Cheng v. Genato

Chapter I, General Provisions (P.D. 1529, Secs. 1–3) — A. Registration

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Case DigestWeek 1–2 — Background, Basic Concepts, and General Provisions

Cheng v. Genato

G.R. No. 129760 · December 29, 1998 · Supreme Court — Second Division

Chapter I, General Provisions (P.D. 1529, Secs. 1–3) — A. Registration

Gist

This case is DIRECT to the Topic/Subtopic of Registration. Ricardo Cheng sought review of a Court of Appeals Decision reversing a trial-court judgment in his favor and instead upholding a prior Contract to Sell over the same land held by respondent-spouses Ernesto and Socorro Da Jose against respondent-vendor Ramon Genato. The dispute arose when Genato, having already annotated a Contract to Sell with the Da Jose spouses on his titles, tried to unilaterally annul it while their extension period was still running, and meanwhile accepted P50,000 from Cheng for the same lots. The Supreme Court denied Cheng's petition and affirmed the Court of Appeals in toto. The doctrine central to Registration is the Court's adoption of Soler and Castillo's definition that registration includes "annotation, and even marginal notes," applied to hold that the Da Jose spouses' annotated contract gave them priority over Cheng's later, bad-faith adverse claim.

Core Doctrine

"Registration," for priority purposes, extends beyond a final deed to annotations and marginal notes validly entered in the registry (Soler and Castillo definition). The primus tempore, potior jure principle may govern priority even where Article 1544's textual elements are unmet. Registration confers priority only when coupled with continuing good faith.

Facts

On September 6, 1989, Genato executed and annotated on his titles (TCT Nos. T-76.196[M] and T-76.197[M]) a Contract to Sell to the Da Jose spouses at P80/sq.m., with P50,000 paid and the P950,000 down-payment balance due in thirty days, subject to their verification of the property's documents. Annotated on the titles the same day it was signed, and that single act is the "registration" this case is about — it is what put Cheng on notice and what settled priority against him.
On October 4, 1989, still verifying, they secured a further thirty-day extension to November 5.
On October 13, 1989 — before that extension lapsed, and without notifying the spouses — Genato executed an unannotated Affidavit to Annul the contract for their supposed default. (Unannotated is the operative word — an affidavit left in a drawer changes nothing on the register. It reached the Registry of Deeds of Meycauayan only on 26 October 1989 as primary entry No. 262702, two days after Cheng had already paid, and only because Cheng reminded Genato to file it.)
On October 24, 1989, Cheng, though shown both the annotated contract and the unannotated affidavit, paid Genato P50,000 by check on Genato's assurance the prior contract would be annulled. (He was shown both documents and paid anyway; the handwritten receipt priced the land at P70.00 per square metre against the P80.00 the Da Jose spouses had agreed. Actual knowledge of the annotation is what destroyed any claim to good faith.)
Genato registered the annulment affidavit only on October 26, 1989, after Cheng reminded him.
On October 27, 1989, the Da Jose spouses learned of it by chance, protested that their extension still ran, and Genato reverted to honoring their contract, tendering back Cheng's payment, which Cheng refused.
On November 2, 1989, the spouses paid the full down payment and, the same day, Cheng annotated an affidavit of adverse claim.
Cheng sued for specific performance on December 8, 1989; the Da Jose spouses intervened.
The trial court ruled for Cheng on January 18, 1994.
The Court of Appeals reversed in toto on July 7, 1997, upholding the Da Jose contract and awarding damages against Cheng.
The Supreme Court affirmed en toto on December 29, 1998.

Arguments of the Parties

Petitioner/Appellant. Cheng argued:

The Da Jose contract had already been validly rescinded by Genato's Affidavit to Annul.
His own transaction was not a contract to sell but a conditional contract of sale analogous to Coronel v. Court of Appeals, giving him a preferred right outside Article 1544.
Damages against him were erroneous.

Respondent/Appellee. Genato and the Da Jose spouses countered that Cheng's payment was merely an option-bid deposit conditioned on prior cancellation of the Da Jose contract — never fulfilled; that the Da Jose spouses held a superior, duly annotated right Genato could not unilaterally rescind without their default and proper notice; and that Cheng was a bad-faith buyer, having been shown the annotation and the affidavit before paying anything.

Common Ground / Stipulations (if any). Both courts below, and Cheng's own pleadings, treated the Cheng-Genato transaction as a contract to sell — a characterization he abandoned only before the Supreme Court.

Issue

MAIN ISSUE (Registration-centered). Whether the Da Jose spouses' annotated Contract to Sell constituted "registration" under Article 1544 of the Civil Code, vesting them with priority over Cheng's later, bad-faith adverse claim.

SECONDARY ISSUES. (1) Whether the Da Jose contract was validly rescinded by Genato's affidavit; (2) whether the Cheng-Genato transaction was a contract to sell or a conditional sale removing it from Article 1544's coverage.

ANCILLARY / INCIDENTAL ISSUES (if any). Whether Cheng was properly held liable for damages for bad faith.

Ruling

On the MAIN ISSUE: YES — the annotation, coupled with good faith, gave the Da Jose spouses priority. First secondary issue: NO — the contract was never validly rescinded; the extension had not lapsed and no notice of rescission was given. Second secondary issue: it was correctly a contract to sell, which never took effect since its suspensive condition never occurred. Ancillary issue: damages AFFIRMED. The dispositive portion reads verbatim: "WHEREFORE, premises considered, the instant petition for review is DENIED and the assailed decision is hereby AFFIRMED EN TOTO. SO ORDERED."

Ratio

Because the Da Jose spouses' extension had not expired when Genato executed his Affidavit to Annul, no default — and thus no breach under Article 1191 — could yet exist.
A Contract to Sell rests on a positive suspensive condition whose non-fulfillment merely prevents the obligation from arising.
Even assuming default, Genato remained bound to give notice of rescission, citing University of the Philippines v. De Los Angeles, which he never gave.
With the Da Jose contract thus subsisting, the Court turned to priority.
The Court of Appeals had found Article 1544 technically inapplicable since neither transaction was a consummated sale, leaving the article's elements — two valid sales of the same property, conflicting buyers, a common seller — unmet.
The Supreme Court nonetheless applied the article's underlying principle, primus tempore, potior jure (first in time, stronger in right), through the doctrine of Registration.
It adopted, verbatim, Soler and Castillo's definition: "'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. In its strict acceptation, it is the entry made in the registry which records solemnly and permanently the right of ownership and other real rights."
Applying this, the Court held that an annotation satisfies the standard, since "when a Deed of Sale is inscribed in the registry of property on the original document itself, what was done with respect to said entries or annotations and marginal notes amounted to a registration of the sale"
That the Da Jose annotation of September 6, 1989 predated Cheng's adverse claim of November 2, 1989.
And that registration must be coupled with continuing good faith, citing Uraca v. Court of Appeals — present in the Da Jose spouses, absent in Cheng, who had "knowledge of facts which should have put him upon such inquiry" before he paid, per Leung Yee v. F.L. Strong Machinery Co.

Doctrine

Doctrines / Rules / Principles Laid Down.

"Registration," for priority purposes, extends beyond a final deed to annotations and marginal notes validly entered in the registry (Soler and Castillo definition). The primus tempore, potior jure principle may govern priority even where Article 1544's textual elements are unmet. Registration confers priority only when coupled with continuing good faith.

Distinctions / Limitations / Qualifications.

The Court did not deem Article 1544 literally applicable — its specific elements were absent since neither transaction was consummated; only its underlying registration-priority rationale was extended to the facts.

Topic/Subtopic Integration (Mandatory).

DIRECT: Cheng v. Genato controls the inclusive scope of "registration" — annotations, not only final deeds, carry legal priority when made in good faith — and this definitional holding, not the incidental contract-to-sell/conditional-sale question, anchors the case to the Registration topic.

Separate Opinions

None. The Decision was unanimous; Bellosillo, Puno, and Mendoza, JJ., concurred without separate opinion.

Full Digest — Recitation Format

Full-length digest in the format required by the course digest prompt.

Classification: DIRECT · Ponente: Martinez, J., Second Division · G.R. No. 129760, December 29, 1998

TOPIC/SUBTOPIC FOCUS: Chapter I – General Provisions (Sections 1–3) > Sec. 1 — Registration

I. Gist and Central Doctrine

The relationship of the case of Cheng v. Genato to the requested topic of Section 1 (Registration) of the Property Registration Decree (Presidential Decree No. 1529) is DIRECT. The controversy arose when Petitioner Ricardo Cheng filed a complaint for specific performance against Respondent Ramon B. Genato to compel the execution of a deed of absolute sale over two parcels of land covered by Transfer Certificates of Title, which parcels of land had been previously subject to a registered and annotated Contract to Sell between Respondent Genato and the Intervenors, the spouses Ernesto and Socorro Da Jose. The Supreme Court denied the petition of Petitioner Cheng and affirmed the decision of the Court of Appeals, which sustained the superior right of the Da Jose spouses as the first buyers. The central doctrine established by this decision is that registration under the Torrens system is the operative act that conveys and affects registered land, serving as constructive notice of the transaction to the entire world under Section 51 and Section 52 of Presidential Decree No. 1529. Consequently, any subsequent purchaser who registers a subsequent transaction with actual or constructive knowledge of a prior registered transaction cannot claim the status of a purchaser in good faith, as the prior registration of the first transaction binds all subsequent dealings and defeats any subsequent claim.

II. Chronological Narration of Material Facts

September 6, 1989: Respondent Ramon B. Genato, as the registered owner of two parcels of land located at Paradise Farms, San Jose del Monte, Bulacan, covered by Transfer Certificate of Title No. T-76.196 (M) and Transfer Certificate of Title No. T-76.197 (M) with an aggregate area of 35,821 square meters, entered into a Contract to Sell with the Intervenors, the spouses Ernesto R. Da Jose and Socorro B. Da Jose, for the purchase price of eighty pesos (P80.00) per square meter.
September 6, 1989: The Contract to Sell between Respondent Genato and the Da Jose spouses was executed in a public instrument and was duly registered and annotated at the back of Transfer Certificate of Title No. T-76.196 (M) and Transfer Certificate of Title No. T-76.197 (M) on the very same day of the execution of the contract.
October 4, 1989: As the Da Jose spouses had not finished verifying the titles mentioned in the contract, the Da Jose spouses requested and were granted by Respondent Genato a thirty-day extension of the contract, extending the period until November 5, 1989.
October 13, 1989: Pending the effectivity of the thirty-day extension period, and without prior notice to the Da Jose spouses, Respondent Genato executed an "Affidavit to Annul the Contract to Sell" based on the alleged failure of the Da Jose spouses to comply with the financial conditions, but Respondent Genato did not immediately cause the annotation of the affidavit on the certificates of title.
October 24, 1989: Petitioner Ricardo Cheng went to the residence of Respondent Genato, expressed interest in buying the subject properties, and was shown by Respondent Genato copies of the transfer certificates of title, including the registered annotations at the back of the titles showing the existing Contract to Sell with the Da Jose spouses, as well as the unannotated "Affidavit to Annul the Contract to Sell."
October 24, 1989: Despite actual knowledge of the existing annotated Contract to Sell, Petitioner Cheng paid Respondent Genato fifty thousand pesos (P50,000.00) as partial payment, for which Respondent Genato issued a handwritten receipt stating that the amount was a partial payment for the two parcels of land at seventy pesos (P70.00) per square meter.
October 25, 1989: Respondent Genato deposited the fifty thousand pesos (P50,000.00) check of Petitioner Cheng, and on the same day, Petitioner Cheng called Respondent Genato to remind Respondent Genato to register the "Affidavit to Annul the Contract to Sell."
October 26, 1989: Acting on the request of Petitioner Cheng, Respondent Genato caused the registration of the "Affidavit to Annul the Contract to Sell" in the Registry of Deeds of Meycauayan, Bulacan, as primary entry No. 262702.
October 27, 1989: The Da Jose spouses met Respondent Genato by coincidence at the Office of the Registry of Deeds of Meycauayan, Bulacan, and upon discovering the "Affidavit to Annul the Contract to Sell," the Da Jose spouses protested against the unilateral rescission and expressed readiness to pay the balance of the down payment.
October 27, 1989: Convinced by the protests of the Da Jose spouses and acknowledging that the thirty-day extension period was still in effect, Respondent Genato decided to continue the Contract to Sell with the Da Jose spouses, which agreement was formalized in a conforme letter executed on the same day.
October 27, 1989: Respondent Genato advised Petitioner Cheng of the decision to continue the contract with the Da Jose spouses and offered to return the fifty thousand pesos (P50,000.00) check.
October 30, 1989: The lawyer of Petitioner Cheng sent a letter to Respondent Genato demanding compliance with the transaction of October 24, 1989, asserting that the contract between Petitioner Cheng and Respondent Genato was already perfected.
November 2, 1989: Consistent with the agreement to continue the contract, the Da Jose spouses paid Respondent Genato the complete down payment of nine hundred fifty thousand pesos (P950,000.00) and delivered three postdated checks in the total amount of one million eight hundred sixty-five thousand six hundred eighty pesos (P1,865,680.00) for the full balance.
November 2, 1989: Petitioner Cheng executed an affidavit of adverse claim and caused the annotation of the adverse claim on the subject transfer certificates of title.
November 2, 1989: Respondent Genato sent a letter to Petitioner Cheng enclosing a Bank of the Philippine Islands Cashier's Check for fifty thousand pesos (P50,000.00) to return the partial payment, which check Petitioner Cheng subsequently returned to Respondent Genato.
December 8, 1989: Petitioner Cheng instituted a complaint for specific performance with damages and a prayer for preliminary attachment against Respondent Genato before the Regional Trial Court of Quezon City, Branch 96.
January 18, 1994: The Regional Trial Court rendered a decision declaring the Contract to Sell with the Da Jose spouses resolved and rescinded under Article 1191 of the Civil Code, and ordering Respondent Genato to execute a deed of sale in favor of Petitioner Cheng.
July 7, 1997: The Court of Appeals, on appeal, reversed and set aside the decision of the Regional Trial Court, ruling that the Contract to Sell in favor of the Da Jose spouses was not validly rescinded, that the contract between Respondent Genato and Petitioner Cheng was without force and effect, and that Petitioner Cheng acted in bad faith.
December 29, 1998: The Supreme Court en banc promulgated the Decision denying the petition of Petitioner Cheng and affirming the Decision of the Court of Appeals.

III. Arguments of the Parties

A. Petitioner / Prosecution (Ricardo Cheng)

Petitioner Cheng argued that the handwritten receipt issued by Respondent Genato on October 24, 1989, was not a mere contract to sell but a perfected conditional contract of sale which gave Petitioner Cheng a superior right over the properties.
Petitioner Cheng contended that the prior Contract to Sell between Respondent Genato and the Da Jose spouses was validly rescinded and resolved by virtue of the "Affidavit to Annul the Contract to Sell" executed by Respondent Genato on October 13, 1989, and registered on October 26, 1989.
Petitioner Cheng asserted that the rules on double sales under Article 1544 of the Civil Code should not apply to the transaction because the contract of Petitioner Cheng was a conditional contract of sale, whereas the contract of the Da Jose spouses was a mere contract to sell.
Petitioner Cheng maintained that Petitioner Cheng could not be held liable for damages because Petitioner Cheng merely sought to protect the perfected contractual rights of Petitioner Cheng in court.

B. Respondent / Defense (Ramon B. Genato & Spouses Ernesto and Socorro Da Jose)

Respondent Genato and the Da Jose spouses argued that the unilateral rescission attempted by Respondent Genato through the "Affidavit to Annul the Contract to Sell" was null, void, and without legal effect because the thirty-day extension period granted to the Da Jose spouses was still active and subsisting.
The Da Jose spouses contended that as the first buyers who had first registered and annotated the Contract to Sell on the transfer certificates of title on September 6, 1989, the registered right of the Da Jose spouses is superior to any subsequent claim.
The respondents asserted that Petitioner Cheng was a buyer in bad faith because Petitioner Cheng had actual knowledge of the existing annotated Contract to Sell on the titles when Petitioner Cheng entered into the transaction with Respondent Genato on October 24, 1989.
The respondents maintained that the registration of the "Affidavit to Annul the Contract to Sell" on October 26, 1989, was procured in bad faith at the instigation of Petitioner Cheng to defeat the registered rights of the Da Jose spouses.

C. Common Ground

Both Petitioner Cheng and the respondents admitted that the handwritten receipt dated October 24, 1989, was executed by Respondent Genato in the handwriting of Respondent Genato and that Petitioner Cheng paid fifty thousand pesos (P50,000.00) on that date.
The parties conceded that the Contract to Sell dated September 6, 1989, was duly registered and annotated on Transfer Certificate of Title No. T-76.196 (M) and Transfer Certificate of Title No. T-76.197 (M) prior to the transaction of October 24, 1989.

IV. Issues

A. Main Issue

Whether the prior registration and annotation of the Contract to Sell on the transfer certificates of title on September 6, 1989, by the first buyers, the spouses Ernesto and Socorro Da Jose, constitutes constructive notice that binds subsequent purchasers, thereby making any subsequent unregistered contract of sale subordinate to the registered right under the Property Registration Decree (Presidential Decree No. 1529).

B. Secondary Issues

Whether the Contract to Sell between Respondent Genato and the Da Jose spouses was validly rescinded by the unilateral execution and subsequent registration of the "Affidavit to Annul the Contract to Sell."
Whether the rules on double sales under Article 1544 of the Civil Code of the Philippines or the principle of prius tempore, potior jure (first in time, stronger in right) apply to determine preference between two conflicting contracts to sell.
Whether Petitioner Cheng is liable for moral and exemplary damages for filing the suit for specific performance.

V. Ruling / Disposition

A. MAIN ISSUE: YES. The Supreme Court ruled that the prior registration and annotation of the Contract to Sell on September 6, 1989, by the Da Jose spouses on the transfer certificates of title constituted constructive notice to the entire world, including Petitioner Cheng, under Section 51 and Section 52 of Presidential Decree No. 1529. Because the contract was duly registered, any subsequent dealing with the registered land was subject to the registered interest. Petitioner Cheng had actual knowledge of this annotation before paying the fifty thousand pesos (P50,000.00), which taints the subsequent transaction and any subsequent registration of Petitioner Cheng with bad faith. Under the law, good faith must concur with registration for a registered right to be enforceable.
B. SECONDARY ISSUES:
1. NO. The Supreme Court held that the unilateral rescission attempted by Respondent Genato was void. The thirty-day extension period granted to the Da Jose spouses was still in effect on October 24, 1989. Under Article 1191 of the Civil Code, the power to rescind is not absolute and is subject to judicial review, and a party cannot unilaterally rescind a contract when the other party is not in default.
2. YES. The Supreme Court ruled that while Article 1544 of the Civil Code strictly applies to double sales where ownership has been transferred, the governing principle of primus tempore, potior jure (first in time, stronger in right) under Article 1544 of the Civil Code applies to determine preference between two conflicting contracts to sell. Since the contract of the Da Jose spouses was executed first and registered first, securing the superior right of the Da Jose spouses, the registered right of the Da Jose spouses must be preferred.
3. YES. The Supreme Court upheld the award of moral and exemplary damages against Petitioner Cheng because Petitioner Cheng acted in bad faith in filing the suit for specific performance, fully aware that the prior Contract to Sell had not been validly rescinded, thereby causing a prolonged and economically unhealthy gridlock on the properties.

Verbatim Dispositive Portion

"WHEREFORE, premises considered, the instant petition for review is DENIED and the assailed decision is hereby AFFIRMED EN TOTO.

SO ORDERED."

VI. Ratio Decidendi and Doctrines

A. Ratio Decidendi

The Operative Act of Registration: Under Section 51 of Presidential Decree No. 1529, no deed, mortgage, lease, or other voluntary instrument, except a will, purporting to convey or affect registered land shall take effect as a conveyance or bind the land, but shall operate only as a contract between the parties and as evidence of authority to the Register of Deeds to make registration. The act of registration is the operative act to convey or affect the land insofar as third persons are concerned.
Constructive Notice to the Whole World: Section 52 of Presidential Decree No. 1529 dictates that every conveyance, mortgage, lease, lien, attachment, order, judgment, instrument, or entry affecting registered land shall, if registered, filed, or entered in the Office of the Register of Deeds for the province or city where the land lies, be constructive notice to all persons from the time of such registering, filing, or entering.
Definition and Scope of Registration: The Supreme Court adopted the jurisprudential definition of registration:

"Registration, as defined by Soler and Castillo, 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. In its strict acceptation, it is the entry made in the registry which records solemnly and permanently the right of ownership and other real rights."
Priority of Prior Registered Encumbrances: Based on the constructive notice rule, the annotation of the "Contract to Sell" made by the Da Jose spouses on the transfer certificates of title on September 6, 1989, bound all subsequent purchasers. Petitioner Cheng cannot claim to be an innocent purchaser because the registration in the public registry served as constructive notice, and Petitioner Cheng admitted to having actual knowledge of the annotation prior to entering into the transaction.
The Requirement of Good Faith in Registration: Mere registration of a subsequent contract is completely ineffectual to confer a superior right if the registration is done in bad faith. The knowledge gained by a subsequent buyer of a prior registered transaction taints any subsequent registration by the subsequent buyer with bad faith, as good faith must concur with registration for the prior right to be enforceable.
Application of primus tempore, potior jure: The Supreme Court established that when the special rules under Article 1544 of the Civil Code do not strictly fit because the contracts are contracts to sell rather than completed sales, the governing principle of primus tempore, potior jure (first in time, stronger in right) must apply. The contract of the Da Jose spouses was executed first and registered first, securing the superior right of the Da Jose spouses.
Unilateral Rescission Is Void Without Default: A contract to sell cannot be unilaterally rescinded by the seller through an affidavit of annulment when the period for performance has been extended and the buyer is not in default. Under Article 1191 of the Civil Code, the right to resolve reciprocal obligations must be exercised in accordance with law, and any unilateral resolution without legal basis is ineffective.

B. Doctrines/Rules

1. The Operative Act of Registration

Under the Torrens system, voluntary dealings with registered land do not bind the land or affect third persons unless the voluntary dealings are registered in the Office of the Register of Deeds where the land lies. Section 51 of Presidential Decree No. 1529 states:

"The act of registration shall be the operative act to convey or affect the land insofar as third persons are concerned, and in all cases under this Decree, the registration shall be made in the office of the Register of Deeds for the province or city where the land lies."

2. The Rule of Constructive Notice

The registration of any instrument affecting registered land creates an absolute, irrebuttable presumption of notice to all persons from the moment of registration under Section 52 of Presidential Decree No. 1529:

"Every conveyance, mortgage, lease, lien, attachment, order, judgment, instrument or entry affecting registered land shall, if registered, filed or entered in the office of the Register of Deeds for the province or city where the land to which it relates lies, be constructive notice to all persons from the time of such registering, filing or entering."

3. The Principle of primus tempore, potior jure

In conflicting claims over registered land arising from multiple transactions, the party who is first in time is preferred in right. This principle is reinforced by registration:

"…the governing principle of Article 1544, Civil Code, should apply in this situation. Jurisprudence teaches us that the governing principle is PRIMUS TEMPORE, PORTIOR JURE (first in time, stronger in right). For not only was the contract between herein respondents first in time; it was also registered long before petitioner's intrusion as a second buyer."

4. Good Faith Must Concur with Registration

To claim protection as a preferred purchaser under the registration laws, a subsequent purchaser must register the transaction in good faith, which means without knowledge of any prior unregistered or registered transaction:

"In contrast, knowledge gained by Cheng of the first transaction between the Da Jose spouses and Genato defeats his rights even if he is first to register the second transaction, since such knowledge taints his prior registration with bad faith."

C. Limitations/Exceptions

Knowledge of Unregistered Sales is Equivalent to Registration: While registration is the operative act to affect registered land, the Supreme Court recognized that actual knowledge of an unregistered transaction by a subsequent purchaser is legally equivalent to registration with respect to that purchaser, thereby preventing the subsequent purchaser from asserting good faith.
Non-Application of Article 1544 to Simple Contracts to Sell: The strict provisions of Article 1544 of the Civil Code regarding double sales do not apply when the transactions are mere contracts to sell where no transfer of ownership has been consummated. In such cases, the court must apply the general principle of primus tempore, potior jure rather than the literal rules of Article 1544 of the Civil Code.

D. Topic Integration

The relationship of the case of Cheng v. Genato to the syllabus topic of Chapter I – General Provisions (Sections 1–3) > Section 1 — Registration is DIRECT. The decision serves as a primary judicial authority on the nature, definition, and legal effects of registration under the Property Registration Decree (Presidential Decree No. 1529). The Supreme Court's analysis directly integrates Section 1, Section 51, and Section 52 of Presidential Decree No. 1529 to clarify that registration is not merely a procedural formality but the very operative act that binds registered land and establishes real rights. By defining registration broadly to include "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," the Court reinforced the integrity of the Torrens system. The case is controlling because the decision establishes that a registered annotation of a contract to sell in the public registry constitutes a real right that is superior to any subsequent unregistered or registered contract, and that actual or constructive notice of such registration precludes any subsequent buyer from claiming the status of an innocent purchaser.

VII. Separate Opinions

The consolidated decision of the Supreme Court in Cheng v. Genato was rendered unanimously. The uploaded excerpts of the decision do not contain any separate concurring or dissenting opinions. Consequently, any separate opinions are NOT IN RECORD.

Cited Laws & Provisions

Every statute, rule, and issuance the decision turns on — the text as written, and the work it does in this case.

Civil Code

Article 1544, Civil Code

Civil Code of the Philippines (R.A. No. 386), Book IV (Obligations and Contracts), Title VI (Sales), Chapter 4 (Obligations of the Vendor), Section 2 (Delivery of the Thing Sold)

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. (1473)

Why it is cited here

The double-sale rule, and the case is about how broadly its first branch is read.

For immovables, ownership belongs "to the person acquiring it who in good faith first recorded it in the Registry of Property"; failing that, to the first in good faith in possession; and failing that, to the one with the oldest title, provided there is good faith.

"Registration," for priority purposes, is read to extend beyond a final deed — it reaches annotations and marginal notes validly entered in the registry. A notice of lis pendens, an adverse claim, a memorandum of an agreement: each is an entry, each is discoverable, and each therefore counts.

The unifying idea is the one Po Sun Tun states from the other side: what matters is whether something was actually entered in the books, because that is what a searcher would find. Entry is the test, not the formality of the instrument entered.

Where nothing at all is entered, the article's remaining branches operate, and the case notes that primus tempore, potior jure — first in time, stronger in right — may govern priority. But that maxim is the fallback, not the rule; the article's own sequence comes first.

Special Law

Section 52, P.D. No. 1529

Constructive notice upon registration

Presidential Decree No. 1529 (Property Registration Decree, 1978)

Every conveyance, mortgage, lease, lien, attachment, order, judgment, instrument or entry affecting registered land shall, if registered, filed or entered in the office of the Register of Deeds for the province or city where the land to which it relates lies, be constructive notice to all persons from the time of such registering, filing or entering.

Why it is cited here

Why an annotation is enough to count.

"Every conveyance, mortgage, lease, lien, attachment, order, judgment, instrument or entry affecting registered land shall, if registered, filed or entered … be constructive notice to all persons."

Look at the breadth of that list — it is not confined to deeds of sale, and it closes with "or entry." Anything properly entered gives constructive notice, so a buyer who could have seen an annotation and did not look is fixed with knowledge of it.

That is what defeats good faith under Article 1544. The two provisions work together: Section 52 decides what a person is deemed to know, and Article 1544 decides who wins given what each party knew.

Special Law

Section 51, P.D. No. 1529

Conveyance and other dealings by registered owner

Presidential Decree No. 1529 (Property Registration Decree, 1978)

An owner of registered land may convey, mortgage, lease, charge or otherwise deal with the same in accordance with existing laws. He may use such forms of deeds, mortgages, leases or other voluntary instruments as are sufficient in law. But no deed, mortgage, lease, or other voluntary instrument, except a will purporting to convey or affect registered land shall take effect as a conveyance or bind the land, but shall operate only as a contract between the parties and as evidence of authority to the Register of Deeds to make registration.

The act of registration shall be the operative act to convey or affect the land insofar as third persons are concerned, and in all cases under this Decree, the registration shall be made in the office of the Register of Deeds for the province or city where the land lies.

Why it is cited here

The provision that explains why the registry is decisive at all: an instrument affecting registered land "shall not take effect as a conveyance or bind the land" until registered, and "the act of registration shall be the operative act to convey or affect the land."

Between the parties a deed binds on execution; against the land it does nothing until entered. So in a contest between two buyers, the question is never who signed first — it is who operated on the land first, and in good faith.

Source: Cheng v. Genato, G.R. No. 129760, December 29, 1998

Cited laws & provisions

Article 1544, Civil Code

Civil Code

Civil Code of the Philippines (R.A. No. 386), Book IV (Obligations and Contracts), Title VI (Sales), Chapter 4 (Obligations of the Vendor), Section 2 (Delivery of the Thing Sold)

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.

Why it is cited here

The double-sale rule, and the case is about how broadly its first branch is read.

Full entry below ↓

Section 52, P.D. No. 1529

Special Law

Constructive notice upon registration

Presidential Decree No. 1529 (Property Registration Decree, 1978)

Why it is cited here

Why an annotation is enough to count.

Full entry below ↓

Section 51, P.D. No. 1529

Special Law

Conveyance and other dealings by registered owner

Presidential Decree No. 1529 (Property Registration Decree, 1978)

Why it is cited here

Full entry below ↓

Facts

On September 6, 1989, Genato executed and annotated on his titles (TCT Nos. T-76.196[M] and T-76.197[M]) a Contract to Sell to the Da Jose spouses at P80/sq.m., with P50,000 paid and the P950,000 down-payment balance due in thirty days, subject to their verification of the property's documents. Annotated on the titles the same day it was signed, and that single act is the "registration" this case is about — it is what put Cheng on notice and what settled priority against him.
On October 4, 1989, still verifying, they secured a further thirty-day extension to November 5.
On October 13, 1989 — before that extension lapsed, and without notifying the spouses — Genato executed an unannotated Affidavit to Annul the contract for their supposed default. (Unannotated is the operative word — an affidavit left in a drawer changes nothing on the register. It reached the Registry of Deeds of Meycauayan only on 26 October 1989 as primary entry No. 262702, two days after Cheng had already paid, and only because Cheng reminded Genato to file it.)
On October 24, 1989, Cheng, though shown both the annotated contract and the unannotated affidavit, paid Genato P50,000 by check on Genato's assurance the prior contract would be annulled. (He was shown both documents and paid anyway; the handwritten receipt priced the land at P70.00 per square metre against the P80.00 the Da Jose spouses had agreed. Actual knowledge of the annotation is what destroyed any claim to good faith.)
Genato registered the annulment affidavit only on October 26, 1989, after Cheng reminded him.
On October 27, 1989, the Da Jose spouses learned of it by chance, protested that their extension still ran, and Genato reverted to honoring their contract, tendering back Cheng's payment, which Cheng refused.
On November 2, 1989, the spouses paid the full down payment and, the same day, Cheng annotated an affidavit of adverse claim.
Cheng sued for specific performance on December 8, 1989; the Da Jose spouses intervened.
The trial court ruled for Cheng on January 18, 1994.
The Court of Appeals reversed in toto on July 7, 1997, upholding the Da Jose contract and awarding damages against Cheng.
The Supreme Court affirmed en toto on December 29, 1998.

Arguments of the Parties

Petitioner/Appellant. Cheng argued:

The Da Jose contract had already been validly rescinded by Genato's Affidavit to Annul.
His own transaction was not a contract to sell but a conditional contract of sale analogous to Coronel v. Court of Appeals, giving him a preferred right outside Article 1544.
Damages against him were erroneous.

Issue

ANCILLARY / INCIDENTAL ISSUES (if any). Whether Cheng was properly held liable for damages for bad faith.

Ruling

Ratio

Because the Da Jose spouses' extension had not expired when Genato executed his Affidavit to Annul, no default — and thus no breach under Article 1191 — could yet exist.
A Contract to Sell rests on a positive suspensive condition whose non-fulfillment merely prevents the obligation from arising.
Even assuming default, Genato remained bound to give notice of rescission, citing University of the Philippines v. De Los Angeles, which he never gave.
With the Da Jose contract thus subsisting, the Court turned to priority.
The Court of Appeals had found Article 1544 technically inapplicable since neither transaction was a consummated sale, leaving the article's elements — two valid sales of the same property, conflicting buyers, a common seller — unmet.
The Supreme Court nonetheless applied the article's underlying principle, primus tempore, potior jure (first in time, stronger in right), through the doctrine of Registration.
It adopted, verbatim, Soler and Castillo's definition: "'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. In its strict acceptation, it is the entry made in the registry which records solemnly and permanently the right of ownership and other real rights."
Applying this, the Court held that an annotation satisfies the standard, since "when a Deed of Sale is inscribed in the registry of property on the original document itself, what was done with respect to said entries or annotations and marginal notes amounted to a registration of the sale"
That the Da Jose annotation of September 6, 1989 predated Cheng's adverse claim of November 2, 1989.
And that registration must be coupled with continuing good faith, citing Uraca v. Court of Appeals — present in the Da Jose spouses, absent in Cheng, who had "knowledge of facts which should have put him upon such inquiry" before he paid, per Leung Yee v. F.L. Strong Machinery Co.

Doctrine

Doctrines / Rules / Principles Laid Down.

"Registration," for priority purposes, extends beyond a final deed to annotations and marginal notes validly entered in the registry (Soler and Castillo definition). The primus tempore, potior jure principle may govern priority even where Article 1544's textual elements are unmet. Registration confers priority only when coupled with continuing good faith.

Distinctions / Limitations / Qualifications.

The Court did not deem Article 1544 literally applicable — its specific elements were absent since neither transaction was consummated; only its underlying registration-priority rationale was extended to the facts.

Topic/Subtopic Integration (Mandatory).

DIRECT: Cheng v. Genato controls the inclusive scope of "registration" — annotations, not only final deeds, carry legal priority when made in good faith — and this definitional holding, not the incidental contract-to-sell/conditional-sale question, anchors the case to the Registration topic.

Separate Opinions

None. The Decision was unanimous; Bellosillo, Puno, and Mendoza, JJ., concurred without separate opinion.

Full Digest — Recitation Format

Full-length digest in the format required by the course digest prompt.

Classification: DIRECT · Ponente: Martinez, J., Second Division · G.R. No. 129760, December 29, 1998

TOPIC/SUBTOPIC FOCUS: Chapter I – General Provisions (Sections 1–3) > Sec. 1 — Registration

I. Gist and Central Doctrine

II. Chronological Narration of Material Facts

September 6, 1989: Respondent Ramon B. Genato, as the registered owner of two parcels of land located at Paradise Farms, San Jose del Monte, Bulacan, covered by Transfer Certificate of Title No. T-76.196 (M) and Transfer Certificate of Title No. T-76.197 (M) with an aggregate area of 35,821 square meters, entered into a Contract to Sell with the Intervenors, the spouses Ernesto R. Da Jose and Socorro B. Da Jose, for the purchase price of eighty pesos (P80.00) per square meter.
September 6, 1989: The Contract to Sell between Respondent Genato and the Da Jose spouses was executed in a public instrument and was duly registered and annotated at the back of Transfer Certificate of Title No. T-76.196 (M) and Transfer Certificate of Title No. T-76.197 (M) on the very same day of the execution of the contract.
October 4, 1989: As the Da Jose spouses had not finished verifying the titles mentioned in the contract, the Da Jose spouses requested and were granted by Respondent Genato a thirty-day extension of the contract, extending the period until November 5, 1989.
October 13, 1989: Pending the effectivity of the thirty-day extension period, and without prior notice to the Da Jose spouses, Respondent Genato executed an "Affidavit to Annul the Contract to Sell" based on the alleged failure of the Da Jose spouses to comply with the financial conditions, but Respondent Genato did not immediately cause the annotation of the affidavit on the certificates of title.
October 24, 1989: Petitioner Ricardo Cheng went to the residence of Respondent Genato, expressed interest in buying the subject properties, and was shown by Respondent Genato copies of the transfer certificates of title, including the registered annotations at the back of the titles showing the existing Contract to Sell with the Da Jose spouses, as well as the unannotated "Affidavit to Annul the Contract to Sell."
October 24, 1989: Despite actual knowledge of the existing annotated Contract to Sell, Petitioner Cheng paid Respondent Genato fifty thousand pesos (P50,000.00) as partial payment, for which Respondent Genato issued a handwritten receipt stating that the amount was a partial payment for the two parcels of land at seventy pesos (P70.00) per square meter.
October 25, 1989: Respondent Genato deposited the fifty thousand pesos (P50,000.00) check of Petitioner Cheng, and on the same day, Petitioner Cheng called Respondent Genato to remind Respondent Genato to register the "Affidavit to Annul the Contract to Sell."
October 26, 1989: Acting on the request of Petitioner Cheng, Respondent Genato caused the registration of the "Affidavit to Annul the Contract to Sell" in the Registry of Deeds of Meycauayan, Bulacan, as primary entry No. 262702.
October 27, 1989: The Da Jose spouses met Respondent Genato by coincidence at the Office of the Registry of Deeds of Meycauayan, Bulacan, and upon discovering the "Affidavit to Annul the Contract to Sell," the Da Jose spouses protested against the unilateral rescission and expressed readiness to pay the balance of the down payment.
October 27, 1989: Convinced by the protests of the Da Jose spouses and acknowledging that the thirty-day extension period was still in effect, Respondent Genato decided to continue the Contract to Sell with the Da Jose spouses, which agreement was formalized in a conforme letter executed on the same day.
October 27, 1989: Respondent Genato advised Petitioner Cheng of the decision to continue the contract with the Da Jose spouses and offered to return the fifty thousand pesos (P50,000.00) check.
October 30, 1989: The lawyer of Petitioner Cheng sent a letter to Respondent Genato demanding compliance with the transaction of October 24, 1989, asserting that the contract between Petitioner Cheng and Respondent Genato was already perfected.
November 2, 1989: Consistent with the agreement to continue the contract, the Da Jose spouses paid Respondent Genato the complete down payment of nine hundred fifty thousand pesos (P950,000.00) and delivered three postdated checks in the total amount of one million eight hundred sixty-five thousand six hundred eighty pesos (P1,865,680.00) for the full balance.
November 2, 1989: Petitioner Cheng executed an affidavit of adverse claim and caused the annotation of the adverse claim on the subject transfer certificates of title.
November 2, 1989: Respondent Genato sent a letter to Petitioner Cheng enclosing a Bank of the Philippine Islands Cashier's Check for fifty thousand pesos (P50,000.00) to return the partial payment, which check Petitioner Cheng subsequently returned to Respondent Genato.
December 8, 1989: Petitioner Cheng instituted a complaint for specific performance with damages and a prayer for preliminary attachment against Respondent Genato before the Regional Trial Court of Quezon City, Branch 96.
January 18, 1994: The Regional Trial Court rendered a decision declaring the Contract to Sell with the Da Jose spouses resolved and rescinded under Article 1191 of the Civil Code, and ordering Respondent Genato to execute a deed of sale in favor of Petitioner Cheng.
July 7, 1997: The Court of Appeals, on appeal, reversed and set aside the decision of the Regional Trial Court, ruling that the Contract to Sell in favor of the Da Jose spouses was not validly rescinded, that the contract between Respondent Genato and Petitioner Cheng was without force and effect, and that Petitioner Cheng acted in bad faith.
December 29, 1998: The Supreme Court en banc promulgated the Decision denying the petition of Petitioner Cheng and affirming the Decision of the Court of Appeals.

III. Arguments of the Parties

A. Petitioner / Prosecution (Ricardo Cheng)

Petitioner Cheng argued that the handwritten receipt issued by Respondent Genato on October 24, 1989, was not a mere contract to sell but a perfected conditional contract of sale which gave Petitioner Cheng a superior right over the properties.
Petitioner Cheng contended that the prior Contract to Sell between Respondent Genato and the Da Jose spouses was validly rescinded and resolved by virtue of the "Affidavit to Annul the Contract to Sell" executed by Respondent Genato on October 13, 1989, and registered on October 26, 1989.
Petitioner Cheng asserted that the rules on double sales under Article 1544 of the Civil Code should not apply to the transaction because the contract of Petitioner Cheng was a conditional contract of sale, whereas the contract of the Da Jose spouses was a mere contract to sell.
Petitioner Cheng maintained that Petitioner Cheng could not be held liable for damages because Petitioner Cheng merely sought to protect the perfected contractual rights of Petitioner Cheng in court.

B. Respondent / Defense (Ramon B. Genato & Spouses Ernesto and Socorro Da Jose)

Respondent Genato and the Da Jose spouses argued that the unilateral rescission attempted by Respondent Genato through the "Affidavit to Annul the Contract to Sell" was null, void, and without legal effect because the thirty-day extension period granted to the Da Jose spouses was still active and subsisting.
The Da Jose spouses contended that as the first buyers who had first registered and annotated the Contract to Sell on the transfer certificates of title on September 6, 1989, the registered right of the Da Jose spouses is superior to any subsequent claim.
The respondents asserted that Petitioner Cheng was a buyer in bad faith because Petitioner Cheng had actual knowledge of the existing annotated Contract to Sell on the titles when Petitioner Cheng entered into the transaction with Respondent Genato on October 24, 1989.
The respondents maintained that the registration of the "Affidavit to Annul the Contract to Sell" on October 26, 1989, was procured in bad faith at the instigation of Petitioner Cheng to defeat the registered rights of the Da Jose spouses.

C. Common Ground

Both Petitioner Cheng and the respondents admitted that the handwritten receipt dated October 24, 1989, was executed by Respondent Genato in the handwriting of Respondent Genato and that Petitioner Cheng paid fifty thousand pesos (P50,000.00) on that date.
The parties conceded that the Contract to Sell dated September 6, 1989, was duly registered and annotated on Transfer Certificate of Title No. T-76.196 (M) and Transfer Certificate of Title No. T-76.197 (M) prior to the transaction of October 24, 1989.

IV. Issues

A. Main Issue

B. Secondary Issues

Whether the Contract to Sell between Respondent Genato and the Da Jose spouses was validly rescinded by the unilateral execution and subsequent registration of the "Affidavit to Annul the Contract to Sell."
Whether the rules on double sales under Article 1544 of the Civil Code of the Philippines or the principle of prius tempore, potior jure (first in time, stronger in right) apply to determine preference between two conflicting contracts to sell.
Whether Petitioner Cheng is liable for moral and exemplary damages for filing the suit for specific performance.

V. Ruling / Disposition

A. MAIN ISSUE: YES. The Supreme Court ruled that the prior registration and annotation of the Contract to Sell on September 6, 1989, by the Da Jose spouses on the transfer certificates of title constituted constructive notice to the entire world, including Petitioner Cheng, under Section 51 and Section 52 of Presidential Decree No. 1529. Because the contract was duly registered, any subsequent dealing with the registered land was subject to the registered interest. Petitioner Cheng had actual knowledge of this annotation before paying the fifty thousand pesos (P50,000.00), which taints the subsequent transaction and any subsequent registration of Petitioner Cheng with bad faith. Under the law, good faith must concur with registration for a registered right to be enforceable.
B. SECONDARY ISSUES:
1. NO. The Supreme Court held that the unilateral rescission attempted by Respondent Genato was void. The thirty-day extension period granted to the Da Jose spouses was still in effect on October 24, 1989. Under Article 1191 of the Civil Code, the power to rescind is not absolute and is subject to judicial review, and a party cannot unilaterally rescind a contract when the other party is not in default.
2. YES. The Supreme Court ruled that while Article 1544 of the Civil Code strictly applies to double sales where ownership has been transferred, the governing principle of primus tempore, potior jure (first in time, stronger in right) under Article 1544 of the Civil Code applies to determine preference between two conflicting contracts to sell. Since the contract of the Da Jose spouses was executed first and registered first, securing the superior right of the Da Jose spouses, the registered right of the Da Jose spouses must be preferred.
3. YES. The Supreme Court upheld the award of moral and exemplary damages against Petitioner Cheng because Petitioner Cheng acted in bad faith in filing the suit for specific performance, fully aware that the prior Contract to Sell had not been validly rescinded, thereby causing a prolonged and economically unhealthy gridlock on the properties.

Verbatim Dispositive Portion

"WHEREFORE, premises considered, the instant petition for review is DENIED and the assailed decision is hereby AFFIRMED EN TOTO.

SO ORDERED."

VI. Ratio Decidendi and Doctrines

A. Ratio Decidendi

The Operative Act of Registration: Under Section 51 of Presidential Decree No. 1529, no deed, mortgage, lease, or other voluntary instrument, except a will, purporting to convey or affect registered land shall take effect as a conveyance or bind the land, but shall operate only as a contract between the parties and as evidence of authority to the Register of Deeds to make registration. The act of registration is the operative act to convey or affect the land insofar as third persons are concerned.
Constructive Notice to the Whole World: Section 52 of Presidential Decree No. 1529 dictates that every conveyance, mortgage, lease, lien, attachment, order, judgment, instrument, or entry affecting registered land shall, if registered, filed, or entered in the Office of the Register of Deeds for the province or city where the land lies, be constructive notice to all persons from the time of such registering, filing, or entering.
Definition and Scope of Registration: The Supreme Court adopted the jurisprudential definition of registration:

"Registration, as defined by Soler and Castillo, 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. In its strict acceptation, it is the entry made in the registry which records solemnly and permanently the right of ownership and other real rights."
Priority of Prior Registered Encumbrances: Based on the constructive notice rule, the annotation of the "Contract to Sell" made by the Da Jose spouses on the transfer certificates of title on September 6, 1989, bound all subsequent purchasers. Petitioner Cheng cannot claim to be an innocent purchaser because the registration in the public registry served as constructive notice, and Petitioner Cheng admitted to having actual knowledge of the annotation prior to entering into the transaction.
The Requirement of Good Faith in Registration: Mere registration of a subsequent contract is completely ineffectual to confer a superior right if the registration is done in bad faith. The knowledge gained by a subsequent buyer of a prior registered transaction taints any subsequent registration by the subsequent buyer with bad faith, as good faith must concur with registration for the prior right to be enforceable.
Application of primus tempore, potior jure: The Supreme Court established that when the special rules under Article 1544 of the Civil Code do not strictly fit because the contracts are contracts to sell rather than completed sales, the governing principle of primus tempore, potior jure (first in time, stronger in right) must apply. The contract of the Da Jose spouses was executed first and registered first, securing the superior right of the Da Jose spouses.
Unilateral Rescission Is Void Without Default: A contract to sell cannot be unilaterally rescinded by the seller through an affidavit of annulment when the period for performance has been extended and the buyer is not in default. Under Article 1191 of the Civil Code, the right to resolve reciprocal obligations must be exercised in accordance with law, and any unilateral resolution without legal basis is ineffective.

B. Doctrines/Rules

1. The Operative Act of Registration

"The act of registration shall be the operative act to convey or affect the land insofar as third persons are concerned, and in all cases under this Decree, the registration shall be made in the office of the Register of Deeds for the province or city where the land lies."

2. The Rule of Constructive Notice

"Every conveyance, mortgage, lease, lien, attachment, order, judgment, instrument or entry affecting registered land shall, if registered, filed or entered in the office of the Register of Deeds for the province or city where the land to which it relates lies, be constructive notice to all persons from the time of such registering, filing or entering."

3. The Principle of primus tempore, potior jure

In conflicting claims over registered land arising from multiple transactions, the party who is first in time is preferred in right. This principle is reinforced by registration:

"…the governing principle of Article 1544, Civil Code, should apply in this situation. Jurisprudence teaches us that the governing principle is PRIMUS TEMPORE, PORTIOR JURE (first in time, stronger in right). For not only was the contract between herein respondents first in time; it was also registered long before petitioner's intrusion as a second buyer."

4. Good Faith Must Concur with Registration

"In contrast, knowledge gained by Cheng of the first transaction between the Da Jose spouses and Genato defeats his rights even if he is first to register the second transaction, since such knowledge taints his prior registration with bad faith."

C. Limitations/Exceptions

Knowledge of Unregistered Sales is Equivalent to Registration: While registration is the operative act to affect registered land, the Supreme Court recognized that actual knowledge of an unregistered transaction by a subsequent purchaser is legally equivalent to registration with respect to that purchaser, thereby preventing the subsequent purchaser from asserting good faith.
Non-Application of Article 1544 to Simple Contracts to Sell: The strict provisions of Article 1544 of the Civil Code regarding double sales do not apply when the transactions are mere contracts to sell where no transfer of ownership has been consummated. In such cases, the court must apply the general principle of primus tempore, potior jure rather than the literal rules of Article 1544 of the Civil Code.