Annotated sale will provide prior notice to prospective buyer

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Persida Acosta

Dear PAO,
My father bought from Teddy a parcel of land in Taguig City (Metro Manila). He failed to register the Deed of Absolute Sale but he caused the annotation of adverse claim at the back of the Certificate of Title covering the property. My father was shocked when he discovered that the property was attached and was sold in a public auction because Teddy failed to pay his obligation to a lending company. My father informed the highest bidder of his claim over the property but the latter said they have superior right because they are a buyer in good faith. Moreover, their transaction was registered with the Registry of Deeds unlike the executed deed of sale between my father and Teddy. Which right prevails in this situation?
Drew

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DearDrew,
Your father’s right over the subject property prevails in this case. Article 1544 of the New Civil Code of the Philippines states: “If the same thing should have been sold to different vendees, the ownership shall be transferred to the person who may have first taken possession thereof in good faith, if it should be movable property. Should it be immovable property, the ownership shall belong to the person acquiring it who in good faith first recorded it in the Registry of Property Xxx xxx xxx.”

Based on the facts you have provided, it is clear that the highest bidder in the public auction involving the property was not a buyer in good faith. In a similar case decided by the Supreme Court (Spouses Ching and Tin vs. Spouses Enrile, G.R. No. 156076, September 17, 2008), Justice Teresita Leonardo-de Castro stated:
“The law does not require a person dealing with the owner of registered land to go beyond the Certificate of Title as he may rely on the notices of the encumbrances on the property annotated on the Certificate of Title or absence of any annotation. Here, petitioners’ adverse claim is annotated at the back of the title coupled with the fact that they are in possession of the disputed property. To us, these circumstances should have put respondents on guard and required them to ascertain that the property being offered to them has already been sold to another to prevent injury to prior innocent buyers. A person who deliberately ignores a significant fact which would create suspicion in an otherwise reasonable man is not an innocent purchaser for value. It is a well-settled rule that a purchaser cannot close his eyes to facts which should put a reasonable man upon his guard, and then claim that he acted in good faith under the belief that there was no defect in the title of the vendor.”

Applying the decision in your case, the buyer had prior notice of the adverse claim annotated at the back of the Certificate of Title; hence, he cannot claim now that he is a buyer in good faith and his rights will prevail over the right obtained by your father.

We hope that we were able to answer your queries. Please be reminded that this advice is based solely on the facts you have narrated and our appreciation of the same. Our opinion may vary when other facts are changed or elaborated.

Editor’s note: Dear PAO is a daily column of the Public Attorney’s Office. Questions for Chief Acosta may be sent to dearpao@manilatimes.net.

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