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SPS. NOEL v. ROMANA DE VERA

FACTS:

The case involves a dispute between two buyers of a property covered by the Torrens system. Gloria Villafania sold the property to Rosenda Tigno-Salazar and Rosita Cave-Go, but the sale was subject to a suit for annulment.

During the proceedings, Villafania obtained a free patent over the land and subsequently sold the property to Romana de Vera. De Vera registered the sale and obtained a title in her name.

Meanwhile, Tigno-Salazar and Cave-Go sold the property to petitioner-spouses Noel and Julie Abrigo. De Vera then filed an action for forcible entry and damages against the Abrigos. The parties eventually reached an agreement and the case was dismissed.

The Abrigos then filed a case for annulment of documents, injunction, preliminary injunction, restraining order, and damages against De Vera and Villafania. The trial court awarded the properties to the Abrigos and ordered Villafania to pay damages and attorney's fees.

Both parties appealed to the Court of Appeals (CA). The CA initially dismissed De Vera's appeal, but on reconsideration, it found her to be a purchaser in good faith and for value. The CA ruled that De Vera relied on the Torrens title of her vendor and must be protected.

The Abrigos filed a Petition for Review before the Supreme Court, raising issues on the validity of the sale to De Vera and who between the parties has better title to the property.

ISSUES:

  1. Whether the sale of the disputed property to Respondent De Vera could be validated, given that it no longer belonged to Gloria Villafania.

  2. Whether Respondent De Vera is a purchaser in good faith and for value.

  3. Whether the execution sale of unregistered land is valid if the land no longer belonged to the judgment debtor at the time of the sale.

  4. Whether the knowledge of the second buyer of the first sale defeats his rights even if he is the first to register the second sale.

  5. Was the registration under Act 3344 by the second buyers sufficient to defeat the right of the first buyers as the true owners of the property?

RULING:

  1. The sale of the disputed property to Respondent De Vera can be validated. Respondent's registration of the sale under the Torrens system prevails over the registration made under Act 3344 by Petitioners and their predecessors. The Court applies the principle of "priority in time" in accordance with Article 1544 of the Civil Code. Since the property was already registered under the Torrens system, Petitioners' registration under Act 3344 was not effective for purposes of Article 1544. Therefore, the sale to Respondent De Vera, registered under the Torrens system in good faith, must be upheld over the sale registered under Act 3344.

  2. The execution sale of unregistered land is not valid if the land no longer belonged to the judgment debtor at the time of the sale.

  3. The knowledge of the second buyer of the first sale defeats his rights even if he is the first to register the second sale.

  4. No, the registration under Act 3344 by the second buyers was not sufficient to defeat the right of the first buyers as the true owners of the property. The Court ruled that constructive notice to the second buyer through registration under Act 3344 does not apply if the property is registered under the Torrens system. The Court further emphasized that the only exception to this rule is when the purchaser has actual knowledge of a flaw or defect in the title of the seller or of such liens or encumbrances.

PRINCIPLES:

  • Double sale of immovables transfers ownership to the first registrant in good faith, the first possessor in good faith, and the buyer who presents the oldest title. (Article 1544 of the Civil Code)

  • Registration of instruments affecting unregistered lands under Act 3344 is without prejudice to a third party with a better right. Mere registration does not give any right over the land if the vendor was not the owner anymore. (Radiowealth Finance Co. v. Palileo)

  • Registration must be done in the proper registry to bind the land. (Soriano v. Heirs of Magali)

  • The registration of a sale under the Torrens system prevails over a sale registered under Act 3344 if the property was already covered by the Torrens system at the time of registration. (Naawan Community Rural Bank v. Court of Appeals)

  • The execution sale of unregistered land is only valid if the land still belonged to the judgment debtor at the time of the sale.

  • In order to acquire ownership or a better right over an immovable property, the second buyer must acquire the property in good faith and register it in good faith. Mere registration of title is not enough; good faith must concur with the registration.

  • The prior registration of a property by the first buyer is constructive notice to the second buyer and defeats the second buyer's rights if the second buyer had knowledge of the first sale. The first buyer, however, is not affected by the knowledge of the second buyer of the first sale.

  • In the Torrens system, the purchaser acquires rights and interests 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 to the rule is when the purchaser has actual knowledge of a flaw or defect in the title of the seller or of such liens or encumbrances.