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Capitol Subd. vs. Prov. of Negros Occ. GRN L-1625 ! "a#uar$ %1& 1'6% Plaintiff, Capitol Subdivision, Inc.

, seeks to recover from defendant, the Province of Negros Occidental, the possession of Lot 3 ! of the cadastral surve" of #acolod, Negros Occidental, and a reasonable compensation for the use and occupation of said lot b" the defendant from November !, $%3&, in addition to attorne"'s fees and costs. On (une )!, $%&$, the Court of *irst Instance of Negros Occidental rendered +udgment for the plaintiff. On appeal taken b" the defendant, this +udgment ,as, ho,ever, set aside b" the Supreme Court -see ../. No. L01)23, decided on (ul" 3$, $%&14, ,hich, like,ise, ordered the case remanded to the lo,er court 5for further trial5, after ,hich another decision ,as rendered b" said court of first instance dismissing plaintiff's complaint and ordering plaintiff to e6ecute a deed conve"ing Lot 3 ! to the defendant. 7he case is, once again, before us, this time on appeal b" the plaintiff, the sub+ect matter of litigation being ,orth more than P)22,222, e6clusive of interest and costs. 7he main facts are not in dispute. Said Lot 3 ! is part of 8acienda 9andalagan, consisting of Lots 3 !, 32&, 32 , 3$2, $)2&, $3&) and $13$ of the aforementioned cadastral surve", ,ith an aggregate area of over &2) hectares, originall" registered in the name of :gustin :menabar and Pilar :menabar. Lot 3 ! has an area of )), !3 s;. meters, more or less, and ,as covered b" Original Certificate of 7itle No. $ 1 -<6hibit 34, issued on :ugust )&, $%$1, in the name of the :menabars. On November 32, $%)2, the latter sold the aforementioned 8acienda to (ose #enares -also referred to in some documents as (ose #enares 9ontelibano4 for the sum of P322,222, pa"able in instalments, as set forth in the deed of sale, <6hibit )$. On *ebruar" !, $%)3, said Original Certificate of 7itle No. $ 1 ,as cancelled and (ose #enares obtained, in lieu thereof, 7ransfer Certificate of 7itle No. 1)%& in his name. 9ean,hile, or on 9arch $), $%)$, the 8acienda, including Lot 3 !, had been mortgaged b" (ose #enares to the #acolod09urcia 9illing Co. for the sum of P) ,%%$. 3 -<6hibit =0)4. On >ecember 1, $%)1, (ose #enares again mortgaged the 8acienda, including said Lot 3 !, to the Philippine National #ank, sub+ect to the first mortgage held b" the #acolod9urcia 9illing Co. -<6hibit =0$4. 7hese transactions ,ere dul" recorded in the office of the /egister of >eeds of Negros Occidental and annotated on the corresponding certificates of title, including said 7ransfer Certificate of 7itle No. 1)%&, covering Lot 3 !. 7he mortgage in favor of the #ank ,as subse;uentl" foreclosed, in pursuance of a decision of the Court of *irst Instance of Negros Occidental dated September )%, $%3$ -<6hibit ?0$4, and the #ank ac;uired the 8acienda, including Lot 3 !, as purchaser at the foreclosure sale. :ccordingl", said 7ransfer Certificate of 7itle No. 1)%& ,as cancelled and, in its stead, 7ransfer Certificate of 7itle No. $ $110,hich, o,ing to its

as issued. the #ank e6ecuted the corresponding deed of absolute sale to the plaintiff -<6hibit @4 and 7ransfer Certificate of 7itle No. dated November !.ith the e6planations given b" said officials.uisition of the 8acienda in $%33 b" the #ank. $%3&. also. son of (ose #enares. plaintiff took steps to take possession5. for the sum of P322. $ %!. 5for some reason or other and for cause be"ond comprehension of the defendant title thereto .er dated (une )3. thereafter. contained a caveat emptor stipulation. on. or on November !.ith the #ank.as completed in $%)1B that since then it had occupied said lot publicl". Ahen. defendant alleged. the #ank agreed to sell the 8acienda to Carlos P. . /70$3 $ in the name of the #ank. *or this reason. notoriousl" and continuousl" as o. $%&2. .222. for assessment purposes until $%&2. and did not declare said lot in its name. e6ecuted b" the #ank in favor of Carlos P. it brought the present action on (une $2. #enares. in lieu of 7ransfer Certificate of 7itle No. In an amended ans. despite the ac. $ $11 -or reconstituted 7ransfer Certificate of 7itle /70$3 $4. in plaintiff's name -<6hibit 24. . adversel".as never transferred in the name of said defendant5B that said lot had been placed indefendant's name for assessment purposes under 7a6 >eclaration No. later. title . sell. through e6propriation proceedingsB that immediatel" after the commencement of said proceedings in $%)3.ith the proper officials to clarif" the status of said occupation and. of the 8acienda.uired Lot 3 ! in the "ear $%)30$%)&. for plaintiff kne.ner thereofB that. covering Lot 3 ! . $%3 4B and that plaintiff had acted in bad faith in purchasing said lot from the #ank in $%3&. aside from the fact that :lfredo 9ontelibano. it took possession of said lot and began the construction thereon of the provincial hospital. to plaintiff herein. operation and maintenance of said hospital. Carlos P. Soon. not being satisfied . $%3%. #enares transferred his rights. :t this +uncture. until full pa"ment thereof. under this contract .hich .hich contributed to the support. In its ans. #enares. $%33 -<6hibit P4. or on October 3. then that the provincial hospital . the controlling stockholder.ould remain in the #ank -<6hibit /4.as the first Cit" 9a"or of #acolod. . defendant maintained that it had ac. president and general manager of plaintiff corporation. on September )%.here it is up to the present.hich completed the pa"ment of the instalments due to the #ank in $%3%.as discovered that Lot 3 ! . it .as issued on 9arch $3. had to be reconstituted as 7ransfer Certificate of 7itle No. $%&2. the latter did not take possession of the propert" for (ose #enares claimed to be entitled to retain it under an alleged right of lease. it should be noted that. $%3% plaintiff made representations . $%3%. $%&2.subse. . 8ence. $1)1% -dated >ecember 3$. September )%. sub+ect to the condition that.uent loss.er. 7hereafter. pa"able in annual instalments. upon the e6ecution of the deed of absolute sale -<6hibit @4 b" the #ank.as the land occupied b" the Provincial 8ospital of Negros Occidental Immediatel". the deed of promise to.as . that the aforementioned e6propriation case .

as settled amicabl" upon pa"ment to him of the sum of P$).overnment. about 5) or 3 da"s5 after the .overnment had taken possession of the land.uestion in the affirmative and declared that plaintiff merel" holds it in trust for the defendant. .22 5in the "ear $%)3 or $%)&5. 7he decision appealed from in effect decided this .ould pa" and did in fact pa" to (ose #enares the assessed value of Lot 3 ! C C C and . 7his conclusion is predicated.ledged to have received said sum of P$).een (ose #enares and plaintiff. in the sense that the Province of Negros Occidental .hatever consideration pertaining to said lot in e6cess of its assessed value .222 on November .as 5amicabl" settled as bet.. for the e6propriation of 0the hospital site of said province.een the parties herein.hose favor the corresponding transfer certificate of title -<6hibit ##0)4 .uestion for determination in this case is .itness (ose .ho sold it. 32&0 #5 in the plan <6hibit D. $%)3B that.ould be donated and . upon the follo.222 for its )).as issued on (ul" $).uired Lot 3 ! in the aforementioned 0=propriation proceedings. 7he testimon" of (ose #enares is e6tremel" contradictor".as in fact donated b" said C C C (ose #enares in favor of the Province purposel" for 8ospital site5. Said testimon" .hich have been finall" decided against the formerB ).as contradicted b" that of defendant's . . he .hich .as due to 5the mistaken notion or belief that said lot forms part of Lot No. he agreed to sell Lot 3 !.hich it ordered the former to conve" said lot to the latter. namel"B that case No. full faith and credence. at the rate of P$. but the latter ackno. ho.ever. and to have sent the mone" the ne6t da" to Pilar :menabar. 323$ of the Court of *irst Instance of Negros Occidental. in .222.222B and that defendant's failure to secure the corresponding transfer certificate of title to Lot 3 ! .hich.as Lot 3 of the aforementioned cadastral surve". !3 s. $%)1. $%)!B 3. becauseE $.ould have us believe. in vie. although. among the lands sought to be e6propriated in said case . (ose #enares appears to be strongl" biased and pre+udiced against the plaintiff and its president. on (ul" $2. 7husE -a4 he testified to having been paid P$).222 a hectare at . 7he main . 7he testimon" of (ose #enares does not deserve. metersB -b4 he claimed to have received said sum of P$). for the former believes that the latter had 5manipulated5 to e6clude him from plaintiff corporation.. substantiall". of . and there have boon four -34 litigations bet. all of .as paid b" the Province . according to the testimon" of (ose #enares. the e6propriation of Lot 3 ! . belonging to one :nacleta :gsam. he should have received less than P3.ing premises.as actuall" commenced on (anuar" )1.222 b" the .hether or not defendant herein had ac. to the defendant -<6hibit ##4. $%)1B that.

hen contrasted .uisition of Lot 3 ! b" the . the latter . but #enares affirmed that he . $ 1. on 7ransfer Certificate of 7itle No.as.hich .as not cancelled until September )!.ith the absence of a similar deed of assignment and of a transfer certificate of title in favor of the Province as regards Lot 3 !. .ithout the intervention of the 9illing Co. ?pon the other hand. .as mortgaged to the #acolod09urcia 9illing Co. as compensation for Lot 3 !. (ose #enares constituted a second mortgage in favor of the #ank.as merel" oralB and -b4 9arco stated that #enares had agreed to accept. and that he later demanded P$.as first offered P322 per hectare .spaper of the corresponding notices -<6hibit $4B ). forE -a4 (ose #enares asserted that there . former deput" clerk of court of Negros Occidental. =et.ith respect to Lot 3 ! had been made or reachedB 3. contradicted b" defendant's . .hich the .ere still pending5 for the ac.overnment had been reached and that the e6propriation had not been consumated. of another title in the name of the Province. and to donate to the .uisition of the land b" the . 7he onl" entries in the docket relative to the e6propriation case refer to its filing and the publication in the ne.222 per hectareB 3.as not "et terminated5 and that 5negotiations . .uentl". Neither could said lot have been .ritten compromise agreement bet. subse.ho positivel" assured the Court that the e6propriation case 5.een this sum and the true value of the propert".as P332.hereas 9arco averred that agreement . $%)$. several circumstances strongl" indicate that no compromise agreement for the ac. Lot 3 ! could not have been e6propriated .222 a hectare.overnment. inter alia.een him and the .itness Ildefonso Coscolluela. also.ed b" the cancellation of the certificate of title in her name and the issuance.overnment .overnment agreed to pa". 7he registration of the deed of sale of Lot 3 b" :nacleta :gsam to the . $%3&. .as not made a part" in the e6propriation proceedingsB 3. the provincial treasurer of Negros Occidental at the time of the e6propriation. the assessed value thereof. he said that /afael :lunan and 9ariano =ulo had prevailed upon him to accept P$.9arco. and this mortgage.as a .hen he retired from the service in $%33. strongl" suggest that no such assignment or agreement . follo. 7he propert" .overnment. since 9arch $). in lieu thereof. dul" registered and annotated. although. in the name of (ose #enares. . . On >ecember )1.ould not have accepted the mortgage had Lot 3 ! not belonged then to the mortgagor. *or instanceE $.overnment the difference bet. 9oreover. $%)1. (ose #enares .hich he re+ected.hich .

Ildefonso Coscolluela. 7o begin .as e6plicitl" stated that portions of Lots 32&. marked <6hibit D0$.itness.ith the corresponding lot number and that portion is precisel" lot No. on November !. that the e6propriation case had ever been dismissed insofar as Lot 3 ! is concerned.er court merel" speculated about the 5chances that the -e6propriation4 case . in the deed e6ecuted b" the #ank. the lo.e find ourselves unable to concur in the foregoing vie.as arrived at after e6amining closel" the plan. $%) b" public land surve"or.overnment of Negros Occidental.as not labelled .hen there is sufficient proof that (ose #enares . is not labelled .h" the government failed to secure the corresponding certificate of title to lot 3 !.ith the corresponding lot number might have misled the authorities to believe that it formed a part of lot 32&0#.ell earned reputation and prestige of the Philippine +udiciar". 7he plan sho. no. promising to sell the 8acienda 9andalagan to Carlos P. 9r.as still pending in $%33. had been e6propriated b" the Provincial .a".as dismissed. 7his conclusion . it .hen he ceased to be the provincial treasurer.ithout the #ank's kno.s that .uestion.5 #" the . 7he Court believes that the failure of the government to secure the corresponding transfer of title to Lot 3 ! lies in the mistaken notion or belief that said lot forms a part of Lot 32&0#. . Ahat is more.er corner of the plan encircled .uentl" thereto .as paid and he e6ecuted the deed of sale in favor of the government. 7his lack of reasonable e6planation . #enares.ledge and participation. 7he fact that this particular portion .ith. 32 0# and 3$20:. 32 0:. . for he testified that the e6propriation case .here the hospital building . altho separated b" the creek.as intimated b" defendant's . *ormento.ith the e6propriation case and the chances are that the case . 7he Court had to e6amine carefull" and minutel" ever" single piece of evidence adduced b" both parties in order to arrive at the correct solution of the m"ster". that Lot 3 ! had not been e6propriated. .as prepared for the government on 9a" $).as dismissed. and defendant has not even tried to prove.hich ad+oins it.e6propriated subse. 7he decision appealed from sa"sE 5' C C It is evident that there . in .ere properl" identified b" lot numbers. 32 and 3$2. thus indicating. that particular portion at the lo.ere no further proceedings in said case. b" necessar" implication.. .as constructed. 7his plan .ere no further proceedings in connection . 3 !. forming part of said 8acienda and designated as Lots 32&0:. <6hibit 6.hile all the subdivided lots . $%3& -<6hibit /4. the contrar" . . there Is no evidence.5 :lthough said decision appears to have been prepared . there . . and the record before us suggests that since the Province took possession of the land in $%)3 or $%)& and completed the construction of the hospital in $%)1.ith red pencil. 8ence. embracing lots covering over )) hectares for the Capitol and hospital sites.ith the conscientiousness and moral courage that account for the .

at the rate of P$. the follo. he did not have.overnment of #acolod. : close e6amination of the latter sho. speciall" the assessor's field sheets and declarations of real propert" for ta6 purposes -<6hibits %. 32&. to be the e6clusive propert" of plaintiff herein. hence.hatsoever that the authorities had been 'misled C C C to believe5 that the portion at the lo.a"s regarded Lot 3 !. as one intended for Lot 3 !.22 in this connection. that the . 32$. appears to have been instituted in the Court of *irst Instance of Negros Occidental. cannot suffice to .arrant0in the face of documentar" evidence to the contrar" the conclusion that Lot 3 ! has alread" been ac. and that Lot 3 ! . there is. said portion <6hibit D0$ is not part of the land covered b" the plan <6hibit D. <videntl".overnment and applied b" him to the pa"ment of his debt to Pilar :menabarG Said amount could not possibl" be the price of Lot 3 !. 7hus. and.hich . like. for.another e6propriation case for the Capitol site. no evidence . on the right hand side of <6hibit D. the evidence on record is far from sufficient to establish the alleged ac. $2. 32 and 3$2 #acolod Cadastre as surve"ed for the Provincial .er corner of said plan0.s that the boundaries of said portion are not delimited on the plan.222 a hectare allegedl" agreed therefor. about the P$). at least. :nd this possibilit" ma" amount to a probabilit" . . $) and $34 sho. . and marked as <6hibit D0$ formed part of Lot 32&0#. during the trial. and. affecting another propert" of (ose #enares. its price could not have e6ceeded P3. as including the hospital site. his testimon" ma" not be relied upon.hich .overnment. against him. Negros Occidental -Capitol site45. In fact.e consider that he erroneousl" believed that there had been onl" one e6propriation case.uisition b" the defendant of Lot 3 !.ise. negates the possibilit" of its being mistaken b" an" bod". not Lot 32&.overnment had al. 0said Lot 3 !. 8o.hich had been e6propriated b" the Province of Negros Occidental. the ver" evidence for the defendant herein.hich must be held.uired b" the . 322.as enclosed. .222. In an" event.ithin a circle in red pencil. therefore. . (ose #enares ma" have mistaken the pa"ment for his land included in the Capitol Site.as affected b" the hospital site.hich .Aith respect to the plan <6hibit D. 323. 321. Lastl".as not included in the mortgage constituted b" him in favor of the Philippine National #ank. instead of t.o cases.222 received b" (ose #enares from the .hen . if an" .ing appears in bold lettersE 5Subdivision F Consolidation PL:N of Lots Nos. aside from the e6propriation proceedings for the hospital site. as part of the Provincial 8ospital Site. 7he absence of Lot 3$! from said enumeration and the e6plicit statement in <6hibit D to the effect that it refers to the 5Capitol Site5. $$. it should be noted that. . . hence. an accurate recollection of the events or transactions affecting his. much less b" government engineers. properties. 9ore important still.ould be remote. said possibilit" of mistake.

vs. and the mortgage.7he lo.as bought b" the plaintiff5.overnment .as one of the properties mortgaged b" him to the #ank. e6cept .as not a.helming fact that Lot No. it held that plaintiff . *ebruar" ) . 9oreover. .hen the part" concerned has actual kno. the purchaser should have in. (ose #enares. Neither ma" such kno. dul" registered. 3 !5B and because 5of the over.ledge of facts and circumstances that should impel a reasonabl" cautious man to make such further in. #enares0.ner thereof.hich the provincial hospital stood .overnment5 and 5. until $%3% that the land on .as ac. as o..n to Carlos P. alread" constructed in Lot 3 ! since $%)1 and the lot .are until $%3% that the land on . .H that he is a son of its former o. it being an established fact that he . $%&%B /evilla vs. ho. there is a total absence of evidence that this fact .o -)4 e6propriation proceedings affecting said propertiesB that the P$).as Lot 3 !.as. and to facilitate transactions relative thereto b" giving the public the right to rel" upon the face of a 7orrens certificate of title and to dispense . and the lo.hich the Provincial 8ospital #uilding stands is Lot 3 !. that there . plaintiff's president did not kno. #enares before $%3%.uiring further. since the "ear $%)$.ell0posted on the status of his properties. because 5the hospital . (ose #enares did not apparentl" kno. because Carlos P. L0$33 %. *urthermore.ever. . =et./. In the case at bar plaintiff had no such actual kno.ere t.as mortgaged to the #acolod09urcia 9illing Co. L0$3% $. until $%3% that Lot 3 % . said lot . ?pon the other hand. L0$%%32. October 3$. No. $%1$4. . No. P88C.er court entertained no doubts about the veracit" of the testimon" of plaintiff's president to the effect that he did not kno. $%12B 9aJacop. Indeed.5 :s above stated. ..as occupied b" the defendant government for the provincial hospital for the last 33 "ears.222 received b" him from the .ner. 3 ! .ner of the Capitol Subdivision and holds a responsible position therein5.hose right to bu" the 8acienda 9andalagan from the #ank .ith the need of in. (r.er court conceded. Cansino.ledge. as .uir" -7iburcio vs.alindeI.hen plaintiff bought the lot in $%3&.ell as annotated on the corresponding certificate of title. or before the e6propriation case for the hospital site had begun.ledge of defendant's possession of the propert" at the time it . 9arch 32.as erroneousl" or inadvertentl" included b" the deeds of sale -<6hibits @ F /4 e6ecuted b" the Philip0pine National #ank in favor of the plaintiff subdivision and that same lot .as 5not a purchaser in good faith for having constructive kno.as not meant for Lot 3 !B and that this lot .as the ver" land occupied b" the provincial hospital..as kno.uired as to its location and improvements5B because 5it took the plaintiff $3 "ears to sleep over their supposed rights to take possession of Lot No.ledge be deduced from the circumstance. for even the latter appears not to be .as declared in the name of the .uired b" plaintiff5is a part o. the main purpose of the 7orrens S"stem is to avoid possible conflicts of title in and to real estate./.as not cancelled until September )!.

as e6ecuted.hat is due b" reason of the e6propriation of said lot. should be deducted. Considering that sugar centrals as . to sell the propert" to Carlos P. and is seemingl" conceded.as not +ustified in assuming that said institutions had scrutiniIed the background of Lot 3 ! and . In short. It is so ordered. Prior to this date.hen said mortgages .n to have an arra" of e6perienced and competent la. thereafter.er court for further proceedings. In short. . since the latter's right to e6propriate Lot 3 ! is not contested. as such.e are of the opinion.hich conse.e find that plaintiff herein is a purchaser in good faith and for value. and so hold.ith costs against the defendant. if an". Ahen the #ank agreed on November !.ell as .er court for the reception of evidence on the date of said actual taking and the amount of compensation collectible from the defendant. . . as of the time .uired title thereto. subse. plus conse.uivalent of Lot 3 !. . :s regards the compensation that. thru foreclosure proceedings.ere constituted. therefor.ith interest.hen possession thereof ."ers. and to the #ank . conve"ed his rights to plaintiff herein.hich ac.hen the #ank e6ecuted the deed of absolute sale in plaintiff's favor on September )2.uential damages the conse. #enares and 0the latter. the title to the propert" . Lot 3 ! . to the lo.uential damages0including attorne"'s fees0from .hen said deed of sale . . as .uentl". it ma" collect from the defendant. plaintiff is entitled to recover from the defendant the fair and full e. $%3%. at the legal rate. A8</<*O/<. $%)1.as in the name of the #ank. it cannot be said that plaintiff . on the aggregate sum due to the plaintiff. that. in $%33. as above stated.$%3&. of the corresponding decision thereon. the plaintiff ma" demand .ell as banks are kno. $%3&.as actuall" taken b" the defendant.as sub+ected to a second mortgage in favor of the #ank.uential benefits. or on >ecember )1. from and after the date of said actual taking. and the rendition.ere satisfied that the same belonged to the mortgagor . the decision appealed from is hereb" reversed and the records remanded to the lo. . 7he case should be remanded.