Addison v.

Felix
GR No. 12342. August 3, 1918. J. Fisher
Petitioner: A. A. Addison
Respondents: Marciana Felix and Balbino Tioco
Summary:

Facts: Addison sold to Marciana 4 parcels of land in a public instrument. Addison filed a claim
for the remaining installments not paid. Marciana countered those parcels of land were not
delivered to her because 2 of the parcels of land cannot be designated and the other 2 were
mostly occupied by third parties. She asks for the rescission of the contract, as stipulated in the
deed of sale. 

Ruling: The mere execution of the instrument was not a fulfillment of the vendor's obligation to
deliver the thing sold, and that from such nonfulfillment arises the purchaser's right to demand,
as Marciana has demanded, the rescission of the sale and the return of the price.

Doctrine: It is the duty of the vendor to deliver the thing sold. Symbolic delivery by the
execution of a public Instrument is equivalent to actual delivery only when the thing sold is
subject to the control of the vendor.

Facts:
1. June 11, 1914: A sale of 4 parcels of land was made in a public instrument to Marciana
Felix.
2. She paid the sum of P3,000 at the time of execution of the deed. 1 st Installment of
P2,000 to be paid on July 15,1914, and 2nd installment of P5,000 thirty days after the
issuance to her of a certificate of title under the Land Registration Act.
3. Also stipulated in the contract: "within one year from the date of the certificate of title in
favor of Marciana Felix, this latter may rescind the present contract of purchase and
sale” in which case:
o Marciana Felix shall be obliged to return to me, A. A. Addison, the net value of all
the products of the four parcels sold
o and I shall be obliged to return to her, Marciana Felix, all the sums that she may
have paid me, together with interest at the rate of 10 per cent per annum."
2. In January 1915, Addison filed a suit in the CFI of Manila to compel Marciana Felix to
pay the 1st installment of P2000
3. Marciana answered the complaint that Addison failed to deliver the parcels of land
despite demand. She prays for the rescission of the contract of purchase and sale and
the refund of the P3000 paid by her. Plus interest and indemnity for damages
4. Addison was not able to designate 2 parcels of the land sold, and the other two, more
than 2/3 was occupied by the Villafuertes (Juan, Leon, and Julio) who claim to be the
owners of said land
5. Marciana’s application with the Land Court for the 4 parcels of land was dismissed.
6. The trial court ruled in favor of Marciana on the basis of stipulation in the agreement that
she may rescind the contract as she was not able to register the land. 
Issue: WON the sale thru the public instrument is equivalent to the delivery of the thing sold.
NO
Held:
1. Plaintiff did not deliver the thing sold. Addison was not able to show the 2 parcels of land
to the purchaser, the other two, more than 2/3 of the area was in possession of a 3 rd
person
2. Art. 1462 of the Civil Code (Art. 1497 of the NCC) imposes upon the vendor the
obligation to deliver the thing sold. The thing is considered to be delivered when it is
placed "in the hands and possession of the vendee."
3. the execution of a public instrument is equivalent to the delivery of the thing which is the
object of the contract, but, in order that this symbolic delivery may produce the effect of
tradition, it is necessary that the vendor shall have had such control over the thing sold
that, at the moment of the sale, its material delivery could have been made.
4. It is not enough to confer upon the purchaser the ownership and the right of possession.
The thing sold must be placed in his control.
5. But if, notwithstanding the execution of the instrument, the purchaser cannot have the
enjoyment and material tenancy of the thing and make use of it himself or through
another in his name, because such tenancy and enjoyment are opposed by the
interposition of another will, then fiction yields to reality — the delivery has not been
effected.
6. The mere execution of the instrument was not a fulfillment of the vendor's obligation to
deliver the thing sold, and that from such nonfulfillment arises the purchaser's right to
demand, as she has demanded, the rescission of the sale and the return of the price.

2. Cheng vs. Genato

Dec 29, 1998 | Martinez, J. | Delivery of the Thing Sold
PETITIONER: Richardo Cheng
RESPONDENTS: Ramon Genato and Ernasto Da Jose & Socorro Da Jose

SUMMARY
Facts: Genato acknowledged the receipt of sum as partial payment but did not provide further
stipulations as to balance or manner of payment.
Ruling: No sale since the requisites were not expressed in the receipt. 

DOCTRINE: Although the Da Jose spouses, as first buyers, knew of the second transaction it
will not bar them from availing of their rights granted by law. Basis? Primus tempore, portior jure
(first in time, stronger in right)

Facts:
 Genato owned 2 parcels of land in Paradise Farms
 He agreed with the Da Jose spouses to enter into a Contract to Sell over the said
parcels. This was embodied in a public instrument annotated to the certificates of title
 They asked for and were granted an extension for the payment of the purchase price
 Unknown to them, Genato dealt with Cheng regarding the lot. Executed an Affidavit to
annul the Contract to Sell. Appraised the latter of his decision to rescind the sale, and
received a down payment from Cheng upon the guarantee that said Contract to Sell will be
annulled. 
 Genato and the spouses met at the RD and again agreed to continue the contract with
them.
 He advised Cheng of his decision; Cheng countered that the sale had already been
perfected
 Cheng executed an Affidavit of Adverse Claim, had it annotated to the TCTs, and sued
for Specific Performance. 

Issue: W/N the Da Jose spouses have a valid title?

Ruling:
 Both agreements involve a contract to sell, which makes Art 1544 inapplicable since
there was no transfer of ownership nor a sales transaction that took place.
 In a Contract to Sell, payment is a positive suspensive condition. Failure of which is not
a breach but a situation that prevents the obligation from acquiring obligatory force.
 Although the Da Jose spouses, as first buyers, knew of the second transaction it will not
bar them from availing of their rights granted by law, among them, to register first their
agreement as against the second buyer.
Basis: (1) Primus tempore, portior jure (first in time, stronger in right); and (2) registered
before petitioner’s intrusion.
 Cheng cannot be considered to have acted on good faith as he had knowledge of prior
transaction 
 Assuming that the receipt, Exh. "D," is to be treated as a conditional contract of sale, it
did not acquire any obligatory force since it was subject to suspensive condition that the
earlier contract to sell between Genato and the Da Jose spouses should first be cancelled or
rescinded — a condition never met, as Genato, to his credit, upon realizing his error,
redeemed himself by respecting and maintaining his earlier contract with the Da Jose
spouses. In fact, a careful reading of the receipt, Exh. "D," alone would not even show that a
conditional contract of sale has been entered by Genato and Cheng. 
 When the requisites of a valid contract of sale are lacking in said receipt, therefore the
"sale" is neither valid or enforceable

FUDOT v. CATTLEYA LAND, INC.

G.R. No. 171008, September 13, 2007
TINGA, J.:

 
SUMMARY: Cattleya land purchased 9 lots to spouses Tecsons through Deed of Conditional
Sale and subsequently, Deed of Absolute Sale. Both Deed of Conditional and absolute sale
were registered in Register of Deeds but the latter refused due to existing notice of attachment.
The attachment was eventually canceled by compromise agreement.
Petitioner Fudot presented for registration of the property. Register of Deeds registered the
property in favor of petitioner.
ISSUE:  Whether or not Fudot has a better right as the first buyer of the subject property in
accordance with Article 1544 of the Civil Code on double sale.
RULING: The sale between Fudot and Spouses Tecson is void. No double sale due to forgery
of signature of Asuncion. Respondent Cattleya Land, who recorded first in the Register of
Deeds without knowledge of the previous sale,
DOCTRINE: ARTICLE 1544 - Should it be immovable property, the ownership shall belong to
the person acquiring it who in good faith first recorded it in the Registry of Property.

 
FACTS:
In July 1992, respondent-Cattleya Land, Inc. asked someone to check, on its behalf, the
titles of nine (9) lots, the subject land included, which it intended to buy from the spouses
Troadio and Asuncion Tecson. Finding no defect, the respondent purchased the nine lots from
Sps Tecson through a Deed of Conditional Sale in November 1992 and subsequently, a Deed
of Absolute Sale over the same properties in August 1993. The Deed of Conditional Sale and
the Deed of Absolute Sale were registered with the Register of Deeds. However, the Register of
Deeds, refused to actually annotate the deed of sale on the titles because of the existing notice
of attachment in connection with Civil Case No. 3399 pending before the Regional Trial Court of
Bohol. The attachment was eventually cancelled by virtue of a compromise agreement between
the Tecsons and their attaching creditor which was brokered by respondent.
On January 1995, petitioner-Fudot presented for registration before the Register of
Deeds the owner’s copy of the title of the subject property, together with the deed of sale
purportedly executed by the Tecsons in favor of petitioner on 19 December 1986. Cattleya
Land, Inc, sent a letter of protest/opposition to Fudot’s application having learned that the
Register of Deeds had already registered the deed of sale in favor of Fudot and issued a new
title in her name.
On May 1995, Cattleya Land, Inc. filed its Complaint for Quieting Of Tile &/Or Recovery
Of Ownership, Cancellation Of Title With Damages before RTC of Tagbiliran City. On June
1995, Asuncion Tecson filed a complaint-in-intervention, claiming that she never signed any
deed of sale covering any part of their conjugal property in favor of petitioner. She averred that
her signature was forged. However, Fudot alleged that the spouses Tecson had sold to her the
subject property for P20,000.00 and delivered the owner’s copy of the title to her. She claims
that she subsequently presented the said title to the Register of Deeds but the latter refused to
register the same because the property was still under attachment.
Petitioner insists that the applicable law in this case is P.D. No. 1529, a special law dealing
precisely with the registration of registered lands or any subsequent sale thereof, and not Article
1544 of the Civil Code which deals with immovable property not covered by the Torrens
System.
Trial Court: Sale between Spouses Tecson and petitioner is invalid due to forged
signature of Asuncion.
Court of Appeals: affirmed. CA also noted the petitioner’s failure to attend the taking of
the oral deposition and to give written interrogatories. Deed of sale is void for lack of marital
consent.
ISSUE:  Whether or not Fudot has a better right as the first buyer of the subject property in
accordance with Article 1544 of the Civil Code on double sale.
RULING: No. The sale between Fudot and Sps. Tecson was null and void because Asuncion’s
signature was forged in the deed. Art. 1544 of the Civil Code 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 Land Inc. Thus, there is
no double sale.
The trial court declared that the sale between the spouses Tecson and petitioner is invalid, as it
bears the forged signature of Asuncion. Said finding is based on the unrebutted testimony of
Asuncion and the trial court's visual analysis and comparison of the signatures in her Complaint-
in-Intervention and the purported deed of sale. This finding was upheld by the Court of Appeals,
as it ruled that the purported sale in petitioner's favor is null and void, taking into account
Asuncion's unrefuted deposition. In particular, the Court of Appeals noted petitioner's failure to
attend the taking of the oral deposition and to give written interrogatories. In short, she did not
take the necessary steps to rebut Asuncion's definitive assertion.
The court affirmed the decision of trial court and CA. 
Under Article 166 of the Civil Code, which was still in effect in 1986, the husband cannot
generally alienate or encumber any real property of the conjugal partnership without wife’s
consent.
Also, according to the rules as to preference of ownership when there is a double sale in case of
real property, the first registrant in good faith is preferred, if none, the first possessor in good
faith and if none, the person with the oldest title in good faith.
 
Coronel v. CA

Doctrine: 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.

Fact: Romulo Coronel, et al. executed a document entitled “Receipt of Down Payment an
amount equivalent to P 50,000” in favor of Ramona Alcaraz as a purchase price of their
inherited house and lot situated in Quezon City. They received the money without reservation
to withhold the transfer of such property until full payment. The total purchase price is
P1,240,000.00,”

Thereafter, the property was transferred to Alcaraz. Subsequently, The Coronels sold the
property to Catalina Mabanag for P 300,000.

Coronels canceled and rescinded the contract with Alcaraz by depositing the down payment
paid by Concepcion in the bank in trust for Ramona Patricia Alcaraz.

As a result, Concepcion, et al., filed a complaint for specific performance against the Coronels
and caused the annotation of a notice of lis pendens.

The RTC ruled in favor of Alcaraz. On appeal, the CA affirmed the decision of the RTC.

Issue: Whether or not Catalina Mabanag is a second buyer who satisfied the requirements
provided for under Article 1544 so that title or ownership of the subject property will transfer to
her.

Ruling: The Court ruled in the negative.

The provision on double sale under Article 1544 of the Civil Code presumes title or ownership to
pass to the first buyer, the exceptions being:

(a) when the second buyer, in good faith, registers the sale ahead of the first buyer, and

(b) should there be no inscription by either of the two buyers, when the second buyer, in
good faith, acquires possession of the property ahead of the first buyer.
Unless the second buyer satisfies these requirements, title or ownership will not transfer to him
to the prejudice of the first buyer.

In the case at bar, Mabanag could not have in good faith, registered the sale because prior to
that, a notice of lis pendens had already been annotated on the transfer certificate of title in the
names of petitioners. Hence, at the time of registration which was a few months after, Mabanag
knew that the subject property had already been previously sold to Alcaraz, or, at least, she was
charged with knowledge that a previous buyer is claiming title to the same property.

Cruz v. Cabana
   GR L-56232, June 22, 1984

FACTS:
 Leodegaria Cabaña sold the land twice; first, to spouses Teofilo Legaspi and Iluminada
Cabaña, and second, to Abelardo Cruz.
 First sale, events:
o June 1, 1965: Land was sold with right to repurchase to spouses Legaspi and
Cabaña. Document stipulated that the land can be repurchased by L. Cabaña
within one year. However, said land was not repurchased, hence, in the
meantime, spouses Legaspi and Cabaña took possession of the property.
o October 21, 1968: L. Cabaña sold the land by way of absolute sale to spouses
Legaspi and Cabaña.
 Second sale, events: 
o November 29, 1968: L. Cabaña sold the same land to Abelardo Cruz.
o September 3, 1970: Cruz tried to registered the deed of sale executed in his
favor and he was informed that L. Cabaña had already sold the land to
spouses Legaspi and Cabaña. 
o February 9, 1971: Cruz was able to register the land in his name.

ISSUE: Who among the vendees (spouses Legaspi & Cabaña and Cruz) has a better title to the
land?

RULING: Court ruled in favor of the spouses Legaspi and Cabaña (first buyers).
 Art. 1544 states “If immovable property is 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; and should there be no inscription, the ownership shall pertain to the person
who in good faith was first in possession.”
 The spouses Legaspi were the first buyers (first on June 1, 1965 under a sale with right
of repurchase, later on October 21, 1968 under the deed of absolute sale). They had
taken possession of the land sold to them.
 The spouses were also the first to register the sale with right of repurchase on May 13,
1965. However they could not register the absolute deed of sale because at that time the
seller’s duplicate certificate was still with PNB. 
 Cruz (second buyer) was a purchaser in bad faith.
o When Cruz registered the land in his favor, he knew that there was a prior sale in
favor of the spouses.
 Court held that knowledge of a prior sale by a subsequent buyer makes him a
purchaser in bad faith. In order to defeat the rights of the first buyer over the property,
the second buyer must first register in good faith the second sale ahead of the first. S/he
must show continuing good faith and innocence or lack of knowledge of the first sale. 
 Emilla Uraca, et al. vs. CA, velz jr.,velez-Ting, VENUE MERCHANDISING, INC.,TING AND
ALFREDO GO
G.R. No. 115158 September 5, 1997 - PANGANIBAN, J.: - Delivery of the thing sold

FACTS: Velezes (herein private respondents) were the owners of the lot and commercial
building in question located in Cebu City. Uraca et.al were the lessees of said commercial
building. Respondents wrote a letter to petitioners offering to sell the subject and at the same
time requesting) to reply in three days. Petitioners sent a reply-letter to the Velezes accepting
the aforesaid offer to sell. Respondents then changed the price, higher than what was
mentioned. There was disagreement with the mode of payment, and no payments were made at
the end. Respondents sold the subject lot and commercial building to the Avenue Group, with
the certificate of title of the said property was clean and free of any annotation of adverse claims
or lis pendens; but petitioners subsequently registered a notice of such. Like the trial court, the
public respondent held that there was a perfected contract of sale of the property for
P1,050,000.00 between the Velezes and herein petitioners. It added, however, that such
perfected contract of sale was subsequently novated.

ISSUE: W/N the CA erred on its ruling that there was a perfected contract of sale of the property
for between the Velezes and herein petitioners, and such perfected contract of sale was
subsequently novated.

HELD: YES. There was no agreement regarding the manner of payment of the price of the
property in the second one, so no new contract was made. Thus, the first contract was still
subsisting. Prior registration of the subject property does not by itself confer ownership or a
better right over the property. Article 1544 requires that before the second buyer can obtain
priority over the first, he must show that he acted in good faith throughout (i.e., in ignorance of
the first sale and of the first buyer’s rights) from the time of acquisition until the title is transferred
to him by registration or failing registration, by delivery of possession. The Court finds that bad
faith tainted the Avenue Group's purchase on July 13, 1985 of the Velezes' real property subject
of this case, and the subsequent registration thereof on August 1, 1995. The Avenue Group had
actual knowledge of the Velezes' prior sale of the same property to the petitioners, a fact
antithetical to good faith.

In double sale of an immovable, the rules of preference are as follows:

(a)       the first registrant in good faith;

(b)       should there be no entry, the first in possession in good faith; and

(c)        in the absence thereof, the buyer who presents the oldest title in good faith. 

Uruca v. CA

Fact: The Velezes were the owners of the lot and commercial building in question located at in
Cebu City. Emilia Uruca et al were the lessees of said commercial building.

The Velezes offered, in writing, to sell the subject property for P1,050,000.00 to Uruca. Uruca
accepted the offer.
Emilia Uraca went to see Carmen Ting about the offer to sell but she was told by the latter that
the price was P1,400,000.00 in cash or manager's check and not P1,050,000.00 as erroneously
stated in their letter-offer after some haggling. Emilia Uraca agreed to the price of
P1,400,000.00 but counter-proposed that payment be paid in installments payable in 30 days.

Carmen Velez Ting did not accept the said counter-offer of Emilia Uraca although this fact is
disputed by Uraca.

No payment was made by Uruca to the Velezes. Later on, Velezes sold the subject lot and
commercial building to Avenue Merchandising Inc. for P1,050,000.00.

At the time the Avenue Group purchased subject property on July 13, 1985 from the Velezes,
the certificate of title of the said property was clean and free of any annotation of adverse claims
or lis pendens.

Uruca filed a complaint against the Velezes. Uruca registered a notice of lis pendens over the
property in question with the Office of the Register of Deeds on August 1, 1985. 

The Avenue Group filed an ejectment case against Uruca before the RTC.

The RTC ruled against the Velezes and that the Velezes were not free to sell the properties to
the Avenue Group." It also found that the Avenue Group purchased the property in bad faith. On
appeal, the CA reversed the decision of the RTC.

Issue: Whether or not Uraca et. al. had better rights to buy and own the property.

Ruling: The Court ruled in the affirmative.

The Civil Code provides that the prior registration of the disputed property by the second
buyer does not by itself confer ownership or a better right over the property. Article 1544
requires that such registration must be coupled with good faith.

In the case, bad faith tainted the purchase by Avenue Group of the subject property, and its
subsequent registration because the lower court found that the Avenue Group had ACTUAL
KNOWLEDGE of the Velezes' prior sale of the property to Uraca, amounting to bad faith.

The Avenue Group, whose store is close to the properties in question, had known the plaintiffs
to be the lessee-occupants thereof for quite a time. Felix Ting admitted to have a talk with Ong
Seng in 1983 or 1984 about the properties. In the cross-examination, Manuel Ting also admitted
that about a month after Ester Borromeo allegedly offered the sale of the properties Felix Ting
went to see Ong Seng again. If these were so, it can be safely assumed that Ong Seng had
consequently told Felix about plaintiffs' offer on January 11, 1985 to buy the properties for
P1,000,000.00 and of their timely acceptance on July 10, 1985 to buy the same at
P1,050,000.00.

Naawan Community Rural Bank vs. Court of Appeals

January 13, 2003 | Corona, J. | Delivery of the thing sold
PETITIONER: Naawan Community Rural Bank, Inc. 
RESPONDENTS: CA and Spouses Alfredo and Annabelle Lumo 

SUMMARY: 

Facts: Comaya (original owner) sold a house and lot to respondents. However, it was
discovered that it was mortgaged to a certain Galupo. They still continued with the sale.
However, again, upon requesting for the issuance of a tax declaration, respondents discovered
that it was named after the petitioner. The petitioner was the mortgagee of Comaya but then the
latter failed to pay his loan resulting to the foreclosure of the land. Petitioner filed an ejectment
case against the respondents but the latter filed a petition for quieting of title. Petitioner contest
that the sheriff’s deed of final conveyance must prosper as a superior right over the subject
property. 

Ruling: The petitioner is wrong. It invoked Article 1544 of the Civil Code; however, the
application of the said provision is only applicable when the execution sale of real estate is
registered under Act 496. The respondents are deemed by the Court as purchasers in good
faith. 

DOCTRINE: In order to invoke Article 1544 of the Civil Code to this situation, it is important that
its registration referred to land not within the Torrens System but under Act 3344.

FACTS:
1. On April 30, 1988, Guillermo Comayas (Comayas) offered to sell a house and lot at
Piniktan Camaman-an, Cagayan de Oro City to herein respondents-spouses Alfredo and
Annabelle Lumo.
1. Respondent-spouses inquired to the Register of Deeds Cagayon de Oro City
regarding the status of the title and found out that it was mortgaged for P8,000 to
Mrs. Galupo (Galupo) and the Certificate of Title was in her possession.
2. Respondent-spouses ordered Comayas to redeem the property. They gave him
P10,000 for the redemption.
2. Before the release of the adverse claim (May 17, 1998), respondent-spouses and
Comayas executed a deed of absolute sale to the subject property. It was sold for
P125,000 but the deed of sale reflected only the amount of P30,000. 
3. On May 30, 1998, a release of adverse claim of Galupo was annotated on the TCT
covering the subject property. 
4. On June 9, 1988, a deed of absolute sale was registered and issued in favor of
respondent-spouses. 
5. When they requested for the issuance of a new tax declaration certificate, respondent-
spouses were surprised to learn that it was already declared in the name of Naawan
Community Rural Bank, Inc. (petitioner).
1. This is because on February 7, 1983, Comayas obtained P15,000 loan from
petitioner using the subject property as a security to it. 
1. When the subject property was used as a security, it was still
unregistered and tax-declared in the name of Sergio Balibay (Balibay). 
2. Balibay executed a special power of attorney authorizing Comayas to
borrow money and used the subject property as a security. Upon the
 registration of the land (registration of Deed of Real Estate Mortgage and
Special Power of Attorney), it was registered to the Province of Misamis
Oriental and not to Cagayan de Oro City because at that time, there was
not Register of Deeds for Cagayan de Oro City until 1985. 
2. Comayas failed to pay the real estate mortgage against petitioner resulting to the
property to be foreclosed and was further awarded to petitioner in the amount of
P16,031.35. 
1. April 17, 1984 – the subject property was registered in the Register of
Deeds of Cagayan de Oro City. 
2. July 23, 1984 – a transfer certificate of title was entered in the name of
Comayas. 
3. September 5, 1986 – the period of redemption of the foreclosed
subject property lapsed; therefore, the MTCC Deputy Sheriff
issued to deliver to petitioner bank the sheriff’s deed of final
conveyance. The deed is also registered in the RD od CDO. 
2. Petitioner bank instituted an action for ejectment against Comayas before the
MTCC. The Court decided in petitioner’s favor as well to the RTC. Upon the
issuance of the order of a writ of execution of its judgment, it was discovered that
Comayas was no longer occupant of the said property but respondent-spouses. 
b. Upon knowing the ejectment case filed against them, respondent-spouses filed an action
for quieting of title. The RTC ruled that respondent-spouses are purchasers for value
and in good faith. They are also deemed as the absolute owners and possessors of the
subject property. 

ISSUE: 
1. Whether or not sheriff's deed of final conveyance was duly executed and registered in
the register of deeds of cagayan de oro city on december 2, 1986;
2. Whether or not respondent-spouses are buyers in good faith.

HELD: 
1. No.
Petitioner bank invoked Article 1544 of the Civil Code, specifically: 
". . . . Should it be immovable property, the ownership shall belong to the person acquiring it
who in good faith first recorded it in the Registry of Property."
However, when a person claims to have superior rights on the ground that he derived his title
from a sheriff’s sale registered in the Registry of Property, the provision above shall only be
applied when the execution sale of real estate is registered under Act 496. 
In application to the case at hand, the subject property was still untitled when it was in the
possession of the petitioner bank. At the time, the respondent-spouses purchased the subject
property, it was already registered under the Torrens System.  
Additional: It must be noted that the execution and delivery of the sheriff’s deed of final
conveyance on September 5, 1986 was already covered by the Land Registration Act, but as
early as April 16, 1984, the Original Certificate of Title was entered into the RD of CDO. From
April 17, 1984, the subject property was under the operation of the Torrens System.
The priority in time principle under the Torrens System is not applicable to the case at hand
because e its registration referred to land not within the Torrens System but under Act 3344.

2. Yes.
Respondent-spouses exercised the required diligence in ascertaining the legal condition of the
subject property through their act of inquiring with the Registry of Deeds and the Bureau of
Lands. They were not aware of any liens, encumbrances or adverse claim except of Galupo.
Private respondents did not go beyond the certificate of title because if they did, the efficacy and
conclusiveness of the Torrens Certificate of Title would be nugatory. 

RADIOWEALTH FINANCE COMPANY vs. MANUELITO S. PALILEO

G.R. No. 83432  May 20, 1991 GANCAYCO, J.:

RECITATION READY

Facts:

Spouses Enrique Castro and Herminia Castro sold a parcel of unregistered coconut land to
Manuelito Palileo by virtue of which a deed of absolute sale was executed.QQNonetheless,
Palileo exercised acts of ownership over the said land. Sometime after, in a civil case\
filed against spouses Castro, the court rendered a decision ordering the former to pay
Radiowealth Finance Company. Upon the finality of the judgment, a writ of execution was
issued ordering the sheriff to levy and sell at public auction the land sold to Palileo.
Consequently, a certificate of sale and a deed of final sale was executed and registered with the
Registry of Deeds in favor of Radiowealth. Learning of what happened to the land, private
respondent Manuelito Palileo filed an action for quieting of title over the same. After a trial on
the merits, the court a quo rendered a decision in his favor. On appeal, the decision of the trial
court was affirmed. Hence, this petition for review on certiorari.

Issue: 

Whether or not the CA erred in recognizing the ownership of the first buyer in a prior sale that
was unrecorded over the second buyer who purchased the land in an execution sale whose
transfer was registered in the Register of Deeds.

Ruling: 

NO. the Court of Appeals correctly held that the execution sale of the unregistered land in favor
of Radiowealth is of no effect because the land no longer belonged to the judgment debtor as of
the time of the said execution sale. The case of Carumba vs. Court of Appeals is a case in
point. It was held therein that Article 1544 of the Civil Code has no application to land not
registered under Act No. 496. Xxx. Applying Section 35, Rule 39 of the Revised Rules of Court,
this Court held that Article 1544 of the Civil Code cannot be invoked to benefit the purchaser at
the execution sale though the latter was a buyer in good faith and even if this second sale was
registered. It was explained that this is because 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.