Bangis vs. Heirs of Serafin and Salud Adolfo

A claim of sale over registered land cannot be established by a photocopy of the deed of sale absent sufficient justification for secondary evidence under the best evidence rule; and a Torrens title that is spurious or non-existent is not indefeasible and may be cancelled, especially where the validity of the title is raised in a counterclaim, which is a direct attack.

The lot was originally registered under OCT No. P-489, derived from Homestead Patent No. V-34974, in the names of Spouses Serafin, Sr. and Salud Adolfo. It had been mortgaged to the Rehabilitation Finance Corporation (now DBP), foreclosed, consolidated in DBP’s name, and repurchased by Serafin, Sr., who was issued TCT No. 6313 in 1971. The subsequent dispute between the Adolfo heirs and Aniceto Bangis’ heirs required the courts to determine the nature of the transaction over the lot and the validity of the Torrens titles derived from it.

The spouses Serafin, Sr. and Salud Adolfo were the original registered owners of a 126,622-square-meter lot covered by OCT No. P-489 issued on December 15, 1954, derived from Homestead Patent No. V-34974, and located in Valencia, Malaybalay, Bukidnon. The property was mortgaged to the Rehabilitation Finance Corporation (now Development Bank of the Philippines or DBP) on August 18, 1955; upon default, it was foreclosed and ownership was consolidated in DBP under TCT No. T-1152. Serafin, Sr. repurchased the property and was issued TCT No. 6313 on December 1, 1971, a year after his wife died in 1970.

Sometime in 1975, Serafin, Sr. allegedly mortgaged the property to Aniceto Bangis for P12,500.00, and Bangis immediately took possession of the land. The transaction was not reduced to writing. When Serafin, Sr. died, his heirs—Luz Adolfo Bannister, Serafin Adolfo, Jr., and Eleuterio Adolfo—executed a Deed of Extrajudicial Partition dated December 24, 1997 covering the property, and TCT No. T-65152 was issued to them. On May 26, 1998, the property was subdivided and separate titles were issued: TCT Nos. T-66562 and T-66563 for Luz, TCT Nos. T-66560 and T-66561 for Serafin, Jr., and TCT Nos. T-66564 and T-66565 for Eleuterio.

In June 1998, the Heirs of Adolfo expressed their intention to redeem the mortgaged property from Bangis, but Bangis refused, claiming that the transaction was one of sale. During barangay conciliation, Bangis’ son, Rudy Bangis, showed them a copy of a deed of sale and a certificate of title to the disputed lot. The parties failed to settle amicably, and the barangay issued a certificate to file action. On July 26, 2000, the Heirs of Adolfo filed a complaint before the Regional Trial Court for annulment of deed of sale and declaration of the purported contract of sale as antichresis, accounting and redemption of property, and damages against Bangis, docketed as Civil Case No. 2993-00.

The complaint was amended on September 11, 2001 to include a prayer for cancellation of TCT No. T-10567 and the tax declarations in Bangis’ name, in view of the manifestation of Ex-Officio Register of Deeds Atty. Phoebe Loyola Toribio of the Registry of Deeds, Malaybalay City that the title was of dubious origin because there was no deed of conveyance upon which it was based and its derivative title, TCT No. T-10566, did not exist in the Registry’s files. On November 12, 2001, the complaint was again amended to reflect the other certificates of title issued in the names of the Heirs of Adolfo and the amount of P12,500.00 representing the mortgage debt. Another amendment on October 13, 2003 alleged that the Heirs had partitioned the lot on December 24, 1997 and that no copy of the supposed deed of sale in favor of Bangis could be found in the records of the Provincial Assessor’s Office and the Registrar of Deeds; in the alternative, they prayed to be allowed to redeem the lot under the Homestead Law and sought indemnity of P50,000.00 each as moral damages, 20% of the property’s value as attorney’s fees, P50,000.00 as litigation expenses, and costs. In his Answer with Counterclaim, Bangis claimed to have bought the property from Adolfo, for which TCT No. T-10567 was issued; he alleged open and adverse possession since 1972 and that the cause of action had prescribed. On November 11, 2001, Bangis died and was substituted by his heirs.

During trial, Rodolfo Bangis presented a photocopy of an Extra-Judicial Settlement with Absolute Deed of Sale dated December 30, 1971 to prove the sale of the lot by Adolfo and his heirs in favor of Aniceto Bangis and Segundino Cortel for P13,000.00. He also presented a Promissory Note of even date purportedly executed by Bangis and Segundino Cortel undertaking to pay the balance of P1,050.00. Both documents were notarized by Atty. Valentin Murillo, who testified to their execution. Rodolfo also testified that they had been paying taxes on the property and had used it as collateral for a bank loan. On rebuttal, Luz Adolfo Bannister denied the due execution and genuineness of the Extra-Judicial Settlement with Absolute Deed of Sale, alleging forgery. The RTC found the transaction to be a mere mortgage or antichresis, not a sale, and the CA affirmed that finding, noting that while Bangis had possession, the certificate of title remained in Adolfo’s custody and was never cancelled.

• Nature of Transaction: Petitioners maintained that the transaction between the parties was one of sale and not a mortgage or antichresis.
• Probative Weight of Deed of Sale: Petitioners argued that the CA erred in not giving probative weight to the Extra-Judicial Settlement with Absolute Deed of Sale, which purportedly established that Aniceto Bangis bought the subject parcel from Adolfo.
• Validity of TCT No. T-10567: Petitioners contended that TCT No. T-10567, issued as a consequence of the sale, should be respected.
• Disregard of Evidence: In their motion for reconsideration, petitioners argued that the CA erred in disregarding their testimonial and documentary evidence, particularly the Extra-Judicial Settlement with Absolute Deed of Sale (Exh. 2).

• No Sale: Respondents averred that the CA committed no reversible error in upholding that no sale transpired between the parties’ predecessors-in-interest.
• TCT Not Offered and Dubious Origin: Respondents argued that petitioners’ TCT No. T-10567 was not offered in evidence and was certified of dubious origin per the Manifestation of the Registrar of Deeds.

• Nature of Transaction: Whether the transaction between Adolfo and Aniceto Bangis was a sale, as claimed by petitioners, or a mortgage/antichresis, as found by the lower courts.
• Proof of Sale / Best Evidence Rule: Whether the CA erred in disregarding the Extra-Judicial Settlement with Absolute Deed of Sale on the ground that only a photocopy was presented without sufficient justification for secondary evidence.
• Validity and Cancellation of TCT No. T-10567: Whether TCT No. T-10567 in the name of Aniceto Bangis can prevail over the titles of the Heirs of Adolfo and whether its cancellation constitutes a prohibited collateral attack.
• Prescription: Whether the action of the Heirs of Adolfo had prescribed due to the Heirs of Bangis’ alleged possession since 1972.
• Interest: Whether the Heirs of Adolfo are liable for interest on the mortgage debt and from what date.

• Nature of Transaction: No. The transaction was a mortgage, not a sale or valid antichresis; no writing specified the principal and interest as required by Article 2134, and substantial evidence supported the lower courts’ finding.
• Proof of Sale / Best Evidence Rule: No. The CA correctly gave no probative weight to the photocopy of the Extra-Judicial Settlement with Absolute Deed of Sale because no exception to the best evidence rule was sufficiently justified under Rule 130.
• Validity and Cancellation of TCT No. T-10567: No. TCT No. T-10567 cannot prevail over the Heirs of Adolfo’s titles; it was spurious or non-existent, and its cancellation was proper because the counterclaim made the attack direct.
• Prescription: No. The action had not prescribed; no title in derogation of the registered owner can be acquired by prescription or adverse possession, and the Heirs of Bangis’ bad-faith possession was short of 30 years under Article 1137.
• Interest: Yes, but only from March 30, 2009. The liability is based on a loan or forbearance of money and bears 12% per annum from the CA’s judicial determination until finality, then 12% until full satisfaction, per Eastern Shipping Lines.

• Nature of Transaction: Rule 45 limits review to questions of law, and the Heirs of Bangis’ insistence that the lower courts misappreciated the evidence raised factual questions. Nevertheless, the records contained substantial evidence supporting the RTC and CA finding that the transaction between Adolfo and Bangis was a mortgage, not a sale. The Heirs of Adolfo could not produce any writing to establish antichresis, and Article 2134 of the Civil Code requires the principal and interest to be specified in writing, failing which the contract is void. The certificate of title remained with Adolfo and was never cancelled, and the alleged sale rested on a document that was not properly proven.
• Proof of Sale / Best Evidence Rule: The subject of inquiry was the contents of the Extra-Judicial Settlement with Absolute Deed of Sale dated December 30, 1971, yet only a photocopy was presented. No sufficient justification for secondary evidence was shown under Section 3 in relation to Section 5 of Rule 130. Rodolfo Bangis’ bare testimony that his father handed him the document and told him the original could not be found did not prove execution or existence and the cause of unavailability without bad faith. The notary’s identification was not verified against his notarial records, and the Heirs of Bangis could have secured a certified copy from the Assessor’s Office under Section 7 of Rule 130. The deed’s existence and due execution were therefore not established, and the lower courts correctly gave it no probative value.
• Validity and Cancellation of TCT No. T-10567: TCT No. T-10567 was not offered in evidence. Its copy showed that it was derived from TCT No. T-10566, which the Heirs of Bangis failed to account for, and it bore no relation to OCT No. P-489 or TCT No. T-6313. The Register of Deeds manifested that TCT No. T-10567 was dubious, that no deed of conveyance supported it, and that its derivative title did not exist in the office. Tracing the original certificates, the titles of the Heirs of Adolfo were legitimately issued, while TCT No. T-10567 was spurious. Although it was issued earlier on August 18, 1976, an earlier title prevails only absent anomaly or irregularity in registration. The CA’s view that cancellation was a collateral attack could not stand because Bangis’ counterclaim sought a declaration of ownership and superiority, making the attack direct; moreover, the prohibition against collateral attack does not protect spurious or non-existent titles.
• Prescription: Bangis took possession upon the alleged mortgage, but TCT No. 6313 remained with Adolfo and passed to his heirs, negating any transfer of ownership. No title in derogation of the registered owner can be acquired by prescription or adverse possession. Even if acquisitive prescription were considered, the Heirs of Bangis’ possession was in bad faith and was two years short of the 30-year uninterrupted adverse possession required by Article 1137 of the Civil Code. They could not claim the rights of a builder in good faith under Article 449 in relation to Article 448, so the order to surrender possession and improvements was proper.
• Interest: The Heirs of Bangis made no judicial or extrajudicial demand for payment of the mortgage debt. Instead, the Heirs of Adolfo signified their intent to pay the P12,500.00 obligation, which was refused. The mortgage contract subsisted because the debt remained unsatisfied. Under Eastern Shipping Lines, Inc. vs. Court of Appeals, a liability based on a loan or forbearance of money bears 12% legal interest per annum from the date it was judicially determined by the CA on March 30, 2009 until finality, not from 1975, 1998, or 2000, because it was the Heirs of Adolfo, not Bangis, who filed the suit to collect the indebtedness. Thereafter, the judgment award inclusive of interest bears 12% per annum until full satisfaction.

• Best Evidence Rule — When the subject of inquiry is the contents of a document, no evidence is admissible other than the original itself, except in the cases enumerated in Section 3, Rule 130 of the Rules of Court. Secondary evidence is allowed only upon proof of the original’s execution or existence and its unavailability without bad faith on the offeror’s part. The rule was applied to reject the photocopy of the Extra-Judicial Settlement with Absolute Deed of Sale because no sufficient justification for secondary evidence was shown, the notary’s testimony was not verified against notarial records, and a certified copy from the public office could have been obtained.
• Antichresis Requires a Writing — Article 2134 of the Civil Code provides that the amount of the principal and interest in an antichresis must be specified in writing; otherwise, the contract is void. No antichresis was found because the Heirs of Adolfo produced no document to support that claim.
• Indefeasibility of Torrens Title and Collateral Attack — A Torrens title cannot be collaterally attacked, but a counterclaim is considered an original complaint and may constitute a direct attack on the title. This principle was applied to hold that Bangis’ counterclaim, which sought a declaration of ownership and superiority of TCT No. T-10567, made the validity issue a direct attack. The prohibition also does not apply to spurious or non-existent titles, which are not accorded indefeasibility.
• Tracing of Original Certificates of Title — Where two certificates of title purport to include the same land, the better approach is to trace the original certificates from which the titles were derived. The Court traced TCT No. T-10567 to a non-existent TCT No. T-10566 and found no relation to OCT No. P-489 or TCT No. T-6313, while the Heirs of Adolfo’s titles were traced to legitimate issuances.
• No Prescription Against a Registered Owner — No title in derogation of that of the registered owner can be acquired by prescription or adverse possession. This rule was applied because TCT No. 6313 remained with Adolfo and passed to his heirs; the Heirs of Bangis’ possession, even if considered, was in bad faith and short of the 30-year period under Article 1137 of the Civil Code.
• Interest on Loans or Forbearance of Money — Under the rule in Eastern Shipping Lines, Inc. vs. Court of Appeals, a liability based on a loan or forbearance of money bears 12% legal interest per annum from the date of judicial determination until finality, and thereafter 12% per annum until full satisfaction. This rule was applied to the P12,500.00 mortgage debt, reckoning interest from March 30, 2009, not from 1975, 1998, or 2000.
• Builder in Good Faith — Articles 448 and 449 of the Civil Code protect a builder in good faith. The Heirs of Bangis could not invoke this protection because their possession was in bad faith, so the order to surrender the land and improvements was proper.

• "For the contract of antichresis to be valid, Article 2134 of the Civil Code requires that "the amount of the principal and of the interest shall be specified in writing; otherwise the contract of antichresis shall be void."" — This states the requisites for a valid antichresis and explains why no such contract existed between the parties.
• "The bare testimony of one of the Heirs of Bangis, Rodolfo Bangis, that the subject document was only handed to him by his father, Aniceto, with the information that the original thereof "could not be found" was insufficient to justify its admissibility." — This applies the best evidence rule and explains why the photocopied deed of sale had no probative value.
• "It is already settled that a counterclaim is considered an original complaint and as such, the attack on the title in a case originally for recovery of possession cannot be considered as a collateral attack on the title." — This defines the direct-attack doctrine and supports the cancellation of TCT No. T-10567.
• "Besides, the prohibition against collateral attack does not apply to spurious or non-existent titles, which are not accorded indefeasibility, as in this case." — This states the exception to indefeasibility and supports the cancellation of the spurious title.

• Top Management Programs Corporation vs. Luis Fajardo and the Register of Deeds of Las Piñas City, G.R. No. 150462, June 15, 2011 — Cited for the rule that if two certificates of title purport to include the same land, the better approach is to trace the original certificates from which they were derived; applied to uphold the Heirs of Adolfo’s titles over TCT No. T-10567.
• Mathay vs. Court of Appeals, G.R. No. 115788, September 17, 1998, 295 SCRA 556, 578 — Cited for the rule that where two transfer certificates of title are issued on different dates, the earlier title may prevail only in the absence of anomaly or irregularity in its registration; the Court found such anomaly in TCT No. T-10567.
• Pasiño vs. Monterroyo, G.R. No. 159494, July 31, 2008, 560 SCRA 739, 750-751 — Cited for the rule that a counterclaim is considered an original complaint and may constitute a direct attack on a Torrens title; applied to allow cancellation of TCT No. T-10567.
• Eastern Shipping Lines, Inc. vs. Court of Appeals, G.R. No. 97412, July 12, 1994, 234 SCRA 78, 95-96 — Cited as the controlling rule on legal interest for loans or forbearance of money; applied to impose 12% interest from March 30, 2009 until full satisfaction.
• Feliciano vs. Spouses Zaldivar, G.R. No. 162593, September 26, 2006, 503 SCRA 182, 197 — Cited for the rule that no title in derogation of the registered owner can be acquired by prescription or adverse possession; applied against the Heirs of Bangis.
• Oliveros vs. San Miguel Corporation, G.R. No. 173531, February 1, 2012 — Cited for the rule that a counterclaim is essentially a complaint and for the principle that the prohibition against collateral attack does not apply to spurious or non-existent titles; applied to permit cancellation of TCT No. T-10567.
• Abalos vs. Spouses Darapa, G.R. No. 164693, March 23, 2011, 646 SCRA 200, 207-208 — Cited for the rule that a Rule 45 petition raises only questions of law and that factual findings of the trial court, when affirmed by the CA, are final and conclusive; applied to reject the Heirs of Bangis’ factual re-evaluation.
• Heirs of Mario Pacres vs. Heirs of Cecilia Ygoña, G.R. No. 174719, May 5, 2010, 620 SCRA 213, 225 — Cited for the rule that questions on the probative weight of evidence are questions of fact; applied to characterize the Heirs of Bangis’ arguments as factual.
• Department of Education, Culture and Sports vs. Del Rosario, et al., G.R. No. 146586, January 26, 2005, 449 SCRA 299, 317 — Cited for the rule that a notary public’s conclusion is not given credence unless verified against his notarial records; applied to reject Atty. Murillo’s identification of the photocopied deed.

• Article 2134, Civil Code — Requires that the amount of the principal and interest in an antichresis be specified in writing; otherwise, the contract is void. Applied: no writing was produced, so no antichresis existed.
• Article 1137, Civil Code — Requires 30 years of uninterrupted adverse possession for acquisitive prescription in the case of bad faith. Applied: the Heirs of Bangis’ possession was two years short of the period.
• Article 449 in relation to Article 448, Civil Code — Governs the rights of a builder in good faith. Applied: the Heirs of Bangis could not claim such rights because their possession was in bad faith.
• Section 3, Rule 130, Rules of Court — Provides that when the subject of inquiry is the contents of a document, no evidence is admissible other than the original, except in specified cases. Applied: the photocopy of the Extra-Judicial Settlement with Absolute Deed of Sale was inadmissible absent an exception.
• Section 5, Rule 130, Rules of Court — Allows secondary evidence when the original is unavailable, but only upon proof of execution or existence and the cause of unavailability without bad faith. Applied: the Heirs of Bangis failed to make such proof.
• Section 7, Rule 130, Rules of Court — Allows the contents of a public record to be proved by a certified copy issued by the public officer in custody. Applied: the Heirs of Bangis could have secured a certified copy from the Assessor’s Office.
• Rule 45, Rules of Court — Limits a petition for review on certiorari to questions of law. Applied: the Heirs of Bangis’ challenge to the probative weight of evidence was a factual question.
• Presidential Decree No. 1529 — Governs Torrens registration and the indefeasibility of titles; the CA invoked it against collateral attack. Applied: the Supreme Court held that the counterclaim made the attack direct and that spurious or non-existent titles are not indefeasible.

Diosdado M. Peralta (Acting Chairperson), Roberto A. Abad, Martin S. Villarama, Jr. (Acting Member), and Jose Catral Mendoza concurred.