purchased a land from his wife's uncle who was in need of cash. The title was issued to them as Spouses even though only the husband spent for the land. But after they got the title, the tenant of the land sued the Seller and the Buyer to annul the sale. and cancel their new title. Apparently, the seller had entered previously into a sales agreement on a lease to own basis with another person who is the current tenant of the property for which he had already completed payment of the twenty four installments and built a fence, constructed a house and tilt a farm in the property. Who has the better right to the property?
My answer is the tenant-purchaser has a better right. Even though the title is in the name of the second buyer, the registration of the title was not done in good faith.
Quoting from the decision of the SC in Pudadera v. Magallanes, GR 170073 http://www.scrulings.com/ruling.php?no=46269
"(I)n case of a double sale of immovables, ownership shall belong to "(1) the first registrant in good faith; (2) then, the first possessor in good faith; and (3) finally, the buyer who in good faith presents the oldest title."30cra1aw However, mere registration is not enough to confer ownership. The law requires that the second buyer must have acquired and registered the immovable property in good faith. In order for the second buyer to displace the first buyer, the following must be shown: "(1) the second buyer must show that he acted in good faith (i.e., in ignorance of the first sale and of the first buyers rights) from the time of acquisition until title is transferred to him by registration or failing registration, by delivery of possession; and (2) the second buyer must show continuing good faith and innocence or lack of knowledge of the first sale until his contract ripens into full ownership through prior registration as provided by law."31
....A real estate buyer must exercise ordinary care in buying x x x real estate, especially the existence of the fence in this case which must have [alerted him to inquire] whether someone was already in possession of the property in question.36
In this case, the buyer bought the property when the tenant already built on the property. The least he could do was to ask the tenant about the contract that enabled him to stay. By not asking, he did not exercise the diligence required and he cannot claim to be a good faith buyer because he ought to have been aware of the defect of the title of the seller.
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