Wrong move

Registration of instruments affecting lands must be done in the proper registry. If the transaction involves a registered land with a Torrens Title it must be registered under Act 496 (Land Registration Act or the Property Registration Decree of 1978). If it is an unregistered land the transaction must be recorded under Act 3344 as amended without prejudice to a third party with a better right. This is the rule applied in this case.

The case involved a 2,000 square meters parcel of land known as Lot No. 4763-D. It was originally a portion of Lot 4763 covered by Original Certificate of Title (OCT No. RO-2754) issued way back in 1934 in favor of the spouses Manny and Mila under the provisions of the Land Registration Act. Said OCT was however lost or destroyed during World War II.

In 1974, Manny and Mila sold Lot 4763 to the spouses Becky and Danny who thereafter secured the reconstitution of OCT RO-2754 still under the names of Manny and Mila. In 1986 after securing a reconstituted title, Danny and Becky registered the Deed of Absolute Sale executed by Manny and Mila in their favor thereby obtaining title in their names (TCT 16735). Thereafter, in December 1987, Becky and Danny sold a portion of the land (Lot 4763-D), to Lina who in turn sold the same lot to her business partners Jun and Max along with their respective spouses Ann and Mina. On September 20, 1993, TCT No. 27044 was issued in the names of Jun and Max who then proceeded to pay realty taxes thereon.

All throughout the chain of ownership, the titles of the previous owners — although from a reconstituted one — were absolutely devoid of any annotation of liens, encumbrances, lis pendens, adverse claims or anything that may cause Jun and Max to suspect any defect in their titles.

But in January 1996, Jun and Max discovered a cloud in their title when their request for a height clearance with the DOTC was referred to the airport authority in their locality (MCIAA). It appears that MCIAA acquired the entire lot 4763 way back in 1958 from the spouses Manny and Mila. But since Manny and Mila lost their title (OCT RO-2754) during the war, they undertook  to assist in the reconstitution of title so that the land will be registered in the name of the government through MCIAA. Meantime both agreed that the property be registered first under Act 3344 pending the reconstitution and issuance of a new title.

So in 1996, Jun and Max and their spouses filed an action for quieting of title against MCIAA. The latter however contended that there was a valid transfer of title to them from Manny and Mila in 1958 and accordingly Jun and Max did not buy Lot 4763-D from a person who could validly dispose of it. It also claimed to have been in possession of the disputed land since it bought the same in 1958 when a public Deed of Sale was executed in its favor. Lastly, MCIAA also contended that Jun and Max were buyers in bad faith. Was MCIAA correct?

No.  Lot 4763 was registered under Act 496 even before the Second World War. The duplicate copy of the Title was only lost or destroyed during the war. Accordingly if the sale of said lot is not registered under Act 496 or the Land Registration Act, said sale is not considered registered and does not operate as constructive notice to the whole world.

The fact that MCIAA was able to register the Deed of Absolute Sale under Act 3344 is of no moment, as the property subject of the sale is indisputably a titled land. Hence it is the act of registration of the Deed of Sale under Act 496 that shall operate to convey and affect the land; absent any such registration the instrument executed by the parties remains only a contract between them and as evidence of authority to the register of deeds to make registration (Sec. 50 Act 496).

For this reason Jun and Max are not buyers in bad faith for having bought the property notwithstanding the registration of the first Deed of Absolute Sale under Act 3344. An improper registration is no registration. Likewise a sale that is not correctly registered is binding only between the seller and the buyer but it does not affect innocent third persons.

The fact that the certificate of title over the registered land was lost or destroyed does not convert it into unregistered land. MCIAA should have availed itself of the legal remedy of reconstitution of lost certificate instead of registration under Act 3344. In this case MCIAA did not bother to have the lost title covering Lot 4763-D reconstituted at anytime, notwithstanding the fact the Deed of Absolute Sale was executed in 1958 or more than 50 years ago. Laws must come to the assistance of the vigilant, not the sleepy. As a matter of fact this entire controversy may very well have been avoided had it not been for MCIAA’s negligence (Mactan-Cebu International Airport Authority vs. Tirol and Ngo, G.R. 171535, June 5, 2009)

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