CASE #15

SPOUSES DANILO CLARITA GERMAN vs SPOUSES BENJAMIN AND EDITHA

SANTUYO AND HELEN S. MARIANO, deceased SUBSTITUTED BY HEIRS
G.R. No. 210845 July 3, 2020

FACTS:
Spouses Francisco and Basilisa Bautista, registered owners of the subject land under Transfer
Certificate No. 11867, sold the same property: first, to the Mariano Spouses in 1986 (who on the
same day sold the same property to the German Spouses); and second, to the respondents Santuyo
Spouses in 1991. Since 1985, German Spouses had been occupying the property as lessee.

On January 12, 2001, the German Spouses filed a case for Declaration of Nullity of Sale,
Recovery of Ownership, Reconveyance with Damages against the Santuyo Spouses and Helen
Mariano claiming that, despite their payment of the full purchase price in 1988, the Mariano Spouses
failed to execute the final Deed of Sale. Instead, the property was sold to Helen Mariano’s sister,
Editha Santuyo. The trial Court ruled in favor of the German Spouses, holding that the sale was valid,
and that the Bautista Spouses could not transfer ownership to the Santuyo Spouses in a subsequent
sale because they were no longer the owners of the property at the time. Moreover, the Santuyo
Spouses were not purchasers in good faith, as the trial court was unconvinced that Editha Santuyo
did not know about the prior sale to the German Spouses. This was reversed by the Court of Appeals.
German Spouses argued that Santuyo Spouses are not in good faith when they bought the property.

ISSUE:
As between German Spouses and Santuyo Spouses, who had a better right of ownership over
the subject land?

HELD:
It is the German Spouses. The second buyer, in this case the Santuyo Spouses, who has
actual or constructive knowledge of prior sale cannot be a registrant in good faith. Due to
respondents’ lack of good faith, they cannot rely on the indefeasibility of their Transfer Certificate of
Title. Thus, in accordance with Article 1544 of the Civil Code, it is the first buyer, namely the Mariano
Spouses (who then sold to German Spouses on the same day the same property), who had a better
right of ownership, and no ownership could pass on to the respondents Santuyo Spouses as a result.

Article 1544 of the Civil Code states:

If the same thing should have been sold to different vendees, the ownership shall be
transferred to the person who may have first taken possession thereof in good faith, if it should
be movable property.
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.
Should there be no inscription, the ownership shall pertain to the person who in good
faith was first in the possession; and, in the absence thereof, to the person who presents the
oldest title, provided there is good faith.