installments and agreed
that teh latter would evict the squatters in the property.
3. Investco would contribute half of the expnenses in clearing the squatters, no
ecxeeding to 350K.
4. Register of Deeds (RD) issued in favor of Investco, But, 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.
5. Solid make no further payment after the downpayment.
6. Investco filed specific performance and damages against Solid.
7. Solid answered that the contract was not yet due and in fact exceeded in payment
due.
8. Solid filed with RD of Marikina a notice of lis pendens with reference to Civil cas
requesting that the same be annotated on titles in Investco's name. Notice of lis
pendens was recorded but not actually annotated in the name of Investco.
RTC: favor Investco.
9. In the meantime, Investco, Inc. offered to sell the property to AFP Mutual Benefit
Association, Inc. payable in installments.
10. AFP verified the titles, and it were genuine and faithful reproductions of original
titles. No liens or encumbrances annotated. AFP agreed to purchase.
11. Investco executed a deed of absolute sale.
12. RD of marikina issued TCT as "clean" and contained no annotation of any lien.
13. Solid commenced action against RD, AFP as purchaser in BF and Investo for
damage.
RTC: Favor Solid
CA: denied MR
ISSUE:
1. WON the RD can be held liable
2. WON solid homes is entitled to the annotation of notice of lis pendens on the titles of
Investco and AFP
3. WON AFP is purchaser in BF
HELD:
1. Register of Deeds obligation to annotate the notice of lis pendens is one that arises
from law. Hence, the action is actually one for mandamus to compel the performance of
a clear legal duty. There is no such action as one for "annotation of lis pendens," as
Solid Homes sought in its complaint.
2.NO. 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."
3. NO. AFP is in GF. All persons dealing with property covered by TCT arfe not required
to go beyond what appears in the face of the title.

LLOYD’S ENTERPRISES and CREDIT CORP. vs. DOLLETON

June 18, 2008 – G.R. No. 171373 – 555 s. 142
J. Tinga

FACTS
Respondent spouses Dolleton were the registered owners of a land with a 4-door
apartment. Unknown to them, their certificate of title has been cancelled and a new one
was entered in the name of Gagan by vitue of a Deed of Absolute Sale.
Gagan mortgaged the property twice to the petitioner herein. When the second
loan was not paid, an extrajudicial foreclosure proceeding ensued. Petitioner, as the
highest bidder, acquired the property and a new TCT was issued in its name.
Petitioner then sent notices to the apartment tenants informing them of the
transfer of ownership and that rents will now be collected by it. The tenants remitted
rentals to petitioner prompting spouses Dolleton to annotate an adverse claim in the
new TCT and to file a complaint for the nullification of the Deed of Absolute Sale and
the mortgage, and restoration of TCT in their name.
The RTC and the CA found that the Deed of Absolute Sale was a forgery.
Petitioner now argues that it is a mortgagee in good faith because it took the necessary
steps which an ordinary prudent man would have taken before buying a property.

ISSUE
Whether or not petitioner can be considered a mortgagee in good faith.

HELD
Petitioner cannot be considered a mortgagee in good faith. Petitioner is engaged
in the business of extending credit to the public and is thus expected to exercise due
diligence in dealing with properties as security.
As held in Express Credit vs. Velasco, entities engaged in the business of
offering real estate loans must exercise a higher degree of caution in accepting
properties as security.
Their expertise or experience in dealing with encumbrances on lands, not to
mention the public interest affecting their business, require them to exercise more care
and prudence in dealing even with registered lands.
In this case, the circumstance that the TCT was newly issued should have put
petitioner on guard and prompted it to conduct an investigation surrounding the transfer
of property.