Spouses Yu vs. Pacleb (G.R. No. 172172, Feb.

24, 2009) FACTS: Baltazar Pacleb and his late first wife Angelita Chan are registered owners of an 18,000-square meter parcel of land in Barrio Langcaan, Dasmarias,Cavite, covered by TCT No. T-118375 (Langcaan Property). On Feb. 27, 1992, Spouses Baltazar Pacleb and Angelita Chan sold the property to Rebecca del Rosario. On May 7, 1992, the lot was thereafter sold to Ruperto Javier. On Nov. 10, 1992, a Contract to Sell was entered into between Javier and Spouses Yu wherein petitioner spouses agreed to pay Javier P200,000 as partial payment and P400,000 to be paid upon execution of the contract, and Javier undertook to deliver possession of the Langcaan Property and to sign a deed of absolute sale within 30 days from execution of contract. All the aforementioned sales were not registered. In 1993, spouses Yu filed a complaint with the RTC for specific performance and damages against Javier, contending that Javier represented to them that the Langcaan Property was not tenanted, but after they already paid P200,000 as initial payment and entered into the agreement of sale on Sept. 11, 1992, they discovered that it was tenanted by Ramon Pacleb, son of Baltazar Pacleb. Subsequently, spouses Yu demanded for the cancellation of the agreement and for the return of their initial payment. On March 10, 1995, spouses Yu, Ramon, and the latters wife executed a Kusangloob na Pagsasauli ng Lupang Sakahan at Pagpapahayag ng Pagtalikod sa Karapatan, where spouses Yu paid Ramon P500,000 in exchange for the waiver of his tenancy rights over the subject property. But on Oct. 12, 1995, Baltazar Pacleb filed a complaint for annulment of the deed of sale to Javier, alleging that the deed of sale executed between him and his late first wife Angelita was spurious as their signatures were forgeries. Meanwhile, on Nov. 23, 1995, spouses Yu filed an action for forcible entry against respondent with the MTC alleging that they had prior physical possession of the Langcaan Property through their trustee Ramon until the latter was ousted by respondent in Sept. 1995. MTC ruled in favor of spouses Yu, affirmed by the RTC, but set aside by CA. His first action for annulment of deed of sale having been dismissed, respondent filed action for removal of cloud from title on May 29, 1996, contending that the deed of sale between him and his late first wife and Rebecca del Rosario could not have been executed on Feb. 27, 1992, because on said date, he was residing in the U.S. and his late first wife died 20 years ago. During pendency of the case, respondent died, succeeded by his surviving spouse and representatives of children with his first wife. RTC held that spouses Yu are purchasers in good faith, but on appeal, CA reversed and set aside lower courts decision and ordered for the cancellation of the annotation in favor of spouses Yu on the TCT of Langcaan Property.
ISSUE: Whether or not petitioner spouses are innocent purchasers for value and in good faith. HELD: Petitioner spouses are not innocent purchasers for value, and they are not in good faith. Several facts should have put petitioner spouses on inquiry as to the alleged rights of their vendor, Javier, over the Langcaan property. First, the property remains to be registered in the name of respondent despite the 2 Deeds of Absolute Sale from respondent to Del Rosario then from the latter to Javier, and both deeds were not even annotated in the title of the subject property. Second, the 2 deeds of absolute sale were executed only 2 months apart containing identical provisions. Third, the fact that the Langcaan Property is in the possession of Ramon, son of the registered owners, this should have made petitioner spouses suspicious as to the veracity of the alleged title of their vendor, Javier. Petitioner spouses could have easily verified the true status of the subject property from Ramons wife, since the latter is their relative. The law protects to a greater degree a purchaser who buys from the registered owner himself. Corollarily, it requires a higher degree of prudence from one who buys from a person who is not the registered owner, although the land object of the transaction is registered. While one who buys from the registered owner does not need to look behind the certificate of title, one who buys from one who is not the registered owner is expected to examine not only the certificate of title but all factual circumstances necessary for him to determine if there are any flaws in the title of the transferor, or in his capacity to transfer the land. Therefore, petitioner spouses cannot be considered as innocent purchasers in good faith, and respondent has a better right over the Langcaan Property as the true owner thereof.