Sapto vs. Fabiana

An unregistered deed of sale of registered land is valid and binding as between the parties and their heirs, registration being required only to bind or protect third persons. Delivery of possession consummated the sale and transferred ownership inter partes, and the possessor-buyer's action to remove the cloud on title was imprescriptible while possession continued.

Vicente Sapto, Laureana Sapto, and Dora (Bagoba) are the widow and children-heirs of Samuel Sapto, who with his brother Constancio had succeeded to Torrens-titled land in Alambre, Toril, Davao City originally registered to Sapto (Moro). Apolonio Fabiana is the purchaser claiming a portion of that land by deed from Samuel and Constancio Sapto. Section 50 of the Land Registration Act, providing that an unregistered deed shall operate only as a contract between the parties and as authority to register, supplies the governing framework for the effect of non-registration.

Sapto (Moro), now deceased, was the registered owner of a parcel of land in Alambre, Toril, Davao City under Transfer Certificate of Title No. T-5701 (0-28) of the Register of Deeds of Davao City. Upon his death he left as heirs his children Samuel, Constancio, and Ramon. Ramon predeceased his two brothers, leaving no other heirs.

On June 6, 1931, Samuel and Constancio Sapto executed a deed of sale of a four-hectare portion of the land in favor of Apolonio Fabiana for P245.00. The sale was duly approved by the Provincial Governor of Davao but was never registered. Possession of the land conveyed was nevertheless transferred to Fabiana, and he remained in possession thereof from 1931 up to the present.

Thereafter Constancio Sapto died without issue. Samuel Sapto married Dora (Bagoba) and upon his death was survived by his widow and two children, Laureana and Vicente Sapto. On October 19, 1954, the widow and children of Samuel Sapto filed an action in the Court of First Instance of Davao for recovery of the parcel sold by their predecessors to Fabiana in 1931. After trial, the facts found material to review were that the 1931 conveyance, though unregistered, had been followed by continuous possession by the vendee, with no subsequent transfer of the property to any other person by appellants or their predecessors-in-interest.

• Operative Effect of Registration: Petitioner argued that under the Torrens system registration is the operative act that gives validity to the transfer or creates a lien upon the land, such that the unregistered 1931 deed could not convey title or bind appellants.
• Prescription of Action for Conveyance: Petitioner maintained that requiring appellants to execute a deed of conveyance was error because the action to obtain it had long prescribed, twenty years having elapsed since the original sale in 1931.

• Validity of Unregistered Sale: Whether the deed of sale executed by appellants' predecessors in favor of appellee, although never registered, is valid and binding on appellants and operated to convey title and ownership to appellee.
• Prescription and Conveyance: Whether the action to obtain execution of a deed of conveyance in appellee's favor had prescribed after twenty years from the 1931 sale.

• Validity of Unregistered Sale: Yes. The unregistered sale was valid and effective between the parties and their heirs, registration being unnecessary inter partes and intended only to protect strangers and subsequent transferees.
• Prescription and Conveyance: No. Prescription did not bar relief because delivery of possession had already consummated the sale, and the action for conveyance was in substance to quiet title, which accrued only in 1954 and is imprescriptible while the plaintiff remains in possession.

• Validity of Unregistered Sale: Section 50 of the Land Registration Act was construed to mean that as between vendor and vendee, actual notice is equivalent to registration and the same rights and remedies exist as for unregistered land. The peculiar force of Torrens title was limited to protection against sales to innocent third parties. Applied here, no right of innocent third persons or subsequent transferees was involved, the property having remained in the vendee's possession since 1931 with no reconveyance by appellants or their predecessors. To hold otherwise would permit the Torrens system to serve as a shield for fraud by vendors or heirs seeking to disregard their own conveyance and reconvey to others. The authorities requiring registration as the operative act were distinguished as involving conflicting rights over registered property and innocent transferees relying on clean titles, which had no bearing where continuous possession existed and no subsequent transfer had occurred.
• Prescription and Conveyance: Enforcement of the 1931 contract as an executory promise was not needed because delivery of possession had consummated the sale and transferred title, registration not being indispensable between the parties. The action for conveyance was in reality to quiet title, to remove the cloud cast by appellants' refusal to recognize their predecessors' sale, and therefore accrued only when appellants filed suit to recover the land in 1954. Moreover, under Art. 480 of the New Civil Code and the cited American rule, actions to quiet title to property in the plaintiff's possession are imprescriptible, since the owner in possession may wait until possession is disturbed or title attacked; the limitations defense against removal of a cloud is unavailable to one out of possession suing one in possession.

• Binding Effect of Unregistered Conveyance Inter Partes — An unregistered deed of sale of registered land operates as a contract between the parties and is valid and effective as between them without registration; actual notice is equivalent to registration. Applied here, the 1931 deed, though never registered, bound Samuel and Constancio Sapto and, equally, their heirs, vesting ownership in Fabiana upon delivery of possession.
• Purpose of Registration Under the Torrens System — Registration is intended merely to notify and protect strangers to the transaction and buyers against claims arising from subsequent alienations by the vendor; it is not necessary to give effect to the deed as between the parties. Applied here, with no subsequent alienation and no innocent third person involved, non-registration did not relieve the vendors or their heirs of their obligations.
• Torrens Title Not a Shield for Fraud — The Torrens system may not be used by a vendor or his heirs to repudiate a prior unregistered conveyance and reconvey to others, as recognized in Gustilo vs. Maravilla. Applied here, allowing appellants to recover despite their predecessors' sale and the buyer's long possession would sanction such fraud.
• Imprescriptibility of Quieting Action by Possessor — The right to have title quieted against an adverse claim is not barred while the plaintiff or his grantors remain in actual possession claiming ownership; the possessor may wait until possession is disturbed or title attacked. Applied here, Fabiana's possession since 1931 rendered his action to remove the cloud created by the 1954 recovery suit imprescriptible under Art. 480 of the New Civil Code.

• "registration is intended to protect the buyer against claims of third persons arising from subsequent alienations by the vendor, and is certainly not necessary to give effect as between the parties to their deed of sale" — States the controlling construction of registration, distinguishing inter partes effect from protection against third persons.
• "the purpose of registration is merely to notify and protect the interests of strangers to a given transaction, who may be ignorant thereof, and the non-registration of the deed evidencing said transaction does not relieve the parties thereto of their obligations thereunder" — Defines the limited function of registration and preserves the vendors' and heirs' obligations despite non-registration.
• "The prevailing rule is that the right of a plaintiff to have his title to land quieted, as against one who is asserting some adverse claim or lien thereon, is not barred while the plaintiff or his grantors remain in actual possession of the land, claiming to be owners thereof" — Formulates the imprescriptibility rule applied to sustain the possessor-buyer's action to remove the cloud on title.

• Galanza vs. Nuesa, 95 Phil., 713 — Followed as authority that registration protects against third-person claims from subsequent alienations and is unnecessary between the parties to the deed.
• Casica vs. Villaseca, G.R. No. L-9590, April 30, 1957 — Reiterated and followed for the rule that registration merely notifies strangers and non-registration does not relieve the parties of their obligations.
• Gustilo vs. Maravilla, 48 Phil., 442 — Followed for the proposition that allowing vendors or heirs to disregard an unregistered sale would make the Torrens system a shield for fraud.
• Medina vs. Imaz and Warner Barnes and Co., 27 Phil., 314 — Followed for the principle that Torrens title exhibits its peculiar force only against innocent third parties, while vendor and vendee retain the same rights as in unregistered land.
• Cooper vs. Rhea, 39 L. R. A. 930; Inland Empire Land Co. vs. Grant County, 138 Wash. 439, 245 Pac. 14 — Cited through American jurisprudence as support for imprescriptibility of quiet-title actions by a plaintiff in possession, made applicable by Art. 480 of the New Civil Code.

• Section 50, Land Registration Act — Provides that no deed shall take effect as a conveyance or bind the land, but shall operate only as a contract between the parties and as evidence of authority to register. Construed to require registration only to affect third persons; as between parties, the unregistered sale with delivery of possession was valid and transferred ownership.
• Article 480, New Civil Code — Makes applicable the rule that actions to quiet title to property in the possession of the plaintiff are imprescriptible. Applied to sustain appellee's action for conveyance as a quiet-title action accruing only upon appellants' 1954 suit while appellee remained in possession.

Paras, C.J., Bengzon, Montemayor, Reyes, A., Bautista Angelo, Labrador, Concepcion, Endencia, and Felix, JJ., concur.