G.R. No. L-21166 September 15, 1967
Bonifacio Gestosani, Hospicio Cunanan, et al., plaintiffs-appellants, vs. Insular Development Company, Inc. and the Register of Deeds of Davao, defendants-appellees.

FACTS

Plaintiffs-appellants, Bonifacio Gestosani, Hospicio Cunanan, and more than thirty others, filed an amended petition (complaint) in the Court of First Instance of Davao seeking: (1) annulment of Transfer Certificate of Title No. TT-9810 issued in the name of defendant Insular Development Company, Inc.; (2) cancellation of said title by the Register of Deeds; (3) a declaration that they had acquired the land (Lot No. 1926, formerly part of Lot No. 512 of the Davao Cadastre) by acquisitive prescription; or, alternatively, (4) a declaration that the land is public domain with preferential rights granted to them as occupants; and (5) damages. They alleged that the issuance of Decree No. N-79289 and the subsequent Original Certificate of Title No. 140 in the name of Maria F. Villa Abrille (predecessor-in-interest) and Transfer Certificate of Title No. TT-9810 were fraudulent and illegal. They claimed to be bona fide occupants who had cultivated the land since time immemorial.
Defendant Insular Development Company, Inc. moved to dismiss on grounds of: (1) litis pendentia (another action pending between the same parties for the same cause); (2) prescription of the cause of action; and (3) failure to state a cause of action. The lower court granted the motion and dismissed the case, ruling that as mere occupants without proprietary interest, plaintiffs could not bring an action for annulment of title, and that a pending action (CA- G.R. No. 22856 -R) between the parties over the same property existed.

ISSUE

Whether the lower court erred in dismissing the amended petition (complaint) on the grounds that: (1) plaintiffs have no right to bring an action for annulment of the certificate of title; (2) there is a pending action between the parties over the same property; and (3) the complaint fails to state a cause of action.

RULING

The Supreme Court affirmed the order of dismissal. The decisive issue is whether the title issued to Maria F. Villa Abrille and subsequently acquired by Insular Development Company, Inc. can still be annulled. The Court held that land registration proceedings under Act No. 496 (the Land Registration Act) are in rem, and the decree of registration and title issued are binding and conclusive upon the whole world. Under Section 38 of Act No. 496 , after the expiration of one year from the entry of the decree, it becomes incontrovertible and can no longer be altered, modified, or set aside. This principle of indefeasibility of title is central to the Torrens system. The property had passed from the original registered owner to innocent third parties (the appellee corporation). The record disclosed sufficient facts to support the regularity of the registration proceedings: a decision was rendered in the original cadastral case (Cadastral Case No. 1, G.L.R.O. Record No. 317) on June 12, 1930, which became final and executory, and a decree and certificate of title were subsequently issued. All presumptions favor the regularity of the proceedings. Appellants’ claim of irregularity and void title is untenable. Consequently, upon the facts alleged, appellants have no cause of action against the appellee corporation. The reliefs prayed for—annulment of title, declaration of ownership by acquisitive prescription, or declaration of the land as public domain with preferential rights—cannot be granted as they derogate the indefeasible title of the appellee. The pending action referred to (CA- G.R. No. 22856 -R, an ejectment case filed by appellee against some appellants) had already been decided by the Court of Appeals and became final, further supporting the dismissal.