Title
Agbayani vs. Lupa Realty Holding Corp.
Case
G.R. No. 201193
Decision Date
Jun 10, 2019
A 91,899-sqm land in Cagayan was falsely sold, with forged deeds transferring ownership from Tranquilino to Lupa Realty via intermediaries. The Supreme Court nullified the fraudulent sales, reinstated Tranquilino’s title, and ruled Lupa Realty failed due diligence, dismissing claims of innocence.
dispute
parcel of land
forged signature

Case Summary (G.R. No. 201193)

Factual Background

Tranquilino Agbayani originally held the 91,899-square meter parcel under Original Certificate of Title (OCT) No. P-46041 pursuant to Free Patent No. 587747. In April 1989, Tranquilino left for California, U.S.A. On October 29, 1997 a document entitled a Deed of Absolute Sale (1997 DAS) purporting to have been executed by Tranquilino in favor of Lupa Realty was used to effect registration in the name of Lupa Realty as Transfer Certificate of Title (TCT) No. T-109129. The record also contained a notarized Deed of Absolute Sale dated January 21, 1992 (1992 DAS) purporting to convey the property from Tranquilino to his brother Nonito Agbayani, and a notarized Deed of Absolute Sale dated May 30, 1997 from Nonito to Moriel Urdas, who in turn conveyed to Lupa Realty on October 29, 1997.

Trial Court Proceedings

Tranquilino filed a complaint for reivindicacion, cancellation of title and document, and damages. He alleged forgery of his signature on the 1997 DAS and denied any sale to Nonito. Lupa Realty answered that the property had passed through valid sales from Tranquilino to Nonito, from Nonito to Moriel, and from Moriel to Lupa Realty, and pleaded innocent purchaser for value and in good faith. Lupa Realty impleaded Moriel for warranty and Moriel impleaded Nonito. At trial, Tranquilino presented lay witnesses but no handwriting expert. Lupa Realty presented testimony and documentary proofs including the chain of deeds; some notarial acknowledgments and documentary details were contested. The trial court found that the 1992 DAS and the 1997 DAS were falsified, that Lupa Realty was not an innocent purchaser for value, and ordered cancellation of TCT No. T-109129, reinstatement of OCT No. P-46041 in Tranquilino’s name, and several monetary awards among the parties.

Court of Appeals Ruling

The Court of Appeals reversed the trial court. The CA held that Tranquilino failed to overcome the presumption of regularity attending the 1992 DAS and failed to prove forgery with clear and convincing evidence. The CA deemed the chain of conveyances between Tranquilino and Nonito, Nonito and Moriel, and Moriel and Lupa Realty to establish lawful acquisition by Lupa Realty. The CA further observed that the mere existence of a deed allegedly used to register the sale was not, by itself, sufficient to invalidate TCT No. T-109129, and suggested that Tranquilino’s action to annul the 1997 DAS amounted to a collateral attack on a Torrens title. The CA dismissed the complaint, third- and fourth-party complaints, and counterclaims. Its denial of reconsideration was affirmed by resolution dated March 9, 2012.

Issues Presented to the Supreme Court

The petition raised three principal legal questions: whether the CA erred in reversing the RTC Decision that declared TCT No. T-109129 null and void; whether the CA erred in treating Tranquilino’s action as a collateral attack on a Torrens title; and whether the CA erred in recognizing and protecting Lupa Realty’s asserted status as an innocent purchaser for value.

Standard of Review and Scope of Rule 45

The Supreme Court acknowledged that review under Rule 45, Rules of Court raises only questions of law but noted the established exception permitting examination of factual findings where there is conflict between the trial court and the Court of Appeals. The Court found that such conflict existed: the RTC had held the 1992 and 1997 deeds falsified and that Lupa Realty was not an innocent purchaser, while the CA upheld the validity of the 1992 DAS and did not resolve the 1997 DAS or the innocence of Lupa Realty. This factual conflict warranted plenary review.

Supreme Court’s Factfinding on the 1997 Deed

The Supreme Court examined the documentary record and agreed with the trial court that the 1997 DAS was sham. The Court highlighted anomalous features: identical notarial particulars and series numbers between the 1997 DAS and the deed by which Moriel sold to Lupa Realty; the mismatch of the OCT and patent numbers recited in the 1997 DAS vis-à-vis Tranquilino’s OCT; the inclusion of corporate representative particulars in the acknowledgment without that person’s signature on the body of the instrument; and the fact that Lupa Realty did not mark the 1997 DAS as its exhibit despite its centrality to registration. The Court treated these irregularities, together with the undisputed fact that Tranquilino had left for the United States in 1989, as proof that the 1997 DAS was falsified and, accordingly, void under Articles 1409(2) and 1346 of the Civil Code. The Court further held that registration procured by presentation of a forged instrument is null and void under Section 53 of PD 1529, and therefore TCT No. T-109129 was null and subject to cancellation.

Supreme Court’s Factfinding on the 1992 Deed

The Supreme Court found controlling a judicial admission made by Nonito’s counsel during pretrial that there was no sale between Tranquilino and Nonito, an admission reaffirmed during Nonito’s testimony. Citing Rule 129, Sec. 4, Rules of Court and the Court’s precedents on judicial admissions, the Court treated that counsel’s statement as conclusive on the factual issue, removable from controversy without further proof. On that basis the Court concluded that the 1992 DAS was simulated and void because the three requisites of simulation were met: an expressed disposition contrary to the parties’ true intent, an apparent but not real agreement, and an intent to deceive third persons. Because the 1992 DAS was void, the subsequent purported sales through Nonito and Moriel could not validly convey ownership to Lupa Realty.

Direct Attack versus Collateral Attack on Torrens Title

The Supreme Court rejected the CA’s characterization of Tranquilino’s complaint as a collateral attack. The Court explained that an attack is direct where the object of the action is to annul or set aside the proceeding or to enjoin its enforcement. The complaint explicitly sought cancellation of TCT No. T-109129 and reinstatement of OCT No. P-46041, thereby constituting a direct attack. The Court therefore held that Section 48 of PD 1529, which bars collateral attacks on Torrens titles, did not bar Tranquilino’s direct action to annul the fraudulent instrument and to cancel the resulting title.

Innocent Purchaser and Bad Faith Findings

Given the findings that the 1997 DAS was falsified and that Lupa Realty failed to exercise due diligence despite being a realty corporation, the Supreme Court sustained the RTC’s conclusion tha

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