PURPOSE AND MEANING OF THE TORRENS SYSTEM OF REGISTRATION EFFECTS OF THE TORRENS TITLE:
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Indefeasibility Imprescriptibility Incontrovertible
EXCEPTIONS:
PURPOSE OF THE TORRENS SYSTEM
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To facilitate transactions concerning the l ands Mirror principle – principle – the the face of the title says it all; whatever is not there cannot bind you, but it has EXCEPTIONS
LE G AR DA, pla plaintiff intiff v. SA LEE B Y, defend defenda ant – appellee -
The real purpose of that system is to quiet title to land; to put a stop forever to any question of the legality of the title, except claims which were noted at the time of registration, in the certificate, or which may arise subsequent thereto. That being the purpose of the law, it would seem that once a title is registered the owner may rest secure, without the necessity of waiting in the portals of the court, or sitting in the "mirador de su casa," to avoid the possibility of losing his land. Of course, it cannot be denied that the proceeding for the registration of land under the torrens system is judicial (Escueta vs. .Director of Lands, 16 Phil. Rep., 482). It is clothed with all the forms of an action and the result is final and binding upon all the world. It is an action in rem. (Escueta vs. Director of Lands ( supra); Grey Alba vs. De la Cruz, 17 Phil. rep., 49 Roxas vs. Enriquez, 29 Phil. Rep., 31; Tyler vs. Judges, 175 Mass., 51 American Land Co. vs. Zeiss, 219 U.S., 47.)
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All the world are parties, including including the government. government. After After the registration is complete complete and final and there exists no fraud, there are no innocent third parties who may claim an interest. The rights of all the world are foreclosed by the decree of registration. The government itself assumes the burden of giving notice to all parties. The registration, registration, under the torrens system, does not give the owner any better title title than he had. If he does not already have a perfect title, he cannot have it registered. Fee simple titles only may be registered. The certificate of registration accumulates in open document a precise and correct statement of the exact status of the fee held by its owner. The certificate, in the absence of fraud, is the evidence of title and shows exactly the real interest of its owner. The title once registered, with very few exceptions, should not thereafter be impugned, altered, changed, modified, enlarged, or diminished, except in some direct proceeding permitted by law. Otherwise all security in registered titles would be lost. A registered title cannot be altered, modified, enlarged, or diminished in a collateral proceeding and not even by a direct proceeding, after the lapse of the period prescribed by law. It is well settled that the decree ordering the registration of a particular parcel of land is a bar to future litigation over the same between the same parties. In view of the fact that all the world are parties, it must follow that future litigation over the title is forever barred; there can be no persons who are not parties to the action. This, action. This, we think, is the rule, EXCEPT as to rights which are noted in the certificate or which arise subsequently, and with certain other exceptions which need not be dismissed at present. present. A title once registered cannot be defeated, even by an adverse, open, and notorious tered title title under the torrens torrens s ys tem tem cannot cannot be defea defeate ted d by pres cri ption ption (s ection possession. R egi s tered
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46, A ct No. 496). The title, title, once reg is tered, tered, is notice to the world. world. All pers ons must take take notice. No one can plead plead ig norance of the the reg is tration. tration. -
Hogg, in his excellent discussion of the "Australian Torrens System," at System," at page 823, says: "The general rule is that in the case of two certificates of title, purporting to include the same land, the earlier in date prevails, whether the land comprised in the latter certificate be wholly, or only in part, comprised in the earlier certificate. (Oelkers certificate. (Oelkers vs. Merry, 2 Q.S.C.R., 193; Miller vs. Davy, 7 N.Z.R., 155;
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Lloyd vs. Myfield, 7 A.L.T. (V.) 48; Stevens vs. Williams, 12 V.L. R., 152; Register of Titles, vs. Esperance Land Co., 1 W.A.R., 118.)" Hogg adds however that, "if it can be very clearly ascertained by the ordinary rules of construction relating to written documents, that the inclusion of the land in the certificate of title of prior date is a mistake, the mistake may be rectified by holding the latter of the two certificates of title t o be conclusive." Section 38 of Act No. 496, provides that; "It (the decree of registration) shall be conclusive upon and against all persons, including the Insular Government and all the branches thereof, whether mentioned by name in the application, notice, or citation, or included in the general description "To all whom it may concern." Such decree shall not be opened by reason of the absence, infancy, or other disability of any person affected thereby, nor by any proceeding in any court for reversing judgments or decrees; subject, however, to the right of any person deprived of land or of any estate or interest therein by decree of registration obtained by fraud to file in the Court of Land Registration a petition for review within one year after entry of the decree (of registration), provided no innocent purchaser for value has acquired an interest.
RULING OF THE COURT: We have in this jurisdiction a general statutory provision which governs the right of the ownership of land when the same is registered in the ordinary registry in the name of two persons. Article 1473 of the Civil Code provides, among other things, that when one piece of real property had been sold to two different persons it shall belong to the person acquiring it, who first inscribes it in the registry. This rule, of course, presupposes that each of the vendees or purchasers has acquired title to the land. The real ownership in such a case depends upon priority of registration. While we do not now decide that the general provisions of the Civil Code are applicable to the Land Registration Act, even though we see no objection thereto, yet we think, in the absence of other express provisions, they should have a persuasive influence in adopting a rule for governing the effect of a double registration under said Act. Adopting the rule which we believe to be more in consonance with the purposes and the real intent of the torrens system, we are of the opinion and so decree that in case land has been registered
under the Land Reg is tration Ac t in the name of two different persons , the earlier i n date s hall prevail. -
“The primary and fundamental purpose of the torrens system is to quiet title. If the holder of a certificate cannot rest secure in this registered title then the purpose of the law is defeated.” We have decided, in case of double registration under the Land Registration Act, that the owner of the earliest certificate is the owner of the land. That is the rule between original parties. May this rule be applied to successive vendees of the owners of such certificates? Suppose that one or the other of the parties, before the error is discovered, transfers his original certificate to an "innocent purchaser." The general rule is that the vendee of land has no greater right, title, or interest than his vendor; that he acquires the right which his vendor had, only. Under that rule the vendee of the earlier certificate
would be the owner as agains t the vendee of the owner of the later c ertific ate. -
Sections 38, 55, and 112 of Act No. 496 indicate that the vendee may acquire rights and be protected against defenses which the vendor would not. Said sections speak of available rights in favor of third parties which are cut off by virtue of the sale of the land to an "innocent purchaser." That is to say,
pers ons who had had a rig ht or interes t in land wrong fully i ncluded i n an or ig inal certi fic ate would be unable to enforce s uch rig hts agains t an " innocent purchaser," by virtue of the provis ions of said s ections . -
Rule of Notice By reason of the prior registry there cannot be an innocent purchaser of land included in a prior original certificate and in a name other than that of the vendor, or his successors. We believe the phrase "innocent purchaser," used in said sections, should be limited only to cases where unregistered land has been wrongfully included in a certificate under the torrens system.
When land is once brought under the torrens system, the record of the original certificate and all s ubs equent trans fers thereof is notic e to all the world.
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The holder of the first original certificate and his successors should be permitted to rest secure in their title, against one who had acquired rights in conflict therewith and who had full and complete knowledge of their rights. The purchaser of land included in the second original certificate, by reason of the facts contained in the public record and the knowledge with which he is charged and by reason of his negligence, should suffer the loss, if any, resulting from such purchase, rather than he who has obtained the first certificate and who was innocent of any act of negligence. Once land is registered and recorded under the torrens system, that record alone can be examined for the purpose of ascertaining the real status of the title to the land. It would be seen to a just and equitable rule, when two persons have acquired equal rights in the same thing, to hold that the one who acquired it first and who has complied with all the requirements of the law should be protected.
BIS HOP v. CA -
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A parcel of land in the possession of the petitioners. The entire parcel is registered under the name of the private respondents under a Transfer Certificate Title. Private respondents sued petitioners for the recovery of the possession of the land. The defendants claimed that the lots were part of the public domain and could not have been registered under the Torrens system. All alleged long and continuous possession of the lots and produced tax declarations in their names. Two of them maintained that they had acquired their respective lots by virtue of valid contracts of sale. Another based her claim on inheritance. After the trial, RTC Judge rendered a judgment in favor of the plaintiffs with basis of the Art. 428 of the New Civil Code: Art. 428 — New Civil Code
"The owner has the right to enjoy and dispose of a thing, without other limitations than those established by law. "The owner has also a right of action against the holder and possessor of the thing in order to recover it." There is, therefore, no doubt in law, that the plaintiffs being the registered owners of the land in question have also the corresponding right to the recovery and possession of the same. The defendants who are in physical occupancy of the land belonging to the plaintiffs have no right whatsoever to unjustly withhold the possession of the said land from the plaintiffs. The defendants’ occupancy of the land in question is unlawful and in violation of plaintiffs’ right to the recovery and possession of the land they owned. Tax declarations of the land made in the names of the defendants are not evidence of title, it appearing that the land is already titled to the plaintiffs. The registration of the land in the names of the defendants with the Assessor’s Office for taxation purposes and the payments of real property taxes by the defendants can not and does not defeat the title of the plaintiffs to the land. The fact that the defendants have been in occupancy of the land in question for quite a period of time is of no moment as prescription will not ripen into ownership because the land is covered by a torrens title. Acquisitive prescription will not be available to land titled under Art. 496. The decision was affirmed by the Court of Appeals. SC RULING: The petition has no merit. On the first ground, the Court notes that the private respondents’ title is traceable to an Original Certificate of Title issued way back in 1910 or eighty-two years ago. That certificate is now incontrovertible and conclusive against the whole world. The presumption of regularity applies to the issuance of that certificate. This presumption covers the finding that the land subject of the certificate was private in nature and therefore registrable under the Torrens system. To sustain an action for annulment of a Torrens certificate for being void ab initio, it must be shown that the registration court had not acquired jurisdiction over the
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case and that there was actual fraud in securing the title. 3 Neither of these requirements has been established by the petitioners. No less importantly, an action to invalidate a certificate of title on the ground of fraud prescribes after the expiration of one (1) year from the entry of the decree of registration 4 and cannot now be resorted to by the petitioners at this late hour. As registered owners of the lots in question, the private respondents have a right to eject any person illegally occupying their property. This right is imprescriptible. Even if it be supposed that they were aware of the petitioners’ occupation of the property, and regardless of the length of that possession, the lawful owners have a right to demand the return of their property at any time as long as the possession was unauthorized or merely tolerated, if at all. This right is never barred by laches. Laches In urging laches against the private respondents for not protesting their long and continuous occupancy of the lots in question, the petitioners are in effect contending that they have acquired the said lots by acquisitive prescription. It is
an elementary principle that the owner of a land registered under the Torrens s ys tem cannot lose it by pres cri ption. 5 The land was in fact registered under the Torrens System and such registration was constructive notice to the whole world, including the petitioners. WHEREFORE, the petition is DENIED, with costs against the petitioners. It is so ordered.
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National G rains A uthority v. Intermediate A ppellate Court -
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Petition for review of the decision of the then Intermediate Appellate Court * (now Court of Appeals) dated January 31, 1984, reversing the decision of the Court of First Instance of Laguna and San Pablo City. Spouses Paulino Vivas and Engracia Lizardo, as owners of a parcel of land, sold for P30,000.00 said property in favor of spouses Melencio Magcamit and Nena Cosico, and Amelita Magcamit (herein private respondents) as evidenced by "Kasulatan Ng Bilihang Mabiling Muli." This sale with right to repurchase was recorded in the Office of the Register of Deeds of Laguna. The sale was made absolute by the spouses Vivas and Lizardo in favor of the private respondents for the sum of P90,000.00; P50,000.00 of which was paid upon the execution of the instrument, entitled "Kasulatan Ng Bilihan Tuluyan," after being credited with the P30,000.00 consideration of the "Kasulatan Ng Mabibiling Muli," and the balance of P40,000.00 was to be paid the moment that the certificate of title is issued. From the execution of said Kasulatan, private respondent have remained in peaceful, adverse and open possession of subject property. An Original Certificate of Title No. T-1728 covering the property in question was issued to and in the name of the spouses Vivas and Lizardo without the knowledge of the private respondents and on April 30, 1975, said Spouses executed a Special Power of Attorney in favor of Irenea Ramirez authorizing the latter to mortgage the property with t he petitioner, National Grains Authority. Counsel of the petitioner requested for the foreclosure of the mortgage executed by Irenea Ramirez, for unpaid indebtedness in favor of the petitioner. The Provincial Sheriff caused the issuance of the notice of sale of the property in question, scheduling the public auction sale on June 28, 1974. The petitioner was the highest and successful bidder so that a Certificate of Sale was issued in its favor on the same date b y the Provincial Sheriff. On July 10, 1974, the petitioner in its capacity as attorney-in-fact of the mortgagor sold the subject real property in favor of itself. By virtue of the deed of absolute sale, TCT No. T-75171 of the Register of Deeds for the Province of Laguna was issued in the name of the petitioner on July 16, 1974. It was only in July 1974, that private respondents learned that a title in the name of the Vivas spouses had been issued covering the property in question and that the same property had been mortgaged in favor of the petitioner. Private respondent Nena Magcamit offered to pay the petitioner NGA the amount of P40,000.00 which is the balance of the amount due the Vivas spouses under the terms of the absolute deed of sale but the petitioner refused to accept the payment. On August 13, 1974 petitioner in its reply informed counsel of private respondents that petitioner is now the owner of the property in question and has no intention of disposing of the same. The private respondents, who as previously stated, are in possession of subject property were asked by petitioner to vacate it but the former refused. Petitioner filed a suit for ejectment against private respondents in the Municipal Court of Victoria, Laguna, but the case was dismissed.
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Private respondents filed a complaint before the Court of First Instance against petitioner spouses Vivas and Lizardo, praying that they be declared the owners of the property and be entitled to possess the same, and to reconvey or transfer ownership to them should petitioner be granted ownership. The trial court rendered a judgment in favour of NGA, declaring them to be the lawful owner of the property. Private respondents interposed an appeal to the Intermediate Appellate Court rendering the reversal of the decision of the lower court. Petitioner filed for reconsideration but was denied thereof. Hence, this petition. ISSUE: Whether or not violation of the terms of the agreement between the spouses Vivas and Lizardo, the sellers, and private respondents, the buyers, to deliver the certificate of title to the latter, upon its issuance, constitutes a breach of trust sufficient to defeat the title and right acquired by petitioner NGA, an innocent purchaser for value. Two Deed of Sales on the same land was executed: (1) a conditional sale with right to repurchase which was registered under Act 3344 and (2) deed of absolute sale which was not registered. The condition that a Certificate of Title will be delivered to buyers upon its issuance and payment of the balance. The land in question at the time of the execution of both sales was not yet covered by the Torrens System of Registration. It is axiomatic, that while the registration of the conditional sale with right of repurchase may be
binding on third persons , it is by provis ion of law " understood to be without prejudice to third party who has better r ig ht" ( S ection 194 of the Adminis trative Code, as amended by A ct No. 3344). In this
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case, it will be noted that the third party NGA, is a registered owner under the Torrens System and has obviously a better right than private respondents and that the deed of absolute sale with the suspensive condition is not registered and is necessarily binding only on the spouses Vivas and Lizardo and private respondents. Time and time again, this Court has ruled that the proceedings for the registration of title to land under the Torrens System is an action in rem not in personam, hence, personal notice to all claimants of the res is not necessary in order that the court may have jurisdiction to deal with and dispose of the res . Neither may lack of such personal notice vitiate or invalidate the decree or title issued in a registration proceeding, for the State, as sovereign over the land situated within it, may provide for the adjudication of title in a proceeding in rem or one in the nature of or akin a to proceeding in rem which shall be binding upon all persons, known or unknown (Moscoso vs. Court of appeals, 128 SCRA 719 [1984], citing: City of Manila vs. Lack, et al., 19 Phil. 324, 337; Roxas vs. Enriquez, 29 Phil. 31; Director of Lands vs. Roman Catholic Archbishop of Manila, 41 Phil. 120; Aguilar vs. Caogdan, 105 Phil. 661). It is thus evident that respondents' right over the property was barred by res judicata when the decree of registration was issued to spouses Vivas and Lizards. It does not matter that they may have had some right even the right of ownership, BEFORE the grant of th e Torrens Title. Thus, under Section 44 of P.D. 1529, every registered owner receiving a certificate of title in
purs uance of a dec ree of r eg is tration, and ever y s ubs equent purc has er of r eg is tered land taking a certifi cate of title for value and in g ood faith, s hall hold the s ame free from all encumbrances except those noted on the certificate and any of the encumbrances which may be subsisting, and enumerated in the law. Under said provision, claims and liens of whatever character, except those mentioned by law as existing, against the land prior to the issuance of certificate of title, are cut off by such certificate if not noted thereon, and the certificate so issued binds the whole world, including the government (Aldecoa and Co. vs. Warner Barns & Co., 30 Phil. 209 [1915]; Snyder vs. Fiscal of Cebu and Avila, 42 Phil. 766 [1922]). Under said ruling, if the purchaser is the only party who appears in the deeds and the registration of titles in the property registry, no one except such purchaser may be deemed by law to be the owner of the properties in question (Ibid ). Moreover, no
title to regi s tered land in derog ation to that of the reg is tered owner shall be acqui red by pres cr iption or adverse poss ess ion (Umbay vs. Alecha, 135 SCRA 427 [1985]). -
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It does not appear that private respondents' claim falls under any of the exceptions provided for under Section 44 of P.D. 1529 which can be enforced against petitioner herein. Thus, it has been invariably restated by this Court, that "The real purpose of the Torrens System is to quiet title to land and to stop forever any question as to its legality. "Once a title is registered, the owner may rest secure, without the necessity of waiting in the portals of the court, or sitting on the "mirador su casato," avoid the possibility of losing his land." "An indirect or collateral attack on a Torrens Title is not allowed (Dominga vs. Santos, 55 Phil. 361; Singian vs. Manila Railroad, 62 Phil. 467)." The only exception to this rule is where a person obtains a certificate of title to a land belonging to another and he has full knowledge of the rights of the true owner. He is then considered as guilty of fraud and he may be compelled to transfer the land to the defrauded owner so long as the property has not passed to the hands of an innocent purchaser for value (Angeles vs. Sania, 66 Phil. 444 [1938], emphasis supplied).
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It will be noted that the spouses Vivas and Lizardo never committed any fraud in procuring the registration of the property in question. The question therefore, is not about the validity of OCT No. 1728 but in the breach of contract between private respondents and the Vivas spouses. Petitioner NGA was never a privy to this transaction. Neither was it shown that it had any knowledge at the time of the execution of the mortgage, of the existence of the suspensive condition in the deed of absolute sale much less of its violation. Unquestionably, therefore, the NGA is an innocent purchaser for value, first as an innocent mortgagee under Section 32 of P.D. 1529 and later as innocent purchaser for value in the public auction sale.
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Well settled is the rule that all pers ons dealing with property cov ered by a torrens certi fic ate of title are not required to g o beyond what appears on the face of the title. When there is nothing on the certifi cate of title to indic ate any cloud or vic e in the owners hip of the property, or any encu mbrance thereon, the purchaser is not required to explore further than what the torrens title upon its face indicates in quest for any hidden defect or inchoate right that may subsequently defeat his right thereto (C enteno vs. C ourt of Appeals , 139 SC R A 545 [1985]).
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Where innocent third persons like mortgagee relying on the certificate of title acquire rights over the property, their rights cannot be disregarded (Duran vs. IAC, 138 SCRA 489 [1985]). Under the circumstances, the Regional Trial Court could not have erred in ruling that plaintiffs (private respondents herein) complaint insofar as it prays that they be declared owners of the land in question cannot prosper in view of the doctrine of indefeasibility of title under the Torrens System, because it is an established pri nciple that a peti tion for review of the decr ee of reg is tration will not pros per
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even if fi led within one year from the entry of the decree if the title has pass ed into the hands of an innocent purchaser for value (Pres. Decree No. 1529, Sec. 32). The setting aside of the decree of
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registration issued in land registration proceedings is operative only between the parties to the fraud and the parties defrauded and their privies, but not against acquirers in good faith and for value and the successors in interest of the latter; as to them the decree shall remain in full force and effect forever (Domingo vs. The Mayon Realty Corp. et al., 102 Phil. 32 [19571). Assuming, therefore, that there was fraud committed by the sellers a gainst the buyers in the instant case, petitioner NGA who was not privy therein cannot be made to suffer the consequences thereof As correctly declared by the trial court, the National Grains Authority is the lawful owner of the property in question by virtue of its indefeasible title. As to private respondents' alternative prayer that the declared owner be ordered to reconvey or transfer the ownership of the property in their favor, it is clear that there is absolutely no reason why petitioner, an innocent purchaser for value, should reconvey the land to the private respondents. PREMISES CONSIDERED, the decision of the Court of Appeals is REVERSED and SET ASIDE, and the decision of the Court of First Instance of Laguna and San Pablo City, now Regional Trial Court, is REINSTATED.
– Everyone is notified of the decree or your ownership despite absence of actual knowledge. Everyone is bound, even the government and those who do not have actual knowledge of such. Principle in Land Registration. Constructive Notice
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The Supreme Court applied the mirror principle in the NGA v IAC case. Mirror Principle: You can rely on the face of the title. Exception: If something excites suspicion, any prudent man should go beyond the title and not rely on its face.
DB T Mar B ay Cons truction, Inc. v. Panes -
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A petition for review on certiorari assailing the decision of the Court of Appeals which was reversed and set aside by the Regional Trial Court of Quezon City. A parcel of land. The property is included in Transfer Certificate of Title (TCT) No. 200519,[5] entered on July 19, 1974 and issued in favor of B.C. Regalado & Co. (B.C. Regalado). It was conveyed by B.C. Regalado to petitioner D.B.T. Mar-Bay Construction, Inc. (DBT) through a dacion en pag o [6] for services rendered by the latter to the former. Panes and other respondents filed a Complaint for Quieting of Title with Cancellation of the TCT against Regalado, Mar Bay Realty Inc. In the Complaints, Ricaredo alleged that he is the lawful owner and claimant of the subject property which he had declared for taxation purposes in his name, and assessed in the amount of P2,602,190.00 by the City Assessor of Quezon City as of the year 1985. Respondents alleged that per Certification[10] of the Department of Environment and Natural Resources (DENR) National Capital Region (NCR) dated May 7,
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1992, Lot Plan Psu-123169 was verified to be correct and on file in said office, and approved on July 23, 1948. Respondents also claimed that Ricaredo, his immediate family members, and the other respondents had been, and still are, in actual possession of the portions of the subject property, and their possession preceded the Second World War. To perfect his title in accordance with Act No. 496 (The Land Registration Act) as amended by Presidential Decree (P.D.) No. 1529 (The Property Registration Decree), Ricaredo filed with the RTC of Quezon City, Branch 82 a case docketed as LRC Case No. Q91-011, with LRC Rec. No. N-62563.[11] Respondents averred that in the process of complying with the publication requirements for the Notice of Initial Hearing with the Land Registration Authority (LRA), it was discovered by the Mapping Services of the LRA that there existed an overlapping of portions of the land subject of Ricaredos application, with the subdivision plan of B.C. Regalado. The said portion had, by then, already been conveyed by B.C. Regalado to DBT. Ricaredo asseverated that upon verification with the LRA, he found that the subdivision plan of B.C. Regalado was deliberately drawn to cover portions of the subject property. Respondents claimed that the title used by B.C. Regalado in the preparation of the subdivision plan did not actually cover the subject property. RTC’s RULING:
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RTC Judge Bacalla rendered a decision in favor of the respondents. On September 12, 2000, DBT filed a Motion[25] for Reconsideration, based on the grounds of prescription and laches. DBT also disputed Ricaredos claim of open, adverse, and continuous possession of the subject property for more than thirty (30) years, and asserted that the subject property could not be acquired by prescription or adverse possession because it is covered by TCT No. 200519. While the said Motion for Reconsideration was pending, Judge Bacalla passed away. On November 8, 2001, the RTC, through Judge Juanson, issued an Order [37] reversing the earlier RTC Decision and dismissing the Complaint for lack of merit. The RTC held that prescription does not run against registered land; hence, a title once registered cannot be defeated even by adverse, open or notorious possession. Moreover, the RTC opined that even if the subject property could be acquired by prescription, respondents' action was already barred by prescription and/or laches because they never asserted their rights when B.C. Regalado registered the subject property in 1974; and later developed, subdivided and sold the same to individual lot buyers.
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CA’s RULING:
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On October 25, 2004, the CA reversed and set aside the RTC Orders dated November 8, 2001 and June 17, 2002 and reinstated the RTC Decision dated June 15, 2000. The CA held that the properties described and included in TCT No. 200519 are located in San Francisco del Monte, San Juan del Monte, Rizal and Cubao, Quezon City while the subject property is located in Brgy. Pasong Putik , Novaliches, Quezon City. Furthermore, the CA held that Engr. Vertudazo's testimony that there is a gap of around 1,250 meters between Lot 503 and Psu 123169 was not disproved or refuted. Petitioner filed a Motion for Reconsideration,[42] which was, however, denied by the CA in its Resolution[43] dated February 22, 2005. Hence, this petition. ISSUES: 1) Did the RTC err in upholding DBT's defenses of prescription and laches as raised in the latter's Motion for Reconsideration? 2) Which between DBT and the respondents have a better right over the subject property? RULING: We answer the first question in the affirmative. However, the conclusion reached by the RTC in its assailed Order was erroneous. The RTC failed to consider that the action filed before it was not simply for reconveyance but an action for quieting of title which is imprescriptible. Verily, an action for reconveyance can be barred by prescription. When an action for reconveyance is based on fraud, it must be filed within four (4) years from discovery of the fraud, and such discovery is deemed to have taken place from the issuance of the original certificate of title. On the other hand, an action for reconveyance based on an implied or constructive trust prescribes in ten (10) years
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from the date of the issuance of the original certificate of title or transfer certificate of title. The rule
is that the reg is tration of an ins trument in the Office of the RD cons titutes cons tructive notice to the whole world and therefore the discovery of the fraud is deemed to have taken place at the time of registration. [47]
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However, the prescriptive period applies only if there is an actual need to reconvey the property as when the plaintiff is not in possession of the property. If the plaintiff, as the real owner of the property also remains in possession of the property, the prescriptive period to recover title and possession of the property does not run against him. In such a case, an action for reconveyance, if nonetheless filed, would be in the nature of a suit for quieting of title, an action that is imprescriptible.[48] Although prescription and laches are distinct concepts, we have held, nonetheless, that in some instances, the doctrine of laches is inapplicable where the action was filed within the prescriptive period provided by law. Therefore, laches will not apply to this case, because respondents' possession of the subject property has rendered their right to bring an action for quieting of title imprescriptible and, hence, not barred by laches. Moreover, since laches is a creation of equity, acts or conduct alleged to constitute the same must be intentional and unequivocal so as to avoid injustice. Laches will operate not really to penalize neglect or sleeping on one's rights, but rather to avoid recognizing a right when to do so would result in a clearly inequitable situation.[52] Albeit the conclusion of the RTC in its Order dated November 8, 2001, which dismissed respondents' complaint on grounds of prescription and laches, may have been erroneous, we, nevertheless, resolve the second question in favor of DBT.
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It is a well-entrenched rule in this jurisdiction that no title to registered land in derogation of the rig hts of the regis tered owner shall be acquired by prescri ption or advers e pos s ess ion . [53]
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Article 1126[54] of the Civil Code in connection with Section 4 6[55] of Act No. 496 (The Land Registration Act), as amended by Section 47[56] of P.D. No. 1529 (The Property Registration Decree), clearly supports this rule. Prescription is unavailing not only against the registered owner but also against his hereditary successors. Possession is a mere consequence of ownership where land has been registered under the Torrens system, the efficacy and integrity of which must be protected. Prescription is rightly regarded as a statute of repose whose objective is to suppress fraudulent and stale claims from springing up at great distances of time and surprising the parties or their representatives when the facts have become obscure from the lapse of time o r the defective memory or death or removal of witnesses. [57] Thus, respondents' claim of acquisitive prescription over the subject property is baseless. Under Article 1126 of the Civil Code, acquisitive prescription of ownership of lands registered under the Land Registration Act shall be governed by special laws. Correlatively, Act No. 496, as amended by PD No. 1529, provides that no title to registered land in derogation of that of the registered owner shall be acquired by adverse possession. Consequently, in the instant case, proof of possession by the respondents is immaterial and inconsequential.[58] DBT is an innocent purchaser for value and good faith which, through a dacion en pago duly entered into with B.C. Regalado, acquired ownership over the subject property, and whose rights must be protected under Section 32[61] of P.D. No. 1529. It must also be noted that portions of the subject property had already been sold to third persons who, like DBT, are innocent purchasers in good faith and for value, relying on the certificates of title shown to them, and who had no knowledge of any defect in the title of the vendor, or of facts sufficient to induce a reasonably prudent man to inquire into the status of the subject property. [63] To disregard these circumstances simply on the basis of alleged continuous and adverse possession of respondents would not only be inimical to the rights of the aforementioned titleholders, but would ultimately wreak havoc on the stability of the Torrens system of registration. While the Torrens system is not a mode of acquiring title, but merely a system of registration of titles to lands, justice and equity demand that the titleholder should not be made to bear the unfavorable effect of the mistake or negligence of the State's agents, in the absence of proof of his complicity in a fraud or of manifest damage to third persons. The real purpose of the Torrens system is to quiet title to land and put a stop forever to any question as to the legality of the title, except claims that were noted in the certificate at the time of the registration or that may arise subsequent thereto.
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Otherwise, the integrity of the Torrens system would forever be sullied by the ineptitude and inefficiency of land registration officials, who are ordinarily presumed to have regularly performed their duties.[64] Thus, where innocent third persons, relying on the correctness of the certificate of title thus issued, acquire rights over the property, the court cannot disregard those rights and order the cancellation of the certificate. The effect of such outright cancellation will be to impair public confidence in the certificate of title. The sanctity of the Torrens system must be preserved; otherwise, everyone dealing with the property registered under the system will have to inquire in every instance on whether the title had been regularly or irregularly issued, contrary to the evident purpose of the law. Every person dealing with the registered land may safely rely on the correctness of the certificate of title issued therefor, and the law will in no way oblige him to go behind the certificate to determine the condition of the property .[65] -
WHEREFORE, the instant Petition is GRANTED and the assailed Court of Appeals Decision dated October 25, 2004 is hereby REVERSED and SET new judgment is hereby ASIDE. A entered DISMISSING the Complaint filed by the respondents for lack of merit.
The registration of the CS on the Registry of Deeds is the reckoning of the one year period. Equity of Redemption – refer to law on Sales Consolidation – ownership is transferred to the highest bidder Land Registration Authority - agency in charge of the registration of lands under the Torrens System; central repository of lands titled under the Torren System Reconstitution – if a copy or copies of title is destroyed (owner’s and vendor’s copy) Replacement under Sec. 109 OF PD 1529 – if Owner’s Duplicate Copy
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DBT is a case of overlapping lands and titles. In connection to the Torrens Title, titles registered shall not be disturbed especially that it has passed to purchasers in good faith. The Land Registration Authority and Bureau of Lands have the jurisdiction or authority to approve the Original Subdivision Plan.
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