Bangis v. Adolfo
REITERATIONFacts
The Antecedents: The original owners of a lot, Serafin Sr. and Saludada Adolfo, mortgaged it to DBP. After foreclosure and repurchase by Serafin Sr., he allegedly mortgaged the property in 1975 to Aniceto Bangis for P12,500.00, who took possession. Serafin Sr. died, and his heirs (Heirs of Adolfo) later obtained separate titles to the property. When the Heirs of Adolfo attempted to redeem the property in 1998, Bangis refused, claiming the transaction was a sale. Bangis' son presented a deed of sale and a certificate of title. Procedural History: The Heirs of Adolfo filed a complaint for annulment of deed of sale, declaration of antichresis, accounting, and redemption. They alleged forgery of the deed of sale and the dubious origin of Bangis' title. The Regional Trial Court (RTC) ruled in favor of the Heirs of Adolfo, declaring the transaction a mortgage, deeming the debt paid, ordering the cancellation of Bangis' title, and affirming the Heirs of Adolfo's titles. The Court of Appeals (CA) affirmed the RTC's finding of a mortgage but ordered the Heirs of Adolfo to pay the mortgage debt with interest and deleted the order to cancel Bangis' title, deeming it a collateral attack. The CA denied reconsideration. The Petition: The Heirs of Bangis filed a petition for review on certiorari, arguing that the transaction was a sale and that the CA erred in disregarding their evidence, particularly the Extra-Judicial Settlement with Absolute Deed of Sale.
Issue(s)
Whether the transaction between the parties' predecessors-in-interest was a sale or a mortgage. Whether the Extra-Judicial Settlement with Absolute Deed of Sale presented by the Heirs of Bangis is valid and has probative value. Whether TCT No. T-10567 in the name of Aniceto Bangis is superior to the titles of the Heirs of Adolfo. Whether the cancellation of TCT No. T-10567 constitutes a collateral attack. Whether the action filed by the Heirs of Adolfo has prescribed.
Ruling
The petition is DENIED. The assailed Decision and Resolution of the Court of Appeals are AFFIRMED with MODIFICATION: (1) cancelling TCT No. T-10567; and (2) ordering respondent Heirs of Adolfo to pay petitioner Heirs of Bangis the sum of ₱12,500.00 with legal interest of 12% per annum reckoned from March 30, 2009 until the finality of this Decision and thereafter, 12% annual interest until its full satisfaction.
Ratio Decidendi
On the nature of the transaction (sale vs. mortgage): The Court held that the transaction was a mortgage, not a sale. The Heirs of Bangis failed to present the original deed of sale, violating the best evidence rule. The photocopy presented was insufficient justification for secondary evidence. Furthermore, the origin of TCT No. T-10567 was dubious, as it was not derived from the original titles of the Adolfo spouses and its supposed derivative title, TCT No. T-10566, did not exist. The Court reiterated the principle that when tracing titles, the original certificates from which they were derived must be examined. The titles of the Heirs of Adolfo were legitimately issued and properly documented, unlike Bangis' title. On the validity and probative value of the Deed of Sale: The Court found that the Heirs of Bangis failed to establish the existence and due execution of the Extra-Judicial Settlement with Absolute Deed of Sale. Only a photocopy was presented without sufficient justification for its admission as secondary evidence. The testimony of the notary public was not given credence as it was not verified against his notarial records. The Court also noted that a certified copy could have been secured from the Assessor's Office. Therefore, the RTC and CA were correct in affording no probative value to the document. On the superiority of TCT No. T-10567: The Court ruled that TCT No. T-10567 could not prevail over the titles of the Heirs of Adolfo. The Register of Deeds' manifestation indicated that TCT No. T-10567 was derived from a non-existent title (TCT No. T-10566) and had no relation to the original titles of the Adolfo spouses. The Court emphasized that when two certificates of title purport to include the same land, the better approach is to trace the original certificates from which they were derived. The titles of the Heirs of Adolfo were legitimately issued after complying with all requirements, unlike Bangis' title. On the cancellation of TCT No. T-10567 as a collateral attack: The Court disagreed with the CA's ruling that the cancellation of TCT No. T-10567 constituted a collateral attack. The Court explained that Bangis, in his Answer, filed a counterclaim seeking to be declared the lawful owner and his title superior. A counterclaim is considered an original complaint, thus making the determination of the validity of TCT No. T-10567 a direct attack. Furthermore, the prohibition against collateral attack does not apply to spurious or non-existent titles, which are not accorded indefeasibility. On prescription: The Court found the claim of prescription untenable. Although Bangis took possession in 1975, the certificate of title remained with Adolfo and his heirs, negating any transfer of ownership. The Court reiterated that no title in derogation of the registered owner can be acquired by prescription or adverse possession. Even if acquisitive prescription were considered, Bangis' possession was in bad faith, and the 28 years of possession were short of the 30-year requirement for uninterrupted adverse possession under Article 1137 of the Civil Code.
Main Doctrine
The Court affirmed the appellate court's finding that the transaction was a mortgage, not a sale, due to the failure to present the original deed of sale and the dubious origin of the transfer certificate of title. The Court also clarified that a counterclaim can constitute a direct attack on a title, and the prohibition against collateral attack does not apply to spurious or non-existent titles. The claim of prescription was also dismissed as the possession was not in bad faith and the title remained with the registered owner.