Leodegaria Cabana sold his real propery first to Teofilo Legaspi and Illuminada Cabana and then later to Abelardo Cruz.
Legaspi and Cabana were able to take possession of the property but they were not able to register the deed of absolute sale because the property was still mortgaged to PNB. They however were able to register with the RD the sale with the right to repurchase.
On the other hand, Cruz succeeded to register the deed of absolute sale in his favor.
HELD:
Even though Cruz was the first to register the deed of absolute sale, he cannot be given a better right over the property because he was a buyer in bad faith.
Cruz knew the prior sale of the property because he was informed by the RD that Legazpi and Cabana already registered the sale of the said property.
Knowledge of a prior transfer of a registered property by a subsequent purchaser makes him a purchaser in bad faith and his knowledge of such transfer vitiates his title acquired by virtue of the latter instrument of conveyance which creates no right as against the first purchaser.
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