Emilia M. Uraca v. Court of Appeals

Summary

This Supreme Court case resolved a double sale dispute involving commercial real property in Cebu City. Petitioners, who were longtime lessees, entered into a written contract to purchase the property for P1,050,000.00. When the vendors later attempted to increase the price to P1,400,000.00 without reaching agreement on payment terms, they sold the same property to the Avenue Group. The Court ruled that no novation occurred since no new contract was perfected, leaving the original sale to petitioners valid and enforceable. Applying Article 1544 of the Civil Code on double sales, the Court found that the Avenue Group's prior knowledge of the first sale constituted bad faith, invalidating their registration priority. The decision clarifies important principles on contract novation and good faith requirements in property registration, ultimately protecting the rights of the first buyers who had a perfected contract.