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Bliss Development

This case involves conflicting claims over rights to purchase a property between Montano Diaz and Edgar Arreza. The Supreme Court ruled that Diaz was not a purchaser in good faith because he failed to diligently inquire into the title of his predecessor in interest. However, the developer, Bliss Development Corporation, was liable to return the amortization payments made by Diaz to prevent unjust enrichment, even though he was not a purchaser in good faith.

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419 views2 pages

Bliss Development

This case involves conflicting claims over rights to purchase a property between Montano Diaz and Edgar Arreza. The Supreme Court ruled that Diaz was not a purchaser in good faith because he failed to diligently inquire into the title of his predecessor in interest. However, the developer, Bliss Development Corporation, was liable to return the amortization payments made by Diaz to prevent unjust enrichment, even though he was not a purchaser in good faith.

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mrpowerplus
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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BLISS DEVELOPMENT CORP. /HOME GUARANTY CORPORATION vs.

MONTANO DIAZ, DOMINGO


TAPAY, AND EDGAR H. ARREZA

G.R. No. 213233, August 05, 2015

VELASCO JR., J.

FACTS: Petitioner Bliss Development Corporation (BDC) (subsequently reorganized as Home Guaranty
Corporation) is the registered owner of Lot No. 27, Block 30, New Capitol Estates I, Brgy. Matandang
Balara, Diliman, Quezon City, and covered by Transfer Certificate of Title (TCT) No. 331582. On October
19, 1984, it entered into and executed a Deed of Sale over the said property in favor of Spouses Emiliano
and Leonila Melgazo (Sps. Melgazo), both of whom are now deceased.

On May 7, 1991, a certain Rodolfo Nacua (Nacua) sent a letter to BDC, saying that Sps. Melgazo
transferred to him their rights over the property. He further expressed willingness to pay the
outstanding obligations of Sps. Melgazo to BDC. Before the property was fully paid, however, Nacua sold
his rights to Olivia Garcia (Garcia), through a Deed of Transfer of Rights. Later, Garcia transferred her
rights to Elizabeth Reyes (Reyes). Reyes then transferred her rights to Domingo Tapay (Tapay), who then
later sold his rights to herein respondent Montano Diaz (Diaz) for Six Hundred Thousand Pesos
(P600,000.00). Diaz then paid BDC the amortizations due on the property, amounting to P406,915.15,
and BDC issued a permit to occupy the property in favor of Diaz. Diaz then introduced improvements on
the property, amounting to P700,000.00. On April 14, 1992, BDC executed a Contract to Sell in favor of
Diaz.3 On April 15, 1994, however, BDC informed Diaz that respondent Edgar Arreza (Arreza) was
claiming that the heirs of Sps. Melgazo sold to him the rights over the property. BDC then placed Diaz’s
account in “inactive status.” To resolve the conflicting claims of Arreza and Diaz, BDC filed a complaint
for Interpleader against them, before the RTC, Makati City, Branch 146. On March 27, 1996, the Makati
City RTC Branch 146 ruled that the signatures of Sps. Melgazo transferring their rights to Nacua were
mere forgeries. Thus, it ruled that Arreza had a better right over the property. This decision became final
and executory.

On August 27, 1996, Diaz filed the present complaint for sum of money against BDC before the RTC.
Both BDC and Tapay argued that their respective acts were lawful and done in good faith.

ISSUE: Whether or not respondent Diaz is a purchaser for value and in good faith.
HELD: NO. For one to be considered a purchaser in good faith, the following requisites must concur: (1)
that the purchaser buys the property of another without notice that some other person has a right to or
interest in such property; and (2) that the purchaser pays a full and fair price for the property at the time
of such purchase or before he or she has notice of the claim of another. We find that in the case at bar,
the first element is lacking.

The CA, in disposing the issue of Diaz’s good faith, merely said that “considering that the property
involved is registered land, Diaz need not go beyond the title to be considered a buyer in good faith.”
We find this to be a serious and reversible error on the part of the CA. In the first place, while it is true
that the subject lot is registered lot, the doctrine of not going beyond the face of the title does not apply
in the case here, because what was subjected to a series of sales was not the lot itself but the right to
purchase the lot from BDC. A careful review of the records of this case reveals that Diaz, in fact, failed to
diligently inquire into the title of his predecessor before entering into the contract of sale. As such, he
cannot be considered a buyer in good faith.

Notwithstanding the fact that Diaz is not an innocent purchaser in good faith and for value, BDC is
nevertheless liable to return to him the amortizations which he already paid on the property, applying
the rule on unjust enrichment.

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