G.R. No. 204369, September 17, 2014
ENRIQUETA M. LOCSIN, Petitioner, vs. BERNARDO HIZON, CARLOS HIZON, SPS. JOSE MANUEL & LOURDES GUEVARA, Respondents.

FACTS

Petitioner Enriqueta M. Locsin was the registered owner of a lot in Quezon City covered by TCT No. 235094. In 1992, she filed an ejectment case against Billy Aceron, which was settled by a court-approved compromise agreement in 1993. Locsin later went to the U.S., continued paying property taxes, and upon discovering her title copy missing, secured a reconstituted title (TCT No. RT-97467) in 1994. In early 2002, she discovered that Marylou Bolos had cancelled her reconstituted title and secured a new one (TCT No. N-200074) in Bolos’s favor by registering a forged Deed of Absolute Sale dated 1979. Bolos then sold the property to Bernardo Hizon for PhP 1.5 million, but the title was issued in the name of his son, Carlos Hizon, on August 12, 1999. On October 1, 1999, Bernardo filed a motion for execution to enforce the compromise agreement in the ejectment case to oust Aceron. After Locsin demanded the property’s return, Carlos denied the request, claiming he was an innocent purchaser. During compromise discussions, Bernardo promised a win-win solution but, on July 15, 2002, Locsin learned Carlos had already sold the property to his sister and brother-in-law, spouses Lourdes and Jose Manuel Guevara, for PhP 1.5 million, with TCT No. N-237083 issued in their names on May 24, 2002. The spouses Guevara immediately mortgaged the property. Locsin filed an action for reconveyance, annulment of title, cancellation of mortgage lien, and damages. The RTC dismissed the complaint, finding insufficient evidence of forgery and that respondents were buyers in good faith. The CA affirmed the RTC’s finding that respondents were innocent purchasers for value, though it found Locsin’s signature in the deed to Bolos was forged.

ISSUE

Whether or not respondents are innocent purchasers for value.

RULING

No. The Supreme Court ruled that respondents are not innocent purchasers for value. The Court found that Bernardo Hizon was not an innocent purchaser because he had actual knowledge of facts sufficient to induce a reasonably prudent person to inquire into the status of the title. Specifically, Bernardo knew of Aceron’s possession and even moved for execution of the compromise agreement in the ejectment case to eject Aceron, demonstrating his awareness of a potential defect or flaw in Bolos’s title. His failure to investigate beyond the certificate of title constituted gross negligence amounting to bad faith. Regarding Carlos Hizon and the spouses Guevara, the Court found the sale between them was simulated, intended to keep the property from Locsin, as evidenced by the lack of genuine consideration, the immediate mortgage by the spouses, and their vague and inconsistent testimonies. Since Bernardo was not a purchaser in good faith, his son Carlos and the spouses Guevara could not have acquired better rights. The Court ordered the respondents to reconvey the property to Locsin and awarded her moral and exemplary damages, attorney’s fees, and costs of suit.