EN BANC

[G.R. No. L-27587. February 18, 1970.]

AMADO CARUMBA, petitioner, vs. THE COURT OF APPEALS,

SANTIAGO BALBUENA and ANGELES BOAQUIÑA, as Deputy
Provincial Sheriff, respondents.

Luis N. de Leon for petitioner.

Reno R. Gonzales for respondents.

SYLLABUS

1. CIVIL LAW; PURCHASE AND SALE; RULE ON DOUBLE SALE OF

UNREGISTERED LAND. — While under Article 1544, registration in good faith
prevails over possession in the event of a doubt sale by the vendor of the
same piece of land to different vendees, said article is of no application to
the case at bar. The reason is that the purchaser of unregistered land at a
sheriff's execution sale only steps into the shoes of the judgment debtor. He
merely acquires the latter's interest in the property sold as of the time the
property was levied upon.
2. ID.; ID.; SALE OF UNREGISTERED LAND, RIGHT OF PURCHASER
WHO TAKES POSSESSION THEREOF. — The deed of sale in favor of Canuto
was executed two years before the levy was made by the Sheriff. While it is
true that the said deed of sale was only embodied in a private document, the
same, coupled with the fact that the buyer (petitioner Carumba) had taken
possession of the unregistered land sold, sufficed to vest ownership on the
said buyer. So that when levy was made by the Sheriff, the judgment debtor
no longer had dominical interest nor any real right over the land that could
pass to the purchaser at the execution sale. Hence, the latter must yield the
land to petitioner Carumba.

DECISION

REYES, J.B.L., J : p

Amado Carumba petitions this Supreme Court for a certiorari to review

a decision of the Court of Appeals, rendered in its Case No. 36094-R, that
reversed the judgment in his favor rendered by the Court of First Instance of
Camarines Sur (Civil Case 4646).
The factual background and history of these proceeding is thus stated
by the Court of Appeals (pages 1-2):
"On April 12, 1956, the spouses Amado Canuto and Nemesia
Ibasco, by virtue of a `Deed of Sale of Unregistered Land with
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 Covenants of "Warranty' (Exh. A), sold a parcel of land, partly
residential and partly coconut land with a periphery (area) of 359.09
square meters, more or less, located in the barrio of Santo Domingo,
Iriga, Camarines Sur, to the spouses Amado Carumba and Benita
Canuto, for the sum of P350.00. The referred deed of sale was never
registered in the Office of the Register of Deeds of Camarines Sur,
and the Notary, Mr. Vicente Malaya, was not then an authorized
notary public in the place, as shown by Exh. 5. Besides, it has been
expressly admitted by appellee that he is the brother-in-law of Amado
Canuto, the alleged vendor of the property sold to him. Amado
Canuto is the older brother of the wife of the herein appellee, Amado
Carumba.
On January 21, 1957, a complaint (Exh. B) for a sum of money
was filed by Santiago Balbuena against Amado Canuto and Nemesia
Ibasco before the Justice of the peace Court of Iriga, Camarines Sur,
known as Civil Case No. 139 and on April 15, 1967, a decision (Exh. C)
was rendered in favor of the plaintiff and against the defendants. On
October 1, 1958, the ex-officio Sheriff, Justo V. Imperial, of Camarines
Sur, issued a "Definite Deed of Sale (Exh. D) of the property now in
question in favor of Santiago Balbuena, which instrument of sale was
registered before the Office of the Register of Deeds of Camarines
Sur, on October 3, 1958. The aforesaid property was declared for
taxation purposes (Exh. 1) in the name of Santiago Balbuena in
1958."
The Court of First Instance, finding that after execution of the
document Carumba had taken possession of the land, planting bananas,
coffee and other vegetables thereon, declared him to be the owner of the
property under a consummated sale; held void the execution levy made by
the sheriff, pursuant to a judgment against Carumba's vendor, Amado
Canuto; and nullified the sale in favor of the judgment creditor, Santiago
Balbuena. The Court, therefore, declared Carumba the owner of the litigated
property and ordered Balbuena to pay P30.00, as damages, plus the costs.
The Court of Appeals, without altering the findings of fact made by the
court of origin, declared that there having been a double sale of the land
subject of the suit Balbuena's title was superior to that of his adversary
under Article 1644 of the Civil Code of the Philippines, since the execution
sale had been properly registered in good faith and the sale to Carumba was
not recorded.
We disagree. While under the invoked Article 1544 registration in good
faith prevails over possession in the event of a doubt sale by the vendor of
the same piece of land to different vendees, said article is of no application
to the case at bar, even if Balbuena, the later vendee, was ignorant of the
prior sale made by his judgment debtor in favor of petitioner Carumba. The
reason is that the purchaser of Unregistered land at a sheriff's execution
sale only steps into the shoes of the judgment debtor, and merely acquires
the latter's interest in the property sold as of the time the property was
levied upon. This is specifically provided by section 35 of Rule 39 of the
Revised Rules of Court, the second paragraph of said section specifically
providing that:
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 "Upon the execution and delivery of said (final) deed the
purchaser, redemptioner, or his assignee shall be substituted to and
acquire all the right, title, interest, and claim of the judgment debtor
to the property as of the time of the levy, except as against the
judgment debtor in possession, in which case the substitution shall
be effective as of the time of the deed . . . " (Italics supplied)
While the time of the levy does not clearly appear, it could not have
been made prior to 15 April 1957, when the decision against the former
owners of the land was rendered in favor of Balbuena. But the deed of sale
in favor of Canuto had been executed two years before, on 12 April 1955,
and while only embodied in a private document, the same, coupled with the
fact that the buyer (petitioner Carumba) had taken possession of the
unregistered land sold, sufficed to vest ownership on the said buyer. When
the levy was made by the Sheriff, therefore, the judgment debtor no longer
had dominical interest nor any real right over the land that could pass to the
purchaser at the execution sale. 1 Hence, the latter must yield the land to
petitioner Carumba. The rule is different in case of lands covered by Torrens
titles, where the prior sale is neither recorded nor known to the execution
purchaser prior to the levy; 2 but the land here in question is admittedly not
registered under Act No. 496.
WHEREFORE, the decision of the Court of Appeals is reversed and that
of the Court of First Instance affirmed. Costs against respondent Santiago
Balbuena.
Concepcion, C.J., Dizon, Makalintal, Zaldivar, Sanchez, Castro,
Fernando, Teehankee, Barredo and Villamor, JJ., concur.

Footnotes
1. Lanci vs. Yangco, 52 Phil. 663; Laxamana vs. Carlos, 57 Phil. 722.

2. Cf. Hernandez vs. Katigbak, 69 Phil. 744; Phil. Executive Commission vs.
Abadilla, 74 Phil. 68, and cases cited.

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 FIRST DIVISION

[G.R. No. 55684. December 19, 1984.]

CHRYSLER PHILIPPINES CORPORATION , petitioner, vs. THE

HONORABLE COURT OF APPEALS and SAMBOK MOTORS CO.
(BACOLOD), respondents.

Reyes, Santayana, Tayao & Picazo Law Office for petitioner.

Alampay, Alvero & Alampay Law Office for private respondent.

DECISION

MELENCIO-HERRERA, J : p

Subject of this Petition for Review is the Decision of the then Court of
Appeals in CA-G.R. No. 65328-R reversing the judgment of the then Court of
First Instance of Rizal, Branch XX, in Civil Case No. 16624, and dismissing
petitioner Chrysler Philippines Corporation's suit for Damages against private
respondent Sambok Motors Company (Bacolod) arising from breach of
contract.
Petitioner is a domestic corporation engaged in the assembling and
sale of motor vehicles and other automotive products. Respondent Sambok
Motors Co., a general partnership, during the period relevant to these
proceedings, was its dealer for automotive products with offices at Bacolod
(Sambok, Bacolod) and Iloilo (Sambok, Iloilo). The two offices were run by
relatives. Miguel Ng was Assistant Manager for Sambok, Bacolod, while an
elder brother, Pepito Ng, was the President. 1
On September 7, 1972, petitioner filed with the Court of First Instance
of Rizal, Branch XX, Pasig, Rizal, a Complaint for Damages against Allied
Brokerage Corporation, Negros Navigation Company and Sambok, Bacolod,
alleging that on October 2, 1970, Sambok, Bacolod, ordered from petitioner
various automotive products worth P30,909.61, payable in 45 days; that on
November 25, 1970, petitioner delivered said products to its forwarding
agent, Allied Brokerage Corporation, for shipment; that Allied Brokerage
loaded the goods on board the M/S Dona Florentina, a vessel owned and
operated by Negros Navigation Company, for delivery to Sambok, Bacolod;
that when petitioner tried to collect from the latter the amount of
P31,037.56, representing the price of the spare parts plus handling charges,
Sambok, Bacolod, refused to pay claiming that it had not received the
merchandise; that petitioner also demanded the return of the merchandise
or their value from Allied Brokerage and Negros Navigation, but both denied
any liability.
In its Answer, Sambok, Bacolod, denied having received from petitioner
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 or from any of its co-defendants, the automotive products referred to in the
Complaint, and professed no knowledge of having ordered from petitioner
said articles.
Upon a Joint Motion to Dismiss filed by petitioner and Allied Brokerage,
the Trial Court on October 23, 1975, dismissed the case with prejudice
against Allied Brokerage for lack of cause of action, and also dismissed the
latter's counterclaim against petitioner. LexLib

On July 31, 1978, the Trial Court rendered its Decision dismissing the
Complaint against Negros Navigation for lack of cause of action, but finding
Sambok, Bacolod, liable for the claim of petitioner, thus:
"PREMISES CONSIDERED, the Court renders judgment as follows:
(1) The complaint against defendant Negros Navigation is
dismissed for lack of cause of action.
(2) Defendant Sambok Motors Co. (Bacolod) is ordered to pay
plaintiff Chrysler Philippines Corporation:

(a) The sum of Thirty-One Thousand Thirty Seven Pesos and

Fifty Six Centavos (P31,037.56) with interest at the rate of twelve
percent (12) per annum from January 1, 1971 until fully paid;

(b) The sum of Five Thousand Pesos as and for attorney's

fees and expenses of litigation;
(c) The costs of the suit.

(3) The counterclaim of defendant Negros Navigation and

Sambok Motors Co. (Bacolod) are dismissed for lack of merit."

The case against Negros Navigation was dismissed for failure of

petitioner and Sambok, Bacolod, to file the necessary notices and claims as
conditions precedent for a judicial action. 2
On the other hand, the Trial Court found that the act of Sambok,
Bacolod, "in refusing to take delivery of the shipment for no justifiable
reason from Negros Navigation despite having received the Bill of Lading
constituted wrongful neglect or refusal to accept and pay for the subject
shipment, by reason of which defendant Sambok Motors may be held liable
for damages."
Sambok, Bacolod, appealed. On November 26, 1980, respondent
Appellate Court set aside the appealed judgment and dismissed petitioner's
Complaint, after finding that the latter had not performed its part of the
obligation under the contract by not delivering the goods at Sambok, Iloilo,
the place designated in the Parts Order Form (Exhibits "A", "A-1" to "A-6"),
and must, therefore, suffer the loss. In other words, respondent Appellate
Court found that there was misdelivery.
Hence, this Petition for Review on Certiorari, with the following errors
assigned to respondent Court:
"I
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 "The Respondent Court of Appeals erred in finding that the issue
of misshipment or misdelivery of the automotive spare parts involved
in the litigation was raised by the private respondent Sambok Motors
Co. (Bacolod) in the Trial Court.

II

"The Respondent Court of Appeals erred in refusing to apply the

provisions of Section 18, Rule 46 of the Revised Rules of Court quoted
below, that since the question of misshipment or misdelivery was not
raised by the private respondent in the Trial Court, this issue cannot for
the first time be raised on appeal.
'Section 18. Questions that may be raised on appeal. — Whether
or not the appellant has filed a motion for new trial in the court
below, he may include in his assignment of errors any question of
law or fact that has been raised in the court below and which is
within the issues framed by the parties.'

III

"The Respondent Court of Appeals erred in finding that the

private respondent gave the alleged instruction to the petitioner to ship
the automotive spare parts to Iloilo City and not to Bacolod City.

IV

"The Respondent Court of Appeals erred in finding that the

defendant Negros Navigation notified the private respondent of the
arrival of the shipment at Bacolod City.

"The Respondent Court of Appeals erred in reversing the decision

of the Trial Court that the act of the private respondent in refusing to
take delivery of the automotive spare parts that it purchased from the
petitioner after having been notified of the shipment constitutes
wrongful neglect resulting in the loss of the cargo for which it should be
liable in damages to the petitioner."

To our minds, the matter of misdelivery is not the decisive factor for
relieving Sambok, Bacolod, of liability herein. While it may be that the Parts
Order Form (Exhibits "A", "A-1" to "A-6") specifically indicated Iloilo as the
destination, as testified to by Ernesto Ordonez, Parts Sales Representative of
petitioner, 3 Sambok, Bacolod, and Sambok, Iloilo, are actually one. In fact,
admittedly, the order for spare parts was made by the President of Sambok,
Pepito Ng, through its marketing consultant. Notwithstanding, upon receipt
of the Bill of Lading, Sambok, Bacolod, initiated, but did not pursue, steps to
take delivery as they were advised by Negros Navigation that because some
parts were missing, they would just be informed as soon as the missing parts
were located. 4
It was only four years later, however, or in 1974, when a
warehouseman of Negros Navigation, Severino Aguarte, found in their off-
shore bodega, parts of the shipment in question, but already deteriorated
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 and valueless. 5
Under the circumstances, Sambok, Bacolod, cannot be faulted for not
accepting or refusing to accept the shipment from Negros Navigation four
years after shipment. The evidence is clear that Negros Navigation could not
produce the merchandise nor ascertain its whereabouts at the time Sambok,
Bacolod, was ready to take delivery. Where the seller delivers to the buyer a
quantity of goods less than he contracted to sell, the buyer may reject them.
6

From the evidentiary record, Negros Navigation was the party

negligent in failing to deliver the complete shipment either to Sambok,
Bacolod, or to Sambok, Iloilo, but as the Trial Court found, petitioner failed to
comply with the conditions precedent to the filing of a judicial action. Thus,
in the last analysis, it is petitioner that must shoulder the resulting loss. The
general rule that before delivery, the risk of loss is borne by the seller who is
still the owner, under the principle of "res perit domino" , 7 is applicable in
petitioner's case. LLjur

In sum, the judgment of respondent Appellate Court, will have to be

sustained not on the basis of misdelivery but on non-delivery since the
merchandise was never placed in the control and possession of Sambok,
Bacolod, the vendee. 8
WHEREFORE, we hereby affirm the Decision of the then Court of
Appeals in CA-G.R. No. 65328-R, without pronouncement as to costs.
SO ORDERED.
Teehankee, Plana, Gutierrez, Jr. and De la Fuente, JJ ., concur.
Relova, J ., took no part.
Footnotes
1. Exhibit "6", Deposition, Miguel Ng, p. 4.
2. CFI Decision, Rollo, p. 140.

3. T.s.n., June 6, 1975, p. 581.

4. Folio of Exhibits, pp. 22-23, Deposition of Miguel Ng.

5. Rollo, pp. 136-137.

6. Article 1522, Civil Code.

7. Article 1504, Civil Code.

8. Article 1497, Civil Code.

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 FIRST DIVISION

[G.R. No. 154409. June 21, 2004.]

Spouses NOEL and JULIE ABRIGO, petitioners, vs. ROMANA DE

VERA, respondent.

DECISION

PANGANIBAN, J : p

Between two buyers of the same immovable property registered under

the Torrens system, the law gives ownership priority to (1) the first registrant in
good faith; (2) then, the first possessor in good faith; and (3) finally, the buyer
who in good faith presents the oldest title. This provision, however, does not
apply if the property is not registered under the Torrens system.

The Case
Before us is a Petition for Review 1 under Rule 45 of the Rules of Court,
seeking to set aside the March 21, 2002 Amended Decision 2 and the July 22,
2002 Resolution 3 of the Court of Appeals (CA) in CA-GR CV No. 62391. The
Amended Decision disposed as follows:
“WHEREFORE, the dispositive part of the original DECISION of
this case, promulgated on November 19, 2001, is SET ASIDE and
another one is entered AFFIRMING in part and 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 an innocent purchaser for value therefor;
“2. Declaring Gloria Villafania [liable] to pay the following to
[Respondent] Romana de Vera and to [Petitioner-] Spouses
[Noel and 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;

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 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 pertinent
antecedents amply summarized by the trial court:

‘On May 27, 1993, Gloria Villafania sold a house and lot
located at Banaoang, Mangaldan, Pangasinan and covered by
Tax Declaration No. 1406 to Rosenda Tigno-Salazar and Rosita
Cave-Go. The said sale became a subject of a suit for annulment
of documents between the vendor and the vendees.

‘On December 7, 1993, the Regional Trial Court, Branch 40

of Dagupan City rendered judgment approving the Compromise
Agreement submitted by the parties. In the said Decision, Gloria
Villafania was given one year from the date of the Compromise
Agreement to buy back the house and lot, and failure to do so
would mean that the previous sale in favor of Rosenda Tigno-
Salazar and Rosita Cave-Go shall remain valid and binding and
the plaintiff shall voluntarily vacate the premises without need of
any demand. Gloria Villafania failed to buy back the house and
lot, 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
Noel and Julie Abrigo].

‘On October 23, 1997, Gloria Villafania sold the same

house and lot to Romana de Vera . . . Romana de Vera registered
the sale and 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
view of their agreement in the instant case that neither of them
can physically take possession of the property in question until
the instant case is terminated. Hence the ejectment case was
dismissed.’ 5

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

“After the trial on the merits, the lower court rendered the
assailed Decision dated January 4, 1999, awarding the properties to
[petitioners] as well as damages. Moreover, . . . Gloria Villafania was
ordered to pay [petitioners and private respondent] damages and
attorney’s fees.

“Not contented with the assailed Decision, both parties [appealed

to the CA].” 6

Ruling of the Court of Appeals

In its original Decision promulgated on November 19, 2001, the CA held
that a void title could not give rise to a valid one and hence dismissed the
appeal of Private Respondent Romana de Vera. 7 Since Gloria Villafania had
already transferred ownership to Rosenda Tigno-Salazar and Rosita Cave-Go,
the subsequent sale to De Vera was deemed void.

The CA also dismissed the appeal of Petitioner-Spouses Abrigo and found

no sufficient basis to award them moral and exemplary damages and attorney’s
fees.
On reconsideration, the CA issued its March 21, 2002 Amended Decision,
finding Respondent De Vera to be a purchaser in good faith and for value. The
appellate court ruled that she had relied in good faith on the Torrens title of her
vendor and must thus be protected. 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
Villafania in favor of [R]espondent Romana de Vera is valid.
“2. Whether or not the [R]espondent Romana de Vera is a
purchaser for value in good faith.
“3. Who between the petitioners and respondent has a better
title over 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:
Better Right over the Property

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 Petitioners contend that Gloria Villafania could not have transferred the
property to Respondent De Vera because it no longer belonged to her. 11 They
further claim that the sale could not be validated, since respondent was not a
purchaser in good faith and for value. 12
Law on Double Sale
The present case involves what in legal contemplation was a double sale.
On May 27, 1993, Gloria Villafania first sold the disputed 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 executed by
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
different vendees, the ownership shall be transferred to the person
who may have first taken possession thereof in good faith, if it should
be movable property.
“Should it be immovable property, the ownership shall belong to
the person acquiring it who in good faith first recorded it in the
Registry of Property.
“Should there be no inscription, the ownership shall pertain to
the person who in good faith was first in the possession; and, in the
absence thereof, to the person who presents the oldest title, provided
there is good faith.”

Otherwise stated, the law provides that a double sale of immovables

transfers ownership to (1) the first registrant in good faith; (2) then, the first
possessor in good faith; and (3) finally, the buyer who in good faith presents the
oldest title. 13 There is no ambiguity in the application of this law with respect
to lands registered under the Torrens system.
This principle is in full accord with Section 51 of PD 1529 14 which
provides that no deed, mortgage, lease or other voluntary instrument — except
a will — purporting to convey or affect registered land shall take effect as a
conveyance or bind the land until its registration. 15 Thus, if the sale is not
registered, it is binding only between the seller and the buyer but it does not
affect innocent third persons. 16

In the instant case, both Petitioners Abrigo and respondent registered the
sale of the property. Since neither petitioners nor their predecessors (Tigno-
Salazar and Cave-Go) knew that the property was covered by the Torrens
system, they registered their respective sales under Act 3344. 17 For her part,
respondent registered the transaction under the Torrens system 18 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 the Torrens

system should prevail over that of petitioners who recorded theirs under Act
3344. De Vera relies on the following insight of Justice Edgardo L. Paras:
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 “. . . If the land is registered under the Land Registration Act (and
has therefore a Torrens Title), and it is sold but the subsequent sale is
registered not under the Land Registration Act but under Act 3344, as
amended, such sale is not considered REGISTERED, as the term is used
under Art. 1544 . . .” 20

We agree with respondent. It is undisputed that Villafania had been issued

a free patent registered as Original Certificate of Title (OCT) No. P-30522. 21 The
OCT was later cancelled by Transfer Certificate of Title (TCT) No. 212598, also
in Villafania’s name. 22 As a consequence of the sale, TCT No. 212598 was
subsequently cancelled and TCT No. 22515 thereafter issued to respondent.

Soriano v. Heirs of Magali 23 held that registration must be done in the

proper registry in order to bind the land. Since the property in dispute in the
present case was already registered under the Torrens system, petitioners’
registration of the sale under Act 3344 was not effective for purposes of Article
1544 of the Civil Code.

More recently, in Naawan Community Rural Bank v. Court of Appeals, 24

the Court upheld the right of a party who had registered the sale of land under
the Property Registration Decree, as opposed to another who had registered a
deed of final conveyance under Act 3344. In that case, the “priority in time”
principle was not applied, because the land was already covered by the Torrens
system at the time the conveyance was registered under Act 3344. For the
same reason, inasmuch as the registration of the sale to Respondent De Vera
under the Torrens system was done in good faith, this sale must be upheld over
the sale registered under Act 3344 to Petitioner-Spouses Abrigo.

Radiowealth Finance Co. v. Palileo 25 explained the difference in the rules

of registration under Act 3344 and those under the Torrens system in this wise:
IcaHTA

“Under Act No. 3344, registration of instruments affecting

unregistered lands is ‘without prejudice to a third party with a better
right.’ The aforequoted phrase has been held by this Court to mean
that the mere registration of a sale in one’s favor does not give him any
right over the land if the vendor was not anymore the owner of the
land having previously sold the same to somebody else even if the
earlier sale was unrecorded.

“The case of Carumba vs. Court of Appeals 26 is a case in point.

It was held therein that Article 1544 of the Civil Code has no application
to land not registered under Act No. 496. Like in the case at bar,
Carumba dealt with a double sale of the same unregistered land. The
first sale was made by the original owners and was unrecorded while
the second was an execution sale that resulted from a complaint for a
sum of money filed against the said original owners. Applying [Section
33], Rule 39 of the Revised Ru les of Court, 27 this Court held that
Article 1544 of the Civil Code cannot be invoked to benefit the
purchaser at the execution sale though the latter was a buyer in good
faith and even if this second sale was registered. It was explained that
this is because the purchaser of unregistered land at a sheriff’s
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 execution sale only steps into the shoes of the judgment debtor, and
merely acquires the latter’s interest in the property sold as of the time
the property was levied upon.
“Applying this principle, . . . the execution sale of unregistered
land in favor of petitioner is of no effect because the land no longer
belonged to the judgment debtor as of the time of the said execution
sale.” 28

Petitioners cannot validly argue that they were fraudulently misled into
believing that the property was unregistered. A Torrens title, once registered,
serves as a notice to the whole world. 29 All 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 second buyer to
acquire the immovable in good faith and to register it in good faith. 31 Mere
registration of title is not enough; good faith must concur with the registration.
32 We explained the rationale in Uraca v. Court of Appeals, 33 which we quote:

“Under the foregoing, the prior registration of the disputed

property by the second buyer does not by itself confer ownership or a
better right over the property. Article 1544 requires that such
registration must be coupled with good faith. Jurisprudence teaches us
that ‘(t)he governing principle is primus tempore, potior jure (first in
time, stronger in right). Knowledge gained by the first buyer of the
second sale cannot defeat the first buyer’s rights except where the
second buyer registers in good faith the second sale ahead of the first,
as provided by the Civil Code. Such knowledge of the first buyer does
not bar her from availing of her rights under the law, among them, to
register first her purchase as against the second buyer. But in
converso, knowledge gained by the second buyer of the first sale
defeats his rights even if he is first to register the second sale, since
such knowledge taints his prior registration with bad faith. This is the
price exacted by Article 1544 of the Civil Code for the second buyer
being able to displace the first buyer; that before the second buyer can
obtain priority over the first, he must show that he acted in good faith
throughout (i.e. in ignorance of the first sale and of the first buyer’s
rights) — from the time of acquisition until the title is transferred to
him by registration, or failing registration, by delivery of possession.’”
34 (Italics supplied)

Equally important, under Section 44 of PD 1529, every registered owner

receiving a certificate of title pursuant to a decree of registration, and every
subsequent purchaser of registered land taking such certificate for value and in
good faith shall hold the same free from all encumbrances, except those noted
and enumerated in the certificate. 35 Thus, a person dealing with registered
land is not required to go behind the registry to determine the condition of the
property, since such condition is noted on the face of the register or certificate
of title. 36 Following this principle, this Court has consistently held as regards
registered land that a purchaser in good faith acquires a good title as against
all the transferees thereof whose rights are not recorded in the Registry of
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 Deeds at the time of the sale. 37

Citing Santiago v. Court of Appeals, 38 petitioners contend that their prior

registration under Act 3344 is constructive notice to respondent and negates
her good faith at the time she registered the sale. Santiago affirmed the
following commentary of Justice Jose C. Vitug:
“The governing principle is prius tempore, potior jure (first in
time, stronger in right). Knowledge by the first buyer of the second sale
cannot defeat the first buyer's rights except when the second buyer
first registers in good faith the second sale (Olivares vs. Gonzales, 159
SCRA 33). Conversely, knowledge gained by the second buyer of the
first sale defeats his rights even if he is first to register, since such
knowledge taints his registration with bad faith (see also Astorga vs.
Court of Appeals, G.R. No 58530, 26 December 1984) In Cruz vs.
Cabana (G.R. No. 56232, 22 June 1984; 129 SCRA 656), it was held that
it is essential, to merit the protection of Art. 1544, second paragraph,
that the second realty buyer must act in good faith in registering his
deed of sale (citing Carbonell vs. Court of Appeals, 69 SCRA 99,
Crisostomo vs. CA, G.R. 95843, 02 September 1992).
xxx xxx xxx
“Registration of the second buyer under Act 3344, providing for
the registration of all instruments on land neither covered by the
Spanish Mortgage Law nor the Torrens System (A ct 496), cannot
improve his standing since Act 3344 itself expresses that registration
thereunder would not prejudice prior rights in good faith (see Carumba
vs. Court of Appeals, 31 SCRA 558). Registration, however, by the first
buyer under Act 3344 can have the effect of constructive notice to the
second buyer that can defeat his right as such buyer in good faith (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 the shoes of the debtor and acquires the
latter's interest as of the time the property is sold (Carumba vs. Court
of Appeals, 31 SCRA 558; see also Fabian vs. Smith, Bell & Co., 8 Phil.
496) or when there is only one sale (Remalante vs. Tibe, 158 SCRA
138).” 39 (Emphasis supplied)

Santiago was subsequently applied in Bayoca v. Nogales, 40 which held:

“Verily, there is absence of prior registration in good faith by
petitioners of the second sale in their favor. As stated in the Santiago
case, registration by the first buyer under Act No. 3344 can have the
effect of constructive notice to the second buyer that can defeat his
right as such buyer. On account of the undisputed fact of registration
under Act No. 3344 by [the first buyers], necessarily, there is absent
good faith in the registration of the sale by the [second buyers] for
which they had been issued certificates of title in their names . . .” 41

Santiago a n d Bayoca are not in point. In Santiago, the first buyers

registered the sale under the Torrens system, as can be inferred from the
issuance of the TCT in their names. 42 There was no registration under Act
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 3344. In Bayoca, when the first buyer registered the sale under Act 3344, the
property was still unregistered land. 43 Such 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 first buyer did not register the
sale. 44 In Taguba , registration was not an issue. 45
As can be gathered from the foregoing, constructive notice to the second
buyer through registration under Act 3344 does not apply if the property is
registered under the Torrens system, as in this case.
We quote below the additional commentary of Justice Vitug, which was
omitted in Santiago. This omission was evidently the reason why petitioner
misunderstood the context of the citation therein:
"The registration contemplated under Art. 1544 has been held to
refer to registration under Act 496 Land Registration Act (now PD 1529)
which considers the act of registration as the operative act that binds
the land (see Mediante vs. Rosabal, 1 O.G. [12] 900, Garcia vs.
Rosabal, 73 Phil 694). On lands covered by the Torrens System, the
purchaser acquires such rights and interest as they appear in the
certificate of title, unaffected by any prior lien or encumbrance not
noted therein. The purchaser is not required to explore farther than
what the Torrens title, upon its face, indicates. The only exception is
where the purchaser has actual knowledge of a flaw or defect in the
title of the seller or of such liens or encumbrances which, as to him, is
equivalent to registration (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. 47 After its factual findings
revealed that Respondent De Vera was in good faith, it explained thus:
“. . . Gloria Villafania, [Respondent] De Vera’s vendor, appears to
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 she need[ed] to look beyond
the title. She had no notice of the earlier sale of the land to
[petitioners]. She ascertained and verified that her vendor was the sole
owner and in possession of the subject property by examining her
vendor’s title in the Registry of Deeds and actually going to the
premises. There is no evidence in the record showing that when she
bought the land on October 23, 1997, she knew or had the slightest
notice that the same was under litigation in Civil Case No. D-10638 of
the Regional Trial Court of Dagupan City, Branch 40, between Gloria
Villafania and [Petitioners] Abrigo. She was not even a party to said
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 case. In sum, she testified clearly and positively, without any contrary
evidence presented by the [petitioners], that she did not know
anything about the earlier sale and claim of the spouses Abrigo, until
after she had bought the same, and only then when she bought the
same, and only then when she brought an ejectment case with the . . .
Municipal Court of Mangaldan, known as Civil Case No. 1452. To the
[Respondent] De Vera, the only legal truth upon which she had to rely
was that the land is registered in the name of Gloria Villafania, her
vendor, and that her title under the law, is absolute and indefeasible. . .
.” 48

We find no reason to disturb these findings, which petitioners have not

rebutted. Spouses Abrigo base their position only on the general averment that
respondent should have been more vigilant prior to consummating the sale.
They argue that had she inspected the property, she would have found
petitioners to be in possession. 49
This argument is contradicted, however, by the spouses’ own admission
that the parents and the sister of Villafania were still the actual occupants in
October 1997, when Respondent De Vera purchased the property. 50 The family
members may reasonably be assumed to be Villafania’s agents, who had not
been shown to have notified respondent of the first sale when she conducted
an ocular inspection. Thus, good faith on respondent’s part stands.
WHEREFORE, the Petition is DENIED and the assailed Decision AFFIRMED.
Costs against petitioners. AScHCD

SO ORDERED.
Davide, Jr., C .J ., Carpio and Azcuna, JJ ., concur.
Ynares-Santiago, J ., is on leave.

Footnotes

1. Rollo , pp. 3–22.

2. Id., pp. 24–31. Former Fifth Division. Penned by Justice Bernardo P.
Abesamis, with the concurrence of Justices Hilarion L. Aquino (acting
chairman) and Perlita J. Tria Tirona (member).

3. Id., p. 33.
4. CA Amended Decision, pp. 7–8; rollo, pp. 30–31.
5. CA Decision dated November 19, 2001, pp. 2–3; rollo, pp. 163–164. Citations
omitted.
6. Id., pp. 3 & 164.
7. Id., pp. 5 & 166.
8. CA Amended Decision dated March 21, 2002, p. 7; rollo, p. 30.

9. This case was deemed submitted for resolution on May 29, 2003, upon this
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 Court’s receipt of petitioners’ Memorandum signed by Atty. Villamor A.
Tolete. Respondent’s Memorandum, signed by Atty. Daniel C. Macaraeg, was
received by this Court on May 13, 2003.
10. Petitioners’ Memorandum, p. 5; rollo, p. 252.

11. Id., pp. 6 & 253.

12. Id., pp. 11 & 258.
13. Gabriel v. Mabanta , 399 SCRA 573, 580, March 26, 2003; Bayoca v.
Nogales, 340 SCRA 154, 166, September 12, 2000; Balatbat v. Court of
Appeals, 329 Phil. 858, 872, August 28, 1996.
14. “The Property Registration Decree,” June 11, 1978.
15. Radiowealth Finance Co. v. Palileo, 274 Phil. 516, May 20, 1991.
16. Revilla v. Galindez , 107 Phil. 480, 484, March 30, 1960.
17. §113 of Chapter XIII of the Property Registration Decree (PD 1529) provides:

“SEC. 113. Recording of instruments relating to unregistered lands. —

No deed, conveyance, mortgage, lease, or other voluntary instrument
affecting land not registered under the Torrens system shall be valid, except
as between the parties thereto, unless such instrument shall have been
recorded in the manner herein prescribed in the office of the Register of
Deeds for the province or city where the land lies.
"xxx xxx xxx."

The sale by Gloria Villafania to Tigno-Salazar and Cave-Go was registered

on June 18, 1993, while the sale by Tigno-Salazar and Cave-Go to the
Spouses Abrigo was registered on October 30, 1997. Petitioners’
Memorandum, p. 10; rollo, p. 257.
18. Formerly Act No. 496, “The Land Registration Act,” November 6, 1902; now
PD 1529.
19. Respondent’s Memorandum, p. 6; rollo, p. 229.
20. Id., pp. 13 & 236; citing Paras, Civil Code of the Philippines Annotated
(1990), Vol. V, p. 154.
21. Id., pp. 4 & 227.
22. Ibid.
23. 8 SCRA 489, July 31, 1963.
24. 395 SCRA 43, January 13, 2003.
25. Supra.
26. 31 SCRA 558, February 18, 1970.
27. The second paragraph of this provision states: “Upon the expiration of the
right of redemption, the purchaser or redemptioner shall be substituted to
and acquire all the rights, title, interest and claim of the judgment obligor to
the property as of the time of the levy. . . .” (Italics supplied.)
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 28. Radiowealth Finance Co. v. Palileo, supra, pp. 521–522, per Gancayco, J.
29. Alvarico v. Sola, 383 SCRA 232, 239, June 6, 2002; Legarda v. Saleeby, 31
Phil. 590, 595, October 2, 1915.

30. Ibid.
31. Gabriel v. Mabanta, supra; Martinez v. Court of Appeals, 358 SCRA 38, 50,
May 21, 2001; Bautista v. Court of Appeals, 230 SCRA 446, 454, February 28,
1994.

32. Bautista v. Court of Appeals, supra.

33. 344 Phil. 253, September 5, 1997.
34. Id., p. 265, per Panganiban, J; citing Cruz v. Cebana, 129 SCRA 656, 663,
June 22, 1984, per Teehankee, J (later CJ).
35. Lu v. Manipon, 381 SCRA 788, 796, May 7, 2002.
36. Bautista v. Court of Appeals, supra, p. 456; Radiowealth Finance Co. v.
Palileo, supra , p. 518.
37. Radiowealth Finance Co. v. Palileo, supra.
38. 247 SCRA 336, August 14, 1995.

39. Id., p. 346, per Melo, J; citing Vitug, Compendium of Civil Law and
Jurisprudence (1993), pp. 604–605.
40. Supra.
41. Id., p. 167–168, per Gonzaga-Reyes, J.
42. Supra, p. 339.
43. Supra, p. 159.
44. Supra, p. 484.
45. 132 SCRA 722, 728, October 23, 1984.

46. Vitug, Compendium of Civil Law and Jurisprudence, supra, p. 604. This
paragraph was originally between the two paragraphs cited in Santiago.
47. “An innocent purchaser for value is one who buys the property of another,
without notice that some other person has a right or interest in such property
and pays the full price for the same, at the time of such purchase or before
he has notice of the claims or interest of some other person in the property.”
De la Cruz v. De la Cruz, GR No. 146222, January 15, 2004.
48. CA Amended Decision, pp. 6–7; rollo, pp. 29–30.

49. Petitioners’ Memorandum, p. 12; id ., p. 259.

50. Id., pp. 13 & 260.

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 EN BANC

[G.R. No. L-16480. January 31, 1962.]

ARTEMIO KATIGBAK, petitioner, vs. COURT OF APPEALS,

DANIEL EVANGELISTA and V. K. LUNDBERG, respondents.

Benjamin J. Molina for petitioner.

Jeus B. Santos for respondent V. K. Lundberg.
Ledesma, Puno, Guytingco, Antonio & Associates for respondent Daniel
Evangelista.

DECISION

PAREDES, J : p

This case arose from an agreed purchase and sale of a Double Drum
Carco Tractor Winch. Artemio Katigbak upon reading an advertisement for
the sale of the winch placed by V. K. Lundberg, owner and operator of the
International Tractor and Equipment Co., Ltd., went to see Lundberg and
inspected the equipment. The price quoted was P12,000.00. Desiring a
reduction of the price, Katigbak was referred to Daniel Evangelista, the
owner. After the meeting, it was agreed that Katigbak was to purchase the
winch for P12,000.00, payable at P5,000.00 upon delivery and the balance of
P7,000.00 within 60 days. The condition of the sale was that the winch would
be delivered in good condition. Katigbak was apprised that the winch needed
some repairs, which could be done in the shop of Lundberg. It was then
stipulated that the amount necessary for the repairs will be advanced by
Katigbak but deductible from the initial payment of P5,000.00. The repairs
were undertaken and the total of P2,029.85 for spare parts was advanced by
Katigbak for the purpose. For one reason or another, the sale was not
consummated and Katigbak sued Evangelista, Lundberg and the latter's
company, for the refund of such amount.
Lundberg and Evangelista filed separate Answers to the complaint, the
former alleging non-liability for the amount since the same (obligation for
refund) was purely a personal account between defendant Evangelista and
plaintiff Katigbak. Lundberg asked P500.00 by way of actual and
compensatory damages and P5,000.00 as moral damages, claiming that the
filing of the suit was malicious; that there is a misjoinder because he is a
stranger in the case, not being a party to the agreement between
Evangelista and Katigbak.
Evangelista, on his part, claimed that while there was an agreement
between him and Katigbak for the purchase and sale of the winch and that
Katigbak advanced the payment for the spare parts, he (Katigbak) refused to
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 comply with his contract to purchase the same; that as a result of such
refusal he (Evangelista) was forced to sell the same to a third person for only
P10,000.00, thus incurring a loss of P2,000.00, which amount Katigbak
should be ordered to pay, plus moral damages of P5,000.00 and P700.00 for
attorney's fees.
The lower court rendered judgment, the dispositive portion of which
reads —
WHEREFORE, judgment is hereby rendered ordering the
defendants Daniel Evangelista and V. K. Lundberg to pay plaintiff the
sum of P2,029.85, with legal interest thereon from the filing of the
complaint until fully paid, plus the sum of P300.00 as attorney's fees,
and the costs."

The Court of Appeals, on September 5, 1959, reversed the judgment in

the following manner: —
"Notwithstanding the breach of contract committed by him, we
may concede appellee's right to a refund of the sum of P2,029.85, but
equally undeniable is appellant Evangelista's right to recover from him
his loss of P2,000.00, which is the difference between the contract
price for the sale of the winch between him and appellee and the actual
price for which it was sold after the latter had refused to carry out his
agreement. As held in the above-cited case of Hanlon, if the purchaser
fails to take delivery and pay the purchase price of the subject matter
of the contract, the vendor, without the need of first rescinding the
contract judicially, is entitled to resell the same, and if he is obliged to
sell it for less than the contract price, the buyer is liable for the
difference. The loss, which is the subject matter of Evangelista's main
counterclaim, should therefore be set off against the sum claimed by
appellee, which would leave in favor of the latter a balance of P29.85.

Considering our finding that it was appellee who committed a

breach of contract, it follows that the present action was unjustified
and he must be held liable to appellant Evangelista for attorney's fees
in the sum of P700.00.

Lastly, inasmuch as, according to the evidence appellant

Lundberg was merely an agent of his co-appellant, it is obvious that he
cannot be held liable to appellee in connection with the refund of the
sum advanced by the latter.

WHEREFORE, the appealed judgment is hereby modified by

dismissing the complaint as to V. K. Lundberg; by reducing the
judgment in favor of appellee to the sum of P29.85, and by sentencing
him, in turn, to pay appellant Evangelista the sum of P700.00 as
attorney's fees.

Plaintiff-appellee Katigbak brought the matter to this Court on appeal

by certiorari. In his petition he claims that the Court of Appeals erroneously
applied the doctrine enunciated in the Hanlon v. Hausserman case (40 Phil.
796, 815-816), and failed to apply the law relative to rescission of contracts.
Other issues raised are strictly factual and will only be mentioned here for
reference.
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 We quote from the Hanlon case:
". . . . In the present case the contract between Hanlon and the
mining company was executory as to both parties, and the obligation of
the company to deliver the shares could not arise until Hanlon should
pay or tender payment of the money. The situation is similar to that
which arises every day in business transactions in which the purchaser
of goods upon an executory contract fails to take delivery and pay the
purchase price. The vendor in such case is entitled to resell the goods.
If he is obliged to sell for less than the contract price, he holds the
buyer for the difference; if he sells for as much as or more than the
contract price, the breach of contract by the original buyer is damnum
absque injuria. But it has never been held that there is any need of an
action of rescission to authorize the vendor, who is still in possession,
to dispose of the property where the buyer fails to pay the price and
take delivery. . . ." (40 Phil. 815)

The facts of the case under consideration are identical to those of the
Hanlon case. The herein petitioner failed to take delivery of the winch,
subject matter of the contract and such failure or breach was, according to
the Court of Appeals, attributable to him, a fact which We are bound to
accept under existing jurisprudence. The right to resell the equipment,
therefore, cannot be disputed. It was also found by the Court of Appeals that
in the subsequent sale of the winch to a third party, the vendor thereof lost
P2,000.00, the sale having been only for P10,000.00, instead of P12,000.00
as agreed upon, said difference to be borne by the supposed vendee who
failed to take delivery and/or pay the price.
Of course, petitioner tried to draw a distinction between the Hanlon
case and his case. The slight differences in the facts noted by petitioner are
not, however, to our mode of thinking, sufficient to take away the case at
bar from the application of the doctrine enunciated in the Hanlon case.
WHEREFORE, the petition is dismissed, and the decision appealed from
is affirmed in all respects with costs against petitioner.
Bengzon, C.J., Bautista Angelo, Labrador, Concepcion, Reyes, J.B.L.,
Barrera and De Leon, JJ., concur.
Padilla and Dizon, JJ., took no part.

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