“The court has said proof of actual knowledge or failure to exercise the diligence of a reasonably prudent person will overcome the claim of good faith“
“BUYERS in good faith buy a property with the belief that the person from whom they receive the thing is the owner who can convey title to the property.
“Such buyers do not close their eyes to facts that should put a reasonable person on guard and still claim that they are acting in good faith.” (Spouses Manalese v. The Estate of the Late Spouses Narciso, et al., G.R. 254046, Nov. 25, 2024 citing Spouses Peralta v. Heirs of Bernardina Abalon)
“[A] buyer for value in good faith is one who buys [the] property of another, without notice that some other person has a right to, or interest in, such property and pays full and fair price for the same, at the time of such purchase, or before he has notice of the claim or interest of some other persons in the property.” (Op cit. citing Spouses Bautista v. Silva)
Simply, “[h]e buys the property with the well-founded belief that the person from whom he receives the thing had title to the property and capacity to convey it.”
“To prove good faith, a buyer of registered and titled land need only [to] show that he relied on the face of the title… [and] need not prove that he made further inquiry [since] he is not obliged to explore beyond the four corners of the title.” (Op cit.)
However, “[s]uch degree of proof of good faith… is sufficient only when the following conditions concur: first, the seller is the registered owner of the land[;] second, the latter is in possession thereof; and third, at the time of the sale, the buyer was not aware of any claim or interest of some other person in the property, or of any defect or restriction in the title of the seller or in his capacity to convey title to the property.” (Op cit.)
“Absent one or two of the foregoing conditions, then the law itself puts the buyer on notice and obliges the latter to exercise a higher degree of diligence by scrutinizing the certificate of title and examining all factual circumstances in order to determine the seller’s title and capacity to transfer any interest in the property.” (Op cit.)
“The presence of anything which excites or arouses suspicion should then prompt the vendee to look beyond the certificate and investigate the title of the vendor appearing on the face of said certificate.
“One who falls within the exception can neither be denominated an innocent purchaser for value nor a purchaser in good faith; and hence does not merit the protection of the law.” (Op cit. citing Spouses Peralta v. Heirs of Bernardina Abalon)
“Under such circumstance, it is no longer sufficient for said buyer to merely show that he relied on the face of the title; he must now also show that he exercised reasonable precaution by inquiring beyond the title. Failure to exercise such degree of precaution makes him a buyer in bad faith.” (Op cit.)
“[A] party who has actual knowledge of facts and circumstances that would impel a reasonably cautious man to make inquiry beyond the register and the certificate of title, or has knowledge of sufficient facts to induce a reasonably prudent person to inquire further, but fails to make such inquiry; and given the presence of anything which excites or arouses suspicion, one who closes his or her eyes to facts that should put a reasonable person on guard, cannot claim that he or she is acting in good faith.” (Op cit. citing Spouses Peralta)
“[T]he… party claiming good faith [has the burden] to show the absence of such suspicious facts or circumstances or lack of knowledge thereof; and in their presence, such party exercised the diligence of a reasonably prudent person to inquire into such facts or circumstances.
“On the other hand, proof of actual knowledge or failure to exercise the diligence of a reasonably prudent person will overcome the claim of good faith.” (Op cit.)
“[T]he determination of good faith is essentially a factual issue, and the specific circumstances of each case vary, the [Supreme] Court proposes another approach which involves the scrutiny and evaluation of, firstly, intrinsic evidence—those which are borne by the register and the certificate of title, and secondly, extrinsic evidence—those circumstances outside of the register and the certificate of title.” (Op. cit)