G.R. No. 125585 ; June 8, 2005
HEIRS OF EDUARDO MANLAPAT, represented by GLORIA MANLAPAT-BANAAG and LEON M. BANAAG, JR., Petitioners, vs. HON. COURT OF APPEALS, RURAL BANK OF SAN PASCUAL, INC., and JOSE B. SALAZAR, CONSUELO CRUZ and ROSALINA CRUZ-BAUTISTA, and the REGISTER OF DEEDS of Meycauayan, Bulacan, Respondents.

FACTS

The case involves Lot No. 2204, originally owned by Eduardo Manlapat under a free patent and OCT No. P-153(M) issued in 1976. In 1954, before the land was titled, Eduardo sold a 553-square-meter portion to Ricardo Cruz, evidenced by a notarized “Kasulatan.” This deed was registered in 1963. In 1981, Eduardo sold an additional 50-square-meter right of way to Ricardo. Both Eduardo and Ricardo died without the sales being annotated on the title. In 1981, petitioners mortgaged the entire lot to respondent Rural Bank of San Pascual (RBSP), depositing the owner’s duplicate certificate of title.
Upon learning of their rights, Ricardo’s heirs, respondents Cruz, sought to secure separate titles. They borrowed the owner’s duplicate title from RBSP’s manager, Jose Salazar, upon presenting the old deed of sale and offering a substitute collateral. Relying on advice from the Register of Deeds, they submitted the title, deeds, and an approved subdivision plan, leading to the cancellation of the OCT and the issuance of two new TCTs: one for the Cruz portion and another for the remaining area in Eduardo’s name.

ISSUE

Whether the Court of Appeals erred in reversing the trial court and upholding the validity of the new Transfer Certificates of Title issued in the names of the Cruz heirs and the Heirs of Eduardo Manlapat.

RULING

The Supreme Court affirmed the Court of Appeals and upheld the validity of the new titles. The legal logic is anchored on the nature of the transaction and the absence of fraud. The Cruzes were the rightful owners of the sold portions by virtue of the valid, pre-existing deeds of absolute sale executed by Eduardo Manlapat himself. Their act of presenting the owner’s duplicate certificate to the Register of Deeds was not for the purpose of transferring ownership—which had already passed to them upon the execution of the sales—but to legally segregate and register the titles according to the existing ownership. This was a ministerial duty of the Register of Deeds upon presentation of the requisite documents, including the owner’s duplicate certificate. The Court found no evidence of fraud or bad faith on the part of the Cruzes or RBSP manager Salazar. Salazar’s act of releasing the title was based on the Cruzes’ proven equitable ownership and was secured by substitute collateral. Consequently, the cancellation of the OCT and issuance of the new TCTs merely reflected the long-completed transfers of ownership and corrected the technical omission in the title. The petitioners, having sold the portions years earlier, suffered no damage warranting the nullification of the titles.