constructive knowledge by virtue of their
(7) Annotation of Adverse Claim
Balatbat v. Court of Appeals
it was held that in the realm of double sales, the
registration of an adverse claim places any
subsequent buyer of the registered parcel of land
in bad faith, for — [S]he should have known that
there was a pending case and an annotation of
adverse claim was made in the title of the
property before the Register of Deeds and she
could have discovered that the subject property
was already sold. ... It is incumbent upon the
vendee of the property to ask for the delivery of
the owner’s duplicate copy of the title from the
vendor. A purchaser of a value piece of property
cannot just close his eyes to facts which should
put a reasonable man upon his guard and then
claim that he acted in good faith and under the
belief that there was no defect or lack of title of
the vendor. One who purchases real estate with
knowledge of a defect or lack of title in his vendor
cannot claim that he has acquired title thereto in
good faith as against the true owner of the land or
of an interest therein; and the same rule must be
applied to one who has knowledge of facts which
should have put him upon such inquiry and
investigation as might be necessary to acquaint
him with the defects in the title of his vendor.
Good faith, or the want of it is not a visible,
tangible fact that can be seen or touched, but
rather a state or condition of mind which can only
be judged of by actual or fancied tokens
or signs.
Alfredo v. Borras
If the annotation of an adverse claim, which was
good for 30-days only is sufficient to place a
subsequent buyer in bad faith, then logically, the
annotation of a lis pendens should have the same
legal effect, as was the ruling in Limketkai Sons
Milling, Inc. v. Court of Appeals.
(8) Existence of Relationship
Pilapil v. Court of Appeals
the Court held that the sale to one’s daughter
and sons will give rise to the conclusion that the
buyers, not being really third parties, knew of the
previous sales and cannot be considered in good
faith, since the buyers “are deemed to have
relationship” to their sellers.
Aguirre v. Court of Appeals
the Court refused to recognize good faith in the
person of a buyer who lived in the same area and
was familiar to the members of the family of the
seller, since “he deliberately chose to close his
eyes to said facts and despite his personal
knowledge to the contrary, he purchased the
disputed property from [seller] on the basis of the
misrepresentation of the latter in his Affidavit of
Transfer that he is the sole surviving heir of [the
decedent]”218 who was the registered owner of
the land.
(9) Stipulations in Deed Showing Bad Faith
Limketkai Sons Milling, Inc. v. Court of
Appeals
The Court held that a stipulation in the deed of
sale providing that any losses which the buyer
may incur in the event the title turns out to be
vested in another person are to be borne by the
buyer alone, showed that the buyer did not
purchase the subject matter in good faith without
notice of any defect in the title of the seller.
(10) When Dealing With Non-Registered
Owner
R.R. Paredes v. Caliling
the Court held that 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.
h. Requisites of Prior Registration
“Registration” - means any entry made in the
books of the registry, including both registration
in its ordinary and strict sense, and cancellation,
annotation, and even marginal notes.
-It is the entry made in the
registry which records solemnly and permanently
the right of ownership and other real rights.
 Annotation of an adverse claim or lis
pendens have been held to produce the
 same effect as formal registration.
Curiously the Court did not consider the
subsequent registration of lis pendens to
be equivalent to the registration required
under Article 1544 as to have greater
effect on the prior possession in good
faith by the second buyer.
 In several other cases, the Court held
that in the case of unregistered land, not
sold under public auction sale,
registration by the first buyer under Act
No. 3344 can have the effect of
constructive notice to the second buyer
that can defeat his right as such buyer,
but not vice versa.
 On the other hand, the Court held that
the registration of the Extrajudicial
Partition which merely mentions the sale
is not the registration covered under
Article 1544 on double sales and cannot
prevail over the registration of the pacto
de retro sale. In another case it was
held that the declaration of purchase for
taxation purpose does not comply with
the required registration, and the fact
alone does not even itself constitute
evidence of ownership.
(1) Prior Registration By the Second Buyer
Must Always Be in Good Faith
Uraca v. Court of Appeals
held that the prior registration of the disputed
property by the second buyer does not by itself
confer ownership or a better right over the
property, and that Article 1544 requires that such
registration must be coupled with good faith, thus
— ahead of the first as provided by the aforequoted
Jurisprudence teaches us that “(t)he governing
principle is primus tempore, potior jure (first in
time, stronger in rights). Knowledge gained by the
first buyer of the second sale cannot defeat the
first buyer’s rights except where the second buyer
registers in good faith the second sale ahead of
the first, as provided by the Civil Code. Such
knowledge of the first buyer does not bar her from
availing of her rights under the law, among them,
to register first her purchase as against the
second buyer. But in converso, knowledge
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 priced exacted by Article 1544
of the Civil Code for the second buyer
being able to displace the first buyer; that
before the second buyer can obtain
priority over the first, he must show that
he acted in good faith throughout (i.e., in
ignorance of the first sale and of the first
buyer’s right) — from the time of
acquisition until the title is transferred to
him by registration or failing registration,
by delivery of possession.”
Esquivias v. Court of Appeals
held that while the deed of sale of a second buyer
was registered ahead of the deed of sale of the
first buyer, the prior registration cannot prevail
over the deed of sale in favor of the first buyer
because the second buyer at that time already
knew of the prior sale to the first buyer, and such
knowledge tainted his registration with bad faith.
To merit protection under Article 1544, the
second buyer must act in good faith in registering
his deed.
(2) The Need for Second Buyer to Do Positive
Act under Article 1544
The Carbonell doctrine that Article 1544 is
addressed particularly to the second buyer to do
a positive act, was reiterated in
Fudot v. Cattleya Land Inc.
where the Court held — Knowledge gained by the
first buyer of the second sale cannot defeat the
first buyer’s rights, except where the second
buyer registers in good faith the second sale
provision of the Civil Code. Such knowledge of
the first buyer does not bar him from availing of
his rights under the law, among them to register
first his purchase as against the second buyer.
However, knowledge gained by the second buyer
of the first sake defeats his rights even if he is first
to registered the second sale, since such
knowledge taints his prior registration with bad
faith it is thus essential, to merit the protection of
Art. 1544, second paragraph, that the second
realty buyer must act in good faith in registering
his deed of sale.
i. First to Possess in Good Faith
Ten Forty Realty and Dev. Corp. v. Cruz
held that in the absence of inscription in double
sales, the law gives preferential right to the
buyer who in good faith is first in possession,
under the following jurisprudential parameters:
(a) Possession mentioned in Article 1544
includes not only material but also symbolic
possession;
(b) Possessors in good faith are those who are
not aware of any flaw in their title or mode of
acquisition;
(c) Buyers of real property that is in the
possession of persons other than the seller must
be wary — they must investigate the rights of the
possessors; and
(d) Good faith is always presumed, upon those
who allege bad faith on the part of the possessors
rests the burden of proof.
 The “juridical parameters” summarized
by Ten Forty Realty, do not all conform to
the previous rulings rendered by the
Court under Article 1544.
 In particular, the Court had ruled
consistently in the past, that under
double sales, presumption of good faith
cannot apply, and the buyer has the
burden of showing that he was the first to
register or possess in good faith
 The rule of “first to possess in good faith,”
is consistent with the provision under
then Act No. 3344, now Sec. 113 of Pres.
Decree No. 1459, that registration of a
transaction over unregistered land shall
be without prejudice to a “third party with
a better right.”
Hanopol v. Pilapil
held that the “better right” that cannot be
prejudiced by the registration of a second sale of
a parcel of unregistered land, referred to in Act
No. 3344, was considered to mean “more than a
mere prior deed of sale in favor of the first buyer.
It involves facts and circumstances — in addition
to a deed of sale — which, combined, would
make it clear that the first buyer has a better right
than the second purchaser,” such as acquisition
of possession by the second buyer either by
actual delivery or through the execution of a
public instrument.
(1) Registration in Good Faith Always
Pre-empts Possession in Good Faith
Santiago v. Court of Appeals
held that in double sales of real property, the
buyer who has in possession the Torrens title
and had the deed of sale registered must
prevail.
Tañedo v. Court of Appeals
buyer-registrant in good faith always has
preference to the buyer-possessor in good faith,
even when in point in time, the possession in
good faith happened ahead of the registration in
good faith. In that case the Court held that under
Article 1544, in case of double sales of an
immovable — ... Ownership shall belong to the
buyer who in good faith registers it first in the
registry of property. Although the deed of sale in
favor of private respondents was later than the
one in favor of petitioner, ownership would vest in
the former because of the undisputed fact of
registration. On the other hand, petitioners have
not registered the sale to them at all. Petitioners
contend that they were in possession of the
property and that private respondents never took
possession thereof. As between two purchasers,
the one who registered the sale in his favor has a
preferred right over the other who has not
registered his title, even if the latter is in actual
possession of the immovable property.
Balatbat v. Court of Appeals
the seller sold his proindiviso share in a
registered land co-owned with his children.
Subsequently, the same entire lot was sold again
by the same seller and his children, represented
by the Clerk of Court under the Rules of Court,
pursuant to a final judgment.
The Court held that undoubtedly this was a case
of double sales of immovable property covered by
Article 1544, and hence ownership shall vests in
the person acquiring it who in good faith first
recorded it in the Registry of Property. The first
buyer had caused the annotation of an adverse
claim on the title of the subject property, which is
deemed sufficient compliance as mandated by
law and serves notice to the whole world, and is
preferred to the notice of lis pendens annotated
by the second buyer subsequently.
In addition, Balatbat held that although the
second buyer was in possession of the subject
property by virtue of the writ of possession issued
by the court, the writ was conditioned as follows
“subject to the valid rights and interest of third
persons over the same portion thereof, other than
vendor or any other person or persons privy to or
claiming any right to interest under it.”
The Court held that “[a]s between two
purchasers, the one who has registered the sale
in his favor, has a preferred right over the other
who has not registered his title even if the latter is
in actual possession of the immovable property.”
San Lorenzo Dev. Corp.,
to wit, “Did the registration of the saleafter the
annotation of the notice of lis pendens obliterate
the effects of delivery and possession in good
faith which admittedly had occurred prior to
[Second Buyer] SLDC’s knowledge of the
transaction in favor of [First Buyer] Babasanta?”
the Court ruled —
We do not hold so x x x.
A purchaser in good faith is one who buys
property of another without notice that some other
person has a right to, or interest in, such property
and pays a full and fair price for the same at the
time of such purchase, or before he has notice of
the claim or interest of some other person in the
property. Following the foregoing
definition, we rule that SLDC qualifies as a buyer
in good faith ... At the time of the sale of the
property to SLDC, the vendors were still the
registered owners of the property and were in fact
in possession of the lands. Time and again, this
Court has ruled that a person dealing with the
owner of registered land is
not bound to go beyond the certificate of title as
he is charged with notice of burdens on the
property which are noted on the face of the
register or on the certificate of title. ... Babasanta
apparently relies on the principle of constructive
notice incorporated in Section 52 of the Property
Registration Decree (P.D. No. 1529)244 ...
However, the constructive notice operates as
such by the express wording of Section 52 from
the time of the registration of the notice of lis
pendens which in this case was effected only on
2 June 1989, at which time the sale in favor of
SLDC had long been consummated [with the] . ...
transfer ownership over the property to SLDC is
concerned.
More fundamentally, given the superiority of the
right of SLDC to the claim of Babasanta the
annotation of the notice of lis pendens cannot
help Babasanta’s position a bit and it is irrelevant
to the good or bad faith characterization of SLDC
as a purchaser.
 The San Lorenzo obiter ruling above-
quoted is disturbingon two points:
a. it equates the annotation of a lis
pendens only to qualifying the state
of minds of the buyers (whether they
be in good faith or bad faith) and
does not equate it to be a species of
registration under the Torrens
system; and
b. it holds that prior possession by the
second buyer in good faith has
“superiority” to a subsequent
registration by the fi rst buyer who
has knowledge of the second sale.
San Lorenzo cites:
Abarquez v. Court of Appeals
to say that “this Court had the occasion to rule
that if a vendee in a double sale registers the sale
after he has acquired knowledge of a previous
sale, the registration constitutes a registration in
bad faith and does not confer upon him any right.
If the registration is done in bad faith, it is as if
there is no registration at all, and the buyer who
has taken possession first of the property in good
faith shall be preferred.”
 Yet a reading of Abarquez would show
that the ruling was addressed to the
second buyer, that his prior registration
cannot overcome the earlier possession
by the first buyer, which was registered
in bad faith.
(2) Possession Under Article 1544 Refers to
Material and Symbolic Possession
Navera v. Court of Appeals
where both deeds of sale over the same
registered parcel of land were not registered with
the Registry of Deeds, the buyer of the first deed
of sale executed in a public instrument had a
better right, although the subsequent buyer took
material possession thereof. It was ruled that
since the sale to the first buyer was in a public
instrument it was clearly tantamount to a delivery
of the land, resulting in the material and symbolic
possession thereof being transferred to the latter.
So that when subsequently the second buyer
took material possession of the same land, he did
so merely as a detainer.
Navera held that the possession mentioned in
Article 1544 for determining who has better right
when the same piece of land has been sold
several times by the same seller includes not only
the material but also the symbolic possession
thereof.
Navera reiterated the doctrine laid down earlier
under the old Civil Code provision on double
sales (then Article 1473) in the cases of Quimson
v. Rosete,249 and Sanchez v. Ramos.250
(3) Possession Acquired in Good Faith Is
Stable Status
 When the second buyer who takes
possession of the subject matter in good
faith, must he remain in good faith
subsequently thereafter in order to claim
priority based on possession under
Article 1544 of the Civil Code?
San Lorenzo Dev. Corp. v. Court of
Appeals
answered this particular issue in favor of the
second buyer when it held:
Did the registration of the sale after the
annotation of the notice of lis pendens obliterate
the effects of delivery and possession in good
faith which admittedly had occurred prior to
SLDC’s knowledge of the transaction in favor of
Babasanta? We do not hold so.
... At the time both deeds were executed, SLDC
had no knowledge of the prior transaction of the
Spouses Lu with Babasanta. Simply stated, from
the time of execution of the fi rst deed up to the
moment of transfer and delivery of possession of
the lands to SLDC, it had acted in good faith and
the subsequent annotation of lis pendens has no
effect at all on the consumm
ated sale between SLDC and the Spouses
j. When Article 1544 Does Not Apply, Priority
in Time Rule Applies
In either of the following situations, thus:
a) Where not all the requisites necessary to
make Article 1544 applicable are
present; or
b) Where the requisites to make Article
1544 applicable were present, but that
either the first to register or first to
possess rules were not complied with;
which legal rule should apply to the
case?
 In the first situation, it would be the
general rule of Prius tempore, potior jure,
which is actually the main rule in double
sales. Article 1544 rules on double sales
provide for special rules and when the
transactions do not fit the specific
circumstances mandated under the
article or by jurisprudence interpreting
the article, then there is no basis to apply
such rules, and the proper doctrine
applicable should be the main rule of
“Priority in time, priority in right.”
 In the second situation, Article 1544
provides that ownership should go “to the
person who presents the oldest title,
provided there is good faith.” Is the buyer
who has the oldest title in good faith not
necessarily the chronological first buyer
under a valid and demandable sale? If
the answer is in the affirmative, then the
“oldest title” rule merely reflects the
general rule of “First in time, priority in
right.” That means there is no race to run
at all because the first buyer should
always win over subsequent buyers.
Cheng v. Genato
the “governing principle” under Article 1544 is
“first in time, priority in rights.” Notice that the rule
of “first in time, priority in right,” is a rule that falls
back to perfection stage: Who between
contending buyers is “first in time” would be that
buyer who chronologically had the first perfected
and valid sale over the same subject matter with
the same seller. The rationale of the rule is that if
none of the contending buyers have validly
effected a transfer of ownership in his favor
through any of the modes of tradition, then the
first buyer in point of time should be preferred
because his title (i.e., the legal basis upon which
he can claim ownership over the subject matter),
was first in time.
Under a global set of rules pertaining to double
sales, the principle of “First in time, priority in
right,” occupies the cellar position only when
special rules do not apply, perhaps because it is
the least representative of the mode of tradition.
OBLIGATIONS OF BUYER
1. Pay the Price
 Buyer is obliged to pay for the price at the
time and place stipulated in the
contract.257 Mere sending of a letter by
the buyer expressing his intention to pay
without the accompanying payment is not
considered a valid tender of payment.258
Unless the parties have agreed to the
payment of the price to any other party,
then its payment to be effective must be
made to the seller in accordance with Art.
1240 of the Civil Code which provides
that “[P]ayment shall be made to the
person in whose favor the obligation has
been constituted or his successor in
interest, or any person authorized to
receive.”
 Buyer is also obliged to pay interest for
the period between delivery of the
subject matter and the payment of the
price when:
a. the same has been stipulated;
b. should object delivered produce
fruits or income; or
c. in case the buyer is in default, from
the time of judicial or extrajudicial
demand.
 Non-payment of the consideration in the
sale does not prove simulation; at most,
it gives the seller the right to sue for
collection.
 Generally in a sale, payment of the price
is a “resolutory condition” and the remedy
of the seller is to exact fulfillment or, in
case of a substantial breach, to rescind
the contract under Article 1191 of the
Civil Code.
2. Accept Delivery of Thing Bought
 The buyer is bound to accept delivery of
the thing bought at the time and place
stipulated in the contract. If the time and
place should not have been stipulated,
the payment must be made at the time
and place of the delivery of the thing sold.
 In case of goods, the buyer is deemed
to have accepted the goods when he
intimates to the seller that he has
accepted them, or when the goods have
been delivered to him, and he does any
act in relation to them which is
inconsistent with the ownership of the
seller, or when, after the lapse of a
reasonable time, he retains the goods
without intimating to the seller that he
has rejected them.
a. Opportunity to Inspect Goods
 Where goods are delivered to the buyer,
which he has not previously examined,
he is not deemed to have accepted them
unless and until he has had a reasonable
opportunity of examining them for the
purpose of ascertaining whether they are
in conformity with the contract, if there is
no stipulation to the contrary
(1) Exception: C.O.D. Sales
 Where goods are delivered to a carrier
in accordance with an order from or
agreement with the buyer, upon the
terms that the goods shall not be
delivered by the carrier to the buyer until
he has paid the price, whether such
terms are indicated by marking the
goods with words “collect on delivery,”
or otherwise, the buyer is not entitled to
examine the goods before the payment
of the price, in the absence of
agreement or usage of trade permitting
such examination.
b. Goods Sold Deliverable by Installments
 Unless otherwise agreed, the buyer of
goods is not bound to accept delivery
thereof by installments. Where the sale
covers goods to be delivered by stated
installments, which are to be separately
paid for, and the seller makes defective
deliveries in respect of one or more
installments, or the buyer neglects or
refuses without just cause to take
delivery of or pay for one or more
installments, it depends in each case on
the terms of the contract and the
circumstances of the case, whether the
breach of contract is so material as to
justify the injured party in refusing to
proceed further and suing for damages
for breach of the entire contract, or
whether the breach is severable, giving
rise to a claim for compensation but not
to a right to treat the whole contract as
broken.
c. Effect of Acceptance of Goods on Seller’s
Warranty
 In the absence of an agreement to the
contrary, acceptance of the goods by the
 buyer shall not discharge the seller from
liability in damages or other legal remedy
for breach of promise or warranty in the
sale.
 However, if after acceptance of the
goods, the buyer fails to give notice to the
seller of breach in any promise or
warranty within a reasonable time after
the buyer knows, or ought to know, of
such breach, the seller is excused.269

d. Refusal to Accept Goods

 Unless otherwise agreed, where goods
are delivered to the buyer, and he
refuses to accept them, having the right
to do so, he is not bound to return them
to the seller, and it is sufficient that he
notifies the seller of his refusal. If he
voluntarily constitutes himself as a
depository, he shall be liable as such.
 On the other hand, in the absence of
stipulation, when the buyer’s refusal to
accept the goods is without just cause,
the title thereto passes to him from the
moment they are placed at his disposal.
—oOo—
270Art. 1587,