DIRECTOR OF LANDS AND ALFONSO MARIANO, PLAINTIFFS; ALFONSO MARIANO, PLAINTIFF AND APPELLANT, VS. MAXIMIANO P. MARTIN AND DATU MAMINTU LUMANTAG, DEFENDANTS AND APPELLEES.

This action for the annulment of a transfer certificate of
title commenced sometime before the war in the Court of First Instance of
Cotabato. From a judgment of dismissal, the case was raised to the Court of
Appeals which held that it involved purely ciuestions of law and, hence,
certified it to this Court. While thus pending, the war came, the case was held
in abeyance, and the records were lost during the destruction of Manila by the
Japanese Forces. After Liberation, the records were reconstituted and the appeal
has been revived.

It appears that in July 1932, Alfonso Mariano, the herein
appellant, filed a homestead application over a parcel of land situated in the
municipality of Libungan, Province of Cotabato. His claim was opposed by Ricardo
Reyes represented by Maximiano P. Martin, one of the appellees herein. On
September 8, 1933, the Director of Lands granted Alfonso Mariano preferential
rights over said homestead known as lot No. 2931 and directed him to file his
application, which he did.

In November of 1933, cadastral hearings were held in Midsayap,
Cotabato, by the Court of First Instance and lot No. 2931 was included among
those to be heard. At the hearing of said lot, Ricardo Reyes, the same one who
bad claimed this lot in the homestead proceedings which resulted favorably for
Alfonso Mariano, and another person name Gattoc, both represented by appellee
Martin, filed their answers as claimants. After hearing, on November 25, 1933,
the court declared said lot as public land and granted Reyes and Gattoc
preferential homestead rights over it. Alfonso Mariano had not taken part in
these proceedings.

A few days after, upon the intervention of their counsel
Maximiano P. Martin. Ricardo Reyes and Gattoc withdrew their claims over lot No.
2931, and at the same time, one Datu Mamintu Lumantag filed a claim of private
ownership over the lot. The referee who had been commissioned to conduct these
proceedings, ordered and held a rehearing of which neither the Director of Lands
nor the Fiscal had been notified. Reyes and Gattoc having withdrawn their
claims, Lumantag’s claim stood unopposed.

This rehearing took place in November 1933 and on December 18,
1933, while the decision of the court was pending, Lumantag sold his rights over
said lot to appellee Martin. Finally, on May 17, 1934, the court rendered
judgment adjudicating the lot to Lumantag as his private property and ordered
the issuance of the decree of registration on November 28, 1934.

On May 13, 1935, appellant Mariano filed with the same court a
petition for review of aforesaid decree on the ground of fraud. However, on July
22, 1935, in pursuance of the decision of the court, the Register of Deeds
issued an Original Certificate of Title over lot No. 2931 in favor of Datu
Mamintu Lumantag. Whereupon, appellant Martin presented the deed of sale
executed by Lumantag in his favor on December 18, 1933, and obtained a Transfer
Certificate of Title in his name on October 7, 1935.

Finally, on March 21, 1936, the same court issued an order on
appellant’s petition for review setting aside its own decision of May 17, 1934
insofar as it declared lot No. 2931 as the private property of Datu Mamintu
Lumantag. From this order there was no appeal.

The controversy thus stood until appellant Mariano filed a
complaint in the same Court of First Instance of Cotabato on March 12, 1938,
asking for the annulment of the Transfer Certificate of Title over lot No. 2931
issued to appellee Maximiano P. Martin. On June 29, 1940, judgment was rendered
dismissing the complaint. Hence, this appeal which has been certified to this
Court lay the Court of Appeals.

This Court finds that appellant’s complaint is meritorious and
was wrongly dismissed by the lower court. It is predicated mainly on the order
of the lower court setting aside its own decision of May 17, 1934, wherein lot
No. 2931 was adjudicated as the private property of Lumantag. Said order is
valid, it having been issued by a court having jurisdiction over the subject
matter and over the persons of the parties. And it has become final, no appeal
having been taken therefrom within the time provided by the Rules. It being
final, it is now conclusive as to the issue of fraud by which Lumantag secured
the decree issued in his favor. And that order is binding upon the purchaser
Maximiano Martin, who made his purchase five months prior to the rendition of
the judgment in favor of the vendor Lumantag. Martin, therefore, is a transferee
pendente lite and without the necessity of joining him as a party, he
stands exactly in the shoes of the transferor and is bound by any Judgment or
decree which may be rendered for or against the transferor. (Rule 3, sec. 20, of
the Rules of Court; Fetalino vs. Sanz, 44 Phil., 691; and Rivera vs. Moran, 48
Phil., 836.) Had the purchase been made after the decree was issued in favor of
Lumantag then nothing that may vitiate the validity of such decree may affect
the purchaser Martin if the latter had acted in good faith. Since, however,
Martin acquired the property while the litigation was pending anything that may
affect the vendor will also affect the vendee, the latter’s good faith being
immaterial. The good faith protects the purchaser when it rests mainly upon a
decree.

Furthermore, the following words of this Court in Rivera vs.
Moran (48 Phil., 836, 840) are perfectly applicable in the instant case: “The
contention that the petitioners must be regarded as innocent purchasers for
value within the meaning of section 38 cannot be sustained. They acquired their
interest in the land before any final decree had been entered; the litigation
was therefore in effect still pending and it appears that they were aware of
that fact. In these circumstances, they can hardly be considered innocent
purchasers in good faith.”

For all the foregoing, the judgment appealed from is reversed
and appellee Maximiano P. Martin is ordered to surrender to the trial court the
transfer certificate of title issued in his name on lot No. 2931, which is
hereby declared null and void, with costs against said appellee.

Ozaeta, Paras, Feria, Perfecto, Tuason, Montemayor, and
Reyes, JJ., concur.
Moran, C.J., Mr. Justice Pablo voted for this decision.
Bengzon and Briones, JJ., took no part.