Facts:

The case involves Felipa Delfin, Gina Maalat, Shirley Tamayo, Recio DaAos, and Roberto Delfin as petitioners against Presentacion D. Billones, Rosario D. Demonarca (accompanied by her husband Pedro Demonarca), Wenefredo Degala (representing Pedro Degala), Ramon Dela Cruz (representing his deceased wife Maria Daradar Dela Cruz), Teresita Daliva Deviiente (daughter of Esperanza Daradar Daliva), and Jolly Datar (representing his deceased mother Trinidad D. Datar) as respondents. The case was decided by the Supreme Court on March 17, 2006, following a petition for review on certiorari that challenged the Decision and Resolution of the Court of Appeals in CA-G.R. CV No. 54035, which reversed the Regional Trial Court's (RTC) ruling from May 27, 1996.

The dispute centers around two properties: Lot No. 213 and Lot No. 3414, originally owned by Teresa DaAos and her family. A Deed of Absolute Sale was executed on July 29, 1960, transferring Lot No. 213 to the spouses Rodolfo and ...

Facts:

Background of the Case

• On 29 July 1960, a Deed of Absolute Sale was executed by Teresa DaAos, Esperanza Daradar, Estrella Daradar, and Maria Daradar, with the marital consent of Cipriano Degala, in favor of the spouses Rodolfo Delfin and Felipa Belo (spouses Delfin) over Lot No. 213. The document was notarized and later registered on 18 November 1980, resulting in the issuance of Transfer Certificate of Title (TCT) No. T-17071 in the name of the spouses Delfin.
• On 26 March 1965, an Extra-Judicial Partition and Absolute Deed of Sale was executed by Teresa DaAos, Trinidad Degala, Leopoldo Degala, Presentacion Degala, Rosario Degala, and Pedro Degala in favor of the spouses Delfin over Lot No. 3414. This deed was also notarized and registered on 24 June 1980, leading to the cancellation of TCT No. T-16804 and the issuance of TCT No. T-16805 in the name of the spouses Delfin.
• The spouses Delfin consolidated Lots No. 213 and No. 3414, subdivided them into six smaller lots, and sold four of these lots to third parties: Roberto Delfin, Recio DaAos, Gina Maalat, and Shirley Tamayo. The remaining two lots were retained by the spouses Delfin, with one used as an access road.

Respondents' Claims

• On 12 April 1994, the respondents, claiming to be the heirs of the original owners of Lots No. 213 and No. 3414, filed an action for annulment, reconveyance, recovery of ownership, and damages. They alleged that:
  • The Deed of Absolute Sale for Lot No. 213 was fictitious and the signatures/thumb marks were forged, as three of the signatories (Estrella Daradar, Esperanza Daradar, and Cipriano Degala) had died before the alleged sale in 1960.
  • The Extra-Judicial Partition and Deed of Absolute Sale for Lot No. 3414 was a simulated transaction, as Teresa DaAos, who was old and sickly, only intended to mortgage the property for P300.00, not sell it.

Petitioners' Defense

• The petitioners argued that:
  • The respondents' action was barred by prescription and laches.
  • The spouses Delfin and subsequent buyers were innocent purchasers for value and in good faith.
  • The deeds of sale were duly executed notarial documents and enjoyed the presumption of regularity.

Trial Court Ruling

• The trial court ruled in favor of the petitioners, holding that:
  • The respondents failed to prove their claims by a preponderance of evidence.
  • The deeds of sale were valid and enforceable, and the respondents' claims of fraud were barred by prescription.
  • The respondents were estopped by laches from annulling the deeds.

Court of Appeals Ruling

• The Court of Appeals reversed the trial court's decision, ruling that:
  • The action for reconveyance was not barred by prescription since the respondents were in possession of the properties.
  • The Extra-Judicial Partition and Deed of Absolute Sale for Lot No. 3414 was an equitable mortgage, not a sale, due to the circumstances surrounding its execution.
  • The Deed of Absolute Sale for Lot No. 213 was invalid because two of the signatories had died before the alleged sale.
  • The subsequent buyers (Roberto Delfin, Recio DaAos, Gina Maalat, and Shirley Tamayo) were not purchasers in good faith.

Issue:

• (Unlock)

Ruling:

• (Unlock)

Ratio:

1. Presumption of Validity of Notarized Documents: Notarized documents enjoy the presumption of regularity, and the burden of proving fraud or simulation lies on the party challenging the document. The respondents failed to provide clear and convincing evidence to overcome this presumption.
2. Burden of Proof: The respondents, as plaintiffs, had the burden to prove their case by a preponderance of evidence. They failed to substantiate their claims of fraud, forgery, and simulation.
3. Innocent Purchasers for Value: The petitioners, including the subsequent buyers, are innocent purchasers for value and in good faith, as they relied on the clean titles of the properties at the time of purchase.
4. No Proof of Possession: The respondents failed to prove that they were in actual possession of the properties, which is a prerequisite for an action for reconveyance based on fraud.
5. No Implied or Constructive Trust: Since the respondents failed to prove fraud, no implied or constructive trust was created in their favor.

Conclusion:

• The Supreme Court upheld the validity of the deeds of sale and the titles derived therefrom, ruling in favor of the petitioners. The respondents' claims were dismissed due to lack of evidence, and the petitioners were declared innocent purchasers for value and in good faith.