G.R. No. L-23480 September 11, 1979
J.M. TUASON & CO., INC., petitioner, vs. HON. COURT OF APPEALS, and GUILLERMO REÑOSA, respondents.

FACTS

J.M. Tuason & Co., Inc., the registered owner of a parcel of land covered by TCT No. 1267, filed an ejectment suit against Guillermo Reñosa. Reñosa admitted the petitioner’s ownership and that he constructed his residence on a 100-square-meter portion in 1967. His defense was that he purchased the lot from a certain Capt. Faustino C. Cruz, who allegedly acquired it through a compromise agreement (Exhibit 1) in prior civil cases involving the petitioner and a group called the “Deudors.” The agreement provided that petitioner would reserve 12,000 square meters of land for specified persons, including Cruz, but the transfer of title was subject to suspensive conditions: deduction of P250,000 from amounts due the Deudors, delivery of “refund” lots to petitioner, and approval of a subdivision plan by government agencies.
The trial court ruled for the petitioner, finding that Cruz was not a party to the compromise agreement and that the suspensive conditions were never fulfilled, thus Cruz acquired no right that he could sell. The Court of Appeals reversed, holding that the compromise agreement created a valid right in favor of Cruz, which was transmitted to Reñosa upon sale, and that there was no evidence the conditions were unfulfilled or the agreement rescinded.

ISSUE

Whether respondent Guillermo Reñosa, through his predecessor-in-interest Capt. Faustino C. Cruz, acquired a valid right to possess the disputed land that is superior to the right of the registered owner, J.M. Tuason & Co., Inc.

RULING

The Supreme Court reversed the Court of Appeals and reinstated the trial court’s decision. The legal logic centers on the nature of Torrens title and the effect of the unfulfilled suspensive conditions in the compromise agreement. As the registered owner under the Torrens system, the petitioner’s title is imprescriptible and cannot be defeated by acquisitive prescription. The compromise agreement did not confer an immediate or vested right of ownership to Cruz. The rights of the beneficiaries, including Cruz, were contingent upon the fulfillment of specific suspensive conditions. Since these conditions—particularly the delivery of “refund” lots and the approval of the subdivision plan—were never proven to have been met, Cruz’s potential right never materialized. Consequently, Cruz could not have been a “true and sole owner” when he sold the property to Reñosa in 1956, as evidenced by his lack of any registered title. Neither Cruz nor Reñosa could be considered possessors in good faith, as they were aware of the petitioner’s registered ownership and the conditional nature of any claim. Therefore, in the absence of any equal or better right of possession in Reñosa, the registered owner is entitled to recover possession. The action for ejectment was the correct remedy.