Tamayao vs. Lacambra

A subsequent buyer of registered land who has actual knowledge of a prior unregistered sale and of the adverse possession of another is not an innocent purchaser for value and cannot acquire a better right over the property by registering the later sale, even if the first sale was never annotated on the original certificate of title.

Vicente Balubal owned Lot No. 2930 in Tuguegarao City, covered by Original Certificate of Title No. 6106. Upon his death in 1944, his children Tomasa and Jose Balubal inherited the property. On January 23, 1962, Tomasa and Jose executed a notarized “Extrajudicial Settlement and Sale” conveying the entire lot to Juan Lacambra for ₱325.00. The sale was not registered and OCT No. 6106 remained in Vicente Balubal’s name, but the owner’s duplicate copy was turned over to Juan, who took possession and whose heirs later planted fruit trees and built houses on the land. After Juan died in 1979, some of his heirs (respondents herein) sold their 5/14 pro indiviso share to Spouses Rogelio Tamayao and Felipa Binasoy Tamayao in 1980. The Spouses Tamayao built their house on the eastern portion of the lot. Thereafter, descendants of Jose Balubal claimed the property had never been sold to Juan Lacambra. Fearing eviction, the Spouses Tamayao purchased the entire lot from these heirs of Balubal in December 1981. The 1981 sale was registered, and a new title (TCT No. T-54668) was issued in the name of Rogelio Tamayao, but the registration was based on a reissued owner’s duplicate that Pedro Balubal had obtained by falsely alleging loss of the original.

• Ownership and First Sale (1962): Vicente Balubal owned Lot No. 2930 (922 sq.m.) covered by OCT No. 6106. He died in 1944 and was survived by his children Jose and Tomasa Balubal. On January 23, 1962, Jose and Tomasa executed a notarized “Extrajudicial Settlement and Sale,” adjudicating the lot to themselves and then selling the entire property to Juan Lacambra for ₱325.00. The document was acknowledged before a notary public and a copy was kept on file with the Clerk of Court. The sale was not annotated on OCT No. 6106, but the owner’s duplicate copy of the title was delivered to Juan, who took actual possession and planted fruit trees on the property.
• Succession and Second Sale (1980): Juan Lacambra died in 1979, leaving the property to his children and a grandson: Felipa, Natividad, Francisco, Sotero, Catalino, Cirilio, all surnamed Lacambra, and Basilio Coballes. They continued to possess Lot No. 2930, with Catalino building a house on the western portion. On January 21, 1980, all the heirs except Cirilio and Catalino sold their collective 5/14 pro indiviso share (329 sq.m.) to Spouses Rogelio Tamayao and Felipa Binasoy Tamayao via a “Deed of Sale of an Undivided Share in a Registered Parcel of Land.” On the same day, Rogelio Tamayao filed and annotated an adverse claim over the 5/14 share on OCT No. 6106. Sotero, Cirilio, and Catalino pointed to the eastern portion of the lot where the Spouses Tamayao could build their house, and the spouses subsequently constructed a house there.
• Dispute and Third Sale (1981): After the house was completed, Pedro Balubal (son of Jose) and Leandro Andal (son of Jose’s deceased daughter) visited the Spouses Tamayao and asserted that Tomasa and Jose never sold the property to Juan Lacambra. Tomasa Balubal likewise denied the sale in her Answer with Counterclaim. Concerned about losing their house, the Spouses Tamayao agreed to purchase the entire Lot No. 2930 from the heirs of Balubal. Meanwhile, on December 2, 1981, Pedro Balubal filed a verified petition alleging loss of the owner’s duplicate of OCT No. 6106 and obtained a reissued owner’s duplicate. On December 24, 1981, the heirs of Balubal (Tomasa, Pedro, and Leandro) executed an “Extrajudicial Settlement of a Parcel of Land with Sale” covering the entire lot in favor of the Spouses Tamayao. By virtue of this sale, OCT No. 6106 was cancelled and TCT No. T-54668 was issued in the name of “Rogelio Tamayao married to Felipa Binasoy.”
• Trial Court Findings: The RTC found that the 1962 sale was valid and binding, as the deed was a notarized public document enjoying the presumption of regularity and the heirs of Balubal’s claim of forgery was unsubstantiated. It also upheld the 1980 partial sale. The 1981 sale, however, was annulled on the ground that the Spouses Tamayao knew the heirs of Lacambra owned and possessed the property, making them purchasers in bad faith; registration could not defeat the descendants of Juan Lacambra. The RTC denied Cirilio and Catalino’s action for legal redemption. The Court of Appeals affirmed in toto, holding additionally that the 1981 sale was wholly inexistent because the vendors had no right to dispose of the property, and that the rule on double sales under Article 1544 of the Civil Code did not apply where only one valid sale existed. Even if Article 1544 were applicable, the Spouses Tamayao’s bad faith would preclude them from prevailing.

• Evidentiary Value of the 1962 Deed: Petitioners argued that the lower courts erred in giving weight to the 1962 Extrajudicial Settlement and Sale because the original document was never presented in court; reliance on a certified true copy violated the best evidence rule.
• Validity of the First Sale: They maintained that the subject property was never sold to Juan Lacambra and that the deed evidencing the sale was forged.
• Good Faith and Better Right: Petitioners contended that they purchased the entire lot from the heirs of Balubal in good faith and for value, relying on the clean Torrens title; as they were the first to register the sale and obtain a TCT in their name, they had a better right over the property.
• Annulment of the Third Sale: They asserted that the CA erred in annulling the 1981 sale and cancelling TCT No. T-54668, insisting that they were innocent purchasers for value entitled to the protection of the Torrens system.

• Validity of the 1962 Sale: Respondents countered that the 1962 Extrajudicial Settlement and Sale was duly notarized and, as a public document, enjoyed the presumption of regularity and due execution. The certified true copy from the Clerk of Court was admissible because the issue concerned the existence and authenticity of the deed, not its contents.
• Delivery and Ownership: They argued that ownership of Lot No. 2930 was transferred to Juan Lacambra through both constructive delivery (execution of the deed as a public instrument) and actual delivery (Juan took possession and his heirs continued to occupy the land).
• Bad Faith of Petitioners: Respondents pointed out that the Spouses Tamayao were fully aware of the prior sale and the heirs of Lacambra’s ownership because they had themselves purchased a 5/14 share from the latter and built their house on the lot with the heirs’ consent. Hence, the 1981 purchase was in bad faith, and registration could not cure that defect.
• Inapplicability of Double Sales Rule: They submitted that Article 1544 of the Civil Code did not govern the dispute because the heirs of Balubal were no longer owners when they executed the 1981 sale.

• Authenticity of the 1962 Sale: Whether the lower courts erred in upholding the validity of the first sale in favor of Juan Lacambra based on a certified true copy of the notarized deed despite the non-production of the original and the claim of forgery.
• Rights Acquired under the 1981 Sale: Whether the Spouses Tamayao validly acquired ownership of the entire Lot No. 2930 by virtue of the 1981 extrajudicial settlement with sale, considering their registration of the title and the alleged clean certificate of title of their vendors.
• Application of Article 1544: Whether the rule on double sales under Article 1544 of the Civil Code applied, and if so, whether the Spouses Tamayao’s prior registration in good faith gave them a better right over the property.

• Authenticity of the 1962 Sale: The 1962 Extrajudicial Settlement and Sale was valid and binding. As a notarized instrument, it was a public document that carried the presumption of regularity and due execution; the burden to rebut this presumption with clear and convincing evidence fell on petitioners, and they failed to adduce any. The best evidence rule did not apply because the dispute centered on the authenticity and due execution of the deed, not its contents; a certified true copy from the official notarial records was competent secondary evidence. Moreover, a contract of sale is consensual and need not be in writing for validity; even a verbal sale may be proven by the contemporaneous and subsequent acts of the parties. Here, the terms of the public instrument, the constructive delivery of ownership under Article 1498 of the Civil Code, the delivery of the owner’s duplicate certificate of title, Juan Lacambra’s actual taking of possession, and the planting of fruit trees and construction of houses by his heirs, all confirmed a perfected and consummated sale.
• Rights Acquired under the 1981 Sale: The 1981 sale was wholly inexistent and conferred no rights on the Spouses Tamayao. The heirs of Balubal had no ownership over Lot No. 2930 to transfer because they had already validly sold the entire property to Juan Lacambra in 1962. Under the principle nemo dat quod non habet, a buyer cannot acquire more than what the seller can legally transfer. The Spouses Tamayao were not innocent purchasers for value; they had actual knowledge of the prior sale and of the adverse possession of the Lacambra heirs, having themselves purchased a 5/14 share from the latter and having been informed by Pedro Balubal of the ownership dispute before the 1981 transaction. A buyer who ignores facts that would put a reasonable person on guard cannot claim good faith. The reissued owner’s duplicate of OCT No. 6106 and the resulting TCT No. T-54668 were void because the original owner’s duplicate had not been lost but was in the possession of the Lacambra heirs; reconstitution proceedings based on a false claim of loss were jurisdictionally flawed. Registration under the Torrens system does not vest ownership—it merely confirms an existing title—and cannot shield a purchaser in bad faith.
• Application of Article 1544: Article 1544 of the Civil Code was inapplicable. The rule on double sales presupposes a single vendor who sells the same property to two or more buyers. Here, the 1981 sale was executed by the heirs of Balubal, who were no longer the owners of the property. Thus, no competition between two valid sales existed. Even if the provision were hypothetically applied, the result would not change: the first buyer, Juan Lacambra (and his heirs), was necessarily in good faith at the time of the 1962 sale, and the second buyer’s prior registration would be unavailing because the Spouses Tamayao acted in bad faith from the moment of purchase until registration. Knowledge of the prior sale taints the second buyer’s registration with bad faith and prevents the second buyer from displacing the first buyer’s stronger right.

• Presumption of Regularity of Notarized Documents — A notarized instrument is a public document that is admissible in evidence without further proof of its due execution and carries a conclusive presumption of the truthfulness of its contents. To overcome the presumption, clear, convincing, and more than merely preponderant evidence is required. In this case, the notarized 1962 Extrajudicial Settlement and Sale conclusively established the sale to Juan Lacambra, and petitioners’ bare denial and unsubstantiated claim of forgery failed to rebut it.
• Best Evidence Rule — Contents vs. Existence — The best evidence rule requires production of the original document only when the contents of a writing are the subject of inquiry. When the issue concerns external facts such as the existence, execution, delivery, or authenticity of a document, the rule does not apply, and secondary evidence is admissible without accounting for the original. The questioned 1962 deed’s contents were not in dispute; only its authenticity and due execution were attacked.
• Consensual Nature of Sale and Constructive Delivery — A contract of sale is perfected by mere consent; no particular form is required for validity. However, when a sale is embodied in a public instrument, the execution thereof is equivalent to delivery of the thing sold (constructive delivery) under Article 1498 of the Civil Code, unless the contrary appears. The 1962 deed contained no reservation of ownership and therefore transferred ownership to Juan Lacambra upon its notarization, even absent physical transfer at that precise moment.
• Registration Does Not Vest Ownership — Under the Torrens system, registration is not a mode of acquiring ownership; it merely serves as evidence of an existing title. The issuance of a new certificate of title does not confer ownership on the buyer where the vendor had no right to transfer the property. The Court reiterated the distinction between the transfer of the certificate of title and the transfer of ownership itself.
• Innocent Purchaser for Value — Requirement of Good Faith and Inquiry — A purchaser claiming the status of an innocent purchaser for value must prove good faith. A buyer who knows of a prior sale or of facts that would induce a reasonably prudent person to inquire into the property’s status is in bad faith. Where the land sold is in the possession of a person other than the vendor, the buyer must go beyond the certificate of title and investigate the possessor’s rights; failure to do so precludes a claim of good faith.
• Nemo Dat Quod Non Habet — A seller can transfer no greater rights than those he possesses. Since the heirs of Balubal had already sold and delivered the entire property in 1962, they had no ownership to convey to the Spouses Tamayao in 1981, and the latter acquired nothing.
• Double Sales — Requisites and Hierarchy, Primus Tempore, Potior Jure — Article 1544 of the Civil Code governs only situations where the same vendor sells the same immovable to two or more vendees; it does not apply when the second sale is made by a person who is no longer the owner. Even between two valid sales, the governing principle is primus tempore, potior jure (first in time, stronger in right). Knowledge by the second buyer of the first sale defeats the second buyer’s rights even if the latter registers first, because such knowledge taints the registration with bad faith.

• “The best evidence rule is inapplicable to the present case. The said rule applies only when the content of such document is the subject of the inquiry. Where the issue is only as to whether such document was actually executed, or exists, or on the circumstances relevant to or surrounding its execution, the best evidence rule does not apply and testimonial evidence is admissible.” — This passage, drawn from Skunac Corporation v. Sylianteng, underpins the admissibility of the certified true copy of the 1962 deed.
• “x x x There is a difference between transfer of the certificate of title in the name of the buyer, and transfer of ownership to the buyer. The buyer may become the owner of the real property even if the certificate of title is still registered in the name of the seller. As between the seller and buyer, ownership is transferred not by the issuance of a new certificate of title in the name of the buyer but by the execution of the instrument of sale in a public document.” — This excerpt from Chua v. Court of Appeals encapsulates the critical distinction between title registration and ownership transfer.
• “One cannot rely upon the indefeasibility of a TCT in view of the doctrine that the defense of indefeasibility of a Torrens title does not extend to transferees who take the certificate of title in bad faith.” — From Melendres v. Catambay, this underlines that good faith is an indispensable condition for Torrens title protection.
• ”[K]nowledge 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. This is the price exacted by Article 1544 of the Civil Code for the second buyer being able to displace the first buyer…” — The Court’s quotation from Uraca v. Court of Appeals defines the legal consequence of bad faith in a double sale scenario.

• Skunac Corporation, et al. v. Sylianteng, et al., 734 Phil. 310 (2014) — Followed for the principle that a notarized instrument enjoys a presumption of regularity and that the best evidence rule is inapplicable when only the authenticity and due execution of the document are questioned.
• Heirs of Prodon v. Heirs of Alvarez, 717 Phil. 54 (2013) — Followed for its comprehensive explanation of the purpose and limitations of the best evidence rule, specifically that the rule applies only when the terms of a writing are in issue.
• San Lorenzo Development Corporation v. Court of Appeals, 449 SCRA 99 (2005) — Followed for the distinctions among perfection, consummation, and delivery in a contract of sale, and the rule that execution of a public instrument effects constructive delivery.
• Chua v. Court of Appeals, 401 SCRA 54 (2003) — Followed for the doctrine that registration is not a mode of acquiring ownership, and that ownership is transferred between the parties upon execution of a public instrument regardless of registration.
• Melendres v. Catambay, 887 SCRA 245 (2018) — Followed for the definition of an innocent purchaser for value, the burden of proving good faith, and the rule that the defense of indefeasibility does not extend to transferees in bad faith.
• Consolidated Rural Bank (Cagayan Valley), Inc. v. Court of Appeals, 489 Phil. 320 (2005) — Followed for the holding that Article 1544 on double sales applies only where the same vendor sells the property to different vendees, and not when the second seller is no longer the owner.
• Uraca v. Court of Appeals, 278 SCRA 702 (1997) — Followed for the principle that knowledge of a prior sale by the second buyer defeats his rights even if he registers first, and for the hierarchy of rights under the primus tempore, potior jure rule.
• Eastworld Motor Industries Corporation v. Skunac Corporation, 487 SCRA 420 (2005) — Followed for the rule that a reconstituted owner’s duplicate certificate of title is void when the original has not actually been lost but remains in the possession of another.

• Article 1458, Civil Code — Defines the contract of sale. Applied to establish the consensual nature of the sale and the reciprocal obligations to transfer ownership and to pay the price.
• Article 1475, Civil Code — States that a contract of sale is perfected at the moment of meeting of the minds on the object and price, from which point parties may reciprocally demand performance. Applied to affirm that the 1962 sale was perfected upon execution.
• Article 1477, Civil Code — Provides that ownership of the thing sold is transferred to the vendee upon actual or constructive delivery. Applied together with Article 1498 to confirm that ownership passed to Juan Lacambra.
• Article 1497, Civil Code — Considers the thing sold as delivered when placed in the control and possession of the vendee. Applied to the actual delivery of Lot No. 2930 to the Lacambra heirs.
• Article 1498, Civil Code — Provides that execution of a public instrument of sale is equivalent to delivery of the thing sold, unless the contrary appears in the deed. Applied to rule that the 1962 notarized deed effected constructive delivery.
• Article 1544, Civil Code — Governs double sales of immovable property, giving priority to the buyer who first registers in good faith. Ruled inapplicable because the second sale was not made by the same owner, but also discussed to show that even if applicable, petitioners’ bad faith would deny them priority.
• Section 53, Presidential Decree No. 1529 (Property Registration Decree) — Requires presentation of the owner’s duplicate certificate for registration of voluntary instruments and declares that registrations procured through fraud or a forged duplicate are null and void. Applied to support the nullity of the reissued title and the derivative TCT.

Chief Justice Peralta (Chairperson), Justices Carandang, Zalameda, and Gaerlan concurred.