Delfin v. Billones
REITERATIONFacts
The Antecedents: This case concerns the ownership of two parcels of land, Lot No. 213 and Lot No. 3414. The dispute originated from two separate deeds of sale executed in 1960 and 1965, respectively. The first deed, dated July 29, 1960, involved Lot No. 213 and was purportedly executed by Teresa Daños, Esperanza Daradar, Estrella Daradar, and Maria Daradar in favor of spouses Rodolfo and Felipa Delfin. The second deed, dated March 26, 1965, involved Lot No. 3414 and was an Extra-Judicial Partition and Absolute Deed of Sale between Teresa Daños, Trinidad Degala, Leopoldo Degala, Presentacion Degala, Rosario Degala, and Pedro Degala, also in favor of the spouses Delfin. The spouses Delfin subsequently registered these deeds, leading to the issuance of new Transfer Certificates of Title in their names. They later consolidated and subdivided these lots, selling portions to Roberto Delfin, Recio Daños, Gina Maalat, and Shirley Tamayo. Procedural History: On April 12, 1994, respondents, claiming to be heirs of the original owners, filed an action for annulment, reconveyance, recovery of ownership and possession, and damages. They alleged that the sale of Lot No. 3414 was a disguised mortgage due to the seller's dire financial condition and that the sale of Lot No. 213 was fictitious because some of the signatories were already deceased at the time of the alleged sale. The Regional Trial Court (RTC) ruled in favor of the petitioners, dismissing the respondents' claims, citing prescription and laches, and upholding the validity of the notarized deeds. The respondents appealed to the Court of Appeals (CA), which reversed the RTC's decision. The CA annulled both deeds, finding that the sale of Lot No. 3414 was an equitable mortgage and that the sale of Lot No. 213 was invalid due to the prior deaths of some signatories. The CA also ruled that the subsequent buyers were not in good faith. The Petition: Petitioners seek a review on certiorari under Rule 45 of the Rules of Court, assailing the decision of the Court of Appeals. They argue that the CA erred in finding that respondents retained possession of the properties, that the respondents' action was barred by prescription, and that the CA improperly disregarded the presumption of regularity of notarized documents. Petitioners contend that respondents failed to prove fraud, inadequacy of price, the frail condition of sellers, or that the subsequent buyers were not purchasers in good faith. They also question the award of exemplary damages and attorney's fees. The Supreme Court, noting conflicting factual findings between the lower courts, agreed to review the case.
Issue(s)
Whether the Court of Appeals erred in finding that respondents retained possession of the subject properties, and whether the respondents' action for annulment and reconveyance of Lot No. 3414 was barred by prescription and laches. Whether the respondents proved fraud and simulation in the sale of Lot No. 3414. Whether the Deed of Absolute Sale for Lot No. 213 was valid, considering the alleged prior deaths of some signatories, and the necessity of Cipriano Degala's consent. Whether the Extra-Judicial Partition and Absolute Deed of Sale for Lot No. 3414 constituted a valid sale or an equitable mortgage. Whether the subsequent buyers (Roberto Delfin, Recio Daños, Gina Maalat, and Shirley Tamayo) were purchasers in good faith and for value, and the effect of the presumption of regularity of notarized documents.
Ruling
The petition is GRANTED. The Decision of the Court of Appeals dated 13 October 2000 is REVERSED and SET ASIDE. The Decision of the Regional Trial Court dated 27 May 1996 is REINSTATED.
Ratio Decidendi
On the issue of possession and prescription for Lot No. 3414: The Court found that respondents failed to establish their possession of the subject properties. The claim of possession was based on insufficient testimony. Respondents' complaint admitted the spouses Delfin took possession after the sale. This judicial admission binds the respondents and contradicts their claim of possession. Consequently, the exception to the prescriptive period for reconveyance based on possession does not apply. An action for reconveyance based on implied or constructive trust prescribes in ten (10) years from the registration of the deed or issuance of the title, and an action based on fraud is imprescriptible only if the plaintiff is in possession. On the alleged fraud and simulation in the sale of Lot No. 3414: The Court held that respondents failed to prove fraud by preponderance of evidence. They made bare allegations regarding the owners' health, the price, and the document's nature, but presented no witnesses to testify on these points. The belated registration was explained by the loss of documents. A duly notarized document enjoys a presumption of regularity, which can only be overcome by clear and convincing evidence, which was lacking. On the validity of the Deed of Absolute Sale for Lot No. 213: The Court found that the certifications of death presented by respondents did not constitute proof of the facts stated therein. They were mere certifications, not certified copies or duly authenticated reproductions of death certificates, and thus did not enjoy the presumption of regularity afforded to public documents. Moreover, the Court noted inconsistencies in the ages and death dates presented. Even if Cipriano Degala's thumb mark was forged, his consent was not necessary as Teresa Daños Degala's share was paraphernal property, alienable without spousal consent under the applicable Civil Code provisions. On whether the Extra-Judicial Partition and Absolute Deed of Sale for Lot No. 3414 constituted a valid sale or an equitable mortgage: The Court did not explicitly rule on whether the deed constituted a valid sale or an equitable mortgage, but its findings on the lack of fraud and the failure to prove that the price was unconscionable suggest that it leaned towards considering it a valid sale. The respondents failed to present sufficient evidence to overcome the presumption of regularity of the notarized deed. On the status of subsequent buyers as innocent purchasers for value, and the presumption of regularity of notarized documents: The Court noted respondents' admission that Recio Daños and Gina Maalat were innocent purchasers for value. Given the failure to prove fraud attributed to the spouses Delfin, the Court concluded that all petitioners, including the subsequent buyers, should be considered purchasers for value and in good faith. The Court consistently upheld the presumption of regularity afforded to duly notarized documents, which are prima facie evidence of their due execution and the facts stated therein. The burden of proof to overcome this presumption lies with the party alleging simulation or fraud, and this burden must be discharged by clear and convincing evidence, which the respondents failed to provide.
Main Doctrine
A duly notarized deed of sale, enjoying the presumption of regularity, can only be overturned by clear and convincing evidence. Allegations of fraud and forgery, without substantiation, are insufficient to invalidate such documents. Furthermore, an action for reconveyance based on fraud is imprescriptible only if the plaintiff is in possession of the property; otherwise, it is subject to prescriptive periods.