EDCA vs.
SPOUSES SANTOS ISSUE: Whether EDCA has been unlawfully deprived of the books because
Facts:
This case arose when a certain Professor Jose Cruz placed an order by
telephone with the petitioner company 406 books, payable on delivery.
- EDCA prepared the corresponding invoice and delivered the books
for which Cruz issued a personal check covering the purchase price
- Cruz then sold 120 of the books to PR Santos who, after verifying
the seller’s ownership from the invoice he showed her, paid him
1700
- EDCA then became suspicious over a second order placed by Cruz
even before clearing of his first check
o Inquired with De La Salle College where had claimed to be a
dean and was informed that there was no such person in its
employ
o It was also revealed that Cruz had no more account or
deposit with the bank against which he had drawn the
payment check.
- EDCA then went to the police, which set a trap and arrested Cruz.
- Investigation disclosed that his real name was Tomas dela Pena and
his sale of 120 of the books he had ordered from EDCA to PR.
- EDCA sought the assistance of police which forced their way into the
store of the PR and threated Santos with prosecution for buying
stolen property.
o They seized the books without warrant, loaded it to a van
belonging to EDCA and turned them over to EDCA
PR sued for the recovery of the books after demand for their return was
rejected by EDCA
- A writ of preliminary attachment was issued and EDCA, after initial
refusal, finally surrendered the books to the private respondents.
EDCA contends that PR have not established their ownership of the
disputed books because they have not yet even produced a receipt to prove
they had bought the stock.
- EDCA argues that it was unlawfully deprived of the books, because
the impostor acquired no title to the books that he could have
validly transferred to the private respondents. Its reason is that as
the payment check bounced for lack of funds, there was a failure of
consideration that nullified the contract of sale between it and Cruz
the check issued by the impostor in payment therefor was dishonored?
Ruling:
The contract of sale is consensual and is perfected once agreement is
reached between the parties on the subject matter and the consideration.
According to the Civil Code:
ART. 1475. The contract of sale is perfected at the moment there is a
meeting of minds upon the thing which is the object of the contract and
upon the price.
From that moment, the parties may reciprocally demand performance,
subject to the provisions of the law governing the form of contracts.
xxx xxx xxx
ART. 1477. The owner ship of the thing sold shall be transferred to the
vendee upon the actual or constructive delivery thereof.
ART. 1478. The parties may stipulate that ownership in the thing shall not
pass to the purchaser until he has fully paid the price.
It is clear from the above provisions, particularly the last one quoted, that
ownership in the thing sold shall not pass to the buyer until full payment of
the purchase price only if there is a stipulation to that effect. Otherwise, the
rule is that such ownership shall pass from the vendor to the vendee upon
the actual or constructive delivery of the thing sold even if the purchase
price has not yet been paid.
Non-payment only creates a right to demand payment or to rescind the
contract, or to criminal prosecution in the case of bouncing checks. But
absent the stipulation above noted, delivery of the thing sold will effectively
transfer ownership to the buyer who can in
turn transfer it to another.
Actual delivery of the books having been made, Cruz acquired ownership
over the books which he could then validly transfer to the private
respondents. The fact that he had not yet paid for them to EDCA was a
matter between him and EDCA and did not impair the title acquired by the
private respondents to the books.
One may well imagine the adverse consequences if the phrase "unlawfully WHEREFORE, the challenged decision is AFFIRMED and the petition is
deprived" were to be interpreted in the manner suggested by the petitioner. DENIED, with costs against the petitioner.
A person relying on the seller's title who buys a movable property from him
would have to surrender it to another person claiming to be the original
owner who had not yet been paid the purchase price therefor. The buyer in
the second sale would be left holding the bag, so to speak, and would be
compelled to return the thing bought by him in good faith without even the
right to reimbursement of the amount he had paid for it.

It bears repeating that in the case before us, Leonor Santos took care to
ascertain first that the books belonged to Cruz before she agreed to
purchase them. The EDCA invoice Cruz showed her assured her that the
books had been paid for on delivery. By contrast,
EDCA was less than cautious — in fact, too trusting — in dealing with the
impostor. Although it had never transacted with him before, it readily
delivered the books he had ordered (by telephone) and as readily accepted
his personal check in payment. It did not verify his identity although it was
easy enough to do this. It did not wait to clear the check of this unknown
drawer. Worse, it indicated in the sales invoice issued to him, by the printed
terms thereon, that the books had been paid for on delivery, thereby
vesting ownership in the buyer.

Surely, the private respondent did not have to go beyond that invoice to
satisfy herself that the books being offered for sale by Cruz belonged to him;
yet she did. Although the title of Cruz was presumed under Article 559 by
his mere possession of the books, these being movable property, Leonor
Santos nevertheless demanded more proof before deciding to buy them.

It would certainly be unfair now to make the private respondents bear the
prejudice sustained by EDCA as a result of its own negligence. We cannot
see the justice in transferring EDCA's loss to the Santoses who had acted in
good faith, and with proper care, when they bought the books from Cruz.

While we sympathize with the petitioner for its plight, it is clear that its
remedy is not against the private respondents but against Tomas de la Peña,
who has apparently caused all this trouble. The private respondents have
themselves been unduly inconvenienced, and
for merely transacting a customary deal not really unusual in their kind of
business. It is they and not EDCA who have a right to complain.
PHILIPPINE SUBURBAN DEVELOPMENT CORPORATION vs. THE AUDITOR
GENERAL, PEDRO GIMENEZ
Facts:
President approved in principle the acquisition by the People’s Homesite
and Housing Corporation of the unoccupied portion of the Sapang Palay in
Sta. Maria, Bulacan for relocating squatters who desire to settle north of
Manila, and of another area either in Las Pinas or Paranaque, Rizal, or
Bacoor, Cavite for those who desire to settle south of Manila.
- Was to be financed through the flotation of bonds under the charter
of the PHHC in the amount of 4.5 million, the same to be absorbed
by the GSIS
- President, through the Executive Secretary, informed the PHHC of
such approval by letter bearing the same date
The Board of Directors of PHHC passed a resolution authorizing the
purchase of the unoccupied portion of the Sapang Palay Estate subject to
the following conditions:
- Confirmation by the OEC and President of the purchase price shall
first be secured pursuant to OEC Memorandum Circular
- The portion of the estate to be acquired shall first be defined and
delineated
- President shall first provide the PHHC with the necessary funds to
effect the purchase and development of this property from the
proposed 4.5 million bond issue to be absorbed by the GSIS
- The vendor shall agree to the dismissal with prejudice of Civil Case
President authorized the floating of bonds under the republic acts in order
to finance the acquisition by the PHHC of the entire Sapang Palay Estate.
Petitioner Philippine Suburban DevCorp, as the owner of the unoccupied
portion of the Sapang Palay Estate and the PHHC entered into a contract
embodied in a public instrument entitled Deed of Absolute Sale whereby
the former conveyed unto the latter the two parcels of land
abovementioned, with a condition that PSDC should register the deed of
absolute sale and secure a new title in the name of PHHC before the latter
can be compelled to pay the purchase price.
Prior to the signing of the deed, PHHC acquired the possession of the
property, with PSDC’s consent, to enable PHHC to proceed immediately with
the construction of roads in the new settlement and to resettle the
squatters and flood victims in Manila.
The Provincial Treasurer requested PHHC to withhold 30K from the
purchase price to be paid by it to PSDC as the realty tax due on the property
involved.
PSDC, through PHHC, paid under protest and thereafter requested to the
Sec of Finance to order a refund, claiming that it ceased to be the owner of
the land in question upon the execution of the Deed of Absolute Sale citing
Article 1498 of NCC
- Said request was denied for under LRA PSDC is still the owner of the
property until the deed of sale has been actually registered
Respondent PHHC argues that the presumptive delivery of property under
A1498 does not apply because of the requirement in the contract that the
sale shall first be approved by the Auditor General that PSDC should first
register the deed and secure a new title in the name of PHHC.
Issue: Who is liable for the payment of the real property tax?
Ruling: It is the buyer, PHHC.
There is no question that PSDC had actually placed PHHC in possession and
control over the thing sold, even before the date of the sale
- The condition that PSDC should first register the deed of sale….did
not preclude the transmission of ownership.
- In the absence of an express stipulation to the contrary, the
payment of the purchase price of the goods is not a condition
precedent to the transfer of title to the buyer, but title passes by
the delivery of the goods.
We fail to see merit in PHHC’s insistence that it PSDC still remains to be the
owner of the property until the deed of sale is actually registered with the
Office of RD because the land sold is registered under the Torrens System.
- The constant doctrine has been that, as between the parties to a
contract of sale, registration is not necessary to make it valid and
effective, for actual notice is equivalent to registration.
- The registration requirement is intended to protect the buyer from
the buyer against claims of third persons arising from subsequent
 alienations by the vendor, and is certainly not necessary to give
effect to the deed of sale, as between the parties to the contract
- In the case at bar, no rights of third persons are involved for it is
undisputed that the property is in possession of the vendee prior to
the execution of the Deed of Absolute Sale.

Since the delivery of possession, coupled with the execution of the deed of
absolute sale, had consummated the sale and transferred the title to PHHC.
- Payment of real estate tax after such transfer is the responsibility of
the purchaser.
- However, PHHC as a government entity, is not subject to real
property tax.
SKUNAC CORP vs. SYLLANTENG
Facts:
R Syllanteng base their claim of ownership over the subject lots a DOAS
executed in their favor by their Mother, Emerenciana.
- Further allege that Emerenciana acquired the lots from the late Luis
and then sold the lots to Syllanteng
P Skunac claim that a certain Romeo Pujalte who was declared as the sole
heir of Luis, caused the reconstitution of the Mother Title resulting to its
cancellation and the issuance of a certificate in his favor.
- Romeo then allegedly sold the lots to Skunas
Resp contend that they have a better right to the lots in question because
the transactions conveying the same to them preceded those claimed by P
Skunac as source of the latter’s title.
- That P could not be considered innocent purchasers because they
had prior notice of the previous transactions as stated in the memo
of encumbrances annotated on the titles.
Pet Skunac maintain that R acquired the lots under questionable
circumstances it appearing that there was no copy of the DOAS between
Emerenciana and Luis with ORD.
Issues:
1. WON respondent’s predecessor-in-interest, Emerenciana, validly
acquired the subject lots from Luis
2. WON respondents, in turn, validly acquired the same lots from
Emerenciana?
Ruling: YES but the court takes exception the to the application of A1544 of
NCC (CA and RTC)
A1544 is not applicable in this case because the subject lots were sold to
petitioners and respondents by two different vendors – Emerenciana and
Romeo Pujalte.
Nonetheless, court agrees that Emerenciana’s acquisition of the subject lots
from Luis and her subsequent sale of the same to respondent Syllanteng are
valid and lawful.
Petitioners insist that they have valid title over the subject properties. They
trace their respective titles from that of Romeo. Romeo, in turn, derives his
supposed ownership of and title over the subject lots from his claim that he
is the sole heir of the estate of his alleged PIN, Luis. Evidence however,
shows that Romeo never became the owner of the subject properties for
two reasons.
1. The lots were already sold by Luis during his lifetime, thus these
lands no longer formed part of his estate when he died.
2. Even granting that the lots formed part of the estate of Luis, it was
proven in a separate case that Romeo is not his heir.
a. Romeo never acquired any right whatsoever over the
subject lots, even if he was able to subsequently obtain a
title in his name.
Stretching petitioners' contention a bit further, granting that both
petitioners and respondents bought the disputed lots in good faith by
simply relying on the certificates of the sellers, and subsequently, acquiring
titles in their own names, respondents' title shall
still prevail. It is a settled rule that when two certificates of title are issued to
different persons covering the same land in whole or in part, the earlier in
date must prevail, and, in case of successive registrations where more than
one certificate is issued over the land,
the person holding a prior certificate is entitled to the land as against a
person who relies on a subsequent certificate. The titles of respondents,
having emanated from an older title, should thus be upheld.
MANIGQUE-STONE vs. CATTLEYA
Ruling:
Facts:
Cattleya entered into a Contract of Conditional Sale with Tecson Spouses
covering 9 parcels of land at Bohol, including the subject property. They
also executed a Deed of Absolute Sale covering the entire property.
- However, neither the Contract of Conditional Sale nor Deed of
Absolute Sale could be annotated on the certificate of title covering
the subject property because the then Registry of Deeds refused to
annotate both deeds because it would be improper to so do so for
there was a writ of attachment annotated on the certificate.
- Soon, the WOA was lifted after the case reached an amicable
settlement but Cattleya could still not successfully have the
registration of the sale.
o As a result, he could not have title of the property
transferred to his name also because the owner’s copy of
the transfer certificate was in possession of the Tecson
spouses and the latter claims that it has been destroyed in a
fire.
1. No. Sec 7, Article 12 of the 1987 Consti disqualifies aliens from
acquiring private lands.
- Taina herself admitted that it was really Mike who paid with his own
funds the subject lot; hence, Mike was the real purchaser or buyer.
They wanted to circumvent the prohibition that’s why the property
was placed under Taina’s name.
2. Given that the sale by Tecson spouses to Taina as Mike’s dummy
was totally abhorrent and repugnant to the Constitution and is thus,
void ab inition, it stands to reason that there can be no double sale
to speak of here.
- In the first place, there is no double sale to speak of. Art 1544,
which provides the rule on double sale, applies only to a situation
where the same property is validly sold to different vendees. In this
case, there is only one sale to advert to, that between the Spouses
Tecson and respondent (Cattleya)

However, such claim turned out to be false. A copy of the TCT had in fact
been presented by Taina (P) along with a DOS executed by Tecson spouses
in favor of Taina.
- It appears that Taina’s common-law husband, Mike Stone, decided
to buy a portion of the beach lot in Bohol and they met Tecson who
agreed to sell them a portion of the beach.
- A DOS covering the subject portion was executed in favor of Taina.

Cattleya instituted against Taina a civil action for quieting of title and/or
recovery of ownership and cancellation of title with damages.

Issues:
1. Whether the sale of land by the Tecson spouses to Mike, a foreigner
or alien, although ostensibly made in Taina’s name, was valid,
despite the constitutional prohibition against the sale of lands in the
Philippines to foreigners or aliens?
2. Whether Art 1544, the article which governs double sales, controls
this case?
EDU vs. GOMEZ

Facts:
A 1968 model Volkswagen, bantam car, allegedly owned by Walter Bala,
under whose name it was originally registered was reported to the Office of
the Commission of Land Transportation as stolen from the residence of Bala.
- The anti-carnapping unit recognized the subject car in the
possession of Lucila Abello and immediately seized and impounded
the car as stolen property.
- Pet Edu, commissioner, seized the car

Resp Abello filed a complaint for replevin with damages, impleading

petitioners and praying for judgment, among others, to order sheriff or
other officer of the court to take the said property (vehicle) into his custody
and to dispose of it in accordance with law.

CFI ruled in favor of Abella and found that the car in question was acquired
by Abello by purchase from it registered owner, Marcelino Guansing under
the notorial deed of sale and that Abello has been in possession thereof
since then until it was seized from her by petitioners who acted in belief
that it is the car which was originally registered in the name of Bala.

There is no merit in the petition considering that the acquirer or the

purchaser in good faith of a chattel of movable property is entitled to be
respected and protected in his possession as if he were the true owner
thereof until a competent court rules otherwise. In the meantime, as the
true owner, the possessor in good faith cannot be
compelled to surrender possession nor to be required to institute an action
for the recovery of the chattel, whether or not an indemnity bond is issued
in his favor. The filing of an information charging that the chattel was
illegally obtained through estafa from its true owner by the transferor of the
bonafide possessor does not warrant
disturbing the possession of the chattel against the will of the possessor.
MANLAN vs. BELTRAN
Facts:
The subject property is originally owned by Orbetas.
Spouses Manlan (P) bought a portion of the subject property from Manuel
Orbeta. After receiving the advance payment, Orbeta allowed petitioners to
occupy the land.
Orbetas (except Manuel, +) executed a DOAS conveying a portion of the
same property to Spouses Beltran (R)
- Beltran then bought the remaining portion from the Orbetas.
- Consequently, the subject property was registered in R’s name
under a TCT
Respondents Beltran demanded Spouses Manlan to vacate the property in
dispute, but to no avail. They brought the matter to brgy lupon but
conciliation failed so respondents filed an action for quieting of title and
recovery.
- R claimed to be the absolute owners of the property having bought
it from Orbetas.
RTC ruled in favor of Sps Beltran, ruling that even though there was a defect
in the DOAS, it did not affect the legality of the conveyance of the land to
the respondents.
- CA affirmed, ruling that the rule on double sale does not apply here
since the lands in dispute are not the same.
- CA explained that there is double sale only when the same
- property is validly sold by one vendor to different vendees. It ruled
that Lot 1366-E was not transferred by a single vendor to several
purchasers considering that respondents bought the contested lot
from the original co-owners, the Orbetas, while petitioners bought
the same contested property from Manuel Orbeta.
Petitioners insist that this is a plain case of double sale. They argue that they
bought in good faith the portion, while the respondents bought the subject
property only in 1990. Stressing that they have a better right on the land.
Issue: WON the rules on double sale under A1544 are applicable?
Ruling:
No, A1544 is not applicable.
In fine, there is double sale when the same thing is sold to different vendees
by a single vendor. It only means that A1544 has no application in cases
where the sales involved were initiated not just by one vender but by
several vendors.
Here, P and R acquired the property from different transferors.
a. The DOAS revealed that all of the original co-owners, except for
Manuel and Serbio who are already deceased, sold the subject lot to
R Beltran.
b. The receipt and PN reveal that only Manuel sold the lot to
petitioners. However, nothing on the records show that Manuel was
duly authorized by the other co-owners to sell the subject property.
*Petitioners maintain that the DOAS cannot be a source of rights for the
respondents because the notarization was defective. They contend that
when the DOAS was notarized, one of its signatories was already dead.
- In other words, the failure to follow the proper form
prescribed by Article 1358 of the Civil Code does not render the acts or
contracts invalid. Where a contract is not in the form prescribed by law, the
parties can merely compel each other to observe that form, once the
contract has been perfected.
- The defective notarization of the DOAS does not affect the validity
of the transaction between the Orbetas and respondents. It has no
effect on the transfer of rights over the subject property.
- A sale of a real property that is not consigned in a public instrument
is valid and binding among the parties.
TEN FORTY REALTY & DEV’T CORP vs. CRUZ
Facts:
A complaint for ejectment was filed by P Ten Forty Realty against R Cruz,
alleging that P is the true and absolute owner of the land, having acquired
the same from Barbara Galino by virtue of a DOAS.
- Sale was acknowledged by Barbara through a ‘Katunayan’; payment
of CGT for the transfer was evidenced by a certification issued by
BIR
- P found out that Babara sold the same property to Cruz, who
immediately occupied the property and which occupation was
merely tolerated by petitioner.
- A demand letter was sent to R Cruz to vacate and pay reasonable
amount for the occupation of the same, however, Cruz, refused to
vacate the premises.
Respondent filed a counterclaim contending the following:
- Petitioner is not qualified to own the residential lost in dispute,
being a public lang
- According to Barbara, she did not sell her house and lot to P but
merely obtained a loan from Lorenzana, president of the
corporation.
- No allegation as to the prior possession of petitioner of the subject
land wherein Barbara was the actual possessor when it was sold and
vacated the premises in favor of the respondent.
Issue: Whether delivery occurred upon the execution of the DOAS to
warrant possession over the subject land?
Ruling: No.
With respect to incorporeal property, A1498 lays down the general rule: the
execution of a public instrument shall be equivalent to the delivery of the
things that is the object of the contract if, from the deed, the contrary does
not appear or cannot be clearly inferred.
However, Ownership is transferred not by contract but by actual delivery,
the NCC did not indicate that the execution of Deed of Sale is a conclusive
presumption of delivery of possession of real estate. SC held that the
execution of public instrument gives rise only to a prima facie presumption
of delivery and such presumption may be destroyed when actual delivery is
not effected because of a legal impediment.
- It could be negated by the failure of the vendee to take actual
possession of the land sold.
Petitioner Ten Forty did not occupy the property from the time it was sold
to the corporation or any time thereafter. Galino remained in possession of
the subject land and later vacated it after the sale to Cruz.
*DOUBLE SALE
Barbara allegedly sold the property in question to petitioner and
subsequently to respondent.
- P argues that being the 1st buyer, it has a better right to own the
realty.
- However, P has not been able to establish that its DOAS was
recorded in the RD. Its claim of an unverified notation of the DOAS
is not equivalent to registration.
In the absence of the required inscription, the law gives the preferential
right to the buyer who in good faith is in possession.
 In determining who is first in possession, certain basis parameters
have been established by jurisprudence.
1. The possession mentioned in A1544 includes not only material but
also symbolic possession
2. Possessors in GF are those who are not aware of any flaw in their
title or mode of acquisition.
3. Buyers of real property that is in the possession of persons other
than the seller must be wary – they must investigate the rights of
the possessors.
4. Good faith is always presumed; upon those who allege bad faith on
the part of the possessors rests the burden of proof.
Earlier, we have ruled that the subject property had not been delivered to
petitioner; hence it did not acquire possession either materially or
symbolically. As between the two buyer, therefore, respondent was first in
actual possession of the property.
SPOUSES OCCENA vs. ESPONILLA
Facts:
Subject property was originally owned by Tordesillas Sps, after their death,
the lot was inherited by their children & grandchildren.
- Three years later, the GC executed a deed of sale over a 748 portion
of the lot in favor of Morales [R] and the notarized deed also
attested that the lot sold were their share in the estate of their
deceased parents.
Alberta possessed the lot as owner, constructed a house.
- Arnold (GC) borrowed the OCT from Alberta and he executed an
affidavit acknowledging receipt of the OCT in trust and undertook to
return it free from changes.
- Arnold and Angela(C), without the knowledge of Alberta, executed a
deed of extrajudicial settlement declaring the two of them as the
only co-owners of the entire lot, without acknowledging the portion
they sold to Alberta.
- When Angela died, Arnold executed an affidavit declaring himself as
the sole heir of Angela.
- Alberta died. Her nieces (only heirs) succeeded in the ownership of
the 748 lot. They kept asking Arnold to deliver the title but the latter
failed.
When Alberta’s heir left for the States, Arnold used the OCT that he
borrowed and subdivided the entire lot into three sublots and registered
them all under his name,
- He sold 2 of the lots to Sps Occena which included the 748 portion
that was previously sold to Alberta Morales.
- A DOAS was executed and titles were transferred to the Sps.
After the death of Arnold, the heirs of Alberta found out about the sale to
Sps Occena. They filed a case for annulment of sale against the sps.
- Sps claimed that they were buyers in good faith as the titles to the
lots were free from liens or encumbrances.
- Claimed the defenses of laches and prescription.
Issue: WON the Occena spouses were purchasers in good faith?
No.
Article 1544 of the New Civil Code provides that in case an immovable
property is sold to different vendees, the ownership shall belong:
(1) to the person acquiring it who in good faith first recorded it in the
Registry of Property;
(2) should there be no inscription, the ownership shall pertain to the person
who in good faith was first in possession; and,
(3) in the absence thereof, to the person who presents the oldest title,
provided there is good faith.
In the case at bar, we find that petitioner-spouses failed to prove good faith
in their purchase and registration of the land.
- A purchaser in good faith and for value is one who buys property
without notice that some other person has a right to or interest in
such property and pays its fair price before he has notice of the
adverse claims and interest of another person in the same property.
- So it is that the “honesty of intention” which constitutes good faith
implies a freedom from knowledge of circumstances which ought to
put a person on inquiry.
- At the trial, Tomas Occeña admitted that he found houses built on
the land during its ocular inspection prior to his purchase. He relied
on the representation of vendor Arnold that these houses were
owned by squatters and that he was merely tolerating their
presence on the land.
o Tomas should have verified from the occupants of the land
the nature and authority of their possession instead of
merely relying on the representation of the vendor that
they were squatters, having seen for himself that the land
was occupied by persons other than the vendor who was
not in possession of the land at that time.
- The settled rule is that a buyer of real property in the possession of
persons other than the seller must be wary and should investigate
the rights of those in possession. Without such inquiry, the buyer
can hardly be regarded as a buyer in good faith and cannot have any
right over the property.
The evidence of the private respondents show that when Tomas Occeña
conducted an ocular inspection of the land prior to the second sale, Abas,
the caretaker of the house which Alberta Morales built on the land,
personally informed Tomas that the lot had been previously sold by the
same vendor Arnold to Alberta Morales. With this information, the
Occeñas were obliged to look beyond the title of their vendor and make
further inquiries from the occupants of the land as to their authority and
right to possess it.

However, despite this information about a prior sale, the Occeñas

proceeded with the purchase in haste. They did not inquire from Abas how
they could get in touch with the heirs or representatives of Alberta to verify
the ownership of the land. Neither do the records reveal that they exerted
effort to examine the documents pertaining to the first sale. Having
discovered that the land they intended to buy was occupied by a person
other than the vendor not in actual possession thereof, it was incumbent
upon the petitioners to verify the extent of the occupant’s possessory rights.
The Occeñas did nothing and chose to ignore and disbelieve Abas’
statement.

Indeed, the general rule is that one who deals with property registered
under the Torrens system need not go beyond the same, but only has to rely
on the title. He is charged with notice only of such burdens and claims as are
annotated on the title.
- However, this principle does not apply when the party has actual
knowledge of facts and circumstances that would impel a
reasonably cautious man to make such inquiry or when the
purchaser has knowledge of a defect or the lack of title in his vendor
or of sufficient facts to induce a reasonably prudent man to inquire
into the status of the title of the property in litigation. One who falls
within the exception can neither be denominated an innocent
purchaser for value nor a purchaser in good faith.
SPRING HOMES SUBDIVISION vs. SPS TABLADA
Petitioners Spouses Lumbres entered into a Joint Venture Agreement with
Spring Homes Subdivision Co for the development of several parcels of land.
For reasons of convenience and in order to facilitate the acquisition of
permits and licenses in connection with the project, the Spouses Lumbres
transferred the titles to the parcels of land in the name of Spring Homes.
Spring Homes entered into a Contract to Sell with respondents Spouses
Tablada, Jr. for the sale of a parcel of land located at Spring Homes
Subdivision. For failure of Spring Homes to comply with the JVA, the
Spouses Lumbres filed a complaint for Collection of Sum of Money.
Unaware of the pending action, the Spouses Tablada began constructing
their house and occupied the same. Spring Homes executed the first Deed
of Absolute Sale in favor of the Spouses Tablada. The title over the subject
property, however, remained with Spring Homes for its failure to cause the
cancellation of the TCT and the issuance of a new one in favor of the
Spouses Tablada, who only received a photocopy of said title.
On the complaint of the Spouses Lumbres, without waiting for trial, the
Spouses Lumbres and Spring Homes entered into a Compromise Agreement,
wherein Spring Homes conveyed the subject property and others to the
Spouses Lumbres. Sps Lumbred (P) were allowed to collect receivables
arising from the conditional sales of properties.
- The Spouses Lumbres sent demand letters to the Spouses Tablada,
and upon failure of the latter to pay, caused the cancellation of the
Contract to Sell executed by Spring Homes in favor of Sps Tablada.
- A second Deed of Sale was executed between Spring Homes and sps
Lumbres, in favor of the Spouses Lumbres.
Sps Tablada filed a complaint for nullification of the second DOAS and the
issuance of a new title in Sps Lumbres.
- As a result of the double sale
First: Spouses Tablada entered into a Contract to Sell with Spring Homes,
which was followed by a DOAS
Second: Sps Lumbres and Spring Homes executed a DOAS over the same
property
Sps Lumbres persistently insist that the DOAS executed by the Sps Tablada is
void for having no valuable consideration. (They allegedly failed to pay rest
of the purchase price.
SC found out that there is no factual basis for the Sps Lumbres to claim that
since the Sps Tablada had an outstanding balance, the sale between Spring
Homes and Sps Tablada was void, and consequently, they were authorized
to cancel such sale. Court found out that the consideration that appeared in
the doas was only for 157,500 and the Sps Tablada even paid an amont
bigger than that. Thus, the first doas executed in favor of Sps Tablada and
Spring homes is valid and with sufficient consideration.
ISSUE: Who, as between the two spouses, properly acquired ownership over
the subject property?
RULING:
The principle of primus tempore, potior jure (first in time, stronger in right)
gains greater significance in case of a double sale of immovable property.
Thus, the Court has consistently ruled that ownership of an immovable
property which is the subject of a double sale shall be transferred:
(1) to the person acquiring it who in good faith first recorded it in
the Registry of Property;
(2) in default thereof, to the person who in good faith was first in
possession; and
(3) in default thereof, to the person who presents the oldest title,
provided there is good faith.
The requirement of the law then is two-fold: acquisition in good faith and
registration in good faith.
In the case at bar, the first buyers of the subject property, the Spouses
Tablada, were able to take said property into possession but failed to
register the same because of Spring Homes' unjustified failure to deliver the
owner's copy of the title
whereas the second buyers, the Spouses Lumbres, were able to register the
property in their names. But while said the Spouses Lumbres successfully
caused the transfer of the title in their names, the same was done in bad
faith.
The Spouses Lumbres cannot claim good faith since at the time of the
execution of their Compromise Agreement with Spring Homes, they were
indisputably and reasonably informed that the subject lot was previously
sold to the Spouses Tablada.
- They were already aware that Sps Tablada had constructed a house
thereon and were in physical possession.
- They cannot claim GF for the simple reason that the first doas was
not annotated at the back of the subject property’s title.

Indeed, knowledge gained by the first buyer of the second sale cannot
defeat the first buyer's rights except only as provided by law, as in cases
where the second buyer first registers in good faith the second sale ahead of
the first. Such knowledge of the first buyer does bar her from
availing of her rights under the law, among them, first her purchase as
against the second buyer.

But conversely, knowledge gained by the second buyer of the first sale
defeats his rights even if he is first to register the second sale, since such
knowledge taints his prior registration with bad faith.

Accordingly, in order for the Spouses Lumbres to obtain priority over the
Spouses Tablada, the law requires a continuing good faith and innocence or
lack of knowledge of the first sale that would enable their contract to ripen
into full ownership through prior registration.
- But from the very beginning, the Spouses Lumbres had already
known of the fact that the subject property had previously been
sold to the Spouses Tablada, by virtue of a valid Deed of Absolute
Sale.
- In fact, the Spouses Tablada were already in possession of said
property and had even constructed a house thereon.

Clearly then, the Spouses Lumbres were in bad faith the moment they
entered into the second Deed of Absolute Sale and thereafter registered the
subject property in their names.

For this reason, the Court cannot, therefore, consider them as the true and
valid owners of the disputed property and permit them to retain title
thereto.