Amoguis vs. Ballado and Ledesma (Civil Law)

Amoguis vs. Ballado and Ledesma

G.R. No. 189626, August 20, 2018

Third Division

Leonen, J

In 1969, Francisco Ballado (Francisco) and Concepcion Ballado (Concepcion) (collectively, the Ballado Spouses) entered into two contracts with owner and developer St. Joseph Realty, Ltd. (St. Joseph Realty) to buy on installment parcels of land, which were designated as Lot Nos. 1 and 2, and were located in Block No. 1, Dadiangas Heights Subdivision, General Santos City.

The Ballado Spouses initially paid a total of P500.00 for the lots, and had to pay monthly for 180 months starting on December 30, 1969. St. Joseph Realty characterized the contracts as contracts to sell and provided for automatic rescission and cancellation.

The Ballado Spouses amortized until 1979 when Crisanto Pinili (Pinili), St. Joseph Realty's collector, refused to receive their payments. They erected a small house made of light materials for their caretaker. Pinili informed them that it was an eyesore and was against the rules of the subdivision. He advised to suspend the payment for the lots, and directed the Ballado Spouses to remove the small house before payments could continue. Francisco informed St. Joseph Realty that the small house had already been taken down, but Pinili still did not come to collect.

By February 1987, the Ballado Spouses discovered that St. Joseph Realty rescinded their contracts. They found out that St. Joseph Realty had sent written demands to pay to the address of Lot Nos. 1 and 2, and not to their residence as declared in the contracts.

Meanwhile, on February 9, 1987, St. Joseph Realty sold Lot Nos. 1 and 2 to the Amoguis Brothers. The Amoguis Brothers then occupied the lots. On August 18, 1987, titles were issued in the Amoguis Brothers' names.

Francisco confronted the Amoguis Brothers when he saw that the barbed fences, which he had installed around the lots, were taken down. Epifanio told him that he bought the lots from St. Joseph Realty. Thereafter, the Amoguis Brothers took down Francisco's mango and chico trees.

Petitioners argue that they are buyers in good faith, as determined by the Court of Appeals. As innocent purchasers, reconveyance is no longer a feasible option against them especially since they have introduced a multitude of improvements on the properties. They have occupied the land since 1987. 

Respondents argue that the Amoguis Brothers never denied that they were buyers in bad faith. Despite protests from the Ballado Spouses, petitioners continued introducing improvements over the properties.

Question: Are the petitioners buyers in good faith?

No.

A buyer in good faith is one who purchases and pays fair price for a property without notice that another has an interest over or right to it. If a land is registered and is covered by a certificate of title, any person may rely on the correctness of the certificate of title, and he or she is not obliged to go beyond the four (4) corners of the certificate to determine the condition of the property.

This rule does not apply, however, when the party has actual knowledge of facts and circumstances that would impel a reasonably cautious man to make such inquiry or when the purchaser has knowledge of a defect or the lack of title in his vendor or of sufficient facts to induce a reasonably prudent man to inquire into the status of the title of the property in litigation.

It is incumbent upon a buyer to prove good faith should he or she assert this status. This burden cannot be discharged by merely invoking the legal presumption of good faith. This Court rules that based on the evidence on record, petitioners failed to discharge this burden. Though they were informed by Francisco on his claim to the properties only after their purchase, it is undisputed from the records that mango and chico trees were planted on the properties, and that they were cordoned off by barbed wires. St. Joseph Realty also informed them that there were previous buyers, who allegedly abandoned their purchase. To merely claim that they were buyers in good faith, absent any proof, does not make the case for them.