DOUBLE SALE AS BETWEEN ORIGINAL PARTIES

(G.R. No. L-21953, March 28, 1969)

Encarnacion Gatioan
v.
Sixto Gaffud, et. al and Philippine National Bank

FACTS:

Petitioner Encarnacion Gatioan bought a parcel of land originally registered in the name
of Rufino Permison, who acquired it on the basis of a free patent. Gatioan had the Original
Certificate of Title of the land cancelled, in lieu of a Transfer Certificate of Title issued in his name.
The land in question was then mortgaged three times for three different loans acquired by her
from the Philippine National Bank. Upon the payment of her last loan, she did not execute any
instrument to discharge the encumbrance on her TCT. Meanwhile, the defendants, Sixto Gaffud
and Villamora Logan, also acquired a free patent over the same land as Gatioan, and an OCT
was issued in their favor. They obtained two loans from PNB, and they used the land as collateral.

The Secretary of Agriculture and Natural Resources was able to compare the petitioner’s
TCT and the defendants’ OCT, and he found out that the titles cover only one and the same parcel
of land. He then ordered the cancellation of the second title. Gatioan filed a complaint for quieting
of title, and a judgment was rendered in her favor. The defendant bank filed an appeal questioning
the part of the judgment stating that the mortgage executed by Gaffud and Logan was null and
void and unenforceable, and claiming that the bank is a mortgagee in good faith and for value.
PNB sought to have the annotation of the mortgage on the OCT of Gaffud and Logan to be carried
over to the TCT of Gatioan as an encumbrance

ISSUE: may the purchaser of land from the owner of the second original certificate be an ‘innocent
purchaser’ when a part or all of such land had theretofore been registered in the name of another,
not the vendor?

RULLING:

He cannot be regarded as an ‘innocent purchaser’ because of the facts contained in the record
of the first original certificate. The rule should not be applied to the purchaser of a parcel of land
the vendor of which is not the owner of the original certificate, or his successors. He, in no sense,
can be an ‘innocent purchaser’ of the portion of the land included in another earlier original
certificate. The Rule of notice of what the record contains precludes the idea of innocence. By
reason of the prior registry there cannot be an innocent purchaser of land included in a prior
original certificate and in a name other than that of the vendor, or his successors. In order to
minimize the difficulties we think this is the safer rule to establish.

We believe the phrase ‘innocent purchaser,’ used in said sections, should be limited only to cases
where unregistered land has been wrongfully included in a certificate under the torrens system.
When land is once brought under the torrens system, the record of the original certificate and all
subsequent transfers thereof is notice to all the world.