Villafria vs. Plazo

An action for judicial partition with annulment of title and recovery of possession is an ordinary civil action cognizable by the RTC, and the inclusion of allegations identifying the heirs and properties of a decedent's estate does not convert it into a special proceeding for settlement of estate. Where the decedent left no debts, heirs may resort to an ordinary action for partition without submitting the estate to judicial administration, and the determination of co-ownership, annulment of transfers, and recovery of possession may all be properly ventilated in the same proceeding.

Pedro L. Rinoza died intestate on November 16, 1989, leaving heirs from two marriages: his children with his first wife, including respondents Ma. Gracia R. Plazo and Ma. Fe Alaras, and his second wife Benita Tenorio Rinoza and their children. His estate comprised a resort and a family home in Nasugbu, Batangas. The dispute arose when some co-heirs sold estate properties to petitioners without the respondents' knowledge, prompting respondents to seek judicial partition coupled with annulment of the conveyance documents and recovery of possession. The legal framework at issue includes Rules 69 and 74 of the Rules of Court, which govern ordinary actions for partition and summary settlement of estate, respectively, and the jurisdictional provisions of Batas Pambansa Blg. 129 as amended by Republic Act No. 7691.

Pedro L. Rinoza died intestate on November 16, 1989, leaving several heirs: his children with his first wife, including respondents Ma. Gracia R. Plazo and Ma. Fe Alaras, and his second wife Benita Tenorio Rinoza and their children. His estate included a resort covered by Transfer Certificates of Title (TCT) Nos. 51354 and 51355, each with an area of 351 square meters, and a family home on land covered by TCT Nos. 40807 and 40808, all located in Nasugbu, Batangas.

Sometime in March 1991, respondents discovered that their co-heirs — Benita and other children — had sold the subject properties to petitioners, spouses Francisco Villafria and Maria Butiong, without their knowledge or consent. When confronted about the sale, Benita acknowledged it and showed respondents a document she believed evidenced receipt of her share. The document, however, did not refer to any sale but to a previous loan obtained by Pedro and Benita from Banco Silangan, evidencing release of their indebtedness in the amount of ₱87,352.62. Upon inquiry, the Register of Deeds of Nasugbu informed respondents that he had no record of any transaction involving the subject properties and issued certified true copies of the titles. When respondents visited the properties, they discovered that four of the eight cottages in the resort had been demolished and that the premises were padlocked.

Respondents subsequently learned that on July 18, 1991, a notice of an extra-judicial settlement of their late father's estate had been published in a tabloid called Balita. They caused the annotation of their adverse claims over the subject properties before the Register of Deeds and filed an Amended Complaint for Judicial Partition with Annulment of Title and Recovery of Possession on September 15, 1993, praying for the annulment of all documents conveying the subject properties to petitioners and the certificates of title issued pursuant thereto.

Petitioners denied the allegations of the complaint on the ground of lack of personal knowledge and claimed good faith in acquiring the subject properties. During trial, Francisco Villafria testified that what they purchased was only the resort. He presented an Extra-Judicial Settlement with Renunciation, Repudiations and Waiver of Rights and Sale, which provided that respondents' co-heirs sold the family home to spouses Rolando and Ma. Cecilia Bondoc for ₱1 million, as well as a Deed of Sale whereby Benita sold the resort to petitioners for ₱650,000.

The trial court found irregularities in both documents of conveyance. The Extra-Judicial Settlement was notarized by Antonio G. Malonzo, who was not duly commissioned as a notary public on the date of execution. The Deed of Sale was undated, the date of acknowledgment was left blank, and the typewritten name "Pedro Rinoza, Husband" on the left side of the document was not signed. Neither document was presented to the Register of Deeds for registration, and the titles remained in the names of Pedro and Benita. The supposed notaries and buyers were not presented as witnesses. The trial court nullified the transfers, ordered the forfeiture of improvements introduced by petitioners, and directed petitioners to vacate the premises and deliver possession to the estate.

• Mischaracterization of the Action: Petitioner asserted that while the complaint was captioned as "Judicial Partition with Annulment of Title and Recovery of Possession," the allegations therein showed that the cause of action was actually one for settlement of estate of decedent Pedro. Since settlement of estate is a special proceeding cognizable by a probate court of limited jurisdiction while judicial partition is an ordinary civil action cognizable by a court of general jurisdiction, the trial court exceeded its jurisdiction in entertaining the latter while sitting merely in its probate jurisdiction, in violation of the prohibition on the joinder of special civil actions and ordinary civil actions.
• Validity of Sale as to Assenting Co-Heirs: Petitioner argued that since the finding of forgery related only to the signatures of respondents and not to their co-heirs who assented to the conveyance, the transaction should be considered valid as to those co-heirs.
• Good Faith of Petitioners: Petitioner denied the findings of the courts below that petitioners were builders in bad faith, maintaining that they only took possession of the subject properties after the execution of the transfer documents and after payment of the consideration on the sale.
• Extrinsic Fraud and Lack of Jurisdiction: In the petition for annulment of judgment before the CA, petitioner argued that the RTC Decision and Order should be annulled on the grounds of extrinsic fraud and lack of jurisdiction, asserting that the trial court ruled on the settlement of the intestate estate in its ordinary jurisdiction when the action filed was for judicial partition.

• Jurisdiction of the RTC: Whether the RTC acted without jurisdiction in entertaining an action for judicial partition with annulment of title and recovery of possession, which petitioner characterizes as actually being a special proceeding for settlement of estate.
• Validity of Sale as to Assenting Co-Heirs: Whether the sale should be considered valid as to the co-heirs who assented to the conveyance, notwithstanding the finding of forgery as to respondents' signatures.
• Good Faith of Petitioners: Whether petitioners can be considered innocent purchasers for value and builders in good faith despite the manifest defects in the instruments conveying their titles.

• Jurisdiction of the RTC: No, the RTC did not act without jurisdiction. The complaint was properly one for judicial partition under Rule 69, not a special proceeding for settlement of estate, and the RTC had exclusive original jurisdiction because the action — which included annulment of title — was incapable of pecuniary estimation under Section 19 of Batas Pambansa Blg. 129 as amended by Republic Act No. 7691.
• Validity of Sale as to Assenting Co-Heirs: No. The authenticity and due execution of the documents of conveyance were inadequately proven, and the circumstances surrounding the purported transfers cast doubt on whether they actually took place.
• Good Faith of Petitioners: No. The manifest defects in the instruments conveying title should have placed petitioners on guard, yet they still demolished cottages and introduced permanent improvements, precluding a claim of good faith.

• Jurisdiction of the RTC: The Court examined the allegations of the complaint and concluded that they were customary and, in fact, mandatory to a complaint for partition of real estate under Section 1, Rule 69 of the Rules of Court. The complaint alleged that Pedro died intestate; that the heirs were all of legal age; that the heirs enumerated were the only known heirs; that there was an account and description of all real properties left by Pedro; that Pedro's estate had no known indebtedness; and that respondents prayed for partition in accordance with the laws of intestacy. These allegations did not perforce make the action one for settlement of estate. Under Section 1, Rule 74, where a decedent left no will and no debts, the heirs may divide the estate among themselves by means of a public instrument or, should they disagree, in an ordinary action of partition, without submitting the same to judicial administration. Since it was expressly alleged and undisputed that Pedro died without a will and without pending obligations, respondents were under no legal obligation to submit the estate to a special proceeding for settlement. The Court cited Pereira vs. Court of Appeals for the proposition that where partition is possible, the estate should not be burdened with administration proceedings without good and compelling reasons. The inclusion of a prayer for annulment of title and recovery of possession did not strip the trial court of jurisdiction, as asking for the annulment of certain transfers of property could be achieved in an action for partition. The Court distinguished between a certificate of title, which cannot be collaterally attacked, and title itself (ownership), which may be resolved in a partition proceeding, citing Bagayas vs. Bagayas and Lacbayan vs. Samoy, Jr. The two-phase nature of partition proceedings — the first phase determining whether co-ownership exists and the second phase effecting the actual partition — necessarily encompasses the resolution of ownership issues. Under Section 1 of Republic Act No. 7691, amending Batas Pambansa Blg. 129, the RTC exercises exclusive original jurisdiction over all civil actions in which the subject of the litigation is incapable of pecuniary estimation; since the action included annulment of title and documents, it was incapable of pecuniary estimation and thus cognizable by the RTC. The Court further noted that even if the action were one for annulment of title alone, the requirement of a separate special proceeding for the determination of heirship could be dispensed with where the parties had voluntarily submitted the issue to the trial court and had already presented evidence thereon, citing Portugal vs. Portugal-Beltran. Petitioner was estopped from assailing the trial court's jurisdiction, having actively participated in the proceedings below, citing Sps. Santos vs. Sps. Lumbao.
• Validity of Sale as to Assenting Co-Heirs: The Court found no compelling reason to deviate from the rulings of the courts below. The authenticity and due execution of the documents on which petitioner's claims were based were inadequately proven. The documents were undated, forged, and acknowledged before a notary public who was not commissioned as such on the date of execution. They were never presented to the Register of Deeds for registration. Neither the supposed notaries nor the buyers were presented as witnesses. While Benita acknowledged the sale of the resort, the circumstances militated against the fact of its occurrence: the Deed of Sale was undated and unsigned by Pedro, and the document Benita presented as evidence of her share did not refer to any sale but to a previous bank loan. Petitioners were also uncertain as to the number and identity of properties they purchased, gave inconsistent statements between their Answer and trial testimony, and never presented any document evidencing actual payment of consideration.
• Good Faith of Petitioners: Good faith consists in the belief of the builder that the land being built on is one's own, without knowledge of any defect or flaw in one's title. However, in view of the manifest defects in the instruments conveying their titles — including the lack of proper notarization, the absence of dates, and the failure to register — petitioners should have been placed on guard. Yet they still demolished several cottages and constructed improvements on the properties. Their claim of good faith was therefore without credence. The Court also invoked the doctrine of immutability of final judgments, noting that the RTC Decision had become final and executory on October 31, 2007, and that petitioner had been given more than ample opportunity to be heard and unbridled access to the appellate courts.

• Judicial Partition vs. Settlement of Estate — Where a decedent dies intestate leaving no debts, the heirs are not bound to submit the estate to judicial administration or to apply for appointment of an administrator. They may resort to an ordinary action for partition under Rule 69, and the inclusion of allegations identifying heirs, properties, and their rights does not convert the action into a special proceeding for settlement of estate under Rule 74. The determination of co-ownership, annulment of transfers, and recovery of possession may all be properly ventilated in partition proceedings. The Court applied this doctrine by holding that respondents' complaint, despite containing allegations inherent in settlement of estate proceedings, was properly one for judicial partition cognizable by the RTC.

• Two-Phase Nature of Partition Proceedings — The first phase of a partition suit involves the determination of whether or not a co-ownership in fact exists and whether partition is proper. The second phase commences when the parties are unable to agree on the partition, and the court effects partition with the assistance of commissioners. The Court relied on this doctrine to establish that the resolution of ownership issues is necessary and proper within a partition proceeding.

• Collateral Attack: Certificate of Title vs. Title — What cannot be collaterally attacked is the certificate of title (the document issued by the Register of Deeds) and not the title itself (ownership). The Court applied this distinction to hold that the annulment of transfers sought in the partition complaint did not constitute a collateral attack on the certificates of title but rather addressed the underlying ownership rights.

• Notarization and Presumption of Regularity — The validity of a notarial certification derives from the authority of the notarial officer. If the notary public does not have the capacity to notarize a document, the document should be treated as unnotarized and loses the presumption of regularity accorded to public documents. The Court applied this doctrine to uphold the nullification of the conveyance documents, one of which was notarized by a person not commissioned as a notary public and the other of which bore indicia of inauthenticity.

• Proof of Private Documents — Under Section 20, Rule 132 of the Rules of Court, before a private document offered as authentic is received in evidence, its due execution and authenticity must be proved either by someone who saw the document executed or by evidence of the genuineness of the signature or handwriting of the maker. The Court applied this rule to uphold the exclusion of the conveyance documents, which petitioners failed to authenticate through the notary, witnesses, or a handwriting expert.

• Builders in Good Faith — Good faith consists in the belief of the builder that the land being built on is one's own, without knowledge of any defect or flaw in one's title. Manifest defects in the instruments conveying title should place a buyer on guard and preclude a claim of good faith. The Court applied this doctrine to hold that petitioners, who took possession and introduced improvements despite blatant legal infirmities in their conveyance documents, could not be considered builders in good faith.

• Estoppel from Assailing Jurisdiction — Active participation of a party in a case pending before a court is tantamount to recognition of that court's jurisdiction and willingness to abide by the resolution of the case, which bars the party from later impugning the court's jurisdiction. The Court applied this doctrine to hold that petitioner, having fully participated in the trial court proceedings, was estopped from later assailing the RTC's jurisdiction.

• Annulment of Judgment Not a Substitute for Appeal — An action for annulment of judgment cannot and is not a substitute for the lost remedy of appeal. A party must first avail of appeal, a motion for new trial, or a petition for relief before an action for annulment can prosper. The Court applied this doctrine to uphold the CA's dismissal of the petition for annulment of judgment, petitioner having failed to avail of the appropriate remedies and there being no showing of extrinsic fraud or lack of jurisdiction.

• Immutability of Final Judgments — A judgment which has acquired finality becomes immutable and unalterable and may no longer be modified in any respect except to correct clerical errors or mistakes. The Court invoked this doctrine to refuse reversal of the lower courts' rulings, the RTC Decision having become final and executory on October 31, 2007.

• "It is clear, therefore, that based on the allegations of the complaint, the case is one for judicial partition. That the complaint alleged causes of action identifying the heirs of the decedent, properties of the estate, and their rights thereto, does not perforce make it an action for settlement of estate." — This passage articulates the ratio decidendi on the core jurisdictional issue: allegations customary to a partition complaint do not transform the action into a special proceeding for settlement of estate.

• "Asking for the annulment of certain transfers of property could very well be achieved in an action for partition, as can be seen in cases where courts determine the parties' rights arising from complaints asking not only for the partition of estates but also for the annulment of titles and recovery of ownership and possession of property." — This passage establishes that annulment of title and recovery of possession are proper reliefs within a partition proceeding and do not divest the court of jurisdiction.

• "What cannot be collaterally attacked is the certificate of title and not the title itself. The certificate referred to is that document issued by the Register of Deeds known as the TCT. In contrast, the title referred to by law means ownership, which is, more often than not, represented by that document." — This passage, quoting Lacbayan vs. Samoy, Jr., defines the critical distinction between a certificate of title and title as ownership, clarifying what may and may not be collaterally attacked in a partition proceeding.

• "Indeed, a judgment which has acquired finality becomes immutable and unalterable, hence, may no longer be modified in any respect except to correct clerical errors or mistakes, all the issues between the parties being deemed resolved and laid to rest." — This passage states the doctrine of immutability of final judgments, which the Court invoked to refuse disturbance of the lower courts' rulings.

• Pereira vs. Court of Appeals, 255 Phil. 863 (1989) — Followed. Held that where partition is possible, the estate should not be burdened with administration proceedings without good and compelling reasons, and that heirs of a decedent who left no debts are not bound to submit the property to judicial administration.
• Bagayas vs. Bagayas, G.R. No. 187308 & 187517, Sept. 18, 2013, 706 SCRA 73 — Followed. Held that a complaint for annulment of sale and partition does not constitute a collateral attack on certificates of title, distinguishing between the certificate of title (which cannot be collaterally attacked) and title as ownership (which may be assailed).
• Lacbayan vs. Samoy, Jr., 661 Phil. 307 (2011) — Followed. Established that an action for partition is premised on the existence or non-existence of co-ownership, and that resolution of the issue of ownership does not subject the Torrens title to a collateral attack.
• Municipality of Biñan vs. Garcia, G.R. No. 69260, Dec. 22, 1989, 180 SCRA 576 — Followed. Described the two-phase nature of partition proceedings: the first phase determining whether co-ownership exists and partition is proper, and the second phase effecting partition with the assistance of commissioners.
• Portugal vs. Portugal-Beltran, 504 Phil. 456 (2005) — Followed. Held that where the only property of an intestate estate is a parcel of land, subjecting it to a special proceeding just to establish heirship is impractical and superfluous where the parties have already presented evidence on the issue before the trial court.
• Sps. Santos vs. Sps. Lumbao — Followed. Held that active participation of a party in a case is tantamount to recognition of the court's jurisdiction, barring the party from later impugning that jurisdiction.
• Mercado vs. Security Bank Corporation — Followed. Held that an action for annulment of judgment is not a substitute for a lost remedy of appeal and may be based only on extrinsic fraud or lack of jurisdiction.
• Tigno vs. Aquino — Followed (as cited by the CA). Held that notarization by a person without notarial commission renders the document unnotarized and strips it of the presumption of regularity accorded to public documents.

• Section 1, Rule 74, Rules of Court — Governs extrajudicial settlement of estate by agreement between heirs. Provides that where the decedent left no will and no debts, and the heirs are all of age, the parties may divide the estate among themselves by means of a public instrument or, should they disagree, in an ordinary action of partition. The Court relied on this provision to hold that respondents were not obligated to submit the estate to a special proceeding for settlement.
• Section 1, Rule 69, Rules of Court — Governs the complaint in an action for partition of real estate, requiring the complainant to set forth the nature and extent of his title and an adequate description of the real estate. The Court applied this provision to demonstrate that the allegations in respondents' complaint were customary and mandatory for a partition action.
• Section 5, Rule 2, Rules of Court — Governs joinder of causes of action, prohibiting the joinder of special civil actions or actions governed by special rules with ordinary civil actions. Petitioner invoked this provision to argue that the trial court lacked jurisdiction; the Court rejected the argument, holding that the action was not a special proceeding.
• Section 19, Batas Pambansa Blg. 129, as amended by Republic Act No. 7691 — Confers on the RTC exclusive original jurisdiction over all civil actions in which the subject of the litigation is incapable of pecuniary estimation. The Court applied this provision to hold that the action for partition with annulment of title, being incapable of pecuniary estimation, was cognizable by the RTC.
• Section 20, Rule 132, Rules of Court — Governs proof of private documents, requiring that due execution and authenticity be proved either by someone who saw the document executed or by evidence of the genuineness of the signature or handwriting of the maker. The Court applied this provision to uphold the exclusion of the conveyance documents for failure to prove their authenticity and due execution.

Presbitero J. Velasco, Jr. (Chairperson), Jose Portugal Perez, Marvic M.V.F. Leonen, and Francis H. Jardeleza concurred in the decision. No separate concurring opinions were noted.