Expresscredit Financing Corporation v. Sps. Morton

Summary

This case involves a double sale of property where Garcia spouses sold to Velasco spouses in 1988 but later mortgaged the same property to Expresscredit in 1989. The Supreme Court applied Article 1544 of the Civil Code and ruled in favor of the Velasco spouses despite their failure to register the sale. The Court found that Expresscredit was not a good faith purchaser because its investigators were informed of the prior sale by the property caretaker. The Court emphasized that financing companies have heightened duty of due diligence and cannot ignore obvious signs of prior transactions. Since the Garcia spouses had already sold the property, they had no right to mortgage it, making the mortgage void and the subsequent foreclosure ineffectual. The decision protects actual possessors against mortgagees who fail to exercise proper diligence in verifying property ownership.