G.R. No. L-72981 January 29, 1988
FRANCISCA DE LA CRUZ (DECEASED) substituted by ROSA ABRENICA assisted by her husband Rafael Montero, petitioner, vs. THE INTERMEDIATE APPELLATE COURT, BENITO MONTE (Deceased), substituted by MIGUEL MONTE, MARIANO MONTE, (Deceased), substituted by ALFREDO MONTE, GERONIMA MONTE, the spouses ANDRES RABARA and JULIANA MACANAS, FAUSTINA LEONIN and JOSEFA MACANAS, and the spouses MONTENILLO RAFANAN and AURELIA RAFANAN, respondents.

FACTS

The case originated from a dispute over two parcels of land owned by the late Gregorio Monte. After his death, his collateral relatives (the Montes) filed an action to recover possession and ownership against several defendants, including Monte’s surviving spouse, Francisca de la Cruz. The trial court and the Court of Appeals ruled in favor of the Montes, declaring the deeds conveying the lots null and void and ordering possession surrendered to the Montes as presumptive heirs. Crucially, the appellate court’s decision contained a finding in its body that de la Cruz, as the surviving spouse, was also an heir entitled to a share under Article 1001 of the Civil Code, but this was omitted from the dispositive portion. This omission was appealed to the Supreme Court, which denied the petition.
Subsequently, the Montes executed an extrajudicial partition excluding de la Cruz and sold portions of the land to various buyers. De la Cruz then filed a complaint for partition against the Montes and the buyers. The Intermediate Appellate Court, in the decision under review, dismissed the complaint against the buyers, declaring them innocent purchasers for value. It converted the action into one for damages against the Montes and ordered the case remanded to determine the rightful heirs.

ISSUE

The primary issue is whether the Intermediate Appellate Court erred in declaring the buyers as innocent purchasers for value and in converting the partition action into a damages action. A secondary issue is whether it erred in remanding the case for further trial instead of resolving the factual issues itself.

RULING

The Supreme Court reversed the appellate court’s ruling on the buyers’ good faith. The legal logic is anchored on the principle that one who purchases property from a person who is not the registered owner is bound to inquire into the vendor’s title and authority to sell. The buyers purchased the lots from the Montes after the finality of a prior court decision which, while awarding possession to the Montes, also contained a clear finding that de la Cruz was a co-heir. This prior decision was a matter of public record and constituted a legal warning or “red flag” that the Montes’ title was questionable and potentially shared with another heir. A purchaser of ordinary prudence would have been put on inquiry and discovered de la Cruz’s claim. By failing to make this inquiry, the buyers cannot be considered in good faith.
Consequently, the conversion of the action into one purely for damages was erroneous. Since the buyers were not in good faith, the action for partition of the estate, including the lots in their possession, properly proceeds. On the procedural issue of remand, the Court held that Batas Pambansa Blg. 129 grants the appellate court the option, not the obligation, to receive evidence itself. However, the Court found that based on the records, the buyers’ bad faith was sufficiently established, making further trial on that point unnecessary. The case was remanded to the trial court solely for the purpose of effecting partition, with de la Cruz (substituted by her heirs) receiving her rightful share as surviving spouse.