SALES

CASE NUMBER: 2
LORENZO BERICO and VISITACION SANCHEZ vs. THE COURT OF
APPEALS, CIRIACO FLORES and FELISA BAREJA
GR NO. 96306
Aug. 20, 1993
Ponente: Davide
Double Sales (Art. 1544)
FACTS
A certain Jose de los Santos owned a parcel of land in Masbate with an area of
9.8 hectares (Lot No. 785). In 1961, Santos sold a 2.25 hectare portion to
private respondents Flores and Bareja. Immediately after the sale, Flores took
possession of the portion sold to them. The land was also declared in the
name of Flores for taxation purposes, and Flores paid the taxes thereon.
Santos half of the said lot to Berico in 1963. 2 months later, Santos minor
children sold the remaining half to Berico as well. Berico was aware of the
sale to Flores and of Flores possession of the land. Despite the knowledge
and recognition of the sale to Flores, and the possession of Flores, Berico
registered the property, causing the cancellation of the OCT of Santos and
the issuance of a TCT in his name. This new TCT covered not only Santos
land but also the portion that was sold to Flores as well. The same were
declared under the name of Bericos wife for taxation purposes, but Berico
paid taxes only from 1973-1986.
In 1978, Flores registered the deed of sale in his favour after discovering the
cancellation of Santos OCT and the issuance to Berico of a new TCT. This also
caused Flores to file a complaint for Annulment of Title with the CFI of
Masbate, praying that the TCT of Berico be annulled insofar as it includes the
portion of Flores.
The trial court ruled in favour of Flores, ruling that the act of Berico
registering the property despite knowing of the sale to Flores makes him a
holder in bad faith and is not accorded protection of the law. It was further
ruled by the trial court that since the registration by Berico of his deed of sale
was done in bad faith, the same was ineffective and inoperative by virtue of
Art. 1544 of the NCC, stressing that the fundamental premise of the provision
is good faith. As such, it is as though there was no registration, and Flores
should be preferred for having been in first possession.
Berico appealed to the CA, arguing that the action of Flores is based in fraud,
which has a prescription of 4 years, or (alternatively) one based on
constructive trust which is barred after 10 years because the issuance of a
title is notice to the public, including Flores. Berico further argued that when
the land was bought from Santos, the title was clean and did not show the
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SALES
portion sold to Flores, and that the TCT was issued in 1968, while Flores
commence the action only on 1978. Because over 10 years passed, the filing
of the complaint had prescribed. However, the CA affirmed the decision of the
trial court.
ISSUES
1. Whether acquisition of Petitioners is valid.
2. Whether Respondents action is barred by prescription.
RULING
1. NO. The force and effect accorded by law to an inscription in public
registry presupposes good faith on the part of the person entering such
inscription. As stated by the Court in Palanca vs. Director of Lands, the record
which Art. 1473 (now Art. 1544) of the Civil Code refers is that made in good
faith, for the law will not protect anything done in bad faith.
In order for the purchaser of realty to merit the protection of Art. 1544(2),
said purchaser must be in good faith when he registers his deed of sale. Good
faith is the premise of the preferential right established in said Article. Hence,
mere registration is not enough; good faith must concur with the registration.
In this case, Berico had knowledge of the prior sale to Flores. Registering the
deed of sale and acquiring the new TCT was in gross and evident bad faith.
Thus, the registration was ineffectual and vested no preferential rights to the
property in derogation to the rights of Flores. Berico, having acquired the land
from Santos who also had no right to sell the portion pertaining to Flores, is
not granted better rights than Santos, for the spring cannot rise higher than
its source. Since it is proven that Flores was the anterior possessor in good
faith, ownership over the questioned portion is vested in Flores by sheer force
of Art. 1544(3).
2. NO. The action is one for annulment of TCT and not based on fraud nor
implied or constructive trust as Petitioners suggest. The elements to establish
fraud or implied or constructive trust are not present in this case. This
complaint is essentially one for quieting of title. It is settled that an action to
quiet title does not prescribe.
DISPOSITIVE PORTION
WHEREFORE, for lack of merit, the instant petition is DENIED, with costs
against the petitioners.

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