Case Digest (G.R. No. 213233)
Facts:
The case involves Bliss Development Corporation (BDC), which later reorganized as Home Guaranty Corporation, as the petitioner, and Montano Diaz, Domingo Tapay, and Edgar H. Arreza as respondents. The dispute centers around a property located at Lot No. 27, Block 30, New Capitol Estates I, Brgy. Matandang Balara, Diliman, Quezon City, covered by Transfer Certificate of Title No. 331582. On October 19, 1984, BDC executed a Deed of Sale for the property in favor of the Spouses Emiliano and Leonila Melgazo, who are now deceased. On May 7, 1991, Rodolfo Nacua claimed that the Melgazo spouses had transferred their rights to him and expressed willingness to settle their outstanding obligations to BDC. However, before the property was fully paid, Nacua sold his rights to Olivia Garcia, who subsequently transferred her rights to Elizabeth Reyes, and then to Domingo Tapay. Tapay later sold his rights to Montano Diaz for P600,000.00. Diaz paid BDC P406,915.15 in amortizations and recei...
Case Digest (G.R. No. 213233)
Facts:
Ownership and Initial Sale:
- Bliss Development Corporation (BDC), later reorganized as Home Guaranty Corporation, owned Lot No. 27, Block 30, New Capitol Estates I, Quezon City, covered by TCT No. 331582.
- On October 19, 1984, BDC sold the property to Spouses Emiliano and Leonila Melgazo (Sps. Melgazo) through a Deed of Sale.
Subsequent Transfers:
- On May 7, 1991, Rodolfo Nacua claimed that Sps. Melgazo transferred their rights to him. Nacua later sold his rights to Olivia Garcia, who transferred them to Elizabeth Reyes, who then transferred them to Domingo Tapay. Tapay sold his rights to Montano Diaz for P600,000.
- Diaz paid BDC P406,915.15 in amortizations and introduced improvements worth P700,000. BDC issued a permit for Diaz to occupy the property.
Conflicting Claims:
- On April 14, 1992, BDC executed a Contract to Sell in favor of Diaz. However, on April 15, 1994, BDC informed Diaz that Edgar Arreza claimed rights over the property, alleging that the heirs of Sps. Melgazo sold the rights to him.
- BDC filed an Interpleader case to resolve the conflicting claims. On March 27, 1996, the RTC ruled that the signatures of Sps. Melgazo transferring rights to Nacua were forged, and Arreza had a better right over the property.
Diaz’s Complaint:
- On August 27, 1996, Diaz filed a complaint for sum of money against BDC, Arreza, and Tapay, seeking reimbursement for the amounts he paid and damages.
RTC and CA Decisions:
- The RTC dismissed Diaz’s complaint, ruling that he failed to prove he was an assignee in good faith.
- The CA reversed the RTC, ruling that Diaz was a buyer and builder in good faith and entitled to reimbursement and damages.
Issue:
- Whether the CA erred in not dismissing the appeal based on the doctrine of immutability of judgment.
- Whether the CA erred in declaring BDC in bad faith.
- Whether the CA erred in finding unjust enrichment on the part of BDC.
- Whether Diaz can claim reimbursement despite the nature of his possession under the Contract to Sell.
- Whether BDC is liable to reimburse Diaz for the amortizations and improvements.
Ruling:
Doctrine of Immutability of Judgment:
- The Supreme Court ruled that the doctrine of immutability of judgment does not apply because the Interpleader case involved different parties and issues.
BDC’s Bad Faith:
- The Court affirmed the CA’s finding that BDC acted in bad faith by accepting payments from Diaz despite knowing about Arreza’s conflicting claim.
Diaz’s Good Faith:
- The Court reversed the CA’s ruling that Diaz was a buyer in good faith. Diaz failed to diligently inquire into the title and source of the rights he purchased, disqualifying him as a buyer in good faith.
Unjust Enrichment:
- The Court ruled that BDC is liable to return the amortizations paid by Diaz under the doctrine of unjust enrichment, as it would be inequitable for BDC to retain the payments after the Interpleader case ruled in favor of Arreza.
Improvements on the Property:
- Both BDC and Diaz acted in bad faith. Under Article 453 of the Civil Code, their rights are treated as if both acted in good faith. BDC is liable to indemnify Diaz for the value of the improvements he introduced on the property.
Damages:
- The Court deleted the CA’s award of moral and exemplary damages and attorney’s fees, as there was no basis for such awards given the mutual bad faith of the parties.
Ratio:
Doctrine of Immutability of Judgment:
- Res judicata does not apply when there is no identity of parties or subject matter between the prior and subsequent cases.
Good Faith in Purchasing Property:
- A buyer in good faith must diligently inquire into the title and source of the rights being purchased. Failure to do so disqualifies the buyer from being considered in good faith.
Unjust Enrichment:
- A party cannot retain benefits at the expense of another without just or legal grounds. BDC’s retention of Diaz’s payments would result in unjust enrichment.
Bad Faith of Both Parties:
- When both parties act in bad faith, their rights are treated as if both acted in good faith. BDC is liable to indemnify Diaz for the improvements, but no damages are awarded due to mutual bad faith.
Modified Decision
- BDC is ordered to pay Diaz P1,106,915.58 for the amortizations and improvements.
- Domingo Tapay is ordered to pay Diaz P600,000 for the transfer of rights.