THIRD DIVISION

[G.R. No. 107132. October 8, 1999.]

MAXIMA HEMEDES, petitioner, vs. THE HONORABLE COURT OF
APPEALS,
DOMINIUM
REALTY
AND
CONSTRUCTION
CORPORATION, ENRIQUE D. HEMEDES, and R & B INSURANCE
CORPORATION, respondents.
[G.R. No. 108472. October 8, 1999.]
R & B INSURANCE CORPORATION, petitioner, vs. THE
HONORABLE COURT OF APPEALS DOMINIUM REALTY AND
CONSTRUCTION CORPORATION, ENRIQUE D. HEMEDES and
MAXIMA HEMEDES, respondents.

Puruganan Chato Tan & Eleazar Law Offices for R & B Ins. Corp.
Conchu, Tancinco & Associates for E. D. Hemedes
Eduardo C. Abayan, Nelson M. Reyes and Luis A. Paredes for Dominium Realty Corp.
Quasha Ancheta Pea & Nolasco for Maxima Hemedes.
SYNOPSIS
Justa Kausapin executed on September 27, 1960 a "Deed of Conveyance of
Unregistered Property by Reversion" whereby she transferred an unregistered
parcel of land to her stepdaughter Maxima Hemedes, pursuant to the resolutory
condition in the deed of donation executed in her favor by her late husband Jose
Hemedes, except the usufruct thereof which shall remain in her during her lifetime
or remarriage, upon which the same shall automatically revert to Maxima.
Thereafter, Maxima initiated registration proceedings and new title was issued in
her name, with the annotation of usufruct in favor of Justa Kausapin. On June 2,
1964, Maxima and her spouse mortgaged said property R & B Insurance as security
for a loan, which they obtained. When Maxima failed to pay the loan, R & B
Insurance extrajudicially foreclosed the mortgage. A public auction sale was held in
which R & B Insurance was the highest bidder. For failure of Maxima to redeem the
property, ownership was consolidated in the name of R & B Insurance and a new
title was thereafter issued in its name. The annotation of usufruct in favor of Justa
Kausapin was maintained in the new title. Despite the earlier conveyance of the
subject land in favor of Maxima, Justa executed a "Kasunduan" on May 27, 1971
whereby she transferred the same land to her stepson, Enrique D. Hemedes. Justa
armed the conveyance of the subject property in favor of Enrique and denied the
conveyance made to Maxima. On February 28, 1979, Enrique sold the property to
Dominium Realty and Construction Corporation. On May 14, 1981, Dominium

leased the property to its sister corporation Asia Brewery, Inc. who immediately
constructed two warehouses upon said property. Thereafter R & B Insurance and
Maxima both claimed ownership of the subject property and the right to appropriate
the constructions. Maxima denied the execution of any real estate mortgage in
favor of R & B Insurance. Dominium and Enrique then led a complaint for the
annulment of the title issued in favor of R & B Insurance and/or reconveyance to
Dominium of the subject property. The trial court rendered judgment in favor of
Dominium and Enrique. On appeal, the Court of Appeals armed in toto the
decision of the trial court. Hence this petition.
Private respondents have failed to produce clear, strong and convincing evidence to
overcome the positive value of the "Deed of Conveyance of Unregistered Real
Property by Reversion" a notarized document. The mere denial of its execution by
the donor will not suffice for the purpose.
Enrique and his transferee, Dominium, did not acquire any rights over the subject
property. The donation in favor of Enrique was null and void for the purported object
thereof did not exist at the time of transfer, having been transferred to his sister,
Maxima. Similarly, the sale of the subject property by Enrique to Dominium was
also a nullity for the latter cannot acquire more rights than its predecessor-ininterest and was definitely not an innocent purchaser for value since Enrique did not
present any certificate of title upon which it relied.
The annotation of usufructuary rights in favor of Justa Kausapin was not sucient
cause to require R & B Insurance to investigate Maxima's title. Ownership over the
property remained unimpaired despite such encumbrance. R & B Insurance had a
right to rely on the certicate of title and was not in bad faith in accepting the
property as a security for the loan it extended to Maxima. Accordingly, the Supreme
Court reversed the decision of the Court of Appeals.
SYLLABUS
1.
REMEDIAL LAW; EVIDENCE; PRESUMPTION; EVIDENCE WILLFULLY
SUPPRESSED WOULD BE ADVERSE IF PRODUCED. Although a comparison of
Justa Kausapin's thumbmark with the thumbmark axed upon the deed of
conveyance would have easily cleared any doubts as to whether or not the deed
was forged, the records do not show that such evidence was introduced by private
respondents and the lower court decisions do not make mention of any comparison
having been made. It is a legal presumption that evidence willfully suppressed
would be adverse if produced. The failure of private respondents to refute the due
execution of the deed of conveyance by making a comparison with Justa Kausapin's
thumbmark necessarily leads one to conclude that she did in fact ax her
thumbmark upon the deed of donation in favor of her stepdaughter.
2.
ID.; ID.; CREDIBILITY OF WITNESSES; RULE THAT MATTER OF CREDIBILITY
LIES WITHIN THE PROVINCE OF TRIAL COURT DOES NOT APPLY WHEN WITNESS'
CREDIBILITY IS IN SERIOUS DOUBT. Public respondent's reliance upon Justa

Kausapin's repudiation of the deed of conveyance is misplaced for there are strong
indications that she is a biased witness. A witness is said to be biased when his
relation to the cause or to the parties is such that he has an incentive to exaggerate
or give false color to his statements, or to suppress or to pervert the truth, or to
state what is false. At the time the present case was led in the trial court in 1981,
Justa Kausapin was already 80 years old, suering from worsening physical
inrmities and completely dependent upon her stepson Enrique D. Hemedes for
support. It is apparent that Enrique D. Hemedes could easily have inuenced his
aging stepmother to donate the subject property to him. Public respondent should
not have given credence to a witness that was obviously biased and partial to the
cause of private respondents. Although it is a well-established rule that the matter
of credibility lies within the province of the trial court, such rule does not apply
when the witness' credibility has been put in serious doubt, such as when there
appears on the record some fact or circumstance of weight and inuence, which has
been overlooked or the significance of which has been misinterpreted.
cEAHSC

3.
ID.; ID.; FACTUAL FINDINGS OF TRIAL COURT ARE ENTITLED TO RESPECT ON
APPEAL; EXCEPTIONS. Even Enrique Hemedes admitted that Justa Kausapin was
dependent upon him for nancial support. The factual ndings of the trial court,
particularly when armed by the appellate court, carry great weight and are
entitled to respect on appeal, except under certain circumstances. One such
circumstance that would compel the Court to review the factual ndings of the
lower courts is where the lower courts manifestly overlooked certain relevant facts
not disputed by the parties and which, if properly considered, would justify a
dierent conclusion. Also, it is axiomatic that the drawing of the proper legal
conclusions from such factual findings are within the peculiar province of this Court.
4.
CIVIL LAW; CONTRACTS; DEED OF CONVEYANCE OF UNREGISTERED REAL
PROPERTY BY REVERSION; ALLEGED DEFECT THEREIN MUST BE CONCLUSIVELY
PROVEN. Public respondent's nding that the "Deed of Conveyance of
Unregistered Real Property By Reversion" executed by Justa Kausapin in favor of
Maxima Hemedes is spurious is not supported by the factual ndings in this case. It
is grounded upon the mere denial of the same by Justa Kausapin. A party to a
contract cannot just evade compliance with his contractual obligations by the simple
expedient of denying the execution of such contract. If, after a perfect and binding
contract has been executed between the parties, it occurs to one of them to allege
some defect therein as a reason for annulling it, the alleged defect must be
conclusively proven, since the validity and fulllment of contracts cannot be left to
the will of one of the contracting parties.
5.
ID.; ID.; ID.; ARTICLE 1332 OF THE CIVIL CODE; DOES NOT COVER A
SITUATION WHERE THERE IS COMPLETE ABSENCE OF CONSENT. Public
respondent was in error when it sustained the trial court's decision to nullify the
"Deed of Conveyance of Unregistered Real Property by Reversion" for failure of
Maxima Hemedes to comply with article 1332 of the Civil Code. Article 1332 was
intended for the protection of a party to a contract who is at a disadvantage due to
his illiteracy, ignorance, mental weakness or other handicap. This article
contemplates a situation wherein a contract has been entered into, but the consent

of one of the parties is vitiated by mistake or fraud committed by the other

contracting party. This is apparent from the ordering of the provisions under Book
IV, Title II, Chapter 2, Section 1 of the Civil Code, from which Article 1332 is taken.
A contract where consent is given through mistake, violence, intimidation, undue
inuence, or fraud is voidable. This is immediately followed by provisions explaining
what constitutes mistake, violence, intimidation, undue inuence, or fraud
sucient to vitiate consent. In order that mistake may invalidate consent, it should
refer to the substance of the thing which is the object of the contract, or to those
conditions which have principally moved one or both parties to enter into the
contract. Fraud, on the other hand, is present when, through insidious words or
machinations of one of the contracting parties, the other is induced to enter into a
contract which, without them, he would not have agreed to. Clearly, Article 1332
assumes that the consent of the contracting party imputing the mistake or fraud
was given, although vitiated, and does not cover a situation where there is a
complete absence of consent.

6.
ID.; ID.; ID.; ID.; NOT APPLICABLE IN CASE AT BAR. Justa Kausapin
disclaims any knowledge of the "Deed of Conveyance of Unregistered Real Property
by Reversion" in favor of Maxima Hemedes. In fact, she asserts that it was only
during the hearing conducted on December 7, 1981 before the trial court that she
rst caught a glimpse of the deed of conveyance and thus, she could not have
possibly axed her thumbmark thereto. It is private respondents' own allegations
which render Article 1332 inapplicable for it is useless to determine whether or not
Justa Kausapin was induced to execute said deed of conveyance by means of fraud
employed by Maxima Hemedes, who allegedly took advantage of the fact that the
former could not understand English, when Justa Kausapin denies even having seen
the document before the present case was initiated in 1981.
7.
ID.; ID.; ID.; MERE PREPONDERANCE OF EVIDENCE IS NOT SUFFICIENT TO
OVERTHROW A CERTIFICATE OF A NOTARY PUBLIC. It has been held by this
Court that ". . . mere preponderance of evidence is not sucient to overthrow a
certicate of a notary public to the eect that the grantor executed a certain
document and acknowledged the fact of its execution before him. To accomplish this
result, the evidence must be so clear, strong and convincing as to exclude all
reasonable controversy as to the falsity of the certicate, and when the evidence is
conicting, the certicate will be upheld." In the present case, we hold that private
respondents have failed to produce clear, strong, and convincing evidence to
overcome the positive value of the "Deed of Conveyance of Unregistered Real
Property by Reversion" a notarized document. The mere denial of its execution by
the donor will not suffice for the purpose.
8.
ID.; PROPERTY; MODE OF ACQUIRING OWNERSHIP; DONATION;
CONSIDERED VOID WHERE THE PURPORTED OBJECT THEREOF DID NOT EXIST AT
TIME OF TRANSFER. In upholding the deed of conveyance in favor of Maxima
Hemedes, we must concomitantly rule that Enrique D. Hemedes and his transferee,
Dominium, did not acquire any rights over the subject property. Justa Kausapin

sought to transfer to her stepson exactly what she had earlier transferred to
Maxima Hemedes the ownership of the subject property pursuant to the rst
condition stipulated in the deed of donation executed by her husband. Thus, the
donation in favor of Enrique D. Hemedes is null and void for the purported object
thereof did not exist at the time of the transfer, having already been transferred to
his sister. Similarly, the sale of the subject property by Enrique D. Hemedes to
Dominium is also a nullity for the latter cannot acquire more rights than its
predecessor-in-interest and is denitely not an innocent purchaser for value since
Enrique D. Hemedes did not present any certificate of title upon which it relied.
9.
ID.; LAND REGISTRATION; TAX DECLARATION AND TAX RECEIPTS; NOT
CONCLUSIVE PROOF OF TITLE TO LAND. The declarations of real property by
Enrique D. Hemedes, his payment of realty taxes, and his being designated as
owner of the subject property in the cadastral survey of Cabuyao, Laguna and in the
records of the Ministry of Agrarian Reform oce in Calamba, Laguna cannot defeat
a certicate of title, which is an absolute and indefeasible evidence of ownership of
the property in favor of the person whose name appears therein. Particularly, with
regard to tax declarations and tax receipts, this Court has held on several occasions
that the same do not by themselves conclusively prove title to land.
10.
ID.; ID.; ANNOTATION OF USUFRUCTUARY RIGHTS IN THE CERTIFICATE OF
TITLE IS NOT SUFFICIENT CAUSE TO REQUIRE MORTGAGEE TO INVESTIGATE
VALIDITY OF MORTGAGOR'S TITLE; REASONS. It is a well-established principle
that every person dealing with registered land may safely rely on the correctness of
the certicate of title issued and the law will in no way oblige him to go behind the
certicate to determine the condition of the 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 such property and pays a full and fair price for the
same at the time of such purchase or before he has notice of the claim of another
person. The annotation of usufructuary rights in favor of Justa Kausapin upon
Maxima Hemedes' OCT does not impose upon R & B Insurance the obligation to
investigate the validity of its mortgagor's title. Usufruct gives a right to enjoy the
property of another with the obligation of preserving its form and substance. The
usufructuary is entitled to all the natural, industrial and civil fruits of the property
and may personally enjoy the thing in usufruct, lease it to another, or alienate his
right of usufruct, even by a gratuitous title, but all the contracts he may enter into
as such usufructuary shall terminate upon the expiration of the usufruct. Only the
jus utendi and jus fruendi over the property is transferred to the usufructuary. The
owner of the property maintains the jus disponendi or the power to alienate,
encumber, transform, and even destroy the same. This right is embodied in the Civil
Code, which provides that the owner of property the usufruct of which is held by
another, may alienate it, although he cannot alter the property's form or substance,
or do anything which may be prejudicial to the usufructuary. There is no doubt that
the owner may validly mortgage the property in favor of a third person and the law
provides that, in such a case, the usufructuary shall not be obliged to pay the debt of
the mortgagor, and should the immovable be attached or sold judicially for the
payment of the debt, the owner shall be liable to the usufructuary for whatever the
latter may lose by reason thereof. Based on the foregoing, the annotation of

usufructuary rights in favor of Justa Kausapin is not sucient cause to require R & B
Insurance to investigate Maxima Hemedes' title, contrary to public respondent's
ruling, for the reason that Maxima Hemedes' ownership over the property remained
unimpaired despite such encumbrance. R & B Insurance had a right to rely on the
certicate of title and was not in bad faith in accepting the property as a security for
the loan it extended to Maxima Hemedes.
cIECTH

11.
ID.; ID.; COURT CANNOT DISREGARD PROPERTY RIGHTS ACQUIRED BY
INNOCENT THIRD PERSONS WHO RELIED UPON CORRECTNESS OF CERTIFICATE
OF TITLE. Even assuming in gratia argumenti that R & B Insurance was obligated
to look beyond the certicate of title and investigate the title of its mortgagor, still,
it would not have discovered any better rights in favor of private respondents.
Enrique D. Hemedes and Dominium base their claims to the property upon the
"Kasunduan" allegedly executed by Justa Kausapin in favor of Enrique Hemedes. As
we have already stated earlier, such contract is a nullity as its subject matter was
inexistent. Also, the land was mortgaged to R & B Insurance as early as 1964, while
the "Kasunduan" was executed only in 1971 and the adavit of Justa Kausapin
arming the conveyance in favor of Enrique D. Hemedes was executed in 1981.
Thus, even if R & B Insurance investigated the title of Maxima Hemedes, it would
not have discovered any adverse claim to the land in derogation of its mortgagor's
title. We reiterate that at no point in time could private respondents establish any
rights or maintain any claim over the land. It is a well-settled principle that where
innocent third persons rely upon the correctness of a certicate of title and acquire
rights over the property, the court cannot just disregard such rights. Otherwise,
public condence in the certicate of title, and ultimately, the Torrens system,
would be impaired for everyone dealing with registered property would still have to
inquire at every instance whether the title has been regularly or irregularly issued.
Being an innocent mortgagee for value, R & B Insurance validly acquired ownership
over the property, subject only to the usufructuary rights of Justa Kausapin thereto,
as this encumbrance was properly annotated upon its certificate of title.
12.
ID.; DAMAGES; MORAL AND EXEMPLARY DAMAGES; AWARD THEREOF,
UNWARRANTED IN CASE AT BAR. As to its claim for moral damages, we hold that
R & B Insurance is not entitled to the same for it has not alleged nor proven the
factual basis for the same. Neither is it entitled to exemplary damages, which may
only be awarded if the claimant is entitled to moral, temperate, liquidated or
compensatory damages.
13.
ID.; ID.; ATTORNEY'S FEES; AWARD THEREOF DEMANDS FACTUAL, LEGAL
AND EQUITABLE JUSTIFICATION. R & B Insurance's claim for attorney's fees must
also fail. The award of attorney's fees is the exception rather than the rule and
counsel's fees are not to be awarded every time a party wins a suit. Its award
pursuant to Article 2208 of the Civil Code demands factual, legal and equitable
justication and cannot be left to speculation and conjecture. Under the
circumstances prevailing in the instant case, there is no factual or legal basis for an
award of attorney's fees.
14.

REMEDIAL LAW; CIVIL PROCEDURE; PARTIES; WHERE A NECESSARY PARTY

WAS NOT JOINED IN THE ACTION, ANY JUDGMENT RENDERED IN THE CASE SHALL
BE WITHOUT PREJUDICE TO ITS RIGHT. As regards R & B Insurance's prayer that
Dominium be ordered to demolish the warehouses or that it be declared the owner
thereof since the same were built in bad faith, we note that such warehouses were
constructed by Asia Brewery, not by Dominium. However, despite its being a
necessary party in the present case, the lower courts never acquired jurisdiction
over Asia Brewery, whether as a plainti or defendant, and their respective
decisions did not pass upon the constructions made upon the subject property.
Courts acquire jurisdiction over a party plainti upon the ling of the complaint,
while jurisdiction over the person of a party defendant is acquired upon the service
of summons in the manner required by law or by his voluntary appearance. As a
rule, if a defendant has not been summoned, the court acquires no jurisdiction over
his person, and any personal judgment rendered against such defendant is null and
void. In the present case, since Asia Brewery is a necessary party that was not
joined in the action, any judgment rendered in this case shall be without prejudice
to its rights.
VITUG, J., separate concurring opinion:
1.
CIVIL LAW; PROPERTY; MODE OF ACQUIRING OWNERSHIP; DONATION;
ONCE PERFECTED WOULD DENY EXECUTION OF SUBSEQUENT INCONSISTENT
DONATION. Article 744 of the Civil Code states that the "donation of the same
thing to two or more dierent donees shall be governed by the provisions
concerning the sale of the same thing to two or more persons," i.e., by Article 1544
of the same Code, as if so saying that there can be a case of "double donations" to
dierent donees with opposing interest. Article 744 is a new provision, having no
counterpart in the old Civil Code, that must have been added unguardedly. Being a
mode of acquiring and transmitting ownership or other real rights, a donation once
perfected would deny the valid execution of a subsequent inconsistent donation
(unless perhaps if the prior donation has provided a suspensive condition which still
pends when the later donation is made).
2.
ID.; CONTRACTS; SALES; RULE ON DOUBLE SALES IS NOT APPLICABLE IN
ORDINARY DONATION. In sales, Article 1544, providing for the rules to resolve
the conicting rights of two or more buyers, is appropriate since the law does not
prohibit but, in fact, sanctions the perfection of a sale by a non-owner, such as the
sale of future things or a short sale, for it is only at the consummation stage of the
sale, i.e., delivery of the thing sold, that ownership would be deemed transmitted to
the buyer. In the meanwhile, a subsequent sale to another of the same thing by the
same seller can still be a legal possibility. This rule on double sales nds no
relevance in an ordinary donation where the law requires the donor to have
ownership of the thing or the real right he donates at the time of its perfection (see
Article 750, Civil Code) since a donation constitutes a mode, not just a title in an
acquisition and transmission of ownership.
MELO, J., dissenting opinion:

1.
REMEDIAL LAW; EVIDENCE; CREDIBILITY OF WITNESSES; MERE
RELATIONSHIP OF A WITNESS TO A PARTY DOES NOT DISCREDIT HIS TESTIMONY
IN COURT. The majority would hold that the twin repudiations cannot be given
credence because the witness is biased in favor of Enrique Hemedes, who, by
providing support and nancial assistance to the witness before, during and after
the execution of the " Kasunduan," is said to have inuenced her into signing the
same. This issue refers to the credibility of witnesses which, is best left for
determination by the trial court (People vs. Oliano, 287 SCRA 158 [1998], citing
People vs. Pontillar, Jr ., 275 SCRA 338 [1997]; and other cases cited). I am not
prepared to substitute my judgment for that of the trial court on the credibility of
Justa Kausapin on the basis alone of the relationship between her and Enrique
Hemedes. To reiterate, the rule is: "Mere relationship of a witness to a party does
not discredit his testimony in court." (U.S. vs. Mante, supra; and other cases cited.).
2.
ID.; ID.; ID.; CIRCUMSTANCES TO DISCREDIT, ABSENCE OF. I cannot infer
from the mere circumstance that Justa Kausapin was receiving support and
sustenance from Enrique Hemedes that she had any improper motives to testify in
favor of Enrique and against Maxima. It must be remembered that Justa Kausapin
had a legal right to such nancial assistance, not only from respondent Enrique
Hemedes, but also from Maxima Hemedes, who are both her stepchildren. If one
must impute improper motives in favor of Enrique, one could just as easily ascribe
these to Maxima. Furthermore, it must be noted that Justa Kausapin's entitlement
to support owed from her usufructuary rights contained in the "Donation Inter
Vivos with Resolutory Conditions" executed by her late husband, Jose Hemedes, the
common father of petitioner Maxima and respondent Enrique Hemedes. In
supporting his stepmother, Enrique was, therefore, merely performing a legal or
contractual duty in favor of Justa Kausapin. There was nothing improper in Justa
Kausapin's repudiation of the conveyance in favor of Maxima, especially so if one
considers the fact that the latter did not adduce any other evidence to defeat the
presumption that Justa Kausapin was stating the truth when she said that she
never conveyed the property to Justa Maxima.
AIcECS

3.
ID.; ID.; WILFUL SUPPRESSION OF EVIDENCE; RULE NOT APPLICABLE WHERE
THE SUPPRESSED EVIDENCE IS AVAILABLE TO THE OTHER PARTY. It is argued
that private respondents failed to have the thumbmarks of Justa Kausapin
appearing on the deeds executed in favor of Maxima and Enrique compared and this
failure may be taken as wilful suppression of evidence that is presumed to be
adverse if produced (Rules of Court, Rule 131, Sec. 3(e). The applicability of this rule
presupposes that the suppressed evidence is not available to the other party for
production in court (People vs. Padiernos, 69 SCRA 484 [1976]; People vs. Silvestre,
279 SCRA 474, 495 [1997]). This is not the case here for the same documents were
available to petitioners. In fact, the records show that counsel for Maxima Hemedes
pledged to submit the document which will be compared with the specimen
thumbmark to be obtained from Justa Kausapin (TSN, December 7, 1981, p. 28).
The records, however, do not show that said counsel persisted in his request for
comparison of Kausapin's thumbmarks. If petitioners were convinced that the
specimen thumbprint of Justa Kausapin was of crucial importance to their cause,
they should have insisted on presenting her as a witness and, thereupon, obtaining

her thumbprint. Their own failure to pursue the production of the specimen
thumbprint of Justa Kausapin negated any belated claim that the said specimen was
suppressed (People vs. Tulop , citing People vs. Pagal , 272 SCRA 443 [1998]; and
other cases cited).
4.
ID.; LAND REGISTRATION; REGISTRATION DOES NOT VALIDATE A FORGED
OR INVALID DOCUMENT. The two courts below were, to my mind, most
perceptive when they held that proof of authenticity of the thumbprint of Justa
Kausapin would not render valid an otherwise void document in light of the
admission of Maxima Hemedes that she did not explain the English contents thereof
to Justa Kausapin in a language understood by her. On the other hand, the validity
of the conveyance to Enrique Hemedes is amply proven by the evidence on record.
The Court of Appeals, therefore, did not err in holding that since the deed of
conveyance to Maxima was found to be spurious, it necessarily follows that OCT No.
(0-941) 0-198 issued in her name is null and void. This is because the registration
will not validate a forged or invalid document.
DECISION
GONZAGA-REYES, J :
p

Assailed in these petitions for review on certiorari is the decision 1 of the eleventh
division of the Court of Appeals in CA-G.R. CV No. 22010 promulgated on September
11, 1992 arming in toto the decision of Branch 24 of the Regional Trial Court of
Laguna in Civil Case No. B-1766 dated February 22, 1989, 2 and the resolution
dated December 29, 1992 denying petitioner R & B Insurance Corporation's (R & B
Insurance) motion for reconsideration. As the factual antecedents and issues are the
same, we shall decide the petitions jointly.
The instant controversy involves a question of ownership over an unregistered
parcel of land, identied as Lot No. 6, plan Psu-111331, with an area of 21,773
square meters, situated in Sala, Cabuyao, Laguna. It was originally owned by the
late Jose Hemedes, father of Maxima Hemedes and Enrique D. Hemedes. On March
22, 1947 Jose Hemedes executed a document entitled " Donation Inter Vivos With
Resolutory Conditions" 3 whereby he conveyed ownership over the subject land,
together with all its improvements, in favor of his third wife, Justa Kauapin, subject
to the following resolutory conditions:
(a)
Upon the death or remarriage of the DONEE, the title to the property
donated shall revert to any of the children, or their heirs, of the DONOR expressly
designated by the DONEE in a public document conveying the property to the
latter; or
(b)
In absence of such an express designation made by the DONEE before her
death or remarriage contained in a public instrument as above provided, the title to
the property shall automatically revert to the legal heirs of the DONOR in common.

Pursuant to the rst condition abovementioned, Justa Kausapin executed on

September 27, 1960 a "Deed of Conveyance of Unregistered Real Property by
Reversion" 4 conveying to Maxima Hemedes the subject property under the
following terms
That the said parcel of land was donated unto me by the said Jose Hemedes,
my deceased husband, in a deed of "DONATION INTER VIVOS WITH
RESOLUTORY CONDITIONS" executed by the donor in my favor, and duly
accepted by me on March 22, 1947, before Notary Public Luis Bella in
Cabuyao, Laguna;
That the donation is subject to the resolutory conditions appearing in the
said deed of "DONATION INTER VIVOS WITH RESOLUTORY CONDITIONS,"
as follows:
"(a)
Upon the death or remarriage of the DONEE, the title
to the property donated shall revert to any of the children, or
their heirs, of the DONOR expressly designated by the DONEE
in a public document conveying the property to the latter; or
LexLib

(b)
In absence of such an express designation made by
the DONEE before her death or remarriage contained in a
public instrument as above provided, the title to the property
shall automatically revert to the legal heirs of the DONOR in
common."
That, wherefore, in virtue of the deed of donation above mentioned and in
the exercise of my right and privilege under the terms of the rst resolutory
condition therein contained and hereinabove reproduced, and for and in
consideration of my love and aection, I do hereby by these presents
convey, transfer, and deed unto my designee, MAXIMA HEMEDES, of legal
age, married to RAUL RODRIGUEZ, Filipino and resident of No. 15 Acacia
Road, Quezon City, who is one of the children and heirs of my donor, JOSE
HEMEDES, the ownership of, and title to the property hereinabove
described, and all rights and interests therein by reversion under the rst
resolutory condition in the above deed of donation; Except the possession
and enjoyment of the said property which shall remain vested in me during
my lifetime, or widowhood and which upon my death or remarriage shall also
automatically revert to, and be transferred to my designee, Maxima
Hemedes.

Maxima Hemedes, through her counsel, led an application for registration and
conrmation of title over the subject unregistered land. Subsequently, Original
Certicate of Title (OCT) No. (0-941) 0-198 5 was issued in the name of Maxima
Hemedes married to Raul Rodriguez by the Registry of Deeds of Laguna on June 8,
1962, with the annotation that "Justa Kausapin shall have the usufructuary rights
over the parcel of land herein described during her lifetime or widowhood."

It is claimed by R & B Insurance that on June 2, 1964, Maxima Hemedes and her
husband Raul Rodriguez constituted a real estate mortgage over the subject
property in its favor to serve as security for a loan which they obtained in the
amount of P6,000.00. On February 22, 1968, R & B Insurance extrajudicially
foreclosed the mortgage since Maxima Hemedes failed to pay the loan even after it
became due on August 2, 1964. The land was sold at a public auction on May 3,
1968 with R & B Insurance as the highest bidder and a certicate of sale was issued
by the sheri in its favor. Since Maxima Hemedes failed to redeem the property
within the redemption period, R & B Insurance executed an Adavit of
Consolidation dated March 29, 1974 and on May 21, 1975 the Register of Deeds of
Laguna cancelled OCT No. (0-941) 0-198 and issued Transfer Certicate of Title
(TCT) No. 41985 in the name of R & B Insurance. The annotation of usufruct in
favor of Justa Kausapin was maintained in the new title. 6
Despite the earlier conveyance of the subject land in favor of Maxima Hemedes,
Justa Kausapin executed a "Kasunduan" on May 27, 1971 whereby she transferred
the same land to her stepson Enrique D. Hemedes, pursuant to the resolutory
condition in the deed of donation executed in her favor by her late husband Jose
Hemedes. Enrique D. Hemedes obtained two declarations of real property in
1972, and again, in 1974, when the assessed value of the property was raised. Also,
he has been paying the realty taxes on the property from the time Justa Kausapin
conveyed the property to him in 1971 until 1979. In the cadastral survey of
Cabuyao, Laguna conducted from September 8, 1974 to October 10, 1974, the
property was assigned Cadastral No. 2990, Cad. 455-D, Cabuyao Cadastre, in the
name of Enrique Hemedes. Enrique Hemedes is also the named owner of the
property in the records of the Ministry of Agrarian Reform oce at Calamba,
Laguna.
On February 28, 1979, Enriques D. Hemedes sold the property to Dominium Realty
and Construction Corporation (Dominium). On April 10, 1981, Justa Kausapin
executed an adavit arming the conveyance of the subject property in favor of
Enrique D. Hemedes as embodied in the "Kasunduan" dated May 27, 1971, and at
the same time denying the conveyance made to Maxima Hemedes.
On May 14, 1981, Dominium leased the property to its sister corporation Asia
Brewery, Inc. (Asia Brewery) who, even before the signing of the contract of lease,
constructed two warehouses made of steel and asbestos costing about
P10,000,000.00 each. Upon learning of Asia Brewery's constructions upon the
subject property, R & B Insurance sent it a letter on March 16, 1981 informing the
former of its ownership of the property as evidenced by TCT No. 41985 issued in its
favor and of its right to appropriate the constructions since Asia Brewery is a builder
in bad faith. On March 27, 1981, a conference was held between R & B Insurance
and Asia Brewery but they failed to arrive at an amicable settlement.
On May 8, 1981, Maxima Hemedes also wrote a letter addressed to Asia Brewery
wherein she asserted that she is the rightful owner of the subject property by virtue
of OCT No. (0-941) 0-198 and that, as such, she has the right to appropriate Asia
Brewery's constructions, to demand its demolition, or to compel Asia Brewery to

purchase the land. In another letter of the same date addressed to R & B Insurance,
Maxima Hemedes denied the execution of any real estate mortgage in favor of the
latter.
On August 27, 1981, Dominium and Enrique D. Hemedes led a complaint 7 with
the Court of First Instance of Binan, Laguna for the annulment of TCT No. 41985
issued in favor of R & B Insurance and/or the reconveyance to Dominium of the
subject property. Specically, the complaint alleged that Dominium was the
absolute owner of the subject property by virtue of the February 28, 1979 deed of
sale executed by Enrique D. Hemedes, who in turn obtained ownership of the land
from Justa Kausapin, as evidenced by the "Kasunduan" dated May 27, 1971. The
plaintis asserted that Justa Kausapin never transferred the land to Maxima
Hemedes and that Enrique D. Hemedes had no knowledge of the registration
proceedings initiated by Maxima Hemedes.
After considering the merits of the case, the trial court rendered judgment on
February 22, 1989 in favor of plaintis Dominium and Enrique D. Hemedes, the
dispositive portion of which states
WHEREFORE, judgment is hereby rendered:
(a)

Declaring Transfer Certicate of Title No. 41985 of the Register of

Deeds of Laguna null and void and ineffective;

(b)

Declaring Dominium Realty and Construction Corporation the

absolute owner and possessor of the parcel of land described in
paragraph 3 of the complaint;

(c)

Ordering the defendants and all persons acting for and/or under
them to respect such ownership and possession of Dominium Realty
and Construction Corporation and to forever desist from asserting
adverse claims thereon nor disturbing such ownership and
possession; and

(d)

Directing the Register of Deeds of Laguna to cancel said Transfer

Certicate of Title No. 41985 in the name of R & B Insurance
Corporation, and in lieu thereof, issue a new transfer certicate of title
in the name of Dominium Realty and Construction Corporation. No
pronouncement as to costs and attorney's fees. 8

Both R & B Insurance and Maxima Hemedes appealed from the trial court's decision.
On September 11, 1992 the Court of Appeals armed the assailed decision in toto
and on December 29, 1992, it denied R & B Insurance's motion for reconsideration.
Thus, Maxima Hemedes and R & B Insurance led their respective petitions for
review with this Court on November 3, 1992 and February 22, 1993, respectively.
In G.R. No. 107132 9 , petitioner Maxima Hemedes makes the following assignment
of errors as regards public respondent's ruling
I

RESPONDENT COURT OF APPEALS GRAVELY ERRED IN APPLYING ARTICLE

1332 OF THE NEW CIVIL CODE IN DECLARING AS SPURIOUS THE DEED OF
CONVEYANCE OF UNREGISTERED REAL PROPERTY BY REVERSION
EXECUTED BY JUSTA KAUSAPIN IN FAVOR OF PETITIONER MAXIMA
HEMEDES.
II
RESPONDENT COURT OF APPEALS GRAVELY ERRED IN NOT FINDING AS
VOID AND OF NO LEGAL EFFECT THE "KASUNDUAN" DATED 27 MAY 1971
EXECUTED BY JUSTA KAUSAPIN IN FAVOR OF RESPONDENT ENRIQUE
HEMEDES AND THE SALE OF THE SUBJECT PROPERTY BY RESPONDENT
ENRIQUE HEMEDES IN FAVOR OF RESPONDENT DOMINIUM REALTY AND
CONSTRUCTION CORPORATION.
III
RESPONDENT COURT OF APPEALS GRAVELY ERRED IN NOT FINDING
RESPONDENTS ENRIQUE AND DOMINIUM IN BAD FAITH.
IV
RESPONDENT COURT OF APPEALS GRAVELY ERRED IN DECLARING THAT
ORIGINAL CERTIFICATE OF TITLE NO. (0-941) 0-198 ISSUED IN THE NAME
OF PETITIONER MAXIMA HEMEDES NULL AND VOID.
V
RESPONDENT COURT OF APPEALS ERRED IN NOT FINDING THAT NO LOAN
WAS OBTAINED BY PETITIONER MAXIMA HEMEDES FROM RESPONDENT R
& B INSURANCE CORPORATION.
VI
RESPONDENT COURT OF APPEALS ERRED IN NOT FINDING THAT NO REAL
ESTATE MORTGAGE OVER THE SUBJECT PROPERTY WAS EXECUTED BY
PETITIONER MAXIMA HEMEDES IN FAVOR OF RESPONDENT R & B
INSURANCE CORPORATION.
VII
RESPONDENT COURT OF APPEALS ERRED IN NOT FINDING THAT THE
VALID TITLE COVERING THE SUBJECT PROPERTY IS THE ORIGINAL
CERTIFICATE OF TITLE NO. (0-941) 0-198 IN THE NAME OF PETITIONER
MAXIMA HEMEDES AND NOT THE TRANSFER CERTIFICATE OF TITLE (TCT)
NO. 41985 IN THE NAME OF R & B INSURANCE CORPORATION. 10

Meanwhile, in G.R. No. 108472 11 , petitioner R & B Insurance assigns almost the
same errors, except with regards to the real estate mortgage allegedly executed by
Maxima Hemedes in its favor. Specifically, R & B Insurance alleges that:
I

RESPONDENT COURT ERRONEOUSLY ERRED IN APPLYING ARTICLE 1332

OF THE CIVIL CODE.
II
RESPONDENT COURT SERIOUSLY ERRED IN GIVING CREDENCE ON (sic)
THE KASUNDUAN BY AND BETWEEN JUSTA KAUSAPIN AND ENRIQUE
NOTWITHSTANDING THE FACT THAT JUSTA KAUSAPIN BY WAY OF A DEED
OF CONVEYANCE OF UNREGISTERED REAL PROPERTY BY REVERSION
CEDED THE SUBJECT PROPERTY TO MAXIMA SOME ELEVEN (11) YEARS
EARLIER.
III
RESPONDENT COURT SERIOUSLY ERRED IN GIVING CREDENCE ON (sic)
THE AFFIDAVIT OF REPUDIATION OF JUSTA KAUSAPIN NOTWITHSTANDING
THE FACT THAT SHE IS A BIAS (sic) WITNESS AND EXECUTED THE SAME
SOME TWENTY-ONE (21) YEARS AFTER THE EXECUTION OF THE DEED OF
CONVEYANCE IN FAVOR OF MAXIMA.
IV
RESPONDENT COURT SERIOUSLY ERRED IN NOT FINDING THAT THE
COMPLAINT OF ENRIQUE AND DOMINIUM HAS PRESCRIBED AND/OR THAT
ENRIQUE AND DOMINIUM WERE GUILTY OF LACHES.
V
RESPONDENT COURT SERIOUSLY ERRED IN FINDING R & B AS A
MORTGAGEE NOT IN GOOD FAITH.
VI
RESPONDENT COURT SERIOUSLY ERRED IN NOT GRANTING THE DAMAGES
PRAYED FOR BY R & B IN ITS COUNTERCLAIM AND CROSSCLAIM. 12

The primary issue to be resolved in these consolidated petitions is which of the two
conveyances by Justa Kausapin, the rst in favor of Maxima Hemedes and the
second in favor of Enrique D. Hemedes, eectively transferred ownership over the
subject land.
The Register of Deeds of Laguna issued OCT No. (0-941) 0-198 in favor of Maxima
Hemedes on the strength of the "Deed of Conveyance of Unregistered Real Property
by Reversion" executed by Justa Kausapin. Public respondent upheld the trial court's
nding that such deed is sham and spurious and has "no evidentiary value under
the law upon which claimant Maxima Hemedes may anchor a valid claim of
ownership over the property." In ruling thus, it gave credence to the April 10, 1981
adavit executed by Justa Kausapin repudiating such deed of conveyance in favor
of Maxima Hemedes and arming the authenticity of the "Kasunduan" in favor of
Enrique D. Hemedes. Also, it considered as pivotal the fact that the deed of
conveyance in favor of Maxima Hemedes was in English and that it was not

explained to Justa Kausapin, although she could not read nor understand English;
thus, Maxima Hemedes failed to discharge her burden, pursuant to Article 1332 of
the Civil Code, to show that the terms thereof were fully explained to Justa
Kausapin. Public respondent concluded by holding that the registration of the
property on the strength of the spurious deed of conveyance is null and void and
does not confer any right of ownership upon Maxima Hemedes. 13

Maxima Hemedes argues that Justa Kausapin's adavit should not be given any
credence since she is obviously a biased witness as it has been shown that she is
dependent upon Enrique D. Hemedes for her daily subsistence, and she was most
probably inuenced by Enrique D. Hemedes to execute the "Kasunduan" in his
favor. She also refutes the applicability of article 1332. It is her contention that for
such a provision to be applicable, there must be a party seeking to enforce a
contract; however, she is not enforcing the "Deed of Conveyance of Unregistered
Real Property by Reversion" as her basis in claiming ownership, but rather her claim
is anchored upon OCT No. (0-941) 0-198 issued in her name, which document can
stand independently from the deed of conveyance. Also, there exist various
circumstances which show that Justa Kausapin did in fact execute and understand
the deed of conveyance in favor of Maxima Hemedes. First, the "Donation Intervivos
With Resolutory Conditions" executed by Jose Hemedes in favor of Justa Kausapin
was also in English, but she never alleged that she did not understand such
document. Secondly, Justa Kausapin failed to prove that it was not her thumbmark
on the deed of conveyance in favor of Maxima Hemedes and in fact, both Enrique D.
Hemedes and Dominium objected to the request of Maxima Hemedes' counsel to
obtain a specimen thumbmark of Justa Kausapin. 14
Public respondent's nding that the "Deed of Conveyance of Unregistered Real
Property By Reversion" executed by Justa Kausapin in favor of Maxima Hemedes is
spurious is not supported by the factual ndings in this case.. It is grounded upon
the mere denial of the same by Justa Kausapin. A party to a contract cannot just
evade compliance with his contractual obligations by the simple expedient of
denying the execution of such contract. If, after a perfect and binding contract has
been executed between the parties, it occurs to one of them to allege some defect
therein as a reason for annulling it, the alleged defect must be conclusively proven,
since the validity and fulllment of contracts cannot be left to the will of one of the
contracting parties. 15
Although a comparison of Justa Kausapin's thumbmark with the thumbmark axed
upon the deed of conveyance would have easily cleared any doubts as to whether or
not the deed was forged, the records do not show that such evidence was introduced
by private respondents and the lower court decisions do not make mention of any
comparison having been made. 16 It is a legal presumption that evidence willfully
suppressed would be adverse if produced. 17 The failure of private respondents to
refute the due execution of the deed of conveyance by making a comparison with
Justa Kausapin's thumbmark necessarily leads one to conclude that she did in fact
affix her thumbmark upon the deed of donation in favor of her stepdaughter.

Moreover, public respondent's reliance upon Justa Kausapin's repudiation of the

deed of conveyance is misplaced for there are strong indications that she is a biased
witness. The trial court found that Justa Kausapin was dependent upon Enrique D.
Hemedes for nancial assistance. 18 Justa Kausapin's own testimony attests to this
fact
Atty. Conchu:
Q:

Aling Justa, can you tell the Honorable Court why you donated this
particular property to Enrique Hemedes?

A:

Because I was in serious condition and he was the one supporting me

financially.

Q:

As of today, Aling Justa are you continuing to receive any assistance

from Enrique Hemedes?

A:

Yes Sir.

(TSN pp. 19 and 23, November 17, 1981)

19

Even Enrique Hemedes admitted that Justa Kausapin was dependent upon him for
financial support. The transcripts state as follows:
Atty. Mora:
Now you said that Justa Kausapin has been receiving from you
advances for food, medicine & other personal or family needs?
E. Hemedes:
A:

Yes.

Q:

Was this already the practice at the time this "Kasunduan" was
executed?

A:

No that was increased, no, no, after this document.

xxx xxx xxx

Q:

And because of these accommodations that you have given to Justa

Kausapin; Justa Kausapin has in turn treated you very well because
she's very grateful for that, is it not?

A:

I think that's human nature.

Q:

Answer me categorically, Mr. Hemedes she's very grateful?

A:

Yes she might be grateful but not very grateful.

(TSN, p. 34, June 15, 1984)

20

A witness is said to be biased when his relation to the cause or to the parties is such

that he has an incentive to exaggerate or give false color to his statements, or to

suppress or to pervert the truth, or to state what is false. 21 At the time the present
case was led in the trial court in 1981, Justa Kausapin was already 80 years old,
suering from worsening physical inrmities and completely dependent upon her
stepson Enrique D. Hemedes for support. It is apparent that Enrique D. Hemedes
could easily have inuenced his aging stepmother to donate the subject property to
him. Public respondent should not have given credence to a witness that was
obviously biased and partial to the cause of private respondents. Although it is a
well-established rule that the matter of credibility lies within the province of the
trial court, such rule does not apply when the witness' credibility has been put in
serious doubt, such as when there appears on the record some fact or circumstance
of weight and inuence, which has been overlooked or the signicance of which has
been misinterpreted. 22
Finally, public respondent was in error when it sustained the trial court's decision to
nullify the "Deed of Conveyance of Unregistered Real Property by Reversion" for
failure of Maxima Hemedes to comply with article 1332 of the Civil Code, which
states:
When one of the parties is unable to read, or if the contract is in a language not
understood by him, and mistake or fraud is alleged, the person enforcing the contract
must show that the terms thereof have been fully explained to the former.

Article 1332 was intended for the protection of a party to a contract who is at a
disadvantage due to his illiteracy, ignorance, mental weakness or other handicap. 23
This article contemplates a situation wherein a contract has been entered into, but
the consent of one of the parties is vitiated by mistake or fraud committed by the
other contracting party. 24 This is apparent from the ordering of the provisions under
Book IV, Title II, Chapter 2, section 1 of the Civil Code, from which article 1332 is
taken. Article 1330 states that
A contract where consent is given through mistake, violence, intimidation, undue
influence, or fraud is voidable.

This is immediately followed by provisions explaining what constitutes mistake,

violence, intimidation, undue inuence, or fraud sucient to vitiate consent. 25 In
order that mistake may invalidate consent, it should refer to the substance of the
thing which is the object of the contract, or to those conditions which have
principally moved one or both parties to enter into the contract. 26 Fraud, on the
other hand, is present when, through insidious words or machinations of one of the
contracting parties, the other is induced to enter into a contract which, without
them, he would not have agreed to. 27 Clearly, article 1332 assumes that the
consent of the contracting party imputing the mistake or fraud was given, although
vitiated, and does not cover a situation where there is a complete absence of
consent.
In this case, Justa Kausapin disclaims any knowledge of the "Deed of Conveyance of
Unregistered Real Property by Reversion" in favor of Maxima Hemedes. In fact, she
asserts that it was only during the hearing conducted on December 7, 1981 before

the trial court that she rst caught a glimpse of the deed of conveyance and thus,
she could not have possibly axed her thumbmark thereto. 28 It is private
respondents' own allegations which render article 1332 inapplicable for it is useless
to determine whether or not Justa Kausapin was induced to execute said deed of
conveyance by means of fraud employed by Maxima Hemedes, who allegedly took
advantage of the fact that the former could not understand English, when Justa
Kausapin denies even having seen the document before the present case was
initiated in 1981.
It has been held by this Court that ". . . mere preponderance of evidence is not
sucient to overthrow a certicate of a notary public to the eect that the grantor
executed a certain document and acknowledged the fact of its execution before him.
To accomplish this result, the evidence must be so clear, strong and convincing as to
exclude all reasonable controversy as to the falsity of the certicate, and when the
evidence is conicting, the certicate will be upheld." 29 In the present case, we hold
that private respondents have failed to produce clear, strong, and convincing
evidence to overcome the positive value of the "Deed of Conveyance of
Unregistered Real Property by Reversion" a notarized document. The mere denial
of its execution by the donor will not suffice for the purpose.
In upholding the deed of conveyance in favor of Maxima Hemedes, we must
concomitantly rule that Enrique D. Hemedes and his transferee, Dominium, did not
acquire any rights over the subject property. Justa Kausapin sought to transfer to
her stepson exactly what she had earlier transferred to Maxima Hemedes the
ownership of the subject property pursuant to the rst condition stipulated in the
deed of donation executed by her husband. Thus, the donation in favor of Enrique D.
Hemedes is null and void for the purported object thereof did not exist at the time of
the transfer, having already been transferred to his sister. 30 Similarly, the sale of
the subject property by Enrique D. Hemedes to Dominium is also a nullity for the
latter cannot acquire more rights than its predecessor-in-interest and is denitely
not an innocent purchaser for value since Enrique D. Hemedes did not present any
certificate of title upon which it relied.
cdasia

The declarations of real property by Enrique D. Hemedes, his payment of realty

taxes, and his being designated as owner of the subject property in the cadastral
survey of Cabuyao, Laguna and in the records of the Ministry of Agrarian Reform
oce in Calamba, Laguna cannot defeat a certicate of title, which is an absolute
and indefeasible evidence of ownership of the property in favor of the person whose
name appears therein. 31 Particularly, with regard to tax declarations and tax
receipts, this Court has held on several occasions that the same do not by
themselves conclusively prove title to land. 32
We come now to the question of whether or not R & B Insurance should be
considered an innocent purchaser of the land in question. At the outset, we note
that both the trial court and appellate court found that Maxima Hemedes did in fact
execute a mortgage over the subject property in favor of R & B Insurance. This
nding shall not be disturbed because, as we stated earlier, it is a rule that the

factual ndings of the trial court, especially when armed by the Court of Appeals,
are entitled to respect, and should not be disturbed on appeal. 33
In holding that R & B Insurance is not a mortgagee in good faith, public respondent
stated that the fact that the certicate of title of the subject property indicates upon
its face that the same is subject to an encumbrance, i.e. usufructuary rights in favor
of Justa Kausapin during her lifetime or widowhood, should have prompted R & B
Insurance to ". . . investigate further the circumstances behind this encumbrance on
the land in dispute," but which it failed to do. Also, public respondent considered
against R & B Insurance the fact that it made it appear in the mortgage contract
that the land was free from all liens, charges, taxes and encumbrances. 34
Cdpr

R & B Insurance alleges that, contrary to public respondent's ruling, the presence of
an encumbrance on the certicate of title is not reason for the purchaser or a
prospective mortgagee to look beyond the face of the certicate of title. The owner
of a parcel of land may still sell the same even though such land is subject to a
usufruct; the buyer's title over the property will simply be restricted by the rights of
the usufructuary. Thus, R & B Insurance accepted the mortgage subject to the
usufructuary rights of Justa Kausapin. Furthermore, even assuming that R & B
Insurance was legally obliged to go beyond the title and search for any hidden
defect or inchoate right which could defeat its right thereto, it would not have
discovered anything since the mortgage was entered into in 1964, while the
"Kasunduan" conveying the land to Enrique D. Hemedes was only entered into in
1971 and the adavit repudiating the deed of conveyance in favor of Maxima
Hemedes was executed by Justa Kausapin in 1981. 35
We sustain petitioner R & B Insurance's claim that it is entitled to the protection of
a mortgagee in good faith.
It is a well-established principle that every person dealing with registered land may
safely rely on the correctness of the certicate of title issued and the law will in no
way oblige him to go behind the certicate to determine the condition of the
property. 36 An innocent purchaser for value 37 is one who buys the property of
another without notice that some other person has a right to or interest in such
property and pays a full and fair price for the same at the time of such purchase or
before he has notice of the claim of another person. 38
The annotation of usufructuary rights in favor of Justa Kausapin upon Maxima
Hemedes' OCT does not impose upon R & B Insurance the obligation to investigate
the validity of its mortgagor's title. Usufruct gives a right to enjoy the property of
another with the obligation of preserving its form and substance. 39 The
usufructuary is entitled to all the natural, industrial and civil fruits of the property 40
and may personally enjoy the thing in usufruct, lease it to another, or alienate his
right of usufruct, even by a gratuitous title, but all the contracts he may enter into
as such usufructuary shall terminate upon the expiration of the usufruct. 41
Clearly, only the jus utendi and jus fruendi over the property is transferred to the
usufructuary. 42 The owner of the property maintains the jus disponendi or the
power to alienate, encumber, transform, and even destroy the same. 43 This right is

embodied in the Civil Code, which provides that the owner of property the usufruct
of which is held by another, may alienate it, although he cannot alter the property's
form or substance, or do anything which may be prejudicial to the usufructuary. 44
There is no doubt that the owner may validly mortgage the property in favor of a
third person and the law provides that, in such a case, the usufructuary shall not be
obliged to pay the debt of the mortgagor, and should the immovable be attached or
sold judicially for the payment of the debt, the owner shall be liable to the
usufructuary for whatever the latter may lose by reason thereof. 45
Based on the foregoing, the annotation of usufructuary rights in favor of Justa
Kausapin is not sucient cause to require R & B Insurance to investigate Maxima
Hemedes' title, contrary to public respondent's ruling, for the reason that Maxima
Hemedes' ownership over the property remained unimpaired despite such
encumbrance. R & B Insurance had a right to rely on the certicate of title and was
not in bad faith in accepting the property as a security for the loan it extended to
Maxima Hemedes.
Even assuming in gratia argumenti that R & B Insurance was obligated to look
beyond the certicate of title and investigate the title of its mortgagor, still, it would
not have discovered any better rights in favor of private respondents. Enrique D.
Hemedes and Dominium base their claims to the property upon the "Kasunduan"
allegedly executed by Justa Kausapin in favor of Enrique Hemedes. As we have
already stated earlier, such contract is a nullity as its subject matter was inexistent.
Also, the land was mortgaged to R & B Insurance as early as 1964, while the
"Kasunduan" was executed only in 1971 and the adavit of Justa Kausapin
arming the conveyance in favor of Enrique D. Hemedes was executed in 1981.
Thus, even if R & B Insurance investigated the title of Maxima Hemedes, it would
not have discovered any adverse claim to the land in derogation of its mortgagor's
title. We reiterate that at no point in time could private respondents establish any
rights or maintain any claim over the land.
It is a well-settled principle that where innocent third persons rely upon the
correctness of a certicate of title and acquire rights over the property, the court
cannot just disregard such rights. Otherwise, public condence in the certicate of
title, and ultimately, the Torrens system, would be impaired for everyone dealing
with registered property would still have to inquire at every instance whether the
title has been regularly or irregularly issued. 46 Being an innocent mortgagee for
value, R & B Insurance validly acquired ownership over the property, subject only to
the usufructuary rights of Justa Kausapin thereto, as this encumbrance was properly
annotated upon its certificate of title.
The factual ndings of the trial court, particularly when armed by the appellate
court, carry great weight and are entitled to respect on appeal, except under certain
circumstances. 47 One such circumstance that would compel the Court to review the
factual ndings of the lower courts is where the lower courts manifestly overlooked
certain relevant facts not disputed by the parties and which, if properly considered,
would justify a dierent conclusion. 48 Also, it is axiomatic that the drawing of the

proper legal conclusions from such factual ndings are within the peculiar province
of this Court. 49
As regards R & B Insurance's prayer that Dominium be ordered to demolish the
warehouses or that it be declared the owner thereof since the same were built in
bad faith, we note that such warehouses were constructed by Asia Brewery, not by
Dominium. However, despite its being a necessary party in the present case, the
lower courts never acquired jurisdiction over Asia Brewery, whether as a plainti or
defendant, and their respective decisions did not pass upon the constructions made
upon the subject property. Courts acquire jurisdiction over a party plainti upon the
ling of the complaint, while jurisdiction over the person of a party defendant is
acquired upon the service of summons in the manner required by law or by his
voluntary appearance. As a rule, if a defendant has not been summoned, the court
acquires no jurisdiction over his person, and any personal judgment rendered
against such defendant is null and void. 50 In the present case, since Asia Brewery is
a necessary party that was not joined in the action, any judgment rendered in this
case shall be without prejudice to its rights. 51
As to its claim for moral damages, we hold that R & B Insurance is not entitled to
the same for it has not alleged nor proven the factual basis for the same. Neither is
it entitled to exemplary damages, which may only be awarded if the claimant is
entitled to moral, temperate, liquidated or compensatory damages. 52 R & B
Insurance's claim for attorney's fees must also fail. The award of attorney's fees is
the exception rather than the rule and counsel's fees are not to be awarded every
time a party wins a suit. Its award pursuant to article 2208 of the Civil Code
demands factual, legal and equitable justication and cannot be left to speculation
and conjecture. 53 Under the circumstances prevailing in the instant case, there is
no factual or legal basis for an award of attorney's fees.

WHEREFORE, the assailed decision of public respondent and its resolution dated
February 22, 1989 are REVERSED. We uphold petitioner R & B Insurance's assertion
of ownership over the property in dispute, as evidenced by TCT No. 41985, subject
to the usufructuary rights of Justa Kausapin, which encumbrance has been properly
annotated upon the said certificate of title. No pronouncement as to costs.
SO ORDERED.

Panganiban and Purisima, JJ ., concur.

Melo, J., please see dissenting opinion.
Vitug, J., please see separate (concurring) opinion.

Separate Opinions

VITUG, J., concurring:

I share the opinion expressed by my esteemed colleague, Mme. Justice Minerva P.
Gonzaga-Reyes, in her ponencia.
I just would like to add that a donation would not be legally feasible if the donor has
neither ownership nor real right that he can transmit to the donee. Unlike an
ordinary contract, a donation, under Article 712, in relation to Article 725 of the
Civil Code is also a mode of acquiring and transmitting ownership and other real
rights by an act of liberality whereby a person disposes gratuitously that ownership
or real right in favor of another who accepts it. It would be an inecacious process if
the donor would have nothing to convey at the time it is made.
Article 744 of the Civil Code states that the "donation of the same thing to two or
more dierent donees shall be governed by the provisions concerning the sale of the
same thing to two or more persons," i.e., by Article 1544 of the same Code, as if so
saying that there can be a case of "double donations" to dierent donees with
opposing interest. Article 744 is a new provision, having no counterpart in the old
Civil Code, that must have been added unguardedly. Being a mode of acquiring and
transmitting ownership or other real rights, a donation once perfected would deny
the valid execution of a subsequent inconsistent donation (unless perhaps if the
prior donation has provided a suspensive condition which still pends when the later
donation is made).
In sales, Article 1544, providing for the rules to resolve the conicting rights of two
or more buyers, is appropriate since the law does not prohibit but, in fact, sanctions
the perfection of a sale by a non-owner, such as the sale of future things or a short
sale, for it is only at the consummation stage of the sale, i.e., delivery of the thing
sold, that ownership would be deemed transmitted to the buyer. In the meanwhile,
a subsequent sale to another of the same thing by the same seller can still be a
legal possibility. This rule on double sales nds no relevance in an ordinary donation
where the law requires the donor to have ownership of the thing or the real right he
donates at the time of its perfection (see Article 750, Civil Code) since a donation
constitutes a mode, not just a title, in an acquisition and transmission of ownership.
MELO, J., dissenting:
I nd myself unable to join the majority. The opinion written by my esteemed
colleague, Madame Justice Minerva Gonzaga-Reyes, will have far-searching
ramications on settled doctrines concerning the nality and conclusiveness of the
factual ndings of the trial court in view of its unique advantage of being able to
observe at rst-hand the demeanor and deportment of witnesses, and especially
when such ndings of facts are armed by the Court of Appeals, which is the nal
arbiter of questions of fact (People vs. Edao , 64 SCRA 675 [1975]; People vs. Tala ,
141 SCRA 240; People vs. Canada and Dondoy , 144 SCRA 121 [1986]; People vs.
Clore, 184 SCRA 638 [1990]; Binalay vs. Manalo, 195 SCRA 374 [1991]; People vs.
Miscala, 202 SCRA 26 [1991]; People vs. Lagrosa , 230 SCRA 298 [1994]). All these
conditions are present in the case at bar, and I have grave reservations about the
propriety of setting aside time-tested principles in favor of a nding that hinges

principally on the credibility of a single witness, whom we are asked to disbelieve on

the basis merely of her recorded testimony without the benet of the advantage
that the trial court had, disregarding in the process another long-established rule
that mere relationship of a witness to a party does not discredit his testimony in
court (U.S. vs. Mante, 27 Phil 124; People vs. Pagaduan , 37 Phil 90; People vs.
Reyes, 69 SCRA 474 [1976]; People vs. Padiernos , 69 SCRA 484 [1976]; Borromeo
vs. Court of Appeals, 70 SCRA 329 [1976]; People vs. Estocada , 75 SCRA 295
[1977]; People vs. Ciria , 106 SCRA 381 [1981]; People vs. Ramo , 132 SCRA 174
[1984]; People vs. Atencio , 156 SCRA 242 [1987]; People vs. Gutierrez, Jr ., 158
SCRA 614 [1988]; People vs. Bandoquillo , 167 SCRA 549 [1988]; People vs. Suitos,
220 SCRA 419 [1993]).
The primordial issue is whether or not the "Deed of Conveyance of Unregistered
Real Property by Reversion" dated September 27, 1960 conveying the subject
property to Maxima Hemedes is valid. If the transfer is not valid, no title passed to
her successor-in-interest, R & B Insurance Corporation.
The Court of Appeals, conrming and summarizing the ndings of fact and law
made by the trial court, declared:
We sustain the findings of the trial court.
To begin with, the "Deed of Conveyance of Unregistered Real Property by
Reversion" was nullified by the trial court on two (2) grounds:
First, MAXIMA failed to comply with the requirements laid down by Article
1332 of the Civil Code. Said provision reads:
"Art. 1332.
When one of the parties is unable to read, or if the
contract is in a language not understood by him, and mistake or fraud
is alleged, the person enforcing the contract must show that the
terms thereof have been fully explained to the former."
In her testimony, MAXIMA admitted the entire document was written in
English, a language not known to Justa Kausapin (TSN, 17 November 1981,
pp. 7-8; Deposition of Justa Kausapin). Yet, MAXIMA failed to introduce
sucient evidence that would purportedly show that the deed of
conveyance was explained to Justa Kausapin before the latter allegedly
axed her thumbmark. On the contrary, she admitted having failed to
translate the deed of conveyance to Justa Kausapin because according to
her, the latter has "no voice" anyway insofar as the property is concerned.
Her testimony reads:
"Q

In connection with this deed of conveyance which has been marked

as Exh. "2-Maxima," we note that this is written in English, do you
know, Mrs. Hernandez (MAXIMA), whether this document was ever
translated to Justa Kausapin?

"A

Justa Kausapin has no voice because that's the order of my father so

anyway . . .

"Court:
Answer the question, you were only asked whether that was translated.
"A

No." (TSN 26 November, 1984, pp. 36-37, Maxima Hemedes).

Second, MAXIMA failed to repudiate the allegation of Justa Kausapin

disclaiming knowledge of her having executed such a deed. As a matter of
fact, Justa Kausapin claimed that it was only during the hearing conducted
on 07 December 1981 that she rst caught glimpse of the deed of
conveyance (TSN, 07 December 1981, pp. 22-23, ibid.) She therefore could
not have possibly axed her thumbmark therein. In the light of such a
denial, the burden of proving that the deed of conveyance was indeed
genuine laid on MAXIMA. After all, any party who asserts the armative of
the issue has the burden of presenting evidence required to obtain a
favorable judgment (Republic v. Court of Appeals , 182 SCRA 290).
Instead, what was clearly established from the deposition of Justa Kausapin
is the fact that she never executed any document donating the property to
anybody else except ENRIQUE. This can be readily gleaned from her
testimony, reading:
"Q

From the time, Aling Justa, that your husband Jose Hemedes donated
the property to you up to the time you in turn donated the same to
Enrique Hemedes in 1971, do you recall having executed any
document donating this particular property to anybody else?

"A

None, Sir. (TSN, 17 November 1981, p. 21)"

(pp. 63-64, Rollo.)

There is no dispute that Justa Kausapin twice repudiated the conveyance in favor of
Maxima Hemedes. As found by the trial court:
In an Adavit dated April 10, 1981 executed by Justa Kausapin before three
witnesses (Exh. D-Dominium), said aant disowned the alleged 'Deed of
Conveyance of Unregistered Real Property by Reversion" invoked by
defendant Maxima Hemedes, and expressly stated that she never granted
any right over the property to Maxima Hemedes, whether as owner or
mortgagor, that she never allowed her to use the land as security or
collateral for loan. In the same adavit, Justa Kausapin armed the
authenticity of the 'Kasunduan' whereby she transferred ownership of the
disputed land to Enrique Hemedes, her stepson and reliable source of
assistance throughout the years that she was in need of help. The testimony
of Justa Kausapin was also taken by deposition on November 17, December
7 and 14, 1981 and on January 14, 1982, wherein all the contending parties
were represented and had the opportunity to cross-examine her. In her
testimony (the entire transcript of which has been submitted as Exh. KEnrique), Justa Kausapin reiterated her repudiation of the Deed of
Conveyance in favor of Maxima Hemedes and re-armed the validity of the
'Kasunduan' in favor of Enrique Hemedes, as well as the subsequent sale of

the land by Enrique Hemedes to Dominium."

(pp. 83-84, Rollo.)

The majority would hold that twin repudiations cannot be given credence because
the witness is biased in favor of Enrique Hemedes, who, by providing support and
nancial assistance to the witness before, during and after the execution of the
"Kasunduan," is said to have inuenced her into signing the same. This issue refers
to the credibility of witnesses which, as stated earlier, is best left for determination
by the trial court (People vs. Oliano , 287 SCRA 158 [1998], citing People vs.
Pontillar, Jr., 275 SCRA 338 [1997]; People vs. Rubio, 257 SCRA 528 [1996]; People
vs. Del Prado, 253 SCRA 731 [1996]). I am not prepared to substitute my judgment
for that of the trial court on the credibility of Justa Kausapin on the basis alone of
the relationship between her and Enrique Hemedes. To reiterate, the rule is: "Mere
relationship of a witness to a party does not discredit his testimony in court." (U.S.
vs. Mante, supra; Aznar vs. Court of Appeals, 70 SCRA 329 [1976]; People vs.
Letigio, 268 SCRA 227, 243 [1997]).

I cannot infer from the mere circumstance that Justa Kausapin was receiving
support and sustenance from Enrique Hemedes that she had any improper motives
to testify in favor of Enrique and against Maxima. It must be remembered that Justa
Kausapin had a legal right to such nancial assistance, not only from respondent
Enrique Hemedes, but also from Maxima Hemedes, who are both her stepchildren.
If one must impute improper motives in favor of Enrique, one could just as easily
ascribe these to Maxima. Furthermore, it must be noted that Justa Kausapin's
entitlement to support owed from her usufructuary rights contained in the
"Donation Inter Vivos with Resolutory Conditions" executed by her late husband,
Jose Hemedes, the common father of petitioner Maxima and respondent Enrique
Hemedes. In supporting his stepmother, Enrique was, therefore, merely performing
a legal or contractual duty in favor of Justa Kausapin. There was nothing improper in
Justa Kausapin's repudiation of the conveyance in favor of Maxima, especially so if
one considers the fact that the latter did not adduce any other evidence to defeat
the presumption that Justa Kausapin was stating the truth when she said that she
never conveyed the property to Justa Maxima. As the trial court found:
. . . The actuation of Enrique Hemedes towards Justa Kausapin is legally and
morally justied. It must be remembered that Justa Kausapin is the
stepmother of Enrique Hemedes; she was also the usufructuary of the
property in dispute. It is only natural and in keeping with law and custom, or
Filipino tradition, for a son to support his mother (even if she happens to be
a stepmother); and form a legal standpoint, the naked owner Enrique
Hemedes was bound to support Justa Kausapin by way of giving her what
she was entitled to as usufructuary.
(p. 104, Rollo.)

The trial court's ruling on the invalidity of the title of Maxima is not based solely on

Justa Kausapin's reputation of the deed of conveyance, but likewise on the very acts
of Maxima and her transferee R & B Surety and Insurance. The factual ndings of
the trial court are to the eect that despite the alleged transfer of ownership from
Justa Kausapin to Maxima Hemedes on September 27, 1960 and the subsequent
transfer to R & B Insurance on May 3, 1968 by way of foreclosure and public auction
sale, neither do these petitioners exercised their rights of ownership over the
disputed property, never even asserting their supposed ownership rights until it was
too late. The following findings of the trial court stand unassailed:
There are other indications which led this Court to believe that neither
defendant Maxima Hemedes not defendant R & B INSURANCE consider
themselves the owner of the property in question. Both of these claimants
never declared themselves as owners of the property for tax purposes;
much less did they pay a single centavo in real estate taxes. The argument
that since Justa Kausapin was in possession of the property as usufructuary
she should pay the taxes contravenes the clear provision of the Civil Code
that the taxes which may be imposed directly on the capital during the
usufruct, in this case the realty taxes, shall be at the expense of the owner
(Article 597, Civil Code). If Maxima Hemedes and R & B INSURANCE were
convinced that they were the owners of the property, why did they not pay
taxes for the same? This attitude is not consistent with that of an owner in
good faith. The Court has noted that the very owner of R & B INSURANCE
has admitted in her testimony that they declared the property as one of the
assets of R & B INSURANCE only in 1976, which is eight years after they
supposedly bought it at public auction in 1968 (TSN, July 6, 1987, pp. 22-23)
Decision, pp. 32-33) .
(pp. 101-102, Rollo.)

Faced with the categorical and straightforward repudiations of the conveyance

supposedly made in her favor, Maxima Hemedes could only gratuitously assert
otherwise, as no other testimonial or documentary evidence was adduced in support
thereof. Maxima's self-serving assertions, however, are legally inrm in view of her
admission that the deed of conveyance in her favor was written in a language
unknown to the person who supposedly executed the same and the terms thereof
were not fully explained to the person executed the same. These are the facts as
found by the trial court:
Questioned about the execution of the 'Deed of Conveyance of Unregistered
Real Property by Reversion' which is the basis of her claim, defendant
Maxima Hemedes admitted that the document which is in English was not
translated or explained to Justa Kausapin before the latter supposedly
axed her thumbmark to the document (TSN, November 26, 1984, p. 34;
TSN, December 10, 1984, p. 9). The Court has noted from the records that
the Notary Public before whom the said document was notarized was not
presented as a wittiness by defendant Maxima Hemedes, if only to attest to
the execution of said document by Justa Kausapin, considering that the
latter is an illiterate when it comes to documents written in English. Maxima
explained the non-translation of the Deed of Conveyance into a language
understood by Justa Kausapin with the statement that the latter (Justa

Kausapin) 'has no voice' anyway in so far as the property is concerned (TSN,

November 26, 1984, p. 36) . . . the Notary Public before whom the said
document was supposed to have been acknowledged was also not
presented as a witness, and there was no explanation as to why he was not
also presented. In the face of such an admission and failure on the part of
defendant Maxima Hemedes, coupled with the straightforward repudiation
by Justa Kausapin herself of the document relied upon by said defendant the
Court nds and so concludes that the 'Deed of Conveyance of Unregistered
Real Property by Reversion' is not a credible and convincing evidence and is
of no evidentiary value under the law upon which claimant Maxima Hemedes
may anchor a valid claim of ownership over the property subject of this
action.
(pp. 91-93, Rollo.)

It is argued that private respondents failed to have the thumbmarks of Justa

Kausapin appearing on the deeds executed in favor of Maxima and Enrique
compared and this failure may be taken as willful suppression of evidence that is
presumed to be adverse if produced (Rules of Court, Rule 131, Sec. 3(e). The
applicability of this rule presupposes that the suppressed evidence is not available to
the other party for production in court (People vs. Padiernos , 69 SCRA 484 [1976];
People vs. Silvestre , 279 SCRA 474, 495 [1997]). This is not the case here for the
same documents were available to petitioners. In fact, the records show that
counsel for Maxima Hemedes pledged to submit the document which will be
compared with the specimen thumbmark to be obtained from Justa Kausapin (TSN,
December 7, 1981, p. 28). The records, however, do not show that said counsel
persisted in his request for comparison of Kausapin's thumbmarks. If petitioners
were convinced that the specimen thumbprint of Justa Kausapin was of crucial
importance to their cause, they should have insisted on presenting her as a witness
and, thereupon, obtaining her thumbprint. Their own failure to pursue the
production of the specimen thumbprint of Justa Kausapin negated any belated claim
that the said specimen was suppressed (People vs. Tulop , citing People vs. Pagal ,
272 SCRA 443 [1998]; Commissioner of Internal Revenue vs. Tokyo Shipping
Company, Ltd., 244 SCRA 332 [1995]; citing Nicolas vs. Nicolas, 52 Phil 265 [1928]
and Ang Seng Quiem vs. Te Chico, 7 Phil 541 [1907]).
The two courts below were, to my mind, most perceptive when they held that proof
of authenticity of the thumbprint of Justa Kausapin would not render valid an
otherwise void document in light of the admission of Maxima Hemedes that she did
not explain the English contents thereof to Justa Kausapin in language understood
by her.
cda

On the other hand, the validity of the conveyance to Enrique Hemedes is amply
proven by the evidence on record. Thus, largely uncontested are the following
findings of the fact of the trial court:
Enough has already been said hereinabove concerning the claim of
ownership of plainti Enrique. From an overall evaluation of the facts found
by the Court to be substantiated by the evidence on record, the Court is

convinced and so holds that the three conicting claimants, it is party

plaintis, Enrique Hemedes and now DOMINIUM, who have both law and
equity on their side. Plainti Enrique Hemedes' title to the property in
question by virtue of the "Kasunduan" dated May 27, 1971 was conrmed
twice by his grantor, Justa Kausapin; he complied with his obligations as
naked owner by giving Justa Kausapin her usufructuary rights in the form of
nancial and other assistance; he declared his ownership of the property
openly and adversely to other claimants by recording the same in the
appropriate government agencies, namely, the Municipal and Provincial
Assessor's Oce, the Ministry of Agrarian Reform and the Bureau of Lands;
he was openly known in the community where the property is located as the
owner thereof; he paid the taxes on the property conscientiously from the
time he acquired the same to the time he sold the same to co-plainti
DOMINIUM; he was in continuous possession of the property during the said
period; he paid the tenant, Nemesio Marquez, the disturbance fee required
under the Land Reform Law.
(pp. 102-103, Rollo.)

The Court of Appeals, therefore, did not err in holding that since the deed of
conveyance to Maxima was found to be spurious, it necessarily follows that OCT No.
(0-941) 0-198 issued in her name is null and void. This is because the registration
will not invalidate a forged or invalid document.
I, therefore, vote to dismiss the petition and to affirm the decision appealed from.

Footnotes

1.

Penned by Pacita Canizares-Nye; Manuel C. Herrera and Justo P. Torres, Jr.,

concurring.

2.

Entitled "Dominium Realty and Construction Corporation and Enrique D. Hemedes

vs. R & B Insurance Corporation and Maxima Hemedes ."

3.

Annex "D" of Maxima Hemedes' Petition; Rollo, pp. 113-114.

4.

Annex "E" of Maxima Hemedes' Petition; Rollo, pp. 115-117.

5.

Annex "H" of Maxima Hemedes' Petition; Rollo, pp. 122-124.

6.

Rollo of G.R. No. 108472, p. 17.

7.

Docketed as Civil Case No. B-1766.

8.

Rollo of G.R. No. 107132, pp. 107-108.

9.

10.
11.

Entitled "Maxima Hemedes vs. The Honorable Court of Appeals, Eleventh Division,
Dominium Realty and Construction Corporation, Enrique D. Hemedes, and R & B
Insurance Corporation."

Rollo of G.R. No. 107132, p. 28.

Entitled "R & B Insurance Corporation vs. The Honorable Court of Appeals,
Eleventh Division, Dominium Realty and Construction Corporation, Enrique D.
Hemedes, and Maxima Hemedes ."

12.

Rollo of G.R. No. 108472, p. 34.

13.

Ibid., pp. 63-64, 91-96.

14.

Rollo of G.R. No. 107132, pp. 29-41.

15.

Chavez vs. IAC, 191 SCRA 211 (1990).

16.

Rollo, pp. 61, 90-96.

17.

Rules of Court, Rule 131, sec. 3(e); Sulit vs. Court of Appeals , 268 SCRA 441
(1997).

18.

Rollo of G.R. No. 107132, p. 94.

19.

Ibid., p. 37.

20.

Ibid., pp. 39-40.

21.

People vs. Dones , 254 SCRA 696 (1996).

22.

People vs. Subido, 253 SCRA 196 (1996), citing People vs. Aguilar, 222 SCRA 394
(1993).

23.

Bunyi vs. Reyes , 39 SCRA 504 (1971), citing the Report of the Code Commission,
p. 136.

24.

Yanas vs. Acaylar , 136 SCRA 52 (1985); Heirs of Enrique Zambales vs. CA, 120
SCRA 897 (1983); Bunyi vs. Reyes , supra.

25.

Civil Code, arts. 1331-1344.

26.

Id., art. 1331.

27.

Id., art. 1338.

28.

Rollo of G.R. No. 108472, p. 64

29.
30.

Bunyi vs. Reyes , supra., citing Robinson vs. Villafuerte, 18 Phil. 171; Jocson vs.
Estacion, 60 Phil. 1055.
Civil Code, art. 1409.

31.

Heirs of Leopoldo Vencilao, Sr. vs. CA, 288 SCRA 574 (1998).

32.

Ibid; Titong vs. CA, 287 SCRA 102 (1998).

33.

People vs. Cahindo, 266 SCRA 554 (1997).

34.

Rollo of G.R. No. 108472, pp. 65-66.

35.

Ibid., pp. 47-55.

36.

Legarda vs. CA, 280 SCRA 642 (1997).

37.

The phrase "innocent purchaser for value" or any equivalent phrase shall be
deemed to include an innocent lessee, mortgagee, or other encumbrancer for
value. Presidential Decree No. 1529, sec. 32.

38.

Mathay vs. CA, 295 SCRA 556 (1998).

39.

Civil Code, art. 562.

40.

Id., art. 566.

41.

Id., art. 572.

42.

Tolentino, II Civil Code of the Philippines, 318 (1992), citing Eleizegui vs. Manila
Lawn Tennis Club, 2 Phil 309.

43.

Ibid., 46.

44.

Civil Code, art. 581.

45.

Id., art. 600.

46.

Cruz vs. CA, 281 SCRA 491 (1997).

47.

Exceptional circumstances that would compel the Supreme Court to review the
ndings of fact of the lower courts are: (1) when the conclusion is a nding
grounded entirely on speculations, surmises or conjectures; (2) when the
inference made is manifestly absurd, mistaken or impossible; (3) when there is
grave abuse of discretion in the appreciation of facts; (4) when the judgment is
premised on a misapprehension of facts; (5) when the ndings of fact are
conicting; (6) when the Court of Appeals in making its ndings, went beyond the
issues of the case and the same is contrary to the admissions of both appellant
and appellee; (7) when the Court of Appeals manifestly overlooked certain relevant
facts not disputed by the parties and which, if properly considered, would justify a
dierent conclusion; and (8) when the ndings of fact of the Court of Appeals are
contrary to those of the trial court, or are mere conclusions without citation of
specic evidence, or where the facts set forth by the petitioner are not disputed
by the respondent, or where the ndings of fact of the Court of Appeals are
premised on absence of evidence but are contradicted by the evidence of record.
Limketkai Sons Milling, Inc. vs. CA , 255 SCRA 626 (1996); Carolina Industries, Inc.
vs. CMS Stock Brokerage, Inc ., G.R. No. L-46908, May 17, 1980; Manlapaz vs. CA,

147 SCRA 236 (1987).

48.

Carolina Industries, Inc. vs. CMS Stock Brokerage, Inc., supra.

49.

Binalay vs. Manalo, 195 SCRA 374 (1991).

50.

Arcelona vs. Court of Appeals , 280 SCRA 20 (1997).

51.

Rules of Court, Rule 3, sec. 9.

52.

Civil Code, art. 2229.

53.

Morales vs. CA, 274 SCRA 282 (1997).