G.R. No. 243146 - Velasco vs. Magpale

Respondent, Rebecca Magpale, is the registered owner of a 6,595-square meter parcel of land covered by Transfer Certificate of Title (TCT) No. 15102.
Petitioners include numerous individuals—such as Amor Velasco, Nolfe Velasco, George Velasco, and others—who are either heirs or tenants of Francisco Velasco, a former co-owner of the original property.
The conflict arises from the dispute over possession of a portion of the property that was derived from the original title and later subdivided by an extrajudicial partition.

The original property, with a total area of 59,355 square meters, was initially covered by TCT No. NT-31597 issued in the names of several co-owners including Francisco Velasco and his relatives.
On April 9, 1992, an Extra Judicial Partition with Subdivision Agreement and Waiver of Rights was executed by the owners.

The partition subdivided the property into three lots: Lot 3360-A-2-A, Lot 3360-A-2-B, and Lot 3360-A-2-C, each containing 19,785 square meters.
The lot corresponding to TCT No. 15102 (Lot 3360-A-2-C) was assigned to the heirs of Leoncia and Benigno, with respondent later emerging as its sole representative via subsequent waivers of rights.

The partition process was contested because petitioners allege that their predecessor, Francisco Velasco, was improperly included in the agreement—specifically questioning the authenticity of his signature since he had died in 1982, a full decade before the partition was executed.

In July 2010, respondent filed a Complaint for Recovery of Possession before the Municipal Trial Court in Cities (MTCC) of San Jose City, Nueva Ecija, asserting her ownership and right to recover possession of the 6,595-square meter lot.
Petitioners, in their Answer, denied all allegations and raised a compulsory counterclaim challenging the validity of TCT No. 15102 on the ground that it was issued based on a falsified extrajudicial partition.

They argued that the document purportedly carried the signature of Francisco Velasco, despite his death in 1982, rendering the partition—and subsequently the title—fraudulent.
Petitioners contended that their possession of the property stemmed from their status as heirs of Francisco and that they never consented to the partition that allegedly benefitted respondent.

The lower courts (MTCC and the Regional Trial Court of San Jose City, Branch 38) ruled in favor of respondent, holding that:

The certificate of title is conclusive evidence of ownership and the allegations challenging its validity constituted a collateral attack that could not be entertained in a recovery of possession proceeding.
Petitioners were ordered to remove their structures and vacate the property, and they were further ordered to pay monthly rental charges.

The Court of Appeals (CA) affirmed the decisions of the lower courts by upholding the conclusive nature of the certificate of title, specifically invoking Section 48 of Presidential Decree No. 1529.
Subsequently, petitioners elevated the issue on certiorari by asserting that their compulsory counterclaim amounted to a direct attack on the validity of respondent’s title, a matter which the lower courts should have resolved.

After the filing of the recovery of possession case, respondent died in April 2011 and was substituted by her children via a Special Power of Attorney.
Petitioners’ main contention remained that TCT No. 15102 was based on an extrajudicial partition agreement which was tainted by fraud, given the inclusion of the signature of the deceased Francisco Velasco.
The pivotal factual controversy centers on the authenticity of the document and whether Francisco’s alleged participation in the partition is legally valid, considering his death long before the document’s execution.

Whether petitioners’ compulsory counterclaim challenging the validity of TCT No. 15102 constitutes a direct attack on the title that can be adjudicated in a recovery of possession proceeding.

Is the counterclaim of nullifying a title issued on a fraudulent partition the proper subject matter for direct judicial review?
Does the alleged inclusion of a falsified signature of Francisco Velasco transform the counterclaim into a direct attack rather than a collateral one?

Whether the Court of Appeals erred in affirming the decisions of the lower courts that granted respondent’s recovery of possession despite petitioners’ allegations of fraud and invalidity in the partition agreement.

Did the lower courts, by deeming the allegations as collateral, overlook the direct impact of the purported forgery on in terrorem title validity?
Is there sufficient evidence that the extrajudicial partition was executed without the consent of all rightful heirs, thus rendering the certificate of title void?

To what extent should the evidence of Francisco Velasco’s death and subsequent lack of capacity to contract be considered in invalidating the partition agreement and the resultant TCT No. 15102.