SECOND DIVISION

CARMELITA FUDOT,
Petitioner,

G.R. No. 171008

Present:

- versus -

CATTLEYA LAND, INC.,

Respondent.

QUISUMBING, J.,
Chairperson,
CARPIO,
CARPIO MORALES,
TINGA, and
VELASCO, JR., JJ.
Promulgated:
September 13, 2007

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DECISION
TINGA, J.:
For resolution is a petition that seeks to nullify the Decision [1] and
Resolution[2] of the Court of Appeals dated 28 April 2005 and 11 January
2006, respectively, in C.A.G.R. CV No. 73025 which declared respondent
as having a better right over a parcel of land located in Doljo, Panglao,
Bohol.

The facts, as culled from the records, follow.

Sometime in July 1992, Cattleya Land, Inc. (hereinafter referred to as

respondent) asked someone to check, on its behalf, the titles of nine (9) lots,
the subject land included, which it intended to buy from the spouses Troadio
and Asuncion Tecson. Finding no defect on the titles, respondent purchased
the nine lots through a Deed of Conditional Sale on 6 November
1992. Subsequently, on 30 August 1993, respondent and the Tecsons
executed a Deed of Absolute Sale over the same properties. The Deed of
Conditional Sale and the Deed of Absolute Sale were registered with the
Register of Deeds on 06 November 1992 and 04 October 1993, respectively.
[3]
The Register of Deeds, Atty. Narciso dela Serna, refused to actually
annotate the deed of sale on the titles because of the existing notice of
attachment in connection with Civil Case No. 3399 pending before the
Regional Trial Court of Bohol.[4] The attachment was eventually cancelled
by virtue of a compromise agreement between the Tecsons and their
attaching creditor which was brokered by respondent. Titles to six (6) of
the nine (9) lots were issued, but the Register of Deeds refused to issue titles
to the remaining three (3) lots , because the titles covering the same were
still unaccounted for.
On 23 January 1995, petitioner presented for registration before the
Register of Deeds the owners copy of the title of the subject property,
together with the deed of sale purportedly executed by the Tecsons in favor
of petitioner on 19 December 1986. On the following day, respondent sent
a letter of protest/opposition to petitioners application. Much to its surprise,
respondent learned that the Register of Deeds had already registered the
deed of sale in favor of petitioner and issued a new title in her name.[5]
On 5 May 1995, respondent filed its Complaint [6] for Quieting Of Title
&/Or Recovery Of Ownership, Cancellation Of Title With Damages before
the RegionalTrial Court of Tagbilaran City.[7] On 26
June
1995, Asuncion filed a complaint-in-intervention, claiming that she never
signed any deed of sale covering any part of their conjugal property in favor
of petitioner. She averred that her signature in petitioners deed of sale was
forged thus, said deed should be declared null and void.[8] She also claimed
that she has discovered only recently that there was an amorous relationship
between her husband and petitioner.[9]

Petitioner, for her part, alleged in her answer [10] that the spouses
Tecson had sold to her the subject property for P20,000.00 and delivered to
her the owners copy of the title on 26 December 1986. She claims that she
subsequently presented the said title to the Register of Deeds but the latter
refused to register the same because the property was still under attachment.
On 31 October 2001, the trial court rendered its decision: [11] (i)
quieting the title or ownership of the subject land in favor of respondent; (ii)
declaring the deed of sale between petitioner and spouses Tecson invalid;
(iii) ordering the registration of the subject land in favor of respondent; (iv)
dismissing respondents claim for damages against the Register of Deeds for
insufficiency of evidence; (v) dismissing Asuncions claim for damages
against petitioner for lack of factual basis; and (vi) dismissing petitioners
counterclaim for lack of the required preponderance of evidence.[12]
According to the trial court, respondent had recorded in good faith the
deed of sale in its favor ahead of petitioner. Moreover, based on Asuncions
convincing and unrebutted testimony, the trial court concluded that the
purported signature of Asuncion in the deed of sale in favor of petitioner
was forged, thereby rendering the sale void.[13]
Petitioner sought recourse to the Court of Appeals, arguing in the main
that the rule on double sale was applicable to the case. The appellate court,
however, dismissed her appeal, holding that there was no double sale
because the alleged sale to petitioner was null and void in view of the
forgery of Asuncions purported signature in the deed. The appellate court
noted that petitioner failed to rebut Asuncions testimony despite
opportunities to do so.[14] Moreover, even if there was double sale,
according to the appellate court, respondents claim would still prevail since
it was able to register the second sale in its favor in good faith, had made
inquiries before it purchased the lots, and was informed that the titles were
free from encumbrance except the attachment on the property due to Civil
Case No. 3399.[15]

Petitioner sought reconsideration of the decision but the Court of

Appeals denied her motion for reconsideration for lack of merit.[16]
Petitioner thus presents before this Court the following issues for
resolution:
I.
BETWEEN 2 BUYERS OF REGISTERED LAND, WHO
HAS THE BETTER RIGHT-IS IT THE FIRST BUYER WHO
WAS GIVEN THE OWNERS DUPLICATE TCT
TOGETHER WITH A DEED OF SALE IN 1986, OR THE
SECOND BUYER IN 1992 WITH ONLY A DEED OF SALE.
II.
IS A BUYER OF REGISTERED LAND WHO DID NOT
DEMAND OR REQUIRE THE DELIVERY OF THE
OWNERS DUPLICATE TCT A BUYER IN GOOD FAITH.
III.
II. IN SUBSEQUENT REGISTRATION OF REGISTERED
LANDS, AS BY SALE, WHICH LAW SHALL GOVERN,
ARTICLE 1455 OF CIVIL CODE OR P.D. 1529
ORTORRENS SYSTEM.[17]

Petitioner avers that she was the first buyer in good faith and even had
in her possession the owners copy of the title so much so that she was able
to register the deed of sale in her favor and caused the issuance of a new title
in her name. She argues that the presentation and surrender of the deed of
sale and the owners copy carried with it the conclusive authority of
Asuncion Tecson which cannot be overturned by the latters oral
deposition.[18]
Petitioner claims that respondent did not demand nor require delivery
of the owners duplicate title from the spouses Tecson, neither did it
investigate the circumstances surrounding the absence of the title. These

indicate respondents knowledge of a defect in the title of the spouses

and, thus, petitioner concludes that respondent was not a buyer in good
faith.[19]
Finally, petitioner insists that the applicable law in this case is P.D.
No. 1529, a special law dealing precisely with the registration of registered
lands or any subsequent sale thereof, and not Article 1544 of the Civil Code
which deals with immovable property not covered by the Torrens System.[20]
Respondent points out, on one hand, that petitioners first two issues
which present an inquiry on who has a better right or which one is a buyer in
good faith, are questions of fact not proper in a petition for review. The third
issue, on the other hand, is ostensibly a question of law which had been
unsuccessfully raised below.[21]
Respondent maintains that there is no room to speak of petitioner as a
buyer in good faith since she was never a buyer in the first place, as her
claim is based on a null and void deed of sale, so the court a
quo found. Respondent also asserts that its status as a buyer in good faith
was established and confirmed in the proceedings before the two courts
below.[22]
Lastly, respondent argues that P.D. No. 1529 finds no application in
the instant case. The production of the owners duplicate certificate x x x
being conclusive authority from the registered owner is only true as
between the registration applicant and the register of deeds concerned, but
never to third parties. Such conclusive authority, respondent adds, is only
for the Register of Deeds to enter a new certificate or to make a
memorandum of registration in accordance with such instrument. It cannot
cure the fatal defect that the instrument from which such registration was
effected is null and void ab initio, respondent concludes.[23]
The petition is bereft of merit.
Petitioners arguments, which rest on the assumption that there was a
double sale, must fail.

In the first place, there is no double sale to speak of. Art. 1544 of the
Civil Code,[24] which provides the rule on double sale, applies only to a
situation where the same property is validly sold to different vendees. In
this case, there is only one sale to advert to, that between the spouses Tecson
and respondent.
In Remalante v. Tibe,[25] this Court ruled that the Civil Law provision
on double sale is not applicable where there is only one valid sale, the
previous sale having been found to be fraudulent. Likewise, in Espiritu and
Apostol v. Valerio,[26] where the same parcel of land was purportedly sold to
two different parties, the Court held that despite the fact that one deed of sale
was registered ahead of the other, Art. 1544 of the Civil Code will not apply
where said deed is found to be a forgery, the result of this being that the right
of the other vendee should prevail.
The trial court declared that the sale between the spouses Tecson and
petitioner is invalid, as it bears the forged signature of Asuncion. Said
finding is based on the unrebutted testimony of Asuncion and the trial
courts visual analysis and comparison of the signatures in her Complaintin-Intervention and the purported deed of sale. This finding was upheld by
the Court of Appeals, as it ruled that the purported sale in petitioners favor
is null and void, taking into account Asuncions unrefuted deposition. In
particular, the Court of Appeals noted petitioners failure to attend the taking
of the oral deposition and to give written interrogatories. In short, she did
not take the necessary steps to rebut Asuncions definitive assertion.
The congruence of the wills of the spouses is essential for the valid
disposition of conjugal property.[27] Thus, under Article 166 of the Civil
Code[28] which was still in effect on 19 December 1986 when the deed of
sale was purportedly executed, the husband cannot generally alienate or
encumber any real property of the conjugal partnership without the wifes
consent.
In this case, following Article 173[29] of the Civil Code, on 26 June
1995, or eight and a half years (8 ) after the purported sale to

petitioner, Asuncion filed her Complaint-in-Intervention seeking the

nullification thereof, and while her marriage with Troadio was still
subsisting. Both the Court of Appeals and the trial court foundAsuncions
signature in the deed of sale to have been forged, and consequently, the
deed of sale void for lack of marital consent. We find no reason to disturb
the findings of the trial court and the Court of Appeals. Findings of fact of
lower courts are deemed conclusive and binding upon the Supreme Court
subject to certain exceptions,[30] none of which are present in this case.
Besides, it has long been recognized in our jurisprudence that a forged deed
is a nullity and conveys no title.[31]
Petitioner argues she has a better right over the property in question,
as the holder of and the first one to present, the owners copy of the title for
the issuance of a new TCT. The Court is not persuaded.
The act of registration does not validate petitioners otherwise void
contract. Registration is a mere ministerial act by which a deed, contract, or
instrument is sought to be inscribed in the records of the Office of the
Register of Deeds and annotated at the back of the certificate of title
covering the land subject of the deed, contract, or instrument. While it
operates as a notice of the deed, contract, or instrument to others, it does not
add to its validity nor converts an invalid instrument into a valid one as
between the parties,[32] nor amounts to a declaration by the state that the
instrument is a valid and subsisting interest in the land.[33] The registration
of petitioners void deed is not an impediment to a declaration by the courts
of its invalidity.
Even assuming that there was double sale in this case, petitioner
would still not prevail. The pertinent portion of Art. 1544 provides:
Art. 1544. x x x.
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.
x x x x.

In interpreting this provision, the Court declared that the governing

principle is primus tempore, potior jure (first in time, stronger in right).
Knowledge gained by the first buyer of the second sale cannot defeat the
first buyers rights, except where the second buyer registers in good faith the
second sale ahead of the first as provided by the aforequoted provision of the
Civil Code. Such knowledge of the first buyer does not bar him from
availing of his rights under the law, among them to register first his purchase
as against the second buyer. However, 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.
[34]
It is thus essential, to merit the protection of Art. 1544, second
paragraph, that the second realty buyer must act in good faith in registering
his deed of sale.[35]
We agree with the trial court and the Court of Appeals that respondent
was a buyer in good faith, having purchased the nine (9) lots, including the
subject lot, without any notice of a previous sale, but only a notice of
attachment relative to a pending civil case. In fact, in its desire to finally
have the title to the properties transferred in its name, it persuaded the
parties in the said case to settle the same so that the notice of attachment
could be cancelled.
Relevant to the discussion are the following provisions of P.D. No.
1529:
Sec. 51. Conveyance and other dealings by registered owner.
An owner of registered land may convey, mortgage, lease, charge
or otherwise deal with the same in accordance with existing laws.
He may use such forms of deeds, mortgages, lease or other
voluntary instruments as are sufficient in law. But no deed,
mortgage, lease or other voluntary instrument, except a will
purporting to convey or affect registered land shall take effect as
a conveyance or bind the land, but shall operate only as a
contract between the parties and as evidence of authority to the
Register of Deeds to make Registration.

The act of registration shall be the operative act to

convey or affect the land insofar as third persons are
concerned, and in all cases under this Decree, the registration
shall be made in the office of the Register of Deeds for the
province or city where the land lies. (Emphasis supplied)

Sec. 52. Constructive notice upon registration.Every

conveyance, mortgage, lease, lien attachment, order, judgment,
instrument or entry affecting registered land shall, if registered,
filed or entered in the office of the Register of Deeds for the
province or city where the land to which it relates lies, be
constructive notice to all persons from the time of such
registering, filing or entering.

It has been held that between two transactions concerning the same
parcel of land, the registered transaction prevails over the earlier
unregistered right. The act of registration operates to convey and affect the
registered land so that a bona fide purchaser of such land acquires good title
as against a prior transferee, if such prior transfer was unrecorded.[36] As
found by the courts a quo, respondent was able to register its purchase ahead
of petitioner. It will be recalled that respondent was able to register its Deed
of Conditional Sale with the Register of Deeds as early as 6 November
1992, and its Deed of Absolute Sale on 14 October 1993. On the other hand,
petitioner was able to present for registration her deed of sale and owners
copy of the title only on 23 January 1995, or almost nine years after the
purported sale. Why it took petitioner nine (9) years to present the deed and
the owners copy, she had no credible explanation; but it is clear that when
she finally did, she already had constructive notice of the deed of sale in
respondents favor. Without a doubt, respondent had acquired a better title
to the property.
Finally, anent petitioners claim that P.D. No. 1529 applies to
registered lands or any subsequent sale thereof, while Art. 1544 of the Civil

Code applies only to immovable property not covered by the Torrens

System, suffice it to say that this quandary has already been answered by an
eminent former member of this Court, Justice Jose Vitug, who explained
that the registration contemplated under Art. 1544 has been held to refer to
registration under P.D. No. 1529, thus:
The registration contemplated under Art. 1544 has been
held to refer to registration under Act 496 Land Registration
Act (now PD 1529) which considers the act of registration as the
operative act that binds the land (see Mediante v. Rosabal, 1 O.G.
[12] 900, Garcia v. Rosabal, 73 Phil 694). On lands covered by the
Torrens System, the purchaser acquires such rights and interest 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 is where the purchaser has actual knowledge
of a flaw or defect in the title of the seller or of such liens or
encumbrances which, as to him, is equivalent to registration (see
Sec. 39, Act 496; Bernales v. IAC, G.R. 75336, 18 October 1988;
Hernandez vs. Sales, 69 Phil 744; Tajonera s. Court of Appeals, L26677, 27 March 1981) (Emphasis supplied)[37]

WHEREFORE, the petition is DENIED. The assailed decision and

resolution of the Court of Appeals are affirmed. Costs against petitioner.
SO ORDERED.