G.R. No. L-47625. April 14, 1941.
AURELIO REYES, petitioner-appellant, vs. EUGENIO EVANGELISTA, oppositor-appellee.

FACTS

Rufina Leus and Crispulo Leus, the original registered owners of two parcels of land (Lots Nos. 15 and 16, Block 3017, Manila), mortgaged the properties to the Government of the Philippine Islands on January 4, 1929. The mortgage was registered on January 14, 1929. On June 7, 1932, the Government filed a foreclosure action (Civil Case No. 42108). A decision was rendered on July 26, 1932, ordering the defendants to pay the debt, and upon their default, the properties were sold at public auction. The Government acquired the land, and Transfer Certificate of Title No. 47038 was issued in its favor.
On February 8, 1935, Eugenio Evangelista applied to purchase the properties from the Bureau of Lands, made a deposit, and later paid the full balance. On June 19, 1935, the Government executed deeds of sale in favor of Evangelista. Due to a pending suit (Civil Case No. 49562), Transfer Certificate of Title No. 50415 (canceling the Government’s title) was not issued to Evangelista until December 7, 1936.
On June 6, 1938, Aurelio Reyes filed a petition in the Court of First Instance of Manila (Cadastral Case No. 71, G.L.R.O. No. 373) seeking the cancellation of Evangelista’s certificate of title and the issuance of a new one in his name. Reyes alleged he acquired the properties from the City of Manila at a delinquent tax sale held on May 3, 1937, and that after the redemption period expired, a final deed of conveyance was executed in his favor. Evangelista opposed the petition.
On January 23, 1939, the lower court denied Reyes’s petition. It ordered, however, that an encumbrance be noted on Transfer Certificate of Title No. 50415 for the amount of P126.15 (plus interest) paid by Reyes to the City of Manila for back taxes on the land, to be reimbursed by Evangelista. Reyes’s motion for reconsideration was denied, and the case was elevated on appeal.

ISSUE

Whether the lower court had jurisdiction to hear and decide upon the petition for cancellation and issuance of a new certificate of title under Sections 78 and 112 of the Land Registration Act ( Act No. 496 ), and whether it acted correctly in denying said petition.

RULING

The Supreme Court affirmed the order of the lower court. It held that the lower court, under Sections 78 and 112 of the Land Registration Act, had the authority to hear and determine whether the petition for cancellation and issuance of a new title should be granted. This function is not merely mechanical; the court is empowered to pass upon and determine whether the petition is supported by good and valid reasons. Upon the facts found, the Supreme Court concluded the lower court did not act arbitrarily in denying the petition.
The Court noted, from an equitable standpoint, that granting Reyes’s petition would have allowed him to acquire properties assessed at P3,138 for only P126.15 (the tax sale price), especially considering the tax delinquency mainly accrued when the properties belonged to the Government. The lower court’s decision to uphold Evangelista’s title and merely require reimbursement of the tax payment was justified. The Supreme Court found it unnecessary to address the other errors assigned by the appellant. Costs were awarded against petitioner-appellant Aurelio Reyes.