What does the law say when a thing is sold to different buyers?
Article 1544 of the Civil Code of the Philippines provides for the rules when the same thing has been sold to different vendees/buyers, to wit:
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.
As stated in paragraph 1 above, if the thing sold is movable (as opposed to immovable, like a parcel of land), whoever first takes possession of the movable property in good faith shall be considered as the owner of the same.
On the other hand, if the thing sold is immovable, paragraphs 2 and 3 above shall apply. In determining ownership, it shall belong:
1. to the person acquiring it who in good faith first recorded it in the Registry of Property (paragraph 2);
2. if the above is absent, to the person who in good faith was first in possession (paragraph 3); and
3. in the absence of the above, to the person who presents the oldest title, provided there is good faith (paragraph 3).
Note must be taken that Article 1544 applies only to registered lands.[1]
Say the second buyer registers the sale ahead of the first buyer, shall ownership vest in the second buyer?
No, because registration alone does not transfer ownership of the property. As stated in the law, it must be coupled with good faith. This is explained by the Supreme Court in the case of Uraca v. Court of Appeals[2], to wit:
Under the foregoing, the prior registration of the disputed property by the second buyer does not by itself confer ownership or a better right over the property. Article 1544 requires that such registration must be coupled with good faith. Jurisprudence teaches us that (t)he governing principle is primus tempore, potior jure (first in time, stronger in right). 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 price 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 buyers rights) --- from the time of acquisition until the title is transferred to him by registration or failing registration, by delivery of possession.