G.R. No. 117609 - Heirs of Gregorio vs. Court of Appeals

Spouses Wilson Tan and Benita Lui Tan were the registered owners of a 1,381.1 square meter lot along Quezon Boulevard, Quezon City, covered by Transfer Certificate of Title (TCT) No. 349788.
The lot was previously owned by Severa P. Gregorio as evidenced by TCT No. 8787 issued to her on January 4, 1949.
In 1965, Shell Company leased the lot from Severa Gregorio for 20 years.
Severa Gregorio died intestate on September 20, 1976, leaving behind three legitimate children: Buenconsejo Vivar, Jesusa Galang, and Cecilio Pineda (who died in 1982).

After the lease expired in late 1985 or 1986, Buenconsejo Vivar attempted to sell the lot and asked her son Oliver to secure certified true copies of relevant documents from the Registry of Deeds.
Oliver obtained certified true copies of:

Deed of Absolute Sale dated July 14, 1971, executed by Severa Gregorio in favor of Ricardo Santos for 2/3 portion of the lot.
Deed of Absolute Sale dated September 17, 1986, executed by Ricardo Santos in favor of spouses Wilson and Benita Tan.
Deed of Assignment dated September 18, 1986, executed by spouses Felicisimo and Rosalina Palomo in favor of spouses Tan covering the remaining 1/3 portion of the lot.

The TCT No. 8787 was cancelled and replaced by TCT No. 349788 issued to spouses Tan covering the entire lot.

The 1/3 portion of the lot was sold on execution to the Palomos in 1978 due to a judgment against Jesusa Galang; this sale was confirmed after the Galangs failed to redeem within one year.
The Palomos assigned their 1/3 portion to spouses Tan on September 18, 1986, for P800,000.00.
On October 30, 1986, heirs of Severa Gregorio filed a complaint for cancellation of title and reconveyance, alleging the July 14, 1971 deed of sale was forged.
A fire on June 11, 1988, destroyed the Quezon City Hall Building and all case records, including original key documents.
The trial court ordered reconstitution of records in 1989.
An amended complaint was filed focusing on the signature of Severa Gregorio on the July 14, 1971 deed of sale.
During trial, heirs presented handwriting expert Bienvenido Albacea of the NBI who testified the signature was forged based on his 1987 examination.
Spouses Tan denied forgery and claimed to be innocent purchasers in good faith.
Ricardo Santos was declared in default for failure to answer.

Declared the July 14, 1971 deed of sale and the subsequent deed of sale between Santos and spouses Tan as null and void for being forged.
Upheld the validity of the deed of assignment from Palomos to spouses Tan over 1/3 portion.
Ordered cancellation of TCT Nos. 349788 (spouses Tan) and 349789 (Ricardo Santos).
Ordered reinstatement of TCT No. 8787 in the name of Severa Gregorio.
Ordered Santos to pay monetary damages and attorney’s fees to the parties.
Ordered heirs to reimburse spouses Tan for taxes paid.

Reversed the trial court ruling, declaring spouses Tan's ownership valid over the entire lot.
Held spouses Tan as innocent purchasers for value and in good faith.
Disregarded the NBI expert’s testimony because it was based on photocopies rather than originals.
Ordered costs against plaintiffs, heirs of Severa Gregorio.

Court of Appeals erred in rejecting NBI handwriting expert’s testimony.
Court of Appeals erred in ruling spouses Tan were innocent purchasers in good faith.

Did not question the deed of assignment by Palomos to spouses Tan over the 1/3 portion.

Whether the Court of Appeals erred in disregarding the testimony of the NBI handwriting expert on the alleged forgery of Severa Gregorio’s signature on the July 14, 1971 deed of sale.

Whether the Court of Appeals erred in finding spouses Wilson and Benita Tan to be innocent purchasers in good faith of the 2/3 portion of the lot despite alleged forgery.