Tuazon v. Isagon
REITERATIONFacts
The Antecedents: Spouses Melencio Diaz and Dolores Gulay owned Lot 103 of the Santa Rosa Estate, Barangay Aplaya, Sta. Rosa, Laguna, consisting of 499 square meters. After Melencio and their daughter Maria predeceased Dolores, Dolores, Paciencia, and Esperanza (two other daughters) adjudicated Lot 103 to Dolores through a Deed of Extrajudicial Settlement on May 28, 1955, excluding Maria's minor children. On March 17, 1956, Dolores sold Lot 103 to Isabel Torres, who then sold it to petitioner Teresa Tuazon (Teresa) on September 29, 1973. On October 12, 1973, Maria's children, including respondent Angel Isagon, executed a Deed of Conformity, honoring the extrajudicial settlement on condition of receiving a one-sixth share. While Gloria, Felix, and Flaviano (Maria's other children) sold their shares to Teresa, Angel Isagon mortgaged his 20.75 square meter share (one-fourth of the one-sixth share) to Teresa on October 20, 1975, through a Kasulatan ng Sanglaan, but subsequently failed to redeem it. Teresa has been paying real estate taxes on Lot 103 since 1974, and an undated and reconstituted Transfer Certificate of Title (TCT) No. (N.A.) RT-1925 was issued in her name. Sometime in 1972, Teresa's brother, Antonio Tuazon, allowed Spouses Angel and Marcosa Isagon (respondents) to build a small hut on a portion of Lot 103 without Teresa's knowledge. In 2000, respondents began constructing a house on the disputed property despite Teresa's protests, though Teresa tolerated their possession for years. Procedural History: In 2007, Teresa filed a complaint against the respondents before the Lupon Tagapamayapa of Barangay Aplaya, but no amicable settlement was reached. On January 24, 2007, Teresa sent a final demand letter to respondents to vacate and pay rental fees, which went unanswered. On September 11, 2007, Teresa filed a complaint for unlawful detainer against the respondents before the Municipal Trial Court in Cities (MTCC), City of Sta. Rosa, Laguna, praying for their eviction and payment of compensation. The respondents, in their answer, claimed ownership and alleged that Teresa fraudulently obtained TCT No. (N.A.) RT-1925. The MTCC, in its January 25, 2008 judgment, ruled in favor of Teresa, ordering the respondents to vacate and pay rent and attorney's fees, holding that Teresa, as the registered owner, was entitled to possession and that a Torrens title could not be collaterally attacked in an unlawful detainer action. The Regional Trial Court (RTC) in Biñan, Laguna, affirmed in toto the MTCC decision and denied the respondents' motion for reconsideration. The Court of Appeals (CA), in its October 28, 2009 Decision, reversed the RTC's ruling, concluding that Teresa was a mere mortgagee, not an owner, based on Angel Isagon's mortgage, and thus had no right to eject the respondents, citing Article 2088 of the Civil Code. The CA also denied Teresa's motion for reconsideration on February 11, 2010. The Petition: Teresa filed a petition for review on certiorari before the Supreme Court, arguing that she is the registered owner, not a mere mortgagee, of the property, as evidenced by TCT No. (N.A.) RT-1925. She contended that Section 51 of Presidential Decree No. 1529 (Property Registration Decree) states that registration is the operative act that conveys registered land, making the TCT the best proof of ownership. Teresa further asserted that the sole issue in an unlawful detainer case is physical possession, and as the registered owner, she possesses the right to enjoy all attributes of ownership, including actual possession, under Articles 428 and 429 of the Civil Code.
Issue(s)
Who has the better right of physical possession between the registered owner as shown in the certificate of title and the mortgagor as shown in the Kasulatan ng Sanglaan?
Ruling
The Supreme Court GRANTED the petition for review on certiorari, REVERSED and SET ASIDE the Decision dated October 28, 2009, and the Resolution dated February 11, 2010, of the Court of Appeals in CA-G.R. SP No. 107937. The Court REINSTATED the decision dated October 15, 2008, of Branch 25 of the Regional Trial Court, Biñan, Laguna, in Civil Case No. B-7472.
Ratio Decidendi
On Issue 1: The Supreme Court held that Teresa Tuazon, as the registered owner of Lot 103 under Transfer Certificate of Title (TCT) No. (N.A.) RT-1925, has the better right of physical possession over the respondents. While the Court of Appeals correctly noted that a mortgage does not transfer ownership, it failed to give primary consideration to the indefeasibility of a Torrens title. An action for unlawful detainer is summary in nature, and the issue of ownership, if raised, is only provisionally determined to ascertain who has the better right to possess the property, as provided in Section 16, Rule 70 of the Rules of Court. A person who possesses a title issued under the Torrens system is entitled to all the attributes of ownership, including possession, as affirmed in Corpuz v. Spouses Aguslin. The respondents' defense that Teresa's certificate of title was fraudulently obtained constitutes a collateral attack on the title, which is prohibited in an action for unlawful detainer, as established in De Villanueva v. Court of Appeals. To directly assail the validity of TCT No. (N.A.) RT-1925, a direct action for reconveyance must be filed, in accordance with Section 48 of Presidential Decree No. 1529. Therefore, based on the certificate of title, Teresa is the owner and is entitled to the physical possession of the subject property.
Main Doctrine
The primary legal doctrine established and applied in this case is that a certificate of title issued under the Torrens system is indefeasible and cannot be collaterally attacked in an action for unlawful detainer. While a mortgage does not transfer ownership, the registered owner, as evidenced by a Transfer Certificate of Title (TCT), holds a superior right to physical possession over a mere mortgagor in an ejectment suit. The adjudication of ownership in an unlawful detainer case is merely provisional, serving only to determine who has the better right to possession, and any challenge to the validity of a Torrens title must be made through a direct action for reconveyance.