G.R. No. L-14698. March 30, 1963.
JOSE E. COLLADO, ET AL., petitioners, vs. THE HON. COURT OF APPEALS, ET AL., respondents.

FACTS

Spouses Pedro Aventura and Anacleta Galan obtained Original Certificate of Title No. C-153 for two lots via a cadastral decree dated January 26, 1951. Shortly after, they sold the lots to spouses Jose E. Collado and Aurora Provido for P4,000.00. Before the sale, Collado inspected the title, which appeared clean, and visited the property. He found Nicomedes Copiat on the land and was told by Galan that Copiat was her tenant. Coronado, an intermediary, informed Copiat of the impending sale, to which Copiat remained silent, reinforcing Collado’s belief. The sale proceeded, and Transfer Certificate of Title No. 11100 was issued to the Collados.
However, three months post-sale, the Collados discovered other claimants, including Copiat, asserting ownership. They subsequently filed an action in the Court of First Instance of Iloilo to recover possession and ownership. The trial court ruled in favor of the Collados, ordering Copiat, et al., to vacate. The Court of Appeals reversed this decision, declaring the cadastral decree and the resulting titles null and void as to the subject lots and ordering the cadastral court to hear the claims of Copiat, et al., on review.

ISSUE

The core issues were: (1) whether the Collados were purchasers in good faith, and (2) whether the Court of Appeals erred in nullifying the registration decree and titles, allegedly constituting a collateral attack.

RULING

The Supreme Court affirmed the Court of Appeals’ decision. On the first issue, the Court upheld the appellate court’s factual finding that the Collados were not purchasers in good faith. The Court of Appeals found that Collado, prior to the sale, had visited the land with policemen and was directly informed by the occupants that the land belonged to the Copiats, not to Aventura. This prior knowledge of an adverse claim, coupled with the swift sequence of events from the issuance of the original title to its transfer, indicated bad faith and possible connivance to deprive the Copiats of their inheritance. As these are factual findings, they are binding on the Supreme Court.
On the second issue, the Supreme Court ruled that the nullification did not constitute an impermissible collateral attack. The record showed that Copiat, et al., had filed a timely petition for review of the cadastral decree within the one-year period prescribed by Section 38 of Act No. 496 (the Land Registration Act). This petition was filed in the very same cadastral case (Cadastral Case No. 88), and its proceedings were merely suspended by the cadastral court pending the outcome of the Collados’ civil action for recovery of possession. Therefore, the attack was a direct attack via a proper petition for review, not a collateral one. The Court of Appeals correctly ordered the cadastral court to proceed with the hearing on the merits of that petition for review. The decision was affirmed with costs against the petitioners.