G.R. No. L-5987, April 7, 1911
THE CITY OF MANILA, plaintiff-appellee, vs. GEORGE M. LACK, JOSEPH L. DAVIS, OSCAR SUTRO, and HENRY T. ALLEN, defendants-appellants.

FACTS

In 1903, defendants-appellants negotiated to purchase a large tract of land in Manila from Doña Isabel Morello. After curing defects in the record title, the sale was consummated on April 29, 1904. The defendants paid the purchase price and the deed was executed in the name of A.P. Bullen, manager of the International Banking Corporation, which financed the purchase. At the time of sale, Morello appeared as the absolute owner with a clean registered title (dominio inscrito), and no adverse claims were noted on the record or physically apparent on the land. Unknown to the defendants, the City of Manila had buried a water main crossing a 4-meter wide strip within the property, with no visible surface indications. After purchase, Bullen initiated registration proceedings under Act No. 496 (Land Registration Act), and a decree was issued on August 15, 1904, registering the entire tract in his name. Subsequently, the City of Manila petitioned the Court of Land Registration to reopen the decree and exclude the strip containing the water main, claiming ownership. On September 29, 1905, the court granted the petition, ordering the segregation of the strip from the registered property. An amended description was filed, and a new decree was issued on November 22, 1905, registering the remaining parcels. The defendants remained in possession of the entire property, including the disputed strip, until the City filed an ejectment action to recover it. The City relied solely on the Land Registration Court’s order as proof of ownership and as res judicata.

ISSUE

Whether the order of the Court of Land Registration, which excluded the disputed strip from registration on the ground that it belonged to the City of Manila, constitutes res judicata and conclusively establishes the City’s title in this ejectment suit.

RULING

No. The Supreme Court reversed the lower court’s decision and dismissed the City’s complaint. The Court held that the order of the Court of Land Registration did not constitute a binding adjudication of title in favor of the City for purposes of res judicata in an ordinary ejectment action. The Land Registration Court is a special tribunal with limited jurisdiction under Act No. 496 , created solely to adjudicate and register titles upon application. Its primary function is to confirm an already vested title and render it indefeasible through registration. It does not have general jurisdiction to try title disputes outside the context of granting or denying an application for registration. The Court emphasized that the Land Registration Court lacks power to execute judgments or grant affirmative relief to parties opposing registration beyond dismissing the application or excluding land from the decree. Consequently, its order excluding the strip was not a final judgment on the merits of ownership that could bind the parties in a subsequent plenary action for ejectment. The defendants, who were purchasers in good faith with a registered title and continuous possession, were not precluded from asserting their ownership. The City failed to present any other evidence of title. Therefore, the ejectment action could not succeed based solely on the Land Registration Court’s order.