**Agbayani v. Lupa Realty Holding Corporation**
### Facts
The case centers on a property dispute involving a 91,899-square meter parcel of land in Sta. Ana, Cagayan. Initially registered under OCT No. P-46041 in the name of Tranquilino Agbayani in June 1979, this property became the subject of legal conflict when in 1999, Tranquilino discovered that the title to the property had been transferred to Lupa Realty Holding Corporation under TCT No. T-109129.
Tranquilino, represented by his relatives, filed a Complaint for Reivindicacion, Cancellation of Title and Document with Damages against Lupa Realty, claiming that a Deed of Absolute Sale presented as evidence of the sale was forged since Tranquilino was in America at the purported time of sale. This led to a series of legal battles involving various parties, including Nonito Agbayani (Tranquilino’s brother), Moriel Urdas (a third-party involved in subsequent transactions), and a fourth-party complaint against Nonito.
Despite Tranquilino’s claims, the Regional Trial Court (RTC) decision favored him, ordering the cancellation of Lupa Realty’s TCT and the reinstatement of the OCT in his name. However, this decision was overturned by the Court of Appeals (CA), which found that Tranquilino failed to substantiate his forgery claims and asserting that TCT No. T-109129 was valid. Tranquilino then appealed to the Supreme Court.
### Issues
1. Did the CA err in overturning the RTC decision declaring the nullity of TCT No. T-109129 in the name of Lupa Realty?
2. Was the CA correct in holding that Tranquilino’s complaint constituted a collateral attack on a Torrens Title?
3. Was Lupa Realty rightfully recognized and protected as an innocent purchaser for value?
### Court’s Decision
The Supreme Court ruled in favor of Tranquilino, finding the petition meritorious. It stated a review of facts was justified due to conflicts in findings between the RTC and CA. The Supreme Court emphasized that both the 1992 and 1997 Deeds of Absolute Sale were proven to be falsified documents, and Tranquilino could not have possibly signed the 1997 Deed as he was in the USA. Moreover, the Court found discrepancies and questioned the failure of Lupa Realty to verify the legitimacy of the title transfers, suggesting a lack of due diligence.
Considering these findings, the Supreme Court reinstated the RTC decision with modifications, nullifying the TCT issued in favor of Lupa Realty, confirming that the property belongs to Tranquilino Agbayani, and ruling out Lupa Realty’s status as an innocent purchaser for value.
### Doctrine
The Supreme Court’s ruling established that a deliberate falsification of documents used to transfer property titles is grounds for nullifying such titles and that corporations engaged in real estate transactions are expected to exercise due diligence in verifying the legitimacy of titles before purchase.
### Class Notes
– **Falsification of Documents**: The presence of falsified documents used in the transfer of property titles can nullify such transfers.
– **Judicial Admission**: Statements made by a party or their counsel during judicial proceedings that dispense with the need for proof concerning admitted facts.
– **Due Diligence in Real Estate Transactions**: Corporations involved in the purchase of real estate are required to verify the authenticity and legitimacy of property titles. Failure to do so may render subsequent property titles null and void.
– **Direct vs. Collateral Attacks on Torrens Titles**: The case illustrates that direct attacks on Torrens titles involve actions specifically aimed at questioning the validity of titles, as opposed to collateral attacks which raise such issues as secondary points in other legal disputes.
### Historical Background
This case reflects the complexities involved in property disputes and the importance of due diligence and integrity in transactions involving land titles. It also exemplifies the judicial process in the Philippines concerning the verification of facts and reconsideration of lower court decisions by higher courts.
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