DOUBLE SALE OF REAL PROPERTY

FACTS: For his bootlegging business, Pete Castellano is renting Lipari warehouse from Turk Sollozzo. One day, Sollozzo sold the said property to Castellano and the latter paid the selling price upon the execution of their handwritten agreement. 

A few years later, Tony Soprano appeared at the warehouse demanding that Castellano leave the premises as he allegedly bought the property from Turk Sollozzo. Soprano showed Castellano a notarized deed of absolute sale and served upon the latter a notice to vacate, with a warning that any failure of Castellano to comply would result in a court action or a "friendly visit" by enforcers from the Soprano family.

As Castellano's consigliere, he seeks your wisdom on the matter.

ISSUE: Who has the better right to the warehouse?

HELD: In double sale of an immovable, the following is the established rule of preference in determining ownership:

(a)            the person acquiring it who in good faith first recorded it in the Registry of Property;

(b)            the person who in good faith was first in the possession; and

(c)             in the absence thereof, to the person who presents the oldest title, provided there is good faith .

It must be observed that the law strictly requires 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 buyer’s rights) from the time of acquisition until the title is transferred to him by registration or failing registration, by delivery of possession.

It must be noted that Soprano cannot be deemed to be in good faith because when he bought the real property, it is in possession of Castellano, a person other than the seller, Sollozzo. In the case of Conspecto vs. Fuerto, the Supreme Court pronounced that, one who purchases real property which is in actual possession of others should, at least, make some inquiry concerning the rights of those in possession. The actual possession by people other than the vendor should, at least, put the purchaser upon inquiry. He can scarcely, in the absence of such inquiry, be regarded as a bona fide purchaser as against such possessions.