GR 203786; (October, 2013) (Digest)
G.R. No. 203786; October 23, 2013
AQUILES RIOSA, Petitioner, vs. TABACO LA SUERTE CORPORATION, Respondent.
FACTS
Petitioner Aquiles Riosa filed a complaint for annulment of a deed of absolute sale and reconveyance against respondent Tabaco La Suerte Corporation. Riosa alleged he owned a commercial lot acquired from his parents. He obtained loans from Sia Ko Pio, La Suerte’s CEO, and was asked to sign a document he believed was a loan receipt. He later discovered the document was a deed of sale conveying his property to La Suerte. Riosa claimed he did not appear before the notary, that the notary (a municipal judge) lacked authority, and that the sale was procured through fraud.
La Suerte countered it was the lawful owner, having purchased the property in 1990, and a TCT was issued in its name. It argued Riosa remained in possession merely by tolerance. The RTC ruled in favor of Riosa, annulling the sale and ordering reconveyance, finding his consent vitiated by fraud under Article 1330 of the Civil Code. The Court of Appeals reversed, upholding the deed of sale and La Suerte’s title, ruling that tax declarations are not conclusive evidence of ownership against a certificate of title.
ISSUE
Whether the Court of Appeals erred in reversing the RTC and upholding the validity of the deed of absolute sale in favor of La Suerte.
RULING
The Supreme Court granted the petition and reinstated the RTC decision. The legal logic centered on the principle that a Torrens title is not a shield for fraud. While a certificate of title is generally indefeasible, it can be challenged if its issuance was procured through fraud or forgery. The Court found the factual findings of the RTC, which had the direct opportunity to observe witness demeanor, to be more credible. It upheld the RTC’s conclusion that Riosa’s consent to the sale was vitiated by fraud, as he was deceived into signing a deed of sale under the belief it was a loan document.
The Court emphasized that the notarization of the deed was irregular, as the notary public, a municipal judge, was not authorized to notarize a deed of conveyance, casting doubt on the document’s authenticity. Furthermore, the Court ruled that La Suerte, having acquired the property through fraud, became a trustee under an implied trust obligated to reconvey the property to the rightful owner, Riosa. The CA’s reliance on the indefeasibility of title was misplaced, as the foundational deed was voidable due to fraud.