FACTS:

The case involves a property dispute in Cagayan de Oro City. Guillermo Comayas offered to sell a house and lot to Alfredo and Annabelle Lumo in April 1988. Before the purchase, the Lumos verified the legal status of the vendor's title by checking with the Office of the Register of Deeds and the Bureau of Lands. They discovered that the property was mortgaged to Mrs. Galupo and that she held the owner's copy of the Certificate of Title. The Lumos asked Comayas to redeem the property from Galupo, which they financed with P10,000. Galupo's adverse claim on the property was released on May 30, 1988.

On May 17, 1988, the Lumos and Comayas executed a deed of absolute sale for the property, with a sale price of P125,000. However, only P30,000 was stated in the deed as the amount the Lumos were ready to pay at that time, with the balance payable in installments. The deed of sale was registered, resulting in the issuance of a new Certificate of Title in the Lumos' name. When they requested a new tax declaration certificate, they found out that the property was also declared in the name of petitioner Naawan Community Rural Bank Inc.

It was discovered that Comayas had obtained a loan from the bank using the property as security. When he defaulted on the mortgage, the bank foreclosed on the property and acquired it through a public auction. As a result, the bank obtained a Certificate of Title and a tax declaration for the property. The bank then filed an ejectment case against Comayas, which it won.

The Lumos subsequently filed a case against the bank to declare their ownership and quiet title to the property. The Regional Trial Court favored the Lumos, and the Court of Appeals affirmed the decision. The bank now files a Petition for Review on Certiorari to challenge the decision of the appellate court.

ISSUES:

1. Whether or not the plaintiffs-spouses are the absolute owners and possessors of the properties in question and if their title should be quieted against any and all adverse claims of the defendant.

2. Whether or not the sheriff's certificate of sale, sheriff's deed of final conveyance, and the tax declarations of the defendant are valid and effective against the plaintiffs' title.

RULING:

1. The plaintiffs-spouses are adjudged the absolute owners and possessors of the properties in question (Lot 18583, and all improvements thereon) and their title should be quieted against any and all adverse claims of the defendant.

2. The sheriff's certificate of sale, sheriff's deed of final conveyance, and the tax declarations of the defendant are declared invalid and ineffective against the plaintiffs' title.

PRINCIPLES:

• A person dealing with registered land may generally rely on the correctness of a certificate of title and the law will not oblige him to go beyond it to determine the legal status of the property.