CASE DIGEST: Filinvest Dev. Corp. vs. Golden Haven

G.R. No. 187824: November 17, 2010

FILINVEST DEVELOPMENT CORPORATION, Petitioner v. GOLDEN HAVEN MEMORIAL PARK, INC., Respondent

FACTS:

Yap, Vivar, Cruz, Aquino, Corpuz and Sobremesana and other relatives inherited a parcel of land in Las Pinas. They had it judicially divided into 13 parcels Lots 1 and 12 went to Aquino, 2 went to Corpuz and Sobremesana, 6 went to Yap, Cruz and the Vivars. Others went to other relatives.

Yap, acting for herself and for Cruz and the Vivars, executed an agreement to sell Lot 6 in favor of Golden Haven Memorial Park, Inc. (GHM), payable in three installments. Another heir, Aquino, acting for himself and for Corpuz and Sobremesana, also executed an agreement to sell Lots 1, 2, and 12 in favor of GHM, payable in the same manner.In both instances, GHM paid the firstinstallment upon execution of the contract. GHM stated that it was waiting for the title to be consolidated in their names for it to pay the 2nd instalment.

Filinvest Development Corporation (Filinvest) applied for the transfer in its name of the titles over Lots 2, 4, and 5 but the Las Pic Register of Deeds declined its application.Upon inquiry, Filinvest learned that Lot 8, a lot belonging to some other heir or heirs and covered by the same mother title, had been sold to Household Development Corporation (HDC), a sister company of GHM, and HDC held the owners duplicate copy of that title. Filinvest alleged that it bought Lots 1, 2, 6, and 12 of the property from their respective owners as evidenced by three deeds of absolute sale in its favor dated September 10, November 18, and December 29, 1989 and that Filinvest was entitled to the registrations of such sales.

GHM filed against the sellers and Filinvest a complaint for the annulment of the deeds of sale issued in the latters favor before the Regional Trial Court (RTC) of Las Pis City in Civil Case 91-098.On March 16, 2006 the RTC rendered a decision after trial, declaring the contracts to sell executed by some of the heirs in GHMs favor valid and enforceable and the sale in favor of Filinvest null and void.Only Filinvest appealed among the defendants.

On November 25, 2008 the Court of Appeals (CA) affirmed the RTC decision with respect to the validity of the contract to sell Lot 6 in GHMs favor.But the CA declared the contracts to sell Lots 1, 2, and 12 in GHMs favor void and the sale of the same lots in favorof Filinvest valid.

ISSUES:

1. Whether or not the contracts to sell that the sellers executed in GHMs favor covering the same lots sold to Filinvest are valid and enforceable.

HELD:

Yes, they are valid contracts.

Civil Law: Buyer in good faith

To prove good faith, the rule is that the buyer of registered land needs only show that he relied on the title that covers the property.But this is true only when, at the time of the sale, the buyer was unaware of any adverse claim to the property.Otherwise, the law requires the buyer to exercise a higher degree of diligence before proceeding with his purchase.He must examine not only the certificate of title, but also the sellers right and capacity to transfer any interest in the property.In such a situation, the buyer must show that he exercised reasonable precaution by inquiring beyond the four corners of the title.Failing in these, he may be deemed a buyer in bad faith.

Here, Filinvest was aware of the notation of adverse claim in the mother title. The notice is a warning to third parties dealing with the property that someone claims an interest in it or asserts a better right than the registered owner.Such notice constitutes, by operation of law, notice to the whole world.Here, although the notice of adverse claim pertained to only one lot and Filinvest wanted to acquire interest in some other lots under the same title, the notice served as warning to it that one of the owners was engaged in double selling.

One who has knowledge of facts which should have put him upon such inquiry and investigation cannot claim that he has acquired title to the property in good faith as against the true owner of the land or of an interest in it.

Petition denied for GR No 187824.

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