Chapter 6 31. NAAWAN COMMUNITY RURAL BANK INC., vs.

THE COURT OF APPEALS and SPOUSES ALFREDO AND ANNABELLE LUMO G.R. No. 128573 January 13, 2003 CORONA, J.: Facts: Guillermo Comayas offered to sell spouses Lumo a house and lot. They found out that the property was mortgaged to Mrs. Galupo and that the owner's copy of the Title to said property was in her possession. They directed Guillermo Comayas to redeem the property from Galupo at their expense. Even before the release of Galupo's adverse claim, respondents and Comayas executed a deed of absolute sale. After obtaining their TCT, respondents requested the issuance of a new tax declaration certificate in their names. They learned that the property was also declared for tax purposes in the name of petitioner Naawan Community Rural Bank Inc. Comayas obtained a loan from petitioner using the property as security. The property was then an unregistered parcel of residential land, tax-declared in the name of Sergio A. Balibay while the residential one-storey house was tax-declared in the name of Comayas. Balibay executed a special power of attorney authorizing Comayas to borrow money and use the lot as security. For failure of Comayas to pay, the real estate mortgage was foreclosed and the property sold at a public auction to the petitioner as the highest bidder. The property was registered in original proceedings under the Land Registration Act. The period for redemption of the foreclosed property lapsed and the Deputy Sheriff issued and delivered to petitioner bank the sheriff's deed of final conveyance. Petitioner Bank obtained a tax declaration for the house and lot. Petitioner Bank instituted an action for ejectment against Comayas. The RTC issued an order for the issuance of a writ of execution of its judgment. When the writ was served, the property was no longer occupied by Comayas but the spouses Lumo who had bought it from Comayas. Private respondents filed an action for quieting of title. The RTC rendered a decision declaring private respondents as purchasers for value and in good faith, and consequently declaring them as the absolute owners and possessors of the subject house and lot. Petitioner appealed to the CA which in turn affirmed the trial court's decision. Issue: Whether or not private respondents could be considered as buyers in good faith. Ruling: Yes. Before private respondents bought the subject property from Guillermo Comayas, inquiries were made with the Registry of Deeds and the Bureau of Lands regarding the status of the vendor's title. No liens or encumbrances were found to have been annotated on the certificate of title. Neither were private respondents aware of any adverse claim or lien on the property other than the adverse claim of a certain Geneva Galupo to whom Guillermo Comayas had mortgaged the subject property. But the claim of Galupo was eventually settled and the adverse claim previously annotated on the title cancelled. Thus, having made the necessary inquiries, private respondents did not have to go beyond the certificate of title. Otherwise, the efficacy and conclusiveness of the Torrens Certificate of Title would be rendered futile and nugatory. Considering therefore that private respondents exercised the diligence required by law in ascertaining the legal status of the Torrens title of Guillermo Comayas over the subject property and found no flaws therein, they should be considered as innocent purchasers for value and in good faith.

51. FLORENTINO, TROADIO and PEDRO, all surnamed OCHOA, vs. MAURO APETA and APOLONIA ALMAZAN, G.R. No. 146259 September 13, 2007 SANDOVAL-GUTIERREZ, J.: Facts: Since 1910, petitioners and their predecessors-in-interest have been occupying Lot No. 1580 covered by Transfer Certificate of Title No. T-40624. They built their houses and apartment building thereon. Respondents found that they are the true owners of the lot. Respondents filed a complaint for recovery of possession and damages against petitioners. They alleged that they are the lawful owners of the lot. Petitioners denied the allegations contending that they are the owners of the lot as shown by TCT. The trial judge commissioned Engr. Romulo Unciano of the Bureau of Lands to conduct a resurvey of the property. The result of the resurvey shows that the lot was registered in the name of Margarita Almada, respondents predecessor-in-interest; and that the lot covered by TCT No. T-40624 is not Lot No. 1580, but Lot No. 1581 registered in the name of Servillano Ochoa, petitioners predecessor-in-interest. This lot has been occupied by Isidro Jasmin. The trial court rendered a Decision in favor of respondents. CA affirmed the judgment of the RTC. Petitioners filed a motion for reconsideration, but it was denied. Issue: Whether or not petitioners are builders in good faith when they built their houses and apartment building on Lot No. 1580. Ruling: Yes. Good faith is an intangible and abstract quality with no technical meaning or statutory definition, and it encompasses, among other things, an honest belief, the absence of malice and the absence of design to defraud or to seek an unconscionable advantage. It implies honesty of intention, and freedom from knowledge of circumstances which ought to put the holder upon inquiry. The essence of good faith lies in an honest belief in the validity of ones right, ignorance of a superior claim and absence of intention to overreach another. Applied to possession, one is considered in good faith if he is not aware that there exists in his title or mode of acquisition any flaw which invalidates it. The landowner can make a choice - either by appropriating the building by paying the proper indemnity or obliging the builder to pay the price of the land. The choice belongs to the owner of the land, a rule that accords with the principle of accession that the accessory follows the principal and not the other way around. He must choose only one. Respondents, as owners of Lot No. 1580, may choose between appropriating as their own the houses and apartment building constructed thereon by petitioners and their predecessors-in-interest by paying the proper indemnity or value; or obliging petitioners to pay the price of Lot No. 1580 which is not more than that of the improvements.

Chapter 8 6. Cabarlo vs. People GR No. 172274 November 16, 2006 YNARES-SANTIAGO, J.: Facts: The Commission on Audit (COA) conducted a comprehensive audit of the accounts of petitioner Romeo D. Cabarlo, then Deputy Provincial and Municipal Treasurer. The audit team discovered a shortage of P3,201,200.00 in the General Fund and P1,106,000.00 in the Cash Fund. The audit also revealed that P800,000.00 from the Special Education Fund (SEF) was transferred to the General Fund without approval of the local school board. When required to explain the shortages, petitioner sought assistance from the Provincial Treasurer who, after an examination of petitioners Cash Book, found no shortage. The Office of the Ombudsman issued a resolution finding evidence of malversation of public funds, for which petitioner was charged before the trial court. For violation of Republic Act No. 3019 for the anomalous transfer and disbursement of the SEF, petitioner, together with the Municipal Mayor and Provincial Auditor, was charged before the Sandiganbayan. Petitioner was convicted. CA affirmed trial courts decision. Petitioner argues that he is not guilty of malversation because he could prove the alleged shortage through supporting vouchers or paid-up cash items showing that the amount covering the shortage had been spent for public purposes. He also claims that the non-presentation of the vouchers during trial was caused by excusable neglect thus, his motion for new trial based on newly discovered evidence should have been allowed. Respondent asserts that the Provincial Treasurers internal audit is incomplete because it was based only on petitioners cash book, whereas the COA not only considered petitioners books but also reconciled the same with the accounting and related records of the municipal accountant, including the schedule of collections and disbursements. Respondent claims that petitioner failed to overcome the presumption that he misappropriated the subject funds despite opportunities to rebut the same and that petitioner was not entitled to a new trial because the vouchers sought to be presented were not newly discovered evidence. Issue: Whether or not petitioners motion for new trial based on newly discovered evidence should have been allowed. Ruling: No. It should be emphasized that the applicant for new trial has the burden of showing that the new evidence he seeks to present has complied with the requisites to justify the holding of a new trial. The threshold question in resolving a motion for new trial based on newly discovered evidence is whether the proferred evidence is in fact a newly discovered evidence which could not have been discovered by due diligence. The question of whether evidence is newly discovered has two aspects: a temporal one, i.e., when was the evidence discovered, and a predictive one, i.e., when should or could it have been discovered. Petitioner failed to prove that the evidence consisting of vouchers and paid-up cash items were discovered after trial or could not have been discovered and produced at the trial with reasonable diligence. In fact, there is no way that petitioner could not have known of the existence of the vouchers and/or paid-up cash items considering that his office is in-charge of their preparation. It is also contrary to human experience to have overlooked evidence which was decisively claimed to have such significance that might probably change the judgment.