G.R. No. 143573 . January 30, 2009.
ADORACION ROSALES RUFLOE, ALFREDO RUFLOE and RODRIGO RUFLOE, Petitioners, vs. LEONARDA BURGOS, ANITA BURGOS, ANGELITO BURGOS, AMY BURGOS, ELVIRA DELOS REYES and JULIAN C. TUBIG, Respondents.

FACTS

Petitioners Adoracion Rufloe (wife) and her children Alfredo and Rodrigo Rufloe are the heirs of Angel Rufloe. During the marriage of Adoracion and Angel, they acquired a 371-square meter parcel of land in Muntinlupa covered by TCT No. 406851. In 1978, respondent Elvira Delos Reyes forged the signatures of Adoracion and Angel (who died in 1974) in a Deed of Sale dated September 8, 1978, making it appear the property was sold to her. Based on this forged deed, Delos Reyes obtained TCT No. S-74933 in her name. In November 1979, the Rufloes filed a complaint for damages against Delos Reyes (Civil Case No. M-7690) in the Pasay City RTC, alleging the deed was falsified, and filed a notice of adverse claim. On December 4, 1984, during the pendency of that case, Delos Reyes sold the property to respondent Burgos siblings (Anita, Angelina, Angelito, and Amy), who were issued TCT No. 135860. On December 12, 1985, the Burgos siblings sold the property to their aunt, respondent Leonarda Burgos, but this sale was not registered, so the title remained in the siblings’ names. On February 6, 1989, the Pasay City RTC rendered a decision in Civil Case No. M-7690 declaring the Deed of Sale in favor of Delos Reyes falsified and forged, and that Delos Reyes acquired no ownership; this decision became final and executory. On February 8, 1990, the Rufloes filed a complaint in the Muntinlupa RTC (Civil Case No. 90-359) for Declaration of Nullity of Contract and Cancellation of Transfer Certificate of Titles against respondents, alleging the forged deed conveyed no valid title to Delos Reyes, thus the subsequent sales to the Burgos siblings and Leonarda were void. The RTC ruled in favor of the Rufloes, declaring respondents were not innocent purchasers for value and the conveyance to Leonarda was simulated, and ordered the reinstatement of the Rufloes’ title and cancellation of subsequent titles. The Court of Appeals reversed the RTC, declaring respondents were purchasers in good faith and for value who relied on a clean title.

ISSUE

1. Whether the sale of the subject property by Delos Reyes to the Burgos siblings and the subsequent sale by the siblings to Leonarda were valid and binding.
2. Whether respondents Burgos siblings and Leonarda Burgos were innocent purchasers in good faith and for value despite the forged deed of sale of their transferor Delos Reyes.

RULING

1. The sales were not valid and binding. The Supreme Court held that the issue of the deed’s validity was already resolved with finality in Civil Case No. M-7690, which declared the signatures of the spouses Rufloe forged, rendering the deed null and void and conveying no title. Applying the principle of “nemo dat quod non habet,” Delos Reyes acquired no right over the property and could not convey any valid title to the Burgos siblings. Consequently, all subsequent transactions, including the sale to Leonarda, were likewise void.
2. Respondents were not innocent purchasers in good faith and for value. The Court ruled that while a forged deed can be the root of a valid title if an innocent purchaser for value intervenes, the respondents failed to prove this status. The burden of proof lies on the one asserting good faith, which cannot be discharged by mere presumption. The general rule that one may rely on a Torrens certificate admits an exception: a purchaser must investigate further when there is actual knowledge of facts that would impel a reasonably cautious man to inquire, such as knowledge of a defect or lack of title, or the presence of anything that excites suspicion. In this case, the Burgos siblings and Leonarda were not in good faith because: (a) the forged deed was executed four years after Angel Rufloe’s death, a fact of public record that should have prompted verification; (b) the Rufloes had filed a notice of adverse claim in 1979, which was annotated on the title, putting respondents on constructive notice of an adverse interest; and (c) the sale to Leonarda was unregistered and the siblings continued paying taxes, indicating they knew their title was defective. Therefore, respondents cannot be considered innocent purchasers for value. The Supreme Court GRANTED the petition, REVERSED and SET ASIDE the Court of Appeals decision and resolution, and REVIVED the trial court’s decision (except the award of actual damages, which was deleted).