G.R. No. 161380 . April 21, 2014.
AZNAR BROTHERS REALTY COMPANY, Petitioner, vs. SPOUSES JOSE AND MAGDALENA YBAÑEZ, Respondents.

FACTS

Petitioner Aznar Brothers Realty Company purchased an unregistered agricultural land from Casimiro Ybañez in 1964. In 1967, it also purchased an adjacent parcel from Saturnino Tanuco, which Tanuco had received from his father-in-law Angel Abellana and was described as “Lot No. 18563.” Casimiro died in 1968. In 1977, his heirs executed an Extrajudicial Declaration of Heirs with Extrajudicial Settlement of Estate and Deed of Absolute Sale, adjudicating among themselves and then selling “Lot No. 18563” to their co-heir, Adriano Ybañez. In 1978, Adriano sold this lot to respondent Jose Ybañez. In 1979, Jose Ybañez obtained a free patent over the land, and Original Certificate of Title (OCT) No. 2150 was issued in his name. In 1989, Aznar Brothers filed a complaint seeking to nullify the extrajudicial settlement and subsequent sale, cancel OCT No. 2150, and recover ownership of Lot No. 18563, claiming it was the same land it had purchased earlier and was thus private property, not public land subject to a free patent. The Regional Trial Court dismissed the complaint, declaring the Spouses Ybañez as the legal owners. The Court of Appeals affirmed the dismissal but deleted the award of damages.

ISSUE

Whether the Spouses Ybañez, as holders of a Torrens title (OCT No. 2150) issued pursuant to a free patent, have a superior right of ownership over Lot No. 18563 as against Aznar Brothers, which claims ownership based on prior deeds of sale registered under Act No. 3344 .

RULING

The Supreme Court DENIED the petition and AFFIRMED the decision of the Court of Appeals. The Spouses Ybañez, as registered owners under the Torrens system, have a superior right.
1. Torrens Title vs. Unregistered Deeds: A Torrens certificate of title is conclusive evidence of ownership and is entitled to greater weight than a mere tax declaration or a deed of sale registered only under Act No. 3344 (the system for recording instruments affecting unregistered lands). The title of the Spouses Ybañez, being registered, prevails over the unregistered claims of Aznar Brothers.
2. Indefeasibility of Title: A title originating from a free patent becomes indefeasible one year after its issuance. Aznar Brothers filed its action ten years after OCT No. 2150 was issued, making its attack on the title belated and barred.
3. Identity of the Land: The Court found that the land purchased by Aznar Brothers from Casimiro Ybañez in 1964 and the land subject of OCT No. 2150 were not identical. The 1964 deed described boundaries different from those in OCT No. 2150. Furthermore, the land Aznar Brothers bought from Tanuco in 1967, while referred to as “Lot No. 18563” in an affidavit, was not conclusively proven to be the same “Lot No. 18563” covered by the title. The technical description in the Torrens title controls.
4. Free Patent and Public Land: The grant of a free patent by the State carries the presumption that the land was public. For Aznar Brothers to nullify the patent and title, it had the burden to present clear and convincing evidence that the land was already private (i.e., acquired by a valid title from the State or its predecessors-in-interest) at the time of the patent application. Aznar Brothers failed to overcome this presumption. Its tax declarations and unregistered deeds are not conclusive evidence of ownership.
5. Laches and Estoppel: Aznar Brothers was negligent in not registering its deeds under the Property Registration Decree or not opposing the free patent application. Its inaction for ten years after the title was issued constituted laches.
6. Collateral Attack: An action for reconveyance or recovery of ownership based on a prior right is not a collateral attack on a Torrens title, as it seeks to transfer the title, not nullify it. However, in this case, Aznar Brothers failed to establish a superior right that would warrant reconveyance.
Therefore, the registered title of the Spouses Ybañez was upheld.