6. Double Sale

D. Double Sale (Civil Code, art. 1544)

Article 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. (1473)

DOUBLE SALE

There is double sale when the same object of the sale is sold to different vendees. (NCC, Art. 1544)

Requisites of Double Sales (NCC, Art. 1544)

• 2 or more sales transactions must constitute valid sales transactions;
• 2 or more sales transactions must pertain to exactly the same subject matter;
• 2 or more buyers at odds over the rightful ownership of the subject matter must each represent conflicting interests; and
• 2 or more buyers at odds over the rightful ownership of the subject matter must have bought from the very same seller. (Rabuya, 2017, citing Cheng v. Genato, G.R. No. 129760, December 29, 1998)

Rules on preference (NCC, Art. 1544)

• MOVABLE – Owner who is first to possess in good faith;
• IMMOVABLE –
• First to register in good faith
• No registration – first to possess in good faith
• No registration & no possession in good faith – person who presents oldest title in good faith.

NOTE: Article 1544 of the Civil Code may apply to double sales of land not registered with the Torrens system, subject to the rules on recording instruments affecting such land under Section 113 of PD 1529. If the sale is not registered, it is binding only as between the seller and the buyer; it does not affect innocent third persons.

Villanueva (2009) proffers that The rules on double sales for immovables under Article 1544 are applicable to unregistered land, but only insofar as they do not undermine specific rules and legislations that have a higher hierarchical enforcement value, such as the “without prejudice to a better right” provision under Act No. 3344, now Section 113 of the Property Registration Decree

Who is a purchaser in good faith

• Buys the property without notice that some other person has a right to, or interest in such property; and
• Pays a full and fair price for the same at the time of such purchase, or before he has notice of the claim or interest of some other person in the property. (Uy v. Fule, citing Agricultural and Home Extension Development Group v. CA, G.R. No. 164961, June 30, 2014)

NOTE: Partial payment is not enough. Full payment is a requirement for purposes of acquiring right over the rules of double sale.

NOTE: Where Art. 1544 of NCC applies, priority in time alone does not establish ownership. For immovable property, preference belongs to the buyer who first records the sale in good faith; absent inscription, to the buyer who first possesses it in good faith; and, absent either, to the buyer with the oldest title, provided there is good faith.

Principle of prius tempore, potior jure – first in time, stronger in right

Knowledge gained by the first buyer of the second sale cannot defeat the first buyer’s rights except only as provided by the NCC and that is where the second buyer first registers in good faith the second sale ahead of the first. (Jurado, 2019) 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 to merit the protection of Art. 1544 (2nd par.) of NCC, the second realty buyer must act in good faith in registering his deed of sale.

NOTE: Where one sale is absolute and the other is a pacto de retro transaction where the period to redeem has not yet expired, Art. 1544 of NCC will not apply.

Q: Does prior registration by the second buyer of a property subject of a double sale confer ownership or preferred right in his favor over that of the first buyer?

A: Yes, if the second buyer first recorded the sale in good faith. Prior registration in bad faith does not confer preference under Art. 1544 (2nd par.) of NCC.

It literally means, ‘Let the buyer beware’. The rule requires the purchaser to be aware of the supposed title of the vendor and one who buys without checking the vendor’s title takes all the risks and losses consequent to such failure.