Agasen v. Court of Appeals
REITERATIONFacts
The Antecedents: Private respondent Petra Bilog filed a complaint for Recovery of Possession and Ownership over an 8,474 square meter parcel of land registered in her name. She alleged that petitioners took possession and appropriated the fruits of the land since 1964 or 1965, and refused to vacate despite demands. Petitioners claimed ownership based on a sale of 1,785 square meters by Leonora Calonge and a Partition with Sale of the remaining 6,717.50 square meters from private respondent on June 24, 1968. They asserted possession since the sale transactions and built a house thereon. They counterclaimed for the annulment of private respondent's title, alleging fraudulent issuance. Procedural History: The Regional Trial Court (RTC) ruled in favor of petitioners, dismissing the complaint and annulling private respondent's title. The Court of Appeals (CA) reversed the RTC decision, declaring private respondent the owner and ordering petitioners to turn over possession. The CA denied petitioners' motion for reconsideration. The Petition: Petitioners seek review of the CA decision, arguing that the CA erred in declaring the Deed of Partition with Sale and Deed of Absolute Sale as not authentic and valid, in giving more credence to private respondent's evidence over theirs, in holding that non-registration affected the validity of the sales, in disregarding the memorandum of installment sale, and in ruling that the Torrens title could not be collaterally attacked.
Issue(s)
Whether the Deed of Partition with Sale and the Deed of Absolute Sale are authentic and valid. Whether the failure to register the Deed of Partition with Sale affects its validity. Whether the tax declarations and tax payments presented by private respondent sufficiently substantiate her claim of ownership over the subject property. Whether the Torrens title of private respondent can be collaterally attacked.
Ruling
The petition is granted. The decision of the Court of Appeals is set aside, and the decision of the Regional Trial Court, which dismissed the complaint, annulled Transfer Certificate of Title No. 16109 in the name of private respondent, and found petitioners to be the lawful owners of the land, is reinstated.
Ratio Decidendi
On the validity of the Deed of Partition with Sale and Deed of Absolute Sale: The Court held that the two subject documents, being notarized public documents, enjoy the presumption of validity as to authenticity and due execution. This presumption was not overcome by preponderant evidence by private respondent. Furthermore, private respondent should have specifically denied under oath the genuineness and due execution of these documents, which were attached to the counterclaim. Her failure to do so is deemed an admission of their authenticity and due execution. The RTC's finding that private respondent's signature on the documents was genuine, based on comparison with her own documentary evidence, further bolstered their validity. The Court found that private respondent's bare denial could not overcome the evidence and legal presumptions in petitioners' favor. On the effect of non-registration: The Court disagreed with the CA's ruling that the non-registration of the Deed of Partition with Sale rendered the transaction "dented" and did not automatically vest title. The Court reiterated the principle that contracts are perfected by mere consent and are binding between the parties. Registration of an instrument is primarily for the benefit of third parties and does not adversely affect the validity of the contract nor the contractual rights and obligations of the parties thereunder. One of the subject documents, the Deed of Absolute Sale, was indeed registered. On the substantiation of ownership claims: The Court found that private respondent's tax declarations, issued after she secured title, were belated and indicative of an absence of a real claim of ownership prior to their issuance. The tax payments referred to the entire mother lot before subdivision. Conversely, petitioners' claim of ownership was backed by their long years of possession since the sale transactions and the construction of a house on the property, which circumstances were not disputed. On the collateral attack of the Torrens title: The Court clarified that the rule on indefeasibility of Torrens titles applies only to original titles, not to subsequent registrations. An action for annulment of title or reconveyance, as interposed by petitioners through their counterclaim, is an available remedy to attack a fraudulently acquired title. The compulsory counterclaim challenging the title of private respondent cannot be dismissed as a mere collateral attack that would bar a ruling on the validity of the title.
Main Doctrine
Notarized public documents enjoy a presumption of validity as to authenticity and due execution, which presumption can only be overcome by preponderant evidence. Failure to specifically deny under oath the genuineness and due execution of documents attached to a counterclaim is deemed an admission thereof. Registration of instruments is primarily for the benefit of third parties and does not affect the validity of the contract between the parties themselves.