"x x x.
The Court cannot sustain the CA's ruling that TCT No. T-10567 cannot be invalidated because it constitutes as a collateral attack which is contrary to the principle of indefeasibility of titles.
It must be noted that Bangis interposed a counterclaim in his Answer seeking to be declared as the true and lawful owner of the disputed property and that his TCT No. T-10567 be declared as superior over the titles of the Heirs of Adolfo. Since a counterclaim is essentially a complaint then, a determination of the validity of TCT No. T-10567 vis-a-vis the titles of the Heirs of Adolfo can be considered as a direct, not collateral, attack on the subject titles.
In Pasiño v. Monterroyo, the Court has ruled, thus:
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. Development Bank of the Philippines v. Court of Appeals is similar to the case before us insofar as petitioner in that case filed an action for recovery of possession against respondent who, in turn, filed a counterclaim claiming ownership of the land. In that case, the Court ruled:
Nor is there any obstacle to the determination of the validity of TCT No. 10101. It is true that the indefeasibility of torrens title cannot be collaterally attacked. In the instant case, the original complaint is for recovery of possession filed by petitioner against private respondent, not an original action filed by the latter to question the validity of TCT No. 10101 on which petitioner bases its right. To rule on the issue of validity in a case for recovery of possession is tantamount to a collateral attack. However, it should not [b]e overlooked that private respondent filed a counterclaim against petitioner, claiming ownership over the land and seeking damages. Hence, we could rule on the question of the validity of TCT No. 10101 for the counterclaim can be considered a direct attack on the same. ‘A counterclaim is considered a complaint, only this time, it is the original defendant who becomes the plaintiff... It stands on the same footing and is to be tested by the same rules as if it were an independent action.’ x x x (Citations omitted) 
Besides, the prohibition against collateral attack does not apply to spurious or non-existent titles, which are not accorded indefeasibility, as in this case.
x x x."