GR L 2333; (February, 1906) (Digest)
G.R. No. L-2333
FACTS:
Edward B. Merchant applied for the registration of a tract of land in Tanduay, Manila, based on a deed of sale from Martiniano M. Veloso, who was previously declared the owner of the land by this Court in Veloso vs. Naguit. However, prior to this, Fernando Zamora had secured a precautionary entry (anotacion preventiva) in the new property registry in 1893, which was later converted into a definite inscription. Zamora sold the land to Aguedo Velarde, who also obtained a precautionary entry. Velarde subsequently sold the property to Manuel Roxas, who then conveyed it through a series of transfers to Abelardo Lafuente. All these latter deeds were duly recorded in the new registry. Lafuente opposed Merchant’s application, claiming ownership. It was established that at the time of Zamora’s and Velarde’s initial entries, Veloso was the true owner. Veloso’s title was recorded only in the old registry (anotaduria) and was never transferred to the new registry established under the Mortgage Law.
ISSUE:
Whether the unrecorded title of Veloso (and his successor, Merchant) in the old registry prevails over the registered title of Lafuente, who derived his claim from entries in the new registry.
RULING:
No. The rights of the subsequent purchaser in good faith, Lafuente, acquired through the new registry, prevail over the unrecorded prior title of Veloso/Merchant. Under Article 34 of the Mortgage Law, acts executed by a person who, according to the registry, has the right to do so, shall not be invalidated with regard to third persons after being recorded, even if the grantor’s right is later annulled by a prior unrecorded deed. Since Veloso’s ownership was not transferred to the new registry, it produced no effect against third persons like Lafuente. The law required the transfer of old entries to the new registry to affect third parties. Veloso’s failure to do so, while a third party relied on the clean record of the new registry, resulted in the loss of his right to defeat that third party’s acquired title. The judgment denying Merchant’s application for registration was affirmed.