G.R. No. 164402 ; July 5, 2010
ASUNCION URIETA VDA. DE AGUILAR, represented by ORLANDO U. AGUILAR, Petitioner, vs. SPOUSES EDERLINA B. ALFARO, Respondents.

FACTS

Petitioner Asuncion Urieta Vda. de Aguilar, representing the heirs of Ignacio Aguilar, filed an action for recovery of possession (accion publiciana) against respondents, the children of Anastacia Urieta. Ignacio Aguilar was issued Original Certificate of Title No. P-9354 over Lot 83 in 1977. Petitioner alleged that Ignacio merely allowed his sister-in-law, Anastacia, to temporarily occupy a portion of the lot in 1968. After Ignacio’s death in 1994 and Anastacia’s subsequent death, respondents refused to vacate the property upon demand.
Respondents claimed ownership over a 367.5-square meter portion of the lot by virtue of a notarized “Kasulatan sa Bilihan” (Deed of Sale) allegedly executed by Ignacio and petitioner in favor of Anastacia in 1973, four years before the land was registered under Ignacio’s name. They asserted continuous possession since 1954 and argued that petitioner’s action had prescribed, as more than ten years had elapsed from their entry. Petitioner, however, denied the sale and alleged forgery of the signatures on the deed.

ISSUE

Who has the better right of possession over the disputed property, the registered owner under the Torrens system or the occupants claiming under an unregistered, notarized deed of sale?

RULING

The Supreme Court ruled in favor of the registered owner, petitioner Asuncion Aguilar. The Court reinstated the Regional Trial Court’s decision ordering respondents to vacate the property. The Torrens system confers upon the registered owner an indefeasible title, which is conclusive against all persons and the whole world. A notarized but unregistered deed of sale does not bind the registered land or defeat the title of the registered owner. Registration is the operative act that conveys ownership under the Torrens system; a prior unregistered instrument is deemed merely a contract between the parties and does not affect the land itself.
The Court emphasized that in an accion publiciana, the issue is purely possession. Since petitioner’s title is indefeasible, her right to possess the property flows from her ownership. Respondents’ claim, based on an unregistered document, cannot prevail over a Torrens certificate of title. The Court also rejected the defense of prescription, noting that possession by mere tolerance of the owner does not ripen into ownership and the ten-year prescriptive period for accion publiciana does not run against the registered owner under such circumstances. The Torrens title remains the best proof of ownership and the source of the superior right of possession.