Francisco H. Lu v. Spouses Orlando

Summary

This case involves a double sale of real property where Juan Peralta first sold Lot 5582-B-7-D to the Manipon spouses in 1981, then mortgaged the entire mother lot to a bank in 1981. After foreclosure, Francisco Lu purchased the property in 1988 and registered it. The Supreme Court ruled that despite Lu's prior registration, the Manipons have superior ownership rights because Lu was not a purchaser in good faith. Lu had actual knowledge of the Manipons' prior occupation and house construction before his purchase, making his registration futile under Article 1544 of the Civil Code. The Court emphasized that registration cannot protect buyers in bad faith and that the preferential right of first registrants is always qualified by good faith. The decision reinforces that the Torrens system registration merely confirms but does not confer ownership, and buyers must exercise reasonable caution when purchasing occupied property.