DANAO COAL MINING SYNDICATE, LTD. APPLICANT, SOUTHWESTERN UNIVERSITY, PETITIONER-APPELLEE, VS. CENON LAURENTE, OPPOSITOR-APPELLANT.

Forwarded to us for review by the Court of Appeals^[1]
is this appeal from two orders issued by the Court of First Instance of Cebu in the latter’s capacity as land registration court.^[2]
The first was a grant of a buyer’s ex parte
petition praying, inter alia, for cancellation
of annotation of incumbrances on the transfer
certificate of title covering a parcel of land it purchased from the heirs of
the registered owner.  The second was a
denial of a motion for reconsideration of the first order which was filed by a
third person whose interest, purportedly, might have been prejudiced by the
cancellation.

The transfer certificate of title (TCT No. 7567) in question
covered a parcel of land situated in Camansi, Danao, Cebu.  The same was issued in 1928 by the Register
of Deeds of Cebu in favor of H. M. H. Nemazee, the proprietor of the original applicant, Danao Coal Mining Syndicate, Ltd.  On the face thereof were annotated the
following incumbrances:

“(a) the condition that
the applicant shall be required to produce from the mining claims referred to a
minimum amount of coal equal to an average daily production of two hundred tons
of twenty-two hundred and forty English pounds for each and every day exclusive
of Sundays and holidays, and in the event of the failure of the said Coal
Mining Syndicate to produce such amount of coal, to pay to the Government of
the Philippine Islands a royalty at the rate of twenty centavos per ton upon
each and every ton of the deficiency between the amount actually produced, and
the minimum amount herein specified, (b) the use and occupancy of the surface
of the said parcel of land in favor of Filomeno del
Mar, as administrator of Roque del Mar, deceased; Lazaro Osmeña, as administrator
of Tomas Osmeña, deceased; H. B. Walker, as
administrator of Candelario Cuizon,
deceased; Juan Medio, Eleno
Hungug, Bernardo Cal, Faustino Batucan,
Perfecto Lavador, Agustin Tito and Salvador Gonzales,
in accordance with the agreement dated at Cebu,
November 22, 1913.”

In a quitclaim deed, dated 14 January 1960, the heirs of Nemazee transferred and quitclaimed in favor of
Southwestern University their rights, title, interest and participation in,
including their mining and leasehold rights over, said land.

Subsequently, Southwestern University petitioned the lower court
to order (1) the cancellation of the afore-quoted annotation of incumbrances on the ground that the condition and agreement
constituting the same were cancelled and rendered inoperative by the outbreak
of World War II as well as by the death of all the listed beneficiaries
thereof; (2) the registration of the quitclaim deed; and (3) the cancellation
of TCT No. 7567 itself, and issuance of a new certificate of title in its
name.  The petition was immediately
granted,^[3] with the lower court dispensing with the usual
notice to interested parties.  A new
certificate of title (TCT No. RT-2164)
was thereafter issued in favor of Southwestern University.

On 12 September 1960,
one Cenon Laurente moved
the lower court to reconsider its order of cancellation, specifically, of the
second portion of the annotation of incumbrances in
question.  He alleged that Southwestern
University had filed an ejectment suit ^[4]
before another branch of the same court against him and several other occupants
of the land covered by TCT No. 7567, over which land, he claimed, he might
possibly have an interest as a purchaser of a certain parcel of land situated
also in Camansi, Danao, Cebu, from Filomeno del Mar, one
of the persons in whose favor “the use and occupancy of the surface of the
. . . . . land” covered by said TCT No. 7567 was reserved.  Laurente thus
argued that the cancellation of the annotation of the incumbrance
in favor of Filomeno del Mar and others should not
have been ordered without giving notice, at least through publication, to the
parties who, like him, being a successor-in-interest of said Filomeno del Mar, might thereby be adversely affected Laurente’s alleged interest was, however, never registered.

The motion for reconsideration was denied, as previously
intimated.  Reasoned the lower court:

“The Court is in accord with this contention (that if there
should be notice, it should be limited to the parties annotated in the
certificate of title itself, and should not be extended to subsequent parties
who, even granting that they acquired the interests of these persons annotated
in the certificate of title, failed to have their rights annotated in said
certificate of title) of petitioner Southwestern University, and maintains
that inasmuch as the law specifically provides notice to parties in interest,
such notice if any, should be limited to the parties listed or annotated on the
certificate of title.  Hence, if such
parties are already dead, as had been alleged and substantiated by petitioner
Southwestern University,
then notice to said parties would not be necessary.  The Court acting within its limited
jurisdiction as a Court of Land Registration, can only act on what appears on
the face of the certificate of title, and cannot go beyond what appears therein
as movant Cenon Laurente would now want this Court to believe.  Notice by Publication is not necessary in
connection with this petition which has been duly filed in accordance with
Section 112 of Act. 496.

“Granting that the use and occupancy which was annotated in
the certificate of title is a real right which could be transferred or disposed
of by the person named in the certificate of title to a third person (in this
case Cenon Laurente),
the latter should have taken the
precaution of having his right annotated on said (certificate of
title).  His failure to do so is
therefore fatal, in the sense that this Court cannot consider him as a party
in interest who is entitled to notice before the petition for cancellation
of incumbrance could be acted upon. . . . . . “^[5]

We find no error in the order appealed from.

Cancellation of registered interests that have terminated and
ceased may be ordered by the land registration court under, and in conformity
with, section 112 of Act No. 496, otherwise known as the Land Registration
Act.  The new owner, Southwestern
University, of the land herein
involved took the right step by petitioning the court under said section to
have the registered interests — the deceased persons’ rights of use and
occupancy of the surface of said land — ordered cancelled on the ground that
the same had terminated and ceased. 
Notice was no longer necessary for the court to acquire jurisdiction
over the petition insofar as the second portion of the annotation of incumbrances was concerned. 
With the death of all the registered adverse claimants thereof, there
were no more parties in interest to be notified.

Appellant Laurente was not and can not
now be considered a party in interest entitled to notice.  He was, as he is now, a stranger representing
no adverse claim as to render the petition for cancellation controversial and,
thereby, divest the lower court of its jurisdiction.  For Laurent’s claim avers that the
cancellation of the right of the persons recorded as entitled to the use and
occupancy of the surface of the land could
affect him adversely because the interest acquired by him from Filomeno del Mar “might be included in that which is referred to in the
aforementioned annotation” (Record on Appeal, page 43).  This is too vague and unsubstantial to give
him standing to claim right to notice or to contest the order of
cancellation.  Before a claimant can be
considered as possessing a genuine adverse interest that would deprive the
Registration Court of jurisdiction to proceed under section 112 of Act 496 in
the absence of notice to him, there must be a showing of the prima facie
truth and validity of such adverse interest. 
Laurente has failed to make such a
showing.  His motion merely speaks of a possibility
of being prejudiced.  He has not produced
any deed of conveyance from Filomeno del Mar, or
secondary evidence thereof.  A mere
verbal agreement will not do here:  there
must be a public instrument in order to affect a stranger (such as the holder
of the certificate of title or his successors in interest).  For Article 1280, No. 1, of the Civil Code of
1889 (in force in 1920 when Laurente claims to have
acquired title) prescribes:

“The following must be reduced to writing in a public
instrument:

“1. Acts or contracts whose object is the creation, transmission
modification or extinction of rights which affect
immovable property.” (Emphasis supplied)

And to affect registered land, such, as is covered by the
Certificates of Titles of appellee Southwestern
University and its predecessor in interest (TCT No. 7567 and RT-2164), the
public document above referred to must be recorded and annotated in the
certificate, as pointed out in the appealed order; and, admittedly, there is no
record of any deed In favor of Laurente.  It is elementary that, under the Torens system, registration is the operative act that binds
the land, and in the absence of record there is only a contract that binds the
parties thereto, without affecting the rights of strangers to such contract
(Act 496, section 51) unless they have actual knowledge thereof,^[6]
which is not alleged here.

What is worse is that Laurente allowed
more than 20 years to elapse without asserting the alleged conveyance in his
favor, when a period of 10 years sufficed under Act 190 (then in force) to bar
any claim to or over real property.  Nor
has Laurente adequately explained such laches on his part.

He avers that he could not cause the recording of the conveyance
in his favor because the registered owner resided in Hongkong.  This is no excuse, for the claimant could
have asked the proper court to have the owner summoned by publication.  Laurente also
pleads that the records of the Cebu Register of Deeds
were destroyed in the last war.  But the
war only broke out in 1941, and the enemy occupied Cebu in 1942, while Laurente’s
vendor, Filo­meno del Mar, ceased to be administrator
of the Estate of Roque del Mar as far back as 1920,
when the proceedings were closed (Record on Appeal, page 61).  Thus, Laurente
unaccountably permitted 21 years to elapse without attempting to record or
enforce the alleged conveyance in his favor.

All the foregoing circumstances cast a dense pall of doubt over
the genuineness and validity of Laurente’s adverse
claim, and fully justify its rejection by the lower Court.

WHEREFORE, the orders appealed from are sustained and affirmed.  Costs against appellant Cenon
Laurente in all instances.

Concepcion, C.J., Dizon,
Makalintal, Zaldivar,
Sanchez, Castro, Fernando and
Capistrano, JJ., concur.

^[1]
Per resolution of the Court of Appeals in its CA-G.R. No. 29130-R, dated 9 May 1962.

^[2]
CIR. Case No. 7365 entitled “Danao Coal Mining Syndicate, Ltd., Applicant, Southwestern
University, Petitioner”.

^[3]
Order, dated 21 January 1960,
“motion granted as prayed for” (Rec. on Appeal, page 40).

^[4]
Civil Case No. R-6688.  Laurente claimed that he only came to know of the
cancellation when he received the summons in said Civil Case No. R-6688.

^[5] Order, dated 7 December 1960, emphasis
supplied.

^[6] Obras Pias vs. Devera Ignacio, 17 Phil. 45; Winkleman
vs. Veluz, 43 Phil. 604; Gustilo
vs. Maravilla, 48 Phil. 442; Quimson vs. Suarez, 45 Phil. 901.