d. REAL ESTATE MORTGAGE (Sec.

60)

HOME BANKERS SAVINGS VS CA ET AL, G.R. 128354, April 26, 2005

In case of banking institutions..

While the cases cited by petitioner held that the mortgagee is not under obligation to look beyond the certificate of
title when on its face, it was free from lien or encumbrances, the mortgagees therein were considered in good faith as
they were totally innocent and free from negligence or wrongdoing in the transaction. In this case, petitioner knew
that the loan it was extending to Garcia/TransAmerican was for the purpose of the development of the eight-unit
townhouses. Petitioners insistence that prior to the approval of the loan, it undertook a thorough check on the
property and found the titles free from liens and encumbrances would not suffice. It was incumbent upon petitioner to
inquire into the status of the lots which includes verification on whether Garcia had secured the authority from the
HLURB to mortgage the subject lots. Petitioner failed to do so. We likewise find petitioner negligent in failing to even
ascertain from Garcia if there are buyers of the lots who turned out to be private respondents. Petitioners want of
knowledge due to its negligence takes the place of registration, thus it is presumed to know the rights of respondents
over the lot. The conversion of the status of petitioner from mortgagee to buyer-owner will not lessen the importance
of such knowledge. Neither will the conversion set aside the consequence of its negligence as a mortgagee.

Judicial notice can be taken of the uniform practice of banks to investigate, examine and assess the real estate
offered as security for the application of a loan. We cannot overemphasize the fact that the Bank cannot barefacedly
argue that simply because the title or titles offered as security were clean of any encumbrances or lien, that it was
thereby relieved of taking any other step to verify the over-reaching implications should the subdivision be auctioned
on foreclosure. (Homebankers Saving & Trust Co. vs. CA, G.R. No. 128354, 2005)

HOME BANKERS SAVINGS & TRUST CO., petitioner, vs. THE HONORABLE COURT OF APPEALS, PABLO N. AREVALO,
FRANCISCO A. UY, SPOUSES LEANDRO A. SORIANO, JR. and LILIAN SORIANO, ALFREDO LIM and FELISA CHI
LIM/ALFREDO LIM, respondents.

FACTS:

Each of private respondents entered into separate contracts to sell with TransAmerican Sales and Exposition
(TransAmerican) through the latters Owner/General Manager, Engr. Jesus Garcia, involving certain portions of land
covered by Transfer Certificate of Title (TCT) No. 19155, located at No. 45 Gen. Lim Street, Heroes Hill, Quezon City,
together with one unit three-storey townhouse to be built on each portion.

On May 30, 1989, Engr. Garcia and his wife Lorelie Garcia obtained from petitioner Home Bankers Savings and Trust
Company (formerly Home Savings Bank and Trust Company) a loan in the amount of P4,000,000.00 and without the
prior approval of the Housing and Land Use Regulatory Board (HLURB), the spouses mortgaged eight lots covered by
TCT Nos. 3349 to 3356 as collateral. Petitioner registered its mortgage on these titles without any other
encumbrance or lien annotated therein. The proceeds of the loan were intended for the development of the lots into
an eight-unit townhouse project. However, five out of these eight titles turned out to be private respondents
townhouses subject of the contracts to sell with Garcia/TransAmerican.

Petitioner filed its Answer contending that private respondents have no cause of action against it; that at the time of
the loan application and execution of the promissory note and real estate mortgage by Garcia, there were no known
individual buyers of the subject land nor annotation of any contracts, liens or encumbrances of third persons on the
titles of the subject lots; that the loan was granted and released without notifying HLURB as it was not necessary.

Petitioner filed its Answer contending that private respondents have no cause of action against it; that at the time of
the loan application and execution of the promissory note and real estate mortgage by Garcia, there were no known
individual buyers of the subject land nor annotation of any contracts, liens or encumbrances of third persons on the
titles of the subject lots; that the loan was granted and released without notifying HLURB as it was not necessary.

Private respondents filed their Reply and a motion for the judgment on the pleadings. Petitioner did not file a
rejoinder. The case against Garcia/TransAmerican was archived for failure to serve summons on him/it despite
efforts to locate his whereabouts or its office. The case was then considered submitted for decision.

On August 16, 1991, OAALA rendered its Decision in favour of the petitioner . Petitioner filed an appeal with the
Board of Commissioners of the HLURB which dismissed the same in a decision dated June 15, 1992. Petitioner then
elevated the case to the Office of the President which rendered a decision dated June 30, 1995 dismissing the appeal
and affirming the June 15, 1992 decision of the HLURB. Petitioners motion for reconsideration was also denied in a
Resolution dated May 7, 1996.

Petitioner filed a petition for review with the CA which, in the herein assailed decision dated November 28, 1996,
denied the petition and affirmed the decision of the Office of the President.
1

ISSUE:
Page

Whether or not the Office of the President erred in ruling that HLURB has jurisdiction to nullify or declare
unenforceable the real estate mortgage validly constituted by the owner.
HELD:
Petitioner cannot claim to be an innocent purchaser for value and in good faith. Indeed it was negligent, as found by
the Office of the President and by the CA. Petitioner should not have relied only on the representation of the
mortgagor that the latter had secured all requisite permits and licenses from the government agencies concerned.
The former should have required the submission of certified true copies of those documents and verified their
authenticity through its own independent effort.

Petitioners admission that it granted and released the loan without notifying the HLURB because of its belief that it
was not necessary to do so, is fatal to petitioners defense. As a consequence thereof, the mortgage constituted in
favor of petitioner can be declared invalid as against private respondents even without the presence of
Garcia/TransAmerican. This petition was DISMISSED.

DE LA MERCED VS GSIS, ET AL., G.R. 167140, NOV 23, 2011

FACTS:
This case involves five registered parcels of land located within the Antonio Subdivision, Pasig City Lots 6, 7, 8, and 10
of Block 2 and Lot 8 of Block 8 (subject properties). These lots were originally owned by, and titled in the name of,
Jose C. Zulueta (Zulueta), as evidenced by Transfer Certificate of Title (TCT) No. 26105 which contains several lots
other than the subject properties within the Antonio Subdivision.

Later, the Zulueta spouses mortgaged several lots contained in TCT No. 26105 to the GSIS, which eventually
foreclosed on the mortgaged properties, including the subject properties. Upon consolidation of GSISs ownership, TCT
No. 26105 in Zuluetas name was cancelled, and TCT No. 23554 was issued in GSISs name.

Upon learning of the foreclosure, petitioners predecessor, Francisco Dela Merced (Dela Merced), later on substituted
by his heirs, filed a complaint praying for the nullity of the GSIS foreclosure on the subject properties (Lots 6, 7, 8, and
10 of Block 2 and Lot 8 of Block 8) on the ground that he, not the Zuluetas, was the owner of these lots at the time of
the foreclosure. Dela Merced also impleaded Victor and Milagros Manlongat, who were claiming Lot 6, Block 2 by
virtue of a sale executed by the GSIS in their daughters (Elizabeth Manlongat) favor. Dela Merced argued that, due to
the nullity of GSISs foreclosure over the subject properties, it had no ownership right that could be transferred to
Elizabeth Manlongat.

After a protracted litigation, the SC rendered a Decision in the petitioners favor and nullified GSISs foreclosure of the
subject properties because these lots were never part of its mortgage agreement with the Zulueta spouses. Pursuant
to the finality of the Decision, petitioners filed a Motion for Execution which GSIS opposed on the basis of Section 39
of the GSIS Act of 1997 (RA 8291 which allegedly exempts GSIS funds and properties from attachment, garnishment,
execution, levy and other court processes. A writ of execution was finally issued, however, first by the RTC and then
by the CA. The GSIS filed a petition for review before the SC which was denied by the latter.

After the resolution of the issue of GSISs exemption, petitioners encountered more problems with the execution of
the Decision. According to the RD of Pasig City, Policarpio Espenesin, he could not cancel the titles of GSIS over Lots 7
and 8 because it no longer had title over these two lots and had already conveyed the same to two other persons.
Hence, the RD claimed that the writ of execution must first be modified to include the cancellation of derivative titles
of the GSIS title.

ISSUES:

[1] Can the GSIS still raise the issue of exemption?

[2] Can a final and executory judgment against GSIS and Manlongat be enforced against their successors-in-interest or
holders of derivative titles?
[3] Does an order to cancel title to a particular property include an order to provide technical descriptions and
segregate it from its mother title?

HELD: [1] The issue of GSIS's alleged exemption under RA 8291 had been finally decided against when this Court
denied GSIS's petition for review. GSIS's attempt to resurrect the same issue by interjecting the same in this
proceeding is barred by the principle of "law of the case," which states that "determinations of questions of law will
generally be held to govern a case throughout all its subsequent stages where such determination has already been
made on a prior appeal to a court of last resort."

[2] A notice of lis pendens is an announcement to the whole world that a particular real property is in litigation,
serving as a warning that one who acquires an interest over said property does so at his own risk, or that he gambles
on the result of the litigation over the said property. It is not disputed that petitioners caused the annotation of lis
pendens on TCT No. 23554 of the lots in question. The current holders of the derivative titles to these lots were aware
2

of such annotation when the individual titles were issued to them. Ineluctably, both were bound by the outcome of
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the litigation.
[3] The order contained in the Decision in G.R. No. 140398 is for the RD to cancel GSIS's titles over Lot 10, Block 2 and
Lot 8, Block 8, inter alia. Whether these titles are individual or contained in a mother title is of no consequence. The
RD has to cause their cancellation. If the cancellation can only be carried out by requiring GSIS or the Bureau of Lands
to provide the necessary information, then they can be compelled to do so. Otherwise, the Courts decision would be
rendered inefficacious, and GSIS would retain ostensible ownership over the lots by the simple expedience that they
are included in a mother title, instead of individual titles. That result is manifestly contrary to the Courts ruling and
would subvert the very purpose of bringing this case for a complete resolution.

RUIZ VS DIMAILIG, G.R. 204280, NOV 9, 2016

EVELYN V. RUIZ, PETITIONER, V. BERNARDO F. DIMAILIG, RESPONDENT.

DECISION

DEL CASTILLO, J.:

This Petition for Review on Certiorari assails the October 22, 2012 Decision[1] of the Court of Appeals (CA) in CA-GR.
CV No. 95046 which reversed and set aside the November 26,2009 Decision[2] and the March 19, 2010 Order[3] of
the Regional Trial Court (RTC) of Cavite City, Branch 16 in Civil Case No. N-7573. The CA declared void the Real Estate
Mortgage (REM) constituted on the property covered by Transfer Certificate of title (TCT) No. T-361747.
Factual Antecedents

Respondent Bernardo F. Dimailig (Bernardo) was the registered owner of a parcel of land covered by TCT No. T-
361747 located in Alapan, Imus, Cavite.[4] In October 1997, he entrusted the owner's copy of the said TCT to his
brother, Jovannie,[5] who in turn gave the title to Editha Sanggalang (Editha), a broker, for its intended sale. However,
in January 1998, the property was mortgaged to Evelyn V. Ruiz (Evelyn) as evidenced by a Deed of REM[6] without
Bernardo's knowledge and consent. Hence, Bernardo instituted this suit for annulment of the Deed of REM.[7]

In her Answer,[8] Evelyn contended that she met Jovannie when she inspected the subject property and assured her
that Bernardo owned the property and his title thereto was genuine. She further claimed that Jovannie mortgaged
the property to her. She also insisted that as a mortgagee in good faith and for value, the REM cannot be annulled
and that she had the right to keep the owner's copy of TCT No. T-361747 until the loan was fully paid to her.

During pre-trial the parties arrived at the following stipulations:[9]

1. That x x x it was not [Bernardo] who signed as mortgagor in the subject Deed of Real Estate Mortgage.

2. That there was a demand letter sent to [Evelyn] x x x to cause a release of mortgage on the subject property.

3. The x x x controversy [was referred] to the Barangay for conciliation and mediation.

[4.] That Jovannie x x x is the brother of [Bernardo].

Thereafter, trial on the merits ensued.

Bernardo testified that when he went abroad on October 19, 1997, he left the owner's copy of the TCT of the subject
property to Jovannie as they intended to sell the subject property.[10] However, on January 26, 1998, a REM was
executed on the subject property. Bernardo argued that his alleged signature appearing therein was merely
forged[11] as he was still abroad at that time. When he learned in September or November 1998 that Editha
mortgaged the subject property, he personally told Evelyn that the REM was fake and demanded the return of his
title. Not heeding his request, he filed a complaint for estafa through falsification of public document against Editha
and Evelyn. The criminal case against Evelyn was dismissed[12] while Editha was found guilty as charged.[13]

Jovannie also took the witness stand. He testified that sometime in December 1997, Editha convinced him to
surrender the owner's copy of TCT No. T-361747 which she would show her buyer.[14] Subsequently, however, Editha
informed him that she misplaced the title. Hence, he executed in August 1998[15] an affidavit of loss and registered it
with the Register of Deeds (RD).[16] In September 1998, Editha finally admitted that the title was not lost but was in
Evelyn's possession because of the REM.[17] Upon learning this, Jovannie inquired from Evelyn if Editha mortgaged
Bernardo's property to her. Purportedly, Evelyn confirmed said mortgage and told him that she would not return the
owner's copy of TCT No. T-361747 unless Editha pay the loan,[18] Jovannie also alleged that he told Evelyn that
Bernardo's alleged signature in the REM was not genuine since he was abroad at the time of its execution.[19]

On the other hand, Evelyn maintained that she was a mortgagee in good faith. She testified that sales agents - Editha,
Corazon Encarnacion, and a certain Parani, - and a person introducing himself as ''Bernardo" mortgaged the subject
property to her for P300,000.00 payable within a period of three months.[20] She asserted that even after the
expiration of said period, "Bernardo" failed to pay the loan.[21]

Evelyn narrated that before accepting the mortgage of the subject property, she, the sales agents, her aunt, and
Bernardo," visited the property. She pointed out that her companions inspected it while she stayed in the vehicle as
3

she was still recuperating from an operation.[22] She admitted that she neither verified from the neighborhood the
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owner of the property nor approached the occupant thereof.[23]

Moreover, Evelyn asserted that when the Deed of REM was executed, the person who introduced himself as
Bernardo presented a community tax certificate and his picture as proof of identity.[24] She admitted that she did not
ask for any identification card from "Bernardo."[25]

Contrary to the allegation in her Answer that Jovannie mortgaged the property, Evelyn clarified that she met Jovannie
for the first time when he went to her house and told her that Bernardo could not have mortgaged the property to
her as he was abroad.[26]

Corazon Abella Ruiz (Corazon), the sister-in-law of Evelyn, was presented to corroborate her testimony. Corazon
averred that in January 1998, she accompanied Evelyn and several others in inspecting the subject property.[27] The
day after the inspection, Evelyn and "Bernardo'' executed the Deed of REM in the office of a certain Atty. Ignacio;
Evelyn handed P300,000.00 to Editha, not to "Bernardo;"[28] in turn, Editha handed to Evelyn the owner's copy of
TCT No. T-361747.[29]

Ruling of the Regional Trial Court

On November 26, 2009, the RTC dismissed the Complaint. It held that while Bernardo was the registered owner of the
subject property, Evelyn was a mortgagee in good faith because she was unaware that the person who represented
himself as Bernardo was an impostor. It noted that Evelyn caused the verification of the title of the property with the
RD and found the same to be free from any lien or encumbrance. Evelyn also inspected the property and met
Jovannie during such inspection. Finally, the RTC declared that there was no showing of any circumstance that would
cause Evelyn to doubt the validity of the title or the property covered by it. In fine, Evelyn did all that was necessary
before parting with her money and entering Into the REM.

On March 19, 2010, the RTC denied Bernardo's Motion for Reconsideration. Thus, he appealed to the CA.

Ruling of the Court of Appeals

On October 22, 2012, the CA rendered the assailed Decision reversing and setting aside the RTC Decision. The
decretal portion of the CA Decision reads:

WHEREFORE, the appeal is GRANTED. The assailed dispositions of the RTC are REVERSED and SET ASIDE. Tile
complaint of Bernardo F. Dimailig is GRANTED. The Deed of Real Estate Mortgage constituted on the real property
covered by TCT No. T-361747 of the Registry of Deeds for the Province of Cavite, registered in his name, is DECLARED
null and void. Evelyn V. Ruiz is ORDERED to reconvey or return to him the owner's duplicate copy of the said title. His
claims for the payment of attorney's fees and costs of suits are DENIED. Costs against Evelyn V. Ruiz.

SO ORDERED.[30]
The CA held that the "innocent purchaser (mortgagor in this case) for value protected by law is one who purchases a
titled land by virtue of a deed executed by the registered owner himself, not by a forged deed."[31] Since the Deed of
REM was forged, and the title to the subject property is still in the name of the rightful owner, and the mortgagor is a
different person who only pretended to be the owner, then Evelyn cannot seek protection from the cloak of the
principle of mortgagee in good faith. The CA held that in this case, ''the registered owner will not personally lose his
title."[32]

The CA further decreed that Evelyn's claim of good faith cannot stand as she failed to verify the real identity of the
person introduced by Editha as Bernardo. It noted that the impostor did not even exhibit any identification card to
prove his identity; and, by Evelyn's admission, she merely relied on the representation of Editha relative to the
identity of "Bernardo." It also held that Evelyn transacted only with Editha despite the fact that the purported owner
was present during the inspection of the property, and during the execution of the REM.

In sum, the CA ruled that for being a forged instrument, the Deed of REM was a nullity, and the owner's copy of TCT
No. T-361747 must be returned to its rightful owner, Bernardo.

Issue

Hence, Evelyn filed this Petition raising the sole assignment of error as follows:

[T]he Court of Appeals erred in holding that petitioner is not a mortgagee in good faith despite the presence of
substantial evidence to support such conclusion of fact.[33]
Petitioners Arguments

Petitioner insists that she is a mortgagee in good faith. She claims that she was totally unaware of the fraudulent acts
employed by Editha, Jovannie, and the impostor to obtain a loan from her. She stresses that a person dealing with a
property covered by a certificate of title is not required to look beyond what appears on the face of the title.

Respondent's Arguments

Bernardo, on his end, contends that since the person who mortgaged the property was a mere impostor, then Evelyn
4

cannot claim that she was a mortgagee in good faith. This is because a mortgage is void where the mortgagor has no
Page

title at all to the property subject of such mortgage.

Bernardo asserts that there were circumstances that should have aroused suspicion on the part of Evelyn relative to
the mortgagor's title over the property. He specifies that throughout the negotiation of the mortgage, Evelyn
transacted only with Editha, not with "Bernardo," despite the fact that Editha and the other real estate agents who
assisted Evelyn in the mortgage transaction were not armed with a power of attorney.

Bernardo likewise stresses that although Evelyn caused the inspection of the subject property, she herself admitted
that she did not alight from the vehicle during the inspection, and she failed to verify the actual occupant of the
property.

Our Ruling

The Petition is without merit.

As a rule, the issue of whether a person is a mortgagee in good faith is not within the ambit of a Rule 45 Petition. The
determination of presence or absence of good faith, and of negligence factual matters, which are outside the scope of
a petition for review on certiorari.[34] Nevertheless, this rule allows certain exceptions including cases where the RTC
and the CA arrived at different or conflicting factual findings,[35] as in the case at bench. As such, the Court deems it
necessary to re-examine and re-evaluate the factual findings of the CA as they differ with those of the RTC.

No valid mortgage will arise unless the mortgagor has a valid title or ownership over the mortgaged property. By way
of exception, a mortgagee can invoke that he or she derived title even if the mortgagor's title on the property is
defective, if he or she acted in good faith. In such instance, the mortgagee must prove that no circumstance that
should have aroused her suspicion on the veracity of the mortgagor's title on the property was disregarded.[36]

Such doctrine of mortgagee in good faith presupposes "that the mortgagor, who is not the rightful owner of the
property, has already succeeded in obtaining a Torrens title over the property in his name and that, after obtaining
the said title, he succeeds in mortgaging the property to another who relies on what appears on the said title."[37] In
short, the doctrine of mortgagee in good faith assumes that the title to the subject property had already been
transferred or registered in the name of the impostor who thereafter transacts with a mortgagee who acted in good
faith. In the case at bench, it must be emphasized that the title remained to be registered in the name of Bernardo,
the rightful and real owner, and not in the name of the impostor.

The burden of proof that one is a mortgagee in good faith and for value lies with the person who claims such status. A
mortgagee cannot simply ignore facts that should have put a reasonable person on guard, and thereafter claim that
he or she acted in good truth under the belief that the mortgagor's title is not defective.[38] And, such good faith
entails an honest intention to refrain from taking unconscientious advantage of another.[39]

In other words, in order for a mortgagee to invoke the doctrine of mortgagee in good faith, the impostor must have
succeeded in obtaining a Torrens title in his name and thereafter in mortgaging the property. Where the mortgagor is
an impostor who only pretended to be the registered owner, and acting on such pretense, mortgaged the property to
another, the mortgagor evidently did not succeed in having the property titled in his or her name, and the mortgagee
cannot rely on such pretense as what appears on the title is not the impostor's name but that of the registered
owner.[40]

In this case, Evelyn insists that she is a mortgagee in good faith and for value. Thus, she has the burden to prove such
claim and must provide necessary evidence to support the same. Unfortunately, Evelyn failed to discharge her
burden.

First, the Deed of REM was established to be a forged instrument. As aptly discussed by the CA, Bernardo did not and
could not have executed it as he was abroad at the time of its execution, to wit:

Verily, Bernardo could not have affixed his signature on the said deed on January 26, 1998 for he left the Philippines
on October 19, 1997, x x x and only returned to the Philippines on March 21, 1998. Not only that, his signature on his
Seafarer's Identification and Record Book is remarkably different from the signature on the assailed mortgage
contract. The variance is obvious even to the untrained eye. This is further bolstered by Evelyn's admission that
Bernardo was not the one who represented himself as the registered owner of the subject property and was not the
one who signed the questioned contract. Thus, there can be no denying the fact that the signature on the Deed of
Real Estate Mortgage was not affixed or signed by the same person.[41]
In fact, during pre-trial, both parties agreed that it was not Bernardo who signed as the mortgagor in the Deed of
REM. It was only an impostor - representing himself as Bernardo - who mortgaged the property. This impostor is not
only without rightful ownership on the mortgaged property, he also has no Torrens title in his own name involving
said property.

Simply put, for being a forged instrument, the Deed of REM is a nullity and conveys no title.[42]

Second, Evelyn cannot invoke the protection given to a mortgagee in good faith. As discussed, the title to the subject
property remained registered in the name of Bernardo. It was not transferred to the impostor's name when Evelyn
transacted with the latter. Hence, the principle of mortgagee in good faith finds no application; correspondingly,
Evelyn cannot not seek refuge therefrom.
5
Page

Third, even assuming that the impostor has caused the property to be titled in his name as if he had rightful
ownership thereof, Evelyn would still not be deemed a mortgagee in good faith. This is because Evelyn did not take
the necessary steps to determine any defect in the title of the alleged owner of the mortgaged property. She
deliberately ignored pertinent facts that should have aroused suspicion on the veracity of the title of the mortgagor
"Bernardo."[43]

One, while ''Bernardo" introduced himself to Evelyn as the owner of the property, he did not present any proof of
identification. To recall, he only exhibited his community tax certificate and a picture when he introduced himself to
Evelyn. Bernardo's" failure to sufficiently establish his identity should have aroused suspicion on the part of Evelyn
whether the person she was transacting with is the real Bernardo or a mere impostor. She should have investigated
further and verified the identity of "Bernardo" but she failed to do so. She even admitted that she did not at all ask for
any identification card from "Bernardo."

Two, Evelyn also ignored the fact that "Bernardo" did not participate in the negotiations/transactions leading to the
execution of the Deed of REM. Notably, no power of attorney was given to Editha who supposedly transacted in
behalf of Bernardo. Despite "Bernardo's" presence during the ocular inspection of the property and execution of the
mortgage contract, it was Editha who transacted with Evelyn. As gathered from the testimony of Corazon, after the
execution of the deed, Evelyn handed the loan amount of P300,000.00 to Editha, not to "Bernardo," and it was Editha
who handed to Evelyn the owner's copy of TCT No. T-361747.

Three, Evelyn likewise failed to ascertain the supposed title of "Bernardo" over the property. Evelyn admitted that
during the ocular inspection, she remained in the vehicle. She did not inquire from the subject property's occupant or
from the occupants of the surrounding properties if they knew "Bernardo" and whether or not he owned the subject
property.

Notably, the RTC misapprehended certain facts when it held that Evelyn inspected the property and met Jovannie
during the inspection. By her own account, Evelyn clarified that she met Jovannie for the first time only when the
latter visited her house to inform her that an impostor mortgaged Bernardo's property to her.

Four, the Court observes that Evelyn hastily granted the loan and entered into the mortgage contract. As also testified
by Corazon, a day after the supposed ocular inspection on the property, Evelyn and "Bernardo" executed the Deed of
REM even without Evelyn verifying the identity of the property's occupant as well as the right of the mortgagor, if
any, over the same. Indeed, where the mortgagee acted with haste in granting the loan, without first determining the
ownership of the property being mortgaged, the mortgagee cannot be considered as an innocent mortgagee in good
faith.[44]

Thus, considering that the mortgage contract was forged as it was entered into by Evelyn with an impostor, the
registered owner of the property, Bernardo, correspondingly did not lose his title thereon, and Evelyn did not acquire
any right or title on the property and cannot invoke that she is a mortgagee in good faith and for value.[45]

WHEREFORE, the Petition is DENIED. Accordingly, the October 22, 2012 Decision of the Court of Appeals in CA-G.R. CV
No. 95046 is AFFIRMED.

e. SALE INVOLVING REAL ESTATE

ESGUERRA VS TRINIDAD, G.R. 169890, MARCH 12, 2007

FELICIANO ESGUERRA, CANUTO ESGUERRA, JUSTA ESGUERRA, ANGEL ESGUERRA, FIDELA ESGUERRA, CLARA
ESGUERRA, and PEDRO ESGUERRA, Petitioners,
vs.
VIRGINIA TRINIDAD, PRIMITIVA TRINIDAD, and THE REGISTER OF DEEDS OF MEYCAUAYAN, BULACAN, Respondents.

DECISION

CARPIO MORALES, J.:

Involved in the present controversy are two parcels of land located in Camalig, Meycauayan, Bulacan.

Felipe Esguerra and Praxedes de Vera (Esguerra spouses) were the owners of several parcels of land in Camalig,
Meycauayan, Bulacan among them a 35,284-square meter parcel of land covered by Tax Declaration No. 10374, half
of which (17,642 square meters) they sold to their grandchildren, herein petitioners Feliciano, Canuto, Justa, Angel,
Fidela, Clara and Pedro, all surnamed Esguerra; and a 23,989-square meter

parcel of land covered by Tax Declaration No. 12080, 23,489 square meters of which they also sold to petitioners, and
the remaining 500 square meters they sold to their other grandchildren, the brothers Eulalio and Julian Trinidad
(Trinidad brothers).

Also sold to the Trinidad brothers were a 7,048-square meter parcel of land covered by Tax Declaration No. 9059, a
4,618-square meter parcel of land covered by Tax Declaration No. 12081, and a 768-square meter parcel of land
covered by Tax Declaration No. 13989.
6
Page
The Esguerra spouses executed the necessary Deed of Sale in favor of petitioners on August 11, 1937,1 and that in
favor of the Trinidad brothers on August 17, 1937.2 Both documents were executed before notary public Maximo
Abao.

Eulalio Trinidad later sold his share of the land to his daughters-respondents herein, via a notarized Kasulatan ng
Bilihang Tuluyan ng Lupa3 dated October 13, 1965. A portion of the land consisting of 1,693 square meters was later
assigned Lot No. 3593 during a cadastral survey conducted in the late 1960s.

On respondents application for registration of title, the then Court of First Instance (CFI) of Bulacan, by Decision4 of
February 20, 1967, awarded Lot No. 3593 in their favor in Land Registration Case No. N-323-V. Pursuant to the
Decision, the Land Registration Commission (LRC, now the Land Registration Authority [LRA]) issued Decree No. N-
114039 by virtue of which the Register of Deeds of Bulacan issued OCT No. 0-36315 in the name of respondents.

Meanwhile, under a notarized Bilihan ng Lupa6 dated November 10, 1958, petitioners sold to respondents parents
Eulalio Trinidad and Damiana Rodeadilla (Trinidad spouses) a portion of about 5,000 square meters of the 23,489-
square meter of land which they previously acquired from the Esguerra spouses.7

During the same cadastral survey conducted in the late 1960s, it was discovered that the about 5,000-square meter
portion of petitioners parcel of land sold to the Trinidad spouses which was assigned Lot No. 3591 actually measured
6,268 square meters.

In a subsequent application for registration of title over Lot No. 3591, docketed as Land Registration Case No. N-335-
V, the CFI, by Decision8 of August 21, 1972, awarded Lot No. 3591 in favor of Eulalio Trinidad. Pursuant to the
Decision, the LRC issued Decree No. N-149491 by virtue of which the Register of Deeds of Bulacan issued OCT No. 0-
64989 in the name of Trinidad.

Upon the death of the Trinidad spouses, Lot No. 3591 covered by OCT No. 0-6498 was transmitted to respondents by
succession.

Petitioners, alleging that upon verification with the LRA they discovered the issuance of the above-stated two OCTs,
filed on August 29, 1994 before the Regional Trial Court (RTC) of Malolos, Bulacan two separate complaints for their
nullification on the ground that they were procured through fraud or misrepresentation.

In the first complaint, docketed as Civil Case No. 737-M-94, petitioners sought the cancellation of OCT No. 0-3631.

In the other complaint, docketed as Civil Case No. 738-M-94, petitioners sought the cancellation of OCT No. 0-6498.

Both cases were consolidated and tried before Branch 79 of the RTC which, after trial, dismissed the cases by Joint
Decision10 of May 15, 1997.

Their appeal with the Court of Appeals having been dismissed by Decision of February 28, 2005, a reconsideration of
which was, by Resolution of October 3, 2005,11 denied, petitioners filed the instant petition.

Petitioners fault the appellate court

1. . . . in misappreciating the fact that the act of the respondent Eulalio Trinidad in acquiring the property from Felipe
Esguerra constituted fraud.

2. . . . in the [i]nterpretation and application of the provisions of Article 1542 of the New Civil Code.

3. . . . in ruling that there is prescription, res judicata, and violation of the non-[forum] shopping.12

In their Comment, respondents assailed the petition as lacking verification and certification against forum shopping
and failing to attach to it an affidavit of service and material portions of the record in support thereof. Petitioners
counter that the procedural deficiencies have been mooted by the filing of a Compliance.

A check of the rollo shows that attached to the petition are an Affidavit of Service dated November 21, 2005 and the
appellate courts Decision of February 28, 2005 and Resolution of October 3, 2005; and that on January 16, 2006 or
almost three months following the last day to file the petition, petitioners submitted, not at their own instance,13 a
Verification and Sworn Certification on Non-Forum Shopping signed by petitioner Pedro Esguerra who cited honest
and excusable mistake behind the omission to submit the same.

This Court has strictly enforced the requirement of verification and certification, obedience to which and to other
procedural rules is needed if fair results are to be expected therefrom.14 While exceptional cases have been
considered to correct patent injustice concomitant to a liberal application of the rules of procedure, there should be
an effort on the part of the party invoking liberality to advance a reasonable or meritorious explanation for his failure
to comply with the rules.15 In petitioners case, no such explanation has been advanced.

With regard to petitioners failure to attach material portions of the record in support of the petition, this
7

requirement is not a mere technicality but an essential requisite for the determination of prima facie basis for giving
Page

due course to the petition.16 As a rule, a petition which lacks copies of essential pleadings and portions of the case
record may be dismissed. Much discretion is left to the reviewing court, however, to determine the necessity for such
copies as the exact nature of the pleadings and portions of the case record which must accompany a petition is not
specified.17

At all events, technicality aside, the petition must be denied.

It is settled that fraud is a question of fact and the circumstances constituting the same must be alleged and proved in
the court below.18

In the present cases, as did the trial court, the appellate court found no fraud in respondents acquisition and
registration of the land, viz:

. . . Appellant Pedro Esguerra even testified that he does not know how appellees were able to secure a title over the
lot in question and that they never sold Lot No. 3593 to Virginia Trinidad since it is part of the whole lot of 23,489
square meters. The said testimony is a mere conclusion on the part of appellants. On the other hand, the evidence
shows that appellees acquired title over the subject property by virtue of a deed of sale executed by their father
Eulalio Trinidad in their favor.

xxxx

[T]hey failed to establish that appellees acquisition of the certificate of title is fraudulent. In fact, in their two
complaints, appellants acknowledged that appellees observed and took the initial procedural steps in the registration
of the land, thus ruling out fraud in the acquisition of the certificate of title. . . .19

Factual findings of the trial court, when affirmed by the Court of Appeals, are final, conclusive and binding on this
Court,20 which is not a trier of facts,21 hence, bereft of function under Rule 45 to examine and weigh the probative
value of the evidence presented,22 its jurisdiction being limited only to the review and revision of errors of law.23
Albeit there are exceptions24 to this rule, the cases at bar do not fall thereunder, there being no showing that the
trial and appellate courts overlooked matters which, if considered, would alter their outcome.

Under the Torrens System, an OCT enjoys a presumption of validity, which correlatively carries a strong presumption
that the provisions of the law governing the registration of land which led to its issuance have been duly followed.25
Fraud being a serious charge, it must be supported by clear and convincing proof.26 Petitioners failed to discharge
the burden of proof, however.

On the questioned interpretation and application by the appellate court of Article 1542 of the Civil Code reading:

In the sale of real estate, made for a lump sum and not at the rate of a certain sum for a unit of measure or number,
there shall be no increase or decrease of the price, although there be a greater or less areas or number than that
stated in the contract.

The same rule shall be applied when two or more immovables are sold for a single price; but if, besides mentioning
the boundaries, which is indispensable in every conveyance of real estate, its area or number should be designated in
the contract, the vendor shall be bound to deliver all that is included within said boundaries, even when it exceeds
the area or number specified in the contract; and, should he not be able to do so, he shall suffer a reduction in the
price, in proportion to what is lacking in the area or number, unless the contract is rescinded because the vendee
does not accede to the failure to deliver what has been stipulated. (Emphasis and underscoring supplied),

while petitioners admittedly sold Lot No. 3591 to the Trinidad spouses, they contend that what they sold were only
5,000 square meters and not 6,268 square meters, and thus claim the excess of 1,268 square meters.

In sales involving real estate, the parties may choose between two types of pricing agreement: a unit price contract
wherein the purchase price is determined by way of reference to a stated rate per unit area (e.g., 1,000 per square
meter), or a lump sum contract which states a full purchase price for an immovable the area of which may be
declared based on an estimate or where both the area and boundaries are stated (e.g., 1 million for 1,000 square
meters, etc.). In Rudolf Lietz, Inc. v. Court of Appeals,27 the Court discussed the distinction:

. . . In a unit price contract, the statement of area of immovable is not conclusive and the price may be reduced or
increased depending on the area actually delivered. If the vendor delivers less than the area agreed upon, the vendee
may oblige the vendor to deliver all that may be stated in the contract or demand for the proportionate reduction of
the purchase price if delivery is not possible. If the vendor delivers more than the area stated in the contract, the
vendee has the option to accept only the amount agreed upon or to accept the whole area, provided he pays for the
additional area at the contract rate.

xxxx

In the case where the area of the immovable is stated in the contract based on an estimate, the actual area delivered
may not measure up exactly with the area stated in the contract. According to Article 1542 of the Civil Code, in the
sale of real estate, made for a lump sum and not at the rate of a certain sum for a unit of measure or number, there
shall be no increase or decrease of the price, although there be a greater or less areas or number than that stated in
8

the contract. . . .
Page

xxxx
Where both the area and the boundaries of the immovable are declared, the area covered within the boundaries of
the immovable prevails over the stated area. In cases of conflict between areas and boundaries, it is the latter which
should prevail. What really defines a piece of ground is not the area, calculated with more or less certainty,
mentioned in its description, but the boundaries therein laid down, as enclosing the land and indicating its limits. In a
contract of sale of land in a mass, it is well established that the specific boundaries stated in the contract must control
over any statement with respect to the area contained within its boundaries. It is not of vital consequence that a deed
or contract of sale of land should disclose the area with mathematical accuracy. It is sufficient if its extent is
objectively indicated with sufficient precision to enable one to identify it. An error as to the superficial area is
immaterial. Thus, the obligation of the vendor is to deliver everything within the boundaries, inasmuch as it is the
entirety thereof that distinguishes the determinate object.28 (Emphasis and underscoring supplied)

The courts below correctly characterized the sale of Lot No. 3591 as one involving a lump sum contract. The Bilihan ng
Lupa shows that the parties agreed on the purchase price of 1,000.00 on a predetermined, albeit unsurveyed, area
of 5,000 square meters and not on a particular rate per unit area. As noted by the Court of Appeals, the identity of the
realty was sufficiently described as riceland:

It is clear from the afore-quoted Bilihan ng Lupa that what appellants sold to Eulalio was the "bahaging palayan."
Though measured as 5,000 square meters, more or less, such measurement is only an approximation, and not an
exact measurement. Moreover, we take note of the fact that the said deed of sale mentioned the boundaries
covering the whole area of 33,489 square meters, including the "bahaging palayan." Had appellants intended to sell
only a portion of the "bahaging palayan," they could have stated the specific area in the deed of sale and not the
entire "bahaging palayan" . . . .29

In fine, under Article 1542, what is controlling is the entire land included within the boundaries, regardless of whether
the real area should be greater or smaller than that recited in the deed. This is particularly true since the area of the
land in OCT No. 0-6498 was described in the deed as "humigit kumulang," that is, more or less.30

A caveat is in order, however. The use of "more or less" or similar words in designating quantity covers only a
reasonable excess or deficiency. A vendee of land sold in gross or with the description "more or less" with reference
to its area does not thereby ipso facto take all risk of quantity in the land.31

Numerical data are not of course the sole gauge of unreasonableness of the excess or deficiency in area. Courts must
consider a host of other factors. In one case,32 the Court found substantial discrepancy in area due to
contemporaneous circumstances. Citing change in the physical nature of the property, it was therein established that
the excess area at the southern portion was a product of reclamation, which explained why the lands technical
description in the deed of sale indicated the seashore as its southern boundary, hence, the inclusion of the reclaimed
area was declared unreasonable.

In OCT No. 0-6498, the increase by a fourth of a fraction of the area indicated in the deed of sale cannot be
considered as an unreasonable excess. Most importantly, the circumstances attendant to the inclusion of the excess
area bare nothing atypical or significant to hint at unreasonableness. It must be noted that the land was not yet
technically surveyed at the time of the sale. As vendors who themselves executed the Bilihan ng Lupa, petitioners
may rightly be presumed to have acquired a good estimate of the value and area of the bahaging palayan.

As for the last assigned error, the appellate court, in finding that the complaints were time-barred, noted that when
the complaints were filed in 1994, more than 27 years had elapsed from the issuance of OCT No. 0-3631 and more
than 20 years from the issuance of OCT No. 0-6498. The prescriptive period of one (1) year had thus set
in.1awphi1.nt

Petitioners reliance on Agne v. Director of Lands33 is misplaced since the cancellation of title was predicated not on
the ground of fraud but on want of jurisdiction. Even assuming that petitioners actions are in the nature of a suit for
quieting of title, which is imprescriptible, the actions still necessarily fail since petitioners failed to establish the
existence of fraud.

A word on Republic Act No. 716034 which was raised by petitioners in their petition. It expressly requires the parties
to undergo a conciliation process under the Katarungang Pambarangay, as a precondition to filing a complaint in
court,35 non-compliance with this condition precedent does not prevent a court of competent jurisdiction from
exercising its power of adjudication over a case unless the defendants object thereto. The objection should be
seasonably made before the court first taking cognizance of the complaint, and must be raised in the Answer or in
such other pleading allowed under the Rules of Court.36

While petitioners admittedly failed to comply with the requirement of barangay conciliation, they assert that
respondents waived such objection when they failed to raise it in their Answer. Contrary to petitioners claim,
however, the records reveal that respondents raised their objection in their Amended Answers37 filed in both cases.

IN FINE, it is a fundamental principle in land registration that a certificate of title serves as evidence of an indefeasible
and incontrovertible title to the property in favor of the person whose name appears therein. Such indefeasibility
commences after the lapse or expiration of one year from the date of entry of the decree of registration when all
9

persons are considered to have a constructive notice of the title to the property. After the lapse of one year,
Page

therefore, title to the property can no longer be contested. This system was so effected in order to quiet title to
land.38
WHEREFORE, the petition is DENIED. The assailed Decision and Resolution of the Court of Appeals are AFFIRMED.

DEL PRADO VS CABALLERO, G.R. 148225, MARCH 3, 2010

CARMEN DEL PRADO, Petitioner,

vs.
SPOUSES ANTONIO L. CABALLERO and LEONARDA CABALLERO, Respondents.

DECISION

NACHURA, J.:

This is a petition for review on certiorari of the decision1 of the Court of Appeals (CA) dated September 26, 2000 and
its resolution denying the motion for reconsideration thereof.

The facts are as follows:

In a judgment rendered on February 1, 1985 in Cadastral Case No. N-6 (LRC Rec. No. N-611), Judge Juan Y. Reyes of
the Regional Trial Court (RTC) of Cebu City, Branch 14, adjudicated in favor of Spouses Antonio L. Caballero and
Leonarda B. Caballero several parcels of land situated in Guba, Cebu City, one of which was Cadastral Lot No. 11909,
the subject of this controversy.2 On May 21, 1987, Antonio Caballero moved for the issuance of the final decree of
registration for their lots.3 Consequently, on May 25, 1987, the same court, through then Presiding Judge Renato C.
Dacudao, ordered the National Land Titles and Deeds Registration Administration to issue the decree of registration
and the corresponding titles of the lots in favor of the Caballeros.4

On June 11, 1990, respondents sold to petitioner, Carmen del Prado, Lot No. 11909 on the basis of the tax declaration
covering the property. The pertinent portion of the deed of sale reads as follows:

That we, Spouses ANTONIO L. CABALLERO and LEONARDA B. CABALLERO, Filipinos, both of legal age and residents of
Talamban, Cebu City, Philippines, for and in consideration of the sum of FORTY THOUSAND PESOS (40,000.00),
Philippine Currency, paid by CARMEN DEL PRADO, Filipino, of legal age, single and a resident of Sikatuna St., Cebu
City, Philippines, the receipt of which is full is hereby acknowledged, do by these presents SELL, CEDE, TRANSFER,
ASSIGN & CONVEY unto the said CARMEN DEL PRADO, her heirs, assigns and/or successors-in-interest, one (1)
unregistered parcel of land, situated at Guba, Cebu City, Philippines, and more particularly described and bounded, as
follows:

"A parcel of land known as Cad. Lot No. 11909, bounded as follows:

North : Lot 11903

East : Lot 11908

West : Lot 11910

South : Lot 11858 & 11912

containing an area of 4,000 square meters, more or less, covered by Tax Dec. No. 00787 of the Cebu City Assessors
Office, Cebu City." of which parcel of land we are the absolute and lawful owners.

Original Certificate of Title (OCT) No. 1305, covering Lot No. 11909, was issued only on November 15, 1990, and
entered in the "Registration Book" of the City of Cebu on December 19, 1990.5 Therein, the technical description of
Lot No. 11909 states that said lot measures about 14,457 square meters, more or less.6

On March 20, 1991, petitioner filed in the same cadastral proceedings a "Petition for Registration of Document Under
Presidential Decree (P.D.) 1529"7 in order that a certificate of title be issued in her name, covering the whole Lot No.
11909. In the petition, petitioner alleged that the tenor of the instrument of sale indicated that the sale was for a
lump sum or cuerpo cierto, in which case, the vendor was bound to deliver all that was included within said
boundaries even when it exceeded the area specified in the contract. Respondents opposed, on the main ground that
only 4,000 sq m of Lot No. 11909 was sold to petitioner. They claimed that the sale was not for a cuerpo cierto. They
moved for the outright dismissal of the petition on grounds of prescription and lack of jurisdiction.

After trial on the merits, the court found that petitioner had established a clear and positive right to Lot No. 11909.
The intended sale between the parties was for a lump sum, since there was no evidence presented that the property
was sold for a price per unit. It was apparent that the subject matter of the sale was the parcel of land, known as
Cadastral Lot No. 11909, and not only a portion thereof.8

Thus, on August 2, 1993, the court a quo rendered its decision with the following dispositive portion:
10

WHEREFORE, premises considered, the petition is hereby granted and judgment is hereby rendered in favor of herein
Page

petitioner. The Register of Deeds of the City of Cebu is hereby ordered and directed to effect the registration in his
office of the Deed of Absolute Sale between Spouses Antonio Caballero and Leonarda Caballero and Petitioner,
Carmen del Prado dated June 11, 1990 covering Lot No. 11909 after payment of all fees prescribed by law.
Additionally, the Register of Deeds of the City of Cebu is hereby ordered to cancel Original Certificate No. 1305 in the
name of Antonio Caballero and Leonarda Caballero and the Transfer Certificate of Title be issued in the name of
Petitioner Carmen del Prado covering the entire parcel of land known as Cadastral Lot No. 11909.9

An appeal was duly filed. On September 26, 2000, the CA promulgated the assailed decision, reversing and setting
aside the decision of the RTC.

The CA no longer touched on the character of the sale, because it found that petitioner availed herself of an improper
remedy. The "petition for registration of document" is not one of the remedies provided under P.D. No. 1529, after
the original registration has been effected. Thus, the CA ruled that the lower court committed an error when it
assumed jurisdiction over the petition, which prayed for a remedy not sanctioned under the Property Registration
Decree. Accordingly, the CA disposed, as follows:

IN VIEW OF ALL THE FOREGOING, the appealed decision is REVERSED and SET ASIDE and a new one entered
dismissing the petition for lack of jurisdiction. No pronouncement as to costs.10

Aggrieved, petitioner filed the instant petition, raising the following issues:

I. WHETHER OR NOT THE COURT OF APPEALS COMMITTED GRAVE ERROR IN MAKING FINDINGS OF FACT CONTRARY
TO THAT OF THE TRIAL COURT[;]

II. WHETHER OR NOT THE COURT OF APPEALS COMMITTED GRAVE ERROR IN FAILING TO RULE THAT THE SALE OF THE
LOT IS FOR A LUMP SUM OR CUERPO CIERTO[;]

III. WHETHER OR NOT THE COURT A QUO HAS JURISDICTION OVER THE PETITION FOR REGISTRATION OF THE DEED OF
ABSOLUTE SALE DATED 11 JUNE 1990 EXECUTED BETWEEN HEREIN PETITIONER AND RESPONDENTS[.]11

The core issue in this case is whether or not the sale of the land was for a lump sum or not.

Petitioner asserts that the plain language of the Deed of Sale shows that it is a sale of a real estate for a lump sum,
governed under Article 1542 of the Civil Code.12 In the contract, it was stated that the land contains an area of 4,000
sq m more or less, bounded on the North by Lot No. 11903, on the East by Lot No. 11908, on the South by Lot Nos.
11858 & 11912, and on the West by Lot No. 11910. When the OCT was issued, the area of Lot No. 11909 was declared
to be 14,475 sq m, with an excess of 10,475 sq m. In accordance with Article 1542, respondents are, therefore, duty-
bound to deliver the whole area within the boundaries stated, without any corresponding increase in the price. Thus,
petitioner concludes that she is entitled to have the certificate of title, covering the whole Lot No. 11909, which was
originally issued in the names of respondents, transferred to her name.

We do not agree.

In Esguerra v. Trinidad,13 the Court had occasion to discuss the matter of sales involving real estates. The Courts
pronouncement is quite instructive:

In sales involving real estate, the parties may choose between two types of pricing agreement: a unit price contract
wherein the purchase price is determined by way of reference to a stated rate per unit area (e.g., 1,000 per square
meter), or a lump sum contract which states a full purchase price for an immovable the area of which may be
declared based on the estimate or where both the area and boundaries are stated (e.g., 1 million for 1,000 square
meters, etc.). In Rudolf Lietz, Inc. v. Court of Appeals (478 SCRA 451), the Court discussed the distinction:

"In a unit price contract, the statement of area of immovable is not conclusive and the price may be reduced or
increased depending on the area actually delivered. If the vendor delivers less than the area agreed upon, the vendee
may oblige the vendor to deliver all that may be stated in the contract or demand for the proportionate reduction of
the purchase price if delivery is not possible. If the vendor delivers more than the area stated in the contract, the
vendee has the option to accept only the amount agreed upon or to accept the whole area, provided he pays for the
additional area at the contract rate.

xxxx

In the case where the area of an immovable is stated in the contract based on an estimate, the actual area delivered
may not measure up exactly with the area stated in the contract. According to Article 1542 of the Civil Code, in the
sale of real estate, made for a lump sum and not at the rate of a certain sum for a unit of measure or number, there
shall be no increase or decrease of the price, although there be a greater or less areas or number than that stated in
the contract. . . .

xxxx

Where both the area and the boundaries of the immovable are declared, the area covered within the boundaries of
11

the immovable prevails over the stated area. In cases of conflict between areas and boundaries, it is the latter which
should prevail. What really defines a piece of ground is not the area, calculated with more or less certainty,
Page

mentioned in its description, but the boundaries therein laid down, as enclosing the land and indicating its limits. In a
contract of sale of land in a mass, it is well established that the specific boundaries stated in the contract must control
over any statement with respect to the area contained within its boundaries. It is not of vital consequence that a deed
or contract of sale of land should disclose the area with mathematical accuracy. It is sufficient if its extent is
objectively indicated with sufficient precision to enable one to identify it. An error as to the superficial area is
immaterial. Thus, the obligation of the vendor is to deliver everything within the boundaries, inasmuch as it is the
entirety thereof that distinguishes the determinate object.14

The Court, however, clarified that the rule laid down in Article 1542 is not hard and fast and admits of an exception. It
held:

A caveat is in order, however. The use of "more or less" or similar words in designating quantity covers only a
reasonable excess or deficiency. A vendee of land sold in gross or with the description "more or less" with reference
to its area does not thereby ipso facto take all risk of quantity in the land..

Numerical data are not of course the sole gauge of unreasonableness of the excess or deficiency in area. Courts must
consider a host of other factors. In one case (see Roble v. Arbasa, 414 Phil. 343 [2001]), the Court found substantial
discrepancy in area due to contemporaneous circumstances. Citing change in the physical nature of the property, it
was therein established that the excess area at the southern portion was a product of reclamation, which explained
why the lands technical description in the deed of sale indicated the seashore as its southern boundary, hence, the
inclusion of the reclaimed area was declared unreasonable.15

In the instant case, the deed of sale is not one of a unit price contract. The parties agreed on the purchase price of
40,000.00 for a predetermined area of 4,000 sq m, more or less, bounded on the North by Lot No. 11903, on the
East by Lot No. 11908, on the South by Lot Nos. 11858 & 11912, and on the West by Lot No. 11910. In a contract of
sale of land in a mass, the specific boundaries stated in the contract must control over any other statement, with
respect to the area contained within its boundaries.161avvphi1

Blacks Law Dictionary17 defines the phrase "more or less" to mean:

About; substantially; or approximately; implying that both parties assume the risk of any ordinary discrepancy. The
words are intended to cover slight or unimportant inaccuracies in quantity, Carter v. Finch, 186 Ark. 954, 57 S.W.2d
408; and are ordinarily to be interpreted as taking care of unsubstantial differences or differences of small importance
compared to the whole number of items transferred.

Clearly, the discrepancy of 10,475 sq m cannot be considered a slight difference in quantity. The difference in the area
is obviously sizeable and too substantial to be overlooked. It is not a reasonable excess or deficiency that should be
deemed included in the deed of sale.

We take exception to the avowed rule that this Court is not a trier of facts. After an assiduous scrutiny of the records,
we lend credence to respondents claim that they intended to sell only 4,000 sq m of the whole Lot No. 11909,
contrary to the findings of the lower court. The records reveal that when the parties made an ocular inspection,
petitioner specifically pointed to that portion of the lot, which she preferred to purchase, since there were mango
trees planted and a deep well thereon. After the sale, respondents delivered and segregated the area of 4,000 sq m in
favor of petitioner by fencing off the area of 10,475 sq m belonging to them.18

Contracts are the law between the contracting parties. Sale, by its very nature, is a consensual contract, because it is
perfected by mere consent. The essential elements of a contract of sale are the following: (a) consent or meeting of
the minds, that is, consent to transfer ownership in exchange for the price; (b) determinate subject matter; and (c)
price certain in money or its equivalent. All these elements are present in the instant case.19

More importantly, we find no reversible error in the decision of the CA. Petitioners recourse, by filing the petition for
registration in the same cadastral case, was improper. It is a fundamental principle in land registration that a
certificate of title serves as evidence of an indefeasible and incontrovertible title to the property in favor of the
person whose name appears therein. Such indefeasibility commences after one year from the date of entry of the
decree of registration.20 Inasmuch as the petition for registration of document did not interrupt the running of the
period to file the appropriate petition for review and considering that the prescribed one-year period had long since
expired, the decree of registration, as well as the certificate of title issued in favor of respondents, had become
incontrovertible.21

WHEREFORE, the petition is DENIED.

AGATEP VS RODRIGUEZ, G.R. 170540, OCT 28, 2009

Respondent Natalia Vda Lim owned a parcel of land in Zinundungan, Lasam, Cagayan. Lim mortgaged said lot to the
PNB to secure a loan worth 30,000 and the mortgage was duly annotated on the TCT of the land. While the mortgage
was in effect, Lim sold the property to the husband (Isaac Agatep) of the petitioner Eufemia Balatico Vda De Agatep
for 18,000.

The sale was not registered on the TCT and Lim also did not deliver the title to Balatico or her husband Agatep. In
12

spite of this, Agatep still took possession of the same and fenced said lot. When Agatep died, his heirs including
petitioner continued possession of said property.
Page
PNB foreclosed the said property when Lim could not pay her loan. Lim also failed to redeem her property during the
one year period of redemption. PNB thus consolidated ownership over the land and a new TCT was issued in PNBs
name. PNB subsequently put up some of its acquired assets for sale which included the subject lot. Roberta Rodriguez
(the daughter of respondent Lim) bought the same during the sale.This prompts Balatico to file a complaint for
reconveyance and/or damages with the RTC.

RTC- dismissed complaint but awarded damages to Balatico

CA- affirmed decision of RTC

ISSUE/S:
1. Whether PNB is a mortgagee, buyer and later seller in good faith
2. Whether PNB acquired ownership over the property

Ruling:

1. PNB was a mortgagee, buyer, and later on, seller in good faith.

Petitioner insists that PNB is not a mortgagee in good faith asserting that, if it only exercised due diligence, it would
have found out that petitioner and her husband were already in adverse possession of the subject property as early
as two years before the same was sold to them. This claim, however, is contradicted by no less than petitioner's
averments in her Brief filed with the CA wherein she stated that "[i]mmediately after the sale, the land was delivered
to Isaac Agatep . . . Since that timeup to the present, Isaac Agatep and after his death, the Appellant have been in
continuous, uninterrupted, adverse and public possession of the said parcel of land". The foregoing assertion only
shows that petitioner's husband took possession of the subject lot only after the same was sold to him.

In any case, the Court finds no error in the findings of both the RTC and the CA that PNB is indeed an innocent
mortgagee for value. When the lots were mortgaged to PNB by Lim, the titles thereto were in the latter's name, and
they showed neither vice nor infirmity. In accepting the mortgage, PNB was not required to make any further
investigation of the titles to the properties being given as security, and could rely entirely on what was stated in the
aforesaid title. The public interest in upholding the indefeasibility of a certificate of title, as evidence of the lawful
ownership of the land or of any encumbrance thereon, protects a buyer or mortgagee who, in good faith, relies upon
what appears on the face of the certificate of title.

2. PNB acquired ownership over the land.

Petitioner contends that PNB did not acquire ownership over the disputed lot because the said property was not
delivered to it. Petitioner asserts that the execution of a public document does not constitute sufficient delivery to
PNB, considering that the subject property is in the adverse possession, under claim of ownership, of petitioner and
her predecessor-in-interest.

The court finds the argument untenable.

When the sale is made through a public instrument, the execution thereof shall be equivalent to the delivery of the
thing which is the object of the contract, if from the deed the contrary does not appear or cannot clearly be
inferred.(Art 1498, CC) Therefore, prior physical delivery or possession is not legally required since the execution of
the Deed of Sale is deemed equivalent to delivery. Thus, the execution of the Deed of Sale in favor of PNB, after the
expiration of the redemption period, is deemed equivalent to delivery.

Petitioner avers that she and her husband were not aware of the mortgage contract which was executed between
PNB and Lim prior to the sale of the subject property by the latter to her husband. The fact remains, however, that
the mortgage was registered and annotated on the certificate of title covering the subject property.

It is settled that registration in the public registry is notice to the whole world. Under the rule of notice, it is presumed
that the purchaser has examined every instrument of record affecting the title. Such presumption may not be
rebutted. He is charged with notice of every fact shown by the record and is presumed to know every fact shown by
the record and to know every fact which an examination of the record would have disclosed.

n the present case, since the mortgage contract was registered, petitioner may not claim lack of knowledge thereof as
a valid defense. The subsequent sale of the property to petitioner's husband cannot defeat the rights of PNB as the
mortgagee and, subsequently, the purchaser at the auction sale whose rights were derived from a prior mortgage
validly registered.

DEL PRADO vs COURT OF APPEALSGR 148225Facts:A lot No. 1109 was adjudicated in favor of spouses Caballero thru a
Deed of Sale. They sold to petitioner said lot on the basis of Tax Declaration covering the said property. In the Deed of
Sale, it is stated that the parcel of land sold to Carmen Del Prado only covers 4,000 square meters while the total area
of the said lot is 14,000 square meters.Issue:Whether or Not the sale of the land was for lump sum or not .Held:The
court reiterated the rulings in Esguerra v. Trinidad; In sales involving real estate, the parties may choose between two
13

types of pricing agreement:Unit price contract, where in the purchase price is determined by way of reference to
stated rate per area.Lump sum, contract whichstates a full purchase price for an immovable, the area of which may
Page

be declared based on the estimate or where both the area and boundaries are stated.In the instant case the sale of
the land was for lump sum because the parties agreed to purchase the land at P 40,000 for pre-determined area of
4,000 square meters, more or less, with boundaries stated therein. In a contract of sale of land in a mass, the specific
boundaries stated in the contract prevails over any other statement with respect to the area contained within its
boundaries.

f. CAVEAT EMPTOR PRINCIPLE

SY VS CAPISTRANO, G.R. 154450, JULY 28, 2008

Sy v. Capistrano
G.R. No. 154450, July 28, 2008

Facts:

Sometime in 1980, Nenita Scott (Scott) approached respondent Nicolas Capistrano, Jr. (Capistrano) and offered her
services to help him sell his 13,785 square meters of land covered by Transfer Certificate of Title (TCT) No. 76496 of
the Register of Deeds of Caloocan City. Capistrano gave her a temporary authority to sell which expired without any
sale transaction being made. To his shock, he discovered later that TCT No. 76496, which was in his name, had already
been cancelled on June 24, 1992 and a new one, TCT No. 249959, issued over the same property on the same date to
Josefina A. Jamilar. TCT No. 249959 likewise had already been cancelled and replaced by three (3) TCTs (Nos. 251524,
251525, and 251526), all in the names of the Jamilar spouses. TCT Nos. 251524 and 251526 had also been cancelled
and replaced by TCT Nos. 262286 and 262287 issued to Nelson Golpeo and John B. Tan, respectively. DTCSHA

Thus, the action for reconveyance filed by Capistrano, alleging that his and his wife's signatures on the purported
deed of absolute sale in favor of Scott were forgeries; that the owner's duplicate copy of TCT No. 76496 in his name
had always been in his possession; and that Scott, the Jamilar spouses, Golpeo, and Tan were not innocent purchasers
for value because they all participated in defrauding him of his property.

RTC:
Decided in favor of Capistrano.
1. Declaring plaintiff herein as the absolute owner of the parcel of land located at the Tala Estate, Bagumbong,
Caloocan City and covered by TCT No. 76496;
CA: Affirmed the Decision of the trial court with the modification that the Jamilar spouses were ordered to return to
Sy, Golpeo, and Tan the amount of P1,679,260.00 representing their full payment for the property, with legal interest
thereon from the date of the filing of the complaint until full payment.

Issue(s):
(1) Whether the purported sale from Capistrano to Scott was a forgery
(2) Whether the petitioners were innocent purchasers for value

Ruling:

(1) Yes. The CA was correct in upholding the finding of the trial court that the purported sale of the property from
Capistrano to Scott was a forgery, and resort to a handwriting expert was not even necessary as the specimen
signature submitted by Capistrano during trial showed marked variance from that found in the deed of absolute sale.

The technical procedure utilized by handwriting experts, while usually helpful in the examination of forged
documents, is not mandatory or indispensable to the examination or comparison of handwritings.
By the same token, we agree with the CA when it held that the deed of sale between Scott and the Jamilars was also
forged, as it noted the stark differences between the signatures of Scott in the deed of sale and those in her
handwritten letters to Capistrano. DTESIA

(2) No, they were not innocent purchasers for value.

The Jamilar spouses were not innocent purchasers for value of the subject property. The CA properly held that they
should have known that the signatures of Scott and Capistrano were forgeries due to the patent variance of the
signatures in the two deeds of sale shown to them by Scott, when Scott presented to them the deeds of sale, one
allegedly executed by Capistrano in her favor covering his property; and the other allegedly executed by Scott in favor
of Capistrano over her property, the P40,000.00 consideration for which ostensibly constituted her initial and partial
14

payment for the sale of Capistrano's property to her.

Page

The CA also correctly found the Gilturas not innocent purchasers for value, because they failed to check the veracity
of the allegation of Jamilar that he acquired the property from Capistrano.
In ruling that Sy was not an innocent purchaser for value, we share the observation of the appellate court that Sy
knew that the title to the property was still in the name of Capistrano, but failed to verify the claim of the Jamilar
spouses regarding the transfer of ownership of the property by asking for the copies of the deeds of absolute sale
between Capistrano and Scott, and between Scott and Jamilar. Sy should have likewise inquired why the Gilturas had
to affix their conformity to the contract to sell by asking for a copy of the deed of sale between the Jamilars and the
Gilturas. Had Sy done so, he would have learned that the Jamilars claimed that they purchased the property from
Capistrano and not from Scott.

We also note, as found by both the trial court and the CA, Tan's testimony that he, Golpeo and Sy are brothers, he
and Golpeo having been adopted by Sy's father. Tan also testified that he and Golpeo were privy to the transaction
between Sy and the Jamilars and the Gilturas, as shown by their collective act of filing a complaint for specific
performance to enforce the contract to sell.

Also noteworthy and something that would have ordinarily aroused suspicion is the fact that even before the
supposed execution of the deed of sale by Scott in favor of the Jamilars, the latter had already caused the subdivision
of the property into nine (9) lots, with the title to the property still in the name of Capistrano.

Notable likewise is that the owner's duplicate copy of TCT No. 76496 in the name of Capistrano had always been in his
possession since he gave Scott only a photocopy thereof pursuant to the latter's authority to look for a buyer of the
property. On the other hand, the Jamilars were able to acquire a new owner's duplicate copy thereof by filing an
affidavit of loss and a petition for the issuance of another owner's duplicate copy of TCT No. 76496. The minimum
requirement of a good faith buyer is that the vendee of the real property should at least see the owner's duplicate
copy of the title. A person who deals with registered land through someone who is not the registered owner is
expected to look beyond the certificate of title and examine all the factual circumstances thereof in order to
determine if the vendor has the capacity to transfer any interest in the land. He has the duty to ascertain the identity
of the person with whom he is dealing and the latter's legal authority to convey.

Finally, there is the questionable cancellation of the certificate of title of Capistrano which resulted in the immediate
issuance of a certificate of title in favor of the Jamilar spouses despite the claim that Capistrano sold his property to
Scott and it was Scott who sold the same to the Jamilars.

In light of the foregoing disquisitions, based on the evidence on record, we find no error in the findings of the CA as to
warrant a discretionary judicial review by this Court.

WHEREFORE, the petition is DENIED DUE COURSE for failure to establish reversible error on the part of the Court of
Appeals. Costs against petitioners.
SO ORDERED.

DOMINGO REALTY VS CA, G.R. 126236, JAN. 26, 2007

COMPROMISE AGREEMENT CANNOT BE SET ASIDE ON THE GROUND OF VAGUENESS AND MISTAKE IF THE OBJECT OF
THE CONTRACT IS DETERMINABLE WITHOUT THE NEED OF A NEW CONTRACT

Domingo Realty, Inc. vs. Court of Appeals

G.R. No. 126236; January 26, 2007
Velasco, Jr., J.

FACTS:
Petitioner Domingo Realty filed a complaint for recovery of possession of three (3) parcels of land against private
respondent Acero, who had constructed a factory building on a portion of said lots. During the pendency of the case,
both petitioner and Acero executed a Compromise Agreement in which the latter admitted that the property he is
occupying by way of lease is encroaching on a portion of the property of petitioner and undertakes to clear all
structures within the period of 60 days.

The Regional Trial Court (RTC) rendered a decision based on the Compromise Agreement. Acero then filed a Motion
to Nullify the Compromise Agreement on the ground of vagueness and mistake. The motion was denied. The Court of
Appeals (CA) set aside the decision of the RTC. Thus, petitioner filed this petition for review on certiorari under Rule
45.

Acero alleges that the Compromise Agreement is vague as there is still a need to determine the exact metes and
bounds of the encroachment on the petitioners lot. Moreover, the agreement is mistaken as it is anchored on his
belief that the encroachment on the property of petitioners is only a portion and not the entire lot he is occupying.

ISSUE:
Should the Compromise Agreement entered into between petitioner and private respondent be set aside on the
ground of vagueness and mistake?
15

RULING:
Page

No, the compromise agreement is valid. Article 1349 of the Civil Code provides that in order for the object of the
contract to be considered as certain, it is enough that the object is determinable. Here, the title over the subject
property contains a technical description that provides the metes and bounds of the property of petitioner. Acero was
also aware of the boundaries of the lot he leased. Thus, the area of the encroachment is determinable without the
need of a new contract between the parties. Before consenting to the agreement, Acero could have simply hired a
geodetic engineer to conduct a verification survey and determine the actual encroachment of the area he was leasing
on the titled lot of petitioner. Moreover, Acero admitted that "the property he is presently occupying by way of lease
is encroaching on a portion of the property of the plaintiff." Thus, whether it is only a portion or the entire lot Acero is
leasing that will be affected by the agreement is of no importance. What controls is the encroachment on the lot of
petitioner regardless of whether the entire lot or only a portion occupied by Acero will be covered by the
encroachment. Therefore, the compromise agreement cannot be set aside on the ground of vagueness and mistake.

LOCSIN VS HIZON, G.R. 204369, SEPT 17, 2014

ENRIQUETA M. LOCSIN, Petitioner, v. BERNARDO HIZON, CARLOS HIZON, SPS. JOSE MANUEL & LOURDES GUEVARA,
Respondents.
DECISION
VELASCO JR., J.:
Nature of the Case

Before Us is a Petition for Review on Certiorari under Rule 45 assailing the Decision1 and Resolution of the Court of
Appeals (CA), dated June 6, 2012 and October 30, 2012, respectively, in CA-G.R. CV No. 96659 entitled Enriqueta M.
Locsin v. Marylou Bolos, et al. In reversing the ruling of the trial court, the CA held that respondents are innocent
purchasers for value and good faith of the subject property.
The Facts

Petitioner Enriqueta M. Locsin (Locsin) was the registered owner of a 760-sq.m. lot covered by Transfer Certificate of
Title (TCT) No. 235094, located at 49 Don Vicente St., Don Antonio Heights Subdivision, Brgy. Holy Spirit, Capitol,
Quezon City. In 1992, she filed an ejectment case, Civil Case No. 38-6633,2 against one Billy Aceron (Aceron) before
the Metropolitan Trial Court, Branch 38 in Quezon City (MTC) to recover possession over the land in issue. Eventually,
the two entered into a compromise agreement, which the MTC approved on August 6, 1993.3 Locsin later went to the
United States without knowing whether Aceron has complied with his part of the bargain under the compromise
agreement. In spite of her absence, however, she continued to pay the real property taxes on the subject lot.

In 1994, after discovering that her copy of TCT No. 235094 was missing, Locsin filed a petition for administrative
reconstruction in order to secure a new one, TCT No. RT-97467.Sometime in early 2002, she then requested her
counsel to check the status of the subject lot. It was then that they discovered the
following:chanRoblesvirtualLawlibrary
1. One Marylou Bolos (Bolos) had TCT No. RT-97467 cancelled on February 11, 1999, and then secured a new
one, TCT No. N-200074, in her favor by registering a Deed of Absolute Sale dated November 3, 1979 allegedly
executed by Locsin with the Registry of Deeds;
2. Bolos later sold the subject lot to Bernardo Hizon (Bernardo) for PhP1.5 million, but it was titled under
Carlos Hizons (Carlos) name on August 12, 1999. Carlos is Bernardos son;
3. On October 1, 1999, Bernardo, claiming to be the owner of the property, filed a Motion for Issuance of Writ
of Execution for the enforcement of the court-approved compromise agreement in Civil Case No. 38-6633;
4. The property was already occupied and was, in fact, up for sale.

On May 9, 2002, Locsin, through counsel, sent Carlos a letter requesting the return of the property since her signature
in the purported deed of sale in favor of Bolos was a forgery. In a letter-reply dated May 20, 2002, Carlos denied
Locsins request, claiming that he was unaware of any defect or flaw in Bolos title and he is, thus, an innocent
purchaser for value and good faith.

On June 13, 2002,4 Bernardo met with Locsins counsel and discussed the possibility of a compromise. He ended the
meeting with a promise to come up with a win-win situation for his son and Locsin, a promise which turned out to be
deceitful, for, on July 15, 2002, Locsin learned that Carlos had already sold the property for PhP 1.5 million to his
sister and her husband,herein respondents Lourdes and Jose Manuel Guevara (spouses Guevara), respectively, who,
as early as May 24, 2002, had a new certificate of title, TCT No. N-237083, issued in their names. The spouses Guevara
then immediately mortgaged the said property to secure a PhP2.5 million loan/credit facility with Damar Credit
Corporation (DCC).

It was against the foregoing backdrop of events that Locsin filed an action for reconveyance, annulment of TCT No. N-
237083, the cancellation of the mortgage lien annotated thereon, and damages, against Bolos, Bernardo, Carlos, the
Sps. Guevara, DCC, and the Register of Deeds, Quezon City,docketed as Civil Case No. Q-02-47925, which was tried by
the Regional Trial Court, Branch 77 in Quezon City (RTC). The charges against DCC, however, were dropped on joint
motion of the parties. This is in view of the cancellation of the mortgage for failure of the spouses Guevara to avail of
the loan/credit facility DCC extended in their favor.5cralawlawlibrary
Ruling of the Trial Court

On November 19, 2010, the RTC rendered a Decision6 dismissing the complaint and finding for respondents, as
16

defendants thereat, holding that: (a) there is insufficient evidence to show that Locsins signature in the Deed of
Absolute Sale between her and Bolos is a forgery; (b) the questioned deed is a public document, having been
Page

notarized; thus, it has, in its favor, the presumption of regularity; (c) Locsin cannot simply rely on the apparent
difference of the signatures in the deed and in the documents presented by her to prove her allegation of forgery; (d)
the transfers of title from Bolos to Carlos and from Carlos to the spouses Guevara are valid and regular; (e) Bernardo,
Carlos, and the spouses Guevara are all buyers in good faith.

Aggrieved, petitioner appealed the case to the CA.

Ruling of the Court of Appeals

The CA, in its assailed Decision, ruled that it was erroneous for the RTC to hold that Locsin failed to prove that her
signature was forged. In its appreciation of the evidence, the CA found that, indeed, Locsins signature in the Deed of
Absolute Sale in favor of Bolos differs from her signatures in the other documents offered as evidence.

The CA, however, affirmed the RTCs finding that herein respondents are innocent purchasers for value. Citing
Casimiro Development Corp. v. Renato L. Mateo,7 the appellate court held that respondents, having dealt with
property registered under the Torrens System, need not go beyond the certificate of title, but only has to rely on the
said certificate. Moreover, as the CA added, any notice of defect or flaw in the title of the vendor should encompass
facts and circumstances that would impel a reasonably prudent man to inquire into the status of the title of the
property in order to amount to bad faith.

Accordingly, the CA ruled that Locsin can no longer recover the subject lot.8 Hence, the insant petition.
Arguments

Petitioner Locsin insists that Bernardo was well aware, at the time he purchased the subject property, of a possible
defect in Bolos title since he knew that another person, Aceron, was then occupying the lot in issue.9 As a matter of
fact, Bernardo even moved for the execution of the compromise agreement between Locsin and Aceronin Civil Case
No. 38-6633 in order to enforce to oust Aceron of his possession over the property.10cralawlawlibrary

Thus, petitioner maintains that Bernardo, knowing as he did the incidents involving the subject property, should have
acted as a reasonably diligent buyer in verifying the authenticity of Bolos title instead of closing his eyes to the
possibility of a defect therein. Essentially, petitioner argues that Bernardos stubborn refusal to make an inquiry
beyond the face of Bolos title is indicative of his lack of prudence in protecting himself from possible defects or flaws
therein, and consequently bars him from interposing the protection accorded to an innocent purchaser for value.

As regards Carlos and the Sps. Guevaras admissions and testimonies, petitioner points out that when these are
placed side-by-side with the concurrent circumstances in the case, it is readily revealed that the transfer from the
former to the latter was only simulated and intended to keep the property out of petitioners reach.

For their part, respondents maintain that they had the right to rely solely upon the face of Bolos clean title,
considering that it was free from any lien or encumbrance.They are not even required, so they claim, to check on the
validity of the sale from which they derived their title.11 Too, respondents claim that their knowledge of Acerons
possession cannot be the basis for an allegation of bad faith, for the property was purchased on an as-is where-is
basis.
The Issue

Considering that the finding of the CA that Locsins signature in the Deed of Absolute Sale in favor of Bolos was indeed
bogus commands itself for concurrence, the resolution of the present petition lies on this singular issuewhether or
not respondents are innocent purchasers for value.12cralawlawlibrary
The Courts Ruling

The petition is meritorious.

Procedural issue

As a general rule, only questions of law may be raised in a petition for review on certiorari .13 This Court is not a trier
of facts; and in the exercise of the power of review, we do not normally undertake the re-examination of the evidence
presented by the contending parties during the trial of the case.14This rule, however, admits of exceptions. For one,
the findings of fact of the CA will not bind the parties in cases where the inference made on the evidence is mistaken,
as here.15cralawlawlibrary

That being said, we now proceed to the core of the controversy.

Precautionary measures for

buyers of real property

An innocent purchaser for value is one who buys the property of another without notice that some other person has
a right to or interest in it, and who pays a full and fair price at the time of the purchase or before receiving any notice
of another persons claim.16 As such, a defective titleor one the procurement of which is tainted with fraud and
misrepresentationmay be the source of a completely legal and valid title, provided that the buyer is an innocent
third person who, in good faith, relied on the correctness of the certificate of title, or an innocent purchaser for
value.17cralawlawlibrary
17

Complementing this is the mirror doctrine which echoes the doctrinal rule that every person dealing with registered
Page

land may safely rely on the correctness of the certificate of title issued therefor and is in no way obliged to go beyond
the certificate to determine the condition of the property.18 The recognized exceptions to this rule are stated as
follows:chanRoblesvirtualLawlibrary
[A] person dealing with registered land has a right to rely on the Torrens certificate of title and to dispense with the
need of inquiring further except when the party has actual knowledge of facts and circumstances that would impel a
reasonably cautious man to make such inquiry or when the purchaser has knowledge of a defect or the lack of title in
his vendor or of sufficient facts to induce a reasonably prudent man to inquire into the status of the title of the
property in litigation. The presence of anything which excites or arouses suspicion should then prompt the vendee to
look beyond the certificate and investigate the title of the vendor appearing on the face of said certificate. One who
falls within the exception can neither be denominated an innocent purchaser for value nor a purchaser in good faith
and, hence, does not merit the protection of the law.19 (emphasis added)

Thus, in Domingo Realty, Inc. v. CA,20 we emphasized the need for prospective parties to a contract involving titled
lands to exercise the diligence of a reasonably prudent person in ensuring the legality of the title, and the accuracy of
the metes and bounds of the lot embraced therein,by undertaking precautionary measures, such
as:chanRoblesvirtualLawlibrary
1. Verifying the origin, history, authenticity, and validity of the title with the Office of the Register of Deeds
and the Land Registration Authority;
2. Engaging the services of a competent and reliable geodetic engineer to verify the boundary, metes, and
bounds of the lot subject of said title based on the technical description in the said title and the approved survey plan
in the Land Management Bureau;
3. Conducting an actual ocular inspection of the lot;
4. Inquiring from the owners and possessors of adjoining lots with respect to the true and legal ownership of
the lot in question;
5. Putting up of signs that said lot is being purchased, leased, or encumbered; and
6. Undertaking such other measures to make the general public aware that said lot will be subject to
alienation, lease, or encumbrance by the parties.

In the case at bar, Bolos certificate of title was concededly free from liens and encumbrances on its face.
However,the failure of Carlos and the spouses Guevara to exercise the necessary level of caution in light of the factual
milieu surrounding the sequence of transfers from Bolos to respondents bars the application of the mirror doctrine
and inspires the Courts concurrence with petitioners proposition.

Carlos is not an innocent purchaser for value

Foremost, the Court is of the view that Bernardo negotiated with Bolos for the property as Carlos agent. This is
bolstered by the fact that he was the one who arranged for the sale and eventual registration of the property in
Carlos favor. Carlos testified during the May 27, 2009 hearing:21cralawlawlibrary
Q: Are you privy with the negotiations between your father, Mr. Bernardo Hizon, and your co-defendant,
Marylou Bolos, the alleged seller?
A: No, Maam.
Q: Do you remember having signed a Deed of Absolute Sale, dated August 12, 1999?
A: Yes, Maam.
Q: And, at that time that you have signed the Deed, was Marylou Bolos present?
A: No, Maam.
Q: Who negotiated and arranged for the sale of the property between Marylou Bolos and you?
A: It was my father.(emphasis ours)

Consistent with the rule that the principal is chargeable and bound by the knowledge of, or notice to, his agent
received in that capacity,22 any information available and known to Bernardo is deemed similarly available and
known to Carlos, including the following:chanRoblesvirtualLawlibrary
1. Bernardo knew that Bolos, from whom he purchased the subject property, never acquired possession over
the lot. As a matter of fact, in his March 11, 2009 direct testimony,23Bernardo admitted having knowledge of
Acerons lot possession as well as the compromise agreement between petitioner and Aceron.
2. Bolos purported Deed of Sale was executed on November 3, 1979 but the ejectment case commenced by
Locsin against Aceron was in 1992, or thirteen (13) years after the property was supposedly transferred to Bolos.
3. The August 6, 1993 Judgment,24 issued by the MTC on the compromise agreement between Locsin and
Aceron, clearly stated therein that [o]n August 2, 1993, the parties [Aceron and Locsin] submitted to [the MTC] for
approval a Compromise Agreement dated July 28, 1993. It further indicated that [Aceron] acknowledges [Locsins]
right of possession to [the subject property], being the registered owner thereof.

Having knowledge of the foregoing facts, Bernardo and Carlos, to our mind, should have been impelled to investigate
the reason behind the arrangement. They should have been pressed to inquire into the status of the title of the
property in litigation in order to protect Carlos interest. It should have struck them as odd that it was Locsin, not
Bolos, who sought the recovery of possession by commencingan ejectment case against Aceron, and even entered
into a compromise agreement with the latter years after the purported sale in Bolos favor. Instead, Bernardo and
Carlos took inconsistent positions when they argued for the validity of the transfer of the property in favor of Bolos,
but in the same breath prayed for the enforcement of the compromise agreement entered into by Locsin.
18

At this point it is well to emphasize that entering into a compromise agreement is an act of strict dominion.25 If Bolos
already acquired ownership of the property as early as 1979, it should have been her who entered into a compromise
Page

agreement with Aceron in 1993, not her predecessor-in-interest, Locsin, who, theoretically, had already divested
herself of ownership thereof.
The spouses Guevara are not innocent purchasers for value

As regards the transfer of the property from Carlos to the spouses Guevara, We find the existence of the sale highly
suspicious. For one, there is a dearth of evidence to support the respondent spouses position that the sale was a
bona fide transaction. Even if we repeatedly sift through the evidence on record, still we cannot find any document,
contract, or deed evidencing the sale in favor of the spouses Guevara. The same goes for the purported payment of
the purchase price of the property in the amount of PhP 1.5 million in favor of Carlos.As a matter of fact, the only
documentary evidence that they presented were as follows:chanRoblesvirtualLawlibrary
1. Deed of Sale between Locsin and Bolos;
2. TCT No. 200074 issued in Bolos name;
3. TCT No. N-205332 in Carlos name;
4. TCT No. N-237083 in the name of the Sps. Guevara.

To bridge the gap in their documentary evidence, respondents proffer their own testimonies explaining the
circumstances surrounding the alleged sale.26 However, basic is the rule that bare and self-serving allegations,
unsubstantiated by evidence, are not equivalent to proof under the Rules.27As such, we cannot give credence to their
representations that the sale between them actually transpired.

Furthermore, and noticeably enough, the transfer from Carlos to the spouses Guevara was effected only fifteen (15)
days after Locsin demanded the surrender of the property from Carlos. Reviewing the
timeline:chanRoblesvirtualLawlibrary
May 9, 2002: Locsins counsel sent a letter to Carlos, requesting that he return the property to Locsin since the latters
signature in the purported deed of sale between her and Bolos was a forgery.

May 20, 2002: Carlos counsel replied to Locsins May 9, 2002 letter, claiming that Carlos was unaware of any defect
or flaw in Bolos title, making him an innocent purchaser of the subject property.

May 24, 2002: The Sps. Guevara allegedly purchased the property from Carlos.

When Bernardo met with Locsins counsel on June 13, 2002, and personally made a commitment to come up with a
win-win situation for his son and Locsin, he knew fully well,too, that the property had already been purportedly
transferred to his daughter and son-in-law, the spouses Guevara, for he, no less, facilitated the same. This, to us, is
glaring evidence of bad faith and an apparent intention to mislead Locsin into believing that she could no longer
recover the subject property.

Also, the fact that Lourdes Guevara and Carlos are siblings, and that Carlos agent in his dealings concerning the
property is his own father, renders incredible the argument that Lourdes had no knowledge whatsoever of Locsins
claim of ownership at the time of the purported sale.

Indeed, the fact that the spouses Guevara never intended to be the owner in good faith and for value of the lot is
further made manifest by their lack of interest in protecting themselves in the case. It does not even appear in their
testimonies that they, at the very least, intended to vigilantly protect their claim over the property and prevent Locsin
take it away from them. What they did was to simply appoint Bernardo as their attorney-in-fact to handle the
situation and never bothered acquainting themselves with the developments in the case.28 To be sure, respondent
Jose Manuel Guevara was not even presented as a witness in the case.

There is also strong reason to believe that even the mortgage in favor of DCC was a mere ploy to make it appear that
the Sps. Guevara exercised acts of dominion over the subject property. This is so considering the proximity between
the propertys registration in their names and its being subjected to the mortgage. Most telling is that the credit line
secured by the mortgage was never used by the spouses, resulting in the mortgages cancellation and the exclusion of
DCC as a party in Civil Case No. Q-02-47925.

These circumstances, taken altogether, strongly indicate that Carlos and the spouses Guevara failed to exercise the
necessary level of caution expected of a bona fide buyer and even performed acts that are highly suspect.
Consequently, this Court could not give respondents the protection accorded to innocent purchasers in good faith
and for value.

Locsin is entitled to nominal damages

We now delve into petitioners prayer for exemplary damages, attorneys fees, and costs of suit.

Here, the Court notes that petitioner failed to specifically pray that moral damages be awarded. Additionally, she
never invoked any of the grounds that would have warranted the award of moral damages. As can be gleaned from
the records, lacking from her testimony is any claim that she suffered any form of physical suffering, mental anguish,
fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, or any other similar
circumstance.29Thus, we are constrained to refrain from awarding moral damages in favor of petitioner.
19

In the same vein, exemplary damages cannot be awarded in favor of petitioner. Well-settled that this species of
damages is allowed only in addition to moral damages such that no exemplary damages can be awarded unless the
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claimant first establishes his clear right to moral damages.30Consequently, despite our finding that respondents
acted in a fraudulent manner, petitioners claim for exemplary damages is unavailing at this point.
 Nevertheless, we find an award for nominal damages to be in order. Under prevailing jurisprudence, nominal
damages are recoverable where a legal right is technically violated and must be vindicated against an invasion that
has produced no actual present loss of any kind or where there has been a breach of contract and no substantial
injury or actual damages whatsoever have been or can be shown.31 As expounded in Almeda v. Cario,32 a violation
of the plaintiffs right, even if only technical, is sufficient to support an award of nominal damages. So long as there is
a showing of a violation of the right of the plaintiff, as herein petitioner, an award of nominal damages is
proper.33cralawlawlibrary

In the case at bar, this Court recognizes that petitioner was unduly deprived of her ownership rights over the
property, and was compelled to litigate for its recovery, for almost ten (10) years. Clearly, this could have entitled her
to actual or compensatory damages had she quantified and proved, during trial, the amounts which could have
accrued in her favor, including commercial fruits such as reasonable rent covering the pendency of the case.
Nonetheless, petitioners failure to prove actual or compensatory damages does not erase the fact that her property
rights were unlawfully invaded by respondents, entitling her to nominal damages.

As to the amount to be awarded, it bears stressing that the same is addressed to the sound discretion of the court,
taking into account the relevant circumstances.34 Considering the length of time petitioner was deprived of her
property and the bad faith attending respondents actuations in the extant case, we find the amount of seventy-five
thousand pesos (PhP75,000)as sufficient nominal damages. Moreover, respondents should be held jointly and
severally liable for the said amount, attorneys fees in the amount of an additional seventy-five thousand pesos (PhP
75,000), and the costs of the suit.

WHEREFORE, in light of the foregoing, the Petition is hereby GRANTED. The assailed Decision of the Court of Appeals
dated June 6, 2012 in CA-G.R. CV No. 96659 affirming the Decision of the Regional Trial Court, Branch 77, Quezon City,
in Civil Case No. Q-02-47925; as well as its Resolution dated October 30, 2012, denying reconsideration thereof, are
hereby REVERSED and SET ASIDE. TCT No. N-200074 in the name of Marylou Bolos, and the titles descending
therefrom, namely, TCT Nos. N-205332 and N-237083 in the name of Carlos Hizon, and the Spouses Jose Manuel &
Lourdes Guevara, respectively, are hereby declared NULL and VOID. Respondents and all other persons acting under
their authority are hereby DIRECTED to surrender possession of the subject property in favor of petitioner.
Respondents Bernardo Hizon, Carlos Hizon, and the spouses Jose Manuel and Lourdes Guevara shall jointly and
severally pay petitionerPhP75,000 as nominal damages, PhP75,000 as attorneys fees, and costs of suit.

The Register of Deeds of Quezon City is hereby ORDERED to (1) cancel TCT No. N-237083;(2) reinstate TCT No. RT-
97467; and (3) re-issue TCT No. RT-97467 in favor of petitioner, without requiring from petitioner payment for any
and all expenses in performing the three acts.

2. INVOLUNTARY DEALINGS

a. Attachments (Sec. 69)

b. Adverse Claims (Sec. 70)

SAJONAS VS CA, G.R. 102377, JULY 5, 1996

RODRIGUEZ vs CA, G.R. 142687, JULY 20, 2006

GOLDEN HAVEN MEMORIAL PARK vs FILINVEST, G.R. 188265, Nov. 17, 2010

MARTINEZ VS GARCIA, G.R. 166356, FEB 4, 2010

c. Enforcement of Liens on Registered Land

PADILLA JR. VS PHIL. PRODUCERS COOPERATIVE, G.R. 141256, July 15, 2005
20

REYES vs TANG SOAT ING, G.R. 185620, Dec. 14, 2011

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 d. LIS PENDENS

VIEWMASTER CONSTRUCTION VS MAULIT, G.R. 136283, FEB 29, 2000

ATLANTIC ERECTORS INC VS HERBAL COVE REALTY, G.R. 148568, March 20, 2003

HOMEOWNERS SAVINGS VS DELGADO, G.R. 189477. Feb 26, 2014

CASIM VS RD OF LAS PINAS, G.R. 168655, July 2, 2010

e. Levies on Execution

PINEDA VS ARCALAS, GR 170172, Nov 23, 2007

VALDEVIESO VS DAMALERIO, G.R 133303, Feb 17, 2005

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