[G.R. No. 130316. January 24, 2007.

]
ERNESTO V. YU and ELSIE O. YU, petitioners, vs. BALTAZAR PACLEB, 1 respondent.
DECISION
CORONA, J p:
The present petition filed under Rule 45 of the Rules of Court originated from an action for forcible
entry and damages filed by petitioners Ernesto and Elsie Yu against respondent Baltazar Pacleb.
TSEAaD
The antecedent facts follow.
Sometime in September 1992, Ruperto Javier allegedly offered to sell Lot No. 6853-D to petitioners
for P75 per sq.m. The lot was approximately 18,000 square meters and was located in Barangay
Langkaan, Dasmariñas, Cavite. Javier supposedly purchased the lot from one Rebecca del Rosario
who, in turn, acquired it from respondent and his wife. The title of the property (Transfer Certificate of
Title [TCT] No. T-118375), however, remained in the names of respondent and his wife. The
instruments in support of the series of alleged sales were not registered.
On September 11, 1992, petitioners accepted the offer and gave Javier P200,000 as downpayment for
the lot. Javier then delivered his supposed muniments of title to petitioners. After the execution of a
contract to sell, he formally turned over the property to petitioners.
At the time of the turn-over, a portion of the lot was occupied by Ramon C. Pacleb, respondent's son,
and his wife as tenants. On September 12, 1992, Ramon and his wife allegedly surrendered possession
of their portion to petitioners. Later on, petitioners appointed Ramon as their trustee over the subject
lot.
Aside from taking possession of the property, petitioners also caused the annotation on TCT No. T-
118375 of a decision rendered in their favor in Civil Case No. 741-93. 2 This decision attained finality
on April 19, 1995.
Petitioners alleged that they exercised ownership rights as well as enjoyed open, public and peaceful
possession over the property from September 12, 1992 until the early part of September 1995. During
this time, respondent was in the United States.
Upon respondent's return to the Philippines in May 1995, he allegedly entered the property by means
of force, threat, intimidation, strategy and stealth thereby ousting petitioners and their trustee, Ramon.
DEcTCa
Despite repeated demands, respondent, asserting his rights as registered owner of the property, refused
to vacate the premises and surrender its possession to petitioners.
Petitioners filed an action for forcible entry 3 in the Municipal Trial Court (MTC) of Dasmariñas,
Cavite on November 23, 1995. Respondent filed an answer with compulsory counterclaim dated
December 8, 1995. After the issues were joined, the MTC required the submission of the parties'
position papers at a preliminary conference on March 11, 1996. Respondent failed to comply.
On June 17, 1996, the MTC ruled:
WHEREFORE, in view of the foregoing, the [respondent] and other persons claiming right under him
are hereby ordered to surrender physical possession of Lot No. 6853-D in favor of the [petitioners]
and to pay the sum of TWENTY-FIVE THOUSAND (P25,000.00) PESOS as attorney's fees.
SO ORDERED. 4
On appeal, 5 the Regional Trial Court (RTC) of Imus, Cavite rendered a decision affirming the MTC
decision in toto. 6
Respondent elevated his case to the Court of Appeals (CA) 7 which rendered the assailed decision on
March 18, 1997:
WHEREFORE, the Petition is GRANTED; the Decision dated October 25, 1996 of the [RTC] of
Imus, Cavite in Civil Case No. 052-96 and the Decision of the [MTC] of Dasmariñas, Cavite in Civil
Case No. 182 are SET ASIDE; and Civil Case No. 182 for Forcible Entry and Damages is hereby
ordered DISMISSED. No pronouncement as to costs. CaTcSA
SO ORDERED. 8
In a resolution dated August 20, 1997, the CA denied petitioners' motion for reconsideration for lack
of merit.
Before us now come petitioners who claim that the appellate court erred in finding that respondent had
prior physical possession of the subject property.
"In an action for forcible entry, the plaintiff must prove that he was in prior possession of the land or
building and that he was deprived thereof by means of force, intimidation, threat, strategy or stealth."
9 The plaintiff, however, cannot prevail where it appears that, as between himself and the defendant,
the latter had possession antedating his own. 10 We are generally precluded in a Rule 45 petition from
reviewing factual evidence tracing the events prior to the first act of spoliation. 11 However, the
conflicting factual findings of the MTC and RTC on one hand, and the CA on the other, require us to
make an exception.
We overrule petitioners' contentions.
The Civil Code states that possession is the holding of a thing or the enjoyment of a right. 12 In the
grammatical sense, to possess means to have, to actually and physically occupy a thing, with or
without right. 13 "Possession always includes the idea of occupation . . . . It is not necessary that the
person in possession should himself be the occupant. The occupancy can be held by another in his
name." 14 Without occupancy, there is no possession. 15
Two things are paramount in possession. 16 First, there must be occupancy, apprehension or taking.
Second, there must be intent to possess (animus possidendi). 17
Here, petitioners failed to establish that they had prior physical possession to justify a ruling in their
favor in the complaint for forcible entry against respondent. IcTCHD
In the decision in Civil Case No. 741-93 (a case for specific performance and damages against Javier,
the alleged vendor of the lot in question) upon which petitioners based their right to possess in the first
place, the trial court categorically stated:
The [petitioners were never placed] in possession of the subject property on which [was] planned to be
[site of] a piggery, nor [were they] given a clearance or certification from the Municipal Agrarian
Reform Officer. 18 (emphasis ours)
The claim that the lot was turned over to petitioners in 1992 was self-serving in the face of this factual
finding. On the other hand, the tax declarations and receipts in the name of respondent in 1994 and
1995 established the possession of respondent. 19 The payment of real estate tax is one of the most
persuasive and positive indications showing the will of a person to possess in concepto de dueño or
with claim of ownership. 20
"[P]ossession in the eyes of the law does not mean that a man has to have his feet on every square
meter of the ground before he is deemed in possession." 21 In this case, Ramon, as respondent's son,
was named caretaker when respondent left for the United States in 1983. 22 Due to the eventual loss
of trust and confidence in Ramon, however, respondent transferred the administration of the land to
his other son, Oscar, in January 1995 until his return in May 1995. 23 In other words, the subject land
was in the possession of the respondent's sons during the contested period.
Petitioners cite an alleged document (Kusangloob na Pagsasauli ng Lupang Sakahan at Pagpapahayag
ng Pagtalikod sa Karapatan) dated March 10, 1995 executed by them and Ramon to prove a turn over
of possession. They also seek to prove their exercise of rights over the land through alleged frequent
visits and the designation of Ramon as their own trustee as declared in a joint affidavit attached to
their position paper filed with the MTC. These instruments, however, fail to convince us of petitioners'
actual occupancy of the subject land. First, petitioners themselves acknowledged that Ramon and his
wife occupied part of the land as tenants of respondent. Second, Ramon, a mere tenant, had no
authority to sign such document dated March 10, 1995 waiving all rights to the land. Third, there was
no clear proof in the records of the appointment of Ramon as petitioners' trustee save their self-serving
statements to this effect. Finally, at the time the Kusangloob na Pagsasauli document was executed,
the caretaker of the land was no longer Ramon but Oscar. 24
Most important, the title of the land in question (TCT No. T-118375) remained in the name of
respondent. 25 "As the registered owner, petitioner had a right to the possession of the property, which
is one of the attributes of ownership." 26 The Civil Code states:
Art. 538. Possession as a fact cannot be recognized at the same time in two different personalities
except in the cases of co-possession. Should a question arise regarding the fact of possession, the
present possessor shall be preferred; if there are two possessors, the one longer in possession; if the
dates of the possession are the same, the one who presents a title; and if all these conditions are equal,
the thing shall be placed in judicial deposit pending determination of its possession or ownership
through proper proceedings. ADHaTC
In view of the evidence establishing respondent's continuing possession of the subject property,
petitioners' allegation that respondent deprived them of actual possession by means of force,
intimidation and threat was clearly untenable. In Gaza v. Lim, we held that:
Where a dispute over possession arises between two persons, the person first having actual possession
is the one who is entitled to maintain the action granted by law; otherwise, a mere usurper without any
right whatever, might enter upon the property of another and, by allowing himself to be ordered off,
could acquire the right to maintain the action of forcible entry and detainer, however momentary his
intrusion might have been. 27
WHEREFORE, the petition is hereby DENIED. The decision of the Court of Appeals dated March 18,
1997 in CA-G.R. SP No. 42604 is AFFIRMED.
Costs against petitioners.
SO ORDERED.
Puno, C.J., Azcuna and Garcia, JJ., concur.
Sandoval-Gutierrez, J., took no part.
Footnotes
1. Baltazar Pacleb passed away during the pendency of this petition. He was substituted by his
surviving spouse, Antonieta S. Pacleb, and by his children with his first wife, Angelita Chan Pacleb:
Lorna Pacleb-Guerrero, Florencio C. Pacleb and Myrla C. Pacleb.
2. On April 20, 1993, petitioner Ernesto Yu filed an action for specific performance and damages
against Javier, vendor of the lot, because of Javier's failure to comply with certain conditions of their
"Contract to Sell" dated September 11, 1992. In a decision dated September 8, 1994, RTC Branch 22
of Imus, Cavite held:
WHEREFORE, judgment is hereby rendered for [petitioner Ernesto] and against [Javier]
based on the sale of subject parcel of land to the former who is entitled thereby to the ownership and
possession thereof from [Javier] . . . . (Annex "J," rollo, p. 88)
The finality of the decision in Civil Case No. 741-93 was annotated at the back of TCT No. T-
118375. (Annex "K," rollo, at the back of p. 90)
3. The case was docketed as Civil Case No. 182.
4. Penned by Judge Lorinda B. Toledo-Mupas of MTC Dasmariñas, Cavite; Annex "A," rollo, pp.
34-35.
5. The appealed case was docketed as Appealed Civil Case No. 052-96.
6. Penned by Judge Cesar A. Mangrobang of Branch 22 of RTC Imus, Cavite; Annex "B," rollo, pp.
36-37.
7. The case was docketed as CA-G.R. SP No. 42604.
8. Penned by Associate Justice Fidel P. Purisima (a retired Associate Justice of this Court) and
concurred in by Associate Justices Angelina Sandoval-Gutierrez (now Associate Justice of this Court)
and Conrado M. Vasquez Jr. of the Second Division of the Court of Appeals; Annex "C," rollo, pp. 40-
43.
9. Gaza v. Lim, G.R. No. 126863, 16 January 2003, 395 SCRA 261, 269. Citation omitted.
10. Id. Citation omitted.
11. Id. Citation omitted.
12. CIVIL CODE, Art. 523.
13. Tolentino, COMMENTARIES AND JURISPRUDENCE ON THE CIVIL CODE OF THE
PHILIPPINES 238 (Central Professional Books, Inc., Quezon City, Philippines) (1992).
14. Id.
15. Id. Citation omitted.
16. Id., at 238. Paras provided a third element of possession. According to him, "possession must be
by virtue of one's own right," as an owner or by virtue of a right derived from the owner such as that
of a tenant. (PARAS, CIVIL CODE OF THE PHILIPPINES ANNOTATED 412 [Rex Book Store,
Manila, Philippines] [1999]) TcEDHa
17. "The animus possidendi may be contradicted and rebutted by evidence which tends to prove that
the person under whose power or control the thing in question appears to be, does not in fact exercise
the power or control and does not intend to do so." (Tolentino, supra note 13, at 239)
18. Annex "J," rollo, p. 88.
19. Annex "C," rollo, p. 40.
20. Paras, supra note 16, at 474. Citations omitted.
21. Dela Rosa v. Carlos, G.R. No. 147549, 23 October 2003, 414 SCRA 226, 235, citing Roales v.
Director of Lands, 51 Phil. 302 (1927).
22. Annex "C," rollo, p. 40.
23. Id.
24. Annex "C," rollo, p. 40.
25. Annex "K," rollo, p. 90.
26. Co v. Militar, G.R. No. 149912, 29 January 2004, 421 SCRA 455, 460.
27. Supra note 9, at 271.

Copyright 2007 C D T e c h n o l o g i e s A s i a, I n c.

[G.R. No. 82680. August 13, 1994.]

NICANOR SOMODIO, petitioner, vs. COURT OF APPEALS, EBENECER PURISIMA and
FELOMINO AYCO, respondents.
SYLLABUS
1. REMEDIAL LAW; APPEALS; FINDINGS OF FACT OF THE COURT OF APPEALS ARE
BINDING ON THE SUPREME COURT; EXCEPTION. — As a general rule, the findings of fact of
the Court of Appeals are binding on this Court. This rule, however, is not without exceptions, one of
which is when the factual findings of the Court of Appeals and the trial court are contrary to each
other. In such a case, this Court may scrutinize the evidence on record in order to arrive at the correct
findings based on the record.
2. CIVIL LAW; EJECTMENT; PRIOR POSSESSION DE FACTO; PROOF THEREOF
ENTITLES A PERSON TO POSSESSION OVER THE PROPERTY. — In ejectment cases, the only
issue for resolution is who is entitled to the physical or material possession of the property involved,
independent of any claim of ownership set forth by any of the party-litigants. Anyone of them who can
prove prior possession de facto may recover such possession even from the owner himself. This rule
holds true regardless of the character of a party's possession, provided that he has in his favor priority
of time which entitles him to stay on the property until he is lawfully ejected by a person having a
better right by either accion publiciana or accion reivindicatoria.
3. ID.; ID.; ID.; ID.; CASE AT BAR. — Petitioner took possession of the property sometime in
1974 when he planted the property to coconut trees, ipil-ipil trees and fruit trees. In 1976, he started
the construction of a building on the property. It is immaterial that the building was unfinished and
that he left for Kidapawan for employment reasons and visited the property only intermittently.
Possession in the eyes of the law does not mean that a man has to have his feet on every square meter
of ground before it can be said that he is in possession. It is sufficient that petitioner was able to
subject the property to the action of his will. . . . Even if the Court of Appeals is correct in its finding
that petitioner started introducing improvements on the land only in 1981, he still enjoyed priority of
possession because respondent Purisima entered the premises only in 1983.
4. ID.; ID.; ID.; AS DISTINGUISHED FROM OWNERSHIP. — Petitioner's prior possession over
the property, however, is not synonymous with his right of ownership over the same. As earlier stated,
resolution of the issue of possession is far from the resolution of the issue of ownership. Forcible entry
is merely a quieting process and never determines the actual title to an estate.
DECISION
QUIASON, J p:
This is a petition for review on certiorari under Rule 45 of the Revised Rules of Court to reverse and
set aside the Decision dated September 29, 1987 and the Resolution dated February 2, 1988 of the
Court of Appeals in CA-G.R. SP No. 11602.
I
On October 21, 1974, Jose Ortigas executed an instrument designated as a Transfer of Rights,
conveying to Wilfredo Mabugat the possession of a residential lot situated at Rajah Muda, Bula,
General Santos City and described in the said instrument as: LibLex
"Lot No. (Unnumbered), bounded on the North by Temporary Road, on the South by Customs Zone
(Sarangani Bay), on the East by Public Land, and on the West by Public Land."
Nicanor Somodio, herein petitioner, contributed one-half of the purchase price. On October 22, 1974,
Mabugat executed an Affidavit of Trust expressly recognizing the right of petitioner over one-half
undivided portion of the lot. Later, petitioner discovered in the District Land Office that the lot was
numbered "6328-X, Csd 2281-D." Thereafter, petitioner and Mabugat partitioned the property into two
portions, with petitioner taking the western part. Immediately after the partition, petitioner took
possession of his portion and planted thereon ipil-ipil trees, coconut trees and other fruit-bearing trees.
In 1976, petitioner began construction of a structure with a dimension of 22-by-18 feet on his lot. His
employment, however, took him to Kidapawan, North Cotabato, and he left the unfinished structure to
the care of his uncle. He would visit the property every three months or on weekends when he had
time.
Sometime in October 1977, petitioner allowed respondent Felomino Ayco, to transfer his hut to
petitioner's lot. About six years later, petitioner demanded that Ayco vacate the premises but such
demand proved futile. Hence, on August 23, 1983, petitioner filed an action for unlawful detainer with
damages against respondent Ayco before the Municipal Trial Court, Branch I, General Santos,
docketed as Civil Case No. 2032-II.
Meanwhile, on June 26, 1983, respondent Ebenecer Purisima entered the land and constructed a house
thereon. Four days later, petitioner filed against respondent Purisima a complaint for forcible entry
before the same court docketed as Civil Case No. 2013-I. Said case was later consolidated with Civil
Case No. 2032-II.
In his answer, respondent Purisima averred that the lot was a portion of the land subject of his
application for miscellaneous sales patent with the Bureau of Lands. Purisima described the lot in
question as: Cdpr
"Lot No. 6328-Y, CSD-2281-D, Bula, General Santos, Cotabato. Bounded on the North by 6328-X; on
the South by Sarangani Bay; on the East by a Municipal Road; and on the West by Lot No. 6328-W,
containing an area of 1,095 square meters and covered by Tax Declaration No. 9647" (Rollo, p. 36;
Emphasis supplied).
Respondent Purisima contended that his father, a geodetic engineer, had surveyed the parcel of land
comprising of Lots Nos. 6427 and 6328 for the Small Farmers Fishpond Association, Inc. in February
1958, and that his father's survey plan was approved by the Director of Lands in 1960. Respondent
Ayco, on the other hand, did not present any evidence but merely anchored his right to possess the
property on the evidence of Purisima.
On April 30, 1986, the trial Court rendered a decision finding that respondent Purisima built his house
"almost on the spot where Somodio's unfinished house" stood "thru stealth and strategy," not knowing
that the house was built on Lot No. 6328-X and not on Lot No. 6328-Y, the lot said respondent was
claiming (Rollo, p. 43). The court went on to state that:
". . . He (private respondent Purisima) was a frequent visitor in Rajah Muda and had sometimes stayed
with Mrs. Maturan in Judge Purisima's house on the adjoining lots, and could not have remained
unaware of the possession of Somodio. He must have depended on the thought that it was his father
who made the subdivision survey and had fenced an area which he had claimed. He did not exactly
verify that the area fenced by his father had an area of only 1,095 square meters, which did not include
the area Lot No. 6328-X. As the situation exists, there is no expectation on his part that his house on
Lot No. 6328-X could eventually be standing on his property, for Lot No. 6328-X is not claimed by
him and has not been applied for even by his father. His father has been abroad and has not taken steps
to apply for Lot No. 6328-X. This lot is not declared for taxation purposes in the name of any
claimant-applicant. Unless and until there would be an administrative proceedings and the title
ultimately issued in favor of an applicant, the possession of the actual claimant and occupant has to be
respected and maintained in the interest of public order . . ." (Rollo, p. 43-44).
The Municipal Trial Court further held that petitioner was the actual possessor of Lot No. 6328-X. The
court did not believe respondent Ayco's claim that the administratrix of the estate of respondent
Purisima's father authorized him to build a hut on Lot No. 6328-X in 1976: At any rate, the court said
that respondent Ayco was willing to vacate the premises provided he be given financial assistance to
do so (Rollo, pp. 43-44).
Noting that the ocular inspection of the area showed that the houses of respondents Purisima and Ayco
were "inside Lot No. 6328-X" and not on Lot No. 6328-Y, the Municipal Trial Court held that the case
became one which entailed mere removal of the houses from the lot in question. Accordingly, the
court ordered private respondents to remove their respective houses, to deliver the land to petitioner,
and to pay attorney's fees and litigation expenses. Cdpr
On appeal, the Regional Trial Court, Branch 22, General Santos City, affirmed in toto the decision of
the Municipal Trial Court. Respondents then elevated the cases on a petition for review to the Court of
Appeals, which, in its decision dated September 27, 1987, set aside the decisions of the two trial
courts and ordered the dismissal of the two complaints filed by petitioner.
The Court of Appeals held that herein petitioner had not "clearly and conclusively established
physical, prior possession over Lot No. 6328-X."
Petitioner's motion for the reconsideration of the decision of the Court of Appeals having been denied,
he filed the instant petition for review on certiorari.
We grant the petition.
II
The procedural issue raised by private respondents should first be resolved. The issue is whether the
instant petition is proper considering that petitioner "merely touch(es) upon questions of fact which
had been carefully considered" by the Court of Appeals (Rollo, p. 92). As a general rule, the findings
of fact of the Court of Appeals are binding on this Court. This rule, however, is not without
exceptions, one of which is when the factual findings of the Court of Appeals and the trial court are
contrary to each other. In such a case, this Court may scrutinize the evidence on record in order to
arrive at the correct findings based on the record (Valenzuela v. Court of Appeals, 191 SCRA 1 [1990];
Roman Catholic Bishop of Malolos, Inc. v. Intermediate Appellate Court, 191 SCRA 411 [1990]).
prcd
Upon a review of the records, we are convinced that petitioner indeed enjoyed priority of possession
over Lot No. 6328-X, notwithstanding respondent Purisima's claim to the contrary.
In ejectment cases, the only issue for resolution is who is entitled to the physical or material
possession of the property involved, independent of any claim of ownership set forth by any of the
party-litigants. Anyone of them who can prove prior possession de facto may recover such possession
even from the owner himself. This rule holds true regardless of the character of a party's possession,
provided that he has in his favor priority of time which entitles him to stay on the property until he is
lawfully ejected by a person having a better right by either accion publiciana or accion reivindicatoria
(De Luna v. Court of Appeals, 212 SCRA 276 [1992]).
Petitioner took possession of the property sometime in 1974 when he planted the property to coconut
trees, ipil-ipil trees and fruit trees. In 1976, he started the construction of a building on the property. It
is immaterial that the building was unfinished and that he left for Kidapawan for employment reasons
and visited the property only intermittently. Possession in the eyes of the law does not mean that a man
has to have his feet on every square meter of ground before it can be said that he is in possession
(Ramos v. Director of Lands, 39 Phil. 175 [1918]). It is sufficient that petitioner was able to subject
the property to the action of his will.
Article 531 of the Civil Code of the Philippines provides:
"Possession is acquired by the material occupation of a thing or the exercise of a right, or by the fact
that it is subject to the action of our will, or by the proper acts and legal formalities established for
acquiring such right."
Even if the Court of Appeals is correct in its finding that petitioner started introducing improvements
on the land only in 1981, he still enjoyed priority of possession because respondent Purisima entered
the premises only in 1983. llcd
It should be emphasized that the Court of Appeals noted that none of the parties had produced tax
declarations or applications as public land claimants. As such, what should have been scrutinized is
who between the claimants had priority of possession.
Moreover, neither is the fact that respondent Purisima's father surveyed the property of help to his
cause. As the Court of Appeals found, respondent Purisima's father surveyed the land for the Small
Farmers Fishpond Association, Inc., not for himself. Although respondent Purisima now claims that
Lot No. 6328-X was in payment of his fee for the services of his father and that he caused the
construction of a perimeter wall in the area, these facts do not mean that respondent Purisima himself
had prior possession. He did not present any proof that his father had authorized him to enter the land
as his successor-in-interest. Neither did he present proof that between 1958, when his father allegedly
took possession of the land, and 1983, when said respondent himself entered the land, his father ever
exercised whatever right of possession he should have over the property. Under these circumstances,
priority in time should be the pivotal cog in resolving the issue of possession.
The Court of Appeals opined that petitioner had not properly identified the lot he had occupied. The
matter of identification of the land, however, had been resolved by respondent Purisima's admission in
his pleadings, as well as by two ocular inspections.
In his answer to the complaint, respondent Purisima claimed possession over Lot No. 6328-Y, while
petitioner identified the lot adjacent to it, Lot No. 6328-X, as the area where private respondents built
their houses. That these two lots are distinct from one another was resolved by the ocular inspection
conducted by a Senior Geodetic Engineer of the Office of the City Engineer, who found that "south of
lot 6328-H across a 10-meter wide road is lot 6328-Y and from thence to the south is lot 6328-X." On
June 13, 1985, the Municipal Trial Court judge himself went to the premises in question and
discovered that aside from the houses of respondents Purisima and Ayco, five other houses had been
built on Lot No. 6328-X. LLjur
Petitioner's prior possession over the property, however, is not synonymous with his right of
ownership over the same. As earlier stated, resolution of the issue of possession is far from the
resolution of the issue of ownership. Forcible entry is merely a quieting process and never determines
the actual title to an estate (German Management & Services, Inc. v. Court of Appeals, 177 SCRA 495
[1989]; Manuel v. Court of Appeals, 199 SCRA 603 [1991].
WHEREFORE, the decision of the Court of Appeals is REVERSED and SET ASIDE and that of the
trial courts REINSTATED. Costs against private respondents.
SO ORDERED.
Davide, Jr., Bellosillo and Kapunan, JJ., concur.
Cruz, J., is on leave.

C o p y r i g h t 1 9 9 4 - 1 9 9 9 C D T e c h n o l o g i e s A s i a, I n c.

[G.R. No. 42859. March 17, 1938.]

GABRIEL LASAM, applicant-appellee, vs. THE DIRECTOR OF LANDS and JOSE CHAN HONG
HIN, ET AL., opponents-appellants.
Acting Solicitor-General Melencio and B. Pobre for appellants.
Alfredo Catolico for appellee.
SYLLABUS
1. REGISTRATION OF LAND; GENUINENESS OF TITLE AND IDENTITY OF LAND;
NECESSARY EVIDENCE. — An applicant for registration of land, if he relies on a document
evidencing his title thereto, must prove not only the genuineness of his title but the identity of the land
therein referred to. The document in such a case is either a basis of his claim for registration or not at
all. If, as in this case, he only claims a portion of what is included in his title, he must clearly prove
that the property sought to be registered is included in that title.
2. ID.; POSSESSION UNDER LAND REGISTRATION ACT; CONSTRUCTIVE POSSESSION.
— While "possession in the eyes of the law does not mean that a man has to have his feet on every
square meter of ground before it can be said that he is in possession", possession under paragraph 6 of
section 54 of Act No. 926, as amended by paragraph (b) of section 45 of Act No. 2874, is not gained
by mere nominal claim. The mere planting of a sign or symbol of possession cannot justify a
Magellan-like claim of dominion over an immense tract of territory. Possession as a means of
acquiring ownership, while it may be constructive, is not a mere fiction.
DECISION
LAUREL, J p:
On January 24, 1930, Gabriel Lasam filed with the Court of First Instance of Cagayan an application
for the registration of 152 parcels of land containing a total area of 24,723,436 square meters, situated
in the municipality of Solana, Province of Cagayan, described in the plan Exhibit K attached to the
application. These 152 parcels include the parcel No. 9 here involved.
According to the lower court, the portions of said parcel No. 9 which were opposed during the time of
survey were delimited and marked on its plan Psu-67516 attached to the record as lots A to Z, AA to
HH, MM to ZZ, AAA to ZZZ, AAAA to ZZZZ, AAAAA, to FFFFF, NNNNN, 35 to 38, and 111 to
143, all inclusive. (Decision of the lower court, Bill of Exceptions of the Government, p. 35.)
The Director of Lands opposed the application on the ground that it is not supported by any title fit for
registration and that the land sought to be registered is public land. The brothers Felipe, Jose, and
Salvador, all surnamed Narag, who are first cousins to the applicant Lasam, also filed opposition on
the ground that they are the owners of parcel No. 9. Oppositions were also filed by Tomas Furigay and
35 other persons as homesteaders; by the provincial fiscal, representing the Director of Forestry, on the
ground that portions thereof are public forests; by Francisco Caronan and some 71 other parties,
claiming the parcels occupied by them as their exclusive properties; by Jose Chan Hong Hin, on the
ground that the application includes his property of about 22 hectares and 50 ares; and by Mauro
Antonio, on the ground that the application includes the portion occupied by him and belonging to
him. Pablo Soriano succeeded in having the order of general default set aside as to him and was
allowed to register his opposition at a later date. Amended applications and oppositions by the parties
were subsequently permitted to be filed.
After a protracted hearing, the lower court rejected all the oppositions filed, declared the applicant,
Gabriel Lasam, the owner of parcel No. 9, as indicated in the plan Psu-67516 (Exhibit K), and decreed
the registration of said parcel in his favor.
On September 10, 1934, counsel for various oppositors, after excepting to the decision, filed a motion
for new trial which was denied, and the case was brought before this court by bill of exceptions.
The Narag brothers and the Director of Forestry appear to have abandoned their opposition. They
made no attempt to substantiate their claims at the trial.
Counsel for the Director of Lands, et al. and for Jose Chan Hong Hin, et al. make various assignments
of error in their respective briefs. It is not believed necessary however, to consider each and every
assignment made as the questions presented may, in our opinion, be reduced to the following
propositions: (a) Whether or not the applicant, Gabriel Lasam, is entitled to the registration of parcel
No. 9 on the basis of the document presented as Exhibit L, hereinafter to be referred to, or in the
alternative, whether or not he is entitled to registration on the basis of public, continuous, and adverse
possession under a claim of ownership during the time prescribed by law (par. 9, application); and in
the negative, (b) whether or not the numerous oppositors — excluding the homesteaders — are
entitled to the parcels which they allege are included in the controverted parcel No. 9. The rights of the
homesteaders necessarily depend on the resolution of these two propositions.
Exhibit L purports to be an application, dated June 27, 1873, addressed by Domingo Narag 1.° to the
Alcalde Mayor, in which the former stated that he had been in possession of the land above described
and asked that informacion testifical be admitted. The informacion testifical was had before the
Alcalde Mayor and appears to have been approved by the Judge of the Court of First Instance without
objection on the part of the fiscal. It is the theory of the applicant that Domingo Narag 1.°, the original
owner of parcel No. 5, described in Exhibit L, owed P1,000 from the applicant's father, which amount
Narag needed for his candidacy as gobernadorcillo of Tuguegarao, Cagayan, in 1880; that the original
of Exhibit L was turned over by the applicant to his lawyer, Vicente Marasigan, who lost it, and for
this reason, only a certified copy of the document marked Exhibit L was presented; and that the fifth
parcel mentioned in the document, Exhibit L, is the same parcel No. 9 described in the plan, Exhibit
K. The Government contends that Exhibit L is not a valid title and does not confer ownership and that
even if it were valid, it does not cover so extensive an area as that appearing on the plan, Exhibit K.
The land designated as the fifth parcel is described in Exhibit L as follows:
"5.a Un terreno o pasto de ganados vacunos llamado Maguirig o Cagguban que linda al poniente con
el estero Pangul, al oriente con el pueblo de la Solana al norte con el sitio llamado Maasim y
Calabbacao y al sur con el sitio llamado Atayao el cual tiene un cabida de siete mil brazas y herede de
mis Padres hace veinte y dos años y en la actualidad es donde posee mis ganados de procreacion."
Parcel No. 9, the registration of which is applied for in these proceedings, is described thus (brief of
claimant appellee, p. 61):
"Por el norte con los barrios de Iraga, Bauan y Bangag;
"Por el este con el Centro y los barrios de Basi, Natapian y Lanna;
"Por el sur con la carretera provincial; y.
"Por el oeste barrios de Maguirig, Cagguban y estero Pangul."
We are of the opinion that the court below committed no error in receiving Exhibit L as evidence for
the claimant, but its admission by the court below does not necessarily entitle the applicant, Gabriel
Lasam, to the registration of the parcel claimed by him in these proceedings. It is apparent that parcel
No. 9, as indicated in the plan, Exhibit K, is not the same parcel No. 5 described in document Exhibit
L. Whereas Exhibit L gives as boundaries on the north the sitios of Maasin and Calabbacao, Exhibit K
gives the barrios of Iraga, Bauan, and Bangag; on the east Exhibit L gives the pueblo of Solana,
whereas Exhibit K gives "el Centro y los barrios de Basi, Natappian y Lanna"; on the west Exhibit L
gives estero Pangul, whereas Exhibit K gives the barrios of Maguirig, Cagguban and estero Pangul; on
the south Exhibit L gives the sitio of Atayao, whereas Exhibit K gives the carretera provincial. While
there may be partial identity as to boundaries on the east and west, such identity is lacking as to the
boundaries on the north and south. This discrepancy is accentuated by the admission of the applicant
that the parcel whose registration is sought is much smaller than that described in paragraph 5 of
Exhibit L. The explanation given by the surveyor, Jose Mallanao, presented as witness by the
claimant, is as follows:
"Because on the north side when we went around the lot and I asked for the barrios of Maasin and
Calabbacao, the applicant pointed to me a place very far from where he was at the time and where he
actually occupied the land, and on the south side he indicated to me the provincial road. I asked why
he should not take the actual land indicated by this title and he told me that he was not occupying that
portion. That is the reason why I took up the boundary on the south as provincial road. On the east
side he indicated to me the center of the municipality of Solana, barrios of Basi, Nangalisan and
Lanna, and on the west is a public land partly bounded by the barrios of Maguirig, and Cagguban and
estero Pangul."
An applicant for registration of land, if he relies on a document evidencing his title thereto, must prove
not only the genuineness of his title but the identity of the land therein referred to. The document in
such a case is either a basis of his claim for registration or not at all. If, as in this case, he only claims a
portion of what is included in his title, he must clearly prove that the property sought to be registered
is included in that title. The surveyor, Jose Mallannao, did not actually check up the boundaries of
parcel No. 5 as described in Exhibit L, and in testifying that parcel No. 9, in Exhibit K, is smaller than
that described as parcel No. 5 in Exhibit L, he relied mostly on hearsay. For instance, when asked
whether north of barrios Iraga, Bauan, and Bangag of the land described in plan Exhibit K he would
locate the sitios of Maasin and Calabbacao, he replied: "They said that Calabbacao is north of that
barrio Iraga yet." (Italics ours.)
Aside from what has been said with reference to discrepancies in the boundaries, we cannot overlook
the fact that the area in Exhibit L is vaguely given as 7,000 brazas. The surveyor for the applicant, Jose
Mallannao, calculated the area of the property described in paragraph 5 of Exhibit L on the basis of
7,000 square brazas or 49,000,000 square brazas as 15,695,500 hectares more or less (s. n. pp. 820-
822). The area claimed here according to the amended application of February 26, 1930, and plan
Exhibit K is 24,723,437 square meters. According to the applicant, before his occupation of the land
ceded by Domingo Narag 1.°, only about 2 hectares were cultivated. (s. n. p. 56, Gabriel Lasam.) And,
with reference to the payment of land tax, the Solicitor-General in his brief (p. 12) makes the
following observation:
"The property appears to have been declared for taxation purposes as evidenced by revisions of tax
declarations, Exhibits G-20 and G-21 (pp. 136, 137, record). There had been previous declarations
with an area of about 294 hectares (id.) but, according to Exhibit G-22 (p. 138, record), the area which
was not previously declared contains 1,685 hectares:
"With the exception of a statement in which it appears that land tax was paid in 1902 (p. 140, id.) there
appears in the record no tax receipts evidencing the payment of taxes continuously from 1902 up to
this time."
It is not necessary to pass upon the contention of the Solicitor- General that the informacion testifical
(Exhibit L) is of no legal effect because of failure subsequently to solicit composition title pursuant to
the Royal Decree of June 25, 1880 (Fuster vs. Director of Lands, G. R. No. 40129, Dec. 29, 1934), or
to convert possession into a registration of ownership in accordance with article 393 of the Mortgage
Law (Fernandez Hermanos vs. Director of Lands (57 Phil., 929), for even if we were to accord all the
legal force to this document (Exhibit L), it would not serve as a basis for the registration of 24,723,437
square meters.
Having arrived at this conclusion as to Exhibit L, is the applicant entitled to registration because of the
required possession during the time prescribed by law? We have examined the evidence on this point
both testimonial and documentary, and while there is evidence showing that the claimant might have
possessed a portion of the parcel claimed by him and the registration of which is sought, we find the
evidence lacking in certainty as to the particular portion occupied and the extent thereof. Counsel for
the applicant invokes the doctrine laid down by us in Ramos vs. Director of Lands (39 Phil., 175,
180). (See also Roales vs. Director of Lands, 51 Phil., 302, 304.) But it should be observed that the
application of the doctrine of constructive possession in that case is subject to certain qualifications,
and this court was careful to observe that among these qualifications is "one particularly relating to the
size of the tract in controversy with reference to the portion actually in possession of the claimant."
While, therefore, "possession in the eyes of the law does not mean that a man has to have his feet on
every square meter of ground before it can be said that he is in possession", possession under
paragraph 6 of section 54 of Act No. 926, as amended by paragraph (b) of section 45 of Act No. 2874,
is not gained by mere nominal claim. The mere planting of a sign or symbol of possession cannot
justify a Magellan-like claim of dominion over an immense tract of territory. Possession as a means of
acquiring ownership, while it may be constructive, is not a mere fiction. In the present case, upon the
description of 7,000 brazas as the area of the land said to have been originally possessed by Domingo
Narag 1.° and conveyed to the applicant, only two hectares of which were according to the applicant
himself cultivated at the time of such transfer, the applicant would, on the basis of the computation
hereinabove referred to and given at the trial by surveyor Jose Mallannao, be entitled under Exhibit L
to more than 13,000 hectares, although only 2,432 odd hectares are now being sought for registration
in these proceedings. The fact, however, that he is claiming only a portion of the land claimed by him
to be included in his title, the further fact that according to his own testimony he has given up more
than 1,000 hectares to the Bureau of Forestry, the discrepancies in the boundaries, his tax declarations,
and the existence of numerous homesteaders and claimants are significant and tend to show that his
possession over the entire portion of the land sought to be registered is not "such as to apprise the
community and the world that the entire land was for his enjoyment". (Ramos vs. Director of Lands,
supra.)
Our attention is next directed to the decision of this court in Pamittan vs. Lasam and Mallonga (60
Phil., 908) which, according to counsel for the claimant Lasam, is determinative of the ownership of
the property now sought to be registered. Said case refers to an action for partition between the heirs
of Sofia Pamittan, wife of Gabriel Lasam, originally brought in the Court of First Instance and
appealed to this court. The trial court in that case found that parcel No. 7 — which is said to
correspond to parcel No. 9 sought to be registered in these proceedings — "although acquired during
the existence of the conjugal partnership, was proven to be the exclusive property of the husband
Gabriel Lasam". This court could not have passed upon the question whether parcel No. 7 was the
same parcel No. 9 in these proceedings; nor could it have passed upon the conflicting claims with
reference to parcel No. 9, now sought to be registered. Whatever was said in that case could not bind
the oppositors in the present case, who were not parties thereto.
The grounds for opposition of the various oppositors are divergent and are based on (a) possession
from time immemorial; (b) acquisition by inheritance, purchase and donations propter nuptias and
inter vivos; (c) payment of land taxes from 1906, 1915, and 1918 up to the filing of oppositions; and
(d) acquisition "a titulo de composicion" with the State. These oppositors denied being tenants of the
applicant Lasam. After perusal of the evidence presented by them, we are constrained to accept the
conclusion of the lower court that none of the portions or lots claimed by them or any one of them has
been sufficiently identified, either by the oral or documentary evidence which they presented. In view
thereof, and because of the insufficiency of the evidence presented, we are of the opinion that the
lower court committed no error in dismissing their oppositions.
In view of the foregoing, the judgment of the lower court is reversed, without prejudice to the filing by
the applicant, Gabriel Lasam, of a new application and plan covering the portion of the land actually
occupied by him since July 25, 1894. Upon the determination of that portion by the lower court, let
judgment be rendered accordingly. The remaining portion or portions of lot No. 9 as indicated on plan
Psu-67516 (Exhibit K) are hereby declared public lands, to be disposed of or otherwise dealt with in
accordance with law. Without pronouncement as to costs. So ordered.
Avanceña, C. J., Villa-Real, Abad Santos, Imperial, Diaz and Concepcion, JJ., concur.

C o p y r i g h t 1 9 9 4 - 1 9 9 9 C D T e c h n o l o g i e s A s i a, I n c.

G.R. No. 44199 March 8, 1938

Sideco v. Heirs of Balajadia
065 Phil 362

[G.R. No. 36995. April 19, 1934.]

ALFREDO RAMIREZ and PAZ BAYOT DE RAMIREZ, applicants-appellee, vs. THE DIRECTOR
OF LANDS, ET AL., oppositors. THE DIRECTOR OF LANDS and THE DIRECTOR OF
FORESTRY, appellants.
Attorney-General Jaranilla for appellants.
Sumulong, Lavides & Mabanag for appellees.
SYLLABUS
1. COMPOSITION TITLE; NULLITY. — Inasmuch as the title acquired by composition with the
State, now under consideration, did not comply with all the requirements necessary to vest property
rights, said title was not valid and vested nothing in the appellees' predecessor in interest.
2. ID.; ID.; POSSESSION. — Inasmuch as the title in question had not vested any right whatsoever
in the appellees' predecessor in interest, the latter could not have validly sold the land covered thereby
on the ground that he neither possessed it nor ever claimed ownership thereof, notwithstanding the
alleged issuances of the document in question in his favor. The mere fact of declaring uncultivated
land for taxation purposes and visiting it every once in a while, does not constitute acts of possession.
DECISION
DIAZ, J p:
In this case the spouses Alfredo Ramirez and Paz Bayot, who are Filipino citizens applied for the
registration in their name of the parcel of land situated at Liang, in the municipality of Siniloan,
Province of Laguna, more particularly described in the plan Exhibit A and annex Exhibit A-1, which is
the technical descriptions thereof, Said land has a total area of 203 hectares, 85 ares and 44 centares.
The Director of Lands, the Director of Forestry and the alleged ground that the parcel of land in
question is public forestry land which was granted by the Insular Government as communal forests to
the above municipalities.
After due hearing which lasted two days according to the decision of the trial court, judgment was
rendered therein declaring the applicants the true owners thereof with the right to have the same
registered in their name as conjugal partnership property under the provisions of Act No. 496, as
amended, and denying all the opposition filed by the four opposition aforementioned. Said oppositors
took exception to and appealed from the said judgment on the ground that the trial court committed
the following six alleged errors, to wit:
"I. The lower court erred in admitting in evidence Exhibit D-2 and in not holding that the same is
null and void ab initio.
"II. The lover court erred in finding that the appellants and their predecessors in interest have been in
the actual, material and physical possession of the land openly, adversely, publicly and under a claim
of ownership before 1888 up to this time.
"III. The lower court, erred in not holding that the applicants failed to establish the identity of the land
in question.
"IV. The lower court erred in applying section 45, paragraph (b), of Act No. 2874 and in not finding
that the land in question belongs to the class of inalienable public land.
"V. The lower court erred in not finding that Tomas Ilao never existed.
"VI. The lower court erred in denying the Government's motion for a new trial."
According to the appellants' evidence, the land in question constituted a third part of a piece of land
which, for ten or eleven years prior to the year 1897, belonged to one Tomas Apat, of the municipality
of Siniloan, Province of Laguna, The same evidence likewise shows that, after having been in
possession of the said land for nearly ten years, that is, on January 2, 1896, said party obtained from
the Spanish Government the title, Exhibit D-2 of the record, wherein it is stated that: Whereas said
Tomas Ilao, who wa then 52 years of age, married, farmer, and a resident of the municipality of
Siniloan, Laguna, had applied for the adjustment with the Government of a parcel of land which he
had in the barrio of Liang in the aforestated municipality and province, the provincial board for the
adjustment of lands granted him the title in question on condition that he register it in the registry of
deeds within one year. It likewise appears on the third page of the document in question that on April
27, 1896, the same was registered as realty No. 92. Santa Cruz, on page 36 of volume I of the records
of Siniloan, which indicates that the condition imposed by the aforesaid board was complied with.
It may be noted, however, that the so-called title (Exhibit D-2) does not bear the dry seal nor the rubric
of the Inspector General of Forests nor does it give the maiden name of Tomas Ilao's mother.
Furthermore, the first paragraphs of the title in question, which refers to the cedula certificate of said
person, reads in part as follows:
". . . whose personal data are attested to by a certificate issued by the 'capitan municipal' thereof on the
twenty-third instant, in connection with the cedula certificate 10th class No. 1940344 exhibited to him
by the grantee . . ." thereby giving rise to a discrepancy therein because the so-called title (Exhibit D-
2), as herein-before stated, is dated January 2, 1896, while the certificate in question bears a very
much later date. On the third page of the said document it may also be noted that the two numbers
"1896", which appear therein as the year when the proceedings therein mentioned were had, have been
plainly altered, to wit: the last two figures "96" of the former number and the figures "8" and "6" of
the latter, and that the stamped paper which forms said page does not bear the year "1896" but the
years 1890-91. However, it is stamped "VALID FOR 1896-97" in red ink. It is also very apparent that
the land granted therein to Tomas Ilao has a total area of 300 hectares.
The same evidence of the appellants-appellees likewise shows that twenty-two months and some days
after Tomas Ilao had obtained his said title (Exhibit D-2), he sold that the land covered thereby to
Pablo Villegas for the sum of two hundred Mexican pesos (Exhibits D-1 and D). Thirty years later,
that is, on January 7, 1928, said Pablo Villegas, in turn, sold the same land-specified in Exhibit D-2 to
Teodoro Kalambakal, stating in Exhibit C that the price thereof was one thousand five hundred pesos.
It was only during the time said Teodoro Kalambakal was in possession thereof, that is, on November
8, 1928, that the land in question, which had belonged to Tomas Ilao, was declared for purposes of
taxation by the latter purchaser. In his declaration presented to that effect it was stated that the
cultivated portion thereof consisted of an area of only two hectares and the uncultivated portion, 298
hectares (Exhibit E). On January 8, 1929, that is, exactly one year and one day from the date he
purchased it from Pablo Villegas, Teodoro Kalambakal sold one-third of said property to the herein
appellants-appellees, for the sum of four thousand pesos, having executed Exhibit B to that effect,
wherein it appears that the portion sold by him had a total area of 100 hectares, although he stated in
his testimony that it was 200 hectares. Subsequently, he sold the remaining portion thereof to Mauricio
Cruz, which, according to his testimony, had an area of 538 hectares.
On a certain portion of the land in question, there are around one thousand young coffee trees about
two years old, which were planted among and under the shade of timber-trees growing on the portion
of lot No. 1 of the plan Exhibit A, indicated with the word "coffee". At the points marked 1, 2, 3, 4 and
5 with red pencil on the same plan, there are likewise traces of clearings (caiñgin) made thereon,
approximately five years prior to September 28, 1931, the date of the hearing of the case in the trial
court.
On the other hand, the evidence of the oppositors shows that lots Nos. 1 and 2 of the aforesaid plan
Exhibit A, which compose all of the land in question, have always been thickly timbered forests and
mountains (Exhibits 17 to 29), for which reason many homestead applications have been turned down
by the Director of Lands on the ground that, far from being agricultural in nature, it was forestry land
(Exhibit 52 to 62).
Said oppositors contend that instead of admitting Exhibit D-2, the trial court should have rejected it on
the ground that it was null and void ab initio. In fact, when the document in question was executed, the
Royal Decree of August 31, 1888, was in full force and effect in the Philippine Islands. The decree in
question classified public lands occupied by inhabitants, who were private individuals, and which
were subject to adjustment with the Treasury into two groups: the first comprised those which were
bounded at any point thereof by other lands belonging to the State, and those which, although entirely
bounded by private lands, had a total area of more than 30 hectares, and the second comprised those
which had an area of less than 30 hectares and were entirely bounded by lands of private ownership.
The aforecited Royal Decree provided that adjustment of lands of the first group should continue to be
heard and determined by the General Directorate of Civil Administration with the intervention of the
Inspector General of Forests. The pertinent provisions thereof relative to the question under
consideration, read as follows:
"ARTICLE 1. All public lands occupied by private individuals in the Philippine Islands, which are
subject to adjustment in accordance with the Regulation of June 25, 1888, shall be divided into two
groups: The first shall comprise those which at any point adjoin other lands belonging to the State, and
those which, although entirely bounded by private lands, have a total area of more than 30 hectares,
and the second shall comprise those having an area of less than 30 hectares and adjoining only lands
of private ownership.
"ART. 2. Adjustment of lands of the first group shall continue to be made in accordance with the
proceeding prescribed in the Regulation of June 25, 1880, that is, with the intervention of the
Inspector General of Forests, under the supervision of the General Directorate of Civil Administration.
xxx xxx xxx
"ART. 4. The different divisions of field personnel (brigadas facultativas) shall be under the
immediate supervision and control of the Inspector General of Forests, and the chief of each division
shall forward to said Inspector General the records of all cases and the plans drawn by the personnel
directly in charge of the work on each piece of land, accompanied by his report thereon. Said Inspector
General, in turn, shall make his recommendation as to the action to be taken in each case to the
General Directorate of Civil Administration.
"ART. 5. For the adjustment of lands of the second group, there shall be established in each provincial
capital a 'provincial board for the adjustment of lands' composed of the Civil or Military-Civil
Governor as president, the Judge of the Court of First Instance, the Prosecuting Attorney, the
provincial treasurer, if any, the Parish Priest, a continental Spanish freeholder designated by the
General Directorate of Civil Administration, the town head (Gobernadorcillo) and 'Juez de
Sementeras'. An officer of the Department of Agriculture (Fomento) shall act as Secretary thereof,
without voice or vote. There shall be no such provincial board in the City of Manila, and the disposal
of cases for adjustment therein, whatever group they belong to, shall devolve upon the General
Inspector of Forests.
xxx xxx xxx
"ART. 7. There shall be established in every municipality a local commission composed of a 'teniente
de justicia' (in every case designated by the 'Gobernadorcillo' to act by turns in all the municipal
districts), the 'Juez de Sementeras', and 'Directorcillo' (town head's secretary) whose duty shall be to
inspect the lands in question.
xxx xxx xxx
"ART. 10. The town head shall forward the record to the chief of the province on the day
following the inspection of the land and the provincial board shall be informed thereof within five
days from the date of its receipt. If the record shows that the land under consideration has a total area
of more than 30 hectares or is not entirely bounded by private lands, the board shall refrain from
taking any cognizance thereof but shall only forward it to the General Directorate of Civil
Administration. Otherwise, it shall designate a day, within 8 days from the date of the session at which
it was informed thereof, for the appearance of the owner of the land in question and of those of the
adjoining lands, upon whom summons to that effect shall be duly served. Upon their appearance, they
shall be requested to show the board whatever rights they may have to the land and the work
performed thereon. In the absence of any protest or adverse claim and if the board is convinced that
they adjustment should be gratuitous on the ground that the possessor has established his right thereto
by prescription as provided in articles 4 and 5 of the Regulation of June 25, 1880, the record shall be
approved and the chief of the province, in his capacity as deputy of the General Directorate of Civil
Administration, shall issue the corresponding title. Failure of the aforesaid persons to appear before
the board for the purpose above referred to, shall not prevent the resolution of the case.
"If protests and claims are filed therein, the protestants and claimants as well as the possessor of the
land in question shall be requested to appear before the board which shall immediately pass upon the
conflicting claims and render the decision it deems just. The chief of the province shall issue the
corresponding title to the property in accordance with such decision."
Pursuant to the provisions of article 17 of the aforecited Royal Decree, the Overseas Minister
(Ministro de Ultramar) issued instructions defining and determining the functions and powers of the
provincial boards and local commissions referred to in articles 5 and 7 thereof. Said instructions,
which were published in the "Gaceta de Manila" on December 20, 1888, read as follows:
"ARTICLE 1. The provincial boards for the adjustment of public lands shall take charge of the
adjustment of those which are situated outside the communal lands and are entirely bounded by
private lands, the area of which is less than 30 hectares, whether they be possessed under a just title or
not.
"ART. 2. The provincial boards shall likewise take charge of the adjustment of those lands which,
having an area of less than 30 hectares, entirely bounded by private property and under cultivation, are
situated within the communal lands, whether the possessor thereof be a native or not.
"ART. 3. Uncultivated lands shall not be admitted to adjustment, unless such adjustment had been
applied for prior to September 8, 1881, the date on which the period for the filing of applications for
lands of this kind expired, in accordance with the Royal Order of July 13, 1881.
"ART. 4. If any of the lands, the adjustment of which devolves upon the provincial boards in
accordance with the provisions of articles 1 and 2 of these Instructions, is under cultivation, possessed
under a just title, and happens to have an area in excess of that specified in said title, the portion in
excess thereof shall be admitted to adjustment if it is cultivated or, if uncultivated, when the
adjustment thereof had been applied for prior to September 8, 1881.
"If under cultivation, the adjustment thereof shall be made in accordance with the provisions of
paragraphs 1 and 2 of article 6 of the Regulation of June 25, 1880, and if not, adjustment shall be
made under paragraph 3 of the same article and Regulations.
"Adjustment of lands the area of which is in excess of the 30 hectares shall correspond to provincial
boards only when the area specified in the title together with that of the portion in excess does not
exceed that area.
"ART. 5. Adjustments shall be free only in the following cases:
"1. When the land is under cultivation, and has been possessed for ten years under a just like, or for
twenty years under no title whatsoever.
"2. When possessed under just title and there being an excess in its area of not more than one-fifth of
that specified in said title, it has been under cultivation.
"In all other cases, adjustment shall be onerous, and the amount which the possessor has to pay to the
Treasury shall be governed by the provisions of the Regulations of June 25, 1880.
xxx xxx xxx
"ART. 7. Provincial boards shall immediately remit to the General Directorate of Civil Administration
all petitions for adjustment of lands not within their jurisdiction, viz: Lands having an area of more
than 30 hectares, such as are, or are not entirely bounded by private lands; also all proceedings to be
heard and determined by said department."
Judging from the area of the land in question and that of the two-third portions from which it has been
segregated, upon the supposition that the three-third portions above-mentioned constitute the whole
tract of land which had originally passed from Tomas Ilao, it is obvious that the same belonged to the
first group, as defined in the aforesaid Royal Decree, on the ground that the area thereof greatly
exceeded thirty hectares and was not entirely bounded by private lands. Notwithstanding such facts,
the title Exhibit D-2 was not issued by the General Directorate of Civil Administration with the
intervention of the Inspector General of Forests, but merely by the provincial board, in open violation
of the laws and regulations relative thereto.
During the period and on the date of the issuance of the title Exhibit D-2 in question, the Maura Law
was also in force in the Philippine Islands by virtue of the Royal Decree of February 13, 1894. Article
6 of said law, which prescribed the procedure for the hearing and disposal of applications for
adjustment, reads as follows:
"ART. 6. All petitions for adjustment, for which a second petition insisting thereon has been made
within the prescribed time limit, shall be disposed of in the shortest time practicable according to the
laws in force prior to the present Decree, excepting as to the provisions of article 8, by the General
Directorate of Civil Administration, assisted by the Inspector General of Forests, whenever such
property adjoins lands belonging to the State or contains more than 30 hectares; in all other cases they
shall be disposed of by the provincial boards established by Decree on Municipal Organization issued
May 19, 1893.
"The provincial boards for the adjustment of lands established by Royal Decree of December 26,
1884, and confirmed by Royal Decree of August 31, 1888, are hereby dissolved, as are also local
commissions created by the latter decree. Municipal tribunals of towns shall assume the duties of said
local commissions. Before dissolving, boards of adjustments are hereby directed to deliver to their
successors, the provincial boards, all records and documents which they may hold in their
possessions." Articles 9, 12, 13 and 40 of the Regulation for the enforcement of the aforesaid Decree,
provide as follows:
"ART. 9. Lands subject to adjustment shall continue to be classified as heretofore into two groups:
The first shall comprise those which have an area of more than 30 hectares, or, if less, when bounded
at any point by other state lands, and the second shall comprise all others.
"Proceedings for adjustment of lands of the first group shall be heard and determined by the General
Directorate of Civil Administration with the assistance of the Inspector General of Forests.
"The adjustments of the second group shall be heard and determined by the provincial boards
established by Royal Decree of 19th of May, 1893, which shall take the place of the boards of
adjustment existing up the present time.
xxx xxx xxx
"ART. 12. When petitions referring to lands included in the second group mentioned in article 9
are received by the General Directorate of Civil Administration they shall be referred to the presidents
of the provincial boards for examinations and report, including records. The secretaries of said boards
shall keep registers in which a record shall be entered of the receipt of all petitions for adjustment.
"ART. 13. Provincial boards shall immediately remit to the General Directorate of Civil
Administration all petitions for adjustment of lands not within their jurisdiction, viz: Lands having an
area of more than 30 hectares, such as are, or are not entirely bounded by private lands; also all
proceedings to be heard and determined by said department.
xxx xxx xxx
"ART. 40. All title deeds shall bear the father's name in full and the mother's maiden name of the
persons to whom they are issued, also their age, civil status, profession, and residence, in compliance
with the provisions of Royal Order of February 15, 1893, and article 2 of the Regulations for the
manner of drafting public documents subject to registration in the archipelago. Title leads deficient in
any of the requisite provisions of law shall not be admitted to registration. Said personal data covering
the grantee must compare with his personal cedula or certificate from the captain or gobernadorcillo of
his district, pursuant to circular dated August 9, 1893, issued by the General Directorate of Civil
Administration and published on the 11th in the Gazette of said month. Such credential shall be
attached to the record, and the fact of its being so attached shall be entered in the instrument of title."
The circular of the General Directorate of Civil Administration on February 14, 1894, was likewise
then in force. Said circular declared null and void all titles issued after October 18, 1893, which did
not comply with the requirement that they bear the dry seal and rubric of the Inspector General of
Forests. The circular in question reads as follows:
"GENERAL DIRECTORATE OF CIVIL ADMINISTRATION OF THE PHILIPPINE ISLANDS
"CIRCULAR
"Inasmuch as article 28 of the Instructions for the adjustment of public lands of the Philippine Islands
expressly provides that titles issued by the chiefs of provinces by virtue of such adjustments be drawn
up on the printed forms which this office shall furnish to the provincial boards for that purpose, in
order to fully comply with the provisions of said article and to facilitate the discovery of any violation
thereof, this office has deemed it convenient to order that all printed forms of this kind furnished to the
said boards for the aforesaid purpose bear a dry seal in the form of mountains with the inscriptions
'Office of the Inspector General of Forests of the Philippine Islands-Adjustment of Lands' and the
rubric of the said Inspector General of Forests. All titles issued by my deputies after October 18, 1893,
which do not comply with these requirements are void. Furthermore each and every one of said papers
shall be serially numbered."
Exhibit D-2 does not bear the serial number either printed or in handwriting as required by the
aforecited circular. Neither is it amiss to repeat herein that the so-called title (Exhibit D-2) does not
bear the required dry seal and rubric of the office of the Inspector General of Forests.
Similarly, the regulation to the effect that the maiden name of the grantee's mother should appear in
the title issued to him was then in force and strictly observed. The regulation in question which is
dated May 10, 1893, and countersigned by the Inspector General of Forests, is embodied in the
circular of the Director General of Civil Administration of the Philippine Islands which was published
in the "Gaceta de Manila" on May 14th of the same year. Said circular reads as follows:
"GENERAL DIRECTORATE OF CIVIL ADMINISTRATION OF THE PHILIPPINE ISLANDS
"CIRCULAR
"Considering that the printed forms which were being used by the boards of adjustment in the issuance
of titles to lands adjusted with the State, do not conform strictly to the provisions of the Mortgage Law
now in force, and in compliance with the Royal Order relative thereto which was issued on February
15th last, this Directorate, at the instance of the Inspector General of Forests, has resolved the
following:
"1. The boards of adjustment of lands shall discontinue issuing title from the date this resolution is
published in the 'Gaceta de Manila'.
"2. The determination of adjustment cases pending hearing before said boards shall be suspended
unless the interested parties furnish their father's surname and their mother's maiden name, their age,
civil status, profession and domicile, all of which data must necessarily be stated in the titles to lands
which may henceforth be issued.
"3. Presidents of boards shall publish the requirements of the preceding paragraph by means of
notices and town criers in order to enable the interested parties to supply any omission in the above
requisite data.
"4. In order that the adjustment work may not be interrupted for any length of time, the presidents of
boards shall remit all printed forms used in the issuance of titles, which they may have in stock at the
first opportunity, so that they may be exchanged for others drawn up in accordance with the provisions
of the Mortgage Law in force in the Philippine Islands, as expressly provided in the aforecited Royal
Order of February 15th, last."
The circular of the General Directorate of Civil Administration of the Philippines, dated August 9,
1893, and published in the "Gaceta de Manila" on the 11th of the same month and year, demanded the
same requisite. Said circular reads as follows:
"GENERAL DIRECTORATE OF CIVIL ADMINISTRATION OF THE PHILIPPINE ISLANDS —
FORESTS
"CIRCULAR
"It being necessary, in conformity with the provisions of the Royal Orders of January 12th and
February 15th last, to state in the adjustment titles to public lands the personal circumstances of the
grantees, as stated in their cedula certificates, and deeming it improper to require the interested parties
to send said cedula certificate either to the Inspector General of Forests or to the presidents of
provincial boards for adjustment of lands, for their guidance in drawing up said titles, both for the
reason that the interested parties to whom they may be indispensable would be deprived thereof for a
long time and because of the likelihood that they may be lost, this office, with the concurrence of the
Inspector General of Forests, has resolved that in all cases in which it is not possible to examine the
cedula certificate of the interested party in drawing up the titles to adjusted lands, the Inspector
General of Forests as well as the presidents of provincial boards for the adjustment of lands may
demand a certificate in connection with such document through the chief of the province.
"This certificate shall be drawn up de oficio at the municipal court of the town where the interested
party resides, the issuing officer having before him the cedula certificate in force, which the interested
party shall be required to exhibit to that effect.
"The certificate shall contain a complete copy of the contents of the cedula certificate and shall further
indicate the maiden name of the grantee's mother, his age, civil status and profession, if such data have
not been stated therein.
"Said certificate shall be signed by the 'gobernadorcillo' or captain, his assistants and the interested
party, or by another person of the same locality at his request if he does not know how to do so.
"Your Honor will please have this circular published by means of town criers, in Spanish and in the
local dialects, in all the municipalities of the province under you, for the information of the general
public."
The contents of the document Exhibit D-2 show that it did not comply with the requirements above
stated.
Everything said thus far shows that the title in question was not valid. It follows, therefore, that it
vested no title in Tomas Ilao.
If this should not be sufficient, it may be added that, in view of the provisions of article 3 of the
aforesaid Decree of the Overseas Minister (Ministro de Ultramar), dated October 20, 1888, which
reads: "Uncultivated lands shall not be admitted for adjustment unless such adjustment had been
applied for prior to September 8, 1881, the date on which the period for the filing of applicants for
lands of this kind expired, in accordance with the Royal Order of July 13, 1881," the presumption is
that the said interested party obtained the aforesaid title Exhibit D-2 on the strength of his affirmation
that the land covered thereby was under cultivation, otherwise such title would not have been issued to
him. Under such circumstances, it is clear that he obtained the title in question not only through error
but also through fraud, inasmuch as the evidence of record shows that, with the exception of a portion
thereof, the land covered thereby was never cultivated during the five years prior to September 28,
1831, when the case was heard in the trial court, judging from clearings (caiñgin), which were in
evidence in some portions thereof, and from the two-year old coffee trees planted on the portion which
is indicated with the word "coffee" on the plan Exhibit A. This is shown more clearly by the fact that
on the entire land and on the portion planted with young coffee trees, there are many timber-trees,
some of which are more than 40 years old according to the evidence of the oppositors.
Exhibit 4, which is an authentic and genuine title to property issued to Pablo Acero y Alcantara by the
chief of the Province of Laguna, seven months after the alleged issuance of Exhibit D-2, and which
refers to a parcel of land having an area of 6 hectares, 54 ares and 82 centares, serves not only to show
how strictly the provisions of the aforecited decrees, laws, and regulations were then observed and
complied with, in connection with the manner in which titles were issued and the persons issuing them
when the land covered thereby did not exceed 30 hectares in area, and, when they exceeded 30
hectares, the dry seal and rubric which such titles should bear and the statements or certificates which
they should contain relative to the full name and surname together with the maiden name of the
mother of the person or persons in whose favor they were issued, but also proves that Exhibit D-2 in
question is fictitious and not genuine. Said Exhibit 4 was issued by the chief of the Province of
Laguna because the land covered thereby had an area of less than thirty hectares. It bears the dry seal
and rubric of the Inspector General of Forests as prescribed in the aforecited circular of the General
Directorate of Civil Administration on February 14, 1894; indicates the maiden name of the mother of
the grantee Pablo Acero y Alcantara, and has the serial number relative to the issuance thereof printed
at the top of the left margin.
Comparing the statements and certificates contained in the two documents above-mentioned, Exhibit
D-2 and Exhibit 4, in connection with the cedula certificates of their respective grantees, it is
inconceivable how it was possible to issue Tomas Ilao a cedula certificate dated January 23, 1896,
with a number (No. 1,940,344 10th class) which is very much higher than that of the one issued to
Pablo Acero y Alcantara (No. 43,723 10th class) on a much later date, that is, on February 28, 1896. It
should further be noted that the two cedula certificate in question had been issued in the same
municipality of Siniloan, Laguna.
Furthermore, the very contents of Exhibit D-2 indicate that it is fraudulent. The certificate referred to
in its first paragraph states that the cedula certificate of Tomas Ilao was issued on the "23d instant",
that is, on January 23, 1896, while said exhibit was issued on the 2d of the same month and year,
according to the date appearing therein.
In case the foregoing are deemed insufficient, it should be added that the evidence of the oppositors
shows that no trace of the issuance of the so-called title Exhibit D-2 of Tomas Ilao, or of the
proceeding thereof, could be found in the National Library or Division of Archives where the records
of all titles to property issued during the Spanish régime, are kept.
It is therefore evident that the trial court committed the first error alleged in the appellant's brief.
Exhibit D-2 should have been rejected not only because it is null and void but also because it is
fictitious or forged and therefore not genuine.
Inasmuch as this court is convinced that Exhibit D-2 did not vest Tomas Ilao with any right, he could
not therefore validly sell the land which he allegedly sold to Pablo Villegas on October 15, 1897,
according to Exhibit D-1. With much less reason could the latter sell it to Teodoro Kalambakal on the
ground that he did not even take possession nor claim ownership thereof in spite of the alleged
execution of the aforesaid document in is favor. Exhibit 48, which is the record of the proceeding in
the homestead application of said Pablo Villegas, and particularly his application therein, prove that in
1918, long before he sold the land of which the parcel in question was a portion, as claimed by the
herein appellees, and long after he purchased it from Tomas Ilao, as also claimed, said Pablo Villegas
did not have any land, having so declared under oath in his application above-mentioned.
Furthermore, he never declared it as his property for taxation purposes at any place, much less in the
municipalities of Siniloan and Famy where said land is situated. All these circumstances show beyond
doubt that he not only did not possess or occupy the land in question but was not even aware of the
existence of the deed of sale Exhibit D-1 which was allegedly executed by Tomas Ilao in his favor.
The foregoing likewise shows that Teodoro Kalambakal's alleged purchase of the land from Pablo
Villegas is fictitious on the ground that, if the latter had no land of his own he could not have sold
what is now claimed to have been bought by the former. The preponderance of evidence, more than
anything else, leads us to the conviction that Teodoro Kalambakal was aware of the manner in which
the so-called title Exhibit D-2 was fabricated. Of this there is no doubt because when he went to the
land in question on or about the month of July, 1929, for the purpose of indicating the boundaries
thereof to Forester Valentin Sajor, who was sent by the Bureau of Forestry to inspect it in connection
with the former's application to the said bureau for the registration thereof, he made the mistake of
narrating how he became the owner of the land by means of some old documents scattered in the
house of a friend in Siniloan, who told him that he could have them because they might be of some
use to him.
If Teodoro Kalambakal neither acquired anything from Pablo Villegas nor actually possessed the land
which he claimed to have bought from the latter, the transfer thereof which he made in favor of the
appellees-spouses would serve them nothing on the ground that it did not vest them with any right
whatsoever. Said spouses, no doubt, were led to believe that Exhibit D-2 was valid. It should be borne
in mind that, as before stated, the only acts of Teodoro Kalambakal which may in some way serve as
evidence of his claims of ownership of the land in question were his having declared it as his property
for taxation purposes in Laguna on November 8, 1928, and his occasional visits to the land about the
same year. It cannot even be said that the clearings (caiñgin), of which there were some traces thereon
and which might have been made about five years prior to September 28, 1931, according to the
evidence, had been made by Kalambakal's order, because there is nothing of record to justify such
conclusion. Neither is it necessary to dwell upon the young coffee trees on the ground that their age
(two years) clearly proves that they had been planted during the time applicants-appellees were in
possession thereof.
Granting that the applicants-appellees have been in possession of the land in question from the date on
which they purchased it in 1929 and had planted it with young coffee trees, it may be inferred from the
foregoing that their possession only commenced from that year in view of the fact that Teodoro
Kalambakal from whom they bought it did not possess it in the legal sense. The mere fact of declaring
uncultivated land for taxation purposes and visiting it every once in a while, as was done by him, does
not constitute acts of possession. (Evangelista vs. Tabayuyong, 7 Phil., 607; Casimiro vs. Fernandez, 9
Phil., 562.)
Therefore, there can be no doubt but that the trial court committed the second error as alleged in the
appellant's brief.
With respect to the fourth alleged error which the appellants contend was committed by the trial court,
this court, after examining and studying the provisions of section 45, paragraphs (b) of Act No. 2874
which amended section 54, paragraph 6 of Act No. 926, is compelled to hold that the connection of
said appellants is likewise correct.
The judgment of the trial court adjudicating the land in question to the appellees under the aforecited
legal provisions, is based on a false premise, to wit: that the land in question is agricultural in nature.
The evidence presented as well as that heretofore stated shows that it is forestry land. This kind of land
is not subject to registration on the ground that it has been occupied for the period of time therein
prescribed (Ankron vs. Government of the Philippine Islands, 40 Phil., 10), particularly when, as
already stated, neither the applicants-appellees nor Teodoro Kalambakal nor Pablo Villegas nor Tomas
Ilao, in this case, possessed the land in question jointly or separately, in succession, under the
conditions prescribed by the law, that is, openly, continuously, exclusively and under a bona fide claim
of ownership, from the year 1888, notwithstanding the attempt of the applicants-appellees to prove the
contrary. The only thing that, in a way, seems certain is that the applicants-appellees cultivated the
land in question for the first time in 1929 or 1930, by means of laborers who planted young coffee
trees thereon. However, that took place after the deed of sale Exhibit B had been executed by Teodoro
Kalambakal in their favor and this fact does not entitle them to register it in their name, either under
Act No. 496 or under Act No. 926.
Having arrived at this conclusion, the court deems it unnecessary to pass upon the third, fifth and sixth
alleged errors relied upon in the appellants' brief.
Wherefore, finding that the judgment appealed from is not in accordance with the law nor supported
by the evidence presented during the trial, it is hereby reversed. The petition of the applicants-
appellees is hereby denied and the land in question is declared forestry land, without special
pronouncement, however, as to costs. So ordered.
Abad Santos, Hull, Imperial and Butte, JJ., concur.

[G.R. No. 146874 *. July 20, 2006.]

REPUBLIC OF THE PHILIPPINES, petitioner, vs. SOCORRO P. JACOB, respondent.
DECISION
CALLEJO, SR., J p:
Before this Court is a Petition for Review on Certiorari filed by the Republic of the Philippines
assailing the Decision 1 of the Court of Appeals (CA) in CA-G.R. CV No. 53606, which affirmed the
ruling of the Regional Trial Court (RTC), Branch 17, Tabaco, Albay, in Land Registration Case No. T-
210. In the said case, the RTC granted the application of private respondent Socorro P. Jacob for
confirmation of her title to Lot No. 4094, Cad-249, Malinao Cadastre of Plan AP-05-002078 in
Barangay Balading, Malinao, Albay. EHTCAa
The antecedents follow:
On August 14, 1970, then President Ferdinand E. Marcos issued Proclamation No. 739, "Establishing
as Reservation for the Purpose of the Exploration, Development, Exploitation and Utilization of
Geothermal Energy, Natural Gas and Methane Gas a Parcel of Land in the Province of Albay, Island of
Luzon, Philippines." Lot No. 4094 of the Malinao Cadastre, consisting of 15,520 square meters, is
covered by the said proclamation.
Nevertheless, on May 6, 1994, private respondent, a retired public school teacher, filed an application
with the RTC of Albay for the confirmation and registration of her alleged title over Lot No. 4094.
The Republic of the Philippines, through the Office of the Solicitor General (OSG), opposed the
application for the following reasons:
3. That the claim of ownership in fee simple on the basis of Spanish title or grant can no longer be
availed of by the applicant/s who have failed to file an appropriate application for registration within
the period of six (6) months from February 16, 1976 as required by P.D. No. 892. From the records, it
appears that the instant application was filed on May 6, 1994.
4. That the parcel/s applied for is/are portions of the public domain belonging to the Republic of the
Philippines not subject to private appropriation. 2
Private respondent appended to her application the tracing cloth plan of the property under the name
of Sotero Bondal. The blue print, 3 dated February 27, 1991, was prepared and signed by Geodetic
Engineer Bonifacio C. del Valle and approved by Ernesto L. Llave, Chief, Regional Surveys Division
of the Lands Management Service. Per Report 4 of the Land Registration Authority dated September
27, 1994, the property was the subject of an application for registration (Cadastral Case No. 42, GLRO
Cadastral Record No. 1324), but "no decision has been rendered thereon, or if there had been any, no
copy of the same was furnished to the [Land Registration Authority]." The report also states that the
property is covered by Free Patent No. V-13062 dated May 21, 1955. 5 Private respondent had also
applied for a free patent over the property, but withdrew her application in a Letter 6 dated October 27,
1994 addressed to the Department of Environment and Natural Resources, Region V, Legaspi City.
Private respondent adduced the following evidence and factual allegations to support her application
before the RTC:
The previous owner of Lot No. 4094, Sotero Bondal, sold the property to Macario Monjardin, 7 a
brother of private respondent's mother, Josefa Monjardin Patricio. Macario declared the property in his
name under Tax Declaration (T.D.) No. 18854 8 in 1930, superseding T.D. No. 15956, and again in
1949 under T.D. No. 7117. 9 Since Macario was residing in Manila and was unable to cultivate the
property, he asked his sister, Josefa to be his encargado. By then, private respondent was already a 17-
year old substitute teacher who then accompanied her mother in supervising the planting and
harvesting of palay and the improvement of the lot. SIcCEA
Sometime in 1946, Macario decided to marry. On January 31, 1946, he sold the property and executed
a deed of sale 10 in favor of the spouses Igmedio A. Patricio and Josefa Monjardin-Patricio, as
vendees, for P400.00. The spouses thereafter received their share of the produce as owners, but failed
to declare the property for taxation purposes under their names.
In 1947, Josefa Patricio died intestate and was survived by her husband Igmedio and private
respondent. T. D. No. 7117 was cancelled effective 1960 by T.D. No. 11602 11 under the name of
"Egmidio A. Patricio." The realty taxes due on the property from 1949 to 1959 were paid on April 16,
1959. 12 Igmedio died intestate in 1968, and on May 8, 1971, private respondent executed an
Affidavit of Extrajudicial Adjudication 13 where she declared that as sole heir of the spouses Igmedio
Patricio, she was the sole owner of the property.
Lot No. 4094 was declared for taxation purposes under the name of Socorro under T.D. No. 00530 14
effective 1985. On July 7, 1983, she paid the realty taxes over the property from 1960 to 1983, and
from 1983 to 1995. 15
When cross-examined, private respondent admitted that she had no copy of the deed of sale executed
by Sotero Bondal in favor of Macario Monjardin. 16
The Republic of the Philippines did not offer any evidence to support its opposition to the application.
On January 30, 1996, the trial court rendered judgment in favor of the applicant. The fallo of the
decision reads:
WHEREFORE, Lot No. 4094 of Plan Ap-05-002078, Cad-249, Malinao Cadastre, more particularly in
the corresponding plan and technical description (Exhibits "O" and "N"), is hereby ordered
REGISTERED and CONFIRMED in the name of Socorro Jacob, of legal age, married to Elias Jacob,
and a resident of Barangay 7, Balintawak Street, Albay District, Legazpi City pursuant to paragraph
(1), Section 14 of the Presidential Decree No. 1529, otherwise known as the Property Registration
Decree.
Once this decision becomes final, let the corresponding decree and Original Certificate of Title be
issued in favor of said applicant.
SO ORDERED. 17
The Republic of the Philippines, through the Office of the Solicitor General, appealed the decision to
the CA on the following ground:
THE HONORABLE COURT ERRED IN FINDING THAT APPELLEE HAS A REGISTRABLE
RIGHT OVER LOT NO. 4049 OF THE MALINAO CADASTRE AND THAT HER POSSESSION
AND THAT OF HER PREDECESSORS-IN-INTEREST OVER THE SAID LOT FOR MORE THAN
TWENTY SEVEN (27) YEARS WAS IN THE CONCEPT OF OWNER. 18
The OSG averred that private respondent failed to prove her claim that the original owner of the
property, Sotero Bondal, sold the property to her uncle Macario Monjardin. It was likewise pointed out
that private respondent admitted that she had no copy of any such deed of sale. The fact that the
property was declared under the name of Sotero Bondal in 1991 (as shown by the tracing cloth plan
approved by the Land Registration Authority on February 27, 1991) negates private respondent's claim
that the property was sold to Monjardin. Even assuming the existence of such sale, the OSG claimed
that private respondent still failed to prove that her predecessors-in-interest had exclusive, open and
adverse occupation under a bona fide claim of ownership over the property since June 12, 1945 or
earlier, up to August 14, 1970 when the property was declared as a reservation under Proclamation No.
739. 19
Private respondent opted not to file any brief.
On January 20, 2001, the CA rendered judgment affirming the appealed decision. It declared that
although private respondent failed to adduce in evidence the deed of sale executed by Sotero Bondal
in favor of Macario Monjardin, her testimony that the sale took place was enough. Her claims were
likewise buttressed by her documentary evidence, and thus she was able to muster the requisite
quantum of evidence to prove exclusive, open, and continuous possession under a bona fide claim of
ownership for the requisite period of time before August 14, 1970. According to the appellate court,
the bare fact that private respondent failed to present any evidence to corroborate such testimony did
not render it self-serving. cDCaHA
The Republic of the Philippines, now petitioner, filed the instant petition, assailing the decision of the
CA on the following grounds:
A
THE COURT OF APPEALS GRAVELY ERRED IN RULING THAT RESPONDENT HAS
ESTABLISHED BY CLEAR AND CONVINCING EVIDENCE HER POSSESSION AND THAT OF
HER PREDECESSOR-IN-INTEREST WITHIN THE PERIOD AND IN THE CONCEPT
REQUIRED BY LAW.
B
THE COURT OF APPEALS GRAVELY ERRED IN RULING THAT RESPONDENT ACQUIRED A
VESTED RIGHT OVER THE SUBJECT PARCEL OF LAND EVEN BEFORE THE EFFECTIVITY
OF PROCLAMATION NO. 739 OF AUGUST 14, 1970. 20
The parties reiterated their arguments in the CA to support their respective claims in this Court.
The petition is meritorious.
Section 48(b) of Commonwealth Act No. 141, as amended by Republic Act No. 1942, reads:
Section 48. The following described citizens of the Philippines, occupying lands of the public
domain or claiming to own any such lands or an interest therein, but whose titles have not been
perfected or completed, may apply to the Court of First Instance of the province where the land is
located for confirmation of their claims and the issuance of a certificate of title therefor, under the
Land Registration Act, to wit:
(b) Those who by themselves or through their predecessors in-interest therein have been in open,
continuous, exclusive, and notorious possession and occupation of agricultural lands of the public
domain, under a bona fide claim of acquisition of ownership, for at least thirty years immediately
preceding the filing of the application for confirmation of title except when prevented by war or force
majeure. These shall be conclusively presumed to have performed all the conditions essential to a
Government grant and shall be entitled to a certificate of title under the provisions of this chapter.
This provision was further amended by Presidential Decree (P.D.) No. 1903 by substituting the phrase
"for at least thirty years" with "since June 12, 1945," thus:
Sec. 4. The provisions of Section 48(b) and Section 48(c), Chapter VIII, of the Public Land Act are
hereby amended in the sense that these provisions shall apply only to alienable and disposable lands of
the public domain which have been in open, continuous, exclusive and notorious possession, and
occupation by the applicant himself or through his predecessor-in-interest, under a bona fide claim of
acquisition of ownership, since June 12, 1945 (emphasis supplied).
Section 14(1) of P.D. No. 1529, otherwise known as the Property Registration Decree, likewise
provides:
SEC. 14. Who may apply. — The following persons may file in the proper Court of First Instance
[now Regional Trial Court] an application for registration of title to land, whether personally or
through their duly authorized representatives:
(1) Those who by themselves or through their predecessors-in-interest have been in open,
continuous, exclusive and notorious possession and occupation of alienable and disposable lands of
the public domain under a bona fide claim of ownership since June 12, 1945, or earlier (emphasis
supplied). HCaEAT
Applicants for confirmation of imperfect title must, therefore, prove the following: (a) that the land
forms part of the disposable and alienable agricultural lands of the public domain; and (b) that they
have been in open, continuous, exclusive, and notorious possession and occupation of the same under
a bona fide claim of ownership either since time immemorial or since June 12, 1945. 21
Under the Regalian doctrine, all lands not otherwise appearing to be clearly within private ownership
are presumed to belong to the State. The presumption is that lands of whatever classification belong to
the State. 22 Unless public land is shown to have been reclassified as alienable or disposable to a
private person by the State, it remains part of the inalienable public domain. Property of the public
domain is beyond the commerce of man and not susceptible of private appropriation and acquisitive
prescription. Occupation thereof in the concept of owner no matter how long cannot ripen into
ownership and be registered as a title. 23 The statute of limitations with regard to public agricultural
lands does not operate against the State unless the occupant proves possession and occupation of the
same after a claim of ownership for the required number of years to constitute a grant from the State.
24
No public land can be acquired by private persons without any grant from the government, whether
express or implied. It is indispensable that there be a showing of a title from the State. The rationale
for the period "since time immemorial or since June 12, 1945" lies in the presumption that the land
applied for pertains to the State, and that the occupants or possessor claim an interest thereon only by
virtue of their imperfect title as continuous, open and notorious possession.
In the case at bar, when private respondent filed her application with the RTC on May 6, 1994, Lot
No. 4094 was no longer alienable and disposable property of the public domain, since as of August 14,
1970, by virtue of Proclamation No. 739, it was segregated from the public domain and declared part
of the reservation for the development of geothermal energy. 25 Private respondent filed her
application for confirmation 24 years after the said proclamation was issued; thus, the period of her
possession and occupancy after such proclamation can no longer be tacked in favor of the claimant. 26
The Court notes that on October 25, 1975, the Secretary of Justice issued an opinion 27 stating that
Proclamation No. 739 was without prejudice to the vested rights of individuals/applicants who had
fully complied with all the requirements under the Public Land Law for the acquisition of ownership
as alienable and disposable. It bears stressing, however, that one claiming private rights under the
Public Land Act, as amended, must prove by clear and convincing evidence that all the substantive
requisites for acquisition of public lands (along with the procedural) had been complied with.
As pointed out by petitioner, private respondent failed to adduce clear and convincing evidence that by
August 14, 1970, she had already acquired ownership over the property by herself or through her
predecessors-in-interest through open, continuous, exclusive and notorious possession and occupation
of the property since 1945 or earlier.
Indeed, the law speaks of "possession and occupation." Possession is broader than occupation because
it includes constructive possession. Unless, therefore, the law adds the word "occupation," it seeks to
delimit the all-encompassing effect of constructive possession. Taken together with the words
"continuous," "exclusive" and "notorious," the word "occupation" seems to highlight the facts that for
an applicant to qualify, her possession of the property must not be a mere fiction.
Actual possession of a land consists in the manifestation of acts of dominion of such a nature as a
party would naturally exercise over her own property. 28 A mere casual cultivation of portions of land
by the claimant does not constitute sufficient basis for a claim of ownership. Such possession is not
exclusive and notorious as it gives rise to a presumptive grant from the State. 29 The applicant is
burdened to offer proof of specific acts of ownership to substantiate the claim over the land. 30 The
good faith of the person consists in the reasonable belief that the person from whom she received the
property was the owner thereof and could transfer ownership. 31
While tax receipts and tax payment receipts themselves do not convincingly prove title to the land, 32
these are good indicia of possession in the concept of an owner, for no one in his right mind would pay
taxes for a property that is not in his actual or, at least, constructive possession. 33 They constitute, at
the least, proof that the holder has a claim of title over the property, particularly when accompanied by
proof of actual possession. 34 The voluntary declaration of a piece of property for taxation purposes
not only manifests one's sincere and honest desire to obtain title to the property, but also announces an
adverse claim against the State and all other interested parties with an intention to contribute needed
revenues to the government. Such an act strengthens one's bona fide claim of acquisition of
ownership. 35
In this case, however, private respondent failed to offer in evidence the deed of sale purportedly
executed by Sotero Bondal in favor of Macario Monjardin as vendee. On cross-examination, she
admitted that the only deed of sale she had was the deed of absolute sale Macario Monjardin executed
in favor of her parents, the spouses Igmedio Patricio. The documentary evidence adduced by private
respondent even belies her claim that Sotero Bondal sold the property to her uncle. She even failed to
identify "B.C. Monjardin," much less explain whether such person was really her uncle. 36 She even
failed to adduce in evidence any tax declaration over the property under his name and that he paid the
realty taxes for the property from 1930 to 1946. aSDHCT
Of great significance is private respondent's "promise" to submit proof based on the records in the
Register of Deeds and other government agencies showing that Sotero Bondal sold the property to
Macario Monjardin; and that if such records had been destroyed during the Second World War, she
would submit proof of said destruction:
Q Who is this Sotero Bondal?
A The original owner of the lot from whom my uncle bought the property.
Q Do you have any document that your uncle Macario Monjardin acquired this property from
Sotero Bondal?
A None. That was the only document executed both by my parents and my uncle.
Q So, there is a gap now to prove that your uncle, Macario Monjardin was able to acquire this from
Sotero because it appears from the survey that the owner is still Sotero Bondal.
A Yes, sir.
Q So, as of now you do not have any document?
A You know during the war years everything was disturbed. So that is the only document that I
have found.
Q So, there is a need for you to submit that to the Court because official documents show that the
property is still in the name of Sotero Bondal. Are you going to prove that before this Court?
A I have to get from the cadastral office?
PROS. BOCALBOS:
It is up to your counsel to secure that. Just to show continuity of ownership of the land from the
original owner, Sotero Bondal. As far as this witness is concerned, Your Honor, no more cross-
examination except to submit the document which we require to show contin[u]ous possession and
ownership of the land.
ATTY. RAÑESES:
Your Honor please, we want to manifest before this Court that as far as that sale is concerned we
cannot assure the Court that we can produce that document. So I'm already manifesting this so that the
distinguished Prosecutor, Your Honor, will not oblige us to produce that. If we cannot produce that we
will leave our evidence to the Honorable Court.
COURT:
It is the observation that most of the records especially those that have been archived were lost
during the war.
PROS. OCALBOS:
Yes, Your Honor. But it is a suggestion that in cases like this, you have to secure a certification
from different agencies that all the records were already destroyed because of the war or whatever. So,
they are going to execute again an affidavit of ownership of the property tracing all the dates from the
predecessor, how this property was acquired by Macario Monjardin. That is an affirmation of the
ownership of the land. As of this date there are still documents showing that the property is owned by
Sotero Bondal otherwise from the date of sale, January 31, 1946 from Macario Monjardin to the
petitioner's parents only shows that he was the owner of the property but without proving how he was
able to secure this from Sotero Bondal.
ATTY. RAÑESES:
Your Honor please, we agree with counsel. If I can only have a copy of that it will be the best
evidence to prove possession. But I must be frank, because of the years that have passed and because
of the Pacific War that occurred in the Philippines. The floods and the natural calamities and time,
Your Honor, I cannot guarantee. But at any rate I filed this original land registration case in
accordance with P.D. 1529 that since this is still a public land, all I have to prove here is the
continuous possession at least for 30 years from 1936 continuously up to the present.
PROS. BOCALBOS:
There is even a gap from that statement, "from 1936", wherein the property was sold in 1946.
COURT:
That was sold to the uncle.
PROS. BOCALBOS:
But prior to that date there was no mention of Macario Monjardin how he was able to acquire this
property. So, he could have executed some document that he was the owner at that time when he sold
the property. So, there is a gap from the possession and ownership of the property from Sotero Bondal
to Macario Monjardin.
ATTY. RAÑESES:
The requirement in the application is to show that there is a continuous, exclusive possession of
the land.
PROS. BOCALBOS:
We are tracing this, Your Honor, to protect the interest of the previous owner, not only the
government. That is only a suggestion. If they could secure from the Bureau of Lands or from any
other agency that the records were already lost from the time Sotero Bondal owned the property so
that they can execute another document an affidavit of ownership tracing the date and how Sotero
Bondal acquired the property. 37
However, private respondent failed to comply with her undertaking and rested her case without
presenting said evidence. ICTaEH
Significantly, the spouses Igmedio Patricio applied for a free patent over the property after the Second
World War, which, according to private respondent, was rejected by the Bureau of Lands. 38 Private
respondent's testimony is further belied by the request to withdraw her application for a free patent
over Lot No. 4094 which she made on October 27, 1994. 39 The records also show that the property is
the subject of Cadastral Case No. 42, G.L.R.O. No. 1324 and there is no evidence on record that this
case has been terminated. There are thus two applications for registration of the same lot: (1) the
application of private respondent in the court below; and (2) Cadastral Case No. 42.
Furthermore, the fact that the blue print copy of the tracing cloth plan covering the subject lot as of
1991 was still in the name of Sotero Bondal is proof that not all the records of the Land Management
Authority relative to the property had been lost. Unless and until respondent offered credible evidence
that Monjardin had purchased the property from Bondal, it cannot be said that the spouses Igmedio
Patricio acquired the rights and interests of Bondal over the property through Monjardin; private
respondent cannot even tack her own possession of the property to that of her parents. In fact, she
failed to adduce evidence that her uncle had been in open, continuous and adverse possession of the
property. While she claimed that her mother was designated as encargado, private respondent failed to
even mention the portion of the property that was cultivated, or at least where and who planted the
palay. Such declaration (that Macario designated her mother as encargado) without more does not
constitute preponderant evidence to prove adverse, continuous, open, public, and peaceful possession
in the concept of owner. Private respondent's testimony that after her parents purchased the lot, they
began receiving the share of the produce of the property does not in itself constitute proof of such
adverse possession.
There is thus no evidence that the parents of private respondent ever had open, continuous, adverse
and actual possession of Lot No. 4094.
IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED. The appealed decision of the
Court of Appeals in CA-G.R. CV No. 53606 is SET ASIDE. The Regional Trial Court is ordered to
DISMISS private respondent's application for confirmation of title over Lot No. 4094.
SO ORDERED.
Panganiban, C.J., Ynares-Santiago, Austria-Martinez and Chico-Nazario, JJ., concur.
Footnotes
* Transferred to the Present First Division on June 6, 2006.
1. Penned by Associate Justice Ruben T. Reyes (now Presiding Justice) with Associate Justices
Presbitero J. Velasco, Jr. (now an Associate Justice of the Supreme Court) and Juan Q. Enriquez, Jr.,
concurring.
2. Records, p. 76.
3. Id. at 70.
4. Id. at 60-61.
5. Id. at 60.
6. Id. at 124.
7. TSN, March 2, 1995, p. 22.
8. Exhibit "U," records, p. 127.
9. Exhibit "T," id. at 126.
10. Exhibit "I," id. at 116.
11. Exhibit "J," id. at 117.
12. Exhibit "S," id. at 125.
13. Exhibit "H," id. at 115.
14. Exhibit "L," id. at 119.
15. Exhibit "S," supra note 12.
16. TSN, March 2, 1995, p. 22.
17. Records, p. 134.
18. CA rollo, p. 22.
19. Id. at 23-27.
20. Rollo, p. 15.
21. Republic v. Alconaba, G.R. No. 155012, April 14, 2004, 427 SCRA 611, 617.
22. Diaz-Enriquez v. Republic, G.R. No. 141031, August 31, 2004, 437 SCRA 311, 322.
23. Pagkatipunan v. Court of Appeals, 429 Phil. 377, 389-390.
24. Gordula v. Court of Appeals, 348 Phil. 670, 686-687 (1998).
25. Records, p. 60.
26. Collado v. Court of Appeals, 439 Phil. 149 (2002).
27. Gordula v. Court of Appeals, 348 Phil. 670 (1998).
28. Republic v. Alconaba, supra note 21.
29. Del Rosario v. Republic, 432 Phil. 824, 838 (2002).
30. Republic v. Alcanaba, supra note 21.
31. Raz v. Court of Appeals, 372 Phil. 710 (1999).
32. Diaz-Enriquez v. Republic, supra note 22, at 324.
33. Republic v. Kalaw, G.R. No. 155138, June 8, 2004, 431 SCRA 401, 413.
34. Republic v. Court of Appeals, 216 Phil. 500, 508-509 (1984).
35. Republic v. Alconaba, supra note 21, at 620.
36. Exhibit "I," records p. 116.
37. TSN, March 2, 1995, pp. 22-26.
38. TSN, March 2, 1995, p. 29.
39. Exhibit "R."

Copyright 2006 C D T e c h n o l o g i e s A s i a, I n c.

[G.R. No. 164801. June 30, 2006.]

PHILIPPINE NATIONAL BANK, petitioner, vs. HEIRS OF ESTANISLAO MILITAR AND
DEOGRACIAS MILITAR, represented by TRANQUILINA MILITAR, respondents.
[G.R. No. 165165. June 30, 2006.]
SPOUSES JOHNNY LUCERO AND NONA ARIETE, petitioners, vs. HEIRS OF ESTANISLAO
MILITAR, DEOGRACIAS MILITAR, and TRANQUILINA MILITAR (deceased), now represented
by AZUCENA MILITAR, FREDDIE MILITAR, EDUARDO MILITAR, ROMEO L. MILITAR,
NELLY LY BOLANIO, LETICIA LY and DELIA LY SI ASOYCO, respondents.
RESOLUTION
YNARES-SANTIAGO, J p:
Before us are the motions for reconsideration filed by petitioners Philippine National Bank (PNB) in
G.R. No. 164801 and Spouses Johnny Lucero and Nona Ariete (Lucero Spouses) in G.R. No. 165165
seeking a reconsideration of our August 18, 2005 Decision in these consolidated cases which affirmed
in toto the June 4, 2004 Decision and August 4, 2004 Resolution of the Court of Appeals in CA-G.R.
CV No. 54831 holding that both petitioners PNB and the Lucero Spouses were not mortgagee and
buyers in good faith, respectively. cIETHa
In their separate motions for reconsideration, both petitioners PNB and the Lucero Spouses in the
main assert that they were mortgagee and buyers for value in good faith, respectively. Thus, the
Lucero Spouses pray that we "take a second hard look at the facts and circumstances of the case."
Respondents however argue that PNB cannot be considered a mortgagee in good faith as it failed to
inspect the disputed property when offered to it as security for the loan, which could have led it to
discover the forged instruments of sale. Similarly, the Lucero Spouses cannot be regarded as innocent
purchasers for value, respondents' claim, as they failed to inquire from the occupants of the disputed
property the status of the property. Before revisiting the facts and circumstances of the instant case, a
review of existing jurisprudence may be expedient in resolving the twin motions for reconsideration.
In Cabuhat v. Court of Appeals, we said that "it is well-settled that even if the procurement of a
certificate of title was tainted with fraud and misrepresentation, such defective title may be the source
of a completely legal and valid title in the hands of an innocent purchaser for value. Thus —
Where innocent third persons, relying on the correctness of the certificate of title thus issued, acquire
rights over the property the court cannot disregard such rights and order the total cancellation of the
certificate. The effect of such an outright cancellation would be to impair public confidence in the
certificate of title, for everyone dealing with property registered under the Torrens system would have
to inquire in every instance whether the title has been regularly or irregularly issued. This is contrary
to the evident purpose of the law. Every person dealing with registered land may safely rely on the
correctness of the certificate of title issued therefor and the law will in no way oblige him to go behind
the certificate to determine the condition of the property. 1
Cabuhat was later invoked by Clemente v. Razo 2 and Velasquez, Jr. v. Court of Appeals. 3
Accordingly, in Lim v. Chuatoco we said that "it is a familiar doctrine that a forged or fraudulent
document may become the root of a valid title, if the property has already been transferred from the
name of the owner to that of the forger. This doctrine serves to emphasize that a person who deals with
registered property in good faith will acquire good title from a forger and be absolutely protected by a
Torrens title. In the final analysis, the resolution of this case depends on whether the petitioners are
purchasers in good faith." 4
In a litany of cases, we have defined a purchaser in good faith as one who buys property of another
without notice that some other person has a right to, or interest in, such property and pays full and fair
price for the same at the time of such purchase or before he has notice of the claim or interest of some
other person in the property. 5
Thus, as a general rule, where the land sold is in the possession of a person other than the vendor, the
purchaser must go beyond the certificate of title and make inquiries concerning the actual possessor. A
buyer of real property which is in possession of another must be wary and investigate the rights of the
latter. Otherwise, without such inquiry, the buyer cannot be said to be in good faith and cannot have
any right over the property. 6 We explained this principle in Consolidated Rural Bank (Cagayan
Valley), Inc. v. Court of Appeals and also held therein that this rule likewise applies to mortgagees of
real property 7 —
As this Court explained in the case of Spouses Mathay v. Court of Appeals:
Although it is a recognized principle that a person dealing on a registered land need not go beyond its
certificate of title, it is also a firmly settled rule that where there are circumstances which would put a
party on guard and prompt him to investigate or inspect the property being sold to him, such as the
presence of occupants/tenants thereon, it is of course, expected from the purchaser of a valued piece of
land to inquire first into the status or nature of possession of the occupants, i.e., whether or not the
occupants possess the land en concepto de dueño, in the concept of the owner. As is the common
practice in the real estate industry, an ocular inspection of the premises involved is a safeguard a
cautious and prudent purchaser usually takes. Should he find out that the land he intends to buy is
occupied by anybody else other than the seller who, as in this case, is not in actual possession, it
would then be incumbent upon the purchaser to verify the extent of the occupant's possessory rights.
The failure of a prospective buyer to take such precautionary steps would mean negligence on his part
and would thereby preclude him from claiming or invoking the rights of a "purchaser in good faith."
This Rule equally applies to mortgagees of real property. In the case of Crisostomo v. Court of
Appeals the Court held —
It is a well-settled rule that a purchaser or mortgagee cannot close his eyes to facts which should put a
reasonable man upon his guard, and then claim that he acted in good faith under the belief that there
was no defect in the title of his vendor or mortgagor. His mere refusal to believe that such defect
exists, or his willful closing of his eyes to the possibility of the existence of a defect in the vendor's or
mortgagor's title, will not make him an innocent purchaser or mortgagee for value, if it afterwards
develops that the title was in fact defective, and it appears that he had such notice of the defects as
would have led to its discovery had he acted with the measure of a prudent man in like situation.
aAHTDS
Accordingly, for a purchaser of a property in the possession of another to be in good faith, he must
exercise due diligence, conduct an investigation, and weigh the surrounding facts and circumstances
like what any prudent man in a similar situation would do. In Domalanta v. Commission on Elections
8 we noted the use in other jurisdictions of the terms "man of reasonable caution" 9 and "ordinarily
prudent and cautious man." 10 These terms, we said, are legally synonymous and their reference is not
to a person with training in law such as a prosecutor or a judge but to the average man on the street. It
ought to be emphasized that the average man weighs facts and circumstances without resorting to the
calibration of our technical rules of evidence of which his knowledge is nil. Rather, he relies on the
calculus of common sense of which all reasonable men have an abundance. And, "[b]y law and
jurisprudence, a mistake upon a doubtful or difficult question of law may properly be the basis of good
faith." 11
On the other hand, a mortgagee, particularly a bank or financial institution whose business is
impressed with public interest, is expected to exercise more care and prudence than a private
individual in its dealings, even those involving registered lands. 12 In Sunshine Finance and
Investment Corp. v. Intermediate Appellate Court we presumed that an investment and financing
corporation "is experienced in its business. Ascertainment of the status and condition of properties
offered to it as security for loans it extends must be a standard and indispensable part of its operations.
Surely, it cannot simply rely on an examination of a Torrens certificate to determine what the subject
property looks like as its condition is not apparent in the document. The land might be in a depressed
area. There might be squatters on it. It might be easily inundated. It might be an interior lot, without
convenient access. These and other similar factors determine the value of the property and so should
be of practical concern to the (investment and financing corporation)." 13
In fine, the diligence with which the law requires the individual or a corporation at all times to govern
a particular conduct varies with the nature of the situation in which one is placed, and the importance
of the act which is to be performed. 14
Similarly, in ascertaining good faith, or the lack of it, which is a question of intention, courts are
necessarily controlled by the evidence as to the conduct and outward acts by which alone the inward
motive may, with safety, be determined. Good faith, or want of it, is capable of being ascertained only
from the acts of one claiming its presence, for it is a condition of the mind which can be judged by
actual or fancied token or signs. 15 Good faith, or want of it, is not a visible, tangible fact that can be
seen or touched, but rather a state or condition of mind which can only be judged by actual or fancied
token or signs. 16 Good faith connotes an honest intention to abstain from taking unconscientious
advantage of another. 17 Accordingly, in University of the East v. Jader we said that "[g]ood faith
connotes an honest intention to abstain from taking undue advantage of another, even though the
forms and technicalities of law, together with the absence of all information or belief of facts, would
render the transaction unconscientious." 18
Withal, in Sigaya v. Mayuga the Court said that "good faith consists in the possessor's belief that the
person from whom he received the thing was the owner of the same and could convey his title. Good
faith, while it is always to be presumed in the absence of proof to the contrary, requires a well founded
belief that the person from whom title was received was himself the owner of the land, with the right
to convey it. There is good faith where there is an honest intention to abstain from taking any
unconscientious advantage of another. Otherwise stated, good faith is the opposite of fraud and it
refers to the state of mind which is manifested by the acts of the individual concerned." 19
Contrastingly, in Magat, Jr. v. Court of Appeals the Court explained that "[b]ad faith does not simply
connote bad judgment or negligence. It imports a dishonest purpose or some moral obliquity and
conscious doing of wrong. It means a breach of a known duty through some motive or interest or ill
will that partakes of the nature of fraud." 20 In Arenas v. Court of Appeals the Court held that the
determination of whether one acted in bad faith is evidentiary in nature. 21 Thus "[s]uch acts (of bad
faith) must be substantiated by evidence." 22 Indeed, the unbroken jurisprudence is that "[b]ad faith
under the law cannot be presumed; it must be established by clear and convincing evidence. 23
All told, the ascertainment of good faith, or lack of it, and the determination of whether due diligence
and prudence were exercised or not, are questions of fact. And while settled is the principle that this
Court is not a trier of facts 24 and the general rule is that the determination of whether or not a buyer
or mortgagee is in good faith is generally outside the province of this Court to determine in a petition
for review, 25 in Gabriel v. Spouses Mabanta we said that "[t]his rule, however, is not an iron-clad
rule. In Floro v. Llenado we enumerated the various exceptions and one which finds application to the
present case is when the findings of the Court of Appeals are contrary to those of the trial court." 26
Thus, in Clemente v. Razo we held that "the issue of whether or not one is an innocent purchaser for
value is a question of fact which, as a rule, is not for this Court to determine. In the same breath,
however, there are recognized exceptions to such rule, not the least of which is when, as in this case,
the findings of the Court of Appeals are contrary to that of the trial court." 27
In the instant case, the trial court which had the sole opportunity to observe first hand the demeanor of
witnesses and consider the relative weight of the evidence presented, concluded that "Philippine
National Bank and Spouses Johnny Lucero and Nona Ariete are purchasers in good faith." Respondent
appellate court however found that neither the PNB nor the Lucero Spouses can be regarded as buyers
in good faith as they failed to inquire from the possessors the status of the disputed property. We thus
go back to the records of the case and the substantiated allegations. HAISEa
We begin with petitioner PNB. While it may be true that the bank could not have known the forgery
committed by the Jalbuna Spouses at the time the disputed property was mortgaged to it, still it could
not be completely exonerated from any liability arising from its apparent omission, if not negligence,
to further investigate the nature of the possession or the title of the respondents who were the alleged
occupants of the property. PNB did not present any witness before the trial court who had personal
knowledge of whether or not the bank had conducted the requisite ocular inspection or investigation
before accepting the property as security for the loan of the Jalbuna Spouses.
Perhaps PNB inordinately relied on the presumption of regularity in its compliance with the
requirements for the Extrajudicial Foreclosure of Mortgage, such as the publication of the notice of
auction sale, and assumed that the burden of proof was on the respondents to prove that the bank was
remiss in its obligation. Perhaps too, the bank assumed that its presumed compliance with the
foregoing requirements was sufficient to operate as a constructive notice to all those claiming
ownership of or a right to possess the mortgaged property, or those who would be adversely affected
by the impending foreclosure sale. It does not however alter the fact that the only witness presented by
PNB merely inherited from his predecessor the records relating to the account of the Jalbuna Spouses,
and hence had no personal knowledge of whether or not an ocular inspection was in fact conducted on
the property. Thus —
Atty. Bañares:
Q Did you not know whether there was an inspector who made the inspection of the property?
A I do not know. 28
xxx xxx xxx
Q So, is it safe to conclude now that you do not know whether Philippine National Bank sent some
inspectors to Lot 3017-B before the loan . . .
Court:
Answered, he did not know. How will he know?
Atty. Bañares:
That will be all, Your Honor. 29
Indeed, had petitioner PNB conducted an ocular inspection as it claims, it would have found out that
the mortgagors, Spouses Jalbuna, were not in actual possession of the property but herein respondents
and their predecessors-in-interest, which information should have put it on inquiry as to the real status
of the property. Consequently, petitioner PNB should have inquired into the circumstances of the
possession by herein respondents and their predecessors in interest.
In fine, there is no showing that petitioner PNB, a banking institution, which is expected to exercise
more care and prudence in its dealings involving registered land, ascertained the status and condition
of the property being offered to it as a security for the loan before it approved the loan. Hence, we
therefore find that there is no reversible error committed by the Court of Appeals in finding that PNB
could not be considered a mortgagee in good faith. ESDcIA
We now go to petitioners Lucero Spouses. The Lucero Spouses knew from the very beginning that the
disputed property was occupied by third parties. They resided in the adjoining property. Thus, they
went beyond the title of petitioner PNB, and upon inquiry, were made to believe that the partial
occupation by private respondents of the disputed property was merely being tolerated by the rightful
owner. Accordingly, before the trial court, petitioner Nona A. Lucero testified that —
Atty. Posecion:
Q Did your mother not tell you that the Militar family has been residing in the land so that it would
be difficult if you buy the land?
A No, because I will make (the) transaction (with) the Philippine National Bank, not (with) the
Militars.
Q So that you disregarded whatever right the Militars have over the land, right?
A No, because the vendee/buyer has the authority to make expenses for all the squatters. 30
The Lucero Spouses also knew that petitioner PNB had already acquired the property in a foreclosure
sale and that petitioner PNB had in fact transferred the title to its name for almost five years already.
Their belief that petitioner PNB thereafter had the right to transfer title over the disputed property was
strengthened by the fact that they similarly consolidated their ownership over the adjoining property
after buying it from respondent Romeo Militar and assuming his loan with petitioner PNB. 31
The reliance of the Lucero Spouses, who never participated in the auction sale, on the right of
petitioner PNB which had the title in its name for almost five years already is not totally misplaced.
On June 5, 1975 the disputed property was mortgaged to petitioner PNB. Some three years later, on
September 5, 1978, the mortgaged property was extrajudicially foreclosed when the mortgagors
defaulted in the payment of their loan obligation, with petitioner PNB as the sole and highest bidder
for P119,961.36. Some four years thereafter, or on November 11, 1982, a deed of sale was executed in
favor of petitioner PNB after the mortgagors failed to redeem the disputed property. On December 6,
1982, title over the disputed property was issued to petitioner PNB. Thus, presented during trial were,
among others, the Affidavit of Publication of Sheriff's Notice of Sale at Public Auction showing that
petitioner PNB complied with the law on extrajudicial foreclosure of mortgage; 32 the Certificate of
Sale at Public Auction of September 5, 1978 issued in favor of petitioner PNB as the highest bidder in
the auction sale of the lot covering the disputed property; 33 and the Certification of September 27,
1994 issued by the Register of Deeds of Iloilo stating that title to the lot covering the disputed property
was issued in favor of PNB. 34 All told, it took almost eight years for petitioner PNB to consolidate its
title over the disputed property from the time it was mortgaged to it.
The Lucero Spouses purchased the disputed property from petitioner PNB as an acquired asset for
P229,000.00 and only on November 9, 1987, or some nine years after it extrajudicially foreclosed the
property, and some five years after title was transferred to it. Hence, we cannot really say that they
acquired the property in bad faith; on the other hand, we are more convinced, if not for fairness, equity
and justice, that they acquired the disputed property in good faith and for a valuable consideration on
the basis of the clean title of the bank. CDAHaE
And between the bank whose proof of ownership is the title acquired after years of foreclosure
proceedings and sale, and the supposed tolerated occupation of herein respondents whose rights are
dubious, and at best vague, petitioners Lucero Spouses cannot be faulted for considering petitioner
PNB as having a better right over herein respondents and could very well rely on the title of the bank.
After all, even this Court has "take(n) judicial notice of the uniform practice of financing institutions
to investigate, examine and assess the real property offered as security for any loan application." 35 It
must be remembered that the prudence required of the Lucero Spouses is not that of a person with
training in law, but rather that of an average man who "weighs facts and circumstances without
resorting to the calibration of our technical rules of evidence of which his knowledge is nil." 36
Hence, petitioners Lucero Spouses bought the disputed property with the honest belief that petitioner
PNB was its rightful owner and could convey title to the property. They can therefore be considered as
buyers in good faith as they have exercised due diligence required under the circumstances.
Also, nowhere in the records does it show that the Lucero Spouses were in bad faith. Neither were
private respondents able to prove it, much less were they able to establish it by clear and convincing
evidence as required by the rules. On the contrary, the trial court found that the Lucero Spouses acted
in good faith "since they bought the lot in question from defendant, Philippine National Bank." 37
They could rely on what appears on the face of the Certificate of Title in light of the attendant
circumstances, especially after considering that the requirements for the extrajudicial foreclosure of
mortgage such as publication and notice appear to have been religiously complied with by PNB.
In contrast, we find, after a meticulous scrutiny of the records, that the respondents are not entirely
blameless. They have not established their right or interest in the property aside from their belated and
unsubstantiated allegation that they were the successors-in-interest of Deogracias, Glicerio, Tomas and
Caridad, all surnamed Militar. Deogracias died on March 17, 1964, Glicerio on March 22, 1939,
Tomas on August 20, 1959, and Caridad on April 29, 1957. Since the deaths of their alleged
predecessors-in-interest, respondents have not shown that they have taken even the initial steps to
have the property registered in their names. Nor have they even alleged that they paid any real
property tax on the disputed property like any real owner should do. For this would have put them on
notice that the said property has been registered in the name of a third party.
Thus, to reiterate for emphasis, the Deed of Sale which transferred the property to the Spouses Jalbuna
was executed on April 24, 1975. Clearly, respondents had more than enough time and opportunity
from the death of their ascendants to institute proceedings to have the property adjudicated to them, if
indeed it was true that they were the lawful heirs of Deogracias, Glicerio, Tomas and Caridad, and
were the new owners of the property by succession. This, they did not do. If they did, the forgery
allegedly committed by the Jalbuna Spouses which resulted in the Deed of Absolute Sale of April 24,
1975 could not have been committed or pushed through and the Lucero Spouses, as a consequence,
would not have been induced to buy the property.
The Jalbuna Spouses acquired title to the property on April 29, 1975. From that time on the doctrine of
"constructive notice" was already in effect against all persons claiming any title or interests in the
property adverse to the registered owners. 38
On June 5, 1975, the Spouses Jalbuna mortgaged the property to PNB. On the same date, the mortgage
was registered with the Register of Deeds of Iloilo City. Again, from that date, the respondents were
deemed to have "constructive notice" of the registration. SAcCIH
Philippine National Bank foreclosed the mortgage on September 5, 1978. The Notice of Extrajudicial
Foreclosure of Mortgage was published in a newspaper of general circulation. The publication
likewise operated as "constructive notice" to all persons who would be adversely affected by the
impending foreclosure of the property. A Certificate of Sale over the property was issued in favor of
PNB as the highest bidder in the auction sale. The Certificate of Sale was again registered and
annotated in the title of the property. Again, the respondents had "constructive notice" of the
registration.
On November 11, 1982, PNB consolidated its title to the property and a Deed of Sale was issued in its
favor. On December 6, 1982, a Transfer Certificate of Title was issued in favor of PNB. Respondents
should likewise be charged with notice of such fact. Since that time up to November 9, 1987 when the
property was sold to the Lucero Spouses, or for five (5) long years, the property was an acquired asset
of the bank. During this time it can be deduced that it was the bank who paid the real estate taxes and
who appeared as owner in the tax declarations and other documents pertaining to the property.
It would appear that it was PNB who exercised acts of ownership over the property during the five-
year period, not the respondents who are now claiming to be the owners. There is no evidence of any
act of ownership exercised by the respondents, such as payment of taxes and introduction of
improvements which would have shown, by preponderance of evidence, the right of ownership to or
interest in the property, aside form their occupation thereof by mere tolerance. Since the death of their
predecessors, there has not even been a showing that respondents verified, inquired or investigated
with the Register of Deeds or the Assessor's Office as to the status of the property. If only respondents
have been more vigilant in the enforcement of their alleged rights and interests, the property would not
have been sold to third persons who paid valuable consideration thereto. Far from being vigilant,
however, respondents have shown sheer disinterest in their claim to the property, thus leading to the
well-founded conclusion that their claimed ownership rights are not anchored in reality. Vigilantibus
sed non dormientibus jura subveniunt. The law aids the vigilant, not those who slumber on their rights.
More. On November 9, 1987, the property was sold by PNB to the petitioners Lucero Spouses and a
Transfer Certificate of Title was issued in their name on November 11, 1987. The respondents
however filed their Complaint for reconveyance and damages only on October 2, 1989, or nearly two
(2) years after title to the property was issued in favor of the Lucero Spouses. Respondents in fact
amended their complaint three (3) times, the last one on December 26, 1994. Clearly, the actuations of
respondents were not normal for those claiming in good faith legitimate ownership over a parcel of
land sufficient to make third persons conclude that their claim is well-founded as against the registered
owner, in this case, PNB. Indeed, respondents were frozen in the shackles of inactivity for too long.
They bestirred themselves for their long slumber after the Lucero Spouses started to recover
possession of the property which is a mere incident to the ownership that they have already gained. In
essence, the respondents slept on their rights, and hence, must suffer the consequences of their
passivity and inaction.
WHEREFORE, the August 18, 2005 Decision of this Court is hereby MODIFIED. The Motion for
Reconsideration of the Philippine National Bank is DENIED WITH FINALITY. However, the Motion
for Reconsideration of the Spouses Johnny Lucero and Nona Ariete is GRANTED, and the October
18, 1995 Decision of the Regional Trial Court of Iloilo, Br. 38, in Civil Case No. 18836 insofar as it
holds Spouses Johnny Lucero and Nona Ariete as innocent purchasers for value in good faith is
REINSTATED and their title to Lot 3017-B under TCT No. 76938 issued on November 11, 1987 is
declared and so confirmed as VALID. cSaATC
SO ORDERED.
Quisumbing, Carpio and Azcuna, JJ., concur.
Footnotes
1. G.R. No. 122425, September 28, 2001, 366 SCRA 176, 182 (citations therein, omitted).
2. G.R. No. 151245, March 4, 2005, 452 SCRA 769, 779.
3. G.R. No. 138480 (consolidated with Ayala Land, Inc. v. Velasquez, Jr., G.R. No. 139449), March
25, 2004, 426 SCRA 309, 315.
4. G.R. No. 161861, March 11, 2005, 453 SCRA 308, 317.
5. See Sigaya v. Mayuga, G.R. No. 143254, August 18, 2005, 467 SCRA 341, 354-355; San
Lorenzo Development Corp. v. Court of Appeals, G.R. No. 124242, January 21, 2005, 449 SCRA 99,
117; Sps. Occeña v. Esponilla, G.R. No. 156973, June 4, 2004, 431 SCRA 116, 124; Spouses Castro v.
Miat, G.R. No. 143297, February 11, 2003, 397 SCRA 271, 284; AFP Mutual Benefit Association, Inc.
v. Court of Appeals, G.R. No. 104769 (consolidated with Solid Homes, Inc. v. Investco, Inc., G.R. No.
135016), September 10, 2001, 364 SCRA 768, 771; Republic of the Philippines v. Court of Appeals,
G.R. No. 99331, April 21, 1999, 306 SCRA 81, 87; Sandoval v. Court of Appeals, G.R. No. 106657,
August 1, 1996, 260 SCRA 283, 296-297.
6. See Sps. Castro v. Miat, supra note 5; Lu v. Manipon, G.R. No. 147072, May 7, 2002, 381 SCRA
788, 798-799; Republic of the Philippines v. De Guzman, G.R. No. 105630, February 23, 2000, 326
SCRA 267, 277; David v. Malay, G.R. No. 132644, November 19, 1999, 318 SCRA 711, 724;
Embrado v. Court of Appeals, G.R. No. 51457, June 27, 1994, 233 SCRA 335, 346.
7. G.R. No. 132161, January 17, 2005, 448 SCRA 347, 366-367 (citations therein, omitted).
8. G.R. No. 125586, June 29, 2000, 334 SCRA 555.
9. Citing Brinegar v. US, 338 US 160 (1949).
10. Citing Del Carmen, Criminal Procedure, Law and Practice, 3rd ed., p. 86.
11. Development Bank of the Philippines v. Court of Appeals, G.R. No. 111737, October 13, 1999,
316 SCRA 650, 664.
12. Consolidated Rural Bank (Cagayan Valley), Inc. v. Court of Appeals, supra note 7 at 367.
13. G.R. Nos. 74070-71, October 28, 1991, 203 SCRA 210, 216.
14. See Cruz v. Judge Gangan, G.R. No. 143403, January 22, 2003, 395 SCRA 711, 717 (citations
therein, omitted); and Bulilan v. Commission on Audit, G.R. No. 130057, December 22, 1998, 300
SCRA 445, 453.
15. Expresscredit Financing v. Spouses Velasco, G.R. No. 156033, October 20, 2005, 473 SCRA 570,
577-578, citing Leung Yee v. FL Strong Machinery, 37 Phil. 644, 651 (1918).
16. Balatbat v. Court of Appeals, G.R. No. 109410, August 28, 1996, 261 SCRA 128, 143, citing
Bautista v. Court of Appeals, G.R. No. 106042, February 28, 1994, 230 SCRA 446, 454-455.
17. Equatorial Realty Development, Inc. v. Mayfair Theater, Inc., G.R. No. 106063, November 21,
1996, 264 SCRA 483, 508.
18. G.R. No. 132344, February 17, 2000, 325 SCRA 804, 811.
19. Supra note 5 at 355, citing Lim v. Chuatoco, supra note 4.
20. G.R. No. 124221, August 4, 2000, 337 SCRA 298, 307.
21. G.R. No. 126640, 345 SCRA 617, 629.
22. ABS-CBN Broadcasting Corp. v. Court of Appeals, G.R. No. 128690, January 21, 1999, 301
SCRA 572, 604.
23. Philippine Airlines v. Miano, G.R. No. 106664, March 8, 1995, 242 SCRA 235, 240; LBC
Express, Inc. v. Court of Appeals, G.R. No. 108670, September 21, 1994, 236 SCRA 602, 608, citing
People's Bank and Trust Co. v. Syvel's Inc., L-29280, August 11, 1988, 164 SCRA 247.
24. Alipoon v. Court of Appeals, G.R. No. 127523, March 22, 1999, 305 SCRA 118.
25. Sigaya v. Mayuga, supra note 5; Orquiola v. CA, G.R. No. 141463, August 6, 2002, 386 SCRA
301, 309; Spouses Uy v. Court of Appeals, G.R. No. 109197, June 21, 2001, 359 SCRA 262, 268-269.
26. G.R. No. 142403, March 26, 2003, 399 SCRA 573 (citations therein, omitted).
27. Supra note 2 at 775.
28. TSN, July 12, 1995, p. 23.
29. Id. at 26.
30. TSN, July 19, 1995, p. 10.
31. Id. at 26-27.
32. Exhibit 5.
33. Exhibit 6.
34. Exhibit 8.
35. State Investment House, Inc. v. Court of Appeals, G.R. No. 115548, March 5, 1996, 254 SCRA
368, 375.
36. See Domalanta v. Commission on Elections, supra note 8.
37. Decision of the trial court, p. 9.
38. Sec. 51, P.D. 1959.

[G.R. No. L-32988. December 29, 1978.]

EVARISTO SALVORO and GAUDENCIA C. SALVORO, petitioners, (plaintiffs-appellants), vs.
PABLO D. TAÑEGA and JOSEFA TAÑEGA, respondents, (defendants-appellees), JUAN TISMO and
DOLORES TISMO, petitioners, (defendants-in-counterclaim).
Jose W. Diokno for petitioners.
Ambrosio Padilla Law Offices for respondents.
SYNOPSIS
On August 9, 1959, the Salvoro spouses sold their property in favor the Tañega spouses, who
immediately took possession of the property and introduced improvement thereon, but did not register
the sale. Subsequently, on August 26, 1960, the Salvoro spouses sold the same property to the Tismo
spouses who registered the sale and secured a transfer certificate of title in their favor. The main issue
is: When real property is sold to two different person by the same vendor, the first immediately taking
possession of the property as owner but neglecting to register the sale to him while the second vendee
had the document in his favor duly registered, who, as between the two vendees, has the better right
over the property under Article 1544 of the Civil Code of the Philippines? The Court of Appeals
affirmed the judgment of the trial court in favor of the Tañega spouses, and ordered the registrar of
deeds to cancel the transfer certificate of title in favor of the Tismo spouses and to issue a new title in
the name of the Tañega spouses.
The Supreme Court affirmed the decision of the Court of Appeals.
SYLLABUS
1. ID.; ID.; GOOD FAITH; PREFERENTIAL/RIGHT IN DOUBLE SALE BASED ON GOOD
FAITH. — The basic premise of the preferential rights established by Article 1544 is good faith. To
enjoy the preferential right, the second vendee must not only have a prior recording of his sale but
must, above all have acted in good faith, that is, without knowledge or notice of the previous and
existing alienation made by his vendor to another. The rights given under this law do not accrue with
the mere inscription of the deed of conveyance unless such inscription is done in good faith. Thus, if a
vendee in a double sale registers the sale after he has acquired knowledge that there was a previous
sale of the same property to a third party, or that another person claims said property in a previous
sale, the registration will constitute a registration in bad faith and will not confer upon him any right. It
is as if there had been no registration and the vendee who first took possession of the real property in
good faith shall be preferred.
DECISION
FERNANDEZ, J p:
This is a petition for review on certiorari of the decision of the Court of Appeals in CA-G. R. No. L-
32811-R, entitled "Evaristo Salvoro, et al., plaintiffs-appellants, versus, Pablo D. Tañega, et al.,
defendants-appellees; Juan Tismo, et al., defendants-in-counterclaim," promulgated on October 28,
1970, the dispositive part of which reads:
"IN VIEW OF ALL THE FOREGOING, the decision of the lower court is hereby AFFIRMED.
Furthermore, the Register of Deeds of the Province of Leyte is hereby ordered to cancel Transfer
Certificate of Title No. 848 in the name of Juan and Dolores Tismo and, in lieu thereof, to issue a new
transfer certificate of title in the name of the appellees, Pablo and Josefa Tañega. Costs in both
instances against the appellants.
SO ORDERED." 1
On September 5, 1960 the spouses Evaristo Salvoro and Gaudencia C. Salvoro commenced in the
Court of First Instance of Leyte an action principally to annul a deed of sale of land dated August 9,
1959 executed by them in favor of the defendants, the spouses Pablo D. Tañega and Josefa Tañega.
The plaintiffs alleged that the said deed of sale should be annulled because the defendants failed to
comply with certain resolutory conditions imposed in the contract. The action was docketed as Civil
Case No. 2826. 2
The sale in favor of the defendants was executed in 1959 but the same was not registered. However,
the defendants immediately took possession of the land upon the sale thereof to them.
The defendants filed on April 15, 1961 an amended answer with a counterclaim including the spouses
Juan Tismo and Dolores Tismo allegedly because after issues had been joined, the plaintiffs sold and
conveyed their interests in the property in question to said spouses, resulting in the issuance of a
certificate of title in favor of the latter. 3
The plaintiffs actually sold the property in question in favor of the Tismos on August 26, 1960.
Meanwhile, the defendants, Pablo D. Tañega and Josefa Tañega, had registered on September 15, 1960
a notice of lis pendens on the land in question with the Register of Deeds of Leyte. However, despite
said notice of lis pendens, the second vendees, Juan Tismo and Dolores Tismo, were able to register
the sale in their favor in December 1960 and to secure the issuance to them of Transfer Certificate of
Title No. 848 which cancelled Transfer Certificate of Title No. T-900 in the name of Evaristo Salvoro
and Gaudencia C. Salvoro. cdrep
On March 8, 1962, the parties entered into the following:
"STIPULATION OF FACTS
COME NOW the parties and their undersigned attorneys, and unto this Honorable Court, respectfully
submit the following stipulation of facts:
1. That the plaintiffs were the owners of that certain parcel of land together with its improvements
at P. Zamora Street, Tacloban City, and more particularly described under Certificate of Title No. T-
900;
2. That the said plaintiffs on December 19, 1951 mortgaged the aforementioned properties to the
Development Bank of the Philippines for P27,000.00, copy of said mortgage contract is herein
attached as Exhibit 'A';
3. That on June 7, 1955 the plaintiffs executed a deed of sale in favor of the defendants of a portion
of the property above-mentioned in consideration of the sum of P30,000.00, P3,000.00 of which was
to be paid in cash upon the execution of the document and P27,000.00 representing the balance due on
the loan of plaintiffs to the Development Bank of the Philippines which was to be assumed by the
defendants, copy of the deed of sale is herein attached as Exhibit 'B';
4. That on March 23, 1959, the defendants executed a deed of absolute sale, copy of which is herein
attached as Exhibit 'C', in favor of the plaintiffs of a portion of that parcel of land designated as Lot
No. 520, situated in Tacloban City in consideration of the sum of P10,000.00, which consideration was
part of the purchase price in the deed of sale referred to as Exhibit 'B' and as amended by the deed of
sale referred to as Exhibit 'D', and the aforementioned deed of sale (Exhibit 'C') was legalized on
August 9, 1969;
5. That on the same date the plaintiffs executed in favor of the defendants an absolute deed of sale
covering the entire property mentioned in paragraph 3 hereof and the consideration for the said sale
was increased from P30,000.00 to P35,000.00, copy of the said deed of sale is herein attached as
Exhibit 'D';
6. That of the various instruments executed by the plaintiffs and the defendants none of them had
been registered under the provisions of the Registration Law although the execution of Exhibits 'B'
and 'D' were known to the Development Bank of the Philippines, Tacloban City Branch;
7. That the defendants did not and have not paid the plaintiffs the sum of P3,000.00 herein above-
mentioned which was part of the consideration of the deed of sale on June 7, 1955, and which was
made payable within three (3) years from the said date, in spite of repeated demands made by the
plaintiffs prior to August 25, 1960;
8. That in the deed of sale executed by the defendants over Lot No. 520 (Transfer Certificate of Title
No. 160), they made it appear that the said properties were free from any lien or encumbrance when in
fact it was mortgaged to the Philippine National Bank for P4,320.00 on November 25, 1955, and that
mortgage is still subsisting up to the present, according to the plaintiffs, which assertion defendants
deny;
9. That the Development Bank of the Philippines did not approve the assumption by the defendants
of the mortgage of plaintiffs for the reasons stated in the communication of Mr. Luis Fabella, Branch
Manager, Development Bank of the Philippines, to the Chairman, Development Bank of the
Philippines, dated September 7, 1960, copy of which is herein attached as Exhibit 'F';
10. That the defendants from June 14, 1955, to July 25, 1959 paid the sum of P20,583.16 to the
Development Bank of the Philippines, which payments were receipted for in the name of the
plaintiffs;
11. That the failure of the defendants to pay the obligation of the plaintiffs with the Development
Bank of the Philippines, the latter foreclosed the mortgage of the plaintiffs and sold the same at public
auction on August 25, 1959, of which the said Bank was the successful bidder;
12. That as a result of the foreclosure of the mortgage and the subsequent sale at public auction of the
mortgaged properties under Act 3135 of which the Bank was the highest bidder, on August 26, 1960
under a special power of attorney executed by the plaintiffs in favor of the said bank, the Development
Bank of the Philippines executed in its favor a deed of sale over the properties foreclosed, which sale
was made a day after the period of redemption had expired, a copy of which is herein attached as
Exhibit 'G';
13. That the plaintiffs repurchased the properties aforementioned from the Development Bank of the
Philippines for P28,197.87, copy of the deed of repurchase dated October 25, 1960 is herein attached
as Exhibit H;
14. That the plaintiffs executed in favor of the spouses Juan S. Tismo and Dolores D. Tismo a deed of
sale over the aforesaid property dated August 26, 1960, after the former had deposited the repurchase
price with the local branch of the Development Bank of the Philippines; copy of which is hereto
attached as Exhibit 'I';
15. That on September 7, 1960, the defendants filed a civil suit against the plaintiffs for breach of
contract with damages, which was docketed as Civil Case No. 2825, copy of which is herein attached
as Exhibit 'J', and in connection with the said case a notice of lis pendens was registered by the
defendants, (plaintiffs in the said case), copy of which is herein attached as Exhibit 'J-1';
16. That the said complaint was made under oath and the defendants never claimed to be the owners
of the properties above-mentioned;
17. That the defendants (plaintiffs in Civil Case No. 2825) asked for the dismissal of the said Civil
Case No. 2825, which was granted by the Honorable Court;
18. That after the filing of the present case, on September 15, 1960 the defendants registered a notice
of lis pendens in connection herewith, copy of which is herein attached as Exhibit 'K';
19. That the defendants have been in possession of the building and the land occupied by the same
subject of this controversy since June, 1955 up to the present without paying any rentals therefor to the
plaintiffs or the intervenors;
20. That Juan S. Tismo and Dolores D. Tismo had demanded from the defendants the possession of
the property but the defendants have refused and continue to refuse to deliver the same to the former;
21. That on January 12, 1961, the said Juan S. Tismo and Dolores D. Tismo filed Civil Case No. R-
541 for unlawful detainer;
22. That on August 8, 1961, the Honorable Municipal Court of the City of Tacloban rendered
judgment against the defendants and from which decision the defendants appealed;
23. That in the aforesaid decision of the Honorable Municipal Court of Tacloban City, the monthly
rentals to be paid by the defendants was fixed at P500.00, a copy of which is herein attached as
Exhibit 'L', but the amount was reduced on the order of the Court to P460.00.
WHEREFORE, it is most respectfully prayed that the foregoing stipulation of facts together with the
exhibits attached therein be made a part of evidence of the parties and after trial all the issue not herein
stipulated upon judgment be rendered.
EVARISTO SALVORO PABLO TAÑEGA
Plaintiff Defendant
JUAN S. TISMO
Defendant
(Counterclaim)
GAUDENCIA C. SALVOROJOSEFA TAÑEGA
Plaintiff Defendant
DOLORES D. TISMO
Defendant
(Counterclaim)
SEGUNDO M. ZOSA ANTONIO MONTILLA
Counsel for plaintiffs & Counsel for defendants" 4
defendants in counterclaim
The trial court rendered a decision dated November 29, 1962 dismissing the complaint and ordering
the defendants to reimburse the plaintiffs in the sum of P28,197.80, with legal interest from August 26,
1960 until the total amount was paid. 5
The plaintiffs appealed from the judgment to the Court of Appeals. 6
The appeal was docketed as CA-G.R. No. 32811-R.
The Special Third Division of the Court of Appeals promulgated its decision on October 28, 1970,
affirming the judgment of the trial court and ordering the Register of Deeds of the Province of Leyte
to cancel Transfer Certificate of Title No. 848 in the name of Juan and Dolores Tismo, and, in lieu
thereof, to issue a new transfer certificate of title in the name of appellees, Pablo and Josefa Tañega,
with costs in both instances against the appellants. LexLib
In their brief, the petitioners assign the following errors:
"I
"THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT THE DEFENDANTS-IN-
COUNTERCLAIM, TISMO SPOUSES, THE SECOND BUYERS OF THE SUBJECT PROPERTY,
WERE VENDEES IN BAD FAITH OR WITH NOTICE SOLELY 'IN VIEW OF THE LIS
PENDENS FILED BY APPELLEES ON SEPTEMBER 15, 1960' THIS DESPITE THE FACT THAT
THE TISMO SPOUSES BOUGHT SAID PROPERTY BEFORE THE AFORESAID DATE, MORE
SPECIFICALLY ON AUGUST 26, 1960, AND DESPITE THE COMPLETE ABSENCE OF ANY
EVIDENCE OF BAD FAITH OR NOTICE ON THEIR PART REGARDING THE PRIOR SALE IN
FAVOR OF DEFENDANTS TAÑEGAS.
II
"THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT THE SALE MADE BY
THE PLAINTIFFS SALVOROS TO THE TISMO SPOUSES 'CANNOT PROSPER' AND THAT
THE FIRST SALE TO THE DEFENDANTS TAÑEGAS SHOULD BE PREFERRED-DESPITE
THE UNDISPUTED FACTS THAT (A) THE TISMOS REGISTERED THE SALE IN THEIR
FAVOR WHEREAS THE TAÑEGAS NEGLECTED AND FAILED TO REGISTER THEIR
PURCHASE; (B) THE LAND INVOLVED IS A REGISTERED PROPERTY; AND (C) THE
TISMOS HAD NO NOTICE OF THE FIRST SALE AT THE TIME THEY BOUGHT THE
PROPERTY.
III
"THE HONORABLE COURT OF APPEALS ERRED IN NOT FINDING THAT, AS INNOCENT
PURCHASERS FOR VALUE, THE TISMOS SHOULD BE THE PREFERRED VENDEES IN
ACCORDANCE WITH ARTICLE 1544 OF THE CIVIL CODE.
IV
"THE HONORABLE COURT OF APPEALS ERRED IN ORDERING THE REGISTER OF DEEDS
OF LEYTE TO CANCEL T.C.T. NO. 848 IN THE NAME OF THE TISMO SPOUSES AND IN
LIEU THEREOF, TO ISSUE A NEW TRANSFER CERTIFICATE OF TITLE IN THE NAME OF
THE TAÑEGAS." 7
The main issue is: When real property is sold to two different persons by the same vendor, the first
immediately taking possession of the property as owner but neglecting to register the sale to him while
the second vendee had the document in his favor duly registered, who, as between the two vendees,
has the better right over the property under Article 1544 of the Civil Code of the Philippines?
The facts, as found by the Court of Appeals, are:
"The plaintiffs, as the owners of a parcel of land as well as of the building and improvements thereon,
located at Padre Zamora Street, Tacloban City, and evidenced by Transfer Certificate of Title No. T-
900, mortgaged on December 19, 1951 said parcel of land and its improvements to the Development
Bank of the Philippines (then Rehabilitation Finance Corporation) for P27,000.00. Plaintiffs failed to
pay any amount to the Development Bank; hence, in June, 1955, the said Bank gave notice to
foreclose the mortgage.
"On June 7, 1955, plaintiffs executed in favor of the defendants a Deed of Absolute Sale over a portion
of the above-described land including the building of strong materials constructed thereon, in
consideration of the sum of Thirty Thousand (P30,000.00) Pesos. The sum of P30,000.00 mentioned
in said Deed of Absolute Sale was agreed to be payable within three (3) years from June 7, 1955.
"On the same date when the said Deed of Absolute Sale was executed, defendants immediately took
possession of the land and building and exercised acts of ownership over them. The building, however,
was not ready for occupancy since the construction was not yet fully completed at the time, thereby
compelling defendants to make necessary improvements thereon for which they spent P7,000.00.
"Under their assumption of the mortgage under the Deed of Absolute Sale of June 7, 1959, defendants
made several payments in the name of plaintiffs to the Development Bank covering the period from
June 15, 1955 to July 24, 1959 in the total sum of P20,583.16.
"Plaintiffs executed on August 9, 1959, another Deed of Absolute Sale whereby they conveyed
absolutely and unconditionally in favor of defendants the ownership of the entire land and building
and improvements described and covered by Transfer Certificate of Title No. T-900 in consideration of
the sum of Thirty-Five Thousand (P35,000.00) Pesos. The cash consideration of P8,000.00,
representing the difference between P35,000.00 in the said second Deed of Absolute Sale, was agreed
to be paid for by the consideration of a Deed of Absolute Sale executed by defendants in favor of
plaintiffs on March 23, 1959 over a portion of a parcel of land containing an area of 795 square meters
and designated as Lot 520, in the sum of P10,000.00.
"On August 25, 1959, or sixteen (16) days after plaintiffs executed the said second Deed of Absolute
Sale of August 9, 1959, and before the Development Bank could act on the assumption by the
defendants of the mortgage of plaintiffs, the said Bank foreclosed the mortgage and, at the public
auction sale, the Development Bank was the sole and highest bidder.
"On August 26, 1960, the plaintiffs redeemed the property from the Development Bank pursuant to the
provisions of Act No. 3135 by paying the sum of P28,197.87. Thereafter, and before the Deed of
Repurchase could be executed by said Bank, plaintiffs executed a deed of sale in favor of the
defendants-in-counterclaim Juan Tismo and his wife Dolores Tismo allegedly for the amount of
P40,000.00. This was the same land and building which they had previously sold to defendants and
covered by Transfer Certificate of Title No. T-900.
"On August 27, 1960, the day following the repurchase by plaintiffs above-mentioned, defendant
Pablo Tañega, upon his arrival from Manila, tendered payment of the repurchase price plus 2%, but
plaintiffs refused to accept the same.
"On September 5, 1960, plaintiffs filed the present complaint and on September 15, 1960, defendants
filed a notice of his pendens with the Register of Deeds of Leyte. Notwithstanding said notice,
defendants-in-counterclaim Juan Tismo and Dolores Tismo were able to register the sale in their favor
on December 19, 1960, and to secure Transfer Certificate of Title No. 848 in lieu of Transfer
Certificate of Title No. T-900 which was cancelled.
"In the complaint filed on September 5, 1960 against defendants, plaintiffs prayed for annulment of
the contract of sale of real property, with damages, on the ground that the conditions thereof had not
been complied with, and claiming the property as owner both by rescission and as redemptioner from
the judgment buyer thereof, mortgage creditor Development Bank of the Philippines (DBP).
"Defendants answered alleging to be the owners of the property because the sale to them by plaintiffs
was absolute and because while plaintiffs only acquired the right to be reimbursed what they had paid
to the Development Bank of the Philippines, plaintiffs had unjustly refused reimbursement from the
defendants. Defendants prayed for dismissal of the complaint, for damages, attorney's fees and
expense of litigation.
"On April 15, 1961, defendants filed a motion to bring in spouses Juan and Dolores Tismo as second
vendees of the property from the plaintiffs, and buyers in bad faith. Said Motion was granted by Court
Order of April 22, 1961." 8
The petitioners have correctly stated that "This case involves double sale of the same real property to
different vendees; hence, Article 1544 of the New Civil Code applies." 9
Article 1544 of the Civil Code of the Philippines provides:
"Art. 1544. If the same thing should have been sold to different vendees, the ownership shall be
transferred to the person who may have first taken possession thereof in good faith, if it should be
movable property.
"Should it be immovable property, the ownership shall belong to the person acquiring it who in good
faith first recorded it in the Registry of Property.
"Should there be no inscription, the ownership shall pertain to the person who in good faith was first
in the possession; and, in the absence thereof, to the person who presents the oldest title, provided
there is good faith."
The undisputed facts are that the sale to the Tañega spouses was not registered but that they
immediately took possession of the property and introduced improvements thereon; that the second
sale to the Tismo spouses was executed on August 26, 1960; that the Tañega spouses caused to be
recorded with the Register of Deeds of Leyte a notice of lis pendens on the property in question on
September 15, 1960; that the Tismo spouses registered the deed of sale in their favor in December
1960; and that Transfer Certificate of Title No. 848, covering the land in question, was issued to said
Tismo spouses.
To be entitled to preference, the Tismo spouses must have registered the deed of sale in their favor in
good faith.
The petitioners contend that the notice of lis pendens could not have affected the presumption of good
faith of the Tismo spouses because the deed of sale in their favor was executed on August 26, 1960,
prior to the registration of the notice of lis pendens on September 15, 1960.
The undisputed fact, however, is that when the deed of sale in favor of the Tismo spouses was
executed on August 26, 1960 the Tañega spouses were already in possession of the land in question
and had introduced valuable improvements thereon. The actual possession of the Tañega spouses is
admitted in the following portions of the Stipulation of Facts:
"19. That the defendants have been in possession of the building and the land occupied by the same
subject of this controversy since June, 1955 up to the present without paying any rentals therefor to the
plaintiffs or the intervenors;"
20. That Juan S. Tismo and Dolores D. Tismo had demanded from the defendants the possession of
the property but the defendants have refused and continue to refuse to deliver the same to the former;"
10
Indeed, the Court of Appeals has found that the Tañega spouses bought the property on August 9, 1959
and immediately took actual physical possession of the property, finishing the uncompleted
improvements thereon; that as stipulated in the sale, the Tañegas made payments to the DBP in the
name of and for the account of the Salvoros, the vendors, while the application for the assumption of
the mortgage by the vendees remained unacted by the Board of the Development Bank of the
Philippines; that the mortgage was foreclosed by the DBP and the latter then acquired the property as
highest bidder in the public auction on August 26, 1959; and that one year after the auction sale, or on
August 26, 1960, the Salvoros reacquired it from the DBP and on the same day sold the property for
the second time to Juan Tismo and his wife Dolores D. Tismo. cdphil
The undisputed fact which militates against the claim of lack of knowledge on the part of the second
vendees of the prior sale of the property is that the same was, at the time of the second sale, peaceably
possessed by the first vendees, the Tañegas. This fact alone should have made the Tismo spouses
inquire into the true status of the immovable they were proposing to buy. They should have
investigated why the Tañega spouses were in possession of the land. If the Tismos failed to exercise
the ordinary care expected of a buyer of real estate, they must suffer the consequences. The rule of
caveat emptor requires the purchaser to be aware of the supposed title of the vendor and one who buys
without checking the vendor's title takes all the risks and losses consequent to such failure. 11
This Court has held in one case, 12 that the basic premise of the preferential rights established by
Article 1473, Civil Code, (now Article 1544) is good faith. To enjoy the preferential right, the second
vendee must not only have a prior recording of his sale but must, above all, have acted in good faith,
that is, without knowledge or notice of the previous and existing alienation made by his vendor to
another. Contrary to the contention of the herein petitioners that good faith at the time of purchase was
sufficient, this Court has ruled that the rights given under this law do not accrue with the mere
inscription of the deed of conveyance unless such inscription is done in good faith. 13 The trial court
as well as the appellate court have both held that when the Tismos on December 19, 1960 registered
the deed of sale executed in their favor of the property previously sold to the Tañegas, they could not
have failed to know the existence of the lis pendens then annotated on the title of the property. In
short, when they were about to register the deed of sale in their favor, they acquired knowledge that
the land had been previously sold to the Tañega spouses. In dubitably, there was bad faith on the part
of the Tismo spouses when they went ahead with the registration despite such knowledge. This Court
had occasions to rule that if a vendee in a double sale registers the sale after he has acquired
knowledge that there was a previous sale of the same property to a third party, or that another person
claims said property in a previous sale, the registration will constitute a registration in bad faith and
will not confer upon him any right. It is as if there had been no registration, and the vendee who first
took possession of the real property in good faith shall be preferred. 14
Applying the foregoing rulings to the present case, this Court holds that the Respondents-Appellees
Pablo D. Tañega and his spouse Josefa Tañega are the owners of the land in question inasmuch as they,
in good faith, were first in possession of said land. cdrep
In Carbonell vs. Court of Appeals, 15 this Court said:
"Article 1544, New Civil Code, which is decisive of this case, recites:
"If the same thing should have been sold to different vendees, the ownership shall be transferred to the
person who may have first taken possession thereof in good faith, if it should be movable property.
"Should it be immovable property, the ownership shall belong to the person acquiring it who in good
faith first recorded it in the Registry of Property.
"Should there be no inscription, the ownership shall pertain to the person who in good faith was first
in the possession; and, in the absence thereof, to the person who presents the oldest title, provided
there is good faith (emphasis supplied).
"It is essential that the buyer of realty must act in good faith in registering his deed of sale to merit the
protection of the second paragraph of said Article 1544.
"Unlike the first and third paragraphs of said Article 1544, which accord preference to the one who
first takes possession in good faith of personal or real property, the second paragraph directs that
ownership of immovable property should be recognized in favor of one 'who in good faith first
recorded' his right. Under the first and third paragraphs, good faith must characterize the prior
possession. Under the second paragraph, good faith must characterize the act of anterior registration
(DBP vs. Mangawang, et al., Magale, et al., 8 SCRA 489).
"If there is no inscription, what is decisive is prior possession in good faith. If there is inscription, as in
the case at bar, prior registration in good faith is a pre-condition to superior title."
Since the Tismos were registrants in bad faith, the situation is as if there was no registration at all.
Therefore, the vendees who first took possession of the property in good faith shall be preferred.
It is to be noted that only the plaintiffs, Evaristo Salvoro and Gaudencia C. Salvoro, petitioners herein,
had appealed from the decision of the Court of First Instance of Leyte. The Tismo spouses cannot be
joined as petitioners in this case inasmuch as they did not appeal. They cannot assail the decision of
the Court of Appeals. cdll
The petition for review was filed out of time. On this ground alone this case may be dismissed.
WHEREFORE, the petition is hereby denied and the decision of the Court of Appeals sought to be
reviewed is affirmed, with costs against petitioners.
SO ORDERED.
Teehankee, Makasiar, Santos and Guerrero JJ., concur.
Footnotes
1. Annex "A", Rollo, pp. 30-47. Written by Justice Jose S. Rodriguez and concurred in by Justice
Ramon O. Nolasco and Justice Edilberto Soriano.
2. Record on Appeal, pp. 1-26.
3. Idem, pp. 39-49.
4. Idem, pp. 53-60.
5. Idem, pp. 81-82.
6. Idem, p. 82.
7. Brief for the Petitioners, pp. 1-3.
8. Annex "A", Rollo. pp. 30-33.
9. Brief for the Petitioners, p. 25.
10. Record on Appeal, pp. 58-59.
11. Dacasin, et al., vs. Court of Appeals, et al., L-32723, October 28, 1977.
12. Bernas vs. Bolo, 81 Phil. 16.
13. Paylago vs. Jarabe, 22 SCRA 1247.
14. Palarca vs. Director of Lands, 43 Phil. 146; Cagaoan vs. Cagaoan, 43 Phil. 554; Fernandez vs.
Mercader, 43 Phil. 581.
15. 69 SCRA 99, 107.

[G.R. No. 138660. February 5, 2004.]

HEIRS OF TRINIDAD DE LEON VDA. DE ROXAS, petitioners, vs. COURT OF APPEALS and
MAGUESUN MANAGEMENT AND DEVELOPMENT CORPORATION, respondents.
Abello Concepcion Regala and Cruz for petitioners.
Ponce Enrile Reyes and Manalastas for Maguesun Mgt., etc.
R.A.S. Dizon Law Office for Meycauayan Control, etc.
SYNOPSIS
The Supreme Court awarded the subject two parcels of land to the herein petitioners in a previous
decision which became final and executory. Meycauayan Central Realty Corporation (Meycauayan),
claiming to be a purchaser in good faith, wanted to retain ownership of some portions of the subject
land. Hence, after its motion for intervention was denied by the Court and their derivative titles were
cancelled by the Register of Deeds of Tagaytay City, it filed a complaint for reconveyance, damages
and quieting of title against petitioners and several others. The complaint filed was almost an exact
reproduction of the petition for intervention it previously filed before the Supreme Court. As a result,
petitioner filed this petition to cite for indirect contempt the officers of Meycauayan. DHTCaI
The Supreme Court found Meycauayan's executive vice president guilty of indirect contempt. Also,
the Court found that Meycauayan committed forum shopping and thus Meycauayan and its executive
vice president were guilty of direct contempt. According to the Court, Meycauayan's defiance to its
decision and resolution by filing an action for reconveyance involving the same parcels of land which
the Court previously decided with finality constituted indirect contempt under the Rules of Civil
Procedure. In this connection, the Court also held that Meycauayan's act of filing a complaint for
reconveyance raising the same issues as it did in its petition for intervention, which the Court had
already denied, constituted forum shopping and considered as an abuse of the Court's processes
equivalent to direct contempt. The general rule is that a corporation and its officers and agents may be
held liable for contempt.
SYLLABUS
1. REMEDIAL LAW; SPECIAL CIVIL ACTIONS; CONTEMPT OF COURT; DEFINED AND
CONSTRUED. — In Halili, et al. vs. CIR, et al., this Court explained the concept of contempt of
court: Contempt of court is a defiance of the authority, justice or dignity of the court; such conduct as
tends to bring the authority and administration of the law into disrespect or to interfere with or
prejudice parties litigant or their witnesses during litigation (12 Am. Jur. 389, cited in 14 SCRA 813).
Contempt of court is defined as a disobedience to the Court by acting in opposition to its authority,
justice and dignity. It signifies not only a willful disregard or disobedience of the court's orders, but
such conduct as tends to bring the authority of the court and the administration of law into disrepute or
in some manner to impede the due administration of justice (17 C.J.S.4). This Court has thus
repeatedly declared that the power to punish for contempt is inherent in all courts and is essential to
the preservation of order in judicial proceedings and to the enforcement of judgments, orders, and
mandates of the court, and consequently, to the due administration of justice (Slade Perkins vs.
Director of Prisons, 58 Phil. 271; In re Kelly, 35 Phil. 944; Commissioner of Immigration vs. Cloribel,
20 SCRA 1241; Montalban vs. Canonoy, 38 SCRA 1). Meycauayan's continuing resistance to this
Court's judgment is an affront to the Court and to the sovereign dignity with which it is clothed.
Meycauayan's persistent attempts to raise issues long since laid to rest by a final and executory
judgment of no less than the highest tribunal of the land constitute contumacious defiance of the
authority of this Court and impede the speedy administration of justice. EAHDac
2. ID.; CIVIL PROCEDURE; JUDGMENT; RES JUDICATA; ELEMENTS; CONSTRUED. —
Well-settled is the rule that when a court of competent jurisdiction has tried and decided a right or fact,
so long as the decision remains unreversed, it is conclusive on the parties and those in privity with
them. More so where the Supreme Court has already decided the issue since the Court is the final
arbiter of all justiciable controversies properly brought before it. As held in Buaya v. Stronghold
Insurance Co., Inc.: . . . An existing final judgment or decree — rendered upon the merits, without
fraud or collusion, by a court of competent jurisdiction acting upon a matter within its authority — is
conclusive of the rights of the parties and their privies. This ruling holds in all other actions or suits, in
the same or any other judicial tribunal of concurrent jurisdiction, touching on the points or matters in
issue in the first suit. . . . Courts will simply refuse to reopen what has been decided. They will not
allow the same parties or their privies to litigate anew a question, once it has been considered and
decided with finality. Litigations must end and terminate sometime and somewhere. The effective and
efficient administration of justice requires that once a judgment has become final, the prevailing party
should not be deprived of the fruits of the verdict by subsequent suits on the same issues filed by the
same parties. This is in accordance with the doctrine of res judicata which has the following elements:
(1) the former judgment must be final; (2) the court which rendered it had jurisdiction over the subject
matter and the parties; (3) the judgment must be on the merits; and (4) there must be between the first
and the second actions, identity of parties, subject matter and causes of action. The application of the
doctrine of res judicata does not require absolute identity of parties but merely substantial identity of
parties. There is substantial identity of parties when there is community of interest or privity of interest
between a party in the first and a party in the second case even if the first case did not implead the
latter.
3. CIVIL LAW; PROPERTY; PURCHASER OF LAND MUST GO BEYOND CERTIFICATE OF
TITLE WHERE THE SAME IS IN POSSESSION OF A PERSON OTHER THAN THE VENDOR;
RATIONALE. — Where the land sold is in the possession of a person other than the vendor, the
purchaser must go beyond the certificates of title and make inquiries concerning the rights of the
actual possessor. Indeed, one who buys property with full knowledge of the flaws and defects of the
title of his vendor and of a pending litigation over the property gambles on the result of the litigation
and is bound by the outcome of his indifference. A purchaser cannot close his eyes to facts which
should put a reasonable man on guard and then claim that he acted in good faith believing that there
was no defect in the title of the vendor. SDATEc
4. REMEDIAL LAW; ACTIONS; FORUM SHOPPING; DEFINED. — Forum shopping is the act
of a party against whom an adverse judgment has been rendered in one forum, seeking another and
possibly favorable opinion in another forum other than by appeal or special civil action of certiorari.
There is also forum shopping when a party institutes two or more actions based on the same cause on
the expectation that one or the other court might look with favor on the party.
5. ID.; SPECIAL CIVIL ACTIONS; CONTEMPT OF COURT; CORPORATION, ITS OFFICERS
AND AGENTS MAY BE HELD LIABLE FOR CONTEMPT. — The general rule is that a
corporation and its officers and agents may be held liable for contempt. A corporation and those who
are officially responsible for the conduct of its affairs may be punished for contempt in disobeying
judgments, decrees, or orders of a court made in a case within its jurisdiction. ACaDTH
6. ID.; ID.; ID.; PENALTY. — Under Section 1 of Rule 71 of the Rules of Court, direct contempt is
punishable by a fine not exceeding two thousand pesos (P2,000) or imprisonment not exceeding ten
(10) days, or both, if committed against a Regional Trial Court or a court of equivalent or higher rank.
Hence, Meycauayan and its Executive Vice President Juan M. Lamson, Jr. are each fined P2,000 for
direct contempt of court for forum shopping.
DECISION
CARPIO, J p:
The Case
This is a petition to cite for indirect contempt the officers of Meycauayan Central Realty Corporation
("Meycauayan") for defying the final and executory Decision and Resolution of this Court in G.R. No.
118436 entitled "Heirs of Manuel A. Roxas and Trinidad de Leon Vda. De Roxas v. Court of Appeals
and Maguesun Management & Development Corporation" ("G.R. No. 118436"). 1 cSIADH
The Antecedents
This petition stems from a case filed by Trinidad de Leon Vda. De Roxas to set aside the decree of
registration over two unregistered parcels of land in Tagaytay City granted to Maguesun Management
and Development Corporation ("Maguesun") before the Regional Trial Court on the ground of actual
fraud. The trial court dismissed the petition to set aside the decree of registration. On appeal, the Court
of Appeals denied the petition for review and affirmed the findings of the trial court. On 21 March
1997, this Court reversed the appellate court's decision in G.R. No. 118436. The dispositive portion
reads:
WHEREFORE, the instant petition is hereby GRANTED. The Decision of the Court of Appeals in
C.A. G.R. CV No. 38328 ("Trinidad de Leon Vda. de Roxas v. Maguesun Management &
Development Corporation, et al.") promulgated on December 8, 1994 is hereby REVERSED AND
SET ASIDE. Accordingly, registration of title over the subject parcels of land, described in Plan AS-
04-000108, Lot Nos. 7231 and 7239, with an area of 3,461 and 10,674 square meters, respectively, as
shown and supported by the corresponding technical descriptions now forming part of the Records of
LRC No. TG-373, is awarded to herein petitioner Trinidad de Leon vda. de Roxas and her heirs, herein
substituted as petitioners. Upon finality of this Decision, the Land Registration Authority is hereby
directed to ISSUE with reasonable dispatch the corresponding decree of registration and certificate of
title pursuant to Section 39 of Presidential Decree No. 1529. 2
On 22 May 1997, Meycauayan filed a Petition for Intervention in G.R. No. 118436. Meycauayan
alleged that on 14 May 1992, it purchased three parcels of land from Maguesun which form part of the
property awarded to the heirs of Trinidad de Leon Vda. De Roxas RoTas heirs"). Meycauayan
contended that since it is a purchaser in good faith and for value, the Court should afford it the
opportunity to be heard. Meycauayan contends that the adverse decision in G.R. No. 118436 cannot
impair its rights as a purchaser in good faith and for value.
On 25 June 1997, this Court denied the Petition for Intervention. This Court also denied the Motion
for Reconsideration filed by Maguesun. Thus, on 21 August 1997, the Decision dated 21 March 1997
in G.R. No. 118436 became final and executory.
On 13 April 1998, the Land Registration Authority ("LRA") submitted a Report to the Regional Trial
Court of Tagaytay City, Branch 18 ("land registration court"), in LR Case No. TG-373, praying that
the land registration court:
a) Order the LRA to cancel Decree No. N-197092 in the name of Maguesun to enable it to issue
another decree in favor of the heirs of Manuel A. Roxas and Trinidad de Leon Vda. de Roxas;
b) Order the Register of Deeds to cancel OCT No. 0-515 and all its derivative titles; and
c) Order the issuance of the Decree with respect to the decision of the Supreme Court dated 21
March 1997.
Meycauayan filed with the land registration court a "Motion For Leave To Intervene And For Period
Of Time To File Opposition To The Report Dated March 25, 1998 Filed By The LRA And To File
Complaint-in-Intervention."
On 4 June 1998, the Roxas heirs filed a Motion for Clarification with this Court raising the following
issues: DCcTHa
a) Whether it is necessary for the trial court to first order the LRA "to cancel Decree No. N-197092
in the name of Maguesun Management and Development Corporation to enable (the LRA) to issue
another decree in favor of the Heirs of Manuel A. Roxas and Trinidad de Leon Vda. de Roxas"? Or is
that order necessarily included in the dispositive portion of the Supreme Court decision directing the
LRA "to issue with reasonable dispatch the corresponding decree of registration and certificate of
title" in favor of the Roxas heirs? Please note that this necessary implication is a consequence of the
Supreme Court finding that the decree in favor of Maguesun was wrongfully issued because it was
"not entitled to the registration decree" as it had no registrable title, since "Zenaida Melliza (from
whom Maguesun supposedly bought the lots) conveyed no title over the subject parcels of land to
Maguesun Corporation as she was not the owner thereof."
b) Whether an order from the trial court is necessary for "the Register of Deeds concerned to cancel
OCT No. 0-515 and all its, derivative titles"? Or is that order necessarily included in the dispositive
portion of the Supreme Court decision directing the LRA to issue the corresponding decree of
registration and certificate of title in favor of the Roxas heirs, considering that the original certificate
of title issued to Maguesun was based on an illegal decree of registration as found by this Honorable
Court. Further, the unconditional order of the Supreme Court to LRA to issue the corresponding
certificate of title to the Roxas heirs necessarily implies that the OCT issued to Maguesun and its
derivative titles shall be canceled, for it cannot [be] assumed that the Supreme Court intended that the
same parcel of land shall be covered by more than one certificate of title.
c) Whether an order from the trial court is necessary before the LRA can comply with the Supreme
Court decision directing the LRA "to issue with reasonable dispatch the corresponding decree of
registration and certificate of title" in favor of the Roxas heirs?
On 23 June 1998, the Roxas heirs filed a Supplement to Motion for Clarification, the pertinent
portions of which are:
1. In petitioners' Motion for Clarification, one of the items sought to be clarified is whether the
derivative titles (i.e., the titles derived from Maguesun Management and Development Corporation's
["Maguesun"] Original Certificate of Title No. 0-515 and issued to Meycauayan Central Realty Corp.)
should be canceled, together with Maguesun's certificates of title, so that new decree of registration
and certificate of title can be issued to petitioners, as ordered in the decision of this Honorable Court
dated 21 March 1997, which has become final and executory?
2. From the Petition for Intervention filed by Meycauayan Central Realty Corporation
("Meycauayan") with this Honorable Court on 22 May 1997, the following statements, among others,
are alleged:
a. "That on May 14, 1992, the intervenor purchased for value several parcels of real property from
private respondent Maguesun Management and Development Corp. covered by TCT Nos. 24294,
24295 and 24296 containing an area of 2,019 square meters each, more or less."
b. "That prior to paying the agreed purchase price in full to respondent Maguesun, an investigation
with the Tagaytay City Office of the Register of Deeds was made to determine and ascertain the
authenticity, status and condition of the titles of Maguesun over the aforesaid properties." EHCaDS
c. "That investigation made by the intervenor with the Office of Register of Deeds of Tagaytay City
showed that in all the certified true copies of the titles to the properties above-mentioned which were
registered in the name of Maguesun, the last entry which appeared was the following, to wit: . . . ".
d. "Appearing that the properties to be purchased by the herein intervenor from respondent
Maguesun have no existing liens and/or encumbrances and considering that the properties do not
appear to be the subject of a pending case which would affect the titles of those who may subsequently
purchase the same, the herein intervenor proceeded to pay, in full, the total amount of ONE MILLION
FIVE HUNDRED THOUSAND PESOS (P1,500,000.00) to Maguesun. Immediately thereafter,
Maguesun, through its duly authorized officer, executed the corresponding Deeds of Absolute Sale."
e. "That after the corresponding taxes and/or fees were paid by herein intervenor, the
aforementioned TCT Nos. T-24294, 24295 and 24296, were canceled and in lieu thereof, new titles in
the name of intervenor were issued by the Register of Deeds of Tagaytay City."
f. "That on March 25, 1997, an officer of the intervenor corporation was informed of a newspaper
report stating, in big bold letters, the following sub-headline, to wit:
SC RULES ON ROXAS FAMILY LAND ROW IN TAGAYTAY"
g. "The President of herein intervenor right after secured from the Tagaytay City Office of the
Register of Deeds certified true copies of torrens titles over its Tagaytay City properties."
h. "That only then, after it secured certified true copies of the titles mentioned in the preceding
paragraph from the Office of the Register of Deeds of Tagaytay City, did intervenor come to know of
the existence of a case involving the properties sold to it by respondent Maguesun on May 14, 1992."
3. Meycauayan's Petition for Intervention was denied by this Honorable Court in its Resolution
dated 25 June 1997, a denial that has since become final and executory. However, as stated in
petitioners' Motion for Clarification, Meycauayan committed the proscribed act of forum-shopping by
filing with the trial court a motion for leave to intervene raising again the issue of its alleged
ownership of portions of the land.
4. In order to settle once and for all Meycauayan's allegation that it was a buyer in good faith, and to
show that its derivative titles should be declared void and canceled by this Honorable Court,
petitioners will show herein that the sale to Meycauayan was spurious or, at the very least, it was a
buyer in bad faith.
In a Resolution dated 29 July 1998, this Court acted favorably on the Roxas heirs' Motion for
Clarification and its Supplement. The pertinent portions of the Resolution read: IDcTEA
Upon careful consideration of the points made by petitioners in their motions, this Court finds the
same meritorious and, hence, a clarification is in order. We, therefore, declare that our directive on the
LRA to issue with reasonable dispatch the corresponding decree of registration and certificate of title
also includes, as part thereof, the cancellation, without need of an order of the land registration court,
of Decree No. N-197092, as well as OCT No. 0-515, and all its derivative titles. This is a necessary
consequence of the Court's earlier finding that the foregoing documents were illegally issued in the
name of respondent. But in light of Section 39 of Presidential Decree No. 1529 (the "Property
Registration Decree"), Decree No. N-197092 which originated from the LRA must be cancelled by the
LRA itself. On account of this cancellation, it is now incumbent upon the LRA to issue in lieu of the
cancelled decree a new one in the name of petitioners as well as the corresponding original certificate
of title. Cancellation of OCT No. 0-515, on the other, hand, properly devolves upon the Register of
Deeds who, under Section 40 of P.D. No. 1529, has earlier entered a copy thereof in his record book.
OCT No. 0-515 having been nullified, all titles derived therefrom must also be considered void it
appearing that there had been no intervening rights of an innocent purchaser for value involving the
lots in dispute.
ACCORDINGLY, the Court hereby resolves to GRANT petitioners' Motion for Clarification together
with the Supplement thereto. For this reason, the dispositive portion of our decision dated March 21,
1997 is clarified, thus:
First, the Register of Deeds shall CANCEL OCT No. 0-515 and all its derivative titles, namely, TCT
Nos. T-25625, T-25626, T-25627, T-25628, T-25688, T-25689, and T-25690, the latter three being
already in the name of Meycauayan Realty and Development Corporation (also designated as
"Meycauayan Central Realty, Inc." and "Meycauayan Realty Corporation").
Thereafter, the Land Registration Authority shall:
(a) CANCEL Decree No. N-197092 originally issued in the name of Maguesun Management and
Development Corporation without need of an order from the land registration court; and
(b) ISSUE with reasonable dispatch a new decree of registration and a new original certificate of title
(OCT) in favor of petitioners pursuant to Section 39 of Presidential Decree No. 1529. (Emphasis
added)
On 11 December 1998, the land registration court issued an order denying the LRA Report dated 25
March 1998 and the Motion for Leave to Intervene filed by Meycauayan since the Supreme Court
Resolution of 29 July 1998 had rendered them moot.
The Register of Deeds of Tagaytay City then canceled TCT Nos. T-25626, T-25627, T-25628, T-
25688, T-25689, T-25690 and T-27390. 3 TCT Nos. T-25688, T-25689, T-25690 and T-27390 were
derivative titles already in the name of Meycauayan.
On 5 April 1999, the Roxas heirs filed a Motion for Issuance of Writ of Possession with the land
registration court.
On 20 April 1999, Meycauayan filed a Complaint for reconveyance, damages and quieting of title
with the trial court entitled "Meycauayan Central Realty Corp. v. Heirs of Manuel A. Roxas and
Trinidad de Leon Vda. de Roxas, Maguesun Management and Development Corp., Register of Deeds
of Tagaytay City, City Assessor of Tagaytay City and Land Registration Authority." 4 The Complaint
is almost an exact reproduction of the Petition for Intervention filed by Meycauayan before this Court.
The Complaint prayed for judgment: DSETac
1. Ordering the defendants Land Registration Authority and the Register of Deeds of Tagaytay City
to cancel the titles and decree of registration they issued in lieu of TCT Nos. 25688, 25689, 25690 and
27390 registered in the name of plaintiff Meycauayan Central Realty Corporation and reconvey said
properties to the plaintiff corporation by reinstating the said cancelled titles or if the same not be
possible, cause the issuance of new decrees and titles thereto;
2. Ordering the defendant City Assessor of Tagaytay City to reinstate the Assessments for real estate
taxes it previously cancelled covering the properties of plaintiff;
3. Ordering the defendants Roxas and Maguesun to jointly and solidarily pay the plaintiff actual
and/or compensatory damages in the total amount of FIVE HUNDRED THOUSAND PESOS
(P500,000.00);
4. Ordering the defendants Roxas and Maguesun to jointly and solidarily pay the plaintiff the
amount of TWO HUNDRED THOUSAND PESOS (P200,000.00) as and by way of nominal
damages;
5. Ordering the defendants Roxas and Maguesun to jointly and solidarily pay the plaintiff
exemplary damages in the amount of TWO HUNDRED THOUSAND PESOS (P200,000.00);
6. Ordering the defendants Roxas and Maguesun to jointly and solidarily pay the plaintiff Attorney's
fees in the amount of ONE HUNDRED THOUSAND PESOS (P100,000.00); and
7. Ordering the defendants Roxas and Maguesun to jointly and solidarily pay the plaintiff the costs
of suit. 5
On 6 May 1999, Meycauayan filed a "Special Appearance Questioning Court Jurisdiction and
Opposition to the Motion for Issuance of Writ of Possession Against Meycauayan Central Realty
Corporation" with the land registration court.
On 2 September 1999, the land registration court issued an order, the dispositive portion of which
reads:
WHEREFORE, in the light of the foregoing, let a Writ of Possession be issued against Maguesun
Management and Development Corporation in these cases. However, insofar as Meycauayan Central
Realty is concerned, let a resolution of the motion filed by the movants herein be deferred until the
Supreme Court had resolved with finality the petition for contempt of herein movant in G.R. No.
138660.
On 7 March 2000, the trial court dismissed for lack of merit Meycauayan's complaint for
reconveyance, damages and quieting of title. The trial court held that (1) the nullity of OCT No. 0-515,
which is the source of Meycauayan's titles, is now res judicata; (2) the complaint's prayer for the trial
court to annul the decision of the Supreme Court in G.R. No. 118436 is beyond the trial court's
jurisdiction; and (3) Meycauayan is guilty of forum shopping. 6 The trial court likewise denied
Meycauayan's Motion for Reconsideration in an Order dated 20 June 2000. 7 On 24 August 2000,
Meycauayan filed a petition for certiorari under Rule 65 of the Rules of Court with the Court of
Appeals assailing the trial court's dismissal of the complaint.
Meanwhile, the Roxas heirs filed on 2 June 1999 this petition to cite for indirect contempt the officers
of Meycauayan.
The Issues
The parties raised the following issues:
1. Whether this Court's Decision and Resolution in G.R. No. 118436 bind Meycauayan; EIaDHS
2. Whether Meycauayan's act of filing with the trial court a complaint for reconveyance, damages
and quieting of title involving parcels of land, which were the subject of this Court's Decision and
Resolution in G.R. No. 118436, constitutes indirect contempt under Section 3, Rule 71 of the Rules of
Civil Procedure; and
3. Whether Meycauayan is guilty of forum shopping.
The Court's Ruling
The petition is meritorious. We find Meycauayan's Executive Vice-President Juan M. Lamson, Jr.
guilty of indirect contempt. We also find that Meycauayan committed forum shopping, and thus
Meycauayan and its Executive Vice President Juan M. Lamson, Jr. are guilty of direct contempt.
The Roxas heirs allege that the following acts of Meycauayan constitute indirect contempt under
Section 3, Rule 71 of the Rules of Civil Procedure: (1) Meycauayan's defiance of the final and
executory Decision and Resolution of this Court in G.R. No. 118436; (2) its act of filing pleadings
before the land registration court to prevent execution of the Decision and Resolution; (3) its act of
filing a Complaint raising the same issues in its Petition for Intervention which this Court had already
denied and urging the trial court to ignore and countermand the orders of this Court.
On the other hand, Meycauayan alleges that the Decision in G.R. No. 118436, does not bind
Meycauayan because it was not a party in the case. According to Meycauayan, the Decision in G.R.
No. 118436 may be enforced against Maguesun but not against Meycauayan which is a stranger to the
case. Meycauayan insists that as a purchaser in good faith and for value its rights cannot be prejudiced
by the alleged fraudulent acquisition by Maguesun of the subject properties. Meycauayan, therefore, is
not liable for contempt of court for filing an action for reconveyance, quieting of title and damages.
The issue of whether the Decision in G.R. No. 118436 binds Meycauayan was already addressed by
this Court when it denied Meycauayan's Petition for Intervention. Furthermore, this Court's Resolution
dated 29 July 1998 clarified the Decision dated 21 March 1997 by ordering the Register of Deeds to
CANCEL OCT No. 0-515 and all its derivative titles, namely, TCT Nos. T-25625, T-25626, T-25627,
T-25628, T-25688, T-25689, and T-25690, the latter three already in the name of Meycauayan Realty
and Development Corporation (also designated as "Meycauayan Central Realty, Inc." and
"Meycauayan Realty Corporation"). This Court also found that there had been no intervening rights of
an innocent purchaser for value involving the lots in dispute.
Indirect Contempt
Meycauayan's obstinate refusal to abide by the Court's Decision in G.R. No. 118436 has no basis in
view of this Court's clear pronouncement to the contrary. The fact that this Court specifically ordered
the cancellation of Meycauayan's titles to the disputed parcels of land in the Resolution dated 29 July
1998 should have laid to rest the issue of whether the Decision and Resolution in G.R. No. 118436 is
binding on Meycauayan. Clearly, Meycauayan's defiance of this Court's Decision and Resolution by
filing an action for reconveyance, quieting of title and damages involving the same parcels of land
which this Court already decided with finality constitutes indirect contempt under Section 3(d), Rule
71 of the Rules of Civil Procedure. Section 3(d) of Rule 71 reads:
SEC. 3. Indirect contempt to be punished after charge and hearing. — After a charge in writing has
been filed, and an opportunity given to the respondent to comment thereon within such period as may
be fixed by the court and to be heard by himself or counsel, a person guilty of any of the following
acts may be punished for indirect contempt: ASICDH
xxx xxx xxx
(d) Any improper conduct tending, directly or indirectly, to impede, obstruct, or degrade the
administration of justice;
In Halili, et al. v. CIR, et al., 8 this Court explained the concept of contempt of court:
Contempt of court is a defiance of the authority, justice or dignity of the court; such conduct as tends
to bring the authority and administration of the law into disrespect or to interfere with or prejudice
parties litigant or their witnesses during litigation (12 Am. Jur. 389, cited in 14 SCRA 813).
Contempt of court is defined as a disobedience to the Court by acting in opposition to its authority,
justice and dignity. It signifies not only a willful disregard or disobedience of the court's orders, but
such conduct as tends to bring the authority of the court and the administration of law into disrepute or
in some manner to impede the due administration of justice (17 C.J.S.4).
This Court has thus repeatedly declared that the power to punish for contempt is inherent in all courts
and is essential to the preservation of order in judicial proceedings and to the enforcement of
judgments, orders, and mandates of the court, and consequently, to the due administration of justice
(Slade Perkins vs. Director of Prisons, 58 Phil. 271; In re Kelly, 35 Phil. 944; Commissioner of
Immigration vs. Cloribel, 20 SCRA 1241; Montalban vs. Canonoy, 38 SCRA 1).
Meycauayan's continuing resistance to this Court's judgment is an affront to the Court and to the
sovereign dignity with which it is clothed. 9 Meycauayan's persistent attempts to raise issues long
since laid to rest by a final and executory judgment of no less than the highest tribunal of the land
constitute contumacious defiance of the authority of this Court and impede the speedy administration
of justice. 10
Well-settled is the rule that when a court of competent jurisdiction has tried and decided a right or fact,
so long as the decision remains unreversed, it is conclusive on the parties and those in privity with
them. 11 More so where the Supreme Court has already decided the issue since the Court is the final
arbiter of all justiciable controversies properly brought before it. 12 As held in Buaya v. Stronghold
Insurance Co., Inc.: 13
. . . An existing final judgment or decree — rendered upon the merits, without fraud or collusion, by a
court of competent jurisdiction acting upon a matter within its authority — is conclusive of the rights
of the parties and their privies. This ruling holds in all other actions or suits, in the same or any other
judicial tribunal of concurrent jurisdiction, touching on the points or matters in issue in the first suit.
xxx xxx xxx
Courts will simply refuse to reopen what has been decided. They will not allow the same parties or
their privies to litigate anew a question, once it has been considered and decided with finality.
Litigations must end and terminate sometime and somewhere. The effective and efficient
administration of justice requires that once a judgment has become final, the prevailing party should
not be deprived of the fruits of the verdict by subsequent suits on the same issues filed by the same
parties.
This is in accordance with the doctrine of res judicata which has the following elements: (1) the
former judgment must be final; (2) the court which rendered it had jurisdiction over the subject matter
and the parties; (3) the judgment must be on the merits; and (4) there must be between the first and the
second actions, identity of parties, subject matter and causes of action. 14 The application of the
doctrine of res judicata does not require absolute identity of parties but merely substantial identity of
parties. 15 There is substantial identity of parties when there is community of interest or privity of
interest between a party in the first and a party in the second case even if the first case did not implead
the latter. 16 HcSCED
The Court ruled in G.R. No. 118436 that Meycauayan's predecessor-in-interest, Maguesun, committed
actual fraud in obtaining the decree of registration of the subject properties. The Decision in G.R. No.
118436 binds Meycauayan under the principle of "privity of interest" since it was a successor-in-
interest of Maguesun. Meycauayan, however, insists that it was a purchaser in good faith because it
had no knowledge of any pending case involving the lots. Meycauayan claims that the trial court had
already canceled the notice of lis pendens on the titles when it purchased the lots from Maguesun. In
its Memorandum, Meycauayan stresses that to ensure the authenticity of the titles and the annotations
appearing on the titles, particularly the cancellation of the notice of lis pendens, Meycauayan checked
with the Register of Deeds and the Regional Trial Court of Tagaytay City. 17 Since Meycauayan
checked with the Regional Trial Court of Tagaytay City, Meycauayan then had actual knowledge,
before it purchased the lots, of the pending case involving the lots despite the cancellation of the
notice of lis pendens on the titles.
Furthermore, as found by this Court in G.R. No. 118436, the Roxas family has been in possession of
the property uninterruptedly through their caretaker, Jose Ramirez who resided on the property. 18
Where the land sold is in the possession of a person other than the vendor, the purchaser must go
beyond the certificates of title and make inquiries concerning the rights of the actual possessor. 19
Meycauayan therefore cannot invoke the right of a purchaser in good faith and could not have
acquired a better right than its predecessor-in-interest. This Court has already rejected Meycauayan's
claim that it was a purchaser in good faith when it ruled in G.R. No. 118436 that there had been no
intervening rights of an innocent purchaser for value involving the lots in dispute. As held in Heirs of
Pael v. Court of Appeals: 20
In the case of Santiago Land Development Corporation vs. Court of Appeals (G.R. No. 106194, 276
SCRA 674 [1997]), petitioner maintained that as a purchaser pendente lite of the land in litigation, it
had a right to intervene under Rule 12, Section 2. We rejected this position and said that "since
petitioner is not a stranger to the action between Quisumbing and the PNB, petitioner in fact having
stepped into the shoes of PNB in a manner of speaking, it follows that it cannot claim any further right
to intervene in the action." As in the instant Petition, it was argued that the denial of the Motion to
Intervene would be a denial likewise of due process. But this, too, was struck down in Santiago Land
where we held that "petitioner is not really denied protection. It is represented in the action by its
predecessor in interest." Indeed, since petitioner is a transferee pendente lite with notice of the pending
litigation between Reyes and private respondent Carreon, petitioner stands exactly in the shoes of
Reyes and is bound by any judgment or decree which may be rendered for or against the latter.
Indeed, one who buys property with full knowledge of the flaws and defects of the title of his vendor
and of a pending litigation over the property gambles on the result of the litigation and is bound by the
outcome of his indifference. 21 A purchaser cannot close his eyes to facts which should put a
reasonable man on guard and then claim that he acted in good faith believing that there was no defect
in the title of the vendor. 22
For the penalty for indirect contempt, Section 7 of Rule 71 of the Rules of Court provides:
SEC. 7. Punishment for indirect contempt. — If the respondent is adjudged guilty of indirect
contempt committed against a Regional Trial Court or a court of equivalent or higher rank, he may be
punished by a fine not exceeding thirty thousand pesos or imprisonment not exceeding six (6) months
or both. . . . ITESAc
In this case, Meycauayan Executive Vice President Juan M. Lamson, Jr. caused the preparation and the
filing of the Petition for Intervention in G.R. No. 118436 and the Complaint for Reconveyance,
Damages and Quieting of Title with the trial court. 23 Juan M. Lamson, Jr. signed the verification and
certification of non-forum shopping for the Petition for Intervention and the Complaint for
Reconveyance, Damages and Quieting of Title. "Even though a judgment, decree, or order is
addressed to the corporation only, the officers, as well as the corporation itself, may be punished for
contempt for disobedience to its terms, at least if they knowingly disobey the court's mandate, since a
lawful judicial command to a corporation is in effect a command to the officers." 24 Thus, for
improper conduct tending to impede the orderly administration of justice, Meycauayan Executive Vice
President Juan M. Lamson, Jr. should be fined ten thousand pesos (P10,000). 25
Direct Contempt
Meycauayan's act of filing a Complaint for Reconveyance, Quieting of Title and Damages raising the
same issues in its Petition for Intervention, which this Court had already denied, also constitutes forum
shopping. Forum shopping is the act of a party against whom an adverse judgment has been rendered
in one forum, seeking another and possibly favorable opinion in another forum other than by appeal or
special civil action of certiorari. There is also forum shopping when a party institutes two or more
actions based on the same cause on the expectation that one or the other court might look with favor
on the party. 26
In this case, the Court had already rejected Meycauayan's claim on the subject lots when the Court
denied Meycauayan's Petition for Intervention in G.R. No. 118436. The Court ruled that there had
been no intervening rights of an innocent purchaser for value involving the lots in dispute. The
Decision of this Court in G.R. No. 118436 is already final and executory. The filing by Meycauayan of
an action to re-litigate the title to the same property, which this Court had already adjudicated with
finality, is an abuse of the court's processes and constitutes direct contempt.
Section 5 of Rule 7 of the Rules of Court provides that "if the acts of the party or his counsel clearly
constitute willful and deliberate forum shopping, the same shall be a ground for summary dismissal
with prejudice and shall constitute direct contempt, as well as a cause for administrative sanctions."
The fact that Meycauayan did mention in its certification of non-forum shopping its attempt to
intervene in G.R. No. 118436, which this Court denied, 27 does not negate the existence of forum
shopping. This disclosure does not exculpate Meycauayan for deliberately seeking a friendlier forum
for its case and re-litigating an issue which this Court had already decided with finality. 28
The general rule is that a corporation and its officers and agents may be held liable for contempt. A
corporation and those who are officially responsible for the conduct of its affairs may be punished for
contempt in disobeying judgments, decrees, or orders of a court made in a case within its jurisdiction.
29
Under Section 1 of Rule 71 of the Rules of Court, direct contempt is punishable by a fine not
exceeding two thousand pesos (P2,000) or imprisonment not exceeding ten (10) days, or both, if
committed against a Regional Trial Court or a court of equivalent or higher rank. Hence, Meycauayan
30 and its Executive Vice President Juan M. Lamson, Jr. are each fined P2,000 for direct contempt of
court for forum shopping.
WHEREFORE, we find Meycauayan Central Realty Corporation's Executive Vice President Juan M.
Lamson, Jr. GUILTY of INDIRECT CONTEMPT and FINE him TEN THOUSAND PESOS
(P10,000). Furthermore, we find Meycauayan Central Realty Corporation and its Executive Vice
President Juan M. Lamson, Jr. GUILTY of DIRECT CONTEMPT for forum shopping and FINE them
TWO THOUSAND PESOS (P2,000) each. The Court warns them that a repetition of the same or
similar offense shall merit a more severe penalty. SCIcTD
SO ORDERED.
Davide, Jr., C.J., Panganiban and Ynares-Santiago, JJ., concur.
Azcuna, J., is on official leave.
Footnotes
1. 337 Phil. 41 (1997).
2. Ibid.
3. TCT No. 27390 was the new title issued in the name of Meycauayan in lieu of the canceled TCT
No. 25625 registered in the name of Maguesun.
4. Civil Case No. TG-1893.
5. Rollo, pp. 62-63.
6. Ibid., pp. 283-287.
7. Ibid., p. 288.
8. 220 Phil. 507 (1985).
9. People v. Godoy, 312 Phil. 977 (1995).
10. See Pacquing v. Court of Appeals, et al., 200 Phil. 516 (1982).
11. Fulgencio, et al. v. National labor Relations Commission (First Division) and Raycor Aircontrol
Systems, Inc., G.R. No. 141600, 12 September 2003; Bardillon v. Barangay Masili of Calamba,
Laguna, G.R. No. 146886, 30 April, 2003; Oropeza Marketing Corporation, et al. v. Allied Banking
Corporation, G.R. No. 129788, 3 December 2002.
12. Firestone Ceramics, Inc. v. Court of Appeals, 372 Phil. 401 (1999).
13. G.R. No. 139020, 11 October 2000, 342 SCRA 576.
14. Rovels Enterprises, Inc. v. Ocampo, G.R. No. 136821, 17 October 2002, 391 SCRA 176; Quezon
Province v. Hon. Marte, 420 Phil. 177 (2001).
15. Development Bank of the Philippines v. Court of Appeals, G.R. No. 110203, 9 May 2001, 357
SCRA 626.
16. Sendon v. Ruiz, 415 Phil. 376 (2001).
17. Rollo, pp. 226-227, 229.
18. Heirs of Manuel A. Roxas v. Court of Appeals, 337 Phil. 41 (1997).
19. Development Bank of the Phils. v. CA, 387 Phil. 283 (2000).
20. 382 Phil. 222, 255-256 (2000), citing Seveses v. Court of Appeals, 375 Phil. 64, 72 (1999).
21. Liu v. Loy, G.R. No. 145982, 3 July 2003, citing Toledo-Banaga v. Court of Appeals, G.R. No.
127941, 28 January 1999, 302 SCRA 331.
22. Domingo v. Roces, G.R. No. 147468, 9 April 2003; Development Bank of the Phils. v. CA, 387
Phil. 283 (2000).
23. Rollo, pp. 32-33, 63.
24. 17 C.J.S. Contempt § 34 (1963).
25. In Ang Bagong Bayani-OFW Labor Party v. COMELEC (G.R. Nos. 147589 & 147613, 18
February 2003), the Court found the COMELEC members guilty of contempt for (1) issuing three
Resolutions which are outside the jurisdiction of the COMELEC, (2) for degrading the dignity of this
Court, (3) for brazen disobedience to this Court's lawful directives, and (4) for delaying the ultimate
resolution of the many incidents of the party-list case, to the prejudice of the litigants and of the
country. The COMELEC Chairman and four COMELEC Commissioners were each fined P20,000
while the two remaining Commissioners, whose actions were less serious in degree than their
colleagues, were each fined P5,000. In Gamido v. New Bilibid Prison (G.R. No. 146783, 29 July
2002, 385 SCRA 325), the Court sentenced the petitioner to pay a fine of P10,000 or suffer
imprisonment for a period of one month and one day, for appearing as counsel in the case without
license to practice law. In In Re: Published Alleged Threats Against Members of the Court in the
Plunder Law Case Hurled by Atty. Leonardo De Vera (A.M. No. 01-12-03-SC, 29 July 2002, 385
SCRA 285), respondent lawyer was fined P20,000 for uttering statements aimed at influencing and
threatening the Court in deciding in favor of the constitutionality of the Plunder Law. In United BF
Homeowners v. Sandoval-Gutierrez (A.M. No. CA-99-30, 16 October 2000, 343 SCRA 162), the
Court imposed a fine of P10,000 on one of the complainants whose scurrilous attacks on the honor and
integrity of two justices as well as that of the members of this Court, undermined the Court's capacity
to render justice.
26. United Special Watchman Agency v. Court of Appeals, G.R. No. 152476, 8 July 2003; Santos v.
Commission on Elections (First Division), G.R. No. 155618, 26 March 2003; New Sampaguita
Builders Construction, Inc. v. The Estate of Fermina Canoso, G.R. No. 151447, 14 February 2003.
27. Rollo, p. 63.
28. See Request for Consolidation of Civil Case Nos. R-1169 & 3640, 416 Phil. 562 (2001).
29. 17 Am. Jur. 2d Contempt § 60 (1990).
30. Under Rule 71 of the Rules of Court, direct contempt may be punished summarily while indirect
contempt requires a written charge and due hearing. Thus, although Meycauayan cannot be held guilty
of indirect contempt because only the officers of Meycauayan were included in the charge for indirect
contempt, Meycauayan can still be held guilty for direct contempt.

[G.R. No. 115548. March 5, 1996.]

STATE INVESTMENT HOUSE, INC., petitioner, vs. COURT OF APPEALS, ET AL., respondents.
Padilla Law Office for petitioner.
Graciano J. Tobias and Cesar Brillantes for Solid Homes, Inc. & Victorio V. Soliven.
Felix O. Lodero, Jr. for private respondents.
SYLLABUS
1. CIVIL LAW; LAND TITLES AND DEEDS; TORRENS SYSTEM OF LAND
REGISTRATION; PURCHASER IS NOT REQUIRED TO EXPLORE FURTHER THAN WHAT
THE TITLE INDICATES; EXCEPTION. — As a general rule, where there is nothing in the certificate
of title to indicate any cloud or vice in the ownership of the property, or any encumbrance thereon, the
purchaser is not required to explore further than what the Torrens Title upon its face indicates in quest
for any hidden defect or inchoate right that may subsequently defeat his right thereto. This rule,
however, admits of an exception as where the purchaser or mortgagee, has knowledge of a defect or
lack of title in his vendor, or that he was aware of sufficient facts to induce a reasonably prudent man
to inquire into the status of the title of the property in litigation.
2. ID.; ID.; ID.; ID.; EXCEPTION PARTICULARLY APPLIES TO FINANCING INSTITUTIONS
ACCEPTING PROPERTIES MORTGAGED BY ENTITIES ENGAGED IN SELLING
SUBDIVISION LOTS. — In this case, petitioner was well aware that it was dealing with SOLID, a
business entity engaged in the business of selling subdivision lots. In fact, the OAALA found that "at
the time the lot was mortgaged, respondent State Investment House, Inc., [now petitioner] had been
aware of the lot's location and that said lot formed part of Capital Park/Homes Subdivision." In
Sunshine Finance and Investment Corp. v. Intermediate Appellate Court, the Court, noting petitioner
therein to be a financing corporation, deviated from the general rule that a purchaser or mortgagee of a
land is not required to look further than what appears on the face of the Torrens Title. The above-
enunciated rule should apply in this case as petitioner admits of being a financing institution. We take
judicial notice of the uniform practice of financing institutions to investigate, examine and assess the
real property offered as security for any loan application especially where, as in this case, the subject
property is a subdivision lot located at Quezon City, M.M. It is a settled rule that a purchaser or
mortgagee cannot close its eyes to facts which should put a reasonable man upon his guard, and then
claim that he acted in good faith under the belief that there was no defect in the title of the vendor or
mortgagor. Petitioner's constructive knowledge of the defect in the title of the subject property, or lack
of such knowledge due to its negligence, takes the place of registration of the rights of respondents-
spouses. Respondent court thus correctly ruled that petitioner was not a purchaser or mortgagee in
good faith; hence petitioner can not solely rely on what merely appears on the face of the Torrens
Title.
DECISION
FRANCISCO, J p:
The factual background of the case, aptly summarized in the decision of the Office of the President
and cited by respondent Court of Appeals 1 in its assailed decision, and which we have verified to be
supported by the record is herein reproduced as follows:
"The uncontroverted facts of the case as recited in the decision of the Office of the President are as
follows:
'Records show that on October 15, 1969, Contract to Sell No. 36 was executed by the Spouses Canuto
and Ma. Aranzazu Oreta, and the Solid Homes, Inc. (SOLID), involving a parcel of land identified as
Block No. 8, Lot No. 1, Phase I of the Capitol Park Homes Subdivision, Quezon City, containing 511
square meters for a consideration of P39,347.00. Upon signing of the contract, the spouses Oreta made
payment amounting to P7,869.40, with the agreement that the balance shall be payable in monthly
installments of P451.70, at 12% interest per annum.
'On November 4, 1976, SOLID executed several real estate mortgage contracts in favor of State
Investment Homes, (sic) Inc. (STATE) over its subdivided parcels of land, one of which is the subject
lot covered by Transfer Certificate of Title No. 209642.
'For Failure of SOLID to comply with its mortgage obligations contract, STATE extrajudicially
foreclosed the mortgaged properties including the subject lot on April 6, 1983, with the corresponding
certificate of sale issued therefor to STATE annotated at the back of the titles covering the said
properties on October 13, 1983.
'On June 23, 1984, SOLID thru a Memorandum of Agreement negotiated for the deferment of
consolidation of ownership over the foreclosed properties by committing to redeem the properties
from STATE.
'On August 15, 1988, the spouses filed a complaint before the Housing and Land Use Regulatory
Board, HLURB, against the developer SOLID and STATE for failure on the part of SOLID "to
execute the necessary absolute deed of sale as well as to deliver title to said property . . . in violation
of the contract to sell . . . ," despite full payment of the purchase price as of January 7, 1981. In its
Answer, SOLID, by way of alternative defense, alleged that the obligations under the Contract to Sell
has become so difficult . . . the herein respondents be partially released from said obligation by
substituting subject lot with another suitable residential lot from another subdivision which
respondents own/operates." Upon the other hand, STATE, to which the subject lot was mortgaged,
averred that unless SOLID pays the redemption price of P125,1955.00, (sic) it has "a right to hold on
and not release the foreclosed properties."
'On May 23, 1989, the Office of Appeals, Adjudication and Legal Affairs (OAALA) rendered a
decision the decretal portion of which reads:
'1. Ordering respondent, State Investment House, Inc. to execute a Deed of Conveyance of Lot 1,
Block 8, in Capital Park Homes Subdivision in favor of complainants and to deliver to the latter the
corresponding certificate of title;
'2. Ordering respondent, Solid Homes, Inc. to pay State Investment House, Inc. that portion of its
loan which corresponds to the value of the lot as collateral;
'3. Ordering respondent, Solid Homes, Inc. to pay to this Board the amount of Six Thousand Pesos
(P6,000.00) as administrative fine in accordance with Section 25 in relation to Section 38 of P.D. 957.
"Both the STATE and SOLID appealed to the Board of Commissioners, HLURB, which affirmed on
June 5, 1990 the OAALA's decision (Annex "C" of the Petition; ibid., p. 34). Again, both STATE and
SOLID appealed the decision of the Board of Commissioners, HLURB, to the Office of the President
which dismissed the twin appeals on February 26, 1993.
"Petitioner filed with the Supreme Court this petition for review of decision of the Office of the
President where it was docketed as G.R. No. 109364. However, in a resolution dated May 13, 1993,
the Supreme Court referred this case to this Court for proper disposition. On the other hand, SOLID
does not appear to have joined herein petitioner in this petition for review." 2
[Emphasis added.]
In a decision dated May 19, 1994, respondent court sustained the judgment of the Office of the
President. Hence, this petition substantially anchored on these two alleged errors, namely: (1) error in
ruling that that private respondent spouses Oreta's unregistered rights over the subject property are
superior to the registered mortgage rights of petitioner State Investment House, Inc. (STATE); and (2)
error in not applying the settled rule that persons dealing with property covered by Torrens certificate
of title are not required to go beyond what appears on the face of the title.
At the outset, we note that herein petitioner argues more extensively on the second assigned issue,
than on the first. In fact, petitioner admits the superior rights of respondents-spouses Oreta over the
subject property as it did not pray for the nullification of the contract between respondents-spouses
and SOLID, but instead asked for the payment of the release value of the property in question, plus
interest, attorney's fees and costs of suit against SOLID or, in case of the latter's inability to pay,
against respondents-spouses before it can be required to release the title of the subject property in
favor of the respondent spouses. 3 And even if we were to pass upon the first assigned error, we find
respondent court's ruling on the matter to be well-founded. STATE's registered mortgage right over the
property is inferior to that of respondents-spouses' unregistered right. The unrecorded sale between
respondents-spouses and SOLID is preferred for the reason that if the original owner (SOLID, in this
case) had parted with his ownership of the thing sold then he no longer had ownership and free
disposal of that thing so as to be able to mortgage it again. 4 Registration of the mortgage is of no
moment since it is understood to be without prejudice to the better right of third parties. 5
Anent the second issue, petitioner asserts that a purchaser or mortgagee of land/s covered under the
Torrens System "is not required to do more than rely upon the certificate of title [for] it is enough that
the [purchaser or mortgagee] examines the pertinent certificate of title [without] need [of] look[ing]
beyond such title." 6
As a general rule, where there is nothing in the certificate of title to indicate any cloud or vice in the
ownership of the property, or any encumbrance thereon, the purchaser is not required to explore
further than what the Torrens Title upon its face indicates in quest for any hidden defect or inchoate
right that may subsequently defeat his right thereto. This rule however, admits of an exception as
where the purchaser or mortgagee, has knowledge of a defect or lack of title in his vendor, or that he
was aware of sufficient facts to induce a reasonably prudent man to inquire into the status of the title
of the property in litigation. 7 In this case, petitioner was well aware that it was dealing with SOLID, a
business entity engaged in the business of selling subdivision lots. In fact, the OAALA found that "at
the time the lot was mortgaged, respondent State Investment House, Inc., [now petitioner] had been
aware of the lot's location and that said lot formed part of Capital Park/Homes Subdivision." 8 In
Sunshine Finance and Investment Corp. v. Intermediate Appellate Court, 9 the Court, noting petitioner
therein to be a financing corporation, deviated from the general rule that a purchaser or mortgagee of a
land is not required to look further than what appears on the face of the Torrens Title. Thus:
"Nevertheless, we nave to deviate from the general rule because of the failure of the petitioner in this
case to take the necessary precautions to ascertain if there was any flaw in the title of the Nolascos and
to examine the condition of the property they sought to mortgage. The petitioner is an investment and
financing corporation. We presume it is experienced in its business. Ascertainment of the status and
condition of properties offered to it as security for the loans it extends must be a standard and
indispensable part of its operations. Surely, it cannot simply rely on an examination of a Torrens
certificate to determine what the subject property looks like as its condition is not apparent in the
document. The land might be in a depressed area. There might be squatters on it. It might be easily
inundated. It might be an interior lot, without convenient access. These and other similar factors
determine the value of the property and so should be of practical concern to the petitioner.
xxx xxx xxx
"Our conclusion might have been different if the mortgagee were an ordinary individual or company
without the expertise of the petitioner in the mortgage and sale of registered land or if the land
mortgaged were some distance from the mortgagee and could not be conveniently inspected. But there
were no such impediments in this case. The facilities of the petitioner were not so limited as to prevent
it from making a more careful examination of the land to assure itself that there were no unauthorized
persons in possession." 10
[Emphasis supplied.]
The above-enunciated rule should apply in this case as petitioner admits of being a financing
institution. 11 We take judicial notice of the uniform practice of financing institutions to investigate,
examine and assess the real property offered as security for any loan application especially where, as
in this case, the subject property is a subdivision lot located at Quezon City, M.M. It is a settled rule
that a purchaser or mortgagee cannot close its eyes to facts which should put a reasonable man upon
his guard, and then claim that he acted in good faith under the belief that there was no defect in the
title of the vendor or mortgagor. 12 Petitioner's constructive knowledge of the defect in the title of the
subject property, or lack of such knowledge due to its negligence, takes the place of registration of the
rights of respondents-spouses. Respondent court thus correctly ruled that petitioner was not a
purchaser or mortgagee in good faith; hence petitioner can not solely rely on what merely appears on
the face of the Torrens Title.
ACCORDINGLY, finding no reversible error in the assailed judgment, the same is hereby
AFFIRMED
SO ORDERED.
Narvasa, C.J., Davide, Jr., Melo and Panganiban, JJ., concur.
Footnotes
1. Fifth Division: Buena, J., Chairman; Rasul, Mabutas. JJ. Members.
2. Decision of the Court of Appeals, pp. 1-4; Rollo, pp. 24-27.
3. Petition, pp. 18-19; Rollo, pp. 19-20.
4. Reyes, et al. v. De Leon, 126 Phil 710.
5. Id., citing Rivera v. Moran, 48 Phil. 836.
6. Petition, p. 9; Rollo, p. 10, citing Reynes v. Barrera, 68 Phil. 656; 658; WH Anderson & Co. v.
Garcia, 64 Phil. 506, 515; Cangas and Basco v. Tan Chuan Leong, 110 Phil. 188. 171; Roxas v.
Dinglasan, 28 SCRA 430 434.
7. Capitol Subdivision v. Province of Negros Occidental, 7 SCRA 60, 70; Mañacop, Jr. v. Cangino,
1 SCRA 572; Leung Yee v. F.L. Strong Machinery Co and Williamson, 37 Phil. 644; Philippine
National Bank v Court of Appeals, 153 SCRA 453, 442; Gomales v. Intermediate Appellate Court, 157
SCRA 587, 595.
8. OAALA Decision, p. 3; Rollo, p. 34.
9. 203 SCRA 210.
10. Id. at pp. 216-217.
11. Petition, p. 15; Rollo, p 16.
12. Crisostomo v. Court of Appeals, 197 SCRA 833, 840.

C o p y r i g h t 1 9 9 4 - 1 9 9 9 C D T e c h n o l o g i e s A s i a, I n c.

[G.R. No. 75336. October 18, 1988.]

SPOUSES ANTONIO BORNALES and FLORENDA DIAZ BORNALES, petitioners, vs. THE
HONORABLE INTERMEDIATE APPELLATE COURT and ISABEL MARQUEZ DUMOLONG,
respondents.
Rodriguez D. Dadivas and Fredicindo A Talabucon for petitioners.
Stephen C. Arceño for private respondent.
SYLLABUS
1. LAND REGISTRATION; BUYERS IN BAD FAITH; FULL KNOWLEDGE OF THE DEFECT
IN THE TITLE. — Even without the circumstances enumerated by the Court of Appeals to
demonstrate the petitioners' lack of good faith, the fact alone that they purchased the property with full
knowledge of the flaws and defect in the title of their vendors is enough proof of their bad faith. In the
case of Gatioan v. Gaffud [G.R. No. L-21953, March 28, 1979, 27 SCRA 706] this Court held that one
who purchases real property with knowledge of a defect in the title of his vendor cannot claim that he
acquired title thereto in good faith as against the owner or of an interest therein.
2. ID.; ID.; ID.; INDEFEASIBILITY OF A CERTIFICATE OF TITLE; DOES NOT EXTEND TO
A TRANSFEREE IN BAD FAITH; CASE AT BAR. — The petitioners claim that they were not aware
of any defect in the title of their vendors because the certificate of title in the name of their
predecessors-in-interest which their lawyer examined contained nothing to put them on guard. The
fact however remains that the petitioners knew and were parties to the fraud committed against the
private respondent. Having bought the land registered under the Torrens system from their vendors
who procured title thereto by means of fraud, petitioners cannot invoke the indefeasibility of a
certificate of title against the private respondent to the extent of her interest therein. The Torrens
system of land registration should not be used as a means to perpetrate fraud against the rightful owner
of real property. Registration, to be effective, must be made in good faith. [Palanca v. Director of
Lands, 43 Phil. 149 (1922).] Thus, it is a settled rule that the defense of indefeasibility of a certificate
of title does not extend to a transferee who takes it with notice of the flaws in his transferor's title. If at
all, the petitioners only acquire the right which their vendors then had. [Ramos, et al, v. Dueno, et al.,
50 Phil. 786 (1927).]
DECISION
CORTES, J p:
The subject matter of this controversy is a parcel of land (Lot 1318) situated in Barrio Indayagan,
Pontevedra (Maayon), Capiz with an area of 74,397 square meters. The land was originally awarded
by Decree No. 29015 dated September 21, 1927 in the name of Sixto Dumolong, married to Isabel
Marquez, to whom Original Certificate of Title No. 6161 was issued. LLjur
Sixto and Isabel whose marriage was not blessed with any child lived separately since 1920.
Subsequently, Sixto cohabited extramaritally with Placida Dumolong with whom he had a son by the
name of Renito Dumolong and other children.
Sometime in November, 1977, representing herself as having hereditary interest in Lot 1318, Placida
filed with the Court of First Instance of Capiz a petition for reconstitution of title over said lot.
Reconstitution was granted in a decision dated November 18, 1977 and Original Certificate of Title
No. RO-6161 was issued in the name of "Sixto Dumolong married to Isabel Marquez".
On March 15, 1978, a "Deed of Extrajudicial Adjudication and Sale of Real Property", which was
purportedly a settlement of the conjugal estate of Sixto Dumolong and Isabel Marquez Dumolong,
involving Lot 1318, and the sale of said lot for P6,000.00 to spouses Carlito Patanao and Minda
Dumolong and to spouses Bernardo Decrepito and Loreta Dumolong, was executed by Renito
Dumolong and by Isabel Marquez Dumolong whose supposed thumbmark appeared in the document.
The deed was registered on November 10, 1978, and pursuant thereto, Transfer Certificate of Title No.
T-15856 was issued the abovenamed spouses on the same date. About three months later, or on
February 21, 1979, the spouses sold Lot 1318 for P40,000.00 to petitioner-spouses Antonio Bornales
and Florenda Diaz Bornales through a Deed of Absolute Sale [Petition, Annex "C", Rollo, p. 15.]
Petitioners eventually secured Transfer Certificate of Title No. 15596 for Lot 1318 in their names.
prLL
Alleging forgery of the "Deed of Extrajudicial Adjudication and Sale of Real Property", private
respondent Isabel Marquez filed on March 11, 1980 an action for reconveyance and damages against
Placida Dumolong, Renito Dumolong, spouses Carlito Patanao and Minda Dumolong, spouses
Bernardo Decrepito and Loreto Dumolong, and spouses Antonio Bornales and Florenda Diaz. The
case was docketed as Civil Case No. V-4366 in the Court of First Instance of Capiz. Only the spouses
Bornales answered; the other defendants were declared in default.
After trial on the merits, the lower court rendered judgment in Civil Case No. V-4366 in favor of
plaintiff and against all the defendants including the petitioners herein who were expressly declared
purchasers in bad faith. The subject land was held to be the conjugal property of Sixto Dumolong and
plaintiff Isabel Marquez and that the Deed of Extrajudicial Adjudication and Sale of Real Property was
a forgery through the machinations of the defaulted defendants.
The spouses Bornales timely filed their appeal with the respondent court, which appeal was docketed
as AC-G.R. CV No. 05578. On April 1, 1986, the appellate court affirmed the appealed decision in
favor of private respondent and against the petitioners but with modifications for the appellate court
found that the land was the exclusive property of Sixto Dumolong who had other illegitimate children
surviving with Renito Dumolong. The dispositive portion of the decision reads:
WHEREFORE, another judgment is entered —
(1) declaring the Deed of Extrajudicial Adjudication dated March 15, 1978 null and void;
(2) cancelling Transfer Certificate of Titles Nos. T-15856 and 15996;
(3) declaring Isabel Marquez Dumolong the true and lawful owner of pro-indiviso one-half of the
land described in said titles as her intestate inheritance from Sixto Dumolong;
(4) declaring the other half of said titles as the intestate inheritance of the illegitimate children of
Sixto Dumolong to be divided by them in equal shares;
(5) ordering the appellants and all defaulted defendants, jointly and severally, to pay the appellee the
sum of P5,000.00 as moral damages with interest of 14% per annum from April 16, 1980, the date the
complaint was filed, until full payment;
(6) ordering appellants and all defaulted defendants, jointly and severally, to pay the appellee the
sum of P5,000.00 as exemplary damages, with interest of 14% per annum from April 16, 1980, the
date the complaint was filed, until full payment;
(7) ordering the appellants and all defaulted defendants to pay the appellee the sum of P5,000.00 as
attorney's fees; and
(8) ordering cross-defendants Carlito Patanao, Minda Dumolong, Bernardo Decrepito and Loreta
Dumolong, jointly and severally, to reimburse to the appellants the sum of P40,000.00 with its
interests of 14% per annum from May 8, 1980, the date of the filing of the answer with cross-claim,
until full payment and the sum of P5,000.00 as attorney's fees.
Costs against the appellants.
SO ORDERED.
[Petition, Annex "D", Rollo, pp. 24-26.]
Petitioner's motion for reconsideration filed on April 19, 1986 was denied in a resolution of respondent
court dated June 17, 1986.
The present petition raises questions of fact. To justify therefore a review by this Court of the decision
of the respondent appellate court, the following reasons are adduced by the petitioners:
(1) The conclusion of respondent court that herein petitioners are purchasers in bad faith is a finding
grounded entirely on speculation, surmises and conjecture; and
(2) The inference made by the respondent court that herein petitioners have knowledge that the
person who sold them the property in question have acquired the same through forged documents is
manifestly mistaken, absurd and impossible. [Petition, p. 5; Rollo, p. 7]
The petitioners assail the finding of the respondent appellate court that they are purchasers in bad faith
on the ground that such is based on a misapprehension of facts.
There is no merit to this allegation. The chain of events starting from the reconstitution of the original
certificates of title to the execution of the deed of absolute sale in favor of the petitioners reveals a
clear scheme to dispossess the private respondent of her share in the property subject of this
controversy.
The finding of the Court of Appeals that the land was sold barely three (3) months after the execution
of the deed of extra-judicial settlement and the deed of sale is supported by evidence on record. The
date appearing on the deed of sale (March 15, 1978) indicates a time span of eight (8) months to the
subsequent execution of the deed of absolute sale in favor of the petitioners. However, when the time
is reckoned from the date of registration of the deed with the Register of Deeds, it appears that only
three (3) months had lapsed when the sale of the subject land to the petitioners took place. The land
was registered in the names of the spouses Carlito Patanao and Minda Dumolong and spouses
Bernardo Decrepito and Loreta Dumolong on November 10, 1978 [See Annex "B", Petition; Rollo, p.
14.] Three (3) months later or on February 21, 1979, the spouses sold the land to the petitioners [See
Annex "C", Petition; Rollo, p. 15.] cdll
Petitioners also deny having knowledge of the abnormal increase in the consideration of the sale from
P6,000.00 to P40,000.00. They claim that contrary to the findings of the Court of Appeals, the transfer
certificate of title which their lawyer examined contained no annotation of the P6,000.00 purchase
price. The fact, however, that petitioners have been the tenants/lessees of the land even during Sixto
Dumolong's lifetime belies any alleged lack of knowledge. Having been the cultivators of the land, it
is unimaginable that the petitioners would have been unaware of the transactions affecting the land. It
appears that petitioners were aware that the private respondent was the legal wife of Sixto Dumolong
and was a rightful heir to the properties of the latter. In fact, the trial court conclusively found that the
petitioners themselves went to see the private respondent sometime in 1980 to secure her signature
and conformity to the Extra-Judicial Adjudication and Sale of Real Property. Cdpr
Thus, even without the circumstances enumerated by the Court of Appeals to demonstrate the
petitioners' lack of good faith, the fact alone that they purchased the property with full knowledge of
the flaws and defect in the title of their vendors is enough proof of their bad faith. In the case of
Gatioan v. Gaffud [G.R. No. L-21953, March 28, 1979, 27 SCRA 706] this Court held that one who
purchases real property with knowledge of a defect in the title of his vendor cannot claim that he
acquired title thereto in good faith as against the owner or of an interest therein.
The petitioners claim that they were not aware of any defect in the title of their vendors because the
certificate of title in the name of their predecessors-in-interest which their lawyer examined contained
nothing to put them on guard. The fact however remains that the petitioners knew and were parties to
the fraud committed against the private respondent. Having bought the land registered under the
Torrens system from their vendors who procured title thereto by means of fraud, petitioners cannot
invoke the indefeasibility of a certificate of title against the private respondent to the extent of her
interest therein. The Torrens system of land registration should not be used as a means to perpetrate
fraud against the rightful owner of real property. Registration, to be effective, must be made in good
faith. [Palanca v. Director of Lands, 43 Phil. 149 (1922).] Thus, it is a settled rule that the defense of
indefeasibility of a certificate of title does not extend to a transferee who takes it with notice of the
flaws in his transferor's title. If at all, the petitioners only acquire the right which their vendors then
had. [Ramos, et al, v. Dueno, et al., 50 Phil. 786 (1927).] LibLex
WHEREFORE, finding no reversible error in the appealed decision, the Court Resolved to DENY the
petition for review for lack of merit and AFFIRM the Court of Appeals Decision dated April 1, 1986.
SO ORDERED.
Fernan, C.J., Gutierrez, Jr., Feliciano and Bidin, JJ., concur.

[G.R. No. L-17681. February 26, 1965.]

MINDANAO ACADEMY, INC., MAURICIO O. BAS, ERLINDA D. DIAZ, accompanied by her
husband ANTOLIN DIAZ, ESTER AIDA D. BAS, accompanied by her husband MAURICIO O.
BAS, ROSALINDA D. BELLEZA, accompanied by her husband APOLINARIO BELLEZA, LUZ
MINDA D. DAJAO, accompanied by her husband ELIGIO C. DAJAO, ADELAIDA D. NUESA,
accompanied by her husband WILSON NUESA, PEDRO N. ABUTON, SY PAOCO, JOSEFA
DIGNUM, and PERFECTO VELASQUEZ, plaintiffs-appellees, vs. ILDEFONSO D. YAP,
ROSENDA A. DE NUQUI, and SOTERO A. DIONISO, JR., defendants, ILDEFONSO D. YAP,
defendant-appellant.
[G.R. No. L-17682. February 26, 1965]
ROSENDA A. DE NUQUI, SOTERO DIONISIO, JR., ERLINDA DIONISIO-DIAZ and ANTOLIN
DIAZ, plaintiffs-appellees, vs. ILDEFONSO D. YAP, ET AL., defendant-appellant.
Mauricio O. Bas for and in his own behalf as plaintiff-appellee.
Eligio C. Dayao for and in his own behalf as plaintiff-appellee.
Roque Desquitado for other plaintiffs-appellees.
Ambrosio Padilla Law Offices for defendant-appellant.
SYLLABUS
1. SALE; VOID ENTIRELY WHERE VENDORS CEDED ALSO INTEREST BELONGING TO
PERSONS NOT PARTIES AND PRESTATION IS INDIVISIBLE. — A contract of sale is entirely
null and void where it purports to sell properties of which the sellers were not the only owners and the
prestation involved was indivisible, and therefore incapable of partial annulment.
2. ID.; LEGAL FICTION OF GOOD FAITH CEASES AFTER COMPLAINT IS FILED IN
COURT. — Although the bad faith of one party neutralizes that of the other and hence as between
themselves their rights would be as if both of them had acted in good faith at the time of the
transaction, this legal fiction of the buyer's good faith ceased when the complaint against him was
filed.
3. ID.; ID.; POSSESSOR IN GOOD FAITH NOT ENTITLED TO FRUITS AFTER LEGAL
INTERRUPTION OF POSSESSION. — A possessor in good faith is entitled to the fruits only so long
as his possession is not legally interrupted, and such interruption takes place upon service of judicial
summons.
4. ID.; ID.; POSSESSOR IN GOOD FAITH NOT ENTITLED TO REIMBURSEMENT OF
IMPROVEMENTS CONSTRUCTED AFTER FILING OF ACTION FOR ANNULMENT. — A
possessor in good faith cannot recover the value of a new building constructed after the filing of an
action for annulment of the sale of land on which it is constructed, thus rendering him a builder in bad
faith who is denied by law any right of reimbursement.
5. DAMAGES; NOMINAL AND EXEMPLARY DAMAGES NOT AWARDED TO
STOCKHOLDERS ALREADY REPRESENTED BY THE CORPORATION. — Where the interests
of the stockholders were already represented by the corporation itself, which was the proper party
plaintiff, and no cause of action accruing to them separately from the corporation is alleged in the
complaint, the trial court's ruling out the claim for moral damages to the corporation also rules out any
award for such nominal and exemplary damages to the stockholders.
DECISION
MAKALINTAL, J p:
By deed entitled "Mutual Agreement," executed on May 10, 1964, Rosenda A. de Nuqui (widow of
deceased Sotero Dionisio) and her son Sotero Dionisio, Jr. sold three parcels of residential land in
Oroquieta, Misamis Occidental, and another parcel in Ozamis City in favor of Ildefonso D. Yap.
Included in the sale were certain buildings situated on said lands as well as laboratory equipment,
books, furniture and fixtures used by two schools established in the respective properties: the
Mindanao Academy in Oroquieta and the Misamis Academy in Ozamis City. The aggregate price
stated in the deed was P100,700.00, to be paid according to the terms and conditions specified in the
contract.
Besides Rosenda and her son Sotero, Jr., both of whom signed the instrument, Adelaida Dionisio
Nuesa (a daughter of Rosenda) is also named therein as co-vendor, but actually did not take part either
personally or through her uncle and supposed attorney-in-fact, Restituto Abuton.
These three —Rosenda and her two children above named — are referred to in the deed as the owners
pro-indiviso of the properties sold. The truth, however, was that there were other co-owners of the
lands, namely, Erlinda D. Diaz, Ester Aida D. Bas, Rosalinda D. Belleza and Luz Minda D. Dajao,
children also of Rosenda by her deceased husband Sotero Dionisio, Sr., and that as far as the school
buildings, equipment, books, furniture and fixtures were concerned, they were owned by the
Mindanao Academy, Inc., a corporation operating both the Mindanao Academy in Oroquieta and the
Misamis Academy in Ozamis City.
The buyer, Ildefonso D. Yap, obtained possession of the properties by virtue of the sale, took over the
operation of the two schools and even changed their names to Harvardian Colleges. In view thereof
two actions were commenced in the Court of First Instance of Misamis Occidental. The first was for
annulment of the sale and recovery of rents and damages (Civil Case No. 1774, filed May 3,1955)
with the Mindanao Academy, Inc., the five children of Rosenda Nuqui who did not take part in the
deed of sale, and several other persons who were stockholders of the said corporation, as plaintiffs,
and the parties who signed the deed of sale as defendants. The second action was for rescission (Civil
Case No. 1907, filed July 17, 1956) with Rosenda Nuqui, Sotero Dionisio, Jr. and Erlinda D. Diaz
(and the latter's husband Antolin Diaz) as plaintiffs, and Ildefonso D. Yap as lone defendant. The other
four children of Rosenda did not join, having previously ceded and quitclaimed their shares in the
litigated properties in favor of their sister Erlinda D. Diaz.
The two actions were tried jointly and on March 31, 1960 the court a quo rendered judgment as
follows:
"In both Cases —
(1) The Mutual Agreement is hereby declared null and void ab initio;
(2) Defendant Ildefonso D. Yap is hereby ordered to pay the costs of the proceedings in both cases.
In Civil Case No. 1907 only —
(1) Defendant Ildefonso D. Yap is hereby ordered to restore to the plaintiffs in said case all the
buildings and grounds described in the Mutual Agreement together with all the permanent
improvements thereon;
(2) To pay to the plaintiffs therein the amount of P300.00 monthly from July 31, 1956 up to the time
he shall have surrendered the properties in question to the plaintiffs therein, plus P1,000.00 as
attorney's fees to plaintiffs Antolin and Erlinda D. Diaz.
In Civil Case No. 1774 only —
(1) Defendant Ildefonso D. Yap is hereby ordered to restore to the Mindanao Academy, Inc., all the
books, laboratory apparatus, furniture and other equipments described in the Mutual Agreement and
specified in the Inventory attached to the Records of this case; or in default thereof, their value in the
amount of P23,500.00;
(2) To return all the Records of the Mindanao Academy and Misamis Academy;
(3) To pay to the plaintiffs stockholders of the Mindanao Academy, Inc., the amount of P10,000.00 as
nominal damages; P3,000.00 as exemplary damages; and P2,000.00 as attorney's fees. These damages
shall be apportioned to each of the stockholders named as plaintiffs in said case in proportion to their
respective interests in the corporation."
Ildefonso D. Yap appealed from the foregoing judgment and has assigned five errors therein.
I. He first contends that the lower court erred "in declaring that the mutual agreement dated May
10, 1954 . . . is entirely void and legally non existent in that the vendors therein ceded to defendant-
appellant not only their interest, rights, shares and participation in the property sold but also those that
belonged to persons who were not parties thereto."
The lower court did not rule categorically on the question of rescission, considering it unnecessary to
do so in view of its conclusion that the contract of sale is null and void. This conclusion is premised on
two grounds: (a) the contract purported to sell properties of which the sellers were not the only
owners, since of the four parcels of land mentioned in the deed their shares consisted only of 7/12,
(6/12 for Rosenda Nuqui and 1/12 for Sotero, Jr.), while in the buildings, laboratory equipment, books,
furniture and fixtures they had no participation at all, the owner being the Mindanao Academy, Inc.;
and (b) the prestation involved in the sale was indivisible, and therefore incapable of partial
annulment, inasmuch as the buyer Yap, by his own admission, would not have entered into the
transaction except to acquire all of the properties purchased by him.
These premises are not challenged by appellant. But he calls attention to one point, namely, that the
four children of Rosenda Nuqui who did not take part in the sale, besides Erlinda Dionisio Diaz,
quitclaimed in favor of the latter their interests in the properties; and that the trial court held that
Erlinda as well as her husband acted in bad faith, because "having reasonable notice of defendants'
having unlawfully taken possession of the property, they failed to make reasonable demands for (him)
to vacate the premises to respect their rights thereto." It is argued that being herself guilty of bad faith,
Erlinda D. Diaz, as owner of 5/12 undivided interest in the properties (including the 4/12 ceded to her
by her four sisters), is in no position to ask for annulment of the sale. The argument does not convince
us. In the first place the quitclaim, in the form of an extrajudicial partition, was made on May 6, 1956,
after the action for annulment was filed, wherein, the plaintiffs were not only Erlinda but also the other
co-owners who took no part in the sale and to whom there has been no imputation of bad faith.
Secondly the trial courts' finding of bad faith is an erroneous conclusion induced by a manifest
oversight of an undisputed fact, namely, that on June 10, 1954, just a month after the deed of sale in
question, Erlinda D. Diaz did file an action against Ildefonso D. Yap and Rosenda Nuqui, among
others, asserting her rights as co-owner of the properties (Case No. 1646). Finally, bad faith on the part
of Erlinda would not militate against the nullity of the sale, considering that it included not only the
lands in common by Rosenda Nuqui and her six children but also the buildings and school facilities
owned by the Mindanao Academy, Inc., an entity which had nothing to do with the transaction and
which could be represented solely by its Board of Trustees.
The first assignment of error is therefore without merit.
II. The second and third errors are discussed jointly in appellant brief. They read as follows:
"THE LOWER COURT ERRED IN HOLDING DEFENDANT - APPELLANT LIABLE FOR
RENTS AND ATTORNEY'S FEES IN THE SUM OF P1,000.00 AFTER DECLARING THAT ALL
THE PLAINTIFFS-APPELLEES IN CIVIL CASE NO. 1907 ACTED IN BAD FAITH.
"THE LOWER COURT ERRED IN HOLDING THAT PLAINTIFFS-APPELLEES IN SAID CIVIL
CASE NO. 1907 ARE ENTITLED TO RECOVER ALL THE LANDS, BUILDINGS AND OTHER
PERMANENT IMPROVEMENTS DESCRIBED IN THE MUTUAL AGREEMENT DATED MAY
10, 1954."
The lower court correctly found that both vendors and vendee in the sale acted in bad faith and
therefore must be treated, vis-a-vis each other, as having acted in good faith. The return of the
properties by the vendee is a necessary consequence of the decree of annulment. No part of the
purchase price having been paid, as far as the record shows, the trial court correctly made no
corresponding order for the restitution thereof.
In regard to the rents the trial court found that prior to the sale the Mindanao Academy, Inc., was
paying P300.00 monthly for its occupancy of the lands on which the buildings are situated. This is the
amount the defendant has been ordered to pay to the plaintiffs in Civil Case No. 1907, beginning July
31, 1956, when he filed his "first pleading" in the case. There can be no doubt that Erlinda D. Diaz is
entitled to recover a share of the said rents in proportion to her own interest in the lands and the
interest of her four co-owners which she had acquired. Rosenda Nuqui and her son Sotero, it is true,
acted in bad faith when they sold the properties as theirs alone; but so did the defendant Yap when he
purchased them with knowledge of the fact that there were other co-owners. Although the bad faith of
one party neutralizes that of the other and hence as between themselves their rights would be as if both
of them had acted in good faith at the time of the transaction, this legal fiction of Yap's good faith
ceased when they sold the properties as theirs alone; but so did the court's declaration of liability for
the rents thereafter is correct and proper. A possessor in good faith is entitled to the fruits only so long
as his possession is not legally interrupted, and such interruption takes place upon service of judicial
summons (Arts. 544 and 1123, Civil Code).
In our opinion the award of attorney's fees to Erlinda D. Diaz and her husband is erroneous. Civil Case
No. 1907, in which said fees have been adjudged, is for rescission (more properly resolution) of the
so-called "mutual agreement" on the ground that the defendant Yap failed to comply with certain
undertakings specified therein relative to the payment of the purchase price. Erlinda Diaz was not a
party to that agreement and hence had no cause of action for rescission. And as already stated, the trial
court did not decide the matter of rescission because of the decree of annulment it rendered in the
other case (Civil No. 1774), wherein the defendants are not only Ildefonso D. Yap but also Rosenda
Nuqui and her son Sotero. Erlinda D. Diaz could just as well have refrained from joining as plaintiff in
the action for rescission, not being a part to the contract sought to be rescinded and being already one
of the plaintiffs in the other action. In other words, it cannot be said with justification that she was
constrained to litigate, in Civil Case No. 1907, because of some cause attributable to the appellant.
The appellant claims reimbursement for the value of the improvements he allegedly introduced in the
schools, consisting of new building worth P8,000.00 and a toilet costing P800.00, besides laboratory
equipment, furniture, fixtures and books for the libraries. It should be noted that the judgment of the
trial court specifies, for delivery to the plaintiffs (in Civil Case No. 1907), only "the buildings and
grounds described in the mutual agreement together with all the permanent improvements thereon." If
the defendant constructed a new building, as he alleges, he cannot recover its value because the
construction was done after the filing of the action for annulment, thus rendering him a builder in bad
faith who is denied by law any right of reimbursement.
In connection with the equipment, books, furniture and fixtures brought in by him, he is not entitled to
reimbursement either, because the judgment does not award them to any of the plaintiffs in these two
actions. What is adjudged (in Civil Case No. 1774) is for the defendant to restore to the Mindanao
Academy, Inc. all the books, laboratory apparatus, furniture and other equipment "described in the
Mutual Agreement and specified in the Inventory attached to the records of this case; or in default
thereof, their value in the amount of P23,500.00." In other words, whatever has been brought in by the
defendant is outside the scope of the judgment and may be retained by him.
III. The appellant's fourth assignment of error refers to the nominal and exemplary damages, as well
as the attorney's fees, granted to the stockholders of the Mindanao Academy, Inc. The trial court
awarded no compensatory damages because the Mindanao Academy, Inc., had been operating the two
schools at a loss before the sale in question, and the defendant himself was no more successful after he
took over. Are the stockholders of the said corporation who joined as plaintiffs in Civil Case No. 1774
entitled to nominal and exemplary damages? We do not believe so. According to their second amended
complaint they were joined merely pro forma, and "for the sole purpose of the moral damage which
has been all the time alleged in the original complaint." Indeed the interests of the said stockholders, if
any, were already represented by the corporation itself, which was the proper party plaintiff; and no
cause of action accruing to them separately from the corporation is alleged in the complaint, other than
that for moral damages due to "extreme mental anguish, serious anxiety and wounded feelings." The
trial court, however, ruled out this claim for moral damages and no appeal from such ruling has taken.
The award for nominal and exemplary damages should be eliminated in toto.
The award for attorney's fees in the amount of P2,000.00 should be upheld, although the same should
be for the account, not of the plaintiff stockholders of the Mindanao Academy, Inc., but of the
corporation itself, and payable to their common counsel as prayed for in the complaint.
IV. Under the fifth and last assignment of error the appellant insists on the warranty provided for in
Clause VI of the deed of sale in view of the claims of the co-owners who did not take part therein. The
said clause provides: "if any claim shall be filed against the properties or any right, share or interest
which are in the possession of the party of the First Part (vendors) which had been hereby transferred,
ceded and conveyed unto the party of the Second Part (vendee) the party of the First Part assumes as it
hereby holds itself answerable."
It is unnecessary to pass upon the question posed in this assignment of error in view of the total
annulment of the sale on grounds concerning which both parties thereto were at fault. The nullity of
the contract precludes enforcement of any of its stipulations.
WHEREFORE, the judgment appealed from is modified by eliminating therefrom the award of
attorney's fees of P1,000.00 in favor of Erlinda D. Diaz and her husband, plaintiffs in Civil Case No.
1907, and the award of nominal and exemplary damages in Civil Case No. 1774; and making the
award of attorney's fees in the sum of P2,000.00 payable to counsel for the account of the Mindanao
Academy, Inc. instead of the plaintiff stockholders. In all other respects the judgment appealed from is
affirmed. No pronouncement as to costs.
Bengzon, C.J., Bautista Angelo, Concepcion, Reyes J.B.L., Paredes and Bengzon, J.P., JJ., concur.
Barrera, Dizon, Regala and Zaldivar, JJ., took no part.

[G.R. No. 5397. December 17, 1909.]

FABIANA ARRIOLA Y CABRERA, as administratrix of the estate of Simona Cabrera, plaintiff-
appellant, vs. CAROLINA GOMEZ DE LA SERNA, defendant-appellee.
Felix Ferrer for appellant.
W.H. Lawrence for appellee.
SYLLABUS
1. REALTY; PRESCRIPTION; GOOD FAITH. — In order that ownership and other property rights
in real property shall prescribe by possession, it is necessary to occupy in good faith and with proper
title.
2. ID.; GOOD FAITH DEFINED. — Good faith consists in the possessor's belief that the person
from whom he received a thing was the owner of the same and could convey his title.
3. ID.; ID.; PRESUMPTION OF GOOD FAITH. — Any person who is not aware that there is in his
title, or in the manner of acquiring it, any flaw invalidating the same, shall be considered a possessor
in good faith. Good faith is always presumed, and any person alleging bad faith on the part of the
possessor is obliged to prove it.
4. ID.; OCCUPATION WITHOUT KNOWLEDGE OF DEFECTIVE TITLE. — A person
occupying and possessing real property under a claim of heredity title will not suffer the consequences
of the faulty possession of his ancestor unless it is proved that he had knowledge of the defects
affecting it.
DECISION
MORELAND, J p:
This is an action of ejectment brought for the recovery of a parcel of land situated in the city of
Manila, at the corner of Calles San Luis and Nueva. The plaintiff sues as administratrix of the estate of
her mother, Simona Cabrera, who died some years ago. She has no documentary title whatever and
relies upon the testimony of witnesses to the effect that her mother was ousted by an order of the court
and possession of the premises was taken by Jose M. Perez Rubio. The defendant shows title in herself
and her minor children by inheritance from her deceased husband, Jose M. Perez Rubio, under a
contract of distribution among his heirs. It appears also upon the defendant's showing that said Jose M.
Perez Rubio acquired title by a conveyance executed by the Court of Quiapo on the 21st day of
December, 1881, and that, immediately upon said conveyance, he entered into possession of the
property and he and his heirs have continued in possession thereof under claim of ownership, publicly,
peacefully, and without interruption, down to the time of the commencement of this action.
The plaintiff contends that the possession of Jose M. Perez Rubio of the land in question was not in
good faith, as required by law, and assigns as a reason for that contention that, subsequent to the
conveyance mentioned, the opponent of Rubio made an application to the court in the action in which
said conveyance was obtained asking that the cause be reheard and that the order of said court which
was the basis of said conveyance be suspended until the cause could be retried; that, pursuant to such
application, said cause was reopened and said order and its operation were suspended; that nothing
further was done in said action by either party, and that, therefore, the effect of the order of
conveyance having been annulled by a suspension of the same and the reopening of the case for a
rehearing, Rubio had no proper title or color thereof when he took possession of said land, and he,
therefore, continued in possession knowing the defect in his title; and that said Rubio, being himself a
lawyer, can not be heard to plead ignorance to protect his possession from the taint of bad faith.
We find, however, that it is not necessary to discuss or decide that question because the defendant in
this action claims ownership of said land not only by virtue of the possession and rights therein of her
husband, Rubio, but also by virtue of her own personal occupancy and possession of the same for
more than 10 years, in good faith and just title, basing the same upon inheritance from her husband
and a contract of distribution among his heirs under which she was awarded the land in question.
Article 1957 of the Civil Code provides that ownership and other property rights in real property shall
prescribe by possession for ten years as to persons present, and for twenty years with regard to those
absent, with good faith and with proper title. Article 1950 of the same code provides that good faith of
the possessor consists in his belief that the person from whom he received the thing was the owner of
the same and could convey his title. Article 433 provides that any person who is not aware that there is
in his title or in the manner of acquiring it any flaw invalidating the same shall be considered a
possessor in good faith. Article 434 provides that good faith on the part of the possessor is obliged to
prove it. That defendant has been possessing since 1896 under a proper title, as defined by law, is
undoubted. It is equally unquestioned that the defendant has been occupying and possessing in good
faith unless the alleged bad faith on the part of her husband can be imputed to her. Article 442 of the
Civil Code provides that a person inheriting by hereditary title shall not suffer the consequences of
faulty possession of the testator unless it is proved that he had knowledge of the defects affecting it.
There being no proof in the record that the defendant had knowledge of the defects, if any, in the title
of her husband, the question of good faith upon his part in possessing such land is of no consequences
in the decision of this case. The defendant, having taken possession of the land in dispute on the 15th
day of February, 1896, in good faith and with a proper title, and having publicly, peacefully and
uninterruptedly possessed the same down to the date on which this action was commenced , viz.,
October 17, 1908, it is evident that the defendant is the owner of said land by virtue of prescription.
The judgment of the court below is, therefore, affirmed, with costs against the appellant. So ordered.
Arellano, C.J. Torres, Johnson and Carson, JJ., concur.

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[G.R. No. 76216. September 14, 1989.]
GERMAN MANAGEMENT & SERVICES, INC., petitioner, vs. HON. COURT OF APPEALS and
ORLANDO GERNALE, respondents.
[G.R. No. 76217. September 14, 1989.]
GERMAN MANAGEMENT & SERVICES, INC., petitioner, vs. HON. COURT OF APPEALS and
ERNESTO VILLEZA, respondents.
Alam, Verano & Associates for petitioner.
Francisco D. Lozano for private respondents.
SYLLABUS
1. CONSTITUTIONAL LAW; BILL OF RIGHTS; DUE PROCESS; NOT DENIED WHERE A
PARTY WAS AFFORDED OPPORTUNITY TO BE HEARD. — The Court of Appeals need not
require petitioner to file an answer for due process to exist. The comment filed by petitioner on
February 26, 1986 has sufficiently addressed the issues presented in the petition for review filed by
private respondents before the Court of Appeals. Having heard both parties, the Appellate Court need
not await or require any other additional pleading. Moreover, the fact that petitioner was heard by the
Court of Appeals on its motion for reconsideration negates any violation of due process.
2. REMEDIAL LAW; SPECIAL CIVIL ACTION; FORCIBLE ENTRY; CAN BE COMMENCED
BY THE ACTUAL POSSESSORS OF THE LAND. — Notwithstanding petitioner's claim that it was
duly authorized by the owners to develop the subject property, private respondents, as actual
possessors, can commence a forcible entry case against petitioner because ownership is not in issue.
Forcible entry is merely a quieting process and never determines the actual title to an estate. Title is
not involved.
3. ID.; ID.; ID.; A PARTY IN PRIOR POSSESSION CAN RECOVER OCCUPATION OF THE
PROPERTY EVEN AGAINST THE OWNER HIMSELF. — It must be stated that regardless of the
actual condition of the title to the property, the party in peaceable quiet possession shall not be turned
out by a strong hand, violence or terror. Thus, a party who can prove prior possession can recover such
possession even against the owner himself. Whatever may be the character of his prior possession, if
he has in his favor priority in time, he has the security that entitles him to remain on the property until
he is lawfully ejected by a person having a better right by accion publiciana or accion reivindicatoria.
4. CIVIL LAW; OWNERSHIP; DOCTRINE OF SELF-HELP; AVAILABLE ONLY AT THE TIME
OF ACTUAL OR THREATENED DISPOSSESSION. — The doctrine of self-help enunciated in
Article 429 of the New Civil Code. Such justification is unavailing because the doctrine of self-help
can only be exercised at the time of actual or threatened dispossession which is absent in the case at
bar. When possession has already been lost, the owner must resort to judicial process for the recovery
of property. This is clear from Article 536 of the Civil Code which states, "(I)n no case may possession
be acquired through force or intimidation as long as there is a possessor who objects thereto. He who
believes that he has an action or right to deprive another of the holding of a thing, must invoke the aid
of the competent court, if the holder should refuse to deliver the thing."
DECISION
FERNAN, C.J p:
Spouses Cynthia Cuyegkeng Jose and Manuel Rene Jose, residents of Pennsylvania, Philadelphia,
USA are the owners of a parcel of land situated in Sitio Inarawan, San Isidro, Antipolo, Rizal, with an
area of 232,942 square meters and covered by TCT No. 50023 of the Register of Deeds of the
province of Rizal issued on September 11, 1980 which canceled TCT No. 56762/ T-560. The land was
originally registered on August 5, 1948 in the Office of the Register of Deeds of Rizal as OCT No. 19,
pursuant to a Homestead Patent granted by the President of the Philippines on July 27, 1948, under
Act No. 141.
On February 26, 1982, the spouses Jose executed a special power of attorney authorizing petitioner
German Management Services to develop their property covered by TCT No. 50023 into a residential
subdivision. Consequently, petitioner on February 9, 1983 obtained Development Permit No. 00424
from the Human Settlements Regulatory Commission for said development. Finding that part of the
property was occupied by private respondents and twenty other persons, petitioner advised the
occupants to vacate the premises but the latter refused. Nevertheless, petitioner proceeded with the
development of the subject property which included the portions occupied and cultivated by private
respondents. prcd
Private respondents filed an action for forcible entry against petitioner before the Municipal Trial
Court of Antipolo, Rizal, alleging that they are mountainside farmers of Sitio Inarawan, San Isidro,
Antipolo, Rizal and members of the Concerned Citizens of Farmer's Association; that they have
occupied and tilled their farmholdings some twelve to fifteen years prior to the promulgation of P. D.
No. 27; that during the first week of August 1983, petitioner, under a permit from the Office of the
Provincial Governor of Rizal, was allowed to improve the Barangay Road at Sitio Inarawan, San
Isidro, Antipolo, Rizal at its expense, subject to the condition that it shall secure the needed right of
way from the owners of the lot to be affected; that on August 15, 1983 and thereafter, petitioner
deprived private respondents of their property without due process of law by: (1) forcibly removing
and destroying the barbed wire fence enclosing their farmholdings without notice; (2) bulldozing the
rice, corn, fruit bearing trees and other crops of private respondents by means of force, violence and
intimidation, in violation of P.D. 1038 and (3) trespassing, coercing and threatening to harass, remove
and eject private respondents from their respective farmholdings in violation of P.D. Nos. 316, 583,
815, and 1028. 1
On January 7, 1985, the Municipal Trial Court dismissed private respondents' complaint for forcible
entry. 2 On appeal, the Regional Trial Court of Antipolo, Rizal, Branch LXXI sustained the dismissal
by the Municipal Trial Court. 3
Private respondents then filed a petition for review with the Court of Appeals. On July 24, 1986, said
court gave due course to their petition and reversed the decisions of the Municipal Trial Court and the
Regional Trial Court. 4
The Appellate Court held that since private respondents were in actual possession of the property at
the time they were forcibly ejected by petitioner, private respondents have a right to commence an
action for forcible entry regardless of the legality or illegality of possession. 5 Petitioner moved to
reconsider but the same was denied by the Appellate Court in its resolution dated September 26, 1986.
6
Hence, this recourse.
The issue in this case is whether or not the Court of Appeals denied due process to petitioner when it
reversed the decision of the court a quo without giving petitioner the opportunity to file its answer and
whether or not private respondents are entitled to file a forcible entry case against petitioner. 7
We affirm. The Court of Appeals need not require petitioner to file an answer for due process to exist.
The comment filed by petitioner on February 26, 1986 has sufficiently addressed the issues presented
in the petition for review filed by private respondents before the Court of Appeals. Having heard both
parties, the Appellate Court need not await or require any other additional pleading. Moreover, the fact
that petitioner was heard by the Court of Appeals on its motion for reconsideration negates any
violation of due process.
Notwithstanding petitioner's claim that it was duly authorized by the owners to develop the subject
property, private respondents, as actual possessors, can commence a forcible entry case against
petitioner because ownership is not in issue. Forcible entry is merely a quieting process and never
determines the actual title to an estate. Title is not involved. 8
In the case at bar, it is undisputed that at the time petitioner entered the property, private respondents
were already in possession thereof. There is no evidence that the spouses Jose were ever in possession
of the subject property. On the contrary, private respondents' peaceable possession was manifested by
the fact that they even planted rice, corn and fruit bearing trees twelve to fifteen years prior to
petitioner's act of destroying their crops.
Although admittedly petitioner may validly claim ownership based on the muniments of title it
presented, such evidence does not responsively address the issue of prior actual possession raised in a
forcible entry case. It must be stated that regardless of the actual condition of the title to the property,
the party in peaceable quiet possession shall not be turned out by a strong hand, violence or terror. 9
Thus, a party who can prove prior possession can recover such possession even against the owner
himself. Whatever may be the character of his prior possession, if he has in his favor priority in time,
he has the security that entitles him to remain on the property until he is lawfully ejected by a person
having a better right by accion publiciana or accion reivindicatoria. 10
Both the Municipal Trial Court and the Regional Trial Court have rationalized petitioner's drastic
action of bulldozing and destroying the crops of private respondents on the basis of the doctrine of
self-help enunciated in Article 429 of the New Civil Code. 11 Such justification is unavailing because
the doctrine of self-help can only be exercised at the time of actual or threatened dispossession which
is absent in the case at bar. When possession has already been lost, the owner must resort to judicial
process for the recovery of property. This is clear from Article 536 of the Civil Code which states,
"(I)n no case may possession be acquired through force or intimidation as long as there is a possessor
who objects thereto. He who believes that he has an action or right to deprive another of the holding of
a thing, must invoke the aid of the competent court, if the holder should refuse to deliver the thing."
WHEREFORE, the Court resolved to DENY the instant petition. The decision of the Court of Appeals
dated July 24, 1986 is hereby AFFIRMED. Costs against petitioner.
SO ORDERED.
Bidin and Cortes, JJ., concur.
Gutierrez, Jr., J., concur in the result.
Feliciano, J., is on leave.
Footnotes
1. Rollo, pp. 30-31.
2. Rollo, p. 37.
3. Rollo, p. 70.
4. Penned by J. Luis Javellana, concurred in by Mariano Zosa, Vicente Mendoza, Ricardo Tensuan,
JJ. Rollo, p. 5.
5. Rollo, p. 19.
6. Rollo, pp. 27-28.
7. Rollo, p. 7.
8. Baptista vs. Carillo, No. L-32192, July 30, 1976, 72 SCRA 214.
9. Drilon vs. Guarana, 149 SCRA 342; Supia and Batioco v. Quintero and Ayala, 59 Phil. 312;
Pitargo v. Sorilla, 92 Phil. 5.
10. Bishop of Cebu vs. Mangaron, 6 Phil. 286, 291.
11. Rollo, p. 38 and p. 70.

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