Land Titles 091113

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1Land Titles and Deeds | Cases, September 11, 2013

G.R. No. 83141 September 21, 1990

SPOUSES FLORENTINO L. FERNANDEZ AND VIVENCIA B.FERNANDEZ, petitioners,

vs.HON. COURT OF APPEALS AND ZENAIDA ANGELES

FERNANDEZ, respondents.

Wilfredo Espiritu Taganas for petitioners.

L.B. Camins for private respondent.

MEDIALDEA, J .:

This is a petition for review of the decision of the Court of Appeals in CA-G.R. CV No. 05191 which modified the decision of the Regional Trial Court, Branch 95, Quezon City in Civil CaseNo. Q-32843 ordering private respondent Zenaida Angeles-Fernandez to execute a deed of conveyance over 1/3 portion or 110 square meters of the lot subject of the action.

The facts of the case are as follows:

On November 28, 1966, petitioners-spouses Florentino andVivencia Fernandez and private respondent Zenaida Angeles-Fernandez and the latter's husband Justiniano Fernandezpurchased in common a parcel of land with an area of 310square meters Identified as Lot 13, Block 19, PagasaSubdivision, Quezon City. The parcel of land was purchased for P15,500.00. Spouses Florentino and Vivencia Fernandezadvanced the downpayment of P5,500.00 to the vendors-spouses Santos and Matilde de Torres. A Deed of ConditionalSale (Exhibit "B") was executed by the spouses de Torres infavor of the two Fernandez couples.

On February 24, 1967, the vendors Torres executed a Deed of

Absolute Sale in favor of spouses Zenaida and JustinianoFernandez only. When petitioners learned that the AbsoluteDeed of Sale did not include their names as vendees theyconfronted Zenaida and Justiniano Fernandez. Thus, on April 24,1967, Zenaida and Justiniano Fernandez executed an affidavit(Exhibit "D") in which they acknowledged the sale to petitionersFlorentino and Vivencia Fernandez of a portion of the subjectparcel of land consisting of 110 square meters and the receipt of the consideration therefor in the amount of P5,500.00.

When private respondent Zenaida Angeles-Fernandez plannedto build a house on the lot, she was informed by the CityEngineer of Quezon City that the area in Pag-asa is classifiedunder the zoning ordinance as R-2 or residential 2, wherein the

minimum requirement for a family house is 240 square metersand therefore, no two (2) separate and independent familyhouses can be built on the 310 square meter lot. She also foundout that the Register of Deeds will not issue a separate title for only 110 square meters (p. 4, C.A. Decision; p. 36, Rollo).

Thus, a duplex building was constructed on the subject land, oneunit known as No. 216-A Road I, Pag-asa, Quezon City whichwas occupied by petitioners Florentino and Vivencia and theother unit known as No. 216, Pag-asa, Quezon City which wasoccupied by the spouses Zenaida and Justiniano.

On January 26, 1970, Zenaida and Justiniano caused theissuance of a certificate of title (TCT No. 149347) only in their

names (p. 47, Rollo).

On February 26, 1976, private respondent Zenaida Fernandezand her husband Justiniano Fernandez filed a petition for voluntary dissolution of their conjugal partnership before theJuvenile and Domestic Relations Court, Quezon City. In thepetition, the couple prayed for judicial approval of their compromise agreement wherein Justiniano waived all his rightsto the conjugal properties including the subject parcel of land.Pursuant to the compromise agreement, the Juvenile andDomestic Relations Court awarded the parcel of land subject of the instant case to private respondent Zenaida Angeles-Fernandez on December 13, 1976. In a letter dated October 22,1977, private respondent demanded that petitioners vacate the

premises of the lot awarded to her. On June 9, 1981, petitioners'spouses Florentino and Vivencia filed an action to quiet title anddamages against Zenaida Fernandez only, who was then alreadyestranged from her husband Justiniano. In another letter datedJune 21, 1981, Zenaida reiterated her demand that petitionersvacate the premises of the lot awarded to her, which lot was alsothe subject matter of the complaint for quieting of title filed bypetitioners.

After trial, a decision (pp. 43-45, Rollo) was rendered on July 23,1984 wherein the trial court made the following findings andconclusions:

1. The genuineness and/or due execution of the Deed of Conditional Sale dated November 28, 1966 (Exhibit 'B' & Exhibit'2') and Affidavit dated April 24, 1967 (Exhibit 'D' & Exhibit '4'),were admitted by defendant Zenaida Angeles-Fernandez.Likewise, the voluntariness of the execution thereof, includingtheir contents, were not seriously controverted by defendantZenaida Angeles- Fernandez. Said documents, therefore, shouldbe taken against her for as ruled by the higher court; a man'sacts, conduct, and declarations wherever made, if voluntary, areadmissible against him, for the reason that it is fair to presumethat they correspond with the truth, and it is his fault if they donot. (US vs. Ching Po, 23 Phil. 578, 583);

2. The claim of defendant Zenaida Angeles-Fernandez to theeffect that the P5,500.00 used as down payment for the purchaseprice in the total amount of P15,500.00 mentioned in the Deed of Conditional Sale dated November 28, 1966 (Exhibit 'B' & Exhibit'2'), was merely a loan, and that she and her husband JustinianoE. Fernandez have already paid the same almost three-fold toplaintiffs, cannot be considered there being no concrete proof onrecord to substantiate the same. The Court noted, however, thatno further amount, aside from the P5,500.00 were paid by theplaintiffs for the purchase of Lot 13, Block N-19 of Pag-asaSubdivision. By mathematical computations, said amount wasshort for the amount they should pay for the 1/2 portion of the

purchased lot, and they should be required to reimbursedefendant Zenaida Angeles- Fernandez;

3. Likewise, the verbal claim of the defendant Zenaida Angeles-Fernandez that she and her husband Justiniano B. Fernandezexecuted the Affidavit dated April 24, 1967 (Exhibit 'D' & Exhibit'4') as security or assurance to plaintiffs' non-eviction from thepremises they are co-occupying and/or payment of the allegedloan, appears gratuitous and illogical, and cannot be given weightmore than their admission (Exhibit 'B' & Exhibit '4'), whileadmission is against interest.

4. The fact that the names of plaintiffs no longer appear as co-vendees in the Deed of Absolute Sale dated February 24,1967

(Exhibit 'C', & Exhibit '3'), and to the title to Lot 13, Block N-1 9 of the Pagasa Subdivision, Quezon City Exhibit 'A' & Exhibit '1'), asof not moment (sic) and inconsequential to their right or ownership over the 1/2 portion of the lot, the same having beensufficiently established by the Deed of Conditional Sale datedNovember 28, 1966 (Exhibit 'B' and Exhibit '2'); the Affidavitdated April 24,1967 (Exhibit 'D' & Exhibit '4'); and the proof onrecord showing that defendant Zenaida Angeles-Fernandezcollected taxes due on the subject lot for the year 1974,1975,1976 and 1977 (Exhibit 'H'). (pp. 50-51, Rollo)

Anent the ownership of the duplex house, the trial courtconcluded that although the petitioners advanced the sum of Pl,258.00 (Exhibit "K" and "K-1") for the unit occupied by them,

said amount is not sufficient to construct one unit of the duplexbuilding.

The trial court disposed of the case as follows:

All told, this Court finds plaintiffs spouses Florentino L.Fernandez and Vivencia B. Fernandez, owner of 1/2 portion or the area of 113 square meters of the Lot 13, Block N-19 of Pag-asa Subdivision, Quezon City, subject to reimbursement of thesum of P 2,250.00, representing the difference of the totalamount they ought to pay for the purchase price thereof, todefendant Zenaida Angeles-Fernandez, plus legal interestthereon from February 24, 1967 until fully paid; and defendantZenaida Angeles-Fernandez owner of the other one-half or 113

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square meters of the aforesaid lot, together with both units of theduplex house existing thereon, subject to the provision of Article448 of the Civil Code.

WHEREFORE, decision is hereby rendered:

l. ORDERING defendant Zenaida Angeles-Fernandez to executea deed of conveyance over 1/2 portion of 13 square meters of Lot13, Block N-19 of Pag-asa Subdivision, covered by Transfer

Certificate of Title No. 149347 of the Register of Deeds of Quezon City, in favor of plaintiffs, spouses Florentino L.Fernandez and Vivencia B. Fernandez, upon the latter's paymentof P 2,225.00 plus legal interest thereon counted from February24, 1967, until fully paid.

2. The portion of the duplex building resting on the portion of thelot to be reconveyed to the plaintiffs, spouses Florentino L.Fernandez and Vivencia B. Fernandez, shall remain under theownership of defendant Zenaida Angeles-Fernandez, subject tothe provision of Article 448 of the Civil Code.

x x x

(pp. 53-54, Rollo).

Petitioners filed a motion to reconsider the decision insofar as thearea awarded them was concerned and the amount spent bythem for the construction of the duplex house. On November 15,1984, an order (pp. 55-56,Rollo) was issued by the trial courtamending the July 23, 1984 decision, thus:

WHEREFORE, 1) The dispositive portion of the decision datedJuly 23, 1984, is hereby amended as follows: 'l. ORDERINGdefendant Zenaida Angeles-Fernandez to execute a deed of conveyance over 1/3 portion or 110 square meters of Lot 13,Block N-19 of the Pag-asa Subdivision, covered by Transfer Certificate of Title No. 149347 of the Register of Deeds of Quezon City, in favor of plaintiffs, spouses Florentino L.Fernandez and Vivencia B. Fernandez, upon the latter's paymentof P 2,225 plus legal interest thereon counted from February 24,1967, until fully paid.' 2) Denying all other matters raised in themotion for reconsideration and opposition thereto.

SO ORDERED. (pp. 55-56, Rollo)

While the order amended the area of the land to be awarded tothe petitioners from 1/2 to 1/3, it failed to delete the portionordering petitioners to pay private respondent the amount of P2,225, as originally ordered in the July 23, 1984 decision.

Not satisfied with the trial court's decision and the order amending said decision, both the petitioners and the privaterespondent appealed to respondent Court of Appeals. In adecision (pp. 33-40, Rollo) promulgated on January 26, 1988,respondent appellate court made a different conclusion andmodified the decision of the trial court:

The main basis of the trial court in concluding that the plaintiffsare entitled to 1/2 and later to 1/3 portion of the lot and house inPag-asa are the deed of conditional sale (Exh. B and 2) and theaffidavit executed by Justiniano Fernandez (Exh. D).

It appears, however, that the effect of said documents have beenmodified by later events. The first is the absolute deed of sale of

the house and lot in question and the subsequent issuance of thetitle thereof only in the name of Justiniano Fernandez and hiswife (Exh. C and 3 and Exh. A and 1). Thereafter, Transfer Certificate of Title No. 149347 in the name of the spousesJustiniano E. Fernandez and Zenaida A. Fernandez was issuedby the Register of Deeds of Quezon City on January 26, 1970(Exh. A). If, indeed, the herein plaintiffs were entitled to 1/2 of thesaid property, they should have taken steps to include their names in the said title or at least had it annotated on said title. ACertificate of Title issued a party accumulates all the ultimatefacts with respect to a particular piece of registered land in onesingle document, making out a precise and correct statement tothe exact status of the fee simple title which the owner has infact. Once issued, the certificate is the evidence of the title which

the owner has (Legarda vs. Saleeby, 31 Phil. 590). A torrens titleconcludes all controversy over ownership of land covered by finaldecree of registration, and title by adverse possession cannot beacquired against the registered owner (Sec. 46, Act 496; J.M.Tuason and Co. vs. Vibat, L-28884, May 29,1963,8 SCRA 54;Espiritu vs. Sison, CA 51612-R, Feb. 14,1979).

What militates more against the claim of ownership of a portion of the property in question by the plaintiffs is the fact that as a result

of marriage settlement between Justiniano Fernandez and hiswife Zenaida, the whole property was adjudicated to Zenaida.The settlement was approved by the Juvenile and DomesticRelations Court. The herein plaintiffs were supposed to knowabout said marriage settlement of property. Here is a situationwhere Zenaida was in fact abandoned by her husbandJustiniano, who is a nephew of plaintiff Florentino Fernandez.The plaintiffs should have intervened in said case by filing their claims on the property that was to be granted to Zenaida alone inthe marriage settlement. Indeed, it would be less than fair for theherein plaintiffs to demand their alleged share against Zenaidaalone after their nephew agreed to grant said property to his wifewhom he abandoned.

Lastly, the cause of action of the plaintiffs had alreadyprescribed. As already stated, the Transfer Certificate of Titlewas issued in the name of the spouses Justiniano and ZenaidaFernandez in 1970. From said date, Justiniano and his wifeexercised acts of absolute ownership by mortgaging the property.The instant action to claim ownership of the portion of the landwas filed on July 9, 1981.

With these findings, We find no merit in the contention of plaintiffs-appellants that they are entitled to damages andattorney's fees.

WHEREFORE, the decision appealed from is hereby MODIFIEDby declaring the defendant Zenaida Fernandez as the sole owner of the property in question covered by Transfer Certificate of TitleNo. 14934, Registry of Deeds of Quezon City. In fairness to theplaintiffs, however, defendant Zenaida Fernandez is ordered toreturn to the plaintiffs the amount of P5,500.00 plus interest atthe legal rate from November 28, 1966 until full payment thereof.SO ORDERED. (pp. 39-40, Rollo)

Petitioners' motion for reconsideration of the decision of the Courtof Appeals was denied on April 22, 1988 (p. 42,Rollo).

On June 15, 1988, petitioners filed the instant petition for review.They contend that respondent appellate court erred in notdeclaring them part owners of the lot in question despite the factthat it is not disputed that petitioners and defendant ZenaidaFernandez with her husband Justiniano Fernandez entered intoan agreement with the vendors-spouses Santos and Matilde deTorres that the subject land would be purchased by them incommon.

While, as a rule, this Court is bound by the findings of the Courtof Appeals in matters of fact, that rule is subject to well-settledexceptions, amongst them: (1) when the same are groundedentirely on speculation, surmise, and conjecture; (2) the inferencemade is manifestly mistaken; (3)...; (4) its judgment is based on amisapprehension of facts; (5) it went beyond the issues of thecase and its findings contravene admissions of the parties; (6) itsfindings of fact are contrary to those of the trial court ; (7) thesame are conclusions without citation of specific evidence; (8) ...;and (9) when the findings of fact of the Court of Appeals are not

supported by the evidence or contradicted in fact by the evidenceon record (Teodoro v. Court of Appeals, L-31471, November 12,1987).

In the instant case, there is a disparity in the factual findings andconclusions of the respondent appellate court and the trial court.On the basis of the evidence presented and in view of theaccepted rule that "the judge who tries a case in the court below,has vastly superior advantage for the ascertainment of truth andthe detection of falsehood over an appellate court of review(Roque v. Buan, L-22459, October 31, 1967, 21 SCRA 642), thefindings of the trial court must be upheld.

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We agree with petitioners' contention that respondent court erredin not declaring them as part owners of the subject property.There is sufficient evidence on record to prove that petitionersand spouses Justiniano and Zenaida Fernandez purchased incommon the lot subject of this case and that it was the parties'intention to become owners of specific portions thereof.

The purchase of the property by the two Fernandez couples wasevidenced by a Deed of Conditional Sale (Exhibit "B" and Exhibit

"2") executed by the previous owners Spouses Santos andMatilde de Torres in favor of the petitioners and the SpousesZenaida and Justiniano Fernandez. Respondent appellate courtconcluded that the effect of the Deed of Conditional Sale wasmodified by later events specifically, the execution of a deed of

Absolute Sale in favor of Justiniano Fernandez and privaterespondent Zenaida Fernandez only. However, respondentappellate court lost sight of the fact that upon petitioners'knowledge that the Deed of Absolute Sale was executed in favor of Justiniano and Zenaida Fernandez only, the petitionersconfronted the latter spouses which led to the execution by thelatter on April 24,1967 of an affidavit (Exhibit 'D') acknowledgingpetitioners' purchase of 110 square meters of the subject lot andthe receipt of the consideration therefor for P5,500.00. The dueexecution and authenticity of both the Deed of Conditional Sale

and Affidavit were never denied by private respondent. Havingrecognized the sale and the receipt of the consideration in theaffidavit, private respondent is now estopped from going againstsuch declaration.

It is noted that subsequent to the execution of the affidavit, aduplex house was constructed on the lot where one unit wasoccupied by private respondent Zenaida and her husbandJustiniano and the other unit by the petitioners. The expenses for the construction of the duplex were advanced by the spousesZenaida and Justiniano, but they demanded reimbursement of the expenses they advanced for the portion belonging topetitioners. Exhibit "I" and Exhibit "J" reveal that on November 10, 1969, Justiniano demanded from the petitioners payment of

their share of the materials used in the construction of their portion of the duplex house amounting to P 2,607.70 (p.44, Rollo) and the taxes due from them for the house and lot. OnMarch 8, 1977, petitioners paid for their share of the realty taxesfor the year 1974,1975,1976 and 1977 in the total amount of P894.36 to private respondent Zenaida (Exhibit "H"). For theexpenses in the construction of the portion of the duplexpossessed by petitioners, they gave P1,258.10 to Justiniano whoissued a receipt therefor (Exhibit "K" and "K-1") Petitionerspromised to liquidate the balance in installment at the rate of P300.00 a month. The trial court concluded that the amount of Pl,258.10 advanced by petitioners was not sufficient to constructtheir portion of the duplex house and that no evidence waspresented to prove that petitioners paid for the balance. From thisfindings, it erroneously concluded that the entire duplex house

belongs to private respondent Zenaida Angeles-Fernandez.

It should be noted that Justiniano Fernandez admitted in Exhibits"I" and "J" petitioner's ownership of the portion of the duplexhouse now occupied by them. It may be that the amount of P1,258.10 paid by petitioner Florentino Fernandez to JustinianoFernandez was not sufficient to construct their portion of theduplex house but such insufficiency cannot be made the basis for divesting them of their ownership.

Respondent court's conclusion that petitioners were not partowners of subject land relied much on the existence of Transfer Certificate of Title No. 149347 issued in the name of SpousesJustiniano and Zenaida Fernandez only. It further concluded that

if, indeed, petitioners were entitled to 1/2 of the property, theyshould have taken steps to include their names in the title.

Section 50 of Act No. 496 (now Sec. 51 of P.D. 1529), providesthat the registration of the deed is the operative act to bind or affect the land insofar as third persons are concerned. But wherethe party has knowledge of a prior existing interest which isunregistered at the time he acquired a right to the same land, hisknowledge of that prior unregistered interest has the effect of registration as to him. The torrens system cannot be used as ashield for the commission of fraud (Gustillo v. Maravilla, 48 Phil.442). As far as private respondent Zenaida Angeles and her husband Justiniano are concerned, the non-registration of theaffidavit admitting their sale of a portion of 110 square meters of

the subject land to petitioners cannot be invoked as a defensebecause (K)nowledge of an unregistered sale is equivalent toregistration (Winkleman v. Veluz, 43 Phil. 604).

The respondent appellate court also erred in ruling that the causeof action of petitioners had already prescribed in view of theissuance in 1970 of a certificate of title in the name of theSpouses Justiniano and Zenaida Fernandez. As already stated,the issuance of a certificate of title in the name appearing therein

does not preclude petitioners from asserting their right of ownership over the land in question. Time and again it has beenruled that the torrens system should not be used as a shield toprotect fraud. Moreover, prescription cannot be consideredagainst petitioners who had been in possession of subjectpremises from the time it was purchased from the de Torresspouses in 1967 and continue to possess the same under claimof ownership. There is no sufficient basis for the respondent courtto conclude that spouses Zenaida and Justiniano werepossessing the entire property adversely against petitioners. Atmost, the first time that respondent Zenaida Fernandez claimedadverse possession of the entire premises was when shedemanded from petitioners the possession of the unit possessedby them in a letter dated October 22, 1977 (Exhibit "F")emboldened by a decision of the Juvenile and Domestic

Relations Court awarding the premises to her. The decision of private respondent to claim total ownership of the premises wasin fact, pursued only half-heartedly by her because the secondtime that she demanded possession of the premises was four (4)years after or on June 21, 1981, after an action to quiet title wasfiled by petitioners on June 9,1981. In Almanza v. Arguelles, L-49250, December 21, 1987, We held that, "prescription cannotbe invoked in an action for reconveyance, which is, in effect anaction to quiet title against the plaintiff therein who is inpossession of the land in question. As lawful possessor andowner of the disputed portion, her cause of action for reconveyance which, in effect, seeks to quiet title to property inone's possession is imprescriptible (also cited in Caragay-Laynov. Court of Appeals, 133 SCRA 718, citing Sapto et al. v.Fabiana, 103 Phil. 683 and Faja v. C.A., 75 SCRA 441). Thereason, we explained in Bucton v. Gabar , L-36359, January 31,1974, 55 SCRA 499, is:

... that while the owner in fee continues liable to an action,proceeding, or suit upon the adverse claim, he has a continuingright to the aid of a court of equity to ascertain and determine thenature of such claim and its effect on his title, or to assert anysuperior equity in his favor. He may wait until his possession isdisturbed or his title is attacked before taking steps to vindicatehis right. But the rule that the statute of limitations is not availableas a defense of an action to remove a cloud from title can only beinvoked by a complainant when he is in possession. .... (44 Am.Jur., p. 47)

The judgment in the petition for dissolution of the conjugalpartnership filed with the Juvenile and Domestic Relations Courtof private respondent Zenaida Angeles-Fernandez and her husband Justiniano where the property in question was awardedto Zenaida cannot bind the petitioners who were not partiesthereto. The failure of petitioners to intervene in the saidproceedings for dissolution of conjugal partnership is not fatal.Petitioners may file their claim of ownership over the one-thirdportion of the property in question separately which they didwhen they brought the complaint for quieting of title before thetrial court.

As already stated, the affidavit executed by Justiniano Fernandezand private respondent Zenaida Angeles Fernandez

acknowledged the sale of one-third (1/3) portion of the subjectland to petitioners-spouses Florentino and Vivencia Fernandezand the receipt by the former of the amount of P5,500.00 asconsideration thereof. However, the trial court in awarding thesaid one-third portion to petitioners also ordered the payment bythem of P 2,225.00 to private respondent Zenaida Angeles-Fernandez, oblivious of the fact that only 1/3 and not one half (1/2) pertain to petitioners and that the P5,500.00 advanced bypetitioners at the time the subject property was purchased fromthe de Torres spouses was sufficient payment for the 1/3 portionawarded to them.

ACCORDINGLY, the petition is GRANTED. The decision of respondent appellate court is REVERSED. Judgment is hereby

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rendered declaring petitioners owners of 1) one-third (1/3) or 110square meters of Lot 13, Block N-19 of Pag-asa Subdivision,presently occupied by them, covered by TCT No. 149347 of theRegister of Deeds of Quezon City; and 2) the portion of theduplex house occupied by them after payment of the balance of P l,349.70 advanced by the husband of private respondentZenaida Fernandez for the construction thereof, with interest atthe legal rate from November 1969 until fully paid.

SO ORDERED.

Narvasa (Chairman), Cruz, Gancayco and Griño-Aquino, JJ.,concur.

G.R. No. 154409 June 21, 2004

Spouses NOEL and JULIE ABRIGO, petitioners,

vs.ROMANA DE VERA, respondent.

D E C I S I O N

PANGANIBAN, J .:

Between two buyers of the same immovable property registeredunder the Torrens system, the law gives ownership priority to (1)the first registrant in good faith; (2) then, the first possessor ingood faith; and (3) finally, the buyer who in good faith presentsthe oldest title. This provision, however, does not apply if theproperty is not registered under the Torrens system.

The Case

Before us is a Petition for Review1

under Rule 45 of the Rules of Court, seeking to set aside the March 21, 2002 AmendedDecision

2and the July 22, 2002 Resolution

3of the Court of

Appeals (CA) in CA-GR CV No. 62391. The Amended Decisiondisposed as follows:

"WHEREFORE, the dispositive part of the original D E C I S I ON of this case, promulgated on November 19, 2001, is SETASIDE and another one is entered AFFIRMING in partand REVERSING in part the judgment appealed from, as follows:

"1. Declaring [Respondent] Romana de Vera the rightful owner and with better right to possess the property in question, being aninnocent purchaser for value therefor;

"2. Declaring Gloria Villafania [liable] to pay the following to

[Respondent] Romana de Vera and to [Petitioner-]Spouses [Noeland Julie] Abrigo, to wit:

As to [Respondent] Romana de Vera:

1. P300,000.00 plus 6% per annum as actual damages;

2. P50,000.00 as moral damages;

3. P50,000.00 as exemplary damages;

4. P30,000.00 as attorney’s fees; and

5. Cost of suit.

As to [Petitioner-]Spouses [Noel and Julie] Abrigo:

1. P50,000.00 as moral damages;

2. P50,000.00 as exemplary damages;

3. P30,000.00 as attorney’s fees;

4. Cost of suit."4

The assailed Resolution denied reconsideration.

The Facts

Quoting the trial court, the CA narrated the facts as follows:

"As culled from the records, the following are the pertinentantecedents amply summarized by the trial court:

‘On May 27, 1993, Gloria Villafania sold a house and lot locatedat Banaoang, Mangaldan, Pangasinan and covered by TaxDeclaration No. 1406 to Rosenda Tigno-Salazar and RositaCave-Go. The said sale became a subject of a suit for annulmentof documents between the vendor and the vendees.

‘On December 7, 1993, the Regional Trial Court, Br anch 40 of Dagupan City rendered judgment approving the Compromise

Agreement submitted by the parties. In the said Decision, GloriaVillafania was given one year from the date of the Compromise

Agreement to buy back the house and lot, and failure to do sowould mean that the previous sale in favor of Rosenda Tigno-Salazar and Rosita Cave-Go shall remain valid and binding andthe plaintiff shall voluntarily vacate the premises without need of any demand. Gloria Villafania failed to buy back the house andlot, so the [vendees] declared the lot in their name.

‘Unknown, however to Rosenda Tigno-Salazar and Rosita Cave-Go, Gloria Villafania obtained a free patent over the parcel of land involved [on March 15, 1988 as evidenced by OCT No. P-30522]. The said free patent was later on cancelled by TCT No.212598 on April 11, 1996.

‘On October 16, 1997, Rosenda Tigno-Salazar and Rosita Cave-Go, sold the house and lot to the herein [Petitioner-Spouses Noeland Julie Abrigo].

‘On October 23, 1997, Gloria Villafania sold the same house andlot to Romana de Vera x x x. Romana de Vera registered the saleand as a consequence, TCT No. 22515 was issued in her name.

‘On November 12, 1997, Romana de Vera filed an action for Forcible Entry and Damages against [Spouses Noel and Julie

Abrigo] before the Municipal Trial Court of Mangaldan,Pangasinan docketed as Civil Case No. 1452. On February 25,1998, the parties therein submitted a Motion for Dismissal in viewof their agreement in the instant case that neither of them canphysically take possession of the property in question until theinstant case is terminated. Hence the ejectment case wasdismissed.’

5

"Thus, on November 21, 1997, [petitioners] filed the instant case[with the Regional Trial Court of Dagupan City] for the annulmentof documents, injunction, preliminary injunction, restraining order and damages [against respondent and Gloria Villafania].

"After the trial on the merits, the lower court rendered theassailed Decision dated January 4, 1999, awarding theproperties to [petitioners] as well as damages. Moreover, x x xGloria Villafania was ordered to pay [petitioners and privaterespondent] damages and attorney’s fees.

"Not contented with the assailed Decision, both parties [appealedto the CA]."

6

Ruling of the Court of Appeals

In its original Decision promulgated on November 19, 2001, theCA held that a void title could not give rise to a valid one andhence dismissed the appeal of Private Respondent Romana deVera.

7Since Gloria Villafania had already transferred ownership

to Rosenda Tigno-Salazar and Rosita Cave-Go, the subsequentsale to De Vera was deemed void.

The CA also dismissed the appeal of Petitioner-Spouses Abrigoand found no sufficient basis to award them moral and exemplarydamages and attorney’s fees.

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On reconsideration, the CA issued its March 21, 2002 AmendedDecision, finding Respondent De Vera to be a purchaser in goodfaith and for value. The appellate court ruled that she had reliedin good faith on the Torrens title of her vendor and must thus beprotected.

8

Hence, this Petition.9

Issues

Petitioners raise for our consideration the issues below:

"1. Whether or not the deed of sale executed by Gloria Villafaniain favor of [R]espondent Romana de Vera is valid.

"2. Whether or not the [R]espondent Romana de Vera is apurchaser for value in good faith.

"3. Who between the petitioners and respondent has a better titleover the property in question."

10

In the main, the issues boil down to who between petitioner-

spouses and respondent has a better right to the property.

The Court’s Ruling

The Petition is bereft of merit.

Main Issue:

Bet ter Right over the Property

Petitioners contend that Gloria Villafania could not havetransferred the property to Respondent De Vera because it nolonger belonged to her.

11They further claim that the sale could

not be validated, since respondent was not a purchaser in goodfaith and for value.

12

Law on Double Sale

The present case involves what in legal contemplation was adouble sale. On May 27, 1993, Gloria Villafania first sold thedisputed property to Rosenda Tigno-Salazar and Rosita Cave-Go, from whom petitioners, in turn, derived their right.Subsequently, on October 23, 1997, a second sale was executedby Villafania with Respondent Romana de Vera.

Article 1544 of the Civil Code states the law on double sale thus:

"Art. 1544. If the same thing should have been sold to differentvendees, the ownership shall be transferred to the person whomay have first taken possession thereof in good faith, if it shouldbe movable property.

"Should it be immovable property, the ownership shall belong tothe person acquiring it who in good faith first recorded it in theRegistry of Property.

"Should there be no inscription, the ownership shall pertain to theperson who in good faith was first in the possession; and, in theabsence thereof, to the person who presents the oldest title,provided there is good faith."

Otherwise stated, the law provides that a double sale of immovables transfers ownership to (1) the first registrant in goodfaith; (2) then, the first possessor in good faith; and (3) finally, thebuyer who in good faith presents the oldest title.

13There is no

ambiguity in the application of this law with respect to landsregistered under the Torrens system.

This principle is in full accord with Section 51 of PD 152914

whichprovides that no deed, mortgage, lease or other voluntaryinstrument -- except a will -- purporting to convey or affectregistered land shall take effect as a conveyance or bind the landuntil its registration.

15Thus, if the sale is not registered, it is

binding only between the seller and the buyer but it does notaffect innocent third persons.

16

In the instant case, both Petitioners Abrigo and respondentregistered the sale of the property. Since neither petitioners nor their predecessors (Tigno-Salazar and Cave-Go) knew that theproperty was covered by the Torrens system, they registeredtheir respective sales under Act 3344.

17For her part, respondent

registered the transaction under the Torrens system18

because,

during the sale, Villafania had presented the transfer certificate of title (TCT) covering the property.

19

Respondent De Vera contends that her registration under theTorrens system should prevail over that of petitioners whorecorded theirs under Act 3344. De Vera relies on the followinginsight of Justice Edgardo L. Paras:

"x x x If the land is registered under the Land Registration Act(and has therefore a Torrens Title), and it is sold but thesubsequent sale is registered not under the Land Registration

Act but under Act 3344, as amended, such sale is not consideredREGISTERED, as the term is used under Art. 1544 x x x."

20

We agree with respondent. It is undisputed that Villafania hadbeen issued a free patent registered as Original Certificate of Title (OCT) No. P-30522.

21The OCT was later cancelled by

Transfer Certificate of Title (TCT) No. 212598, also in Villafania’sname.

22As a consequence of the sale, TCT No. 212598 was

subsequently cancelled and TCT No. 22515 thereafter issued torespondent.

Soriano v. Heirs of Magali 23

held that registration must be done inthe proper registry in order to bind the land. Since the property indispute in the present case was already registered under theTorrens system, petitioners’ registration of the sale under Act3344 was not effective for purposes of Article 1544 of the CivilCode.

More recently, in Naawan Community Rural Bank v. Court of Appeals,

24the Court upheld the right of a party who had

registered the sale of land under the Property RegistrationDecree, as opposed to another who had registered a deed of final conveyance under Act 3344. In that case, the "priority intime" principle was not applied, because the land was alreadycovered by the Torrens system at the time the conveyance wasregistered under Act 3344. For the same reason, inasmuch asthe registration of the sale to Respondent De Vera under theTorrens system was done in good faith, this sale must be upheldover the sale registered under Act 3344 to Petitioner-Spouses

Abrigo.

Radiowealth Finance Co. v. Palileo

25

explained the difference inthe rules of registration under Act 3344 and those under theTorrens system in this wise:

"Under Act No. 3344, registration of instruments affectingunregistered lands is ‘without prejudice to a third party with abetter right.’ The aforequoted phrase has been held by this Courtto mean that the mere registration of a sale in one’s favor doesnot give him any right over the land if the vendor was notanymore the owner of the land having previously sold the sameto somebody else even if the earlier sale was unrecorded.

"The case of Carumba vs. Court of Appeals26

is a case in point. Itwas held therein that Article 1544 of the Civil Code has no

application to land not registered under Act No. 496. Like in thecase at bar, Carumba dealt with a double sale of the sameunregistered land. The first sale was made by the original ownersand was unrecorded while the second was an execution sale thatresulted from a complaint for a sum of money filed against thesaid original owners. Applying [Section 33], Rule 39 of theRevised Rules of Court,

27this Court held that Article 1544 of the

Civil Code cannot be invoked to benefit the purchaser at theexecution sale though the latter was a buyer in good faith andeven if this second sale was registered. It was explained that thisis because the purchaser of unregistered land at a sheriff’sexecution 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.

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6 APRIL ISIDRO

"Applying this principle, x x x the execution sale of unregisteredland in favor of petitioner is of no effect because the land nolonger belonged to the judgment debtor as of the time of the saidexecution sale."

28

Petitioners cannot validly argue that they were fraudulentlymisled into believing that the property was unregistered. ATorrens title, once registered, serves as a notice to the wholeworld.

29All persons must take notice, and no one can plead

ignorance of the registration.30

Good-Faith Requirement

We have consistently held that Article 1544 requires the secondbuyer to acquire the immovable in good faith and to register it ingood faith.

31Mere registration of title is not enough; good faith

must concur with the registration.32

We explained the rationalein Uraca v. Court of Appeals,

33which we quote:

"Under the foregoing, the prior registration of the disputedproperty by the second buyer does not by itself confer ownershipor a better right over the property. Article 1544 requires that suchregistration must be coupled with good faith. Jurisprudence

teaches us that ‘(t)he governing principle is primus tempore, potior jure (first in time, stronger in right). Knowledge gained bythe first buyer of the second sale cannot defeat the first buyer’srights except where the second buyer registers in good faith thesecond sale ahead of the first, as provided by the Civil Code.Such knowledge of the first buyer does not bar her from availingof her rights under the law, among them, to register first her purchase as against the second buyer. But inconverso,knowledge gained by the second buyer of the first sale defeatshis rights even if he is first to register the second sale, since suchknowledge taints his prior registration with bad faith. This is theprice exacted by Article 1544 of the Civil Code for the secondbuyer being able to displace the first buyer; that before thesecond 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 acquisitionuntil the title is transferred to him by registration, or failing registration, by delivery of possession.’"

34(Italics supplied)

Equally important, under Section 44 of PD 1529, every registeredowner receiving a certificate of title pursuant to a decree of registration, and every subsequent purchaser of registered landtaking such certificate for value and in good faith shall hold thesame free from all encumbrances, except those noted andenumerated in the certificate.

35Thus, a person dealing with

registered land is not required to go behind the registry todetermine the condition of the property, since such condition isnoted on the face of the register or certificate of title.

36Following

this principle, this Court has consistently held as regards

registered land that a purchaser in good faith acquires a goodtitle as against all the transferees thereof whose rights are notrecorded in the Registry of Deeds at the time of the sale.

37

Citing Santiago v. Court of Appeals,38

petitioners contend thattheir prior registration under Act 3344 is constructive notice torespondent and negates her good faith at the time she registeredthe sale. Santiagoaffirmed the following commentary of JusticeJose C. Vitug:

"The governing principle is prius tempore, potior jure (first in time,stronger in right). Knowledge by the first buyer of the second salecannot defeat the first buyer's rights except when the secondbuyer first registers in good faith the second sale (Olivares vs.

Gonzales, 159 SCRA 33). Conversely, knowledge gained by thesecond buyer of the first sale defeats his rights even if he is firstto register, since such knowledge taints his registration with badfaith (see also Astorga vs. Court of Appeals, G.R. No 58530, 26December 1984) InCruz vs. Cabana (G.R. No. 56232, 22 June1984; 129 SCRA 656), it was held that it is essential, to merit theprotection of Art. 1544, second paragraph, that the second realtybuyer must act in good faith in registering his deed of sale(citing Carbonell vs. Court of Appeals, 69 SCRA 99, Crisostomovs. CA, G.R. 95843, 02 September 1992).

x x x x x x x x x

"Registration of the second buyer under Act 3344, providing for the registration of all instruments on land neither covered by theSpanish Mortgage Law nor the Torrens System (Act 496), cannotimprove his standing since Act 3344 itself expresses thatregistration thereunder would not prejudice prior rights in goodfaith (see Carumba vs. Court of Appeals, 31 SCRA558). Registration, however, by the first buyer under Act3344 can have the effect of constructive notice to the secondbuyer that can defeat his right as such buyer in goodfaith (see Arts. 708-709, Civil Code; see also Revilla vs.Galindez , 107 Phil. 480; Taguba vs. Peralta, 132 SCRA 700). Art.1544 has been held to be inapplicable to execution sales of unregistered land, since the purchaser merely steps into theshoes of the debtor and acquires the latter's interest as of thetime the property is sold (Carumba vs. Court of Appeals, 31SCRA 558; see alsoFabian vs. Smith, Bell & Co., 8 Phil. 496) or when there is only one sale (Remalante vs. Tibe, 158 SCRA138)."

39(Emphasis supplied)

Santiago was subsequently applied in Bayoca v.Nogales,

40which held:

"Verily, there is absence of prior registration in good faith bypetitioners of the second sale in their favor. As stated inthe Santiago case, registration by the first buyer under Act No.3344 can have the effect of constructive notice to the secondbuyer that can defeat his right as such buyer. On account of theundisputed fact of registration under Act No. 3344 by [the firstbuyers], necessarily, there is absent good faith in the registrationof the sale by the [second buyers] for which they had beenissued certificates of title in their names. x x x."

41

Santiago and Bayoca are not in point. In Santiago, the firstbuyers registered the sale under the Torrens system, as can beinferred from the issuance of the TCT in their names.

42There

was no registration under Act 3344. InBayoca, when the firstbuyer registered the sale under Act 3344, the property was stillunregistered land.

43Such registration was therefore considered

effectual.

Furthermore, Revilla and Taguba, which are cited in Santiago,are not on all fours with the present case. In Revilla, the firstbuyer did not register the sale.

44In Taguba, registration was not

an issue.45

As can be gathered from the foregoing, constructive notice to thesecond buyer through registration under Act 3344 does not applyif the property is registered under the Torrens system, as in thiscase.

We quote below the additional commentary of Justice Vitug,which was omitted in Santiago. This omission was evidently thereason why petitioner misunderstood the context of the citationtherein:

"The registration contemplated under Art. 1544 has been held torefer to registration under Act 496 Land Registration Act (now PD1529) which considers the act of registration as the operative actthat binds the land (see Mediante vs. Rosabal , 1 O.G. [12]900, Garcia vs. Rosabal , 73 Phil 694). On lands covered by theTorrens System, the purchaser acquires such rights and interestas they appear in the certificate of title, unaffected by any prior lien or encumbrance not noted therein. The purchaser is notrequired to explore farther than what the Torrens title, upon itsface, indicates. The only exception is where the purchaser hasactual knowledge of a flaw or defect in the title of the seller or of

such liens or encumbrances which, as to him, is equivalent toregistration (see Sec. 39, Act 496; Bernales vs. IAC , G.R. 75336,18 October 1988;Hernandez vs. Sales, 69 Phil 744; Tajonera vs.Court of Appeals, L-26677, 27 March 1981),"

46

Respondent in Good Faith

The Court of Appeals examined the facts to determine whether respondent was an innocent purchaser for value.

47After its

factual findings revealed that Respondent De Vera was in goodfaith, it explained thus:

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"x x x. Gloria Villafania, [Respondent] De Vera’s vendor, appearsto be the registered owner. The subject land was, and still is,registered in the name of Gloria Villafania. There is nothing in her certificate of title and in the circumstances of the transaction or sale which warrant [Respondent] De Vera in supposing that sheneed[ed] to look beyond the title. She had no notice of the earlier sale of the land to [petitioners]. She ascertained and verified thather vendor was the sole owner and in possession of the subjectproperty by examining her vendor’s title in the Registry of Deedsand actually going to the premises. There is no evidence in therecord showing that when she bought the land on October 23,1997, she knew or had the slightest notice that the same wasunder litigation in Civil Case No. D-10638 of the Regional TrialCourt of Dagupan City, Branch 40, between Gloria Villafania and[Petitioners] Abrigo. She was not even a party to said case. Insum, she testified clearly and positively, without any contraryevidence presented by the [petitioners], that she did not knowanything about the earlier sale and claim of the spouses Abrigo,until after she had bought the same, and only then when shebought the same, and only then when she brought an ejectmentcase with the x x x Municipal Court of Mangaldan, known as CivilCase No. 1452. To the [Respondent] De Vera, the only legal truthupon which she had to rely was that the land is registered in thename of Gloria Villafania, her vendor, and that her title under the

law, is absolute and indefeasible. x x x."

48

We find no reason to disturb these findings, which petitionershave not rebutted. Spouses Abrigo base their position only on thegeneral averment that respondent should have been morevigilant prior to consummating the sale. They argue that had sheinspected the property, she would have found petitioners to be inpossession.

49

This argument is contradicted, however, by the spouses’ ownadmission that the parents and the sister of Villafania were stillthe actual occupants in October 1997, when Respondent DeVera purchased the property.

50The family members may

reasonably be assumed to be Villafania’s agents, who had not

been shown to have notified respondent of the first sale whenshe conducted an ocular inspection. Thus, good faith onrespondent’s part stands.

WHEREFORE, the Petition is DENIED and the assailedDecision AFFIRMED . Costs against petitioners.

SO ORDERED.

Davide, Jr., Ynares-Santiago* , Carpio, and Azcuna, JJ., concur.

G.R. No. 124242 January 21, 2005

SAN LORENZO DEVELOPMENT CORPORATION, petitioner,vs.

COURT OF APPEALS, PABLO S. BABASANTA, SPS.MIGUEL LU and PACITA ZAVALLA LU, respondents.

D E C I S I O N

TINGA, J .:

From a coaptation of the records of this case, it appears thatrespondents Miguel Lu and Pacita Zavalla, (hereinafter, theSpouses Lu) owned two (2) parcels of land situated in Sta. Rosa,Laguna covered by TCT No. T-39022 and TCT No. T-39023 bothmeasuring 15,808 square meters or a total of 3.1616 hectares.

On 20 August 1986, the Spouses Lu purportedly sold the twoparcels of land to respondent Pablo Babasanta, (hereinafter,Babasanta) for the price of fifteen pesos (P15.00) per square

meter. Babasanta made a downpayment of fifty thousand pesos(P50,000.00) as evidenced by a memorandum receipt issued by

Pacita Lu of the same date. Several other payments totaling twohundred thousand pesos (P200,000.00) were made by

Babasanta.

Sometime in May 1989, Babasanta wrote a letter to Pacita Lu todemand the execution of a final deed of sale in his favor so thathe could effect full payment of the purchase price. In the sameletter, Babasanta notified the spouses about having receivedinformation that the spouses sold the same property to another

without his knowledge and consent. He demanded that thesecond sale be cancelled and that a final deed of sale be issuedin his favor.

In response, Pacita Lu wrote a letter to Babasanta wherein sheacknowledged having agreed to sell the property to him at fifteenpesos (P15.00) per square meter. She, however, reminded

Babasanta that when the balance of the purchase price becamedue, he requested for a reduction of the price and when she

refused, Babasanta backed out of the sale. Pacita added that shereturned the sum of fifty thousand pesos (P50,000.00) to

Babasanta through Eugenio Oya.

On 2 June 1989, respondent Babasanta, as plaintiff, filed beforethe Regional Trial Court (RTC), Branch 31, of San Pedro,Laguna, a Complaint for Specific Performance and Damages

1 against his co-respondents herein, the Spouses Lu.

Babasanta alleged that the lands covered by TCT No. T- 39022and T-39023 had been sold to him by the spouses at fifteenpesos (P15.00) per square meter. Despite his repeated demands

for the execution of a final deed of sale in his favor, respondentsallegedly refused.

In their Answer ,2 the Spouses Lu alleged that Pacita Lu obtained

loans from Babasanta and when the total advances of Pacitareached fifty thousand pesos (P50,000.00), the latter and

Babasanta, without the knowledge and consent of Miguel Lu, hadverbally agreed to transform the transaction into a contract to sellthe two parcels of land to Babasanta with the fifty thousandpesos (P50,000.00) to be considered as the downpayment for

the property and the balance to be paid on or before 31December 1987. Respondents Lu added that as of November 1987, total payments made by Babasanta amounted to only twohundred thousand pesos (P200,000.00) and the latter allegedly

failed to pay the balance of two hundred sixty thousand pesos(P260,000.00) despite repeated demands. Babasanta had

purportedly asked Pacita for a reduction of the price from fifteenpesos (P15.00) to twelve pesos (P12.00) per square meter and

when the Spouses Lu refused to grant Babasanta’s request, the

latter rescinded the contract to sell and declared that the originalloan transaction just be carried out in that the spouses would beindebted to him in the amount of two hundred thousand pesos(P200,000.00). Accordingly, on 6 July 1989, they purchased

Interbank Manager’s Check No. 05020269 in the amount of twohundred thousand pesos (P200,000.00) in the name of

Babasanta to show that she was able and willing to pay thebalance of her loan obligation.

Babasanta later filed an Amended Complaint dated 17 January1990

3 wherein he prayed for the issuance of a writ of preliminary

injunction with temporary restraining order and the inclusion of the Register of Deeds of Calamba, Laguna as party defendant.He contended that the issuance of a preliminary injunction wasnecessary to restrain the transfer or conveyance by the SpousesLu of the subject property to other persons.

The Spouses Lu filed their Opposition4 to the amended complaint

contending that it raised new matters which seriously affect their substantive rights under the original complaint. However, the trialcourt in its Order dated 17 January 1990

5 admitted the amended

complaint.

On 19 January 1990, herein petitioner San Lorenzo DevelopmentCorporation (SLDC) filed a Motion for Intervention

6 before the

trial court. SLDC alleged that it had legal interest in the subjectmatter under litigation because on 3 May 1989, the two parcels of land involved, namely Lot 1764-A and 1764-B, had been sold to i tin a Deed of Absolute Sale with Mortgage.

7 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.

In his Opposition to SLDC’s motion for intervention,8 respondent

Babasanta demurred and argued that the latter had no legalinterest in the case because the two parcels of land involvedherein had already been conveyed to him by the Spouses Lu andhence, the vendors were without legal capacity to transfer or dispose of the two parcels of land to the intervenor.

Meanwhile, the trial court in its Order dated 21 March 1990allowed SLDC to intervene. SLDC filed its Complaint-in-Intervention on 19 April 1990.

9 Respondent Babasanta’s motion

for the issuance of a preliminary injunction was likewise granted

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8 APRIL ISIDRO

by the trial court in its Order dated 11 January 199110

conditionedupon his filing of a bond in the amount of fifty thousand pesos(P50,000.00).

SLDC in its Complaint-in-Intervention alleged that on 11 February1989, the Spouses Lu executed in its favor anOption to Buy thelots subject of the complaint. Accordingly, it paid an option moneyin the amount of three hundred sixteen thousand one hundredsixty pesos (P316,160.00) out of the total consideration for the

purchase of the two lots of one million two hundred sixty-four thousand six hundred forty pesos (P1,264,640.00). After the

Spouses Lu received a total amount of six hundred thirty-twothousand three hundred twenty pesos (P632,320.00) they

executed on 3 May 1989 a Deed of Absolute Sale withMortgage in its favor. SLDC added that the certificates of titleover the property were delivered to it by the spouses clean andfree from any adverse claims and/or notice of lis pendens. SLDCfurther alleged that it only learned of the filing of the complaintsometime in the early part of January 1990 which prompted it tofile the motion to intervene without delay. Claiming that it was abuyer in good faith, SLDC argued that it had no obligation to lookbeyond the titles submitted to it by the Spouses Lu particularlybecause Babasanta’s claims were not annotated on thecertificates of title at the time the lands were sold to it.

After a protracted trial, the RTC rendered its Decision on 30 July1993 upholding the sale of the property to SLDC. It ordered theSpouses Lu to pay Babasanta the sum of two hundred thousandpesos (P200,000.00) with legal interest plus the further sum of

fifty thousand pesos (P50,000.00) as and for attorney’s fees. On

the complaint-in-intervention, the trial court ordered the Register of Deeds of Laguna, Calamba Branch to cancel the notice of lis

pendens annotated on the original of the TCT No. T-39022 (T-7218) and No. T-39023 (T-7219).

Applying Article 1544 of the Civil Code, the trial court ruled thatsince both Babasanta and SLDC did not register the respectivesales in their favor, ownership of the property should pertain tothe buyer who first acquired possession of the property. The trial

court equated the execution of a public instrument in favor of SLDC as sufficient delivery of the property to the latter. Itconcluded that symbolic possession could be considered to havebeen first transferred to SLDC and consequently ownership of the property pertained to SLDC who purchased the property ingood faith.

Respondent Babasanta appealed the trial court’s decision to theCourt of Appeals alleging in the main that the trial court erred inconcluding that SLDC is a purchaser in good faith and inupholding the validity of the sale made by the Spouses Lu infavor of SLDC.

Respondent spouses likewise filed an appeal to the Court of Appeals. They contended that the trial court erred in failing toconsider that the contract to sell between them and Babasantahad been novated when the latter abandoned the verbal contractof sale and declared that the original loan transaction just becarried out. The Spouses Lu argued that since the propertiesinvolved were conjugal, the trial court should have declared theverbal contract to sell between Pacita Lu and Pablo Babasantanull and void ab initio for lack of knowledge and consent of Miguel Lu. They further averred that the trial court erred in notdismissing the complaint filed by Babasanta; in awardingdamages in his favor and in refusing to grant the reliefs prayedfor in their answer.

On 4 October 1995, the Court of Appeals renderedits Decision

11 which set aside the judgment of the trial court. It

declared that the sale between Babasanta and the Spouses Luwas valid and subsisting and ordered the spouses to execute thenecessary deed of conveyance in favor of Babasanta, and thelatter to pay the balance of the purchase price in the amount of two hundred sixty thousand pesos (P260,000.00). The appellate

court ruled that the Absolute Deed of Sale with Mortgage in favor of SLDC was null and void on the ground that SLDC was apurchaser in bad faith. The Spouses Lu were further ordered toreturn all payments made by SLDC with legal interest and to payattorney’s fees to Babasanta.

SLDC and the Spouses Lu filed separate motions for reconsideration with the appellate court.

12 However, in

aManifestation dated 20 December 1995,13

the Spouses Lu

informed the appellate court that they are no longer contestingthe decision dated 4 October 1995.

In its Resolution dated 11 March 1996,14

the appellate courtconsidered as withdrawn the motion for reconsideration filed bythe Spouses Lu in view of their manifestation of 20 December 1995. The appellate court denied SLDC’s motion for reconsideration on the ground that no new or substantialarguments were raised therein which would warrant modification

or reversal of the court’s decision dated 4 October 1995.

Hence, this petition.

SLDC assigns the following errors allegedly committed by theappellate court:

THE COURT OF APPEALS ERRED IN HOLDING THAT SANLORENZO WAS NOT A BUYER IN GOOD FAITH BECAUSEWHEN THE SELLER PACITA ZAVALLA LU OBTAINED FROMIT THE CASH ADVANCE OF P200,000.00, SAN LORENZO

WAS PUT ON INQUIRY OF A PRIOR TRANSACTION ON THEPROPERTY.

THE COURT OF APPEALS ERRED IN FAILING TO

APPRECIATE THE ESTABLISHED FACT THAT THE ALLEGEDFIRST BUYER, RESPONDENT BABASANTA, WAS NOT INPOSSESSION OF THE DISPUTED PROPERTY WHEN SANLORENZO BOUGHT AND TOOK POSSESSION OF THEPROPERTY AND NO ADVERSE CLAIM, LIEN,ENCUMBRANCE OR LIS PENDENS WAS ANNOTATED ONTHE TITLES.

THE COURT OF APPEALS ERRED IN FAILING TO APPRECIATE THE FACT THAT RESPONDENT BABASANTAHAS SUBMITTED NO EVIDENCE SHOWING THAT SANLORENZO WAS AWARE OF HIS RIGHTS OR INTERESTS INTHE DISPUTED PROPERTY.

THE COURT OF APPEALS ERRED IN HOLDING THAT

NOTWITHSTANDING ITS FULL CONCURRENCE ON THEFINDINGS OF FACT OF THE TRIAL COURT, IT REVERSED

AND SET ASIDE THE DECISION OF THE TRIAL COURTUPHOLDING THE TITLE OF SAN LORENZO AS A BUYER

AND FIRST POSSESSOR IN GOOD FAITH. 15

SLDC contended that the appellate court erred in concluding thatit had prior notice of Babasanta’s claim over the property merelyon the basis of its having advanced the amount of two hundredthousand pesos (P200,000.00) to Pacita Lu upon the latter’s

representation that she needed the money to pay her obligationto Babasanta. It argued that it had no reason to suspect thatPacita was not telling the truth that the money would be used topay her indebtedness to Babasanta. At any rate, SLDC averred

that the amount of two hundred thousand pesos (P200,000.00)

which it advanced to Pacita Lu would be deducted from thebalance of the purchase price still due from it and should not beconstrued as notice of the prior sale of the land to Babasanta. Itadded that at no instance did Pacita Lu inform it that the landshad been previously sold to Babasanta.

Moreover, SLDC stressed that after the execution of the sale inits favor it immediately took possession of the property andasserted its rights as new owner as opposed to Babasanta whohas never exercised acts of ownership. Since the titles bore noadverse claim, encumbrance, or lien at the time it was sold to it,SLDC argued that it had every reason to rely on the correctnessof the certificate of title and it was not obliged to go beyond thecertificate to determine the condition of the property. Invoking the

presumption of good faith, it added that the burden rests onBabasanta to prove that it was aware of the prior sale to him butthe latter failed to do so. SLDC pointed out that the notice of lis

pendens was annotated only on 2 June 1989 long after the saleof the property to it was consummated on 3 May1989.1awphi1.nét

Meanwhile, in an Urgent Ex-Parte Manifestation dated 27 August1999, the Spouses Lu informed the Court that due to financialconstraints they have no more interest to pursue their rights inthe instant case and submit themselves to the decision of theCourt of Appeals.

16





























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On the other hand, respondent Babasanta argued that SLDCcould not have acquired ownership of the property because itfailed to comply with the requirement of registration of the sale ingood faith. He emphasized that at the time SLDC registered thesale in its favor on 30 June 1990, there was already a notice of lis

pendens annotated on the titles of the property made as early as2 June 1989. Hence, petitioner’s registration of the sale did notconfer upon it any right. Babasanta further asserted thatpetitioner’s bad faith in the acquisition of the property is evidentfrom the fact that it failed to make necessary inquiry regardingthe purpose of the issuance of the two hundred thousand pesos(P200,000.00) manager’s check in his favor.

The core issue presented for resolution in the instant petition iswho between SLDC and Babasanta has a better right over thetwo parcels of land subject of the instant case in view of thesuccessive transactions executed by the Spouses Lu.

To prove the perfection of the contract of sale in his favor,Babasanta presented a document signed by Pacita Luacknowledging receipt of the sum of fifty thousand pesos(P50,000.00) as partial payment for 3.6 hectares of farm lot

situated at Barangay Pulong, Sta. Cruz, Sta. Rosa,Laguna.

17 While the receipt signed by Pacita did not mention the

price for which the property was being sold, this deficiency wassupplied by Pacita Lu’s letter dated 29 May 1989

18 wherein she

admitted that she agreed to sell the 3.6 hectares of land toBabasanta for fifteen pesos (P15.00) per square meter.

An analysis of the facts obtaining in this case, as well as theevidence presented by the parties, irresistibly leads to theconclusion that the agreement between Babasanta and theSpouses Lu is a contract to sell and not a contract of sale.

Contracts, in general, are perfected by mere consent,19

which ismanifested by the meeting of the offer and the acceptance uponthe thing which are to constitute the contract. The offer must becertain and the acceptance absolute.

20 Moreover, contracts shall

be obligatory in whatever form they may have been entered into,

provided all the essential requisites for their validity are present.21

The receipt signed by Pacita Lu merely states that she acceptedthe sum of fifty thousand pesos (P50,000.00) from Babasanta as

partial payment of 3.6 hectares of farm lot situated in Sta. Rosa,Laguna. While there is no stipulation that the seller reserves theownership of the property until full payment of the price which is adistinguishing feature of a contract to sell, the subsequent acts of the parties convince us that the Spouses Lu never intended totransfer ownership to Babasanta except upon full payment of thepurchase price.

Babasanta’s letter dated 22 May 1989 was quite telling. Hestated therein that despite his repeated requests for theexecution of the final deed of sale in his favor so that he couldeffect full payment of the price, Pacita Lu allegedly refused to doso. In effect, Babasanta himself recognized that ownership of theproperty would not be transferred to him until such time as heshall have effected full payment of the price. Moreover, had thesellers intended to transfer title, they could have easily executedthe document of sale in its required form simultaneously withtheir acceptance of the partial payment, but they did not.Doubtlessly, the receipt signed by Pacita Lu should legally beconsidered as a perfected contract to sell.

The distinction between a contract to sell and a contract of sale isquite germane. In a contract of sale, title passes to the vendeeupon the delivery of the thing sold; whereas in a contract to sell,by agreement the ownership is reserved in the vendor and is not

to pass until the full payment of the price.22

In a contract of sale,the vendor has lost and cannot recover ownership until andunless the contract is resolved or rescinded; whereas in acontract to sell, title is retained by the vendor until the fullpayment of the price, such payment being a positive suspensivecondition and failure of which is not a breach but an event thatprevents the obligation of the vendor to convey title frombecoming effective.

23

The perfected contract to sell imposed upon Babasanta theobligation to pay the balance of the purchase price. There beingan obligation to pay the price, Babasanta should have made theproper tender of payment and consignation of the price in courtas required by law. Mere sending of a letter by the vendee

expressing the intention to pay without the accompanyingpayment is not considered a valid tender of payment.

24 Consignation of the amounts due in court is essential

in order to extinguish Babasanta’s obligation to pay the balanceof the purchase price. Glaringly absent from the records is anyindication that Babasanta even attempted to make the proper consignation of the amounts due, thus, the obligation on the partof the sellers to convey title never acquired obligatory force.

On the assumption that the transaction between the parties is acontract of sale and not a contract to sell, Babasanta’s claim of ownership should nevertheless fail.

Sale, being a consensual contract, is perfected by mereconsent

25 and from that moment, the parties may reciprocally

demand performance.26

The essential elements of a contract of sale, to wit: (1) consent or meeting of the minds, that is, totransfer ownership in exchange for the price; (2) object certainwhich is the subject matter of the contract; (3) cause of theobligation which is established.

27

The perfection of a contract of sale should not, however, beconfused with its consummation. In relation to the acquisition andtransfer of ownership, it should be noted that sale is not a mode,

but merely a title. A mode is the legal means by which dominionor ownership is created, transferred or destroyed, but title is onlythe legal basis by which to affect dominion or ownership.

28 Under

Article 712 of the Civil Code, "ownership and other real rightsover property are acquired and transmitted by law, by donation,by testate and intestate succession, and in consequence of certain contracts, by tradition." Contracts only constitute titles or rights to the transfer or acquisition of ownership, while delivery or tradition is the mode of accomplishing the same.

29 Therefore,

sale by itself does not transfer or affect ownership; the most thatsale does is to create the obligation to transfer ownership. It istradition or delivery, as a consequence of sale, that actuallytransfers ownership.

Explicitly, the law provides that the ownership of the thing sold is

acquired by the vendee from the moment it is delivered to him inany of the ways specified in Article 1497 to 1501.

30 The word

"delivered" should not be taken restrictively to mean transfer of actual physical possession of the property. The law recognizestwo principal modes of delivery, to wit: (1) actual delivery; and (2)legal or constructive delivery.

Actual delivery consists in placing the thing sold in the controland possession of the vendee.

31 Legal or constructive delivery,

on the other hand, may be had through any of the following ways:the execution of a public instrument evidencing thesale;

32 symbolical tradition such as the delivery of the keys of the

place where the movable sold is being kept;33

traditio longamanu or by mere consent or agreement if the movable soldcannot yet be transferred to the possession of the buyer at thetime of the sale;34 traditio brevi manu if the buyer already hadpossession of the object even before the sale;

35 and traditio

constitutum possessorium, where the seller remains inpossession of the property in a different capacity.

36

Following the above disquisition, respondent Babasanta did notacquire ownership by the mere execution of the receipt by PacitaLu acknowledging receipt of partial payment for the property. For one, the agreement between Babasanta and the Spouses Lu,though valid, was not embodied in a public instrument. Hence, noconstructive delivery of the lands could have been effected. For another, Babasanta had not taken possession of the property atany time after the perfection of the sale in his favor or exercisedacts of dominion over it despite his assertions that he was the

rightful owner of the lands. Simply stated, there was no deliveryto Babasanta, whether actual or constructive, which is essentialto transfer ownership of the property. Thus, even on theassumption that the perfected contract between the parties was asale, ownership could not have passed to Babasanta in theabsence of delivery, since in a contract of sale ownership istransferred to the vendee only upon the delivery of the thingsold.

37

However, it must be stressed that the juridical relationshipbetween the parties in a double sale is primarily governed by

Article 1544 which lays down the rules of preference between thetwo purchasers of the same property. It provides:




















































































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10 APRIL ISIDRO

Art. 1544. If the same thing should have been sold to differentvendees, the ownership shall be transferred to the person whomay have first taken possession thereof in good faith, if it shouldbe movable property.

Should it be immovable property, the ownership shall belong tothe person acquiring it who in good faith first recorded it in theRegistry of Property.

Should there be no inscription, the ownership shall pertain to theperson who in good faith was first in the possession; and, in theabsence thereof, to the person who presents the oldest title,provided there is good faith.

The principle of primus tempore, potior jure (first in time, stronger in right) gains greater significance in case of double sale of immovable property. When the thing sold twice is an immovable,the one who acquires it and first records it in the Registry of Property, both made in good faith, shall be deemed theowner .

38 Verily, the act of registration must be coupled with good

faith— that is, the registrant must have no knowledge of thedefect or lack of title of his vendor or must not have been awareof facts which should have put him upon such inquiry andinvestigation as might be necessary to acquaint him with the

defects in the title of his vendor .39

Admittedly, SLDC registered the sale with the Registry of Deedsafter it had acquired knowledge of Babasanta’s claim.Babasanta, however, strongly argues that the registration of thesale by SLDC was not sufficient to confer upon the latter any titleto the property since the registration was attended by bad faith.Specifically, he points out that at the time SLDC registered thesale on 30 June 1990, there was already a notice of lis

pendens on the file with the Register of Deeds, the same havingbeen filed one year before on 2 June 1989.

Did the registration of the sale after the annotation of the noticeof lis pendens obliterate the effects of delivery and possession ingood faith which admittedly had occurred prior to SLDC’s

knowledge of the transaction in favor of Babasanta?

We do not hold so.

It must be stressed that as early as 11 February 1989, theSpouses Lu executed the Option to Buy in favor of SLDC uponreceiving P316,160.00 as option money from SLDC. After SLDC

had paid more than one half of the agreed purchase priceof P1,264,640.00, the Spouses Lu subsequently executed on 3

May 1989 a Deed of Absolute Sale in favor or SLDC. At the timeboth 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 betweenSLDC 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 thesame at the time of such purchase, or beforehe has notice of theclaim or interest of some other person in the property.

40 Following

the foregoing definition, we rule that SLDC qualifies as a buyer ingood faith since there is no evidence extant in the records that ithad knowledge of the prior transaction in favor of Babasanta. Atthe time of the sale of the property to SLDC, the vendors werestill the registered owners of the property and were in fact inpossession of the lands.l^vvphi1.net Time and again, this Court

has ruled that a person dealing with the owner of registered landis not bound to go beyond the certificate of title as he is chargedwith notice of burdens on the property which are noted on theface of the register or on the certificate of title.

41 In assailing

knowledge of the transaction between him and the Spouses Lu,Babasanta apparently relies on the principle of constructivenotice incorporated in Section 52 of the Property RegistrationDecree (P.D. No. 1529) which reads, thus:

Sec. 52. Constructive notice upon registration. – Everyconveyance, mortgage, lease, lien, attachment, order, judgment,instrument or entry affecting registered land shall, if registered,filed, or entered in the office of the Register of Deeds for theprovince or city where the land to which it relates lies, be

constructive notice to all persons from the time of suchregistering, filing, or entering.

However, the constructive notice operates as such¾by theexpress wording of Section 52¾from the time of the registrationof the notice of lis pendens which in this case was effected onlyon 2 June 1989, at which time the sale in favor of SLDC had longbeen consummated insofar as the obligation of the Spouses Luto transfer ownership over the property to SLDC is concerned.

More fundamentally, given the superiority of the right of SLDC tothe claim of Babasanta the annotation of the notice of lis

pendens cannot help Babasanta’s position a bit and it isirrelevant to the good or bad faith characterization of SLDC as apurchaser. A notice of lis pendens, as the Court held in Nataño v.Esteban,

42serves as a warning to a prospective purchaser or

incumbrancer that the particular property is in litigation; and thathe should keep his hands off the same, unless he intends togamble on the results of the litigation." Precisely, in this caseSLDC has intervened in the pending litigation to protect its rights.Obviously, SLDC’s faith in the merit of its cause has beenvindicated with the Court’s present decision which is the ultimatedenouement on the controversy.

The Court of Appeals has made capital43

of SLDC’s averment inits Complaint-in-Intervention

44 that at the instance of Pacita Lu it

issued a check for P200,000.00 payable to Babasanta and the

confirmatory testimony of Pacita Lu herself on cross-examination.

45 However, there is nothing in the said pleading and

the testimony which explicitly relates the amount to thetransaction between the Spouses Lu and Babasanta for whatthey attest to is that the amount was supposed to pay off theadvances made by Babasanta to Pacita Lu. In any event, theincident took place after the Spouses Lu had already executedthe Deed of Absolute Sale with Mortgage in favor of SLDC andtherefore, as previously explained, it has no effect on the legalposition of SLDC.

Assuming ex gratia argumenti that SLDC’s registration of the sale

had been tainted by the prior notice of lis pendens and assumingfurther for the same nonce that this is a case of double sale, stillBabasanta’s claim could not prevail over that of SLDC’s.In Abarquez v. Court of Appeals,

46 this Court had the occasion to

rule that if a vendee in a double sale registers the sale after hehas acquired knowledge of a previous sale, the registrationconstitutes a registration in bad faith and does not confer uponhim any right. If the registration is done in bad faith, it is as if there is no registration at all, and the buyer who has takenpossession first of the property in good faith shall be preferred.

In Abarquez, the first sale to the spouses Israel was notarizedand registered only after the second vendee, Abarquez,registered their deed of sale with the Registry of Deeds, but theIsraels were first in possession. This Court awarded the propertyto the Israels because registration of the property by Abarquezlacked the element of good faith. While the facts in the instantcase substantially differ from that in Abarquez, we would nothesitate to rule in favor of SLDC on the basis of its prior possession of the property in good faith. Be it noted that deliveryof the property to SLDC was immediately effected after theexecution of the deed in its favor, at which time SLDC had noknowledge at all of the prior transaction by the Spouses Lu infavor of Babasanta.1a\^/phi1.net

The law speaks not only of one criterion. The first criterion ispriority of entry in the registry of property; there being no priorityof such entry, the second is priority of possession; and, in theabsence of the two priorities, the third priority is of the date of

title, with good faith as the common critical element. Since SLDCacquired possession of the property in good faith in contrast toBabasanta, who neither registered nor possessed the property atany time, SLDC’s right is definitely superior to that of Babasanta’s.

At any rate, the above discussion on the rules on double salewould be purely academic for as earlier stated in this decision,the contract between Babasanta and the Spouses Lu is not acontract of sale but merely a contract to sell. In Dichoso v.Roxas,

47 we had the occasion to rule that Article 1544 does not

apply to a case where there was a sale to one party of the landitself while the other contract was a mere promise to sell the landor at most an actual assignment of the right to repurchase the









































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same land. Accordingly, there was no double sale of the sameland in that case.

WHEREFORE, the instant petition is hereby GRANTED. Thedecision of the Court of Appeals appealed from is REVERSEDand SET ASIDE and the decision of the Regional Trial Court,Branch 31, of San Pedro, Laguna is REINSTATED. No costs.

SO ORDERED.

Puno, (Chairman), Austria-Martinez, Callejo, Sr., and Chico-Nazario, JJ., concur.

G.R. No. L-76265 March 11, 1994

VIRGINIA CALALANG, petitioner,vs.

REGISTER OF DEEDS OF QUEZON CITY, ADMINISTRATOROF NATIONAL LAND TITLES AND DEEDS REGISTRATION,

LUCIA DE LA CRUZ, CONSTANCIO SIMANGAN, and IGLESIANI KRISTO, respondents.

G.R. No. L-83280 March 11, 1994

AUGUSTO M. DE LEON, JOSE M. DE CASTRO, JOSE A.PANLILEO, FELICIDAD VERGARA VDA. DE PINEDA,

FERNANDO L. VITUG I, FERNANDO M. VITUG II, FERNANDOM. VITUG III, FAUSTINO TOBIA, ELENO M. OSTREA and

FELISA C. CRISTOBAL-GENEROSO, petitioners,vs.

THE HONORABLE COURT OF APPEALS and BISHOPERANO-MANALO, respondents.

Alam pay & Manhit Law Off ice for petit ion er in G.R. 83280.

Araceli B avieraa for petit ion er in G.R. 76265.

Cuevas, De la Cuesta & De las Alas for respo nden ts INC and

Manalo.

Balgos & Perez Law Off ices for intervenors.

El iseo M. Cruz for the heirs of L ucia de la Cruz.

Cruz, Tafalla, Castil lo, Jr., Peren & As soc iates for priv ate

respondent INC.

R E S O L U T I O N

MELO, J .:

The Decision of the Second Division of this Courtpromulgated April 22, 1992 (208 SCRA 215) dismissing, for lack of merit, these two (2) consolidated petitions, isassailed by petitioners in their separate motions for reconsideration.

The assailed Decision states:

With this Court's ruling promulgated in 1984, it is our considered view that the petitioners can not raise anew thequestion of ownership of Lucia de la Cruz over Lot 671which had been determined by the Court of Appeals andaffirmed by the Supreme Court in the de la Cruz case . Well-settled in the rule enunciated in Church Assistance

Progr am, Inc. v. Sibulo , 171 SCRA 408 [1989] that:

When a right or fact has been judicially tried and determinedby a court of competent jurisdiction, so long as it remainsunreversed, it should be conclusive upon the parties andthose in privity with them in law or estate.

The Court's ruling has long been final and the issue onownership of Lot 671 finally disposed of several years ago.

This declaration must be respected and followed in theinstant case applying the principle of res judicata or,otherwise, the rule on conclusiveness of judgment. The lessfamiliar concept of less terminological usage of res jud icat a as a rule on conclusiveness of judgment refers tothe situation where the judgment in the prior action operatesas an estoppel only as to the matters actually determinedtherein or which were necessarily included therein. (De la Cruz v. Court of App eals , 187 SCRA 165 [1990]).

Inevitably, the de la Cruz ruling should be applied to thepresent petitions since the facts on which such decisionwas predicated continue to be the facts of the case beforeus now (See Rivas v. SEC , 190 SCRA 295 [1990]). Even thepetitioners substantially adopt the same findings of facts intheir pleadings. The factual inquiry with regards to thehistory of Lot 671 has already been laid to rest and may no

longer be disturbed.

xxx xxx xxx

In our capacity as the court of last resort, the petitioners tryto convince us to look or inquire into the validity of the

reconstitution proceedings initiated by Lucia de la Cruzruling, contending that the implementation of de la

Cruz ruling would deprive them of their properties withoutdue process of law. We have looked long and hard into therecords of the case but the facts and circumstances plus lawand jurisprudence on the matter do not warrant such actionfrom the Court. INK's title over Lot 671 which necessarilyincluded Lot 671-A had already become incontrovertible andindefeasible. To reopen or to question the legality of INK'stitle would defeat the purpose of our Torrens system whichseeks to insure stability by quieting titled lands and puttingto a stop forever any question of the legality of theregistration in the certificate or questions which may arisetherefrom. (de la Cruz v. de la Cruz, sup ra .) In fairness toINK, as registered owner it is entitled to rest secure in its

land title.

In view of all the foregoing, it would be for the public interestand the maintenance of the integrity and stability of theTorrens system of land registration that all transfer certificates of title derived from the reconstituted title of Eugenia de la Paz and Dorotea de la Cruz be annulled inorder to prevent the proliferation of derivative titles whichare null and void. The legality or validity of INK's title over Lot 671 has been settled. The Court has spoken and it hasdone so with finality, logically and rightly so as to assurestability in legal relations and avoid confusion. (See Ver v.

Quetul io , 163 SCRA 80 [1988]).

(pp. 224-225; 229-230.)

In G.R. No. 76265, petitioners seek a reconsideration of theaforesaid decision because allegedly, the same is contraryto the following settled principles of law and doctrines laiddown this Court, to wit:

1. That a judgment rendered in an action in personam bindsonly the parties to the action;

2. That a petition for "reconstitution" of a certificate of titlefiled in 1971, thirty years after the sale to respondent Luciade la Cruz in 1941, without personal notice to petitioners andother title holders of Lot 671-A, whose titles date from 1952,

is void and can be collaterally attacked;

3. That the registration of the sale to respondent Lucia de laCruz in the Primary Entry Book of the Register of Deeds of Manila in 1943 of a land located in Caloocan, Rizal, cannotbe the operative act to convey said property to the vendee,as the record of the title to said property was then in Pasig,Rizal and then transferred to Quezon City, after the war;

4. That the indefeasibility of a Torrens title after one year from issuance, refers to the indefeasibility of a decree of registration after one year from entry thereof in an originalregistration or cadastral proceeding, and by analogy, the

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12 APRIL ISIDRO

principle is extended to a patent issued in an administrativeproceeding, but not to a reconstitution of a certificate of titleallegedly lost, nor to the issuance of subsequent transfer

certificate of title; and

5. That respondent Iglesia ni Kristo cannot be considered asan innocent purchaser for value as far as petitioners andother title holders to Lot 671-A are concerned, because thetitles of respondent Iglesia ni Kristo are derived from the

"reconstituted" title of respondent Lucia de la Cruz issued in1971. Respondent Iglesia ni Kristo is deemed to have actualand constructive knowledge of the rights of more than 80buyers of Lot 671-A who were issued transfer certificates of

title dating from 1952.

In G.R. No. 83280, petitioners assail the decision on thefollowing grounds:

1. The decision in the de la Cruz case does not bind thepetitioners.

2. The Iglesia ni Kristo, represented by public respondent, isnot an innocent purchaser for value of the parcels of land in

dispute.

3. Petitioners, as duly registered owners of land under theTorrens system, are purchasers in good faith whose titles

have become indefeasible.

Aware of the importance of the case, the Court granted therequest of petitioners to have their motions for reconsideration be considered by the Court en banc .

At the core of the controversy is the case of Agus t ina de la Cruz et al. vs. Luc ia de la Cruz, Iglesia ni Kristo and Hon .

Court of App eals (130 SCRA 666 [1984]) which has settledonce and for all the question of ownership of Lot 671 of thePiedad Estate in Barrio Culiat, Quezon City. A portion of thislot, Lot 671-A, is the subject of these two (2) consolidatedpetitions at bar.

In said de la Cruz case , the Court found and held:

1. The mother title of Lot 671 is OCT. No. 614 registered onMarch 12, 1912 in the name of the Philippine Government.When Lot 671, with an area of 184,268 square meters, moreor less, was segregated the original title was partiallycancelled and TCT-40355 T-201 was issued to Eugenia de laPaz and Dorotea de la Cruz by virtue of Entry No. 3241 whichreads:

. . . Vendido a Eugenia de la Paz y Dorotea de la Paz yDorotea de la Cruz el Lote No. 671 del terreno en estecertificado de titulo, mediante escritura ratificada al 27 deJulio de 1931 en Manila, ante Vicente Garcia, NotarioPublico, se cancela parcialmente al presente certificado detitulo, en cuanto al lote mencianado y se expide otro anombre de las compradoras con el No. 40355, folio 5, TomoT-201 del libro de transferencias; archivandose la escriturade que se ha hecho referencia en el LegajoT-No. 40355.

2. On November 29, 1941 Eugenia de la Paz and Dorotea dela Cruz sold Lot 671 to Lucia de la Cruz and TCT No. 40355T-201 was cancelled by virtue of Entry No. 258, Page 7,volume 7, Primary Entry Book of the Registry of Deeds of Manila. Said entry reads as follows:

1. Number of Entry 2582. Date of filing:Month, day & year July 17, 1943Hour and Minute 10:15 A.M.3. Nature of Contract Sale4. Executed by Doroteo (sic)de la Cruz, et al.5. In favor of Lucia de la Cruz6. Date of Instrument 11-29-417. Relative to:

Certificate of Title No 40355Book T-2018. Papers presented by:Name Regino CleofasAddress Pasong Tamo,Quezon City9. Contract value P2,500.0010. Remark Caloocan

3. In 1971, Lucia de la Cruz petitioned for the reconstitutionof her title in the Court of First Instance of Manila. The courtgranted the petition and the Register of Deeds of Manilaissued to her TCT No. RT-58, thereby cancelling TCT 40355T-201. (at p. 698.)

4. The petition for reconstitution was duly published andproper notices posted in accordance with law; and after duehearing, was granted by the court in the exercise of itsauthority and jurisdiction. "Hence, We reject petitioners'assignment of error that the Court of Appeals erred in notdeclaring that the reconstituted title of Lucia de la Cruz isabsolutely null and void." (at p. 698.).

5. "With respect to the reconstituted title of Dorotea de lawhich was granted by the Court of First Instance of Rizal onDecember 14, 1945 and TCT 5284 of the Register of Deeds of Quezon City was issued in substitution and/or reconstitutionof TCT 40355 of the Register of Deeds of Rizal, . . . it may betrue that the order granting reconstitution was null and voidby reason of the failure to cause the necessary publicationof the petition, and, therefore, the reconstituted title wasineffective. More than that, it is established that Dorotea dela Cruz and Eugenia de la Paz had previously sold the landto Lucia de la Cruz on November 29, 1941 as indicated inEntry No. 258 so that Dorotea de la Cruz was no longer theowner at the time she petitioned for reconstitution." (at pp.298-699.)

6. "Nonetheless, it is not disputed that Dorotea de la Cruztogether with Eugenia de la Paz were the registered ownersof Lot 671 under TCT 40355, T-201 of the Register of Deedsof Rizal and they could legally transfer the same to Lucia dela Cruz who thereafter sold in favor of Iglesia ni Kristo." (atp. 699.)

7. Under Section 38 of the Land Registration Act, "theregistered title of Lucia de la Cruz reconstituted as TCT No.RT-58 in 1971 became indefeasible and incontrovertible oneyear from its issuance. As registered owner, Lucia de la Cruzhad the perfect and legal right to sell, assign, and conveythe property to respondent Iglesia ni Kristo who as

purchaser for value in good faith hold the same free from allencumbrances except those noted in said certificate (Sec. 39Land Registration Act). The Iglesia may then safely rely onthe correctness of the certificate of title issued therefor andthe will in no way oblige him to go behind the certificate todetermine the condition of the property". (at p. 7063.)

The rule is well-settled that once a decision becomes final,the Court can no longer amend, modify, much less, set asidethe same (Adez Realty Inc. vs. Court o f Ap peals , 212 SCRA625 [1992]); otherwise, endless litigation will result (Fabular vs. Court of Appeals, 119 SCRA 329 [1982])

In fact, in Duenas vs. Mandi (151 SCRA 530 [1987]) cited

in Adez , we held that the trial court and the appellate courtmay have committed error in the assignment or partition of the eight (8) parcels of land to the parties in said case, butconsidering that their judgments are already final, the error,assuming one was committed, can no longer be amended or corrected.

In Icao vs. Apal isok (180 SCRA 680 [1989]), likewise citedin Adez , we ruled that even the subsequent discovery of anerroneous imposition of a penalty will not justify correctionof the judgment after it has become final.

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Our decision in these two consolidated petitions is anapplication of this well-established rule, that once a decisionbecomes final, the Court can no longer modify, amend,much less, set aside the same. To grant a reconsideration of this decision would also reconsider, reverse, and set asideour 1984 decision which was long become final. For, whilethe 1984 decision declared the reconstituted title RT-58 of Lucia de la Cruz valid and legal, petitioners would want us toreach 10 years back and declare the same title null and void;while the 1984 decision declared the Iglesia ni Kristo apurchaser in good faith and for value, petitioners wouldwant us to do a complete turn around and find the Iglesia niKristo a purchaser in bad faith.

In the case of Legard a vs. Savellano (158 SCRA 194 [1988]the Court stated:

. . . It is a general rule common to all civilized system of jurisprudence, that the solemn and deliberate sentence of the law, pronounced by its appointed organs, upon adisputed fact or a state of facts, should be regarded as afinal and conclusive determination of the question litigated,and should forever set the controversy at rest. Indeed, it hasbeen well said that this maxim is more than a mere rule of law, more than an important principle of public policy; andthat it is not too much to say that it is a fundamental conceptin the organization of every jural system. Public policy andsound practice demand that at the risk of occasional errors,

judgments of courts should become final at some definitedate fixed by law. The very object for which courts wereconstituted was to put an end to controversies.

If we were to allow repeated suits seeking to nullify OCTNos. 1348-1355 issued to Benito Legarda, Sr. in 1907, theindefeasibility of titles issued under the Torrens systemsand land registration, which the Philippines has adopted,will be defeated and set to naught. (at p. 200.)

The Court, speaking through Justice Nocon, in Swan vs.

Court of App eals (212 SCRA 114 [1992]) stated:

It is high time that we write f in is to a litigation that has beenpending for years not only to the prejudice of the prevailingparties, but also to the prompt determination of controversies, and in violation of the fundamental conceptthat public policy and sound practice demand that

judgments of courts shall become final at some definite datefixed by law. (at p. 124)

Petitioners contend that the de la Cruz case is not applicableand that the doctrine of res judicata should not have beenapplied. We do not agree.

The doctrine res judicata actually embraces two differentconcepts: (1) bar by former judgment and (b)

conclusiveness of judgment.

The second concept — conclusiveness of judgment — states that a fact or question which was in issue in a former suit and was there judicially passed upon and determined bya court of competent jurisdiction, is conclusively settled bythe judgment therein as far as the parties to the action andpersons in privity with them are concerned and cannot beagain litigated in any future action between such parties or their privies, in the same court or any other court of concurrent jurisdiction on either the same or different cause

of action, while the judgment remains unreversed by proper authority. It has been held that in order that a judgment inone action can be conclusive as to a particular matter inanother action between the same parties or their privies, it isessential that the issue be identical. If a particular point or question is in issue in the second action, and the judgmentwill depend on the determination of that particular point or question, a former judgment between the same parties or their privies will be final and conclusive in the second if thatsame point or question was in issue and adjudicated in thefirst suit (Nabus vs. Court of App eals , 193 SCRA 732 [1991]).Identity of cause of action is not required but merely identityof issue.

Justice Feliciano, in Smith B ell & Comp any (Phils.), Inc. vs.

Court of Appeals (197 SCRA 201, 210 [1991]),reiterated Lop ez vs. Reyes (76 SCRA 179 [1977]) in regard tothe distinction between bar by former judgment which barsthe prosecution of a second action upon the same claim,demand, or cause of action, and conclusiveness of

judgment which bars the relitigation of particular facts or issues in another litigation between the same parties on adifferent claim or cause of action.

The general rule precluding the relitigation of material factsor questions which were in issue and adjudicated in former action are commonly applied to all matters essentiallyconnected with the subject matter of the litigation. Thus, itextends to questions necessarily implied in the final

judgment, although no specific finding may have been madein reference thereto and although such matters were directlyreferred to in the pleadings and were not actually or formallypresented. Under this rule, if the record of the former trialshows that the judgment could not have been renderedwithout deciding the particular matter, it will be consideredas having settled that matter as to all future actions betweenthe parties and if a judgment necessarily presupposescertain premises, they are as conclusive as the judgment

itself . . .

(at pp. 186-187.)

The issue of the validity of the reconstituted title of Lucia dela Cruz over Lot 671 of the Piedad Estate, the issue of whether or not the Iglesia ni Kristo was an innocentpurchaser for value and in good faith, and the issue of thevalidity of the reconstituted title of Dorotea de la Cruz andEugenia de la Paz (herein petitioners' predecessors-in-interest) were actually, directly, and expressly raised,controverted, litigated and resolved in our 1984 decision.Applying the rule on conclusiveness of judgment, theseissue may no longer be relitigated in these present petitions.

Petitioners cannot evade the conclusive effect of the 1984decision, merely because they were not impleaded parties inthe said case. It has been said that the foundation principleupon which the doctrine of res judicata rests is that partiesought no to be permitted to litigate the same issue morethan once; that, when a right or fact has been judicially triedand determined by a court of competent jurisdiction, or anopportunity for such trials has been given, the judgment of the court, so long as it remains unreversed, should beconclusive upon the parties those in privity with them in lawor estate. (Nabus vs. Court of App eals , supra ).

In the case of Vda. de Medina vs. Cruz (161 SCRA 36 [1988]),

the Court stated:

The crucial issue in this case is whether or not the decisionin Civil Case No. C-120 which has long become final andexecutory can be enforced against the petitioner who is nota party to the aforementioned case.

Petitioner alleged in her memorandum that she is notaffected by the decision in C-120 as persons who are notparties to a suit are not bound by the judgment and that shepurchased the lot in good faith from an entirely differentperson — the Heirs of Don Mariano San Pedro y Estebanand not from either the plaintiffs or defendants of theaforesaid case.

It is a generally accepted principle "that no man shall beaffected by any proceeding to which he is a stranger . . .

[but] being a privy, the petitioner can be reached by theorder of execution and Writ of Demolition.

(at pp. 43-44.)

Also, in the case of Varsity Hills , Inc. vs. Navarro (43 SCRA503 [1972]), the Court ruled:

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In the face of these declarations in a final decisions of thehighest Court of the land, it becomes indubitable that theaction in the court below was definitely barred: for whilepresent private respondents were not parties in the 1993cause, their predecessor-in-interest Quintin Mejia was sucha party and the final judgment against him concludes andbars his successors and privies as well.

(at pp. 510-511.)

Admittedly, petitioners derived their title from AmandoClemente and/or Clemville Subdivision. Amando Clementederived his title from Dorotea de la Cruz and Eugenia de laPaz. Being privies and/or successors in interest to theparties in the 1984 decision, petitioners are bound by said

decision.

Likewise untenable is petitioners' contention that the

reconstituted titled of Lucia de la Cruz, RT-58, is void.

Proceedings for judicial reconstitution or certificates of titleare proceedings in rem . Thus, notice of hearing by proper publication is sufficient to clothe the Court with jurisdiction

and the mere fact that a person purporting to have alegitimate claim in the property did not receive personalnotice is not sufficient ground to invalidate the proceedings.

In Adez Realty, Inc. vs. Court of Appeals (212 SCRA 625[1992]), the Court, through Justice Bellosillo, held:

Besides, as early as 1910, in Grey Alb a v. de la Cruz (17 Phil.41) We already ruled that the land registration proceedingsare proceedings in rem , not in personam , and therefore it isnot necessary to give personal notice to the owners or claimants of the land sought to be registered, in order tovest the courts with power and authority over the res. Thus,while, it may be true that no notice was sent by registered

mail to petitioners when the judicial reconstitution of titlewas sought, such failure, however, did not amount to a

jurisdictional defect. (See PNR vs. De la Vina & Zamacona,109 Phil. 342). In Register of Deeds of Malabon vs. RTC,

Malabon, Metro Manila, Br. 170 (G.R. No. 886623, February 5,1990, 181 SCRA 788), We said that "the purpose of thepublication of the notice of the petition for reconstitution inthe Official Gazette is to apprise the whole world that such apetition has been filed and that whoever is minded tooppose it for good cause may do so within thirty (30) daysbefore the date set by the court for hearing the petition. It isthe publication of such notice that brings in the whole wordas a party in the case and vests the court with jurisdiction tohear and decide it." Thus, notice of hearing by proper publication in the Official Gazette is sufficient to clothe thecourt with jurisdiction, and the mere fact that a personpurporting to have a legitimate claim in the property did notreceive personal notice is not sufficient ground to invalidatethe proceedings. (at p. 628.)

Besides, the official records of the Quezon City MunicipalHall, as certified to by the Office of the City Assessor of Quezon City (pp. 456-556, Rollo of G.R. No. 83280) show thatthere are no improvements whatsoever on the property inquestion thus signifying that the property is unoccupied.Therefore, it would have been impossible for Lucia de laCruz to notify petitioners.

Be this as it may, the issue of the validity of the 1971

reconstitution proceedings is no longer a valid issue inthese petitions at bar, its validity having already beenresolved with finality in the 1984 decision.

The contention that the registration of the November 29,1941 sale by Dorotea de la Cruz and Eugenia de la Paz toLucia de la Cruz, with the Register of Deeds of Manila isirregular deserves scant consideration.

As certified to by the Administrator of the Land. RegistrationAuthority (p. 448, Rollo of G.R. No. 83280) the City of Manilaand the nearby towns and cities were treated as a singlepolitical unit, that is Greater Manila, during the Japanese

Occupation. Thus, the Excerpts from volume 7 of theRegistry Book of Manila, year 1943 (p. 447, Rollo of G.R. No.83280), show, among other things, the following entries:

(a) The sale of a parcel of land located in Quezon Cityexecuted by Magdalena Estates, Inc. in favor of DionisioBravo;

(b) The mortgage of a parcel of land in Quezon City by

Antonio Zuzuareggui in favor of Elena Africa, et al.; and

(c) The sale of a parcel of land in Quezon City to Lucia de laCruz by Dorotea de la Cruz, et al.

clearly indicating that transactions involving parcels of landlocated in Quezon City were indeed recorded and registered

in the Registry of Manila.

Under the law, it is the act of registration of the deed of conveyance that serves as the operative act to convey theland registered under the Torrens system. The act of registration creates constructive notice to the whole worldof the fact of such conveyance. (Quil isadio vs. Court of

Appeals , 182 SCRA 401 [1990]; De la Calzada-Cierras vs .Court of App eals , 212 SCRA 390 [1992]).

We cannot go along with petitioners' position that their titles, because they were issued in 1952, must prevail over the title of the Iglesia ni Kristo.

The titles issued to petitioners are derived from TCT No.

5284. This title, TCT No. 5284 is the reconstituted title of Dorotea de la Cruz which was declared null and void in the1984 decision.

3. With respect to the reconstituted title of Dorotea de la

Cruz which was granted by the Court of First Instance of Rizal on December 14, 1945 and TCT 5284 of the Register of Deeds of Quezon City was issued in substitution and/or reconstitution of TCT 40355 of the Register of Deeds of Rizalby virtue of the following inscription on TCT 40335, to wit:

Se expide otra copia para el dueno del presente certificadode titulo en sustitucion del duplicado que se alega habersequemado, en virtud de na orden del juzgado de PrimeraInstancia de Rizal dictada el 14 de Deciembre, 1945, enExpediente G.L.R.O. Rec. No. 5975, y en donde se declaranulo y ninguna valor dicho duplicado quemado.

MAMERTO TINGKUNGKO

Register of Deeds Interino it may be true that the order granting reconstitution was null and void by reason of thefailure to cause the necessary publication of the petition,and therefore, the reconstituted title was ineffective. Morethan that, it is established that Dorotea de la Cruz andEugenia de la Paz had previously sold the land to Lucia de laCruz executed on November 29, 1941 as indicated in EntryNo. 258 so that Dorotea de la Cruz was no longer the owner at the time she petitioned for reconstitution. Nonetheless, itis not disputed that Dorotea de la Cruz together withEugenia de la Paz were the registered owners of Lot 671under TCT 40355, T-201 of the Register of Deeds of Rizal,and they could legally transfer the same to Lucia de la Cruzwho thereafter sold in favor of respondent Iglesia ni Kristo.

(at pp. 698-699.)

Needless to state, all subsequent certificates of titleincluding petitioners' titles are also void because of the legaltruism that the spring cannot rise higher than its source (De Santos vs. Intermediate Appel late Court , 157 SCRA 295[1988].) The law must protect and prefer the lawful holder of registered title over the transferee of a vendor bereft of anytransmissible rights (Baltazar vs. Court of Appeals , 168SCRA 354 [1988]).

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Finally, both petitions are procedurally erroneousbecause cert iorar i is not the proper remedy.

G.R. No. 76265 stemmed from a letter in consu l ta addressedby the then Acting Register of Deeds of Quezon City to theAdministrator of the National Land Titles and DeedsRegistration Administration involving the registrability of adeed of sale presented for registration. by Mr. ConstancioSimangan.

The Administrator issued a resolution dated April 4, 1988ordering the Register of Deeds to register the deed of salesubject of the consu l ta .

The Register of Deeds moved for reconsideration. Hereinpetitioner Virginia Calalang moved to intervene.

The Acting Administrator denied both motions. Calalangfiled a motion for reconsideration but the same was denied,and forthwith, Calalang filed the present petition.

The proper remedy available to Calalang is an appeal to theCourt of Appeals pursuant to Section 117 of PresidentialDecree No. 1529 and Republic Act No. 5434, andnot cert iorar i or prohibition.

Sec. 117, PD 1529 (Property Registration Decree) Procedure— . . . the party in interest who disagrees with the finalresolution, ruling or order of the Commission relative totheconsultas may appeals to the Court of Appeals within theperiod and in the manner provided in Republic Act No. 5434.

Sec. 2, RA 5434 (Uniform Procedure for Appeals) Appeals toCourt of Appeals. — Appeals to the Court of Appeals shallbe filed within fifteen (15) days from notice of the ruling,award, order, decision or judgment or from the date of itslast publication, if publication is required by law for itseffectivity; . . . If no appeal is filed within the periods herefixed, the ruling, award, order, decision or judgment shallbecome final and may be executed as provided by existinglaw.

The other case, G.R. No. 83280, stemmed from an injunctionsuit filed by Augusto de Leon et al. against the Iglesia niKristo and Bishop Manalo.

The case was dismissed by the Regional Trial Court. Insteadof appealing the order of dismissal, petitioners filed with the

Court of Appeals the following.

1. A "Motion for Reconsideration Ad Cautelam"; and

2. An "Omnibus Motion Incident to Execution of theDecision"

The Court of Appeals denied both motions. Hence, the other herein petition.

It is elementary that a petition for cert iorar i can notsubstitute for a lost appeal. The order of the Regional TrialCourt dismissing the case was appealable. Petitioners in thesecond petition failed to appeal the same, consequently theorder has already become final and may no longer bereviewed oncert iorar i .

Moreover, these petitions amount to a collateral attack onthe title of the Iglesia ni Kristo. Well-settled is the rule that acertificate of title cannot be altered, modified or cancelledexcept in a direct proceeding in accordance with law.(Section 48, PD No. 1529.)

IN VIEW OF THE FOREGOING, petitioners' Motion for Reconsiderations are hereby DENIED.

Narvasa, C.J., Cruz, Padil la, Bidin, Regalado, Nocon,

Bel los i l lo and Puno , JJ., concur.

G.R. No. L-56232 June 22, 1984

ABELARDO CRUZ (deceased) substituted by Heirs ConsueloC. Cruz, Claro C. Cruz and Stephen C. Cruz, per

Resolution, petitioners,

vs.LEODEGARIA CABANA, TEOFILO LEGASPI , ILUMINADA

CABANA and THE HONOR- ABLE COURT OFAPPEALS,* respondents.

Nazareno, Azada, Sabado & Dizon for petitioners.

Felixberto N. Boquiren for respondents.

TEEHANKEE, J .:

The Court affirms the questioned decision of the now defunctCourt of Appeals which affirmed that of the Court of FirstInstance of Quezon Province, but directs that the seller,respondent Leodegaria Cabana who sold the property inquestion twice, first to her co-respondents Teofilo Legaspi andIluminada Cabana and later to petitioner Abelardo Cruz (now

deceased), should reimburse to petitioner's heirs the amounts of P2,352.50, which the late petitioner Abelardo Cruz paid to thePhilippine National Bank to discharge the mortgage obligation of said respondent Leodegaria Cabana in favor of said bank, and of P3,397.50, representing the amount paid by said Abelardo Cruzto her as consideration of the sale with pacto de retro of thesubject property.

This is a simple case of double sale of real property. Respondentappellate court in its decision of August 13, 1980 stated thebackground facts and resolved the issue in favor of defendants-appellees, first buyers- respondents herein, and against plaintiff-appellant Abelardo Cruz, petitioner herein (substituted by hisheirs), as follows:

Defendants' evidence shows that on October 21, 1968,defendant Leodegaria Cabana sold the land in question todefendants-spouses Teofilo Legaspi and Iluminada Cabana(Exh. 1). The said defendants-spouses attempted to register thedeed of sale but said registration was not accomplished becausethey could not present the owner's duplicate of title which was atthat time in the possession of the PNB as mortgage.

Likewise, when plaintiff tried to register the deed of sale executedby Leodegaria Cabana on September 3, 1970, said plaintiff wasinformed that the owner thereof had sold the land to defendants-spouses on October 21, 1968. Plaintiff was able to register theland in his name on February 9, 1971 (Exh. A). With theadmission of both parties that the land in question was sold totwo persons, the main issue to be resolved in this appeal is as towho of said vendees has a better title to said land.

There is no dispute that the land in question was sold with right of repurchase on June 1, 1965 to defendants- spouses TeofiloLegaspi and Iluminada Cabana (Exh. 1). The said document'Bilihang Muling Mabibili' stipulated that the land can berepurchased by the vendor within one year from December 31,1966 (see par. 5, Exh. 1). lwphl@itç Said land was notrepurchased and in the meantime, however, said defendants-spouses took possession of the land.

Upon request of Leodegaria Cabana, the title of the land was lentto her in order to mortgage the property to the Philippine National

Bank. Said title was, forthwith, deposited with the PNB. OnOctober 21, 1968, defendant Leodegaria Cabana sold the landby way of absolute sale to the defendants- spouses (Exh. 2).However, on November 29, 1968 defendant sold the sameproperty to herein plaintiff and the latter was able to register it inhis name.

The transaction in question is governed by Article 1544 of theCivil Code. True it is that the plaintiff was able to register the salein his name but was he in good faith in doing so?

While the title was registered in plaintiff- appellant's name onFebruary 9, 1971 (Exh. A), it appears that he knew of the sale of

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the land to defendants-spouses Legaspi as he was informed inthe Office of the Register of Deeds of Quezon. It appears that thedefendants-spouses registered their document of sale on May13, 1965 under Primary Entry No. 210113 of the Register of Deeds (Exh. 2).

Under the foregoing circumstances, the right of ownership andtitle to the land must be resolved in favor of the defendants-spouses Legaspi on three counts. First, the plaintiff-appellant

was not in good faith in registering the title in his name.Consistent is the jurisprudence in this jurisdiction that in order that the provisions of Article 1544 of the new Civil Code may beinvoked, it is necessary that the conveyance must have beenmade by a party who has an existing right in the thing and thepower to dispose of it (10 Manresa 170, 171). It cannot be set upby a second purchaser who comes into possession of theproperty that has already been acquired by the first purchaser infull dominion (Bautista vs. Sison, 39 Phil. 615), this notwithstanding that the second purchaser records his title in thepublic registry, if the registration be done in bad faith, thephilosophy underlying this rule being that the public recordscannot be covered into instruments of fraud and oppression byone who secures an inscription therein in bad faith (Chupinghongvs. Borreros, 7 CA Rep. 699).

A purchaser who has knowledge of fact which would put himupon inquiry and investigation as to possible defects of the title of the vendor and fails to make such inquiry and investigation,cannot claim that he is a purchaser in good faith. Knowledge of aprior transfer of a registered property by a subsequent purchaser makes him a purchaser in bad faith and his knowledge of suchtransfer vitiates his title acquired by virtue of the latter instrumentof conveyance which creates no right as against the firstpurchaser (Reylago vs. Jarabe, L-20046, March 27, 1968, 22SCRA 1247).

In the second place, the defendants-spouses registered the deedof absolute sale ahead of plaintiff- appellant. Said spouses were

not only able to obtain the title because at that time, the owner'sduplicate certificate was still with the Philippine National Bank.

In the third place, defendants-spouses have been in possessionall along of the land in question. If immovable property is sold todifferent vendees, the ownership shall belong to the personacquiring it who in good faith first recorded it in the registry of property; and should there be no inscription, the ownership shallpertain to the person who in good faith was first in the possession(Soriano, et al. vs. The Heirs of Domingo Magali et al., L-15133 ,July 31, 1963, 8 SCRA 489). Priority of possession stands goodin favor of herein defendants-spouses (Evangelista vs. Abad,[CA] 36 O.G. 2913; Sanchez vs. Ramos, 40 Phil. 614, Quimsonvs, Rosete, 87 Phil. 159).

The Court finds that in this case of double sale of real property,respondent appellate court, on the basis of the undisputed facts,correctly applied the provisions of Article 1544 of the Civil Codethat

Art. 1544. If the same thing should have been sold to differentvendees, the ownership shall be transferred to the person whomay have first taken possession thereof in good faith, if it shouldbe movable property.

Should it be immovable property, the ownership shall belong tothe person acquiring it who in good faith first recorded it in theRegistry of Property.

Should there be no inscription, the ownership shall pertain to theperson who in good faith was first in the possession; and, in theabsence thereof, to the person who presents the oldest title,provided there is good faith.

There is no question that respondents-spouses Teofilo Legaspiand Iluminada Cabana were the first buyers, first on June 1, 1965under a sale with right of repurchase and later on October 21,1968 under a deed of absolute sale and that they had takenpossession of the land sold to them; that petitioner was thesecond buyer under a deed of sale dated November 29, 1968,which to all indications contrary to the text was a sale with right

of repurchase for ninety (90) days. 1 There is no question either

that respondents legaspi spouses were the first and the onlyones to be in possession of the subject property.

Said respondents spouses were likewise the first to register thesale with right of repurchase in their favor on May 13, 1965 under Primary Entry No. 210113 of the Register of Deeds. They couldnot register the absolute deed of sale in their favor and obtain thecorresponding transfer certificate of title because at that time the

seller's duplicate certificate was still with the bank. But there is noquestion, and the lower courts so found conclusively as a matter of fact, that when petitioner Cruz succeeded in registering thelater sale in his favor, he knew and he was informed of the prior sale in favor of respondents-spouses. Respondent appellatecourt correctly held that such "knowledge of a prior transfer of aregistered property by a subsequent purchaser makes him apurchaser in bad faith and his knowledge of such transfer vitiateshis title acquired by virtue of the latter instrument of conveyancewhich creates no right as against the first purchaser."

As the Court held in Carbonell vs. Court of Appeals2

"it isessential that the buyer of realty must act in good faith inregistering his deed of sale to merit the protection of the secondparagraph of [the above quoted] Article 1544." As the writer stressed in his concurring opinion therein, "(T)he governingprinciple here is prius tempore, potior jure (first in time, stronger in right). Knowledge gained by the first buyer of the second salecannot defeat the first buyer's rights except only as provided bythe Civil Code and that is where the second buyer first registersin good faith the second sale ahead of the first. Such knowledgeof the first buyer does not bar her from availing of her rightsunder the law, among them, to register first her purchase asagainst the second buyer. But in conversoknowledge gained bythe second buyer of the first sale defeats his rights even if he isfirst to register the second sale, since such knowledge taints hisprior registration with bad faith. This is the price exacted by

Article 1544 of the Civil Code for the second buyer being able todisplace the first buyer; that before the second buyer can obtain

priority over the first, he must show that he acted in good faiththroughout (i.e. in ignorance of the first sale and of the firstbuyer's rights) — from the time of acquisition until the title istransferred to him by registration or failing registration, bydelivery of possession. The second buyer must show continuinggood faith and innocence or lack of knowledge of the first saleuntil his contract ripens into full ownership through prior registration as provided by law."

Petitioner's prayer for alternative relief for reimbursement of theamount of P2,352.50 paid by him to the bank to discharge theexisting mortgage on the property and of the amount of P3,397.50 representing the price of the second sale are welltaken insofar as the seller Leodegaria Cabana is concerned.These amounts have been received by the said seller Leodegaria

Cabana on account of a void second sale and must be dulyreimbursed by her to petitioner's heirs, but the Legaspi spousescannot be held liable therefor since they had nothing to do withthe said second sale nor did they receive any benefit therefrom.Petitioner's claim for reimbursement of the amount of P102.58 asreal estate taxes paid on the property is not well taken becausethe respondents Legaspi spouses had been paying the realestate taxes on the same property since June 1, 1969.

4

ACCORDINGLY, the appealed judgment of respondent appellatecourt, upholding respondents-spouses Teofilo Legaspi andIluminada Cabana as the true and rightful owners of the propertyin litigation and ordering the issuance of a new title with thecancellation as null and void of Title No. T- 99140 obtained by

petitioner Abelardo C. Cruz, is hereby affirmed in toto. Inaccordance with the partial grant of petitioner's prayer for alternative relief as stated in the preceding paragraph hereof, theCourt hereby orders and sentences respondent LeodegariaCabana to reimburse and pay to petitioner's heirs the total sum of P5,750.00.

Melencio-Herrera, Plana, Relova, Gutierrez, Jr. and De laFuente, JJ., concur.

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