AVELINO REVILLA AND ELENA FAJARDO, PLAINTIFFS AND APPELLANTS, VS. GODOFREDO GALINDEZ, DEFENDANT AND APPELLEE.

In the complaint they filed in the Court of First Instance of Nueva
Ecija, Avelino Revilla, and Elena Fajardo are seeking to recover the
possession of a parcel of land, now known as Lot No. 659-A, subdivision
plan Psd-28954, but which used to be the southwestern portion of Lot
No. 659 of the cadastral survey of Rizal, Nueva Ecija. This latter lot
was formerly registered in the name of Alipio Gasmeña as per T.C.T. No.
7454 (Exhibit 4). On May 18, 1938, Alipio Gasmeña donated to Florencio
Gasmeña said southwestern portion of the lot, with an area of 1.8144
hectares (Exhibit 5). The donation was duly annotated on the
certificates of title. On May 21, 1938, Florencio Gasmeña mortgaged his
unsegregated portion to Godofredo Galindez, defendant-appellee herein,
for the sum of P350.00 (Exhibit 8); and on October 5, 1938 sold it
outright to defendant-appellee (Exhibit 7). The mortgage was registered
and a memorandum thereof entered on T.C.T. No. 7454, but the subsequent
sale was never registered. However, from the date of the mortgage,
defendant-appellee had been in possession of the property.

Several years after Florencio Gasmeña’s death in 1941, the portion
which he had conveyed to defendant-appellee was segregated and
designated as Lot No. 659-A. Oh August 28, 1950, T.C.T. No. NT-7782,
covering Lot No. 659-A, was issued in the name of the already deceased
Florencio’ Gasmeña. This certificate of title carried no annotation of
the registered mortgage in favor of defendant-appellee. On September
20, 1950, the widow and heirs of Florencio Gasmeña executed a deed of
extrajudidal partition with sale (Exhibit B) wherein they declared that
on November 15, 1941, Florencio Gasmeña died intestate, without debts
and possessed solely of Lot No. 659-A, which lot they adjudicated to
themselves and then sold for P2,000.00 to plaintiffs-appellants. Before
they purchased the land, plaintiffs-appellants had examined Florencio
Gasmeña’s title and had found no encumbrance noted thereon. The deed of
extrajudicial partition with sale was registered, so T.C.T. No. NT-7782
in the name of Florencio Gasmeña was cancelled, and in lieu thereof
T.C.T. No. NT-7938 was issued to plaintiffs-appellants subject to the
provisions of Sections 4 and 5 of Rule 74, Rules of Court.
Plaintiffs-appellants attempted to take possession of the land, but
defendant-appellee’s overseer informed them that defendant-appellee had
previously purchased it from Florencio Gasmeña. Defendant-appellee’s
refusal to relinquish possession of the lot prompted
plaintiffs-appellants to commence this action.

The lower court, after trial, rendered judgment declaring the deed
of extrajudicial partition with sale (Exhibit B) null and void and
ordering the Register of Deeds to cancel T.C.T. No. NT-7938.

Raising questions purely of law, plaintiffs have appealed directly to this Court.

We have here a case of registered land which had been sold to two
different persons. Where the same immovable property is sold to
different vendees, the property shall belong to the one who first
recorded it in the Registry of Deeds (Article 1544, N.C.C., Article
1473, O.C.C.). This rule covers all kinds of immovables, including
land, and makes no distinction as to whether the immovable is
registered or not. But in so far as registered land is concerned said
rule is in perfect accord with the Land Registration Act, Section 50 of
which provides that 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 until its
registration.

The first sale was in favor of defendant-appellee, and was never
registered, although from the time the land was mortgaged to him up to
the present, he has been in uninterrupted possession of the land. But
since we are dealing with registered land, title to which is
imprescriptible (Section 46, Act 496), defendant-appellee certainly
cannot claim title by acquisitive prescription. To successfully bind
the land, he should have registered the sale in his favor. By reason of
his failure to do so, the sale operated only as a contract between him
and the vendor, Florencio Gasmeña, and as evidence of authority to the
Register of Deeds to make registration (Section 50,: Act 496; Buzon vs. Licauco, 13 Phil., 354; Worcester vs. Ocampo 34 Phil., 646; Fidelity and Surety Co. vs.
Conegero, 41 Phil., 396). Florencio Gasmeña and his heirs were bound to
respect the contract, but innocent third persons cannot be affected
thereby. From the time Florencio Gasmeña acquired the questioned lot up
to the time of his death (and even for nine years thereafter), there
was an annotation on Alipio Gasmeña’s certificate of title to the
effect that said portion of land had been conveyed to Florencio
Gasmeña. Hence, from the viewpoint of third persons, Florencio Gasmeña
was still the owner even after the unregistered sale to
defendant-appellee. And it follows that if Florencio Gasmeña had been
of a mind to sell the land, he could have subsequently sold it and
could still have passed good title to an innocent purchaser for value,
subject, of course, to the registered mortgage in favor of
defendant-appellee.

One of the main features of the Torrens system of registration is
that all encumbrances on the land or special estates therein shall be
shown, or at least intimated upon the certificate of title and a person
dealing with the owner of the registered land is not bound to go behind
the certificate and inquire into transactions, the existence of which
is not there intimated (Quimson vs. Suarez, 45 Phil., 901);
but he is only charged with notice of the burdens on the property which
are noted on the face of the register or on the certificate of title
(Anderson and Co. vs. Garcia, 64 Phil., 506). The Torrens
system seeks to insure the efficacy and conclusiveness of the
certificate of title. To enhance this aim we thus have the provision
that every person receiving a certificate of title in pursuance of a
degree of registration, and every subsequent purchaser of registered
land who takes certificate of title for value in good faith shall hold
the same free of all incumbrances except those noted on said
certificate (Section 39, Act 496).

Unquestionably, the sale in favor of plaintiffs-appellants was a
registered one, and a certificate of title was issued to them. The
point of inquiry is whether they are purchasers in good faith. It is
true that before they bought the lot they had first examined the
certificate of title of Florencio Gasmeña and had found it absolutely
clean in the sense that there was no annotation of any encumbrance. But
one fact stands out just as clearly. Plaintiffs-appellants did not buy
the land from the registered owner, Florencio Gasmeña. They bought it
from his heirs.

The law protects to a greater degree a purchaser who buys from the
registered owner himself. Corollarily, it requires a higher degree of
prudence from one who buys from a person who is not the registered
owner, although the land object of the transaction is registered, While
one who buys from the registered owner does not need to look behind the
certificate of title, one who buys from one who is not the registered
owner is expected to examine not only the certificate of title but all
factual circumstances necessary for him to determine if there are any
flaws in the title of the transferor, or in his capacity to transfer
the land.

This Court has consistently applied the stricter rule when it comes
to deciding the issue of good faith of one who buys from one who is not
the registered owner, but who exhibits a certificate of title.

This is well illustrated in Veloso and Rosales vs. La
Urbana and Del Mar (58 Phil., 681) where this Court declared that one
who deals with the supposed attorney in fact of a registered owner, has
the duty of ascertaining the genuineness of the deed purporting to be a
power of attorney, and that should he fail to determine whether such
attorney in fact has the power to dispose of the land, then he must
suffer the consequences and damages resulting from the transaction. One
who intends to purchase registered land, must first make sure that the
persons selling it to him is the person named as owner in the
certificate of title, and not an impostor. If he should neglect to
ascertain the identity of the seller, the law will not protect him,
should such seller turn out to be an impostor (De lara and De Guzman vs.
Ayroso, 95 Phil., 185; 50 Off. Gaz., No, 10, 4838). Where a person buys
land not from, the registered owner but from one whose right to the
land has been merely annotated on the certificate of title, and such
purchaser merely had his deed of sale annotated on the certificate of
title, he is not considered a “subsequent purchaser of registered land
who takes certificate of title for value and in good faith and who is
protected against any encumbrance except those noted on said
certificate” (Mirasol vs. Gerochi, 93 Phil., 480).

The problem before us finds a parallel in the case of Mari vs.
Bonilla (83 Phil., 137; 46 Off. Gaz., 4258) where a question also arose
respecting the vendees’ good faith. In said case, the property was
still in the name of the already deceased Casimiro Evangelista at the
time the vendees purchased it from one of Casimiro’s son. This son,
Deogracias Evangelista, posing as sole heir of the deceased, had
adjudicated the land to himself and had then sold it to the vendees
without first acquiring a certificate of title in his name. It turned
out later that the deceased had other heirs who sought to recover the
property from the vendees. In resolving the question presented, this
Court declared that:

“Good faith affords protection only to purchasers
for value from the registered owner. Deogracias Evangelista,
defendants’ grantor, was not a registered, owner. The land was and
still is registered in the name of Casimiro Evangelista. In no way does
the certificate state that Deogracias owned the land; consequently
defendants cannot summon to their aid the theory of indefeasibility of
Torrens Title. There is nothing in the certificate and in the
circumstances of the transaction which warrant them in supposing that
they need not look beyond the title. If anything, it would have put
them on their guard, cautioned them to ascertain and verify that the
vendor was the only heir of his father, that there was no debt, and
that the latter was the sole owner of the parcel of land.”

The above pronouncement may well be made here. Plaintiffs-appellants
did not buy the lot from the registered owner. Thus they were bound at
their peril to investigate their transferors’ right to sell the
property. Ordinary prudence called for a scrutiny of the deed of
extrajudicial partition with sale (Exhibit B) as well as the transfer
certificate in the name of Florencio Gasmeña. Such an examination would
have inevitably revealed to plaintiffs-appellants that Florencio
Gasmeña’s heirs allowed almost a decade to pass before they attempted
to adjudicate the lot unto themselves, and, more important, that
Florencio Gasmeña had been dead nine years before the lot was
segregated from Lot No. 659 and T.C.T. No. NT-7782 issued in his name.
With these facts on hand, any prospective buyer of the land would have
examined the previous transfer certificate of title in the name of
Alipio Gasmeña, T.C.T. No. 7454, and would thus have discovered that at
ho time during his life was Florencio Gasmeña ever the registered owner
of said portion of land. The memorandum of conveyance to him in the
certificate of title of Alipio Gasmeña served merely as a notice to
third parties of the fact that said portion had been transferred to
Florencio Gasmeña (Section 58, Act No. 496, as amended by Act No.
4029), but it did, not have the same effect as a certificate of title
issued to Florencio Gasmeña himself. The doctrine therefore in the
Bonilla case applies with more force herein for neither
plaintiffs-appellants transferors nor the latter’s predecessor was ever
the registered owner of the lot.

An examination of Alipio Gasmeña’s certificate of title would
likewise have yielded the fact that said portion of land had been
mortgaged to defendant-appellee. All these circumstances were
sufficient to warn plaintiffs-appellants that their transferors did not
have clean title to the land. Their failure to make the investigations
required by the circumstances constitutes lack of good faith. They
cannot now plead ignorance because they had before them facts which
would have reasonably impelled an ordinarily prudent buyer to make an
inquiry and to exercise due care.

“A purchaser cannot close his eyes to facts which
should put a reasonable man upon his guard, and then claim that he
acted in good faith under the belief that there was no defect in the
title of the vendor. His mere refusal to believe that such defect
exists, or his willful closing of his eyes to the possibility of the
existence of a defect in his vendor’s title, will not make him an
innocent purchaser for value, if it afterwards develops that the title
was in fact defective, and it appears that he had such notice of the
defect as would have led to its discovery had he acted with that
measure of precaution which may reasonably be required of a prudent man
in like situation.” (Leung Yee vs. F. L. Strong Machinery Co., and Williamson, 87 Phil., 644).

Not being purchasers in good faith, plaintiffs-appellants are clearly not entitled to the rights of a registered owner.

Neither of the vendees having registered their respective sales in
good faith, their right to the property must be determined by the
priority of possession. Where the same immovable property was sold to
two different persons neither of whom recorded the transfer in good
faith, ownership shall pertain to the person who in good faith was
first in the possession (Article 1544, N.C.C.; Article 1473, O.C.C.).
The lot, therefore properly belongs to defendant-appellee.

Having arrived at the foregoing conclusions, we find it unnecessary to discuss the other points raised by the parties.

Wherefore, the appealed judgment is hereby affirmed with costs against appellants.

Paras, C. J., Bengzon, Montemayor, Bautista Angelo, Labrador, Concepcion, Reyes, J. B. L., and Barrera, JJ., concur.