G.R. No. 172172 - Spouses Yu vs. Pacleb

Respondent Baltazar N. Pacleb and his late first wife, Angelita Chan, were the registered owners of an 18,000-square meter parcel of land in Barrio Langcaan, Dasmariñas, Cavite, covered by Transfer Certificate of Title (TCT) No. T-118375 (the "Langcaan Property").
Petitioner spouses Ernesto V. Yu and Elsie Ong Yu agreed to purchase the Langcaan Property from Ruperto L. Javier, through a series of purported transfers originating from Pacleb and his late wife.

February 27, 1992: Deed of Absolute Sale executed between Baltazar N. Pacleb and Angelita Chan (owners) and Rebecca Del Rosario.
May 7, 1992: Deed of Absolute Sale between Rebecca Del Rosario and Ruperto L. Javier.
November 10, 1992: Contract to Sell between Ruperto L. Javier and petitioners, agreeing for petitioners to pay Php 900,000 with Php 600,000 already received by Javier. Javier undertook to deliver possession and a deed of absolute sale within 30 days. None of these subsequent sales were registered.

On April 23, 1993, petitioners sued Javier in the Regional Trial Court (RTC) to compel delivery of ownership, possession, and title to the Langcaan Property (Civil Case No. 741-93).
Petitioners alleged Javier represented the property as not tenanted. Only after payment and entering an agreement did they discover Ramon C. Pacleb was a tenant.
They asked for cancellation of the agreement and refund but, upon Ramon’s willingness to vacate, entered into a new Contract to Sell; Javier did not fulfill obligations.
Javier failed to appear and was declared in default.
On September 8, 1994, RTC ruled in favor of petitioners, ordering ownership and possession transferred, and damages awarded. This decision was annotated on the TCT.

On March 10, 1995, petitioners paid Php 500,000 to tenant Ramon and his wife in exchange for waiver of tenancy rights.
On October 12, 1995, respondent Baltazar N. Pacleb filed Civil Case No. 1199-95 for annulment of the Deeds of Sale, alleging forgery of signatures (including that of his deceased wife). Notably, Pacleb claimed he was in the United States on the date of the 1992 deed purportedly executed by him.
The trial court denied summons by publication against Rebecca Del Rosario; later, the case was dismissed without prejudice due to failure to locate parties.

November 23, 1995: Petitioners filed forcible entry case against respondent before the Municipal Trial Court (MTC), alleging prior possession of the Langcaan Property via Ramon. MTC and RTC ruled in favor of petitioners.
The Court of Appeals (CA) reversed on the grounds that respondent had prior possession, evidenced by real estate tax payments.

May 29, 1996: Respondent filed a case to remove cloud from title and to cancel the annotations on the TCT concerning the 1994 RTC decision.
Respondent died in 1997; substituted by surviving spouse and children.
In December 27, 2002, the trial court dismissed respondent’s case, ruling petitioners were purchasers in good faith, relying on the prior favorable Decision in Civil Case No. 741-93. It ordered cancellation of respondent’s title and issuance of new title to petitioners.
On appeal, the Court of Appeals reversed this ruling, stating petitioners were not purchasers in good faith and the prior specific performance decision did not transfer ownership to them. It ordered the cancellation of the annotation on the registration title. The CA later denied the motion for reconsideration.

They are purchasers in good faith, relying on the notarized deeds and their inspection of the property.
The 1994 RTC decision in Civil Case No. 741-93 is conclusive and binding on respondent despite his absence therein, as it involved ownership and possession of the property.

Petitioners contested the CA’s findings that they were on notice of potential defects, alleging that Ramon clarified his father was the former owner and he was just a tenant.

Whether petitioner spouses are innocent purchasers for value and in good faith.
Whether ownership over the Langcaan Property was properly vested in petitioners by virtue of the 1994 RTC Decision in Civil Case No. 741-93.