G.R. No. L-32128 August 3, 1978
SOCORRO M. ORLINO, AUGUSTO ORLINO, LUIS ORLINO, SANTIAGO ORLINO and MAGIN ORLINO, plaintiffs-appellants, vs. PHILIPPINE NATIONAL BANK (Dagupan Branch), defendant-appellee.

FACTS

The dispute involves a parcel of land originally possessed by Candido Orlino, who filed a free patent application. In 1925, Candido exchanged this land with another owned by Aniceto Orlino, but the Bureau of Lands was not informed. Aniceto took possession. After Candido’s death, a free patent was issued in 1956 to the “Heirs of Candido Orlino,” and an Original Certificate of Title was issued. Through alleged manipulation, individuals named Federico Cabais, Juan Conde, and Feliciano Conde, using the surname Orlino, executed an extrajudicial partition as Candido’s heirs, obtained a Transfer Certificate of Title, mortgaged the land to Philippine National Bank (PNB), and defaulted. PNB foreclosed and purchased the land at auction in 1961.
Meanwhile, the heirs of Aniceto Orlino (the appellants) filed a protest with the Bureau of Lands in 1957, seeking cancellation of the free patent, which resulted in a notice of lis pendens annotated on the title in 1959, after the mortgage was executed but before the foreclosure sale. The Director of Lands, in a 1962 decision, ruled the patent was wrongfully issued and that the land should be reverted to the government. The appellants also filed a prior reconveyance suit (Civil Case No. A-399) against the impostors and PNB, which was dismissed because the court found PNB to be a mortgagee in good faith. That dismissal was affirmed by the Supreme Court.

ISSUE

Whether the heirs of Aniceto Orlino have a valid cause of action for legal redemption against the Philippine National Bank.

RULING

No. The Supreme Court affirmed the dismissal of the complaint, holding the appellants had no cause of action for legal redemption against PNB. The legal logic is clear: a right of legal redemption presupposes a specific legal relationship, such as that of a co-owner, which was absent here. The appellants were never the registered owners of the land. Their claim derived from Aniceto Orlino, who was not the patent applicant. Critically, the Director of Lands’ decision did not recognize their ownership but instead ordered reversion of the land to the government, negating any basis for a redemption right. Furthermore, the finality of the decision in Civil Case No. A-399, which upheld PNB’s status as a mortgagee and later purchaser in good faith, barred this subsequent action. The Court emphasized that the Torrens system protects innocent purchasers for value; since the mortgage was executed before the lis pendens annotation and the title was clean at that time, PNB’s rights were indefeasible. The appellants’ proper recourse, if any, was an action for damages against the impostors who defrauded them, not a redemption claim against the bank, which acquired valid title. The action was correctly dismissed.