ROSALINA Z. TIONGCO, PETITIONER, VS. GUILLERMO DE LA MERCED AND RITA VENERACION, RESPONDENTS.

Tiongco versus De la Merced

The Case

This is a petition brought by Rosalina Tiongco against Guillermo de la Merced and Rita Veneracion, seeking to reverse the decision of the Court of Appeals which sustained the lower court's denial of her petition for review of a cadastral decree covering two lots in the Santa Rosa Cadastre in Nueva Ecija. The case matters because it confronts a tension every land-law student must resolve: a decree of registration may have been secured through fraud and in clear denial of due process, yet the Torrens title that issues from it may still be beyond attack once it has passed into the hands of an innocent purchaser for value. The Supreme Court here settles that tension in favor of the innocent purchaser.

Procedural History

The case began as a cadastral proceeding in the Court of First Instance, where a decree of registration was entered over the lots in question. Tiongco filed a petition for review of that decree, but the then Judge Felix Makasiar denied it. She elevated the matter to the Court of Appeals, which affirmed the denial. From that affirmance, she came to the Supreme Court by petition, asking it to reverse the Court of Appeals and to set aside the decree notwithstanding the finding that the respondents were innocent purchasers for value.

Facts

The facts were undisputed. Tiongco and the other claimants of the lots were deprived of their rights without due process of law, through the fraudulent machinations of Pascual Cando, a deputy clerk of court. It was on the strength of that fraud that the cadastral decree over the lots came to be entered.

Lots 1838 and 1856 thereafter came into the hands of Guillermo de la Merced and Rita Veneracion. Both the lower court and the Court of Appeals found that these two were innocent purchasers for value, relying on the Torrens title issued in pursuance of the decree.

Tiongco sought to review and annul the decree on the ground of fraud and lack of due process. She argued that because the judgment and the decree were void from the beginning for want of due process, no innocent purchaser for value could acquire a valid title as against her. She also pressed indications casting doubt on the good faith of the respondents, but that contention was rejected by the Court of Appeals.

Issues

• Whether or not a decree of registration obtained through fraud and in denial of due process may still be reviewed and set aside where an innocent purchaser for value has already acquired an interest in the land.
• Whether or not the Supreme Court may set aside the express finding of the Court of Appeals that the respondents were innocent purchasers for value.

Applicable Provisions

Section 38 of the Land Registration Act provides:

Such decree shall not be opened by reason of the absence, infancy or other disability of any person affected thereby, nor by any proceeding in any court for reversing judgments or decree, subject, however to the right of any person deprived of land or of any estate or interest therein by decree of registration obtained by fraud to file in the competent Court of First Instance a petition for review within one year after entry of the decree provided no innocent purchaser for value has acquired an interest.

This is the provision on which the entire case turns, because it expressly conditions the right to review a fraudulent decree on the absence of an innocent purchaser for value.

Ruling

On the first issue, the Court held that the review may no longer be had. It relied on its earlier pronouncement in Vda. de Cuaycong versus Vda. de Sengbengco, where it was said that even if a decree in a cadastral proceeding is infected with nullity for a clear denial of procedural due process, an innocent purchaser for value relying on a Torrens title issued in pursuance thereof is protected. The Court explained that this is not a mere passing remark but rests on express statutory language. As the Court put it in the Cuaycong decision:

Now then, if a decree issued in pursuance of a valid decision, obtained by fraud, may be annulled within one year from entry of said decree, there is more reason to hold that the same, if entered in compliance with a decision suffering from a fatal infirmity, for want of due process, may be reviewed, set aside and cancelled upon petition filed within the same period, provided that no innocent purchaser for value will be injured thereby.

On the second issue, the Court held that it could not disturb the finding of the Court of Appeals. That finding was express: Rita Veneracion and Guillermo de la Merced are innocent purchasers of the lots, and as such are protected by Sections 38 and 39 of the Land Registration Act. The Court noted that the question of good faith was properly pressed before the Court of Appeals, that it was rejected there, and that the Supreme Court's jurisdiction is limited to reviewing errors of law, not to weighing the evidence anew.

Doctrine

A decree of registration obtained by fraud, and even one entered in denial of due process, is not absolutely void against the whole world. It may be annulled upon a petition for review filed within one year from its entry, but only provided no innocent purchaser for value has acquired an interest. Once such an innocent purchaser for value has acquired an interest in reliance on the Torrens title, the remedy of review is closed, and the title of that purchaser is protected. This rule flows directly from the express language of Section 38 of the Land Registration Act. Corollary to this, the finding of the Court of Appeals on the good faith of a purchaser is a finding of fact that the Supreme Court will not set aside absent exceptional circumstances.

Disposition

The Court affirmed the decision of the Court of Appeals, with costs against the petitioner, so that the respondents prevailed and their titles as innocent purchasers for value were upheld.

Remember This

The one line to memorize: a fraudulent or even void decree may be reviewed within one year, but never at the expense of an innocent purchaser for value. Examiners use this case to test the limits of the remedy of review of a decree of registration under Section 38 of the Land Registration Act, and the finality of the Court of Appeals' factual findings on good faith.