Rules on double sale of real property

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Persida Acosta

Persida Acosta

Dear PAO,

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Between two buyers of one and the same land, to whom shall the land be awarded in case of a court litigation, to the first buyer who just paid the agreed price and signed the notarized deed of sale or to the second buyer who did not only pay the price and sign the deed of sale but also occupied the land and transferred the title in his name?

Simon

Dear Simon,

The New Civil Code of the Philippines will give light to your question. Article 1544 thereof provides:

“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.”

The above provision squarely answers your question. Since the land mentioned in your letter was sold to two different buyers, ownership thereof was transferred to the buyer who first registered the Deed of Sale before the Registry of Deeds of the place where the land is situated. However, the registration must be made in good faith, meaning the buyer must have no knowledge of the other transaction pertaining to the sale of the same land to another buyer, prior to or during the registration.

You failed to mention in your letter whether the second buyer registered the sale oblivious of the fact that the land was already sold to the first buyer. If it was registered in good faith, meaning the second buyer was not aware of the first sale, conducted an inquiry on and ocular inspection of the land sold and inquired with the Registry of Deeds as to the real owner and other transactions involving the land, then ownership thereof was transferred to him.

On the other hand, if the second buyer knew that the land was already sold to the first buyer, it is the latter that has a better right over the property. Registration of the land in bad faith, in cases of double sale, produces no legal effect and does not confer any right. The case of Alejandro Gabriel vs. Spouses Pablo Mabanta and Escolastica Colobong (G.R. No. 142403, March 26, 2003) gives light to this:

“Otherwise stated, where it is an immovable property that is the subject of a double sale, ownership shall be transferred (1) to the person acquiring it who in good faith first recorded it in the Registry of Property; (2) in default thereof, to the person who in good faith was first in possession; and (3) in default thereof, to the person who presents the oldest title, provided there is good faith. The requirement of the law then is two-fold: acquisition in good faith and registration in good faith. The rationale behind this is well-expounded in Uraca vs. Court of Appeals, where this Court held:

“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 right 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 right 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 right) – from the time of acquisition until the title is transferred to him by registration or failing registration, by delivery of possession.” (Emphasis supplied)

Again, we find it necessary to mention that this opinion is solely based on the facts you have narrated and our appreciation of the same. The opinion may vary when the facts are changed or elaborated.

We hope that we were able to guide you with our opinion on the matter.

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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1 Comment

  1. Atty. Roslee M. Formoso on

    In double sale, penalty to the seller Both buyers, paid consideration, deed of sales. It can be deduced that. Second buyer must have verified sellers title and made actual ocular inspection of the property and found that in deed it was free and unemcumbered, took actual possession and registered his title. when is there bad faith?
    Second buyer was able to occupy because there was no notice of some claimant. another, he was able to register his deed of sale to a title because when he filed registration the title was still in the name of the seller and the law says we must rely on it. Judge should leave quiet the title and order the seller to return the money of the first buyer with exemplary damages.