In a dispute over land ownership, Philippine law prioritizes registered transactions over unregistered ones to protect innocent purchasers. The Supreme Court affirmed this principle, favoring the registered Deed of Absolute Sale over an earlier, unregistered donation propter nuptias (by reason of marriage). This ruling underscores the importance of registering property transactions to ensure legal protection against third parties unaware of prior claims. It highlights the security and reliability the Torrens system provides to those who rely on registered titles when acquiring property.

Love and Land: When an Unregistered Gift Loses to a Valid Sale

The case of Spouses Juan and Antonina Cano v. Spouses Arturo and Emerenciana Cano (G.R. No. 188666 and G.R. No. 190750) revolves around a parcel of land in San Carlos City, Pangasinan. Petitioners Juan and Antonina Cano claimed ownership based on a donation propter nuptias from Feliza Baun in 1962. Respondents Arturo and Emerenciana Cano, on the other hand, asserted their right as purchasers of the land from Feliza in 1982, with the sale duly annotated on the Original Certificate of Title (OCT) No. 62276. The central legal question was: who has the superior right to the land – the donees of an unregistered donation or the purchasers in a registered sale?

The legal battle unfolded across two cases. The first, an ejectment case (G.R. No. 188666), was initiated by the respondents to evict the petitioners from the property. The second, a case for quieting of title (G.R. No. 190750), was filed by the petitioners to assert their ownership and nullify the respondents’ claim. The Municipal Trial Court in Cities (MTCC) initially favored the petitioners in the ejectment case, upholding the validity of the donation. However, the Regional Trial Court (RTC) reversed this decision, a ruling upheld by the Court of Appeals (CA), which favored the respondents due to the registered Deed of Absolute Sale.

The Supreme Court (SC) began its analysis by clarifying the rules governing donations propter nuptias. At the time of the donation in 1962, the Civil Code was in effect. Under Article 129 of the Civil Code, express acceptance was not necessary for the validity of donations propter nuptias. Thus, implied acceptance, such as the celebration of marriage, was sufficient. The Court, therefore, disagreed with the CA’s pronouncement that the donation was invalid due to lack of express acceptance. It emphasized that laws existing at the time of the contract’s execution are applicable. However, this did not change the outcome of the case.

Building on this clarification, the SC addressed the core issue: the effect of an unregistered donation on the rights of third parties. Article 709 of the Civil Code provides that titles of ownership or other rights over immovable property, which are not duly inscribed or annotated in the Registry of Property, shall not prejudice third persons. Similarly, Sections 51 and 52 of Presidential Decree No. (P.D.) 1529, the Property Registration Decree, state that registration is the operative act to convey or affect the land insofar as third persons are concerned, and that every registered instrument affecting registered land serves as constructive notice to all persons.

Quoting Gonzales v. Court of Appeals, the SC reiterated the principle that registration is not necessary for the validity of a donation between the parties. However, registration is essential to bind third persons. Since the donation propter nuptias in favor of petitioners was never registered, it could not prejudice the respondents, who had no participation in the deed or actual knowledge of it. The Court emphasized that mere possession of the property by the petitioners was insufficient to equate to actual knowledge on the part of the respondents.

“Art. 709. The titles of ownership, or other rights over immovable property, which are not duly inscribed or annotated in the Registry of Property shall not prejudice third persons.”

The Court further held that the respondents were innocent purchasers for value, having relied on the clean title (OCT No. 62276) which indicated Feliza’s ownership and did not reflect the donation. Persons dealing with registered land have the right to rely completely on the Torrens title, as stated in the case of Nobleza v. Nuega, and are not required to go beyond what the certificate of title indicates on its face. This protection extends to buyers acting in good faith, without notice of any other person’s right or interest in the property.

While the principle of innocent purchaser for value is not absolute, the petitioners failed to prove that the respondents had actual knowledge of their claim or that there were circumstances that should have compelled them to inquire further. The RTC found that respondent Arturo Cano was in possession of the property as a tenant prior to the sale, based on the annotation on the title. The petitioners could not demonstrate that the structures they claimed as evidence of their possession were present at the time of the sale.

The Court also dismissed the petitioners’ claim of ownership through acquisitive prescription. Section 47 of P.D. 1529 explicitly states that no title to registered land in derogation of that of the registered owner shall be acquired by prescription or adverse possession. Since the subject property was registered land, the petitioners’ possession, even if prolonged, could not ripen into ownership. Consequently, the Court affirmed the CA’s decision, declaring the respondents the rightful owners of the property and entitled to its possession.

“Section 47. Registered land not subject to prescriptions. No title to registered land in derogation to that of the registered owner shall be acquired by prescription or adverse possession.”

The SC concluded that since the respondents were the rightful owners, they had the right to enjoy and dispose of the property without limitations, as provided by Article 428 of the Civil Code. Any issues related to accession, such as the right to reimbursement of expenses for structures on the land, were left to be addressed in a separate proceeding due to the absence of evidence and arguments presented on these matters.

FAQs

What was the key issue in this case?	The primary issue was determining who had the superior right to a parcel of land: the donees of an unregistered donation propter nuptias or the purchasers in a registered sale. The Supreme Court had to resolve the conflict between these competing claims of ownership.
What is a donation propter nuptias?	A donation propter nuptias is a gift made before a marriage, in consideration of the marriage, and in favor of one or both of the future spouses. It is a special type of donation governed by specific rules under the Civil Code and Family Code.
Why was the donation in this case not considered valid initially by the Court of Appeals?	The Court of Appeals initially ruled the donation invalid because it believed there was no proof of acceptance of the donation by the donees in a public instrument. The Supreme Court clarified this point, noting that under the Civil Code (in effect at the time of the donation), express acceptance was not required for donations propter nuptias.
What is the significance of registering property transactions?	Registering property transactions, such as sales or donations, provides legal protection against third parties who may be unaware of the transaction. Registration serves as constructive notice to the world, meaning that anyone dealing with the property is presumed to know about the registered transaction.
What does it mean to be an ‘innocent purchaser for value’?	An innocent purchaser for value is someone who buys property without notice of any other person’s right or interest in the property and pays a fair price for it. They are protected by law and have the right to rely on the correctness of the certificate of title.
Can registered land be acquired through prescription or adverse possession?	No, registered land cannot be acquired through prescription or adverse possession. This is explicitly stated in Section 47 of P.D. 1529, the Property Registration Decree.
Why did the Supreme Court ultimately rule in favor of the respondents?	The Supreme Court favored the respondents because they were considered innocent purchasers for value and their Deed of Absolute Sale was registered. This registration provided them with a superior right over the petitioners’ unregistered donation.
What happens to the structures built on the land by the petitioners?	The Supreme Court acknowledged that its ruling might affect the structures on the property and raise issues of accession (improvements made to the property). However, since these matters were not raised in the case, they would have to be dealt with in a separate proceeding.

This case underscores the critical importance of registering property transactions to protect one’s rights against third parties. While a donation may be valid between the parties involved, it does not bind those without knowledge of it. The ruling reinforces the reliability of the Torrens system, which allows individuals to confidently rely on registered titles when purchasing property.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Spouses Juan and Antonina Cano, et al. v. Spouses Arturo and Emerenciana Cano, G.R. No. 188666 and G.R. No. 190750, December 14, 2017