G.R. No. 180523 - Dona Rosana Realty and Development Corp. vs. Molave Development Corp.

Carmelita Austria Medina owned an 86.4959-hectare parcel of land in Anupil, Bamban, Tarlac, covered by Transfer Certificate of Title (TCT) No. T-31590.
On December 16, 1994, Medina executed a contract to sell the land to Molave Development Corporation, represented by its president, Teofista P. Tinitigan, for a total price of P14 million.

Molave Development initially paid P1 million upon the signing of the contract, followed by a first installment of P1.3 million.
The respondent subsequently refused to pay the remaining installments when informed by the Department of Agrarian Reform (DAR) of the presence of alleged tenants on the property.

In January 1997, Medina sent a letter to Molave Development rescinding the contract to sell.
Prior to the rescission, on December 18, 1996, Medina sold the same land to DoAa Rosana Realty and Development Corporation, to which the Register of Deeds later issued TCT No. 288633.

On March 3, 1997, Molave Development filed an action in the Regional Trial Court (RTC) of Capas, Tarlac (Civil Case 389), seeking specific performance, delivery of possession, annulment of title, and additional damages for alleged conspiracy and collusion to defraud.
The complaint targeted Medina, DoAa Rosana Realty, and its chairman, Sy Ka Kieng, with a prayer for moral and exemplary damages plus attorney’s fees totaling P1.1 million.
Concurrently, by way of a third-party complaint, DoAa Rosana Realty charged Medina’s nephew, Wilfredo Miranda, and his lawyer, Atty. Delfin Supapo, Jr., with conspiring with Medina to conceal the original contract of sale between Medina and Molave Development.

Medina was declared in default by the RTC.
DoAa Rosana Realty filed an answer and a motion to set the case for a preliminary hearing to resolve its special and affirmative defenses.
The petitioner (DoAa Rosana Realty) asserted that it purchased the property in good faith and contended that Molave Development was estopped from questioning the sale—particularly after its president received P1.3 million as a partial reimbursement following the cancellation of the contract.
Molave Development, in its own submissions, presented evidence including a letter from Tinitigan to Medina (dated March 15, 1997) which treated the P1.3 million as partial payment for the damages claimed.

On February 5, 1998, the RTC denied DoAa Rosana Realty’s motion to dismiss.
The Court of Appeals (CA), upon review, directed the RTC to conduct a preliminary hearing on the special affirmative defense of good faith and, subsequently, on November 19, 2003, the RTC dismissed the complaint insofar as it concerned DoAa Rosana Realty and Sy Ka Kieng—holding them to be bona fide purchasers.
Although Molave Development filed a motion for reconsideration (denied on July 16, 2004), the CA on appeal held that the complaint stated a cause of action against Medina and the petitioner, remanding the case for further proceedings.
Dissatisfied with the CA ruling, DoAa Rosana Realty elevated the matter to the Supreme Court through the present petition.

Whether the Court of Appeals erred in holding that no ground existed for dismissing Molave Development’s complaint against DoAa Rosana Realty despite the complaint allegedly stating a cause of action.
Whether the RTC’s dismissal of the complaint, based on the special affirmative defense of good faith—supported by the acceptance of a partial reimbursement and the evidentiary showing that the petitioner was a bona fide purchaser—was proper.