G.R. No. 200009, 23 January 2017, 815 SCRA 114

FACTS:

Spouses Pedro L. Lumbres and Rebecca T. Roaring, (Spouses Lumbres) entered into a Joint Venture Agreement with Spring Homes Subdivision Co., Inc., through its chairman, the late Mr. Rolando B. Pasic, for the development of several parcels of land consisting of an area of 28,378 square meters. For reasons of convenience and in order to facilitate the acquisition of permits and licenses in connection with the project, the Spouses Lumbres transferred the titles to the parcels of land in the name of Spring Homes.

Spring Homes entered into a Contact to Sell with respondents, Sps. Tablada, for the sale of a parcel of land. The Sps. Lumbres filed with the RTC of Calamba City a complaint for Collection of Sum of Money, specific performance and damages with prayer for the issuance of a Writ of Preliminary Attachment against Spring Homes for its alleged failure to comply with the terms of the Joint Venture Agreement. Spring Homes executed a Deed of Absolute Sale in favor of Sps Tablada. The title over the subject property, however, remained with Soring Homes for its failure to cause the cancellation of the TCT and the issuance of a new one in favor of the Sps. Tablada.

Sps Lumbres and Spring Homes entered into a Compromise agreement wherein spring homes conveyed the subject property, as well as several others, to the sps. Lumbres. The latter started collecting deficiency payments from the subdivision lot buyers. When no payment was received, the Sps lumbres caused the cancellation of the Contract to Sell previously executed by Spring Homes in favor of sps tablada. The Lumbres’ and Spring Homes executed a Deed of Absolute Sale over the subject property, and as a result, a new title was issued in the name of the Lumbres’.

The sps Lumbres filed an ejectment suit of their own before the MTCC of Calamba City demanding the the Sps. Tablada vacate the subject property and pay rentals due thereon. The court, however, dismissed the suit, ruling that the Lumbres’ registered their title over the subject property in bad faith. Such ruling was reversed by the RTC which found that there was no valid deed of absolute sale between the sps. Tablada and Spring Homes. Nevertheless, the CA agreed with the MTCC and reinstated the decision thereof.

ISSUE:

Whether the sps Tablada have acquired ownership over the subject property.

RULING:

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. (Emphasis supplied). The principle of primus tempore, potior jure (first in time, stronger in right) gains greater significance in case of a double sale of immovable property.

Thus, the Court has consistently ruled that ownership of an immovable property which is the subject of a double sale 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. Good faith must concur with the registration – that is, the registrant must have no knowledge of the defect or lack of title of his vendor or must not have been aware of facts which should have put him upon such inquiry and investigation as might be necessary to acquaint him with the defects in the title of his vendor. If it is shown that a buyer was in bad faith, the alleged registration they have made amounted to no registration at all. Here, the first buyers of the subject property, the Spouses Tablada, were able to take said property into possession but failed to register the same because of Spring Homes’ unjustified failure to deliver the owner’s copy of the title whereas the second buyers, the Spouses Lumbres, were able to register the property in their names. But while said the Spouses Lumbres successfully caused the transfer of the title in their names, the same was done in bad faith.

As correctly observed by the Court in Spouses Lumbres v. Spouses Tablada, the Spouses Lumbres cannot claim good faith since at the time of the execution of their Compromise Agreement with Spring Homes, they were indisputably and reasonably informed that the subject lot was previously sold to the Spouses Tablada. They were also already aware that the Spouses Tablada had constmcted a house thereon and were in physical possession thereof. They cannot, therefore, be permitted to freely claim good faith on their part for the simple reason that the First Deed of Absolute Sale between Spring Homes and the Spouses Tablada was not annotated at the back of the subject property’s title. It is beyond the Court’s imagination how spouses Lumbres can feign ignorance to the first sale when the records clearly reveal that they even made numerous demands on the Spouses Tablada to pay, albeit erroneously, an alleged balance of the purchase price.

Indeed, knowledge gained by the first buyer of the second sale cannot defeat the first buyer’s rights except only as provided by law, as in cases where the second buyer first registers in good faith the second sale ahead of the first.57 Such knowledge of the first buyer does bar her from availing of her rights under the law, among them, first her purchase as against the second buyer. But conversely, 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.

Accordingly, in order for the Spouses Lumbres to obtain priority over the Spouses Tablada, the law requires a continuing good faith and innocence or lack of knowledge of the first sale that would enable their contract to ripen into full ownership through prior registration. 59 But from the very beginning, the Spouses Lumbres had already known of the fact that the subject property had previously been sold to the Spouses Tablada, by virtue of a valid Deed of Absolute Sale. In fact, the Spouses Tablada were already in possession of said property and had even constructed a house thereon. Clearly then, the Spouses Lumbres were in bad faith the moment they entered into the second Deed of Absolute Sale and thereafter registered the subject property in their names. For this reason, the Court cannot, therefore, consider them as the true and valid owners of the disputed property and permit them to retain title thereto.

*Case digest by Jhazeel Zhan Jebone, JD-4, Andres Bonifacio Law School, SY 2019-2020