EN BANC

G.R. No. 47566; July 3, 1942

THE DIRECTOR OF LANDS, petitioner,

vs.
BASILIO ABACHE, ET AL., claimants;

SANTIAGO, movant-appellee,

vs.

LUIS MENESES, oppositor-appellant.

Luis Meneses in his own behalf.
Calleja & Sierra for appellee.

MORAN, J.:

In a cadastral proceeding in the Court of First Instance of Albay, Lina F. de Vda. Imperial and Santiago Imperial, mother and son, appeared and claimed lot No. 8305, the latter asserting ownership and the former her usufructuary right as widow. After hearing at which Santiago Imperial appeared as the sole witness for the claimants, the court awarded to them the said property. However, in the written decision subsequently rendered the lot was awarded in favor of Inocencio, Simeona, David, Constancio Salvacion and Solomon, all surnamed Adornado, who had neither presented any claim nor appeared at the trial, and, thereafter, original, certificate of title No. 15150 was issued in their names. The lot was later mortgaged by the Adornados to Luis Meneses. Santiago Imperial filed a motion asking that said certificate of title and the lien noted thereon be declared null and void and that a new certificate of title be issued in his favor, her mother having died.

Upon the authority of Laureano vs. Stevenson (45 Phil., 252) and Government of the Philippines vs. Trino (50 Phil., 763), we affirmed the order on appeal wherein certificate of title No. 15150 was declared null and void as well as the lien noted thereon in favor of Luis Meneses and a new certificate title ordered issued in the name of Santiago Imperial. Luis Meneses moved for reconsideration praying that the ruling laid down in the two cases above cited be reexamined and abandoned. We granted the motion and, after a careful deliberation, we have decided to modify the ruling.

We still hold that, in registration proceedings, a cadastral court has no authority to award a property in favor of persons who have put in no claims to it and have never asserted any right of ownership thereover, and the certificate of title issued under the circumstances to such persons would be declared null and void. Where, however, innocent third persons, relying on the correctness of the certificate of title thus issued, acquire rights over the property, the court cannot disregard such rights and other the total cancellation of the certificate. The effect of such an outright cancellation would be to impair public confidence in the certificates of title, for everyone dealing with property registered under the Torrens System would have to inquire in every instance as to whether the title has been regularly or irregularly issued by the court. And this is contrary to the evident purpose of the law. Section 39 of Act No. 496 provides that every person receiving a certificate of title in pursuance of a decree of registration, and every subsequent purchaser of registered land who takes a certificate of title for value in good faith, shall hold the same free of all encumbrance except those noted on said certificate. We have heretofore emphasized, and do so now, that every person dealing with 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.

Modifying the judgment rendered in this case, we declare null and void certificate of title No. 15150 issued in favor of the Adornados and order that a new certificate of title to be issued in favor of Santiago Imperial, but subject to the mortgage lien of Luis Meneses which appears duly noted in the certificate to be cancelled. Luis Meneses may, in a single complaint, sue the Adornados and Santiago Imperial for the collection of his mortgage credit, the former as primary obligors and the latter as owner of the property mortgaged, without prejudice to any right which Santiago Imperial may have against the assurance fund. We make no, pronouncement as to costs in this instance.

Yulo, C.J., Ozaeta, Paras and Bocobo, JJ., concur.

Batas Pinas