G.R. No. 170677 ; October 24, 2012
VSD REALTY & DEVELOPMENT CORPORATION, Petitioner, vs. UNIWIDE SALES, INC. and DOLORES BAELLO TEJADA, Respondents.

FACTS

Petitioner VSD Realty filed a complaint for annulment of title and recovery of possession against respondents. VSD claimed to be the registered owner of a parcel of land in Caloocan City, having purchased it from Felisa D. Bonifacio, whose title originated from a 1992 segregation order in Land Registration Commission Case No. C-3288. VSD alleged that respondent Dolores Baello Tejada held a spurious title, TCT No. (35788) 12754, covering the same property. VSD contended that the technical description in Baello’s title was vague, did not correspond to any identifiable lot on the referenced subdivision plan, and had no basis in the records of the Lands Management Bureau. Baello had leased the property to respondent Uniwide Sales, Inc., which constructed a building thereon.
Respondent Baello claimed ownership by virtue of a will from her adoptive mother, Jacoba Galauran. She asserted that her title was registered as early as September 6, 1954, predating VSD’s title by nearly 40 years, and that she had been in open, continuous, and public possession of the property, paying realty taxes. She argued that VSD’s action was barred by prescription and laches. Uniwide, as a lessee, defended its possession based on its lease contract with Baello.

ISSUE

The core issue was which party had a superior right to the subject property, hinging on the validity of their respective certificates of title.

RULING

The Supreme Court ruled in favor of respondent Baello, affirming the Court of Appeals’ decision. The legal logic centered on the principle of indefeasibility and incontrovertibility of a Torrens title. Baello’s title, registered in 1954, was issued by virtue of a judicial decree in a land registration proceeding and had become incontrovertible one year after its issuance. VSD’s attack on Baello’s title, filed decades later in 1995, was a collateral attack not permitted by law. A Torrens title cannot be impeached collaterally in an action for recovery of possession; a direct proceeding for its nullification is required.
Furthermore, the Court found that VSD failed to present clear and convincing evidence that Baello’s title was fraudulent or spurious. The alleged defects in the technical description and its non-conformity with survey plans did not conclusively prove the title’s invalidity, especially against a title that had been existing for over forty years. Baello’s long-standing possession and tax payments bolstered her claim. Consequently, VSD’s action was barred by prescription and laches. As Baello was declared the rightful owner, Uniwide’s possession as a lessee in good faith was upheld. The Court, however, did not rule on the issue of builder in good faith, as it was not squarely raised in the petition.