Second DIVISION

June 10, 2019

G.R. No. 201193

TRANQUILINO AGBAYANI, Petitioner
vs.
LUPA REALTY HOLDING CORPORATION, Respondent

RESOLUTION

CAGUIOA, J.:

Before the Court is a Petition for Review on Certiorari  (Petition) under Rule 45 of the Rules of Court
1

assailing the Decision  dated September 14, 2011 (CA Decision) and the Resolution  dated March 9,
2 3

2012 (CA Resolution) of the Court of Appeals  (CA) in CA-G.R. CV No. 93912. The CA Decision
4

reversed and set aside the Decision  dated June 15, 2009 rendered by the Regional Trial Court,
5

Branch 7, Aparri, Cagayan (RTC) in Civil Case No. 07-532. The CA Decision also dismissed the
complaint of petitioner Tranquilino Agbayani (Tranquilino) as well as the third-party complaint of
respondent Lupa Realty Holding Corporation (Lupa Realty), fourth-party complaint of Moriel Urdas
(Moriel) and the counterclaims. The CA Resolution denied the motion for reconsideration filed by
Tranquilino.

The Facts and Antecedent Proceedings

The CA Decision narrates the factual antecedents as follows:

The property subject of the instant case is a 91,899-square meter parcel of land, situated in Barrio
Sinungan, Sta. Ana, Cagayan, originally registered under OCT No. P-46041 in the name of x x x
Tranquilino Agbayani (Tranquilino), pursuant to Free Patent No. 587747 on 7 June 1979.

On 11 October 1999, Tranquilino, who was by then already residing in America, filed a Complaint for
Reivindicacion, Cancellation of Title and Document with Damages against Lupa Realty Holding
Corporation (Lupa Realty), through his brother, Kennedy Agbayani, and his nephew, Vernold
Malapira (Vernold). We note that Vernold is also written as "Bernold" in other parts of the record,
and is admitted to be the same "Bernard" referred to in the Complaint and in the Special Power of
Attorney as having been authorized by Tranquilino to file the instant case.

The Complaint alleged that sometime in April 1999, [Vernold] went to the Office of the Municipal
Treasurer of Sta. Ana, Cagayan to pay the real estate taxes on the subject property, but was told
that Lupa Realty was already the new owner thereof and that the tax declaration had already been
transferred to its name. Tranquilino further alleged that upon verifying with the Registry of Deeds for
Cagayan, [Vernold] discovered that the subject property was already registered in the name of Lupa
Realty under TCT No. T-109129 pursuant to a Deed of Absolute Sale purportedly executed by
Tranquilino on 29 October 1997 in favor of Lupa Realty, in consideration of the sum of P425,500.00.

In his complaint, Tranquilino denied having executed said Deed of Absolute Sale, insisting that his
signature thereon must be a forgery because he was in America on 29 October 1997. Accordingly,
[he] prayed for the cancellation of Lupa Realty's TCT No. T-109129 and the reinstatement of OCT
No. P-46041 in his name, plus damages.

In its Answer, Lupa Realty countered that contrary to the allegation of Tranquilino that he never sold
the subject property, he sold the same to his brother, Nonito Agbayani (Nonito), as shown by a
notarized Deed of Absolute Sale executed on 21 January 1992. In turn, Nonito sold the subject
property to Moriel Urdas (Moriel) in a notarized Deed of Absolute Sale, dated 30 May 1997.
According to Lupa Realty, it acquired the subject property not from Tranquilino but from Moriel by
way of a notarized Deed of Absolute Sale, dated 29 October 1997.

Lupa Realty further insisted that it was an innocent purchaser for value and in good faith. Lupa
Realty explained that it was Moriel and his mother who registered the sale in the Registry of Deeds,
as shown by the Affidavit executed by Moriel's mother. According to Lupa Realty, it had no idea that
Moriel and his mother had used a falsified deed of sale with Tranquilino's forged signature in
registering the sale. Thus, Lupa Realty filed a third-party complaint against Moriel to enforce the
latter's warranty of a valid title and peaceful possession against the claims of third persons.

In his Answer to the Third-Party Complaint, Moriel denied having caused the registration of the sale
to Lupa Realty, and denied having prepared the falsified deed of sale that was used in transferring
the title to Lupa Realty. Moriel insisted that contrary to Lupa Realty's assertions, it was actually the
latter's personnel who registered the sale.

Moriel laid the blame squarely on Tranquilino for having entrusted his original certificate of title to his
brother Nonito, thereby making it possible for the latter to fraudulently transfer the property to an
innocent third person like Moriel. Thus, Moriel filed a Fourth-Party Complaint against Nonito, praying
that if it turns out that Tranquilino really did not sell the subject property to Nonito, the latter should
be made liable for whatever liability may be adjudged against [Moriel].

In his Answer (to the Fourth-Party Complaint), Nonito admitted to having signed the Deed of
Absolute Sale in favor of Moriel, but qualified that the execution of the same was "attended by undue
pressure considering that at that time, [Nonito] was of confused state of mind brought about by the
numerous unfortunate events that beset his family." According to Nonito, it was Moriel who prepared
the Deed of Absolute Sale, which [Nonito] mistakenly believed to be merely one of mortgage to
secure a loan that he had obtained from Moriel. Accordingly, Nonito prayed that the fourth-party
complaint against him be dismissed and that the Deed of Absolute Sale in favor of Moriel be
nullified.

Curiously, during trial, despite Tranquilino's insistence that his signature on the deed of sale in favor
of Lupa Realty was forged, he did not present a handwriting expert to prove the alleged forgery.
Neither did Tranquilino present any evidence controverting Lupa Realty's allegations that he had
sold the property to his brother Nonito, who, in turn, transferred the property to Moriel, and the latter
eventually transferred the same to Lupa Realty.

Instead, Tranquilino presented only his nephew, Vernold, and his tenants, Felino Rizaldo (Felino)
and Florante Ruiz (Florante). [Vernold] testified on the matters contained in the Complaint; i.e.,
about how he discovered that the land is now registered in the name of Lupa Realty. While Felino
and Florante both testified that they were instituted as tenants in the property by the family of
Tranquilino since 1992 and no one has ever disturbed them in their possession thereof.

On the other hand, Lupa Realty presented its former employee, Demetria Balisi [(Demetria)], who
testified that she was one of the two witnesses to the deed of sale between Lupa Realty and Moriel.

Demetria further testified that because the OCT was in the name of Tranquilino and not Moriel, Lupa
Realty had asked for proof of Moriel's ownership thereof, and the latter submitted to them the deed
of sale between Tranquilino and Nonito, and the deed of sale between Nonito and Moriel. We note
that Tranquilino's counsel admitted in open court the existence of the deed of sale between
Tranquilino and Nonito.

Demetria acknowledged that none of the deeds of conveyances between Tranquilino and Nonito;
between Nonito and Moriel; and between Moriel and Lupa Realty - was used in registering the
transfer of the subject property to Lupa Realty. According to Demetria, it was Moriel's mother who
processed the registration, and this was further confirmed by Moriel's mother in an affidavit stating
that they "were able to secure at (their) own ways and means a new Title of the subject property in
favor of [Lupa Realty]."

To prove that Nonito really sold the subject property to him, Moriel presented Onorio Rumbaoa
[(Onorio)], who testified that he was the agent of the sale between Nonito and Moriel. Onorio testified
that both Nonito and Moriel are his townmates and he arranged for the two to meet when Nonito
wanted to sell the subject property. According to Onorio, when he remarked to Nonito that the OCT
was not in his name, Nonito showed him the deed of sale executed by Tranquilino to prove that he
(Nonito) already own[ed] the subject property. Onorio testified that after Moriel agreed to purchase
the property, the three of them (Nonito, Moriel and Onorio) went to the notary public where they
signed the deed of sale, with Onorio as witness. Moriel corroborated the testimony of Onorio with
regard to the details of the sale to him of the subject property by Nonito.

Finally, Nonito testified that he only borrowed money from Moriel and denied having sold the subject
property to him. According to Nonito, he gave Moriel a collateral for the purported loan but it was not
the subject property. When asked on cross-examination what the collateral was, Nonito could not
say. When asked how Moriel came into possession of the OCT in Tranquilino's name, Nonito also
could not say.

After due proceedings, the trial court rendered a decision with the following disposition:

"WHEREFORE, premises considered, the Court declares and Orders that:

1. OCT (sic) No. P-109129 in the name of Lupa Realty is null and void, hence, the Register of
Deeds, Tuguegarao, Cagayan is ordered to immediately cancel the same;

2. TCT (sic) No. T-46041 in the name of the plaintiff is reinstated and the property subject of the
same is reconveyed to the plaintiff;

3. Defendant shall pay plaintiff attorney's fees in the amount of P30,000.00;

4. Third Party Defendant Moriel Urdas shall pay Defendant/Third Party Plaintiff Lupa Realty the
amount of P551,394 plus legal interest from the time the Third Party complaint was filed until full
satisfaction of this judgment;
5. Fourth Party Defendant Nonito Agbayani pays Third Party Defendant/Fourth Party Plaintiff Moriel
Urdas the amount of P286,698.32 plus legal interest from the time the Fourth Party complaint was
filed up to full satisfaction of this judgment;

6. For the same reason that the Court allows the plaintiff to collect attorney's fees from the
Defendant, the 3rd party defendant is likewise adjudged to pay the Third Party plaintiff reasonable
attorney's fees in the amount of P30,000.00. Likewise 4th party plaintiff is entitled to collect from the
4th party defendant the amount of P30,000.00 by way of attorney's fees.

The other damages sought in the 3rd party and 4th party complaints as well as the parties'
respective counter claims are denied for lack of merit.

SO ORDERED."

Hence, [the] appeal by [Lupa Realty to the CA.]  6

Ruling of the CA

The CA in its Decision dated September 14, 2011 granted the appeal. The CA held that the
conclusions reached by the RTC are not in accord with law and the evidence on record; therefore,
the reversal of the trial court's decision is warranted. 7

The CA ruled that Tranquilino failed to discharge his burden to present clear and convincing
evidence to overthrow the presumption of regularity in the execution on January 21, 1992 of
the Deed of Absolute Sale (1992 DAS) in favor of his brother Nonito and to prove his allegation of
forgery regarding his signature.  According to the CA, Tranquilino's insistence that he could not have
8

signed the 1992 DAS because he was in America at that time  was insufficient.  Further, the CA
9 10

stated that the fact that there is a Deed of Absolute Sale (1997 DAS) purportedly executed by
Tranquilino on October 29, 1997 in favor of Lupa Realty, which Moriel and his mother used in
registering the sale to Lupa Realty, is not sufficient in itself to invalidate Transfer Certificate of Title
(TCT) No. T-109129 in the name of Lupa Realty. 11

In fine, the CA ruled in favor of the dismissal of Tranquilino's complaint based on the lack of
evidence regarding his forgery allegation and its postulation that his action for declaration of nullity of
the 1997 DAS is not the direct proceeding required by law to attack a Torrens certificate of title since
it cannot be collaterally attacked. 12

The dispositive portion of the CA Decision states:

WHEREFORE, the Decision, dated 15 June 2009, of the Regional Trial Court, Branch 7, Aparri,
Cagayan, in Civil Case No. 07-532 is REVERSED and SET ASIDE. Tranquilino Agbayani's
complaint, as well as Lupa Realty's third-party complaint, Moriel Urdas' fourth-party complaint, and
all parties' counterclaims, are DISMISSED.

SO ORDERED. 13

Tranquilino filed a motion for reconsideration, which was denied by the CA in its Resolution  dated
14

March 9, 2012.

Hence, the instant Rule 45 Petition. Lupa Realty filed its Comment  dated October 8, 2012.
15

Tranquilino filed a Reply  dated June 28, 2013.

16
 The Issues

The Petition raises the following issues:

1. whether the CA erred in reversing the RTC Decision that declared the nullity of TCT No. T-109129
in the name of Lupa Realty;

2. whether the CA erred in reversing the RTC Decision on the ground that the RTC erred in ordering
the cancellation of the TCT under Lupa Realty's name because the action filed by Tranquilino
constitutes a collateral attack on a Torrens title; and

3. whether the CA erred in recognizing and protecting Lupa Realty's right as an innocent purchaser
for value (IPV).

The Court's Ruling

The Petition is meritorious.

Rule 45 of the Rules of Court on Appeal by Certiorari to the Supreme Court mandates that: the
petition shall raise only questions of law;  this mode of review is not a matter of right, but of sound
17

judicial discretion; and it will be granted only when there are special and important reasons
therefor.  A Rule 45 review is warranted when there is finding by the Court that the court a quo has
18

decided a question of substance in a way probably not in accord with law or with the applicable
decisions of the Court.19

While only questions of law may be raised in a Rule 45 certiorari petition, there are admitted
exceptions, which includes the instance when there is conflict in the findings of fact of the trial court
and the CA. The instant case falls under this exception.

The RTC found that the 1992 DAS between Tranquilino and Nonito was established by
preponderance of evidence to be a falsified document;  the 1997 DAS between Tranquilino and
20

Lupa Realty was also falsified;  and Lupa Realty was not an IPV.  On the other hand, the CA ruled
21 22

that the 1992 DAS was valid because Tranquilino was unable to prove that his signature therein was
forged.  The CA did not, however, rule squarely on whether the 1997 DAS was falsified  and
23 24

whether Lupa Realty was an IPV. 25

Given the conflict in the findings of the RTC and the CA, a review of the facts is justified.

Tranquilino posits that both the 1992 DAS in favor of Nonito and the 1997 DAS in favor of Lupa
Realty, which Tranquilino purportedly executed, are spurious and false.

As to the 1997 DAS (Exh. "F" ), which is purportedly a unilateral sale in favor of Lupa Realty and
26

signed only by Tranquilino, he reproduces the following portion of the RTC Decision in support of his
argument regarding its falsity:

"What really boggles the mind of the court is the existence of the Deed of Sale (Exh. "F") dated Oct.
29, 1997 allegedly executed between Tranquilino Agbayani and LUpa Relaty (sic) and which was
registered and instrumental for the cancellation of OCT No. P-4601 [sic] and the issuance of TCT
No. T-109129. Worst, a careful study of said deed of sale and the Deed of Sale executed by and
between Moriel Urdas and Lupa Realty would reveal that the two deeds, although allegedly
executed and notarized on different dates, have the same Doc. No., Book No., Page No., and series.
The defendant [Lupa Realty] cannot feign ignorance and innocence on the existence of the Deed of
Sale (Exh. "F"). It is a corporation whose business is, as apparent in its business name, mainly
concerns real estate, thus, it is incredible that it would entirely leave the transfer of the title into the
hands of Moriel Urdas and his mother. It is expected that it would exert due diligence in its
transactions, it being in the realty business. Defendant having uttered a Deed of Sale (Exh. "F"),
which plaintiff has established by preponderance of evidence to have been falsified and which
Defendant impliedly admitted in its Answer and Third Party Complaint as indeed falsified when it
claimed that its title was derived from the Deed of Sale executed in its favor by Third Party
Defendant Moriel Urdas, Defendant cannot [n]ow claim it was an innocent purchaser for value.

The operative act in the cancellation of TCT [sic] No. 4604 [sic] and the issuance of the TCT No.
109129 in favor of the defendant was the presentation with the Register of Deeds of falsified Deed of
Sale allegedly executed by Tranquilino Agbayani in favor of Lupa Realty." 27

The CA justified the validity of the sale to Lupa Realty and its TCT in this wise:

On the other hand, Lupa Realty presented sufficient proof of its lawful acquisition of the subject
property. The deeds of sale between Tranquilino and Nonito; between Nonito and Moriel; and
between Moriel and Lupa Realty show the legal tie that bind the parties and legally conveyed the
subject property to Lupa Realty.

The fact that there is a Deed of Sale between Tranquilino and Lupa Realty that Moriel and his
mother used in registering the sale is not sufficient in itself to invalidate TCT No. T-109129 in the
name of Lupa Realty. 28

DEED ABSOLUTE SALE" (DAS Moriel-Lupa Realty; Exh. 2 Lupa" ) by and between Moriel and
29

Lupa Realty with "29 day of Oct 1997'' as date of execution, which bears both the signatures of
"Roberto P. Alingog" with "CTC No. 7968352, Issued at Cauayan, Isa[bela], Issued on 01/22/97" and
"Moriel C. Urdas" (but the acknowledgment does not reflect Moriel's name but the name of
"Luzviminda Urdas" (Moriel's spouse) without the specifics of her CTC information) bears the
following notarial information: "Doc. No. 47; Page No. 10, Book No. 11; Series of 1997." 30

On the other hand, the "DEED ABSOLUTE SALE" (1997 DAS; Exh. "F" ) also bears "29 day
31

of Oct 1997" as date of execution; the name of "Roberto P. Alingog" with "CTC No. 7968352, Issued
at Cauayan, Isa[bela], Issued on 01/22/97" in the acknowledgment portion, together with Tranquilino
Agbayani and the specifics of his CTC, but Roberto P. Alingog is not a signatory thereto; and the
following notarial information: "Doc. No. 47; Page No. 10, Book No. 11; Series of 1997." 32

The Court notes that the 1997 DAS contains this recital: "Their right thereto being duly registered in
accordance with the Land Registration Act and evidenced by Original Certificate of Title No. P-
26619 with Homestead Patent No. 119163."  It must be noted that Tranquilino's title is Original
33

Certificate of Title (OCT) No. P-46041 with Free Patent No. 587747. 34

In both documents, the Notary Public's name is illegible. However, the following entries below the
signature of the Notary Public are almost identical:

DAS Moriel-Lupa Realty: 35

1997 DAS 36

Notary Public Notary Public

Until Dec. 31. 1997 Until Dec. 31, 1997
PTR No. 5445937 S PTR No. 5445937- S
Issued at Ilagan, Isabela Issued at ILAGAN, ISABELA
 Issued on January 8, 1997 Issued on JAN. 8, 1997

The Court agrees with the RTC that it is indeed mind boggling how two distinct documents which
were supposedly notarized on the same date by one Notary Public have identical notarial
details, i.e., document number, page number, book number and year series. Indeed, one of them
must be fake or false.

Based on all the facts narrated, it is the 1997 DAS which is sham or spurious. As noted above, these
are: (1) the similarity of its notarial details' with those of the DAS Moriel-Lupa Realty; (2) the recital
that it pertained to the land covered by "Original Certificate of Title No. P-26619 with Homestead
Patent No. 119163" and not to Tranquilino's OCT No. P-46041 with Free Patent No. 587747; (3) the
inclusion of Lupa Realty, represented by its President, Roberto P. Alingog, as a party and the CTC
details of Roberto P. Alingog, but who is not made a signatory thereto; (4) the identity of its date of
execution with that of the DAS Moriel-Lupa Realty; and (5) the identity of the notary public's details in
both 1997 DAS and the DAS Moriel-Lupa Realty.

In addition, the Court does not lose sight of the fact that there is uncontested evidence that
Tranquilino could not have signed the 1997 DAS because he had left for California, U.S.A. in April,
1989. 37

It is likewise significant to note the fact that Lupa Realty did not even have the 1997 DAS marked
and offered as its evidence is a very strong indication of its falsity. In the Formal Offer of
Documentary Exhibits of Lupa Realty, the 1997 DAS was not marked and offered as one of its
exhibits.  If the 1997 DAS was truly executed by Tranquilino and is genuine, why did not Lupa
38

Realty have it marked and offered as its documentary exhibit? The answer is obvious: because Lupa
Realty wanted to distance itself therefrom because it might be accused as being complicit with
Moriel and/or his mother in falsifying the 1997 DAS.

In People v. Sendaydiego,  the Court stated the rule that if a person had in his possession a falsified
39

document and he made use of it (uttered it), taking advantage of it and profiting therefrom, the
presumption is that he is the material author of the falsification.  Pursuant to Re: Fake Decision
40

Allegedly in G.R. No. 75242,  the simulation of a public or official document, done in a manner as to
41

easily lead to error as to its authenticity, constitutes the crime of falsification.  Under Rule 132,
42

Section 19(b), documents acknowledged before a notary public except last wills and testaments are
public documents. Further, it is presumed that "evidence willfully suppressed would be adverse if
produced." 43

Article 1409(2) of the Civil Code provides that contracts "which are absolutely simulated or fictitious"
are inexistent and void from the beginning. It is also provided in Article 1346 that "[a]n absolutely
simulated or fictitious contract is void."

Justice Eduardo P. Caguioa discusses the concept and requisites of simulation in the following
manner:

x x x Simulation is the declaration of a fictitious intent manifested deliberately and in accordance with
the agreement of the parties in order to produce for the purpose of deceiving others the appearance
of a transaction which does not exist or which is different from their true agreement.  Simulation
44

involves a defect in the declaration of the will. x x x Simulation requires the following: (1) A deliberate
declaration contrary to the will of the parties; (2) Agreement of the parties to the apparently valid act;
and (3) The purpose is to deceive or to hide from third persons although it is not necessary that the
purpose be illicit or for purposes of fraud. The above three requisites must concur in order that
simulation may exist. x x x45

The three requisites are present in the 1997 DAS. There is a deliberate declaration that Tranquilino
sold the subject land to Lupa Realty, which is contrary to their will. The agreement appears on its
face to be a valid act. The purpose is to deceive third persons into believing that there was such a
sale between Tranquilino and Lupa Realty. The purpose, in this case, is evidently tainted with fraud.

Since the 1997 DAS is void, its registration is likewise void pursuant to Section 53 of Presidential
Decree No. (PD) 1529 (the Property Registration Decree), which provides that "any subsequent
registration procured by the presentation of a forged duplicate certificate of title, or a forged deed or
other instrument, shall be null and void." The registration of the 1997 DAS being null and void, it
follows that TCT T-109129 in the name of Lupa Realty is also null and void. Being null and void, it
should be cancelled.

Moreover, the Court is perplexed why the Registry of Deeds for the Province of Cagayan allowed the
registration of the 1997 DAS.

While the Court has held that registration is a mere ministerial act by which a deed, contract or
instrument is sought to be inscribed in the records of the Office of the Register of Deeds and
annotated at the back of the certificate of title covering the land subject of the deed, contract or
instrument and is not a declaration by the state that such an instrument is a valid and subsisting
interest in land; it is merely a declaration that the record of the title appears to be burdened with such
instrument, according to the priority set forth in the certificate,  and that no valid objection can be
46

interposed to the registration of a document by the Register of Deeds who finds nothing defective or
irregular on its face upon an examination thereof,  the fact of the matter is that the 1997 DAS
47

is not regular on its face because, as duly noted above, it pertained to the land covered by OCT
No. P-26619 with Homestead Patent No. 119163. Presented with the 1997 DAS that has reference
to an OCT different from that of Tranquilino's title and to a Homestead Patent instead of a Free
Patent, the Register of Deeds concerned should not have allowed its registration because of the
obvious or patent irregularity appearing on the face of the 1997 DAS.

From the foregoing, the CA erred when it ruled that the TCT of Lupa Realty is valid.

With the declaration by the Court that the 1997 DAS is sham or spurious and the TCT in the name of
Lupa Realty is null and void, does it follow that the sale of the subject land to Lupa Realty is also null
and void? In other words, can Lupa Realty be nonetheless declared as the lawful owner of the
subject land despite the finding that the TCT issued in his favor is void?

The resolution of this issue hinges on the validity of the 1992 DAS. If the 1992 DAS between
Tranquilino and Nonito is valid, then Nonito could have validly sold the subject land to Moriel and
Moriel could have thereafter validly sold it to Lupa Realty. The invalidity of Lupa Realty's TCT does
not necessarily render invalid its right of ownership over the subject land if the sales preceding the
sale to it by Moriel are valid.

As to the 1992 DAS, Tranquilino argues that the unqualified admission made during the pre-trial
proceedings in the RTC by Nonito, through his counsel on record, Atty. Frederick Aquino, that there
was no such sale between Tranquilino and Nonito is a judicial admission that it is spurious, which
dispenses with the need to present proof of the matter of fact already admitted.  The Pre-Trial Order
48

dated April 22, 2003 states: "Atty. Aquino denied that Tranquilino Agbayani executed a Deed of
Absolute Sale in favor of Nonito Agbayani. According to Atty. Aquino there was no such sale." 49
Regarding admissions by counsel of a party during the preliminary conference, Camitan v. Fidelity
Investment Corporation  is instructive:
50

x x x Unfortunately for petitioners, their counsel admitted the genuineness of the owner's duplicate
copy of the TCT presented by Fidelity during the preliminary conference at the CA. The following
exchange is revealing:

J. MARTIN:

Counsel for the private respondent, will you go over the owner's copy and manifest to the
court whether that is a genuine owner's copy?

ATTY. MENDOZA:

Yes, Your Honor.

J. MARTIN:

Alright. Make it of record that after examining the owner's copy of TCT NO. (T-12110) T-4342,
counsel for the private respondent admitted that the same appears to be a genuine owner's
copy of the transfer certificate of title. x x x

xxxx

The foregoing transcript of the preliminary conference indubitably shows that counsel for petitioners
made a judicial admission and failed to refute that admission during the said proceedings despite the
opportunity to do so. A judicial admission is an admission, verbal or written, made by a party in the
course of the proceedings in the same case, which dispenses with the need for proof with respect to
the matter or fact admitted. It may be contradicted only by a showing that it was made through
palpable mistake or that no such admission was made. 51

On the other hand, American jurisprudence sets the following parameters on judicial admissions:

A judicial admission is a formal statement, either by party or his or her attorney, in course of judicial
proceeding which removes an admitted fact from field of controversy. It is a voluntary concession of
fact by a party or a party's attorney during judicial proceedings.

Judicial admissions are used as a substitute for legal evidence at trial. Admissions made in the
course of judicial proceedings or judicial admissions waive or dispense with, the production of
evidence, and the actual proof of facts by conceding for the purpose of litigation that the proposition
of the fact alleged by the opponent is true. x x x

A judicial admission is a deliberate, clear, unequivocal statement of a party about a concrete fact
within that party's peculiar knowledge, not a matter of law. x x x In order to constitute a judicial
admission, the statement must be one of fact, not opinion. To be a judicial admission, a statement
must be contrary to an essential fact or defense asserted by the person giving the testimony; it must
be deliberate, clear and unequivocal x x x.

Judicial admissions are evidence against the party who made them, and are considered conclusive
and binding as to the party making the judicial admission. A judicial admission bars the admitting
party from disputing it. x x x
A judicial admission of fact may carry with it an admission of other facts necessarily implied from it.

xxxx

Judicial admissions may occur at any point during the litigation process. An admission in open court
is a judicial admission. x x x 
52

The admission by Nonito's counsel during the pre-trial proceedings before the RTC that there was
no sale between Tranquilino and Nonito qualifies as a judicial admission because the statement is a
deliberate, clear, unequivocal statement of a party's attorney during judicial proceedings in open
court about a concrete or essential fact within that party's peculiar knowledge. Since such statement
is a judicial admission, it does not require proof according to Section 4, Rule 129 of the Rules of
Court, which provides:

SEC. 4. Judicial admissions. - An admission, verbal or written, made by a party in the course of the
proceedings in the same case, does not require proof. The admission may be contradicted only by
showing that it was made through palpable mistake or that no such admission was made.

Moreover, there was no palpable mistake on the part of Nonito's counsel in making the admission
because in the offer of Nonito's testimony on December 2, 2008, he stated that "the land was the
property in suit was never sold to him [Nonito] by his brother Tranquilino Agbayani."  That is not all.
53

The admission by Nonito himself, on cross-examination by Tranquilino's counsel, that Tranquilino

was in the United States at the time of the purported transaction  supports the statement of the
54

counsel of Nonito that there was no sale between Tranquilino and Nonito.

Since there is judicial admission that there was no sale of the subject land between Tranquilino and
Nonito, affirmed anew during oral testimony by Nonito himself, then there is no question that the
1992 DAS is void. The three requisites of a simulated contract are existent. There is a deliberate
declaration that Tranquilino sold the subject land to Nonito, which is contrary to their will because
there was no sale between them. The agreement appears on its face to be a valid act. The purpose
is to deceive third persons into believing that there was such a sale between them.

Consequently, the CA committed egregious error when it made the finding that the 1992 DAS is
valid. Given that Tranquilino did not sell the subject land to Nonito, it could not have been sold by
Nonito to Moriel and Moriel could not, in turn, have sold it to Lupa Realty.

Lupa Realty's argument that Tranquilino's action for declaration of nullity of the 1997 DAS is not the
direct proceeding required by law to attack a Torrens certificate of title since it cannot be collaterally
attacked, upheld by the CA, is untenable.

In deference to the conclusiveness and indefeasibility of Torrens titles, a certificate of title shall not
be subject to collateral attack pursuant to Section 48 of PD 1529.

As to what constitutes a direct attack on a Torrens title, the Court observed in Firaza, Sr. v. Spouses
Ugay: 55

The attack is considered direct when the object of an action is to annul or set aside such proceeding,
or enjoin its enforcement. Conversely, an attack is indirect or collateral when, in an action to obtain a
different relief an attack on the proceeding is nevertheless made as an incident thereof. Such action
to attack a certificate of title may be an original action or a counterclaim, in which a certificate
of title is assailed as void. x x x56
Here, there is a direct attack on Lupa Realty's TCT.

Firstly, the Complaint filed by Tranquilino before the RTC is captioned: "For: Reivindicacion,
Cancellation of Title and Document with Damages." 57

Secondly, the Complaint alleged:

7. That the "Deed Absolute Sale" [or 1997 DAS] (Annex "B") is a falsified document and the
signature purporting to be that of the plaintiff in said document is a forgery for the reason that he
never sold the land in suit to anybody; that he never signed said document; that he never received
P425,500.00 from the defendant; that he never appeared before Notary Public Agustin Ladera in
Cauayan, Isabela on October 29, 1997 because on that date he was in the United States of
America.

8. That as a consequence, the ''Deed Absolute Sale" (Annex "B") should be declared null and void
and that Transfer Certificate of Title No. T-109129 (in the name of the defendant) should also be
declared null and void, and cancelled and that Original Certificate of Title No. P-46041 in the name
of the plaintiff should be revived and reinstated. 58

Thirdly, the Complaint prayed that judgment be rendered for Tranquilino declaring, among others,
the nullity and ordering the cancellation of TCT No. T-109129 (in the name of Lupa Realty) and
ordering the revival and reinstatement of OCT No. P-46041 in the name of Tranquilino. 59

The foregoing clearly show that the Complaint purposefully sought the cancellation of Lupa Realty's
TCT, which is a direct attack thereon. 1âшphi1

With the pronouncement that there could not have been a valid sale of the subject land to Lupa
Realty, the latter cannot qualify as an IPV. Also, the Court totally agrees with the RTC that:

x x x [Lupa Realty] is a corporation whose business is, as apparent in its business name, mainly
concern[ed with] real estate, thus, it is incredible that it would entirely leave the transfer of the title
into the hands of Moriel x x x and his mother. It is expected that it would exert due diligence in its
transactions, it being in the realty business. x x x 60

Evidently, in allowing the falsified 1997 DAS to cause the cancellation of Tranquilino's OCT and the
issuance of a TCT in its name, Lupa Realty acted in bad faith.

WHEREFORE, the Petition is hereby GRANTED. The Decision dated September 14, 2011 and the
Resolution dated March 9, 2012 of the Court of Appeals in CA-G.R. CV No. 93912
are REVERSED and SET ASIDE. The Decision dated June 15, 2009 rendered by the Regional Trial
Court, Branch 7, Aparri, Cagayan in Civil Case No. 07-532 is REINSTATED with modifications:
with respect to no. 1: "OCT No. P-109129 in the name of Lupa Realty ..." should instead read
"TCT No. T-109129 in the name of Lupa Realty ..." and no. 2: "TCT No. T-46041 in the name of the
plaintiff ..." should instead read "OCT No. P-46041 in the name of the plaintiff ..."

SO ORDERED.

Carpio (Chairperson), Perlas-Bernabe, and Lazaro-Javier, JJ., concur.

J. Reyes, Jr., on leave.

Footnotes

1
 Rollo, pp. 9-34, excluding Annexes.

 Id. at 36-52. Penned by Associate Justice Ricardo R. Rosario, with Associate Justices
2

Hakim S. Abdulwahid and Danton Q. Bueser concurring.

3
 Id. at 55-56.

4
 Ninth Division and Former Ninth Division, respectively.

5
 Rollo, pp. 86-95. Penned by Judge Oscar T. Zaldivar.

6
 Id. at 37-44.

7
 Id. at 46.

8
 Id. at 48.

 The RTC Decision states that as testified upon by Vernold, his uncle Tranquilino left for
9

California, U.S.A. in April, 1989. Id. at 89.

10
 Rollo, pp. 48-49.

11
 Id. at 50.

12
 Id at 50-51.

13
 Id. at 51.

14
 Id. at 55-56.

15
 Id. at 108-137.

16
 Id. at 144-149.

17
 RULES OF COURT, Rule 45, Sec. 1.

18
 Id., Rule 45, Sec. 6.

19
 Id., Rule 45, Sec. 6(a).

20
 Rollo, pp. 92-93.

21
 Id. at 93.
  Id.
22

 See id. at 48.

23

 The CA merely stated: "The fact that there is a Deed of Sale between Tranquilino and Lupa
24

Realty that Moriel and his mother used in registering the sale is not sufficient in itself to
invalidate TCT No. T-109129 in the name of Lupa Realty." Id. at 50.

 The CA merely stated: "Lupa Realty presented sufficient proof of its lawful acquisition of
25

the subject property" and "Tranquilino's action for declaration of nullity of said Deed of
Sale is not the direct proceeding required by law to attack a Torrens certificate of title." Id.

 Records, pp. 239-240.

26

 Rollo, pp. 25-26 and 92-93.

27

 Id. at 50.
28

 Records, pp. 331-332.

29

 Id. at 332.
30

 Id. at 239-240.
31

 Id. at 239.
32

 Rollo, p. 152. Emphasis supplied.

33

 Id. at 57.
34

 Id. at 151. Entries below appear to be computer generated.

35

 Id. at 153. Entries in bold appear to be handwritten.

36

 This was noted in the RTC Decision. Id. at 89.

37

 Records, pp. 326-344.

38

 171 Phil. 114 (1978).

39

 Id. at 134.
40

 491 Phil. 539 (2005).

41

 Id. at 567.
42

 RULES OF COURT, Rule 131, Sec. 3(e).

43

 IV Eduardo P. Caguioa, COMMENTS AND CASES ON CIVIL LAW, CIVIL CODE OF THE
44

PHILIPPINES, 1983 Rev. Second Ed., p. 549, citing 1 Castan, 8th Ed., Part II, p. 504.
  Id., citing 1 Castan, 8th Ed., Part II, p. 504, citing Ferrara.
45

 Agricultural Credit Cooperative Association of Hinigaran v. Yusay, 107 Phil. 791, 793-794
46

(1960).

 Antonio H. Noblejas and Edilberto H. Noblejas, REGISTRATION OF LAND TITLES AND

47

DEEDS, p. 349 (2007 rev. ed.); see also Narciso Peña, REGISTRATION OF LAND TITLES
AND DEEDS, p. 166 (1980 rev. ed.).

 See rollo, p. 23.
48

 Records, p. 167.
49

 574 Phil. 672 (2008).

50

 Id. at 680-682, citing RULES OF COURT, Rule 129, Sec. 4.

51

 29A Am. Jur. 2d, Evidence §§ 770-771, pp. 136-138. Citations omitted.
52

 TSN, December 2, 2008, p. 3.

53

 Id. at 8.
54

 708 Phil. 24 (2013).

55

 Id. at 29. Citations omitted.

56

 Rollo, p. 63.
57

 Id. at 64-65.
58

 Id. at 65.
59

 Id. at 92.
60