MAGDALENA G. VDA. DE CUAYCONG, PETITIONER AND APPELLANT VS. CRISTETA L. VDA. DE SENGBENGCO, OPPOSITOR AND APPELLEE.

An appeal from two (2) prders of the Court of First Instance of Negros
Occidental, dated May 8 and July 21, 1954, respectively. The record on appeal
was originally forwarded to the Court of Appeals, which, however, certified it
to this Court, only questions of law being raised |n the case.

By a decision of said court of first instance, dated September 5, 1935, Lot
903 of the Sagay Cadastre was ordered registered as follows: one-half (1/2) in
the name of Cristeta L. Vda. de Sengbengco and the other half in that of the
fieirs of J. Clayton Nichols. The decision having presumably become final, the
corresponding decree and original certificate of title were issued on November
21 and December 12, J935, respectively. Less than a year later, or on September
8, 1936, the heirs of Rafael Balila, who had filed their answer, claiming said
Lot 903, way back in 1923, moved for a reconsideration of said decision and a
new trial upon the ground that the movants had not been notified of the hearing
held in connection with the aforementioned lot. This motion was denied by an
order dated October 2,1936, which, on July 17,1937, was reconsidered and set
aside by Hon. Sotero Rodas, Judge, who then presided the court aforementioned.
Pertinent parts of the order to this effect read:

“Habiendose presentado la moci6n de revision antes del transcurso de un afio
a contar desde la expedicion del decreto, no cabe duda alguna que procede
acceder a la misma siempre y cuando haya habido fraude en la obtencion del
citado decreto. No hay pruebas de que las adjudicatorios arriba nombrados fuesen
responsables de la falta de notificacion a los recurrentes, pero es
significativo el hecho de que el ultimo reclamante que alego ser dueno de la
totalidad del lote en cuestion y cuya contestacion solo se presento en 30 de
julio y sin que conste que haya sido admitida y levantada previamente la orden
de rebeldia en cuanto a el, entro en convenio con J. Clayton Nichols que tambien
reclamaba la totalidad de dicho lote, en dividirse por mitad el terreno y pedir
su adjudication a favor de ellos en partes iguales. El Juzgado es de
opinion que se les ha privado a los recurrentes de su propiedad sin previo
proceso legal no habiendoseles concedido su ‘day in court’ y que este Juzgado no
tenia jurisdiccion para conocer de la reclamation de Sing Bengco que no ha
sido admitida debidamente, y que el caso cae en el significado de la
palabra fraude que ae requiere que se demuestre para que haya revision de
decreto.

* * * * * * *

“Por todo lo expuesto, el Juzgado reconsidera su auto de fecha 2 de
octubre y accediendo a la mocion de revision ordena que se señale a vista
el lote No. 903 de este expediente.” (Italics ours.)

The records do not show what happened immediately thereafter. War broke out
in the Pacific late in 1941, and, subsequently, the records were seemingly lost
or destroyed. On or about September 5, 1953, Mrs. Sengbengco filed a petition,
dated August 21, 1953, for reconstitute of the certificate of title above
referred to, the original of which and its owner’s duplicate having been
allegedly burned, destroyed or lost during the last war. The motion was granted
by an order dated November 17, 1953, in com-pliance with which Original
Certificate of Title No. 15104 was issued on January 2, 1954. Soon later or on
January 16, 1954, Magdalena G. Vda. de Cuaycong, to whom the rights and interest
of the heirs of Rafael Balila in and to Lot 903 were conveyed, assigned and
transferred on August 28, 1936, moved for the cancellation of said Original
Certificate of Title No. 15104, upon the ground that the same had been issued
illegally and in consequence of an oversight, for, apart from being null and
void, the decision upon which it is based was reconsidered and set aside by the
aforementioned order of July 17, 1937. This motion was granted by an order dated
February 14, 1954, which, on motion of Mrs. Sengbengco, was reconsidered and set
aside by another order-issued by Hon. Francisco Arellano, Judge, who then
presided the court-under date of May 8, 1954. A reconsideration of the latter
order having been denied on July 21, 1954, Mrs. Cuaycong interposed the present
appeal.

Appellee maintains, and the lower court held, that appellant’s motion of
September 8, 1936, for reconsideration of the decision dated September 5, 1935
and new trial, as well as the order of Judge Rodas of July 17, 1937, granting
said motion, were premised upon Section 38 of Act No. 496, pursuant to which
every decree of registration shall be conclusive upon and against all persons,
subject to the right of the parties injured by a decree obtained by fraud to
seek a review, within one (1) year from entry of thevdecree, provided no
innocent purchaser for value has acquired an interest; that the failure of the
Clerk of the CSourt of First Instance of Negros Occidental to notify the heirs
of Rafael Balila of the date of the hearing does not constitute fraud; that the
heirs of Rafael Balila had “no legal personality” to file their petition for
review, on September 8, 1936, inasmuch as prior thereto, or on August 28, 1936,
herein appellant had acquired their interest in Lot 903; and that, having failed
to avail herself, within a reasonable time, of the benefits of the order of
Judge Rodas, dated July 17, 1937, appellant is now barred by laches from either
invoking said order or seeking the protection of the law.

We are unable to agree with this view. If the principle of laches were
applicable to appellant, on account of her failure, up to January 16, 1954, to
urge the enforcement of the order of July 17, 1937, it should operate equally
upon the appellee, who did not seek to contest said order and have it set aside
until March 6, 1954, or almost 17 years later.

Moreover, in paragraph 15. of her “petition for reopening and review of
decree” (p. 52, Rec. on Appeal), appellant alleged-and this was impliedly
admitted in appellee’s brief (p. 23)-that said appellee and the heirs of J.
Clayton Nichols had obtained the decision of September 5, 1935, by submitting a
stipulation to the effect that Lot 903 be adjudicated to them as the
only claimants thereof, although the answer containing the claim of the
Balilas appeared in the record of the proceedings, with which the parties must
be deemed familiar. We note, also, that according to the verified pleadings
before us-the pertinent allegations of which have not been denied by herein
appellee-said lot had been in the adverse possession of the Balilas, actually,
openly and continuously, for over 40 years, prior to September, 1935, and,
thereafter, of appellant herein, up to the present, so that the appellee could
not possibly have been unaware of such fact. This conclusion appears to be borne
out by the circumstance that despite the decision and the decree, as well as the
certificate of title in her favor, way back in 1935, Mrs. Sengbengco has not, up
to the present, even attempted to take possession of Lot 903. In the light of
these circumstances, we are satisfied that, as hejd by Judge Rodas, said decree
was tainted with fraud sufficiently to justify the order of July 17, 1937
(Director of Lands vs. Aniceto Aba, et al., 68 Phil., 85).

Again, a decree of registration secured through fraud is valid,
although annullable, upon petition filed within one (1) year after entry of the
decree, in the absence of an innocent purchaser for value, whereas a decision
rendered without notice to the parties of record is void for lack of due process
(46 C.J. p. 552; 16A C.J.S. 835; Taylor vs. Phox Bus Co. et al., 129
N.J. Eq. 610, 20 A 2d. 343; People ex rel Van Dyk vs. Van Dyk, 33
N.Y.S. 2d 766; Producers Inv. Co. et al. vs. Colvert, 187 Okl. 59, 100
P. 2d. 1005; Harris et al. vs. Deal, 189 Va. 675, 54 S.E. 2d. 161;
State ex real Adams vs. Superior Court of the State, Pierce County; 36
Wash. 2d. 868, 220 P. 2d. 1081; State ex rel First National Bank vs.
Hastings, 207 P. 23, 31; Bass vs. Hoag-land, C.A. Tex. 172 F. 2d 205,
70 S. Ct. 57, 338 U.S. 816, 94 L. ed. 494; Hovey vs. Elliot, 167 U.S.
409,17 S. Ct. 841, 42 L. ed. 215; Wiodson vs. McVeigh, 93 U.S. 274, 23
L. ed. 914; Wetmore vs. Karrich, 205 U.S. 141, 27 S. Ct. 434, 51 L. ed.
745; Atlantic Coast Line Railroad Co. vs. Lake County Citrus Sales,
Inc., 48 So. 2d. 922; Adams & McGahey vs. Clyde B. Neill, 58 N.M.
782, 276 P. 2d. 913). Indeed, acts of Congress, as well as those of the
Executive, can deny due process only under pain of nullity, and judicial
proceedings suffering from the same flaw are subject to the same sanction, any
statutory provision to the contrary notwithstanding.

Now then, if a decree issued in pursuance of a valid decision,
obtained by fraud, may be annulled within one (11 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 fetal 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.

Lastly, the conveyance to Mrs. Cuaycong of the rights and interest of the
heirs of Rafael Balila did not affect the “legal personality” of the latter.
Besides, they retained an interest in Lot 903, in view of their obligation in
favor of Mrs. Cuaycong to warrant the titlg thereto.

Wherefore, the aforementioned orders of May 8 and July 31,1954 are hereby
reversed and set aside, and the order of July 17, 1937, accordingly reinstated;
and let the record of this case be remanded to the court of origin for further
proceedings, in conformity with the order last, mentioned, with costs against
the oppositor-appellee. It is so ordered.

Paras, C.J., Bengzon, Padilla, Buutista Angelo, Labrador, Reyes, J.B.L.,
Barrera, Gutierrez David, Paredes, and Dizon, JJ., concur.

Orders reversed.