Eagle Realty Corporation vs Republic of the Philippines

October 3, 2010
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594 SCRA 555 – Civil Law – Land Titles and Deeds – Innocent Purchaser – Sunshine Finance Doctrine

Eagle Realty Corporation, a company engaged in the real estate business, bought a parcel of land from a certain Reyes in 1984 via a Deed of Sale. This Reyes acquired the land from a certain Medina who earlier acquired the said land via surreptitiously entering a false record in the records of the Land Registration Commission. Eventually, the true owners of the said land, the de Leons, discovered that another title was fraudulently issued to Medina over the same parcel of land. De Leon was able to have the said title annulled as well as the TCT issued to Eagle Realty by virtue of the Deed of Sale.

ISSUE: Whether or not Eagle Realty is an innocent purchaser.

HELD: No. Based on case law (Sunshine Finance vs IAC, Oct. 28, 1991 / 203 SCRA 210), a corporation engaged in the buying and selling of real estate is expected to exercise a higher standard of care and diligence in ascertaining the status and condition of the property subject of its business transaction. Similar to investment and financing corporations, it cannot simply rely on an examination of a Torrens certificate to determine what the subject property, looks like as its condition is not apparent in the document.

 

Motion for Reconsideration (July 31, 2009)

 

Eagle Realty, not content with the SC decision file a Motion for Reconsideration. It averred that the Sunshine Finance case is not applicable because the principle and jurisprudence laid down in that decision was promulgated by the SC for the first time only in 1991. That prior to that, when Eagle bought the land in 1984, such extra diligence was not required from corporations engaged in real estate business.

ISSUE: Whether or not to apply the Sunshine Finance case in the case at bar.

HELD: Yes. The case law is not in the nature of a statute that cannot be retroactively applied. Hence, the decision rendered by the SC in 2008 is merely based on contemporaneous legislative intent that the interpreted law carried into effect. The SC was following with consistency its construction. Further, the ruling in the Sunshine Finance case should be applied to this latter case otherwise it would be reduced to “a mere academic exercise with the result that the doctrine laid down would be no more than a dictum, and would deprive the holding in the case of any force.”

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