The Supreme Court ruled that a title obtained through a falsified deed is void. This decision protects landowners from losing their property due to fraudulent transactions. It emphasizes the importance of due diligence in real estate dealings and reinforces the principle that a forged document cannot be the basis of a valid title. This case clarifies the rights of property owners and the responsibilities of those involved in land transactions.

Challenging Ownership: How a Forged Deed Undermined a Real Estate Firm’s Title

This case revolves around Tranquilino Agbayani’s fight to reclaim his land after discovering it had been fraudulently transferred to Lupa Realty Holding Corporation. Tranquilino claimed that his signature on the Deed of Absolute Sale (DAS) to Lupa Realty was forged. He sought to nullify Lupa Realty’s title and reinstate his own. The central legal question is whether a title derived from a falsified deed can be considered valid, especially when the subsequent buyer claims to be an innocent purchaser for value (IPV).

The factual backdrop involves a series of transactions. Tranquilino originally owned the land under Original Certificate of Title (OCT) No. P-46041. A Deed of Absolute Sale (DAS) purportedly executed by Tranquilino in favor of Lupa Realty led to the issuance of TCT No. T-109129 in Lupa Realty’s name. Lupa Realty contended that it acquired the property not directly from Tranquilino, but from Moriel Urdas, who allegedly bought it from Tranquilino’s brother, Nonito Agbayani. This claim was supported by another DAS purportedly executed by Tranquilino in favor of Nonito. However, Tranquilino denied ever selling the property or signing any deed in favor of Lupa Realty, claiming he was in the United States at the time of the alleged sale.

The Regional Trial Court (RTC) ruled in favor of Tranquilino, declaring Lupa Realty’s title null and void. However, the Court of Appeals (CA) reversed the RTC’s decision, stating that Tranquilino failed to prove the forgery of his signature on the DAS to Nonito. The CA also noted that the action for nullity was a collateral attack on a Torrens title. This conflicting view necessitated a review by the Supreme Court.

The Supreme Court emphasized that while only questions of law may be raised in a Rule 45 certiorari petition, an exception exists when there is a conflict in the factual findings of the lower courts. The Court then delved into the validity of the 1997 DAS between Tranquilino and Lupa Realty. A critical point of contention was the authenticity of the document itself.

The Court noted significant irregularities in the 1997 DAS. The document shared identical notarial details (document number, page number, book number, and year series) with another DAS between Moriel Urdas and Lupa Realty, raising suspicions of falsification. Moreover, the 1997 DAS referred to a different Original Certificate of Title number than Tranquilino’s actual title. This discrepancy further undermined the document’s credibility.

Furthermore, the Court highlighted the fact that Lupa Realty did not even offer the 1997 DAS as evidence, suggesting an attempt to distance themselves from a potentially falsified document. In legal terms, the Court referenced the principle that “evidence willfully suppressed would be adverse if produced,” indicating that Lupa Realty’s reluctance to present the document implied its falsity.

Drawing on the principle outlined in People v. Sendaydiego, the Court reiterated that possession and use of a falsified document create a presumption that the possessor is the author of the falsification. The Court also cited Re: Fake Decision Allegedly in G.R. No. 75242, emphasizing that simulating a public document in a way that leads to errors about its authenticity constitutes falsification.

Given these irregularities, the Supreme Court concluded that the 1997 DAS was indeed simulated or fictitious. As stipulated in Article 1409(2) of the Civil Code, contracts that are absolutely simulated or fictitious are inexistent and void from the beginning. This nullity, therefore, extended to the registration of the deed and the consequent title issued to Lupa Realty. Section 53 of Presidential Decree No. (PD) 1529, the Property Registration Decree, clearly states that any subsequent registration procured by a forged deed shall be null and void.

The Court went further to address the validity of the 1992 DAS between Tranquilino and his brother, Nonito. During pre-trial proceedings, Nonito’s counsel made a judicial admission that no such sale occurred. This admission, according to the Court, dispenses with the need for further proof, as a judicial admission is a voluntary concession of fact that removes the admitted fact from the field of controversy.

Referencing Camitan v. Fidelity Investment Corporation, the Court emphasized the binding nature of judicial admissions unless demonstrably made through palpable mistake. In this case, there was no such mistake. Nonito himself affirmed during testimony that Tranquilino was in the United States at the time of the alleged transaction, reinforcing the judicial admission.

The Supreme Court dismissed Lupa Realty’s argument that Tranquilino’s action constituted a collateral attack on a Torrens title. The Court clarified that a direct attack occurs when the object of an action is to annul or set aside a proceeding, citing Firaza, Sr. v. Spouses Ugay. Tranquilino’s complaint, which sought the cancellation of Lupa Realty’s title, constituted a direct attack.

Ultimately, the Supreme Court concluded that Lupa Realty could not claim the status of an innocent purchaser for value. The Court reiterated that Lupa Realty, being in the real estate business, should have exercised due diligence in verifying the authenticity of the documents presented to them. This expectation aligns with the principle that those dealing in real estate must conduct thorough investigations to avoid participating in fraudulent transactions.

FAQs

What was the key issue in this case?	The key issue was whether a title derived from a falsified deed of sale is valid, and whether Lupa Realty could claim the status of an innocent purchaser for value.
What did the Supreme Court rule?	The Supreme Court ruled that the title of Lupa Realty was null and void because it was based on a falsified deed of sale. The Court also found that Lupa Realty could not be considered an innocent purchaser for value.
What is a Deed of Absolute Sale (DAS)?	A Deed of Absolute Sale is a legal document that transfers ownership of a property from one party (the seller) to another (the buyer). It serves as proof of the sale and outlines the terms of the transaction.
What is an Original Certificate of Title (OCT)?	An Original Certificate of Title is the first title issued for a piece of land when it is registered under the Torrens system. It serves as the foundation for all subsequent transfers and transactions related to that property.
What does it mean to be an innocent purchaser for value (IPV)?	An innocent purchaser for value is someone who buys property without any knowledge of defects in the seller’s title and pays a fair price for it. IPVs are generally protected by law, but this protection does not extend to cases involving forgery.
What is a judicial admission?	A judicial admission is a statement made by a party or their attorney during legal proceedings that concedes a fact, removing the need for further proof. These admissions are binding unless shown to be made through palpable mistake.
What is a collateral attack on a Torrens title?	A collateral attack on a Torrens title is an attempt to challenge the validity of a title in a lawsuit that has a different primary purpose. Direct attacks, on the other hand, specifically aim to annul or set aside the title.
What is the significance of falsifying a public document?	Falsifying a public document, like a deed of sale, is a serious offense because it undermines the integrity of the legal system. Such actions can lead to the nullification of contracts and titles, as well as criminal prosecution.

This case highlights the critical importance of verifying the authenticity of documents in real estate transactions. It serves as a reminder that titles obtained through fraud will not be upheld, and that all parties involved must exercise due diligence to protect their interests and the integrity of the land registration system.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: TRANQUILINO AGBAYANI, PETITIONER, V. LUPA REALTY HOLDING CORPORATION, RESPONDENT., G.R. No. 201193, June 10, 2019