**Carmelita Fudot vs. Cattleya Land, Inc., G.R. No. 172254**
### Facts:
**July 1992** – Cattleya Land, Inc. (respondent) intended to buy nine lots from Troadio and Asuncion Tecson. The titles were checked and found without defects.
**November 6, 1992** – A Deed of Conditional Sale was executed for the purchase of the nine lots.
**August 30, 1993** – The respondent and the Tecsons executed a Deed of Absolute Sale. Both deeds were registered, but annotation on the titles was refused due to a notice of attachment related to Civil Case No. 3399.
**1994** – The attachment was canceled following a compromise agreement between the Tecsons and the creditor, brokered by the respondent. Six lot titles were issued to the respondent; the remaining three titles were unaccounted for.
**January 23, 1995** – Carmelita Fudot (petitioner) presented an owner’s title copy and a deed of sale dated December 19, 1986, for registration, resulting in the issuance of a new title in her name.
**May 5, 1995** – Respondent filed a complaint for quieting of title, recovery of ownership, and cancellation of title with damages at the Regional Trial Court (RTC) of Tagbilaran City.
**June 26, 1995** – Asuncion Tecson intervened, claiming her signature on the petitioner’s deed was forged.
**October 31, 2001** – RTC Decision:
1. Title to subject land quieted in favor of the respondent.
2. Deed of sale between the petitioner and Tecsons declared invalid.
3. Registration ordered in favor of the respondent.
4. Respondent’s and Asuncion’s claims for damages dismissed.
5. Petitioner’s counterclaim dismissed.
Petitioner appealed to the Court of Appeals (CA), alleging double sale and good faith possession of the owner’s title.
**April 28, 2005** – CA dismissed the petitioner’s appeal, affirming there was no double sale since the petitioner’s deed was found fraudulent and void.
**January 11, 2006** – CA denied the petitioner’s motion for reconsideration.
**Supreme Court (SC) Review** – The petitioner raised issues concerning priority between buyers of registered land, determination of good faith, and applicable law, asserting her rights based on holding the owner’s title copy.
### Issues:
1. **Priority of Rights Between Buyers**:
– Who has a better right: the first buyer (petitioner) with the owner’s duplicate title and a deed of sale dated 1986, or the second buyer (respondent) with deeds of sale executed and registered in 1992?
2. **Good Faith of the Buyer**:
– Is a buyer who did not demand the delivery of the owner’s duplicate title considered a buyer in good faith?
3. **Applicable Law**:
– Which law governs subsequent registration of registered lands: Article 1544 of the Civil Code or P.D. 1529 (Torrens System)?
### Court’s Decision:
**1. Priority of Rights Between Buyers:**
– The SC affirmed that there was no double sale. The petitioner’s deed was found to be forged, rendering it void ab initio. Thus, only the sale to the respondent was valid. Even if there were a double sale, respondent’s earlier registration of the sale in good faith gave it priority under the “primus tempore, potior jure” principle (first in time, stronger in right).
**2. Good Faith of the Buyer:**
– The SC ruled that respondent was a buyer in good faith, having made diligent inquiries and finding the titles to be free from encumbrances (except the attachment which was later lifted). The petitioner’s claim to good faith failed since she based her claim on a void deed.
**3. Applicable Law:**
– The Court clarified that both Article 1544 of the Civil Code and P.D. No. 1529 apply where the land is covered by the Torrens System. Respondent’s registration under P.D. No. 1529 provided constructive notice to all parties and established respondent’s superior right, consistent with the requirements of Article 1544.
### Doctrine:
– **No Double Sale Rule:** A double sale under Art. 1544 applies only when there are valid sales to two different vendees. A forged deed cannot confer any rights.
– **Primus Tempore, Potior Jure:** The principle that the first to register in good faith has a better right.
– **Effect of Registration (P.D. 1529):** Registration provides constructive notice and affects registered lands, establishing a purchaser’s rights over prior unregistered claims unless the purchaser had actual knowledge of defects or prior claims.
### Class Notes:
– **Key Elements:**
– **Double Sale Rule (Art. 1544 of Civil Code):** Validity of first vs. second sale, affect of good faith registration.
– **Good Faith in Real Estate Transactions:** Due diligence, absence of notice of defects.
– **Effect of Registration (P.D. 1529):** Registration operates to convey and affect land regarding third parties.
– **Verbatim Citations:**
– **Civil Code, Art. 1544** – Establishes the regulation for double sale regarding immovable property.
– **P.D. No. 1529, Sec. 51 & 52** – Registration as the operative act binding land and providing constructive notice.
### Historical Background:
– **Context:** The case underscores the importance of the Torrens System in Philippine land registration, aimed at providing certainty and security of title. The controversy illustrates the legal mechanisms to resolve conflicts arising from fraudulent transactions and the due diligence required from buyers in property acquisitions under the Torrens system.
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