G.R. No. L-5695, December 2, 1911
GREGORIO MADARIAGA, ET AL., plaintiffs-appellees, vs. MANUEL CASTRO, defendant-appellant. MANUEL RUIZ and EUSEBIO TIONGSON, ET AL., interveners-appellants.

FACTS

In 1902, plaintiffs (Gregorio Madariaga, et al.) filed a suit against Manuel Castro to recover six parcels of land in Ilocos Norte. They alleged that they, along with others, had an agreement with Fructuoso Castro (Manuel’s father) to have the land titles adjusted. Fructuoso applied for a government grant in 1890 but had the patent issued solely in his name in 1891 (registered in 1895). Upon Fructuoso’s death, Manuel inherited the land and dispossessed the plaintiffs. Manuel later sold the land to Manuel Ruiz in 1896. Interveners (Eusebio Tiongson, et al.) also claimed ownership. Two related cases (No. 53 and No. 356) were consolidated. The trial court declared the government grant to Fructuoso null and void, annulled the sale to Ruiz, and declared the land property of the State, ordering the cancellation of the registered title.

ISSUE

Whether the trial court erred in declaring the government grant null and void and the land property of the State, and in annulling the registered title and subsequent sale.

RULING

Yes. The Supreme Court reversed the trial court’s decision.
1. The government grant issued to Fructuoso Castro was duly inscribed in the property register. The unrecorded agreement between Fructuoso and third parties (plaintiffs and interveners) cannot affect the rights of Manuel Ruiz, who purchased the land in good faith from Manuel Castro, the registered owner. Ruiz’s rights as an innocent purchaser for value are protected under the principle of indefeasibility of torrens title.
2. The trial court exceeded its authority by declaring the land property of the State, as the State was not a party to the action and did not seek cancellation of the title.
3. The appointment of a receiver was unjustified. The possession of the land should be returned to Manuel Ruiz.
The Court ordered the receiver discharged and the land returned to Ruiz. No costs awarded.