Consolidated Rural Bank (Cagayan Valley), Inc vs Court of Appeals

448 SCRA 347 January 17, 2005

Tinga, J.
TOPIC: Double Sales: Sale of Immovables

FACTS:
- The Madrid brothers were registered owners of Lot No. 7036-A in Isabela per TCT No.
T-8121. It was subdivided into several lots.

1ST SALE (August 15 1957)

- Rizal Madrid sold part of his share to Gamiao and Dayag by virtue of a deed of sale, to
which his brothers offered no objection. The deed of sale was not registered with the
Office of the Register of Deeds, but Gamiao and Dayag declared the property in their
names for taxation purposes.
- Gamiao and Dayag sold the southern portion of the land to Teodoro dela Cruz, and the
northern portion was sold to Restituto Hernandez. These buyers took possession of and
cultivated the portions of the property respectively sold to them.
ND
2 SALE (June 15 1976)
- The Madrid brothers conveyed all their rights and interests to Pacifico Marquez. The
deed of sale was registered with the Office of the Register of Deeds. Marquez subdivided
the lot into 8. Lots 7036-A-7-A until7036-A-7-D were mortgaged to the Consolidated
Rural Bank to secure a loan of P100,000. Additionally, Marquez mortgaged Lot No.
7036-A-7-E to the Rural Bank of Cauayan to secure a loan of P10,000. These deeds of
real estate mortgage were registered with the Office of the Register of Deeds. Meanwhile,
Marquez sold Lot No. 7036-A-7-G to Romeo Calixto.
- Marquez defaulted in the payment of his loan and CRB caused the foreclosure of the
mortgages and the lots were sold to it as the highest bidder.

The heirs of Teodoro dela Cruz filed a case for reconveyance and damages as to the southern
portion of the land, claiming to be null and void:
- the issuance of TCTs to Marquez;
- the foreclosure sale in favour of CRB;
- the mortgage to RBC;
- and the sale to Calixto.
Evangeline del Rosario, successor-in-interest of Hernandez, filed a Complaint in Intervention
wherein she claimed the northern portion of Lot No. 7036-A 7.

Marquez argued that:

- he was a buyer in good faith and for value.
- that being the first registrant, the sale in favor of him must prevail over the sale to
Gamiao and Dayag which shouldn’t be binding upon him, that being unregistered.

CRB, on the other hand, insisted that:

- they were mortgagees in good faith and
- that they had the right to rely on the titles of Marquez.
The RTC ruled in favour of Marquez, finding nothing to show that Marquez was aware of dela
Cruz and del Rosario’s claim of ownership and holding that it was, indeed, Marquez, who first
registered.

The CA, however, reversed the ruling of the RTC, holding that Marquez failed to prove that he
was a purchaser in good faith and noting that while Marquez was the first registrant, there was no
showing that the registration was coupled with good faith. Marquez admitted having knowledge
that there was dispute over said property and that the Heirs of dela Cruz were also in possession
of the land. As to the mortgages, the CA held that the banks merely relied on the certificates of
title and this failure to observe diligence in standard banking procedure constitutes bad faith
and on that basis, the mortgages were declared null and void.
CRB insisted that Marquez had the right over the said property being the first registered owners.
Hence, this petition.

ISSUE/HELD/RATIO:
1. W/N Marquez, having registered first, has better right over the property – NO.

Applicability of 1544.
The RTC and the CA, albeit arriving at different conclusions, both relied on the NCC’s
provision on double sale (1544) to resolve the case. However, SC held that provision is not
applicable in this case. 1544 contemplates a case of double sale by a single vendor. It is
necessary that the conveyance must have been made by a party who has an existing right in the
thing and the power to dispose of it. It cannot be invoked where the two different contracts of
sale are made by two different persons, one of them not being the owner of the property sold.

In the case at bar, the subject property was not transferred to several purchasers by a single
vendor. In the first sale, the vendors were Gamiao and Dayag whose right to the property
originated from their acquisition thereof from Rizal Madrid. In the second sale, the vendors were
the Madrid brothers but at that time they were no longer the owners since they had long disposed
of the property.

In a situation where not all the requisites are present which would warrant the application of
1544, the principle that “he who is first in time is preferred in right” should apply. In the instant
case, the sale by Gamiao and Dayag who first bought it from Rizal Madrid was anterior to the
sale to Marquez. The Heirs of dela Cruz and Hernandez also had possession of the property first.
Thus, applying the principle, the Heirs have a superior right to the subject property. Morover,
since the Madrid brothers were no longer the owners of the lot at the time of the sale to Marquez,
Marquez did not acquire any right to it.

Assuming arguendo that 1544 applies, the claim of Marquez still cannot prevail over the right of
the Heirs since he was not a purchaser in good faith

JUDGMENT: Petition is DENIED. CA Decision AFFIRMED.

 Carbonell v. CA 69 SCRA 99 (1976)
Jan 26, 1976 | Makasiar, J. | Petition for Certiorari | Double Sales-General Rule
PETITIONER: Rosario Carbonell
RESPONDENT: CA, Jose Poncio, Emma Infante and Ramon Infante

SUMMARY: Poncio orally sold his land to Carbonell and executed an agreement with her. Subsequently,
he sold the same land for a higher price to Infante. Carbonell registered her adverse claim before Infante
registered the deed of sale in her favor. The Court ruled that Carbonell had a superior claim to the property.

DOCTRINE: In case of double sale, Art 1544 par 2 directs that ownership should be recognized in favor
of one who in good faith first recorded his right.

FACTS:
1. Prior to Jan 27, 1955, Jose Poncio owned a parcel of land (195sqm) subject to a mortgage in favor of
Republic Savings Bank for P1500. Carbonell is a cousin and adjacent neighbor of Poncio. Carbonell and
Emma Infante (lives behind the houses of Poncio and Carbonell) both offered to buy Poncio’s lot.
2. Poncio offered to sell the lot to Carbonell, excluding his house, for P9.50 per sqm, on the condition that
from the purchase price would come the money to be paid to the bank. Carbonell and Poncio then went to
the bank to pay the arrears on the mortgage in the amount of P247.26.
3. Carbonell and Poncio executed a document in the Batanes dialect translated as: Contract for One Half
Lot which I Bought From Jose Poncio. Poncio is allowed to live on the lot for a year without rent, but if
after 1 year he could not find a place to move his house, he has to pay rent to Carbonell.
4. On January 31, Poncio sold the property and the improvements to Infante for P3,535, with assumption
of mortgage. On Feb 2, Poncio executed a deed of sale in favor of Infante who paid the mortgage on that
same date.
5. Carbonell asked Atty. Reyes to prepare a formal deed of sale, which she brought to Poncio along with
the P400 balance of the purchase price. BUT Poncio refused to honor the sale since he already gave the lot
to Infante. By Feb 5, Infante had already built a fence around the lot. Carbonell wanted to talk to Infante
but the latter refused. Carbonell consulted Atty. Garcia who advised her to present an adverse claim.
6. Since the sale to Infante had not yet been registered, Atty. Garcia prepared an adverse claim and
registered it on Feb 8, 1955.
7. Feb 12, the deed of sale to Infante was registered but the TCT was already annotated with the adverse
claim of Carbonell. Infante took possession of the property and introduced improvements (garden, wall,
gate, house in 1959).
8. Carbonell filed a complaint in June 1955. TC dismissed on the ground that the written agreement between
Carbonell and Poncio does not satisfy the requirements of the law. SC remanded the case on the ground
that the Statute of Frauds does not apply.
9. TC: sale to Infante is null and void. BUT after re-trial, TC held that Infante’s claim was superior and so
it reversed its earlier decision.
10. CA: reversed. BUT granted Infante’s MR.
11. Carbonell appeals.

ISSUE/S: WON Carbonell has a better right to the property - YES

RULING: Decision of the Special Division is hereby reversed. Carbonell is declared to have the superior
right to the land in question.

RATIO:
1. Under Art. 1544, it is essential that the buyer of realty must act in good faith in registering his deed of
sale. If there is no inscription, what is decisive is prior possession in good faith. If there is an inscription,
as in this case, prior registration in good faith is a pre-condition to superior title.

2. Carbonell’s prior purchase was made in good faith. Her good faith subsisted when she recorded her
adverse claim and even after Poncio informed her of the sale to Infante.

3. On the other hand, Infante’s bad faith is shown by: her refusal to see Carbonell; the fact that Carbonell
was already in possession of the mortgage passbook and the mortgage contract; the fact that Infante did not
bother to inquire about the mortgage contracts and passbook; her registration of her deed of sale 4 days
after Carbonell’s adverse claim was registered.

4. The prior sale to Carbonell is duly established by the written agreement written in Batanes dialect and
signed by Poncio. There was also partial performance of the sale when Carbonell paid P247 on account of
Poncio’s mortgage indebtedness and the subsequent possession of Carbonell of the passbook and mortgage
contract.

5. There was adequate consideration or price for the sale in favor of Carbonell: P400, payment of arrears
worth P247, assumption of mortgage and the right of Poncio to stay for a 1 year without paying rent.