FIRST DIVISION

[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 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
Resolution3 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 attorneys 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 attorneys 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
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 attorneys 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 attorneys
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 Courts Ruling
The Petition is bereft of merit.
Main Issue:
Better Right over the Property
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:
. . . 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
Villafanias 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 ones 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 Rules 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 sheriffs execution sale only steps into the
shoes of the judgment debtor, and merely acquires the latters 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 buyers 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 buyers 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 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 faithat 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 (Act 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 and 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 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 InTaguba, 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 Veras 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 vendors 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 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 Villafanias agents, who had not
been shown to have notified respondent of the first sale when she conducted an
ocular inspection. Thus, good faith on respondents part stands.
WHEREFORE, the Petition is DENIED and the assailed Decision AFFIRMED. Costs
against petitioners. AScHCD
SO ORDERED.