[G.R. No. 103727. December 18, 1996]

INTESTATE ESTATE OF THE LATE DON MARIANO SAN PEDRO Y ESTEBAN, represented by its HEIR-JUDICIAL ADMINISTRATOR, ENGRACIO F. SAN PEDRO, petitioner-appellant, vs. COURT OF APPEALS (Second Division), AURELIO OCAMPO, DOMINADOR D. BUHAIN, TERESA C. DELA CRUZ, respondents-appellees.

[G.R. No. 106496. December 18, 1996]

ENGRACIO SAN PEDRO, CANDIDO GENER, ROSA PANTALEON, VICENTE PANTALEON, ELEUTERIO PANTALEON, TRINIDAD SAN PEDRO, RODRIGO SAN PEDRO, RICARDO NICOLAS, FELISA NICOLAS, and LEONA SAN PEDRO, petitioners, vs. THE HONORABLE COURT OF APPEALS, (Sixteenth Division) and REPUBLIC OF THE PHILIPPINES, respondents.

D E C I S I O N

HERMOSISIMA, JR., J.:

FACTS:

The heirs of the late Mariano San Pedro y Esteban have been laying claim to the ownership of a total land area of approximately 173,000 hectares or “214,047 quiniones,” on the basis of a Spanish title, entitled “Titulo de Propriedad Numero 4136”. The claim appears to cover lands extending from Malolos, Bulacan to the City Hall of Quezon City and the land area between Dingalan Bay in the north and Tayabas Bay in the south.

A complaint for recovery of possession of real property and/or reconveyance with damages and with a prayer for preliminary injunction was filed by Engracio San Pedro as heir-judicial administrator of the “Intestate Estate of Don Mariano San Pedro y Esteban” against Jose G. De Ocampo, Aurelio Ocampo, MARECO, Inc., Rey Antonio Noguera, Teresa C. dela Cruz, Gaudencio R. Soliven, Diomedes Millan, Carmen Rayasco, Dominador D. Buhain, Mario D. Buhain, Jose D. Buhain, Arestedes S. Cauntay, Manuel Chung and Victoria Chung Tiu (El Mavic Investment & Development Corporation), Capitol Hills Realty Corporation and Jose F. Castro.

Complaint alleged: (1) that Engracio San Pedro discovered that the aforenamed defendants were able to secure from the Registry of Deeds of Quezon City titles to portions of the subject estate; (2) that the aforesaid defendants were able to acquire exclusive ownership and possession of certain portions of the subject estate in their names through deceit, fraud, bad faith and misrepresentation; (3) that Original Certificates of Title Nos. 614 and 333 had been cancelled by and through a final and executory decision in relation to letter recommendations by the Bureau of Lands, Bureau of Forest Development and the Office of the Solicitor General and also in relation to Central Bank Circulars and (4) that the issue of the existence, validity and genuineness of Titulo Propriedad No. 4136 which covers the subject estate had been resolved in favor of the petitioner estate in a decision by the defunct Court of First Instance, Branch 1 of Baliwag, Bulacan pertaining to a case docketed as Special Proceeding No. 312-B.

Summons were served. The lower court proceeded against the private respondents Ocampo, Buhain and Dela Cruz. The lower court rendered judgment dismissing the complaint. The motion for reconsideration was denied. The appeal was dismissed.

ISSUE:

Whether or not petitioners’ Titulo de Propriedad No. 4136 is null and void and of no legal force and effect

HELD:

It is settled that by virtue of Presidential Decree No. 892 which took effect on February 16, 1976, the system of registration under the Spanish Mortgage Law was abolished and all holders of Spanish titles or grants should cause their lands covered thereby to be registered under the Land Registration Act[53] within six (6) months from the date of effectivity of the said Decree or until August 16, 1976.[54] Otherwise, non-compliance therewith will result in a re-classification of their lands.[55] Spanish titles can no longer be countenanced as indubitable evidence of land ownership.[56]

Petitioners-heirs did not adduce evidence to show that Titulo de Propriedad 4136 was brought under the operation of P.D. 892 despite their allegation that they did so. Time and again we have held that a mere allegation is not evidence and the party who alleges a fact has the burden of proving it. Proof of compliance with P.D. 892 should be the Certificate of Title covering the land registered.

We are in accord with the appellate courts’ holding in G.R. No. 103727 insofar as it concludes that since the Titulo was not registered under Act No. 496, otherwise known as the Land Registration Act, said Titulo is inferior to the registered titles of the private respondents Ocampo, Buhain and Dela Cruz.

Hence, we conclude that petitioners-heirs failed to establish by competent proof the existence and due execution of the Titulo. Their explanation as to why the original copy of the Titulo could not be produced was not satisfactory. The alleged contents thereof which should

have resolved the issue as to the exact extent of the subject intestate estate of the late Mariano San Pedro were not distinctly proved.

Whether Titulo de Propriedad No. 4136 is valid or not, must now be laid to rest. The Titulo cannot be relied upon by the petitioners-heirs or their privies as evidence of ownership. In the petition for letters of administration the inventory submitted before the probate court consisted solely of lands covered by the Titulo. Hence, there can be no “net estate” to speak of after the Titulo’s exclusion from the intestate proceedings of the estate of the late Mariano San Pedro.

The Titulo cannot be superior to the Torrens Titles. Under the Torrens system of registration, the titles of private respondents became indefeasible and incontrovertible one year from its final decree. More importantly, TCT Nos. 372592, 8982, 269707, having been issued under the Torrens system, enjoy the conclusive presumption of validity.

Presidential Decree No. 892, quoted hereinabove, grants all holders of Spanish Titles the right to apply for registration of their lands under Act No. 496, otherwise known as the Land Registration Act, within six (6) months from the effectivity of the Decree. Thereafter, however, any Spanish Title, if utilized as evidence of possession, cannot be used as evidence of ownership in any land registration proceedings under the Torrens system.

All instruments affecting lands originally registered under the Spanish Mortgage Law may be recorded under Section 194 of the Revised Administrative Code, as amended by Act 3344.

WHEREFORE, in view of all the foregoing, the petitions in G.R. Nos. 103727 and 106496 are hereby DISMISSED for lack of merit.

Consequently, in G.R. No. 103727, the decision of the Court of Appeals dated January 20, 1992 is hereby AFFIRMED.

In G.R. No. 106496, judgment is hereby rendered as follows :

(1) Titulo de Propriedad No. 4136 is declared null and void and, therefore, no rights could be derived therefrom;

(2) All lands covered by Titulo de Propriedad No. 4136 are excluded from the inventory of the estate of the late Mariano San Pedro y Esteban;

(3) The petition for letters of administration, docketed as Special Proceedings No. 312-B, should be, as it is, hereby closed and terminated.

(4) The heirs, agents, privies and/or anyone acting for and in behalf of the estate of the late Mariano San Pedro y Esteban are hereby disallowed to exercise any act of possession or ownership or to otherwise, dispose of in any manner the whole or any portion of the estate covered by Titulo de

Propriedad No. 4136; and they are hereby ordered to immediately vacate the same, if they or any of them are in possession thereof.

This judgment is IMMEDIATELY EXECUTORY.

SO ORDERED.

Narvasa, C.J., Padilla, Regalado, Davide, Jr., Romero, Bellosillo, Puno, Panganiban, and Torres, Jr., JJ., concur.

Melo, Kapunan, Mendoza, and Francisco, JJ., no part. Vitug, J., on official leave.

G.R. No. 128573 January 13, 2003

NAAWAN COMMUNITY RURAL BANK INC., petitioner, vs. THE COURT OF APPEALS and SPOUSES

ALFREDO AND ANNABELLE LUMO, respondents.

CORONA, J.:

FACTS:

Guillermo Comayas offered to sell to private respondent-spouses Alfredo and Annabelle Lumo, a

house and lot measuring 340 square meters located at Pinikitan, Camaman-an, Cagayan de Oro City.

Private respondents made inquiries at the Office of the Register of Deeds of Cagayan de Oro City

where the property is located and the Bureau of Lands on the legal status of the vendor's title. They

found out that the property was mortgaged for P8,000 to a certain Mrs. Galupo and that the owner's

copy of the Certificate of Title to said property was in her possession.

Private respondents directed Guillermo Comayas to redeem the property from Galupo at their

expense. A release of the adverse claim of Galupo was annotated on TCT No. T-41499 which covered the

subject property.

Even before the release of Galupo's adverse claim, private respondents and Guillermo Comayas,

executed a deed of absolute sale. The subject property was allegedly sold for P125,000 but the deed of

sale reflected the amount of only P30,000 which was the amount private respondents were ready to pay

at the time of the execution of said deed, the balance payable by installment.

The deed of absolute sale was registered and inscribed. After obtaining their TCT, private

respondents requested the issuance of a new tax declaration certificate in their names. However, they

were surprised to learn from the City Assessor's Office that the property was also declared for tax

purposes in the name of petitioner Naawan Community Rural Bank Inc. Records in the City Assessor's

Office revealed that bore the note: "This lot is also declared in the name of Naawan Community Rural

Bank Inc. under T/D # 71210".

Apparently, Guillermo Comayas obtained a P15,000 loan from petitioner Bank using the subject

property as security. At the time said contract of mortgage was entered into, the subject property was

then an unregistered parcel of residential land, tax-declared in the name of a certain Sergio A. Balibay

while the residential one-storey house was tax-declared in the name of Comayas.

It appears that, when the registration was made, there was only one Register of Deeds for the

entire province of Misamis Oriental, including Cagayan de Oro City. For failure of Comayas to pay, the

real estate mortgage was foreclosed and the subject property sold at a public auction to the mortgagee

Naawan Community Rural Bank.

The subject property was registered in original proceedings under the Land Registration Act. The

name of Guillermo P. Comayas was entered in the Register of Deeds of Cagayan de Oro City.

The period for redemption of the foreclosed subject property lapsed and the MTCC Deputy

Sheriff of Cagayan de Oro City issued and delivered to petitioner bank the sheriff's deed of final

conveyance. This time, the deed was registered under Act 3344 and recorded in the registration book of

the Register of Deeds of Cagayan de Oro City.

By virtue of said deed, petitioner Bank obtained a tax declaration for the subject house and lot.

Petitioner Bank instituted an action for ejectment against Comayas. The Regional Trial Court issued an

order for the issuance of a writ of execution of its judgment. The MTCC, being the court of origin,

promptly issued said writ. When the writ was served, the property was no longer occupied by Comayas

but herein private respondents, the spouses Lumo who had, as earlier mentioned, bought it from

Comayas.

Alarmed by the prospect of being ejected from their home, private respondents filed an action

for quieting of title. The Regional Trial Court rendered a decision declaring private respondents as

purchasers for value and in good faith, and consequently declaring them as the absolute owners and

possessors of the subject house and lot. Petitioner appealed to the Court of Appeals which in turn

affirmed the trial court's decision.

ISSUE/ HELD:

I. Whether or not the sheriff's deed of final conveyance was duly executed and registered in the

register of deeds of cagayan de oro city on december 2, 1986; Whether or not registration of sheriff's

deed of final conveyance in the proper registry of deeds could be effective as against spouses lumo.

It has been held that, where a person claims to have superior proprietary rights over another on

the ground that he derived his title from a sheriff's sale registered in the Registry of Property, Article

1473 (now Article 1544) of the Civil Code will apply only if said execution sale of real estate is registered

under Act 496.

Unfortunately, the subject property was still untitled when it was already acquired by petitioner

bank by virtue of a final deed of conveyance. On the other hand, when private respondents purchased

the same property, it was covered by the Torrens System. The subject property was already under the

operation of the Torrens System. Under the said system, registration is the operative act that gives

validity to the transfer or creates a lien upon the land. The issuance of a certificate of title had the effect

of relieving the land of all claims except those noted thereon. Accordingly, private respondents, in

dealing with the subject registered land, were not required by law to go beyond the register to

determine the legal condition of the property. They were only charged with notice of such burdens on

the property as were noted on the register or the certificate of title. To have required them to do more

would have been to defeat the primary object of the Torrens System which is to make the Torrens Title

indefeasible and valid against the whole world.

The rights created by the above-stated statute of course do not and cannot accrue under an

inscription in bad faith. Mere registration of title in case of double sale is not enough; good faith must

concur with the registration.

II. Whether or not private respondents could be considered as buyers in good faith.

The "priority in time" principle being invoked by petitioner bank is misplaced because its

registration referred to land not within the Torrens System but under Act 3344. On the other hand,

when private respondents bought the subject property, the same was already registered under the

Torrens System. It is a well-known rule in this jurisdiction that persons dealing with registered land have

the legal right to rely on the face of the Torrens Certificate of Title and to dispense with the need to

inquire further, except when the party concerned has actual knowledge of facts and circumstances that

would impel a reasonably cautious man to make such inquiry.

III. Private respondents exercise the required diligence in ascertaining the legal condition of the title to

the subject property so as to be considered as innocent purchasers for value and in good faith?

- Affirmative.

Before private respondents bought the subject property from Guillermo Comayas, inquiries were made

with the Registry of Deeds and the Bureau of Lands regarding the status of the vendor's title. No liens or

encumbrances were found to have been annotated on the certificate of title. Neither were private

respondents aware of any adverse claim or lien on the property other than the adverse claim of a

certain Geneva Galupo to whom Guillermo Comayas had mortgaged the subject property.

Considering therefore that private respondents exercised the diligence required by law in

ascertaining the legal status of the Torrens title of Guillermo Comayas over the subject property and

found no flaws therein, they should be considered as innocent purchasers for value and in good faith.

Alfredo and Annabelle Lumo as the true and rightful owners of the disputed property is

affirmed.

MACTAN-CEBU INTERNATIONAL G.R. No. 171535

AIRPORT AUTHORITY, Petitioner,

Present: PUNO, C.J., Chairperson, - versus - CARPIO, CORONA, LEONARDO-DE CASTRO, and

BERSAMIN, JJ.

SPOUSES EDITO and MERIAN

TIROL and SPOUSES ALEJANDRO Promulgated: and MIRANDA NGO, Respondents. June 5, 2009

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D E C I S I O N

PUNO, C.J.:

Spouses Edito and Merian Tirol and Spouses Alejandro and Miranda Ngo

filed a complaint against petitioner Mactan-Cebu International Airport Authority

(MCIAA) for quieting of title.

The instant appeal revolves around a certain parcel of land, Lot No. 4763-D, over which the parties to the above-entitled case assert ownership and possession.

xxx xxx xxx

Plaintiffs-appellees and business partners, Edito P. Tirol and Alejandro Y. Ngo, along with their respective spouses, claim to have purchased a 2,000 square meter parcel of land, Lot No. 4763-D, from a certain Mrs. Elma S. Jenkins, a Filipino citizen married to a certain Mr. Scott Edward Jenkins, an American citizen, per Deed of Absolute Sale . Plaintiffs-appellees bought the said property on the strength of the apparent clean title of vendor Jenkins as evidenced by the Tax Declaration and Transfer Certificate of Title No. 18216, all under Mrs. Elma Jenkins’ name, which bear no annotation of liens, encumbrances, lis pendens or

any adverse claim whatsoever. After the sale wherein plaintiffs-appellees were purportedly purchasers for value and in good faith, they succeeded in titling the said lot under their names and further proceeded to pay realty taxes thereon. The plaintiffs-appellees discovered a cloud on their title when their request for a Height Clearance with the Department of Transportation and Communications was referred to the defendant-appellant Mactan[-]Cebu International Airport Authority (MCIAA, for brevity), on account of the latter’s ownership of the said lot by way of purchase thereof dating far back to 1958.

At this point, it becomes imperative to trace the chain of ownership over Lot No. 4763-D. It is undisputed that the original owners of said property were the spouses Julian Cuison and Marcosa Cosef, who owned the entire Lot No. 4763, of which Lot No. 4763-D is a portion of. According to plaintiffs-appellees: Originally, the entire Lot No. 4763 was decreed in the names of spouses Julian Cuison and Marcosa Cosef under the provisions of the Land Registration Act on June 1, 1934. [In] January 1974, spouses Julian Cuison and Marcosa Cosef sold Lot No. 4763 to Spouses Moises Cuizon and Beatriz Patalinghug. The latter spouses thereafter succeeded to secure the reconstitution of Original Certificate of Title of Lot No. 4763, Opon Cadastre as evidenced by Court Order. Said Court Order subsequently became final and executory thus a reconstituted title was issued in the name of the original owners-spouses Julian Cuison and Marcosa Cosef. The Deed of Absolute Sale between spouses Julian Cuison/Marcosa Cosef and spouses Moises Cuizon/Beatriz Patalinghug was registered and annotated on OCT No. RO-2754, which was cancelled to give way to the issuance of TCT No. 16735 in the name of spouses Moises Cuizon and Beatriz Patalinghug. Thereafter, the latter sold a portion, denominated as Lot No. 4763-D, to Mrs. Elma Jenkins on December 15, 1987, who[,] as earlier discussed, sold the same lot to herein plaintiffs-appellees on September 15, 1993. Plaintiffs-appellees contend that all throughout the chain of ownership, the titles – albeit from a reconstituted one – of the previous owners were absolutely devoid of any annotations of liens, encumbrances, lis pendens, adverse claim, or anything that may cause a reasonable man of ordinary prudence and diligence to suspect the contrary. Furthermore, plaintiffs-appellees have been in actual, uninterrupted and peaceful possession of the property since 1993, and if the possession of their predecessors-in-interest be tacked, plaintiffs-appellees would be in constructive, uninterrupted and peaceful possession for sixty-two (62) long years as of the date of filing their Complaint for Quieting of Title in the court a quo.

The original owners, spouses Julian Cuison and Marcosa Cosef sold Lot No. 4763 to the government, through the [then] Civil Aeronautics Administration (CAA, for brevity). In a Certificate, vendor Julian Cuison confirmed that he was the possessor and actual owner of Lot No. 4763 which was located within the

“Mactan Alternate International Airport” and that the duplicate copy of the certificate of title was lost or destroyed during the last war without him or his predecessor(s)-in-interest having received a copy thereof. Since then, the government, through defendant-appellant MCIAA, has been in open, continuous, exclusive and adverse possession of the property in the concept of owner. In paragraph 5 of the same Deed of Absolute Sale, the parties also agreed that the property be registered under Act 3344 pending the reconstitution and issuance of title. Purportedly, in gross and evident bad faith and in open violation of their Deed of Absolute Sale, the spouses Julian Cuison and Marcosa Cosef again sold the same property to spouses Moises Cuizon and Beatriz Patalinghug, who in turn sold the lot to Mrs. Elma Jenkins, who eventually sold the same to herein plaintiffs-appellees. Defendant-appellant MCIAA further imputes bad faith to plaintiffs-appellees under the rationale that because their title came from a reconstituted one and that Lot No. 4763 was within the Clear Zone of Runway 22 of the airport, plaintiffs-appellees should have exerted effort in researching the history of ownership and cannot possibly claim to be innocent of MCIAA’s ownership and possession thereof.

Trial Court ruled in favor of petitioner MCIAA. o MCIAA, is adjudged as (sic) the lawful owner of the entire Lot 4763, Opon

Cadastre. o The Deed of Absolute Sale involving Lot 4763-D in favor of plaintiffs is null

and void. o Transfer Certificate of Title No. 27044 for Lot 4763-D under the names of

plaintiffs is null and void. o The Register of Deeds is directed to issue to the defendant MCIAA a

transfer certificate of title covering the whole Lot 4763.

The trial court held that there was a valid transfer of title from Spouses Julian

Cuison and Marcosa Cosef to the Civil Aeronautics Administration (CAA), and

accordingly, the respondents did not buy Lot No. 4763-D from a person who could

validly dispose of it. Likewise the government (through the CAA, and now

respondent MCIAA) has been in possession of the disputed land since it bought

the same in 1958, when a public deed of absolute sale was executed in its favor.

Lastly, respondents were considered as having bought Lot No. 4763-D in bad faith

since they ignored circumstances that should have made them curious enough to

investigate beyond the four corners of the Transfer Certificate of Title.

Respondents filed their Motion for Reconsideration and a

Supplemental (sic) to Motion for Reconsideration. Petitioner duly filed its

Opposition to the said Motions.

In an Order, the trial court did a complete volte face and reversed its

Decision.

ISSUE:

Between respondents Spouses Tirol and Spouses Ngo, on the one hand,

and petitioner MCIAA, on the other, who has the superior right to the subject

property?

HELD:

We rule in favor of the respondents.

Preliminarily, reliance on Article 1544 of the New Civil Code is misplaced.

The requisites that must concur for Article 1544 to apply, viz.:

(a) The two (or more) sales transactions must constitute valid sales;

(b) The two (or more) sales transactions must pertain to exactly the same

subject matter;

(c) The two (or more) buyers at odds over the rightful ownership of the

subject matter must each represent conflicting interests; and

(d) The two (or more) buyers at odds over the rightful ownership of the

subject matter must each have bought from the very same seller.

Said provision has no application in cases where the sales involved were

initiated not by just one vendor but by several successive vendors. In the instant

case, respondents and petitioner had acquired the subject property from

different transferors. Petitioner, through its predecessor-in-interest (CAA),

acquired the entire Lot No. 4763 from its original owners, spouses Julian Cuison

and Marcosa Cosef. On the other hand, respondents acquired the subject parcel

of land from Mrs. Elma Jenkins, another transferee, some thirty-five years later.

The immediate transferors of Elma Jenkins were the spouses Moises Cuizon and

Beatriz Patalinghug who, in turn, obtained the subject property from spouses

Julian Cuison and Marcosa Cosef. Therefore, the instant controversy cannot be

governed by Article 1544 since petitioner and respondents do not have the same

immediate seller.

Well-settled is the rule that registration of instruments must be done in the

proper registry in order to effect and bind the land. Prior to the Property

Registration Decree of 1978, Act No. 496 (or the Land Registration Act) governed

the recording of transactions involving registered land, i.e., land with

a Torrens title. On the other hand, Act No. 3344, as amended, provided for the

system of recording of transactions over unregistered real estate without

prejudice to a third party with a better right. Accordingly, if a parcel of land

covered by a Torrens title is sold, but the sale is registered under Act No. 3344

and not under the Land Registration Act, the sale is not considered registered and

the registration of the deed does not operate as constructive notice to the whole

world.

The fact that petitioner MCIAA was able to register its Deed of Absolute

Sale under Act No. 3344 is of no moment, as the property subject of the sale is

indisputably registered land. Section 50 of Act No. 496 in fact categorically states

that it is the act of registration that shall operate to convey and affect the land;

absent any such registration, the instrument executed by the parties remains only

as a contract between them and as evidence of authority to the clerk or register

of deeds to make registration, viz.:

SECTION 50. An owner of registered land may convey, mortgage, lease, charge, or otherwise deal with the same as fully as if it had not been registered. He may use forms of deeds, mortgages, leases, or other voluntary instruments like those now in use and sufficient in law for the purpose intended. But no deed, mortgage, lease, or other voluntary instrument, except a will, purporting to convey or affect registered land, shall take effect as a conveyance or bind the land, but shall operate only as a contract between the parties and as evidence of authority to the clerk or register of deeds to make registration. The act of registration shall be the operative act to convey and affect the land, and in all cases under this Act the registration shall be made in the office of register of deeds for the province or provinces or city where the land lies. (italics supplied)

Hence, respondents may not be characterized as buyers in bad faith for

having bought the property notwithstanding the registration of the first Deed of

Absolute Sale under Act No. 3344. An improper registration is no registration at

all. Likewise, a sale that is not correctly registered is binding only between the

seller and the buyer, but it does not affect innocent third persons.

Furthermore, under the established principles of land registration, a person

dealing with registered land may generally rely on the correctness of a certificate

of title and the law will in no way oblige him to go beyond it to determine the

legal status of the property, except when the party concerned has actual

knowledge of facts and circumstances that would impel a reasonably cautious

man to make such inquiry. Applying this standard to the facts of this case, we rule

that respondents exercised the required diligence in ascertaining the legal

condition of the title to the subject property as to be considered innocent

purchasers for value and in good faith.

IN VIEW WHEREOF, the Petition is hereby DENIED. The May 27, 2005

Decision and the February 17, 2006 Resolution of the Court of Appeals are

AFFIRMED.