G.R. No. L-22731 November 15, 1967
SILVESTRA GALARPE DE MELGAR, petitioner, vs. ADORACION PAGAYON, ET AL., respondents.

FACTS

The disputed land was originally owned by Basilia Paccial. On December 6, 1924, Paccial sold the land with pacto de retro to Eladio Palomillo, with a three-year repurchase period. The period expired without repurchase. On April 18, 1950, petitioner Silvestra Galarpe de Melgar acquired whatever rights Palomillo had in the lot for P300.00. However, on January 30, 1925, the Court of First Instance of Iloilo rendered a judgment in Cadastral Case No. 31 decreeing the registration of the lot in favor of Basilia Paccial, with an annotation that it was encumbered to Palomillo for P10.00. Original Certificate of Title No. 27663 was issued in Paccial’s name on October 20, 1925, with the encumbrance annotated. Paccial did not disclose the pacto de retro sale in the cadastral proceedings. On October 7, 1949, Salvador Pagayon, predecessor-in-interest of respondents, bought the property from Paccial for P2,000.00. The deed was registered, and Transfer Certificate of Title No. T-6904 was issued in Pagayon’s name, cancelling Paccial’s title.

ISSUE

Who has a better right to the disputed property: the respondents (Pagayons), whose predecessor-in-interest acquired the land by purchase from the registered owner (Paccial) after the issuance of a Torrens title, or the petitioner (de Melgar), whose right emanates from the vendee a retro (Palomillo) who claims ownership due to Paccial’s failure to repurchase within the stipulated period?

RULING

The Supreme Court affirmed the decision of the Court of Appeals in favor of the respondents, the Pagayons. The Court held that the Torrens title issued to Paccial, and subsequently transferred to Pagayon, is conclusive and indefeasible. The decree of registration and the title issued are binding upon the whole world. Upon the expiration of the one-year period for review, the decree becomes incontrovertible. The vendee a retro’s unregistered interest, arising from a transaction prior to registration, cannot prevail over the registered title subsequently acquired by an innocent purchaser for value. The Court clarified that the ruling in Cabanos v. Register of Deeds, cited by petitioner, does not support the annulment of a Torrens title but instead underscores the doctrine of indefeasibility. The title legitimately passed to the Pagayons, and the issue of the vendee a retro’s action to compel an absolute deed being barred by prescription need not be discussed. Costs were imposed on petitioner.