Cabigas vs.

Limbaco

A purchaser in good faith is one who buys the property of another without notice that some other person has a right
to or interest in such property, and pays a full and fair price for the same at the time of such purchase or before he
has notice of the claim of another person. It is a well-settled rule that a purchaser cannot close his eyes to facts which
should put a reasonable man upon his guard, and then claim that he acted in good faith under the belief that there
was no defect in the title of the vendor. His mere refusal to believe that such defect exists, or his willful closing of his
eyes to the possibility of the existence of a defect in his vendor’s title, will not make him an innocent purchaser for
value, if it afterwards develops that the title was in fact defective, and it appears that he had such notice of the defect
as would have led to its discovery had he acted with that measure of precaution which may reasonably be required of
a prudent man in a like situation.

FACTS:
Petitioners purchased 2 lots from Cobarde in 1980 who in turn had purchased these lots from Ouano in
1948. Nothwithstanding the sale, the 2 lots remained registered in the name of Ouano. Ouano was able to sell these
same lots to the National Airports Corporation (NAC) in 1952 for its airport expansion project. NAC promptly had
the titles for these properties registered in its name. When the airport expansion project fell through, respondent and
the legal heirs of Ouano succeeded in reclaiming title to the 2 lots through an action for reconveyance. The titles over
these lots were thereafter registered in their names then they subdivided the lots and sold them to various buyers who
registered the titles over their respective lots in their names.

ISSUE:
Who has a better right to the subject lots.

HELD:
Cabigas spouses are not buyers in good faith. A purchaser in good faith is one who buys the property of
another without notice that some other person has a right to or interest in such property, and pays a full and fair price
for the same at the time of such purchase or before he has notice of the claim of another person. It is a well-settled
rule that a purchaser cannot close his eyes to the fact which should put a reasonable man upon his guard, and then
claim that he acted in good faith under the belief that there was no defect in the title of the vendor. At the time of the
sale to the Cabigas spouses, the land was registered not in Cobarde’s name but in Ouano’s name. They relied
completely onCobarde’s representation that he owned the properties in question and did not even bother to perform
the most perfunctory of investigations by checking the properties’ titles with the Registry of Deeds. Their failure to
exercise the plain common sense expected of real estate buyers bound them to the consequences of their own inaction.

The overriding consideration to determine ownership of an immovable property is the good or bad faith of
the buyer, specifically who first registered the ale with the Registry of Deeds in good faith. Since the Cabigas spouses
have no legally recognizable interest in the lots in question, it follows that the petitioners, who are subrogated to the
rights of the former by virtue of succession, also have no legally recognizable rights to the properties that could be
enforced by law.