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Investing in real estate can be a lucrative endeavor, but it requires careful consideration and thorough due diligence to ensure a successful and secure investment. In this article, we will explore a specific court case involving Viva Homes Subdivision in Dasmarinas Cavite, where the significance of due diligence and the involvement of licensed real estate professionals in the investment process becomes evident.

We will discuss why due diligence is crucial in real estate investments, highlight the importance of hiring or availing the services of licensed professionals such as brokers and consultants, and examine the implications of a court case granting a writ of demolition for the property in question.

UNDERSTANDING THE COURT CASE
(Paxton vs Virata, G.R. No. 248066, 2019)

In the specific case of Paxton Development Corporation, Petitioner, vs. Antenor Virata, Pilar Development Corporation and the Registry of Deeds of Cavite, Respondent.

Paxton Development Corporation filed a complaint for Quieting of Title with Damages against Antenor Virata, Pilar Development Corporation, and the Registry of Deeds of Cavite. Paxton claimed ownership of a parcel of land (where Viva Homes Subdivision currently stands) based on a sale from the heirs of Serapio Cuenca in 1995 after Serapio died in 1988. Serapio's title was yet to be issued as the records were damaged by the war in 1944.

Pilar, on the other hand, asserted ownership through a purchase from Virata in 1973, who also purchased the same property from Serapio Cuenca in 1958. The dispute revolved around conflicting titles and the validity of the transfers.

Regional Trial Court and Court of Appeals Ruling

The case was tried jointly, and the trial court ruled in favor of Paxton, declaring Pilar's title null and void and upholding Paxton's title. However, the Court of Appeals reversed the decision and declared Paxton's title null and void, favoring Pilar's title.

Supreme Court Ruling

The Supreme Court found in favor of Paxton and reversed the decision of the Court of Appeals. The Supreme Court reinstated the decision of the Regional Trial Court (RTC), Imus, Cavite, which ruled in favor of Paxton. The RTC declared Pilar Development Corporation's title null and void and upheld Paxton's title. The Supreme Court agreed with the RTC's findings that Paxton presented the greater weight of credible evidence to prove its title over the property.

The Court also emphasized that a forged deed is a nullity and conveys no title, and therefore Pilar's title, which was derived from a forged deed, is invalid. As a result, the property remained in the name of the original registered owner, Serapio Cuenca, and Paxton's purchase from Serapio's heirs was deemed valid.

THE IMPORTANCE OF DUE DILIGENCE

Due diligence refers to the process of conducting a comprehensive investigation and analysis of a property or investment opportunity before making a purchase or investment decision. It plays a crucial role in mitigating risks and ensuring that investors are well-informed about the property's legal status, potential issues, and market conditions. Here are some reasons why due diligence is vital when investing in real estate:

1. Verifying Property Ownership and Title Status: Thorough due diligence involves verifying the ownership of the property and assessing the validity and authenticity of its title. This step helps identify any potential issues such as fraudulent titles or conflicting claims that could lead to legal complications in the future.

2. Assessing Legal and Regulatory Compliance: Conducting due diligence allows investors to evaluate whether the property complies with local laws, zoning regulations, building codes, and other legal requirements. Non-compliance can result in legal liabilities, penalties, or even demolition orders, as seen in the Viva Homes Subdivision case.

3. Evaluating Financial Viability: Due diligence involves analyzing the financial aspects of the investment, including property valuation, income potential, rental rates, operating expenses, and projected returns. This assessment ensures that investors have a clear understanding of the property's financial viability and potential profitability.

4. Identifying Environmental and Structural Issues: Thorough due diligence investigates potential environmental hazards, such as contamination or proximity to environmentally sensitive areas, as well as structural integrity concerns. Uncovering such issues enables investors to assess the associated risks and costs involved in remediation or repairs.

THE ROLE OF LICENSED REAL ESTATE PROFESSIONALS

Navigating the complexities of real estate transactions requires expertise and knowledge of the local market. Licensed real estate professionals, such as brokers and consultants, play a crucial role in assisting investors throughout the investment process. Here's why their involvement is important:

1. Market Knowledge and Expertise: Licensed real estate professionals possess in-depth knowledge of the local market conditions, property values, and investment opportunities. They can provide valuable insights and guidance, helping investors make informed decisions.

2. Access to Networks and Resources: Professionals in the real estate industry have access to a wide network of contacts, including other industry professionals, legal experts, and financial institutions. They can leverage these connections to facilitate due diligence, streamline processes, and ensure a smooth transaction.

3. Legal and Regulatory Compliance: Licensed real estate professionals are well-versed in the legal and regulatory requirements governing real estate transactions. They can help investors navigate complex legal frameworks, ensure compliance, and identify potential risks.

4. Negotiation and Documentation: Real estate professionals have expertise in negotiating favorable terms, preparing and reviewing contracts, and ensuring all necessary documentation is in order. Their involvement minimizes the risk of material mistakes and safeguards the interests of the investor.

It is truly unfortunate for the Viva Homes Subdivision homeowners who find themselves in a precarious situation. As buyers in good faith, they entered into their investments with the belief that their titles were legitimate and secure.

However, the subsequent issuance of null and void titles has placed their ownership rights in jeopardy. These homeowners trusted the system and made significant financial commitments, only to discover that their rights may be disregarded due to fraudulent practices that preceded their involvement.

The situation evokes sympathy for these homeowners, who now face uncertainty and potential losses through no fault of their own. It underscores the importance of due diligence and highlights the need for stronger safeguards in the real estate industry to protect innocent buyers from such unfortunate circumstances.

The Viva Homes Subdivision case serves as a reminder of the importance of due diligence when investing in real estate. Conducting thorough investigations and involving licensed real estate professionals can help mitigate risks and ensure a secure investment.

Investors should prioritize verifying property ownership, assessing legal compliance, evaluating financial viability, and identifying any potential issues before making a purchase. By working with licensed professionals, investors can navigate complex processes, protect their interests, and minimize the likelihood of material mistakes occurring along the way.

BY: CARLO JAY (CJ) MANALO
Bachelor of Science in Real Estate Management, PLM, 2025
Marketing Executive, DRIVEN Marketing Group Inc., (est. 2010)
Legal Aspects of Real Estate
0938 829 9733

Sources: (Paxton vs Virata, G.R. No. 248066, 2019)

FROM PTV | 0938 829 9733