Cuizon vs. Remoto

An earlier unregistered deed of sale prevails over a later registered conveyance when the subsequent buyer had actual knowledge of the prior sale, applying the principle of prior tempore, potior jure; a Torrens title does not cloak a transferee who takes with notice of a defect, and a co-owner’s sale of his undivided share is valid but transfers only the rights appurtenant to that share upon partition.

Placida Tabada-Lambo, Eugenio Tabada, Raymunda Tabada, and Patrecia Tabada were registered co-owners of a 16-hectare parcel in Agusan del Norte covered by Transfer Certificate of Title (TCT) No. RT-183, each holding an undivided one-fourth share. On September 19, 1968, Placida executed a notarized Deed of Sale of Real Property covering 4,300 square meters of her share in favor of Angel Remoto. The deed was never registered or annotated on TCT No. RT-183, but Angel and his heirs—respondents Mercedes, Leonida, Celerina, and Remedios—immediately entered into possession and continuously occupied the lot. On August 3, 1983, the heirs of Placida, including petitioner Encarnacion L. Cuizon, executed an Extra-Judicial Settlement with Sale adjudicating Placida’s one-fourth portion to themselves and simultaneously selling it to Encarnacion. TCT No. RT-3121 was issued in her name on March 15, 1984. Respondents filed an action for reconveyance shortly thereafter, asserting ownership under the 1968 sale.

• The 1968 Deed of Sale: On September 19, 1968, Placida Tabada-Lambo, co-owner of an undivided one-fourth share in a 16-hectare property under TCT No. RT-183, executed a notarized Deed of Sale of Real Property in favor of Angel Remoto covering a 4,300-square-meter portion of her share. The deed was not registered or annotated on the certificate of title. Angel and his heirs—respondents Mercedes C. Remoto (wife) and Leonida, Celerina, and Remedios (children)—entered into possession of the lot and continuously occupied it under a claim of ownership from that date onward.

• The 1983 Extra-Judicial Settlement with Sale: On August 3, 1983, the heirs of Placida Tabada-Lambo, including petitioner Encarnacion L. Cuizon, executed an Extra-Judicial Settlement with Sale whereby they adjudicated Placida’s entire one-fourth share to themselves and simultaneously sold it to Encarnacion. Pursuant to this instrument, TCT No. RT-3121 was issued on March 15, 1984 in the name of “Encarnacion L. Cuizon, married to Salvador Cuizon,” reflecting a transfer from TCT No. RT-183.

• Petitioners’ Knowledge of the Prior Sale: The trial court found that in September 1982—before the execution of the 1983 Extra-Judicial Settlement—petitioners visited the Remotos’ residence and were shown the 1968 Deed of Sale, which they read and examined. Petitioners claimed the visit occurred in 1983, but the trial court credited the respondents’ version. Petitioners had never taken possession of the disputed lot, while respondents and their predecessor had been in open, continuous, and adverse possession as owners since 1968.

• Co-ownership and Other Transactions: TCT No. RT-183 bore inscriptions of several deeds of mortgage and a deed of sale with right of repurchase executed by Placida’s co-owner Eugenio Tabada over his one-fourth share, indicating that the co-owners had already allocated and exercised proprietary rights over their respective undivided portions even without formal subdivision.

• Validity of the 1968 Deed of Sale: Petitioners argued that the 1968 Deed of Sale is void, fictitious, unenforceable, and without legal effect, asserting it could not defeat their registered title.

• Reliance on the Torrens System: Petitioners maintained that they are entitled to rely on the correctness of TCT No. RT-3121, issued pursuant to a registered Extra-Judicial Settlement with Sale, and that the Torrens system protects them as lawful owners.

• Lack of Notice to Redemptioners: Petitioners contended that the 1968 sale was invalid because no written notice was given to all possible co-redemptioners, co-heirs, and co-owners, as required under Articles 1620 and 1623 of the Civil Code.

• Superiority of Torrens Title over Possession: Petitioners argued that respondents’ possession, however long, is ineffectual against a Torrens title.

• Prescription and Laches: Petitioners asserted that respondents’ action for reconveyance was barred by prescription and laches.

• Validity and Binding Effect of the Prior Sale: Respondents countered that the 1968 Deed of Sale is a duly notarized public document, valid and binding between the parties and their successors-in-interest, and that petitioners’ actual knowledge of its existence made them buyers in bad faith.

• Priority in Time: Respondents argued that the earlier sale confers a superior right under the principle of prior tempore, potior jure, and that registration of the later deed cannot defeat a prior unregistered interest of which the subsequent purchaser had notice.

• Heirs’ Lack of Title: Respondents maintained that since Placida had already sold her share in 1968, her heirs had nothing to adjudicate or convey in 1983; the subsequent title was thus voidable.

• No Prescription or Laches: Respondents pointed out that they have continuously possessed the property in the concept of an owner since 1968 and that their suit to protect that possession does not prescribe.

• Validity of the 1968 Deed of Sale: Whether the unregistered notarized Deed of Sale executed in 1968 is valid and enforceable against petitioners.

• Priority of Right (Double Sale): Whether the earlier unregistered sale prevails over the subsequent registered Extra-Judicial Settlement with Sale and the Torrens title issued in favor of petitioners.

• Good Faith and Indefeasibility of Torrens Title: Whether petitioners, having inspected the 1968 deed before acquiring their own interest, can invoke the indefeasibility of their Torrens title to defeat respondents’ claim.

• Right of Legal Redemption and Notice: Whether the absence of written notice to co-owners or co-heirs under Articles 1088, 1620, and 1623 of the Civil Code invalidates the 1968 sale.

• Prescription and Laches: Whether respondents’ action for reconveyance is barred by prescription or laches.

• Extent of Interest Conveyed by a Co-Owner: What interest Angel Remoto acquired from Placida’s sale of a specifically measured portion of her undivided one-fourth share, and whether the sale validly transferred 4,300 square meters.

• Validity of the 1968 Deed of Sale: The 1968 Deed of Sale, being a duly notarized public document, carries the presumption of regularity. Petitioners failed to present clear, convincing, and more than preponderant evidence to prove it was void, fictitious, or unenforceable. Registration is not an element of a valid contract; an unregistered deed remains binding between the parties and their successors-in-interest with actual notice.

• Priority of Right (Double Sale): Under the principle of prior tempore, potior jure (“he who is first in time is preferred in right”), the first buyer has a superior right. Here, the 1968 sale preceded the 1983 Extra-Judicial Settlement. Because petitioners had actual knowledge of the prior sale, that knowledge is equivalent to registration as to them, and the earlier unregistered sale prevailed.

• Good Faith and Indefeasibility of Torrens Title: The defense of indefeasibility of a Torrens title does not extend to a transferee who accepts the certificate with notice of a flaw in his title. Petitioners learned of the 1968 Deed of Sale in 1982 before the Extra-Judicial Settlement and the issuance of TCT No. RT-3121. Being purchasers in bad faith, they could not invoke the protection of the Torrens system. Moreover, the heirs of Placida could not transfer what they no longer owned (nemo dat quod non habet), rendering the subsequent registration ineffective against respondents.

• Right of Legal Redemption and Notice: The right of legal redemption under Articles 1088, 1620, and 1623 of the Civil Code belongs to the original co-owners of Placida (Eugenio, Raymunda, and Patrecia Tabada and their heirs), not to petitioners who are heirs of Placida. The written notice must come from the vendor, Placida, not from the buyer or any other person. The absence of such notice does not invalidate the sale; it only affects the running of the redemption period. Consequently, petitioners have no standing to raise this objection.

• Prescription and Laches: The action for reconveyance was not barred. Respondents and their predecessor have been in actual, continuous possession since 1968. A suit to quiet title brought by one in possession of the property does not prescribe; the possessor may wait until his possession is disturbed or his title is attacked. Laches was also absent: the complaint was filed only about one year after the Extra-Judicial Settlement, approximately one year after its registration, and less than five months after TCT No. RT-3121 was issued, showing vigilance rather than neglect.

• Extent of Interest Conveyed by a Co-Owner: Under Article 493 of the Civil Code, a co-owner may alienate his undivided share, but the effect of the alienation is limited to the portion that may be allotted to him upon partition. Because the entire co-owned property measures 16 hectares, Placida’s one-fourth interest corresponds to 4,000 square meters, not 4,300. The 1968 sale therefore transferred only what would correspond to Placida’s undivided share upon division—i.e., 4,000 square meters—and did not validly convey a fixed portion exceeding that share.

• Prior tempore, potior jure — In conflicts of ownership arising from successive alienations of the same property, priority in time confers the preferred right; the first vendee who acts in good faith has a superior claim over a later buyer who acquires a registered title with notice of the prior sale.

• Knowledge Equivalent to Registration — Where a party has actual knowledge of a prior unregistered interest at the time he acquires a right to the same land, that knowledge has the effect of registration as to him, and he cannot defeat the prior interest by relying on the Torrens system.

• Validity of Unregistered Notarized Deeds — Documents acknowledged before a notary public are public documents; they are admissible without further proof of authenticity and enjoy a presumption of regularity. Registration is not required for validity between the contracting parties or their successors-in-interest with notice.

• Indefeasibility of Title Not Available to Transferee in Bad Faith — The principle that a Torrens title is indefeasible does not protect a transferee who takes the certificate with actual notice of a defect or prior adverse claim; fraud or bad faith negates the shield of indefeasibility.

• Nemo dat quod non habet — One cannot give what one does not have. A vendor can only sell what he owns or is authorized to sell, and the buyer acquires no greater right than the seller could legally transfer.

• Co-Owner’s Right to Alienate Undivided Share (Article 493) — Each co-owner has full ownership of his ideal share and may alienate it; however, the alienation is limited to the portion that may be allotted to him upon partition. A sale by a co-owner of a specific metes-and-bounds portion is not void but merely transfers the seller’s undivided right to that portion, subject to the result of the partition.

• Imprescriptibility of Reconveyance by Possessor — An action for reconveyance which also quiets title filed by a person in actual possession of the property does not prescribe, because undisturbed possession gives rise to a continuing right to seek judicial determination of adverse claims.

• “Prior tempore, potior jure. It simply means, ‘He who is first in time is preferred in right.’ The only essential requisite of this rule is priority in time, and the only one who can invoke this is the first vendee.”

• “Registration is not a requirement for validity of the contract as between the parties, for the effect of registration serves chiefly to bind third persons. Petitioners are not third persons within the contemplation of the registration rule. … Petitioners are both related to the original owner of the property, Placida. Petitioner Encarnacion Lambo-Cuizon is an heir of Placida, while Salvador Cuizon is Encarnacion’s husband. Hence, registration is not required to bind petitioners.”

• “[W]here the party has knowledge of a prior existing interest which is unregistered at the time he acquired a right to the same land, his knowledge of that prior unregistered interest has the effect of registration as to him.”

• “No one can give what one does not have — nemo dat quod non habet. Accordingly, one can sell only what one owns or is authorized to sell, and the buyer can acquire no more than what the seller can transfer legally. Such being the case, the heirs of Placida did not acquire any right to adjudicate the property unto them and sell it to Encarnacion.”

• “[T]he defense of indefeasibility of the torrens title does not extend to a transferee who takes the certificate of title with notice of a flaw in his title. The principle of indefeasibility of title is unavailing where there was fraud that attended the issuance of the free patents and titles.”

• Consolidated Rural Bank (Cagayan Valley), Inc. vs. Court of Appeals, G.R. No. 132161, January 17, 2005 — Followed for the principle of prior tempore, potior jure and the rule that a subsequent buyer cannot acquire more than what the seller legally owns (nemo dat quod non habet).

• Heirs of Manlapat vs. Court of Appeals, G.R. No. 125585, June 8, 2005 — Relied on for the doctrines that registration binds third persons except those with actual knowledge, and that knowledge of a prior unregistered interest has the effect of registration.

• Ruiz, Sr. vs. Court of Appeals, G.R. No. 121298, July 31, 2001 — Cited to establish that notarized documents are public documents with a presumption of regularity rebuttable only by clear and convincing evidence.

• Vda. de Cabrera vs. Court of Appeals, G.R. No. 108547, February 3, 1997 — Applied to support the rule that indefeasibility of a Torrens title is unavailing where fraud attended the issuance, and that a possessor’s action to quiet title does not prescribe.

• De Ape vs. Court of Appeals, G.R. No. 133638, April 15, 2005 — Used to clarify that the written notice required for legal redemption must come from the vendor, not the buyer.

• Aguirre vs. Court of Appeals, G.R. No. 122249, January 29, 2004 — Relied on for the rule that a co-owner’s sale of the entire property without consent of other co-owners is not void but transfers only the seller’s undivided share.

• Article 493, Civil Code — Confirms a co-owner’s right to alienate his undivided share; the alienation affects only the portion that may be allotted to him upon partition. Applied to hold that Placida’s sale to Angel transferred her one-fourth pro indiviso interest and that the sale of a definite 4,300-square-meter portion did not exceed the seller’s rights but merely gave the buyer a co-ownership interest subject to partition.

• Articles 1088, 1620, 1623, Civil Code — Govern legal redemption by co-heirs and co-owners and the requirement of written notice by the vendor. Interpreted to mean that the right of redemption belongs to Placida’s original co-owners and their heirs, not to petitioners who are Placida’s own heirs, and that the absence of notice does not invalidate the sale.

• Article 1403(2)(e), Civil Code — Statute of Frauds provision relied upon by the trial court to reject petitioners’ unsubstantiated claim of an earlier installment sale in 1964 for lack of a written memorial.

• Rule 45, Rules of Court — The Court’s review in petitions for review on certiorari is limited to errors of law; factual findings of the trial court affirmed by the CA are conclusive absent exceptional circumstances, none of which were present.

Associate Justices Reynato S. Puno, Romeo J. Callejo, Sr., Dante O. Tinga, and Minita V. Chico-Nazario concurred without separate opinions.