G.R. No. 33862 ; November 11, 1931
PABLO CHOZAS and EUGENIA BUNDULIAN, applicants, vs. JUAN T. CRUZ, petitioner-appellee, and CEFERINO CATIPON, respondent-appellant.

FACTS

Pablo Chozas and his wife Eugenia Bundalian sold two parcels of land to Juan T. Cruz in May 1926 under a contract of sale with a right of repurchase (venta con pacto de retro). In December 1926, the spouses applied for registration of those parcels without disclosing the prior sale to Cruz, thereby obtaining original certificates of title (Nos. 6906 and 6908) free from any lien. Subsequently, Pablo Chozas sold four parcels, including one of the parcels previously sold to Cruz, to Ceferino Catipon under a similar pacto de retro. This sale to Catipon was annotated on the certificate of title, while the sale to Cruz was not recorded. Upon learning of this, Cruz filed a petition for review of the decree under Section 38 of Act No. 496 (the Land Registration Act) within one year, alleging fraud in the registration proceedings and that Catipon was not an innocent purchaser.

ISSUE

Whether the registration decrees should be set aside due to fraud and whether Catipon was an innocent purchaser for value.

RULING

The Supreme Court found that Pablo Chozas fraudulently concealed the prior sale to Juan T. Cruz during the registration proceedings. The Court also held that Ceferino Catipon was not an innocent purchaser, as the evidence indicated his connivance with Chozas. However, the Court modified the trial court’s decision. Instead of annulling the entire sale to Catipon and setting aside the registration decrees, it declared the sale to Catipon null and void only with respect to the specific parcel previously sold to Cruz. The Court ordered the annotation of Cruz’s prior sale as a superior and preferential conveyance on the relevant certificates of title (Nos. 6906 and 6908), without the need to issue new titles.

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