ARCAINA V INGRAM

Arcaina is the owner of Lot No. 3230 . Her attorney-in-fact, Banta, entered into a contract with Ingram
for the sale of the property. Banta showed Ingram and the latter’s attorney-in-fact, respondent Ma.
Nenette L. Archinue (Archinue), the metes and bounds of the property and represented that Lot No.
3230 has an area of more or less 6,200 square meters (sq.m.) per the tax declaration covering it. The
contract price was ₱1,860,000.00, with Ingram making installment payments for the property from May
5, 2004 to February 10, 2005 totaling ₱1,715,000.00.

Banta and Ingram thereafter executed a Memorandum of Agreement acknowledging the previous
payments and that Ingram still had an obligation to pay the remaining balance in the amount of
₱145,000.00. They also separately executed deeds of absolute sale over the property in Ingram’s favor.

Subsequently, Ingram caused the property to be surveyed and discovered that Lot No. 3230 has an area
of 12,000 sq. m.

Upon learning of the actual area of the property, Banta allegedly insisted that the difference of 5,800
sq. m. remains unsold.

This was opposed by Ingram who claims that she owns the whole lot by virtue of the sale.

Thus, Archinue, on behalf of Ingram, instituted the recovery case, docketed as Civil Case No. S-241,
against petitioners before the MCTC.

In her Complaint, Ingram alleged that upon discovery of the actual area of the property, Banta insisted
on fencing the portion which she claimed to be unsold. Ingram further maintained that she is ready to
pay the balance of ₱145,000.00 as soon as petitioners recognize her ownership of the whole property.

Accordingly, Ingram prayed that the MCTC declare her owner of the whole property and order
petitioners to pay moral damages, attorney's fees and litigation expenses. She also asked the court to
issue a writ of preliminary injunction to enjoin the petitioners from undertaking acts of ownership over
the alleged unsold portion.

In their Answer with Counterclaim, petitioners denied that the sale contemplates the entire property
and contended that the parties agreed that only 6,200 sq. m. shall be sold.

This, according to petitioners, is consistent with the contemporaneous acts of the parties: Ingram
declared only 6,200 sq. m. of the property for tax purposes, while Arcaina declared the remaining
portion under her name with no objection from Ingram.

Petitioners averred that since Ingram failed to show that that she has a right over the unsold portion of
the property, the complaint for recovery of possession should be dismissed.

After Ingram presented her evidence, petitioners filed a demurrer on the grounds that (1) Ingram failed
to sufficiently establish her claim and (2) her claim lacks basis in fact and in law.15

MCTC RULING: granted petitioners' demurrer and DISMISSED the case for insufficiency of evidence.

The MCTC held that the testimonies of Ingram and her witnesses suffer from several inconsistencies
and improbabilities.
For instance, while Archinue claimed that what was sold was the entire property, she also admitted in
her cross-examination that she was not present when the sale was consummated between Banta,
Ingram and Ingram's husband Jeffrey. Further, Archinue stated that she was made aware before their
ocular visit to the property that the lot being sold is only 6,200 sq. m. based on the tax declaration
covering it.17 Ingram also had knowledge of the area of the property as confirmed by her husband
Jeffrey's testimony. Jeffrey also testified that Banta gave them a copy of the tax declaration of the
property.18

The MCTC declared that the survey showed that the property was 12,000 sq. m. or more than what was
stated in the deeds of sale. For Ingram to be awarded the excess 5,800 sq. m. portion of the property,
she should have presented evidence that she paid for the surplus area consistent with Article 1540 of
the Civil Code which reads:

Art. 1540. If, in the case of the preceding article, there is a greater area or number in the immovable
than that stated in the contract, the vendee may accept the area included in the contract and reject the
rest. If he accepts the whole area, he must pay for the same at the contract rate.

Accordingly, since Ingram failed to show that she paid for the value of the excess land area, the MCTC
held that she cannot claim ownership and possession of the whole property.

RTC RULING: reversed and set aside the Order of the MCTC.

1. Ordering Ingra, to Arcaina the amount of ₱145,000.00 representing the remaining balance of the
purchase price of Lot 3230;

2. Declaring Noemi L. Ingram the owner of the whole Lot 3230;

The RTC found that neither of the parties presented competent evidence to prove the property's actual
area. Except for a photocopy of the cadastral map purportedly showing the graphical presentation of
the property, no plan duly prepared and approved by the proper government agency showing the area
of the lot was presented.

Hence, the RTC concluded that the area of Lot No. 3230 as shown by the boundaries indicated in the
deeds of sale is only 6,200 sq. m. more or less. Having sold Lot No. 3230 to Ingram, Arcaina must
vacate it.

In addition, the RTC held that Article 1542, which covers sale of real estate in lump sum, applies in this
case.

Having apparently sold the entire Lot No. 3230 for a lump sum, Arcaina, as the vendor, is obligated to
deliver all the land included in the boundaries of the property, regardless of whether the real area
should be greater or smaller than what is recited in the deeds of sale.

CA RULING: Affirmed the RTC's ruling

The CA agreed with the RTC that other than the uniform statements of the parties, no evidence was
presented to show that the property was found to have an actual area of more or less 12,000 sq. m.
It held that the parties' statements cannot be simply admitted as true and correct because the area of
the land is a matter of public record and presumed to have been recorded in the Registry of Deeds.
The CA noted that the best evidence should have been a certified true copy of the survey plan duly
approved by the proper government agency.

The CA also agreed with the RTC that the sale was made for a lump sum and not on a per-square-meter
basis. The parties merely agreed on the purchase price of ₱l,860,000.00 for the 6,200 sq. m. lot, with the
deed of sale providing for the specific boundaries of the property.

Further, the CA found the area in excess "substantial" which, to its mind, "should have not escaped the
discerning eye of an ordinary vendor of a piece of land." Thus, it held that the RTC correctly ordered
petitioners to deliver the entire property to Ingram.

The CA, however, deleted the award of attorney's fees and the costs of suit, stating that there was no
basis in awarding them. First, the RTC did not discuss the grounds for granting attorney's fees in the
body of its decision. Second, Arcaina cannot be faulted for claiming and then fencing the excess area of
the land after the survey on her honest belief that the ownership remained with her.

Petitioners moved for reconsideration, raising for the first time the issue of prescription.

They pleaded that under Article 1543 of the Civil Code, Ingram should have filed the action within six
months from the delivery of the property.

Counting from Arcaina's execution of the notarized deed of absolute sale on April 13, 2005, petitioners
concluded that the filing of the case only on January 25, 2006 is already time-barred.

The CA denied petitioners' motion for reconsideration

Article 1543 does not apply because Ingram had no intention of rescinding the sale. In fact, she
instituted the action to recover the excess portion of the land that petitioners claimed to be unsold.
Thus, insofar as Ingram is concerned, that portion remained undelivered.

Petitioners now assail the CA' s declaration that the sale of the property was made for a lump sum.

They insist that they sold the property on a per-square-meter basis, at the rate of ₱300.00 per sq. m.

They further claim that they were aware that the property contains more than 6,200 sq. m.

This is the reason why the area sold is specifically stated in the deeds of sale. Unfortunately, in the
drafting of the deeds, the word "portion" was omitted.

They allege that contemporaneously with the execution of the formal contract of sale, they delivered
the area sold and constructed a fence delineating the unsold portion of the property.

Ingram allegedly recognized the demarcation because she introduced improvements confined to the
area delivered.

Since the sale was on a per-square-meter basis, petitioners argue that it is Article 1539 and not Article
1542 of the Civil Code, which governs.
Issue: whether the sale was made on a lump sum or per-square-meter basis.

Ruling: Lot No. 3230 was sold for a lump sum.

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, ₱1,000.00 per sq. m.) 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 sq. m., etc.).

Here, the Deed of Saleboth show that the property was conveyed to Ingram at the predetermined price
of ₱1,860,000.00. There was no indication that it was bought on a per-square-meter basis.

Thus, Article 1542 of the Civil Code governs the sale, viz.:

Art. 1542. 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 area or number than that stated in the contract.

The provision teaches that where both the area and the boundaries of the immovable are declared in a
sale of real estate for a lump sum, the area covered within the boundaries of the immovable prevails
over the stated area.

The vendor is obliged to deliver all that is included within the boundaries regardless of whether the
actual area is more than what was specified in the contract of sale; and he/she shall do so without a
corresponding increase in the contract price.

In Del Prado v. Spouses Caballero,47 we were confronted with facts analogous to the present petition.

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.

xxx

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.

Black's Law Dictionary defines the phrase "more or less" to mean:

slight or unimportant inaccuracies in quantity; 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.48 (Emphasis supplied; citations
omitted.)

In a lump sum contract, a vendor is generally obligated to deliver all the land covered within the
boundaries, regardless of whether the real area should be greater or smaller than that recited in the
deed.49 However, in case there is conflict between the area actually covered by the boundaries and the
estimated area stated in the contract of sale, he/she shall do so only when the excess or deficiency
between the former and the latter is reasonable.50

Applying Del Prado to the case before us, we find that the difference of 5,800 sq. m. is too substantial
to be considered reasonable.

We note that only 6,200 sq. m. was agreed upon between petitioners and Ingram. Declaring Ingram as
the owner of the whole 12,000 sq. m. on the premise that this is the actual area included in the
boundaries would be ordering the delivery of almost twice the area stated in the deeds of sale.

Surely, Article 1542 does not contemplate such an unfair situation to befall a vendor-that he/she would
be compelled to deliver double the amount that he/she originally sold without a corresponding increase
in price.

Therefore, we rule that Ingram is entitled only to 6,200 sq. m. of the property. An area of 5,800 sq. m.
more than the area intended to be sold is not a reasonable excess that can be deemed included in the
sale.53

Further, at the time of the sale, Ingram and petitioners did not have knowledge of the actual area of
the land within the boundaries of the property. It is undisputed that before the survey, the parties relied
on the tax declaration covering the lot, which merely stated that it measures more or less 6,200 sq. m.
Thus, when petitioners offered the property for sale and when Ingram accepted the offer, the object
of their consent or meeting of the minds is only a 6,200 sq. m. property. The deeds of sale merely put
into writing what was agreed upon by the parties. In this regard, we quote with approval the ruling of
the MCTC:

In this case, the Deed of Absolute Sale (Exhibit "M") dated April 13, 2005 is clear and unequivocal as to
the area sold being up to only 6,200 square meters. No amount of extrinsic aids are required and no
further extraneous sources are necessary in order to ascertain the parties' intent, determinable as it is,
from the document itself. The court is thus convinced that the deed expresses truly the parties' intent as
against the oral testimonies of Nenette, and the Spouses Ingram.54

The contract of sale is the law between Ingram and petitioners; it must be complied with in good
faith. Petitioners have already performed their obligation by delivering the 6,200 sq. m. property. Since
Ingram has yet to fulfill her end of the bargain, she must pay petitioners the remaining balance of the
contract price amounting to ₱145,000.00.

AGATEP V. RODRIGUEZ
 The subject property was previously owned by herein respondent Natalia Aguinaldo Vda. de
Lim. On July 18, 1975, Lim mortgaged the lot to the Philippine National Bank (PNB). Lim was not able
to pay her loan prompting PNB to foreclose the property. As a consequence, TCT No. T-10759 in the
name of Lim was canceled and a new certificate of title (TCT No. T-65894) was issued in the name of
PNB on November 8, 1985. 6
Meanwhile, on August 18, 1976, while the mortgage was still in effect, Lim sold the subject
property to herein petitioner's husband, Isaac Agatep (Agatep). However, the sale was not registered.
Neither did Lim deliver the title to petitioner or her husband. Nonetheless, Agatep took possession of
the same, fenced it with barbed wire and introduced improvements thereon.
In July 1992, the subject lot was included among PNB's acquired assets for sale. Later on, an
invitation to bid was duly published. On April 20, 1993, the disputed parcel of land was sold to herein
respondent Roberta L. Rodriguez (Rodriguez), who is the daughter of respondent Lim. Subsequently,
TCT No. T-65894, in the name of PNB, was canceled and a new title (TCT No. T-89400) was issued in
the name of Rodriguez.
On January 27, 1995, herein petitioner filed a Complaint for "reconveyance and/or damages"
with the RTC of Aparri, Cagayan against herein respondents.
Later, the complaint was amended to implead PNB as a party-defendant.

ISSUE:

1. WON PNB is in good faith in registering the land

2. WON PNB did not acquire ownership over the disputed lot because the said property was not
delivered to it.
3. WON Agatep is bound to recognize and respect the mortgage entered by Lim to PNB.

RULING:

1. Yes. PNB is innocent.

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 time up 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". 24 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. No, PNB acquired ownership.

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. Petitioner further assails the ruling of the CA that PNB, who
was the buyer in the foreclosure sale, became the absolute owner of the property purchased when it
consolidated its ownership thereof for failure of the mortgagor Lim to redeem the subject property
during the period of one year after the registration of the sale.
The Court finds petitioner's arguments untenable.
The Court's ruling in Manuel R. Dulay Enterprises, Inc. v. Court of Appeals 26 is instructive, to
wit:
Under Article 1498 of the New Civil Code, the mere execution of the deed of sale in a
public document is equivalent to the delivery of the property. Likewise, this Court had
held that:
It is settled that the buyer in a foreclosure sale becomes the absolute owner of
the property purchased if it is not redeemed during the period of one year after
the registration of the sale. As such, he is entitled to the possession of the said
property and can demand it at any time following the consolidation of
ownership in his name and the issuance to him of a new transfer certificate of
title. The buyer can, in fact, demand possession of the land even during the
redemption period except that he has to post a bond in accordance with Section
7 of Act No. 3133, as amended. No such bond is required after the redemption
period if the property is not redeemed. Possession of the land then becomes
an absolute right of the purchaser as confirmed owner. aSIHcT
Therefore, prior physical delivery or possession is not legally required since the
execution of the Deed of Sale is deemed equivalent to delivery.
This ruling was reiterated in Spouses Sabio v. The International Corporate Bank,
Inc. 28 wherein it was held that:
Notwithstanding the presence of illegal occupants on the subject property, transfer of
ownership by symbolic delivery under Article 1498 can still be effected through the
execution of the deed of conveyance. As we held in Power Commercial and Industrial
Corp. v. Court of Appeals [274 SCRA 597, 610], the key word is control, not possession,
of the subject property. Considering that the deed of conveyance proposed by
respondents did not stipulate or infer that petitioners could not exercise control over
said property, delivery can be effected through the mere execution of said deed.
. . . It is sufficient that there are no legal impediments to prevent petitioners from
gaining physical possession of the subject property. As stated above, prior physical
delivery or possession is not legally required and the execution of the deed of sale or
conveyance is deemed equivalent to delivery. This deed operates as a formal or
 symbolic delivery of the property sold and authorizes the buyer or transferee to use the
document as proof of ownership. Nothing more is required. 29
Thus, the execution of the Deed of Sale in favor of PNB, after the expiration of the redemption
period, is deemed equivalent to delivery.

3. Yes.
As buyers or transferees, petitioner and her husband simply stepped into the shoes of Lim,
who, prior to selling the subject property to them, mortgaged the same to PNB. As Lim's successors-
in-interest, their possession could not be said to be adverse to that of Lim. Thus, they are also bound
to recognize and respect the mortgage entered into by the latter. Their possession of the disputed lot
could not, therefore, be considered as a legal impediment which could prevent PNB from acquiring
ownership and possession thereof.
It bears to reiterate the undisputed fact, in the instant case, that Lim mortgaged the subject
property to PNB prior to selling the same to petitioner's husband. Settled is the rule that a mortgage
is an accessory contract intended to secure the performance of the principal obligation. One of its
(mortgage) characteristics is that it is inseparable from the property. It adheres to the property
regardless of who its owner may subsequently be. 30
This is true even in the case of a real estate mortgage because, pursuant to Article 2126 of
the Civil Code, the mortgage directly and immediately subjects the property upon which it is imposed,
whoever the possessor may be, to the fulfillment of the obligation for whose security it was
constituted. It is inseparable from the property mortgaged as it is a right in rem — a lien on the
property whoever its owner may be. It subsists notwithstanding a change in ownership; in short, the
personality of the owner is disregarded. Thus, all subsequent purchasers must respect the mortgage
whether the transfer to them be with or without the consent of the mortgagee, for such mortgage
until discharged follows the property.

ALEJANDRINO V. CA

Spouses Jacinto Alejandrino and Enrica Labunos left their six children named Marcelino, Gregorio,
Ciriaco, Mauricia, Laurencia and Abundio a 219-square-meter lot in Mambaling, Cebu City identified as
Lot No. 2798 and covered by Transfer Certificate of Title No. 19658. Upon the demise of the Alejandrino
spouses, the property should have been divided among their children with each child having a share of
36.50 square meters. However, the estate of the Alejandrino spouses was not settled in accordance with
the procedure outlined in the Rules of Court.

Petitioner Mauricia (one of the children) allegedly purchased 12.17 square meters of Gregorio's share,
36.50 square meters of Ciriaco's share and 12.17 square meters of Abundio's share thereby giving her a
total area of 97.43 square meters, including her own share of 36.50 square meters. It turned out,
however, that a third party named Licerio Nique, the private respondent in this case, also purchased
portions of the property, to wit: 36.50 square meters from Laurencia, 36.50 square meters from
Gregorio "through Laurencia," 12.17 square meters from Abundio also "through Laurencia" and 36.50
square meters from Marcelino or a total area of Laurencia" and 36.50 square meters from Marcelino or
a total area of 121.67 square meters of the Alejandrino property. 2

However, Laurencia (the alleged seller of most of the 121.67 square meters of the property) later
questioned the sale in an action for quieting of title and damages against private respondent Nique. It
was docketed as Civil Case No. CEB-7038 in the Regional Trial Court of Cebu City, Branch 9 presided by
Judge Benigno G. Gaviola. In due course, the lower court rendered a decision on November 27, 1990
disposing of the case as follows:

WHEREFORE, the Court hereby renders judgment in favor of defendant and against plaintiff, dismissing
the complaint filed by plaintiff against defendant, and on the Counterclaim and prayer of defendant in
its Answer, the Court hereby declares defendant as the owner in fee simple of the share of plaintiff
Laurencia Alejandrino and the shares of Marcelino, Gregorio and Abundio, all surnamed Alejandrino, of
the parcel of land known as Lot No. 2798 and covered by Transfer Certificate of Title No. 19658 which 4
shares totals an area of 146 square meters more or less; and the Court further Orders plaintiff to:

1. Vacate the premises subject of the complaint and surrender the property to defendant to the
extent of the 4 shares aforementioned;

2. Pay the defendant the amount of P15,000.00 as litigation and necessary expenses; the sum of
P10,000.00 as reimbursement for attorney's fees; the sum of P10,000.00 as moral damages and
P10,000.00 as exemplary damages;

3. Plus costs.

SO ORDERED. 3

Laurencia appealed the decision to the Court of Appeals under CA-G.R. CV No. 33433 but later withdrew
the same. 4 On April 13, 1992, the Court of Appeals considered the appeal withdrawn in accordance
with Rule 50 of the Rules of Court. 5

Meanwhile, herein petitioner Mauricia Alejandrino filed on May 5, 1992 before the Regional Trial Court
of Cebu City, Branch VII, a complaint for redemption and recovery of properties with damages against
private respondent Nique that was docketed as Civil Case No. CEB-11673. Adelino B. Sitoy, Laurencia's
counsel in Civil Case No. CEB-7038, filed Civil Case No. CEB-11673 for petitioner Mauricia.
The amended complaint in the latter case dated May 17, 1992 alleged that private respondent Nique
never notified petitioner Mauricia of the purchase of 121.67 square meters of the undivided Lot No.
2798 nor did he give petitioner Mauricia the preemptive right to buy the area as a co-owner of the same
lot. As such co-owner, petitioner Mauricia manifested her willingness to deposit with the court the
amount of P29,777.78, the acquisition cost of the portion purchased by private respondent Nique.
Petitioner Mauricia also alleged that she demanded from private respondent the area of around 24.34
square meters that the latter had "unduly, baselessly and maliciously claimed as his own but which, as
part of Lot No. 2798, actually belongs to her." The amended complaint prayed that petitioner Mauricia
be allowed to redeem the area of 121.67 square meters under the redemption price of P29,777.78 and
that private respondent Nique be ordered to execute the necessary documents for the redemption and
the eventual transfer of certificate of title to her. The amended complaint further prayed for the return
to petitioner Mauricia of the 24.34-square-meter portion of the lot and for damages amounting to
P115,000 and attorney's fees of P30,000.

On August 2, 1993, the lower court granted the motion to admit the amended complaint and forthwith
ordered the defendant therein to file an amended answer.

In Civil Case No. CEB-7038 in the meantime, private respondent filed a motion for the segregation of the
146-square-meter portion of the property that had been declared by the trial court as his own by virtue
of purchase. On May 6, 1993, the trial court issued an order the pertinent portions of which read as
follows:

ORDER

For resolution is a "Motion to Order Segregation of 146 Square Meters In Lot No. 2798" dated January
15, 1993 filed by defendant and the "Opposition" thereto dated February 2, 1992 by plaintiff. Movant-
defendant also filed a rejoinder dated February 15, 1993 to the Opposition.

After going over the allegations in the motion, the opposition thereto and the rejoinder as well as the
records of the case, particularly the decision rendered by this Court and the Order dated October 28,
1992, denying the motion for reconsideration filed by plaintiffs and allowing the issuance of a writ of
execution, the Court is inclined to Grant the instant motion.

xxx xxx xxx

In addition thereto, the Court makes the following observation:

1. Plaintiff (oppositor) has a total share of 146 square meters. This is admitted by her in her
complaint (par. 4 thereof). In the decision rendered by this Court, this share now belongs to defendant
movant by way of sale. The decision of this Court has long become final.

2. The total area of the land is 219 sq. meters (par. 2 of complaint), thus, the share of Mauricia
Alejandrino is only 73 square meters.

3. As early as June 10, 1983, Mauricia Alejandrino and Laurencia Alejandrino had entered into an
"Extrajudicial Settlement of Estate" whereby they agreed to divide the land subject of this case with
Laurencia Alejandrino owning 146 square meters in the frontage and Mauricia Alejandrino owning 75
square meters in the back portion (Exh. '16', Extrajudicial Settlement of Estate, par. 1) (emphasis
supplied), and that the parties assure each other and their successor in interest that a right of way of
two meters is granted to each party by the other permanently (Exh. '16', par. 2). This partition is signed
by the parties and their witnesses. Although not notarized, it is certainly valid as between the parties,
Maurecia (sic) Alejandrino, being an immediate party, may not renege on this.

4. Since the share of defendant Licerio P. Nique is specifically known to be 146 square meters, and
that its location shall be on the "frontage" of the property while the 73 square meters of Maurecia (sic)
Alejandrino shall be at the back portion, then, the Court cannot see its way clear, why the 146 sq.
meters share of defendant may not be segregated.

5. The contention by oppositor that the "segregation of defendant's share of 146 sq. meters from
Lot No. 2798 was not decreed in the judgment" is a rather narrow way of looking at the judgment.
Paragraph 1 of the dispositive portion of the judgment by this Court, Orders plaintiff to "vacate the
premises subject of the complaint and surrender the property to defendant to the extent of the 4 shares
aforementioned." The 4 shares of Laurencia Alejandrino of 146 sq. meters can be segregated because
Laurencia and Maurecia had already executed an extrajudicial partition indicating where their respective
shares shall be located (Exh. '16'). To deny the segregation is to make the decision of this Court just
about valueless is not altogether useless. The matter of allowing the segregation should be read into the
decision.

The bottomline is still that plaintiff Laurencia, despite the fact that the decision of this Court had long
become final; and despite the fact that she even withdraw (sic) her appeal, she still is enjoying the fruits
of the property to the exclusion of the rightful owner.
WHEREFORE, the Court hereby Grants the motion. The defendant Licerio Nique may proceed to
segregate his 2146 (sic) sq. meters from Lot No. 2798 covered by TCT. No. 19658, by having the same
surveyed by a competent Geodetic Engineer, at the expense of movant-defendant.

SO ORDERED. 6

Petitioner Mauricia questioned this order of the lower court in a petition for certiorari and prohibition
with prayer for the issuance of a writ of preliminary injunction filed before the Court of Appeals. In due
course, the Court of Appeals dismissed the petition in a Decision promulgated on August 25, 1993.

The Court of Appeals stated that, in issuing the questioned order of May 6, 1993, the respondent court
was merely performing its job of seeing to it that "execution of a final judgment must conform to that
decreed in the dispositive part of the decision." It ratiocinated thus:

. . . . In ordering the segregation of the 146 square meters, respondent Judge correctly referred to the
text of the decision to ascertain which portion of the land covered by TCT No. 19658 was actually sold by
Laurencia Alejandrino (sister of herein petitioner Mauricia) to private respondent Nique. The respondent
Judge did not err in relying upon Exhibit '16', the Deed of Extrajudicial Settlement, dated June 10, 1983,
mentioned in page 3 of the Decision. Pertinent portion of Exhibit '6' reads:

NOW, THEREFORE, the above-named parties-heirs hereby stipulates (sic), declare and agree as follows:

1. That the parties have agreed to divide the parcel of land with Laurencia Alejandrino owning 146
square meters in the frontage and Mauricia Alejandrino 73 square meters in the back portions;

2. That the parties mutually and reciprocally assure each other and their successor of interest (sic)
that a right of way of two meters is granted to each party to the other permanently. (emphasis supplied,
Annex '1', Comment, p. 65, Rollo).

duly signed by herein petitioner and witnessed by private respondent Nique. It readily reveals that when
Laurencia subsequently sold her shares to herein private respondent, per the Deed of Absolute Sale
dated October 29, 1986 (Exhs. 'B' and '10'), the parties must have referred to the 146 square meters in
the frontage described in said document, Exhibit '16'. Laurencia had no authority to sell more, or, less,
than that agreed upon in the extrajudicial settlement between her and herein petitioner Mauricia.
Insofar as the latter is concerned, she is estopped from claiming that said extrajudicial settlement was a
fatally defective instrument because it was not notarized nor published. What is important is that
private respondent personally knew about Laurencia and Mauricia's agreement because he was a
witness to said agreement and he relied upon it when he purchased the 146 square meters from
Laurencia.

It cannot be validly claimed by petitioner that she was deprived of her property without due process of
law considering that private respondent is merely segregating the portion of the land actually sold to
him by Laurencia Alejandrino and it does not affect the 73 square meters that properly pertain to
petitioner.

Moreover, the Supreme Court has ruled that where there is ambiguity caused by an omission or mistake
in the dispositive portion of a decision the court may clarify such ambiguity by an amendment even after
the judgment had become final, and for this purpose it may resort to the pleadings filed by the parties,
the court's finding of facts and conclusions of law as expressed in the body of the decision (Republic
Surety and Insurance Co., Inc., et al., vs. Intermediate Appellate Court, et al., 152 SCRA 309). The
assailed order, in effect, clarifies the exact location of the 146 square meters pursuant to Exhibit '16'.
Respondent court did not act in excess of its jurisdiction. Hence, writs of certiorari and prohibition do
not lie in this case. 7

Petitioner Mauricia filed a motion for the reconsideration of the Court of Appeals' decision. However, on
February 15, 1994, the Court of Appeals denied the same for lack of merit "there being no new ground
or compelling reason that justifies a reconsideration" of its Decision. 8

In the instant petition for review on certiorari, petitioner assails the decision of the Court of Appeals,
contending that the lower court acted beyond its jurisdiction in ordering the segregation of the property
bought by private respondent as the same was not decreed in its judgment, which had long become
final and executory. Petitioner argues that partition of the property cannot be effected because private
respondent is also a defendant in Civil Case No. CEB-11673. She asserts that Exhibit 16, the extrajudicial
settlement of estate referred to in the questioned order of the lower court, was not discussed in the
decision of the lower court and even if it were, she could not be bound thereby considering that she was
not a party litigant in Civil Case No. CEB-7038. She questions the validity of the deed of extrajudicial
settlement because it was not notarized or published.

In his comment on the petition, private respondent alleges that although petitioner was not a party
litigant in Civil Case No. CEB-7038, she is estopped from questioning the decision in that case and filing
the instant petition because she had "knowledge of the existence of said case" where res judicata had
set in. He adds that the instant petition was filed in violation of Circular No. 28-91 on forum shopping "in
that the Petitioner in the instant petition whose counsel is also the counsel of plaintiff-appellant
Laurencia Alejandrino in CA-G.R. CV No. . . ., had filed a civil action — Civil Case No. CEB-11673 . . . for
"REDEMPTION & RECOVERY OF PROPERTIES WITH DAMAGES", which is presently pending before Branch
7 of the Regional Trial Court of Cebu City." He asserts that the lower court did not exceed its jurisdiction
and/or commit grave abuse of discretion in granting his motion for segregation of the 146 square
meters of the land involved that rightfully belonged to him in accordance with the decision of the lower
court. He charges counsel for petitioner with exhibiting "unethical conduct and practice" in appearing as
counsel for petitioner in Civil Case No. CEB-11673 after he had appeared for complainant Laurencia in
CA-G.R. CV No. 33433 or Civil Case No. CEB-7038.

Under the circumstances of this case, the ultimate issue that needs determination is whether or not as
an heir of the Alejandrino property, Laurencia may validly sell specific portions thereof to a third party.

Art. 1078 of the Civil Code provides that where there are two or more heirs, the whole estate of the
decedent is, before partition, owned in common by such heirs, subject to the payment of the debts of
the deceased. Under a co-ownership, the ownership of an undivided thing or right belongs to different
persons. 9 Each co-owner of property which is held pro indiviso exercises his rights over the whole
property and may use and enjoy the same with no other limitation than that he shall not injure the
interests of his co-owners. The underlying rationale is that until a division is made, the respective share
of each cannot be determined and every co-owner exercises, together with his co-participants, joint
ownership over the pro indiviso property, in addition to his use and enjoyment of the same. 10

Although the right of an heir over the property of the decedent is inchoate as long as the estate has not
been fully settled and partitioned, 11 the law allows a co-owner to exercise rights of ownership over
such inchoate right. Thus, the Civil Code provides:

Art. 493. Each co-owner shall have the full ownership of his part and of the fruits and benefits
pertaining thereto, and he may therefore alienate, assign or mortgage it, and even substitute another
person in its enjoyment, except when personal rights are involved. But the effect of the alienation or the
mortgage, with respect to the co-owners, shall be limited to the portion which may be allotted to him in
the division upon the termination of the co-ownership.

With respect to properties shared in common by virtue of inheritance, alienation of a pro indiviso
portion thereof is specifically governed by Article 1088 that provides:

Art. 1088. Should any of the heirs sell his hereditary rights to a stranger before the partition, any or
all of the co-heirs may be subrogated to the rights of the purchaser by reimbursing him for the price of
the sale, provided they do so within the period of one month from the time they were notified in writing
of the sale by the vendor.
In the instant case, Laurencia was within her hereditary rights in selling her pro indiviso share in Lot No.
2798. However, because the property had not yet been partitioned in accordance with the Rules of
Court, no particular portion of the property could be identified as yet and delineated as the object of the
sale. Thus, interpreting Article 493 of the Civil Code providing that an alienation of a co-owned property
"shall be limited to the portion which may be allotted to (the seller) in the division upon the termination
of the co-ownership, the Court said:

. . . (p)ursuant to this law, a co-owner has the right to alienate his pro-indiviso share in the co-owned
property even without the consent of the other co-owners. Nevertheless, as a mere part owner, he
cannot alienate the shares of the other co-owners. The prohibition is premised on the elementary rule
that "no one can give what he does not have" (Nemo dat quod non habet). Thus, we held in Bailon-
Casilao vs. Court of Appeals (G.R. No. 78178, April 15, 1988, 160 SCRA 738, 745), viz:

. . . since a co-owner is entitled to sell his undivided share, a sale of the entire property by one co-owner
without the consent of the other co-owners is not null and void. However, only the rights of the co-
owner-seller are transferred, thereby making the buyer a co-owner of the property.

The proper action in cases like this is not for the nullification of the sale or for the recovery of possession
of the thing owned in common from the third person who substituted the co-owner or co-owners who
alienated their shares, but the DIVISION of the common property of the co-owners who possessed and
administered it. 2

The legality of Laurencia's alienation of portions of the estate of the Alejandrino spouses was settled in
Civil Case No. CEB-7038. The decision in that case had become final and executory with Laurencia's
withdrawal of her appeal. When private respondent filed a motion for the segregation of the portions of
the property that were adjudged in his favor, private respondent was in effect calling for the partition of
the property. However, under the law, partition of the estate of a decedent may only be effected by (1)
the heirs themselves extrajudicially, (2) by the court in an ordinary action for partition, or in the course
of administration proceedings, (3) by the testator himself, and (4) by the third person designated by the
testator. 13

The trial court may not, therefore, order partition of an estate in an action for quieting of title. As there
is no pending administration proceedings, the property of the Alejandrino spouses can only be
partitioned by the heirs themselves in an extrajudicial settlement of estate. However, evidence on the
extrajudicial settlement of estate was offered before the trial court and it became the basis for the order
for segregation of the property sold to private respondent. Petitioner Mauricia does not deny the fact of
the execution of the deed of extrajudicial settlement of the estate. She only questions its validity on
account of the absence of notarization of the document and the non-publication thereof.

On extrajudicial settlement of estate, Section 1 of Rule 74 of the Rules of Court provides:

If the decedent left no will and no debts and the heirs are all of age, or the minors are represented by
their judicial or legal representatives duly authorized for the purpose, the parties may, without securing
letters of administration, divide the estate among themselves as they see fit by means of a public
instrument filed in the office of the register of deeds, and should they disagree, they may do so in an
ordinary action for partition. . . . .

The fact of the extrajudicial settlement or administration shall be published in a newspaper of general
circulation in the manner provided in the next succeeding section; but no extrajudicial settlement shall
be binding upon any person who has not participated therein or had no notice thereof.

Notarization of the deed of extrajudicial settlement has the effect of making it a public document 14
that can bind third parties. However, this formal requirement appears to be superseded by the
substantive provision of the Civil Code that states:

Art. 1082. Every act which is intended to put an end to indivision among co-heirs and legatees or
devisees is deemed to be a partition, although it should purport to be a sale, an exchange, a
compromise, or any other transaction.

By this provision, it appears that when a co-owner sells his inchoate right in the co-ownership, he
expresses his intention to "put an end to indivision among (his) co-heirs." Partition among co-owners
may thus be evidenced by the overt act of a co-owner of renouncing his right over the property
regardless of the form it takes. In effect, Laurencia expressed her intention to terminate the co-owner
by selling her share to private respondent.

Moreover, the execution of the deed of extrajudicial settlement of the estate reflected the intention of
both Laurencia and petitioner Mauricia to physically divide the property. Both of them had acquired the
shares of their brothers and therefore it was only the two of them that needed to settle the estate. The
fact that the document was not notarized is no hindrance to its effectivity as regards the two of them.
The partition of inherited property need not be embodied in a public document. In this regard, Tolentino
subscribes to that opinion when he states as follows:
. . . . We believe, however, that the public instrument is not essential to the validity of the partition. This
is not one of those contracts in which form is of the essence. The public instrument is necessary only for
the registration of the contract, but not for its validity. The validity of an oral contract among the heirs,
terminating the co-ownership, has been recognized by the Supreme Court in a decision . . . (where) that
tribunal said: "An agreement among the heirs that a certain lot should be sold and its proceeds paid to
one of them is a valid oral contract, and the same has the force of law between the parties from and
after the original assent thereto, and no one of them may withdraw or oppose its execution without the
consent of all".

In a still later case, the Supreme Court held that "partition among heirs or renunciation of an inheritance
by some of them is not exactly a conveyance for the reason that it does not involve transfer of property
from one to the other, but rather a confirmation or ratification of title or right to property by the heir
renouncing in favor of another heir accepting and receiving the inheritance." Hence, the court
concluded, "it is competent for the heirs of an estate to enter into an oral agreement for distribution of
the estate among themselves." 15

The deed of extrajudicial settlement executed by Mauricia and Laurencia evidence their intention to
partition the property. It delineates what portion of the property belongs to each other. That it was not
notarized is immaterial in view of Mauricia's admission that she did execute the deed of extrajudicial
settlement. Neither is the fact that the trial court only mentioned the existence of such document in its
decision in Civil Case No. CEB-7028. That document was formally offered in evidence and the court is
deemed to have duly considered 16 it in deciding the case. the case. The court has in its favor the
presumption of regularity of the performance of its task that has not been rebutted by petitioner
Mauricia. Neither may the fact that the other heirs of the Alejandrino spouses, named Marcelino,
Gregorio, Ciriaco and Abundio did not participate in the extrajudicial settlement of estate affect its
validity. In her amended complaint in Civil Case No. CEB-11673, petitioner Mauricia herself admitted
having acquired by purchase the rights over the shares of her brothers.

On the part of Laurencia, the court found that she had transmitted her rights over portions she had
acquired from her brothers to private respondent Nique. The sale was made after the execution of the
deed of extrajudicial settlement of the estate that private respondent himself witnessed. The
extrajudicial settlement of estate having constituted a partition of the property, Laurencia validly
transferred ownership over the specific front portion of the property with an area of 146 square meters.

The trial court, therefore, did not abuse its discretion in issuing the order for the segregation of the
property. In so doing, it was merely reiterating the partition of the property by petitioner Mauricia and
her sister Laurencia that was embodied in the deed of extrajudicial settlement of estate. The order may
likewise be deemed as a clarification of its decision that had become final and executory. Such
clarification was needed lest proper execution of the decision be rendered futile.
The Court finds no merit in the issue of forum shopping raised by private respondent. Forum shopping
exists where the elements of litis pendentia are present or where a final judgment in one case will
amount to res judicata in the other. 17 Because the judgment in Civil Case No. CEB-7028 is already final
and executory, the existence of res judicata is determinative of whether or not petitioner is guilty of
forum shopping. For the principle of res judicata to apply, the following must be present: (1) a decision
on the merits; (2) by a court of competent jurisdiction; (3) the decision is final; and (4) the two actions
involve identical parties, subject matter and causes of action. 18 The fourth element is not present in
this case. The parties are not identical because petitioner was not impleaded in Civil Case No. CEB-7028.
While the subject matter may be the same property, of the Alejandrino spouses, the causes of action are
different. Civil. Case No. CEB-7028 is an action for quieting of title and damages while Civil Case No. CEB-
11673 is for redemption and recovery of properties.

It appears moreover, that private respondent's argument on forum shopping is anchored on the fact
that counsel for both plaintiffs in those two cases is one and the same, thereby implying that the same
counsel merely wanted to prevail in the second case after having failed to do so in the first. The records
show, however, that Laurencia executed an affidavit 19 consenting to the appearance of her counsel in
any case that petitioner Mauricia might file against private respondent. She affirmed in that affidavit
that she could be included even as a defendant in any case that petitioner Mauricia would file because
she "fully agree(d)" with whatever cause of action Mauricia would have against private respondent.
Such a statement can hardly constitute a proper basis for a finding of forum shopping, much less
evidence of misconduct on the part of counsel. As noted earlier, the two cases have different causes of
action and the two plaintiffs who would have conflicting claims under the facts of the case actually
presented a united stand against private respondent. If there is any charge that could be leveled against
counsel, it is his lack of thoroughness in pursuing the action for quieting of title. As counsel for plaintiff
therein, he could have impleaded petitioner Mauricia knowing fully well her interest in the property
involved in order to avoid multiplicity of suits. However, such an omission is not a sufficient ground for
administrative sanction.

WHEREFORE, the instant petition for review on certiorari is hereby DENIED for lack of merit. Costs
against petitioner.

SY V. CAPISTRANO

[IMPORTANT] Minimum requirement of a good faith buyer

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 (and not a PHOTOCOPY).

Facts: Sometime in 1980, Scott approached respondent 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. 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
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 Golpeo and Tan,
respectively.

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.

Ruling of the RTC and CA – in favor of Capistrano

Note:

Capistrano to Scott; Scott to Jamilars; Jamilars to Gilturas; Jamilars and Gilturas to Golpeo and Tan

Capistrano – Scott – Jamilars– Golpeo and Tan

Issue: WON the buyers of the property are buyers in good faith

Ruling: No.

First. 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. In the same token, 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.

Second. The Jamilar spouses 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.

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. 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.

[IMPORTANT] Minimum requirement of a good faith buyer

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 (and not a PHOTOCOPY).

DOMINGO REALTY VS CA

IMPORTANT] CAVEAT EMPTOR

We have no power to make or alter contracts in order to save him from the adverse stipulations in the
Compromise Agreement. Hopefully this case will serve as a precaution to prospective parties to a
contract involving titled lands for them to exercise the diligence of a reasonably prudent person by
undertaking measures to ensure the legality of the title and the accurate metes and bounds of the lot
embraced in the title. It is advisable that such parties

(1) verify the origin, history, authenticity, and validity of the title with the Office of the Register of
Deeds and the Land Registration Authority;

(2) engage 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) conduct an actual ocular inspection of the lot;

 (4) inquire from the owners and possessors of adjoining lots with respect to the true and legal
ownership of the lot in question;

(5) put up signs that said lot is being purchased, leased, or encumbered; and

(6) undertake such other measures to make the general public aware that said lot will be subject to
alienation, lease, or encumbrance by the parties. Respondent Acero, for all his woes, may have a
legal recourse against lessor David Victorio who inveigled him to lease the lot which turned out to
be owned by another.

Facts: Domingo Realty filed a complaint in the RTC against Antonio Acero, Victorio and others for
recovery of possession of 3 parcels of land. The said lots have an aggregate area of 26,705 sqm n a
portion of which Acero had constructed a factory for hollow blocks. Acero alleged that he merely
leased the land from Victorio who in turn claimed to be the owner of the property on which the
building stood. Victorio on the other hand questioned the validity of the TCT of Domingo Realty that he
and his predecessor-in-interest had been in possession for 70 years. A compromise agreement however
was reached signed by Acero (lessee) and Mariano Yu (representing Domingo Realty), in which Acero
recognizes the ownership of Domingo Realty over the property and that the property he is occupying
by way of lease encroaches “on a portion of Domingo Realty”. The RTC adopted the compromise
agreement.

Note: The Compromise Agreement was between Domingo and Acero only. Victorino was not a party
thereof. Note also that the Compromise Agreement says that Acero leased only “a portion of”
Domingo Realty’s property and NOT a specific measure on how many sq. meters was encroached.

Compromise Agreement, which contained the following stipulations, to wit:

1. That defendants admit and recognize the ownership of the plaintiff over the property
subject of this case, covered by TCT No. S-107639 (75600), S-107643 (67007), and S-107640
(67006) with a total area of 26,705 square meters;
2. That defendant Luis Recato Dy admits and recognizes that his title covered by TCT No.
108027 has been proven not to be genuine and that the area indicated therein is inside the
property of the plaintiff;
3. That defendant Acero admits that the property he is presently occupying by way of
lease is encroaching on a portion of the property of the plaintiff and assume[s] and
undertakes to vacate, remove and clear any and all structures erected inside the property
of the plaintiff by himself and other third parties, duly authorized and/or who have an
existing agreement with defendant Acero, and shall deliver said portion of the property of
the plaintiff free and clear of any unauthorized structures, shanties, occupants, squatters
or lessees within a period of sixty (60) days from date of signing of this compromise
agreement. Should defendant Acero fail in his obligation to vacate, remove and clear the
structures erected inside the property of the plaintiff within the period of 60 days afore-
mentioned, plaintiff shall be entitled to a writ of execution for the immediate demolition or
 removal of said structure to fully implement this agreement; and ejectment of all squatters
and occupants and lessees, including the dependents to fully implement this agreement;
4. That plaintiff admits and recognizes that defendant Luis Recato Dy bought and occupied
the property in good faith and for value whereas defendant Acero leased the portion of
said property likewise in good faith and for value hereby waives absolutely and
unconditionally all claims including attorney's fees against both defendants in all cases
pending in any court whether by virtue of any judgment or under the present complaint
and undertake to withdraw and/or move to dismiss the same under the spirit of this
agreement;
5. That defendants likewise waive all claims for damages including attorney's fees against
the plaintiff;
6. That plaintiff acknowledges the benefit done by defendant Luis Recato Dy on the
property by incurring expenses in protecting and preserving the property by way of
construction of perimeter fence and maintaining a caretaker therein and plaintiff has
agreed to pay Luis Recato Dy the amount of P100,000.00 upon approval of this agreement
by this Honorable Court. 7
To implement the said Decision, Domingo Realty asked the trial court for permission to conduct a re-
survey of the subject properties, which was granted in the January 22, 1988 Order.

Respondent Acero then a Motion to Nullify the Compromise Agreement, claiming that the Order
authorizing the survey plan of petitioner Domingo Realty would violate the Compromise Agreement
since the whole area he occupied would be adjudged as owned by the realty firm.

To settle the conflict, the parties agreed to have the disputed lots re-surveyed by the Bureau of Lands.
Thus, the trial court issued the March 21, 1988 Order directing the Director of Lands to conduct a re-
survey of the subject properties.

Survey Plan Vs-13-000135 (prepared by Engr. Lara of Bureau of Lands) – would show that Petitioners'
TCTs covered the entire land occupied by the respondent's hollow block factory.

In its December 28, 1990 Order, the trial court directed Acero to conduct his own re-survey of the lots.

Survey Plan Vs-13-000185 (prepared by Engr. Cruz) - when the said Verification Survey Plan was
presented to the Bureau of Lands for approval, it was rejected because Engr. Cruz failed to comply with
the requirements of the Bureau.

Dom: in the Compromise Agreement, it was stipulated that Acero only occupied 2,000 sq meters, or a
portion of Domingo Realty’s property. However, the first Survey Plan would show that he occupied
the entire property of Domingo Realty. This is why he wanted to nullify the first Survey Plan.
Given the conflicting Verification Survey Plans, the RTC issued an order requiring the Bureau of Lands to
determine which survey was correct. The LRA issued an order that the survey conducted by Engr. Lara
which was commissioned by Domingo Realty as the correct plan.

Issue:

1. WON Victorino, not being a party to the Compromise Agreement, can assail the validity of the
Compromise Agreement as not binding upon him and give rise to another suit.
2. WON 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.
3. WON the compromise judgment can be set aside on the ground of mistake because respondent
Acero gave his consent to the Compromise Agreement in good faith that he would only vacate a
portion of his lot in favor of petitioner Domingo Realty.

Ruling:

1) Yes. The only legal effect of the non-inclusion of a party in a compromise agreement is that said party
cannot be bound by the terms of the agreement. The Compromise Agreement shall however be "valid
and binding as to the parties who signed thereto.”

2) No. The object of a contract, in order to be considered as "certain," need not specify such object with
absolute certainty. It is enough that the object is determinable in order for it to be considered as
"certain." Article 1349 of the Civil Code provides:

Article 1349. The object of every contract must be determinate as to its kind. The fact that the
quantity is not determinate shall not be an obstacle to the existence of the contract, provided it is
possible to determine the same, without the need of a new contract between the parties.

In the instant case, the title over the subject property contains a technical description that provides
the metes and bounds of the property of petitioners. Such technical description is the final
determinant of the extent of the property of petitioners. Thus, the area of petitioners' property is
determinable based on the technical descriptions contained in the TCTs.

Compromise Agreement is determinate and specific

Notably, the determination made by the Bureau of Lands — that Verification Survey Plan No. Vs-13-
000135 is the correct Plan — is controlling and shall prevail over Verification Survey Plan No. Vs-13-
000185 submitted by Acero. Findings of fact by administrative agencies, having acquired expertise in
their field of specialization, must be given great weight by this Court. Even if the exact area of
encroachment is not specified in the agreement, it can still be determined from the technical description
of the title of plaintiff which defendant Acero admitted to be correct. Whether it is only a portion or the
entire lot Acero is leasing that will be affected by the agreement is of no importance.

We therefore rule that the terms of the Compromise Agreement are clear and leave no doubt upon the
intent of the parties that respondent Acero will vacate, remove, and clear any and all structures erected
inside petitioners' property, the ownership of which is not denied by him.

Dom: from what I understand, it doesn’t matter how many sq. meters Acero encroached, be it 2,000
sq. meters or the whole 26,000 sq. meters, Acero will still vacate regardless the gravity of his
encroachment. That is why the Court ruled that there is no vagueness for lack of specificity since the
results would be practically the same – Acero will vacate.

3) No. Although Articles 2038 and 1330 of the Civil Code allow a party to a contract, on the ground of
mistake, to nullify the agreement. Article 1333 of the Civil Code also provides that "there is no mistake
if the party alleging it knew the doubt, contingency or risk affecting the object of the contract."

Respondent Acero, before signing the Compromise Agreement, was already aware of his encroachment.
Therefore, there is no “mistake”.

Prior to the execution of the Compromise Agreement, respondent Acero was already aware of the
technical description of the titled lots of petitioner Domingo Realty and more so, of the boundaries and
area of the lot he leased from David Victorio. Before consenting to the agreement, he 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 Domingo Realty. Had he undertaken such a
precautionary measure, he would have known that the entire area he was occupying intruded into the
titled lot of petitioners and possibly, he would not have signed the agreement.

In this factual milieu, respondent Acero could have easily averted the alleged mistake in the contract;
but through palpable neglect, he failed to undertake the measures expected of a person of ordinary
prudence. Without doubt, this kind of mistake cannot be resorted to by respondent Acero as a ground
to nullify an otherwise clear, legal, and valid agreement, even though the document may become
adverse and even ruinous to his business.

Moreover, respondent failed to state in the Compromise Agreement that he intended to vacate only a
portion of the property he was leasing. Such provision being beneficial to respondent, he, in the exercise
of the proper diligence required, should have made sure that such matter was specified in the
Compromise Agreement. Respondent Acero's failure to have the said stipulation incorporated in the
Compromise Agreement is negligence on his part and insufficient to abrogate said agreement.
[IMPORTANT] CAVEAT EMPTOR

We have no power to make or alter contracts in order to save him from the adverse stipulations in the
Compromise Agreement. Hopefully this case will serve as a precaution to prospective parties to a
contract involving titled lands for them to exercise the diligence of a reasonably prudent person by
undertaking measures to ensure the legality of the title and the accurate metes and bounds of the lot
embraced in the title. It is advisable that such parties

(1) verify the origin, history, authenticity, and validity of the title with the Office of the Register of
Deeds and the Land Registration Authority;

(2) engage 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) conduct an actual ocular inspection of the lot;

(4) inquire from the owners and possessors of adjoining lots with respect to the true and legal
ownership of the lot in question;

(5) put up signs that said lot is being purchased, leased, or encumbered; and

(6) undertake such other measures to make the general public aware that said lot will be subject to
alienation, lease, or encumbrance by the parties. Respondent Acero, for all his woes, may have a legal
recourse against lessor David Victorio who inveigled him to lease the lot which turned out to be owned
by another.

LOCSIN V. HIZON

Having knowledge of the foregoing facts, Bernardo and Carlos, buyers, 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(alleged 3rd person) not Bolos (seller), who sought the recovery of
possession by commencing an ejectment case against Aceron (possessor), and even entered into a
compromise agreement with the latter years after the purported sale in Bolos' favor.

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
agreement

FACTS:
Locsin was the registered owner of a 760-sq.m. lot covered by Transfer Certificate of Title (TCT) No.
235094, located at Quezon City. In 1992, she filed an ejectment case, ] against one Billy Aceron (Aceron)
before the MTC to recover possession over the land in issue. Eventually, the two entered into a
compromise agreement, 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:

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 PhP 1.5 million, but it was
titled under Carlos Hizon's (Carlos') name on August 12, 1999. Carlos is Bernardo's 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; (SIGN OF BAD FAITH – READ RULING NO 2)

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 Locsin's 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, Bernardo met with Locsin's 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 PhP 2.5 million loan/credit facility with Damar Credit Corporation (DCC).

Summary:
Locsin

Aceron – Bolos – Carlos (via Bernardo) – Sps Guevara

ISSUE/S:

1. How to prove due diligence

2. WON Carlos is an innocent buyer
3. WON Sps. Guevara is an innocent buyer.

RULING:

1. .
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 person's claim. 16 As such, a defective title — or one the
procurement of which is tainted with fraud and misrepresentation — may 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. 17
Complementing this is the mirror doctrine which echoes the doctrinal rule that every person dealing with
registered 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:
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.
Mirror Principle cannot apply absent of these 6 precautionary measures (caveat emptor)
Thus, in Domingo Realty, Inc. v. CA, 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:
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 Court's concurrence with petitioner's proposition.

2. No. Carlos is not an innocent purchaser for value. 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.

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:
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, Bernardo admitted having knowledge of Aceron's 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 [Locsin's] 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 commencing an 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. TIcEDC
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 agreement with Aceron in 1993, not her predecessor-in-
interest, Locsin, who, theoretically, had already divested herself of ownership thereof.
3. No. The spouses Guevara are not innocent purchasers for value
- there is a lack 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.
- 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.
- When Bernardo met with Locsin's 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 Locsin's claim of ownership at the time of the purported sale.
- 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.
- 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 property's 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 mortgage's 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.