XVII Rules in case of double sale

Paylago vs. Jarabe

Facts:
The entire lot involved in this suit was originally
registered in the name of Anselmo Lacatan. After his death, the
transfer certificate was issued in the name his two sons and heirs,
Vidal and Florentino Lacatan. After Vidal Lacatan died, his heirs
executed a deed of sale of a portion of their lot in favor of
petitioners-spouses. Years after, Florentino Lacatan also died. His
heirs likewise executed a deed of sale in favor of the same
vendees over a portion of the same lot.
Upon the registration of the two deeds of sale, a new TCT
was issued in favor of petitioners-spouses. However, subsequent
subdivision survey for the purpose of segregating the two
portions of land described in the deeds revealed that a portion of
the total area purchased by petitioners was being occupied by
defendant-respondent. Hence, an action to recover possession
and ownership of the said portion was filed.
The lower court rendered judgment in favor of respondent,
and was affirmed in toto by the Court of Appeals
Issue: Who has a better right in case of double sale of real
property, the registered buyer or the prior but unregistered
purchaser?
Held:
As held by the Court, the general rule in this matter is
that, between two purchasers, the one who has registered the
sale in his favor, in good faith, has a preferred right over the
other who has not registered his title, even if the latter is in the
actual possession of the immovable property. This is in
accordance with Art 1544, providing that if the same immovable
property should have been sold to different vendees, "the
ownership shall belong to the person acquiring it who in good
faith first recorded it in the registry of property. However, it was
found that their acquisition and subsequent registration were
tainted with the vitiating element of bad faith; petitioners knew
beforehand that the parcel of land in question was owned by
respondent.
The fundamental premise of the preferential rights
established by Article 1544 of the New Civil Code is good faith. To
be entitled to the priority, the second vendee must not only show

prior recording of his deed of conveyance or possession of the

property sold, but must, above all, have acted in good faith, that
is to say, without knowledge of the existence of another
alienation by his vendor to a stranger.
Hanopol vs. Pilapil
Facts:
Iluminado Hanopol claims ownership of the land by
virtue of a series of purchases effected in 1938 by means of
private instruments, executed by the former owners Teodora,
Lucia, Generosa, Sinforosa and Isabelo, all surnamed Siapo.
Perfecto Pilapil. asserts title to the property on the strength of a
duly notarized deed of sale executed in his favor by the same
owners on December 3, 1945, which deed of sale was registered
in the Registry of Deeds.
Issue:
w/n the registration of the second sale in favour of
Pilapil affects Hanopols rights as the first vendee
Held:
Yes, it will. It appears from the documentary evidence
that Pilapil derived his right to the land from the sale to him of
the said property on December 3, 1945, long before the filing of
the complaint against the vendors in 1948. On the otherhand,
there appears to be no clear evidence of Hanopol's possession of
the land in controversy. In fact, in his complaint against the
vendors, Hanopol alleged that the Siapos took possession of the
same land under claim of ownership in 1945 and continued and
were in such possession at the time of the filing of the complaint
against them in 1948. Consequently, since the Siapos were in
actual occupancy of the property under claim of ownership, when
they sold the said land to appellee Pilapil on December 3, 1945,
such possession was transmitted to the latter, at least
constructively, with the execution of the notarial deed of sale, if
not actually and physically as claimed by Pilapil in his answer filed
in the present case. Thus, even on this score, Hanopol cannot
have a better right than appellee Pilapil who, according to the
trial court, "was not shown to be a purchaser in bad faith".

Balatbat vs. CA
Facts:
A parcel of land was acquired by plaintiff Aurelio Roque
and Maria Mesina during their conjugal union. Maria died on
August 28, 1966. On June 15, 1977, Aurelio filed a case for
partition. The trial court held that Aurelio is entitled to the
portion at his share in the conjugal property, and 1/5 of the other
half which formed part of Marias estate, divided equally among
him at his 4 children. The decision having become final and
executory, the Register of Deeds of Manila issued a transfer
certificate of title on October 5, 1979 according to the ruling of
the court. On April 1, 1980, Aurelio sold his 6/10 share to
spouses Aurora Tuazon-Repuyan and Jose Repuyan, as evidenced
by a deed of absolute sale. On June 21, 1980, Aurora caused the
annotation of her affidavit of adverse claim. On August 20, 1980,
Aurelio filed a complaint for rescission of contract grounded on
the buyers failure to pay the balance of the purchase price. On
February 4, 1982, another deed of absolute sale was executed
between Aurelio and his children, and herein petitioner Clara
Balatbat, involving the entire lot. Balatbat filed a motion for the
issuance of writ of possession, which was granted by the court on
September 20, 1982, subject to valid rights and interests of third
persons. Balatbat filed a motion to intervene in the rescission
case, but did not file her complaint in intervention.
Issue: w/n petitioner is a buyer in good faith
Held:
Petitioner cannot be considered as a buyer in good
faith. In the complaint for rescission filed by vendor Aurelio Roque
on August 20, 1980, herein petitioner filed a motion for
intervention on May 20, 1982 but did not file her complaint in
intervention, hence, the decision was rendered adversely against
her. If petitioner did investigate before buying the land, she
should have known that there was a pending case and an
annotation of adverse claim was made in the title of the property
before the Register of Deeds and she could have discovered that
the subject property was already sold to the private
respondents. It is incumbent upon the vendee of the property to
ask for the delivery of the owners duplicate copy of the title from
the vendor. A purchaser of a valued piece of property cannot just
close his eyes to facts which should put a reasonable man upon
his guard and then claim that he acted in good faith and under

the belief that there were no defect in the title of the vendor.
[39]
One who purchases real estate with knowledge of a defect or
lack of title in his vendor cannot claim that he has acquired title
thereto in good faith as against the true owner of the land or of
an interest therein; and the same rule must be applied to one
who has knowledge of facts which should have put him upon such
inquiry and investigation as might be necessary to acquaint him
with the defects in the title of his vendor. Good faith, or the want
of it is not a visible, tangible fact that can be seen or touched, but
rather a state or condition of mind which can only be judged of by
actual or fancied tokens or signs.[40]
In fine, petitioner had nobody to blame but herself in dealing
with the disputed property for failure to inquire or discover a flaw
in the title to the property, thus, it is axiomatic that - culpa lata
dolo aequiparatur - gross negligence is equivalent to intentional
wrong.
Caram vs. Laureta
Facts:
Marcos Mata conveyed an agricultural land in favor of
the respondent. The deed of absolute sale was not registered
because it was not acknowledged before a notary public or any
other authorized officer. At the time the sale was executed, there
was no authorized officer before whom the sale could
be acknowledged inasmuch as the civil government in Tagum,
Davao was not as yet organized. However, Marcos Mata delivered
to respondent the peaceful and lawful possession of the premises
of the land together with the pertinent papers thereof. Since then
repondent Laureta had been and is still in continuous, adverse
and notorious occupation of said land, without being molested,
disturbed or stopped by any of the defendants or their
representatives. In fact, he had been paying realty taxes due
thereon and had introduced improvements worth not less than
P20,000.00 at the time of the filing of the complaint. However,
the said property was sold to Fermin Caram, Jr., the petitioner, by
Marcos Mata on May 5, 1947. And the latter was able to declare
the ODOCT in the possession of Laureta null and void, after Mata
filed for an issuance of new ODOCT before the Registry of Deeds
of Davao on the ground of loss of the said title. The Trial Court
ruled infavor of respondent, stating that petitioner was not a

purchase rin good faith, and the Court of Appeals then after
affirmed the decision of the lower court.
Issue:

w/n petitioner acted is a purchaser in good faith

Held:
No. Bad faith is not based solely on the fact that a
vendee had knowledge of the defect or lack of title of his vendor.
In the instant case, Irespe and Aportadera had knowledge of
circumstances which ought to have put them an inquiry. Both of
them knew that Mata's certificate of title together with other
papers pertaining to the land was taken by soldiers under the
command of Col. Claro L. Laureta. Added to this is the fact that at
the time of the second sale Laureta was already in possession of
the land. Irespe and Aportadera should have investigated the
nature of Laureta's possession. If they failed to exercise the
ordinary care expected of a buyer of real estate they must suffer
the consequences. The rule of caveat emptor requires the
purchaser to be aware of the supposed title of the vendor and
one who buys without checking the vendor's title takes all the
risks and losses consequent to such failure.
The principle that a person dealing with the owner of the
registered land is not bound to go behind the certificate and
inquire into transactions the existence of which is not there
intimated should not apply in this case. It was of common
knowledge that at the time the soldiers of Laureta took the
documents from Mata, the civil government of Tagum was not yet
established and that there were no officials to ratify contracts of
sale and make them registerable. Obviously, Aportadera and
Irespe knew that even if Mata previously had sold t he Disputed
such sale could not have been registered.
There is no doubt then that Irespe and Aportadera, acting as
agents of Caram, purchased the property of Mata in bad faith.
Applying the principle of agency, Caram as principal, should also
be deemed to have acted in bad faith
Taedo vs. CA
Facts:
Lazaro Taedo executed a deed of absolute sale in favor
of Ricardo Taedo and Teresita Barrera in which he conveyed a
parcel of land which he will inherit. Upon the death of his father
he executed an affidavit of conformity to reaffirm the said sale.
He also executed another deed of sale in favor of the spouses

covering the parcel of land he already inherited. Ricardo

registered the last deed of sale in the registry of deeds in their
favor.
Ricardo later on learned that Lazaro sold the same property to his
children through a deed of sale.
Issue:
w/n respondents acted in good faith in registering the
deed of sale
Held:
The property in question is land, an immovable, and
following the above-quoted law, ownership shall belong to the
buyer who in good faith registers it first in the registry of
property. Thus, although the deed of sale in favor of private
respondents was later than the one in favor of petitioners,
ownership would vest in the former because of the undisputed
fact of registration. On the other hand, petitioners have not
registered the sale to them at all.
Petitioners contend that they were in possession of the
property and that private respondents never took possession
thereof. As between two purchasers, the one who registered the
sale in his favor has a preferred right over the other who has not
registered his title, even if the latter is in actual possession of the
immovable property.
Tanongon vs. Samson
Facts:
Respondents filed a complaint against Cayco Marine
Service (CAYCO) and its owner Iluminada Cayco Olizon (Olizon)
for illegal dismissal, underpayment of wages, non-payment of
holiday pay, rest day pay and leave pay, the respondents being
employees of the latter. The labor arbiter decided the case in
favour of the respondents, and ordered that CAYCO and Olizon
pay respondents their respective earnings.
Following the order, a writ of execution was issued directing the
NLRC sheriff to collect from CAYCO and Olizon the amount of P
1,192,422.55.
After the notice of levy/sale on execution of personal
property was issued, a motor tanker was set to be sold at a public
auction. However, a certain Tanongon, filed a third party claim
before the labor arbiter, alleging that she was the owner of the

subject motor tanker, having acquired the same from Olizon on

July 29, 1997, for and in consideration of P1,100,000.00.
Issue:

w/n petitioner is a buyer in good faith and for value

Held:
No. the act of Olizon was a cavalier attempt to evade
payment of the judgment debt. She obviously got word of the
issuance of the Writ and disposed of the tanker to prevent its sale
on execution. Despite knowledge of these antecedents, petitioner
bought the tanker barely ten days before it was levied upon on
August 8, 1997.
It is not only the proximity in time that supports this
finding. Under Article 1387 of the Civil Code, alienations by
onerous title are presumed to be fraudulent when done by
persons against whom some judgment has been rendered or
some writ of attachment issued in any instance. We stress that in
the present case, the Writ of Attachment has been issued, the
levy already made and the property is still in the name of Olizon
and CAYCO.
A purchaser in good faith or an innocent purchaser for value
is one who buys property and pays a full and fair price for it at
the time of the purchase or before any notice of some other
persons claim on or interest in it. We emphasize that one cannot
close ones eyes to facts that should put a reasonable person on
guard and still claim to have acted in good faith. Petitioner should
have inquired whether Olizon had other unsettled obligations and
encumbrances that could burden the subject property. Any person
engaged in business would be wary of buying from a company
that is closing shop, because it may be dissipating its assets to
defraud its creditors.
Consolidated Rural Bank vs. CA
Facts:
The Madrid brothers were the registered owners of a lot
situated in San Mateo, Isabela.
The lot was then subdivided into several more. One of the
brothers sold part of his share to Gamiao and Dayag by virtue of
a Deed of Sale to which the other brothers did not object. The
deed was not registered but Gamiao and Dayag declared the
property for taxation purposes. The two sold the lot, the northern
part to a certain Teodoro dela Cruz and the southern part to a
Restituto Hernandez. The latter then donated his part to his

daughter while the formers children continued their possession of

the lot.
Meanwhile, the Madrid brothers, in a deed of sale, conveyed
all their rights and interests over the subject lot to Pacifico
Marquez. The deed was subsequently registered. He then
subdivided the lot into eight parts, four of which he mortgaged to
petitioner bank. The mortgage was then registered.
However Marquez defaulted in payment which caused the
foreclosure of the mortgaged properties and the lots were sold to
it as the highest bidder.
The Heirs-now respondents filed a case for reconveyance
and damages for the southern portion of the subject property
against Marquez and CRB.
The RTC handed down a decision in favor of Marquez. The
Heirs interposed an appeal with the CA, which upheld the claim of
the Heirs. Hence, the instant CRB petition.
Issue: w/n there is a double sale
Held:
The provision of Art 1544 is not applicable in the
present case. It contemplates a case of double or multiple sales
by a single vendor. More specifically, it covers a situation where a
single vendor sold one and the same immovable property to two
or more buyers. According to a noted civil law author, it is
necessary that the conveyance must have been made by a party
who has an existing right in the thing and the power to dispose of
it. It cannot be invoked where the two different contracts of sale
are made by two different persons, one of them not being the
owner of the property sold. And even if the sale was made by the
same person, if the second sale was made when such person was
no longer the owner of the property, because it had been
acquired by the first purchaser in full dominion, the second
purchaser cannot acquire any right.
In the case at bar, the subject property was not transferred
to several purchasers by a single vendor. In the first deed of sale,
the vendors were Gamiao and Dayag whose right to the subject
property originated from their acquisition thereof from Rizal
Madrid with the conformity of all the other Madrid brothers in
1957, followed by their declaration of the property in its entirety
for taxation purposes in their names. On the other hand, the
vendors in the other or later deed were the Madrid brothers but

at that time they were no longer the owners since they had long
before disposed of the property in favor of Gamiao and Dayag.
Dela Merced vs. GSIS
Facts:
Spouses Zulueta are the owners of several parcels of
land located at Pasig City.
Later on they obtained a loan from the Government Servie
Insurance System, as security for which they mortgaged the part
of their owned lands. It was expressly stipulated in the mortgage
deed that certain lots within shall be excluded from the mortgage
because they have been either previously sold to third parties or
donated to the government. Several additional loans were
obtained which caused to include other parts of the lot.
Meanwhile, the Zulueta spouses executed a contract to sell
whereby they undertook to sell to Francisco dela Merced and
Evarista Mendoza part of the subject lot. After full payment by
Col. dela Merced of the purchase price, a Deed of Absolute Sale
was executed by the Zuluetas in his favor.
Later, the Zulueta spouses mortgaged parts of the subject
properties which eventually was foreclosed. Upon consolidation of
GSISs ownership, Zuluetas name was cancelled, and an issuance
in the name of GSIS was given.[11]
Upon learning of the foreclosure, filed a complaint [12] praying
for the nullity of the GSIS foreclosure on the subject properties
on the ground that he was the owner of these lots at the time of
the foreclosure. Petioner argued that, due to the nullity of GSISs
foreclosure over the subject properties, it had no ownership right
that could be transferred.
Issue: w/n petitioners have preferential rights over respondents
Held: Petitioners rights of ownership over the properties in
dispute, albeit unregistered, are superior to the registered
mortgage rights of GSIS over the same. The execution and
validity of the contract to sell dated September 3, 1957 executed
by the Zulueta spouses, as the former subdivision owner, in favor
of Francisco dela Merced, are beyond cavil. There is also no
dispute that the contract to sell was entered into by the parties
before the third mortgage was constituted on October 15, 1957
by the Zuluetas in favor of GSIS on the property covered by TCT
No. 26105, which included the subject lots. Francisco dela Merced

was able to fully pay the purchase price to the vendor, who later
executed a deed of absolute sale in his favor. However, the
Zuluetas defaulted on their loans; hence, the mortgage was
foreclosed and the properties were sold at public auction to GSIS
as the highest bidder.
Therefore, the registered right of GSIS as mortgagee of the
property is inferior to the unregistered right of Francisco dela
Merced. The unrecorded sale between Francisco dela Merced as
the vendee of the property and the Zuluetas, the original owners,
is preferred for the same reason stated above.
San Lorenzo Development Corp. vs. CA
Facts:
Spouses Lu purportedly sold the two parcels of land to
respondent Pablo Babasanta. The latter made a downpayment of
as evidenced by a memorandum receipt issued of the same date.
Several other payments were made by respondent. He demanded
the execution of a Final Deed of Sale in his favor so he may effect
full payment of the purchase price; however, the spouses declined
to push through with the sale. They claimed that when he
requested for a discount and they refused, he rescinded the
agreement. Thus, Babasanta filed a case for Specific
Performance.
On the other hand, San Lorenzo Development Corporation
(SLDC) alleged that the two parcels of land involved, had been
sold to it in a Deed of Absolute Sale with Mortgage. It alleged
that it was a buyer in good faith and for value and therefore it
had a better right over the property in litigation.
Issue:
w/n the registration of the sale after the annotation of
the notice of lis pendens obliterate the effects of delivery and
possession in good faith
Held:
No. At the time both deeds were executed, SLDC had
no knowledge of the prior transaction of the Spouses Lu with
Babasanta. Simply stated, from the time of execution of the first
deed up to the moment of transfer and delivery of possession of
the lands to SLDC, it had acted in good faith and the subsequent
annotation of lis pendens has no effect at all on the consummated
sale between SLDC and the Spouses Lu.
A purchaser in good faith is one who buys 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 or interest of some other person in the property.
[40]
Following the foregoing definition, we rule that SLDC qualifies
as a buyer in good faith since there is no evidence extant in the
records that it had knowledge of the prior transaction in favor of
Babasanta. At the time of the sale of the property to SLDC, the
vendors were still the registered owners of the property and were
in fact in possession of the lands. Time and again, this Court has
ruled that a person dealing with the owner of registered land is
not bound to go beyond the certificate of title as he is charged
with notice of burdens on the property which are noted on the
face of the register or on the certificate of title
Carumba vs. CA
Facts:
Spouses Amado Canuto and Nemesia Ibasco, by virtue
of a deed of sale, sold a parcel of landin favour of the spouses
Amado Carumba and Benita Canuto. The referred deed of sale
was never registered notary, was not then an authorized notary
public in the place. It has also been expressly admitted Amado
Canuto is the older brother of the wife of Amado Carumba.
A complaint for a sum or money was filed against Amado
Canuto and Nemesia Ibasco by Santiago Balbuena, and a decision
was rendered in favor against them. The ex-officio Sheriff, issued
a "Definite Deed of Sal of the property now in question in favor of
Santiago Balbuena, which instrument of sale was registered. The
aforesaid property was declared for taxation purposes in the
name of Santiago Balbuena.
The Court of First instance nullified the sale in favor of the
judgment creditor, Santiago Balbuena. However upon appeal, the
appellate court declared that there having been a double sale of
the land subject of the suit Balbuena's title was superior to that of
the other; the execution being properly registered in good faith
and that the sale to Carumba was not recorded.
Issue:

w/n there is double sale

Held:
Under the invoked Article 1544 registration in good
faith prevails over possession in the event of a double sale by the
vendor of the same piece of land to different vendees, however it
does not apply to the present case, even if Balbuena, the later

vendee, was ignorant of the prior sale made by his judgment

debtor in favor of petitioner Carumba. The reason is that the
purchaser of unregistered land at a sheriff's execution sale only
steps into the shoes of the judgment debtor, and merely acquires
the latter's interest in the property sold as of the time the
property was levied upon.
But the deed of sale in favor of Canuto had been executed
earlier. Addiotnally, the fact that petitioner Carumba had taken
possession of the unregistered land sold, sufficed to vest
ownership on the said buyer. When the levy was made by the
Sheriff, therefore, the judgment debtor no longer had dominical
interest nor any real right over the land that could pass to the
purchaser at the execution sale. Hence, the latter must yield the
land to petitioner Carumba.