G.R. No. 147072 - Lu vs. Spouses Manipon

On May 9, 1981, Juan Peralta executed a deed of sale by installment in favor of spouses Orlando and Rosita Manipon (respondents), selling 350 square meters out of his 2,078 square-meter lot (covered by TCT No. 137911, located at Barrio Dilan, Urdaneta, Pangasinan).
The deed of sale executed on that date was not registered with the Registry of Deeds.

On June 10, 1981, Juan Peralta mortgaged the entire lot to Thrift Savings and Loan Association, Inc. (TSLAI) to secure a loan.
Due to non-payment of the loan, the mortgage was judicially foreclosed, and TSLAI purchased the property at a foreclosure sale for P62,789.18.
TSLAI resold the property on July 15, 1988 for P80,000.00 to petitioner Francisco H. Lu.

On August 30, 1989, petitioner subdivided the foreclosed and purchased lot into five lots, one of which became Lot 5582-B-7-D (339 square meters).
This particular lot (Lot 5582-B-7-D) was part of the area previously sold by installment to the respondents.
The subdivided lot was covered by Transfer Certificate of Title No. 171497.

On July 30, 1983, Juan Peralta executed a second deed of sale in favor of the respondents concerning the subject lot.
Although the respondents paid a total amount of P8,000.00, this deed of sale, like the previous one, was not registered.

On January 22, 1990, petitioner, through counsel, notified respondents regarding their occupation of the disputed lot.
After unsuccessful settlement efforts between the parties, petitioner filed a case on February 26, 1990, alleging that he was the rightful owner of the entire lot, including the disputed portion occupied by the respondents.
Petitioner supported his claim by citing a previous regional trial court decision from Urdaneta, Pangasinan, Branch 49 (Civil Case No. U-4399).

In their answer, respondents claimed that petitioner was a buyer in bad faith, noting that even before purchasing the lot, he was aware that they had already bought and occupied Lot 5582-B-7-D since 1981.
They further asserted that petitioner knew about their claim on the property, as his purchase of the foreclosed lot from TSLAI occurred amid a similar dispute involving the whole lot.

Who holds a superior right of ownership over Lot 5582-B-7-D, notably considering the overlapping transactions and non-registration issues?
Does the fact that petitioner registered the purchase of the mother lot give him a preferential claim over the earlier, non-registered sale to respondents?

Was petitioner a purchaser in bad faith, given his knowledge of respondents’ occupation and the prior sale?
Can respondents invoke the doctrine of estoppel against petitioner’s claim to ownership?

What is the proper purchase price of the disputed lot, particularly in light of petitioner's plea to set it at P2,000.00 per square meter?
Should respondents be exempt from paying petitioner the previously determined amount as a consequence of the errors in the appealed decisions?