Good-faith requirement in double sales

Article 1544 of the Civil Code provides:[1]

"If the same thing should have been sold to different vendees, the ownership shall be transferred to the person who may have first taken possession thereof in good faith, if it should be movable property.

"Should it be immovable property, the ownership shall belong to the person acquiring it who in good faith first recorded it in the Registry of Property.

"Should there be no inscription, the ownership shall pertain to the person who in good faith was first in the possession; and, in the absence thereof, to the person who presents the oldest title, provided there is good faith."

The aforesaid provision clearly states that the rule on double or multiple sales applies only when all the purchasers are in good faith. In detail, Art. 1544 requires 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 rights, from the time of acquisition until the title is transferred to him by registration or failing registration, by delivery of possession.[2]

A purchaser in good faith is one who buys the property of another without notice that some other person has a right to, or an 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 some other person’s claim or interest in the property.[3]

[1] CIVIL CODE, Art. 1544.

[2] Consolidated Rural Bank, Inc., v. CA, 489 Phil. 320, 334 (2005).

[3] Centeno v. Spouses Viray, 440 Phil. 881, 885 (2002).