AMADO CAYANAN, ET AL., PETITIONERS-APPELLANTS, VS. LEON DE LOS SANTOS AND FELIX L. CAMAYA, RESPONDENTS-APPELLEES.

Cayanan versus De los Santos

The Case

This is a petition for review of a decree of registration, filed by Amado Cayanan and others against Leon de los Santos and Felix Camaya. The petitioners claim that De los Santos obtained his title to a cadastral lot through actual fraud, and that he afterwards executed a simulated deed of absolute sale over the same lot in favor of Camaya, precisely to defeat any review of the decree. The trial court refused to hear the petition and told the petitioners to file an ordinary civil action instead. The case matters because it settles a procedural question every land registration lawyer must know: within one year from the entry of the final decree, which court may reopen it, and may that court also look into a transfer alleged to be simulated?

Procedural History

The Court of First Instance of Pampanga, sitting as a cadastral court, confirmed the title of De los Santos to the lot. Within the year, the petitioners filed a petition for review in the same cadastral proceeding, praying for the reopening of the decree, the cancellation of the original certificate of title and of the transfer certificate of title, and the adjudication of the lot in their favor. The cadastral court denied the petition in its order of February 9, 1959. It reasoned that the lot had already been transferred to Camaya under Section 38 of the Land Registration Act, and that the claim of simulation and lack of innocent purchaser status should be threshed out in an ordinary civil action, not in a simple petition. The order dismissed the petition without prejudice to the filing of an ordinary civil action. The petitioners appealed directly to the Supreme Court, which reversed the order.

Facts

On May 30, 1958, the title of Leon de los Santos to Lot Number 56 of the Porac Cadastre was confirmed by Judge Arsenio Santos of the Court of First Instance of Pampanga. A decree of registration was entered on August 8, 1958.

On October 26, 1958, De los Santos executed a deed of absolute sale over the lot in favor of Felix Camaya. The petitioners later alleged that this sale was simulated.

On December 16, 1958, still within one year from the entry of the decree, Amado Cayanan and others filed a petition for review in the same cadastral proceeding. They alleged that the lot had been registered in the name of De los Santos through actual fraud, through deceit, and through intentional omission of facts. They also alleged that the deed of sale in favor of Camaya was simulated, so that Camaya was not a purchaser for value and not an innocent purchaser. The cadastral court denied the petition, and the petitioners appealed.

Issues

• Whether or not, in a petition for review of a decree filed within the one-year period on the ground of actual fraud, the cadastral court acting as such may inquire into an allegation that the lot subject of the decree was transferred in a simulated sale intended to avoid such a review.
• Whether or not the pendency of a transfer of the lot in favor of another person bars the cadastral court from acting on the petition for review and requires the petitioners to file an ordinary civil action instead.

Applicable Provisions

Section 38 of the Land Registration Act, Act Number 496, as discussed in the decision, provides:

The mere mention by the law that the relief afforded by Section 38 of Act 496 may be sought in the competent Court of First Instance is no sufficient indication that the petition must be filed in the Court of First Instance, exercising its general jurisdiction, considering the fact that it is also the Court of First Instance that acts on land registration cases.

This provision is the source of the one-year remedy of review on the ground of fraud, and the Court construes its reference to the competent Court of First Instance to include the cadastral court that rendered the decree.

Ruling

On the first issue, the Court held that the cadastral court can inquire into the allegation of a simulated sale. It was error for the lower court to deny the petition and to require the filing of an ordinary civil action in order to test the validity of the transfer to one allegedly not an innocent purchaser for value.

On the second issue, the Court held that the transfer does not bar the cadastral court from acting. The Court relied on its earlier pronouncement in Director of Lands versus Busuego, where it said:

In the present case, as the petitions were filed within one year from the date of the issuance of the decree, pursuant to Section 38 of Act 496, the same are properly cognizable by the court that rendered the decision and granted the said decree.

The Court explained the reason: the adjudication of land in a registration or cadastral case does not become final and incontrovertible until the expiration of one year from the entry of the final decree. As long as the final decree is not issued and the one-year period within which it may be reviewed has not elapsed, the decision remains under the control and sound discretion of the court rendering the decree, which court, after hearing, may even set aside the decision or decree and adjudicate the land to another. The Court traced this doctrine through a line of cases, from Guzman versus Ortiz in 1909, through Afalla versus Rosauro, Valmonte versus Nable, Capio versus Capio, and Santos versus Ichon.

Doctrine

Within one year from the entry of the final decree, a petition for review on the ground of actual fraud under Section 38 of the Land Registration Act may be filed in the very cadastral court that rendered the decree, and that court retains control and sound discretion over its decision until the year expires. The pendency of a transfer of the lot to another person does not divest the cadastral court of that jurisdiction; the allegation that the transfer is simulated and that the transferee is not an innocent purchaser for value is a matter the cadastral court may hear and resolve in the same petition, without need of a separate ordinary civil action. After the one-year period, the adjudication becomes final and incontrovertible.

Disposition

The Supreme Court set aside the order of February 9, 1959, and remanded the case to the Court of First Instance of Pampanga for a hearing on the merits of the petition for the reopening of the decree of registration in favor of Leon de los Santos, with costs against the appellees.

Remember This

Memorize this line: until one year from the entry of the final decree, the cadastral court retains control over its decision and may reopen it for fraud, even against a transferee alleged to be a mere simulation. Examiners use this case to test jurisdiction over a petition for review of a decree and the effect of a subsequent transfer on that jurisdiction.