G.R. Nos. L-47859 & L-57132 July 10, 1981
SAN MAURICIO MINING COMPANY, MARSMAN AND COMPANY, INC., and PEDRO L. MOYA, petitioners-appellants, vs. HONORABLE CONSTANTE A. ANCHETA, as Presiding Judge of Branch III, Court of First Instance of Camarines Norte, PHILIPPINE SMELTERS CORPORATION, NATIONAL SHIPYARDS AND STEEL CORPORATION, DIRECTOR OF LANDS, COMMISSIONER OF LAND REGISTRATION and REGISTER OF DEEDS OF CAMARINES NORTE, respondents-appellees.

FACTS

The controversy involves a parcel of land in Camarines Norte titled in the name of respondent Philippine Smelters Corporation (SMELTERS), which acquired it from the National Shipyards and Steel Corporation (NASSCO). Petitioners San Mauricio Mining Company (SAN MAURICIO) and Marsman & Company, Inc. (MARSMAN) asserted a prior claim to the property. They based this on a 1957 deed where SAN MAURICIO sold “surface rights” to NASSCO, allegedly with a collateral verbal agreement for repurchase, and subsequent purported retransfer deeds from NASSCO to them in 1973 and 1975. They also claimed pre-existing mining rights under the Act of Congress of July 1, 1902. SMELTERS filed an action for removal of a cloud on its title, leading to the consolidated appeals.

ISSUE

The primary issue is whether the petitioners’ adverse claim, based on the alleged repurchase agreements and pre-existing mining rights, constitutes a valid cloud on SMELTERS’ Torrens title, thereby entitling SMELTERS to the relief sought.

RULING

The Supreme Court affirmed the trial court’s decision in favor of SMELTERS. The legal logic rests on the supremacy of the Torrens system and the specific legal effects of subsequent presidential issuances. The Court found the petitioners’ claim of a collateral repurchase agreement legally insubstantial as it was merely verbal and unenforceable against a registered innocent purchaser for value. More critically, the Court ruled that any pre-existing mining rights petitioners might have held were extinguished by Proclamation No. 500 and Presidential Decree No. 837. These laws withdrew the land from the public domain, reserved it for NASSCO’s smelter site, and authorized NASSCO to obtain a Torrens title. This state action vested NASSCO with absolute ownership, free from any prior claims, and conferred upon it the full right to validly transfer the property to SMELTERS. Consequently, the petitioners’ annotations of adverse claim created an illegal cloud on SMELTERS’ indefeasible title, which the court properly ordered removed. The appeal from a related partial judgment was deemed moot.