GR 45848; (September, 1938) (Digest)
G.R. No. 45848 ; September 30, 1938
Government of the Philippine Islands, Tomas Balandra, and Levy Hermanos, Inc. vs. Menzi and Co., Inc., et al.
FACTS
In a cadastral proceeding, Lot No. 1237 was erroneously registered in the name of Manuel Consing (and his spouse) instead of Cristeta Ibañez, while the adjacent Lot No. 1238 was erroneously registered in the name of Cristeta Ibañez instead of Manuel Consing. Subsequently, Lot No. 1237 (registered under Consing) was sold at a public auction to Tomas Balandra by virtue of an execution, and a transfer certificate of title was issued to him. Lot No. 1238 (registered under Ibañez) was mortgaged by Ibañez to Levy Hermanos, Inc., foreclosed, and purchased by Levy Hermanos at a public auction, with a transfer certificate of title issued in its name. Later, Ibañez filed a motion in the cadastral case, without notifying the interested parties (Balandra and Levy Hermanos), to correct the error by swapping the titles. The court granted the motion, ordering the cancellation of the existing certificates and the issuance of new ones, effectively transferring Lot No. 1237 to Ibañez (who then mortgaged it to Menzi & Co., later assigned to Asuncion Monfort) and Lot No. 1238 to Consing. Balandra and Levy Hermanos appealed.
ISSUE
Whether the court order directing the exchange of certificates of title between the lots, without notice to the subsequent innocent purchasers for value, is valid.
RULING
No. The order is null and void. The court reversed the order and directed the reinstatement of the titles of the innocent purchasers. The Torrens system’s principles of indefeasibility and conclusiveness of title protect purchasers in good faith who rely on the certificate of title. Balandra and Levy Hermanos, Inc. were such purchasers for value at a public auction, acquiring valid titles. The proper remedy for the original error was an action for damages against the assurance fund under Section 102 of Act No. 496 (the Land Registration Act), not an order that would divest innocent third parties of their acquired rights. The court also held the order violated due process as it was issued without notice to the affected parties.
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