G.R. No. L-49686 August 31, 1988
FELIX GOCHAN & SONS REALTY CORPORATION, petitioner-appellant, vs. VICENTE CAÑADA, substituted by MONA LISA MA. REYES, and THE COURT OF APPEALS, respondents-appellees.

FACTS

Vicente Cañada filed an action for partition against Juan Jabutay over an unregistered parcel of land, Lot No. 6733. The trial court declared them co-owners and ordered partition. During Jabutay’s appeal of this decision, and without notice to Cañada, Jabutay surreptitiously applied for and obtained original registration of the entire lot in his name alone under the Torrens system. Subsequently, Jabutay sold the entire registered lot to Felix Gochan & Sons Realty Corporation. Gochan, finding no notice of lis pendens on the title, paid the consideration and received a clean Transfer Certificate of Title.
After discovering the sale, Cañada filed a separate action to annul the sale to Gochan and caused a notice of lis pendens to be annotated on Gochan’s title years after the partition judgment. Meanwhile, the Court of Appeals affirmed the partition judgment. In execution proceedings long after the judgment became final, the appellate court, upon motion, impleaded Gochan as an additional party-defendant and ordered the partition to proceed against Gochan’s titled property.

ISSUE

Did the Court of Appeals err in ordering the execution of the partition judgment against Gochan, a purchaser for value of the registered land who was not a party to the original partition suit?

RULING

Yes. The Supreme Court annulled the orders for partition against Gochan. The legal logic rests on the principles of due process and the indefeasibility of a Torrens title. Gochan was not a party to the original partition case (Civil Case No. R-1630) between Cañada and Jabutay. No notice of lis pendens was annotated on Jabutay’s title at the time of the sale to Gochan. Consequently, Gochan, as an innocent purchaser for value, acquired a title cleansed of the unregistered claim arising from the partition suit. The Court of Appeals lost jurisdiction over the partition case after its judgment became final and executory. Impleading Gochan at the execution stage, years after finality, violated Gochan’s fundamental right to due process, as it was deprived of the opportunity to be heard and to defend its registered ownership.
The registration of the land under the Torrens system in Jabutay’s name extinguished all prior unregistered claims, including Cañada’s right under the unexecuted partition judgment. A final judgment can only bind parties and their successors-in-interest, not strangers like Gochan who derived title from a separate registered source. The proper remedy for Cañada’s successor-in-interest is an independent action for reconveyance against Gochan, where the issue of Gochan’s good faith and the superiority of titles can be properly litigated. The Court cannot allow execution against a property held by a non-party whose rights were vested through a registered transaction.