SECOND DIVISION

[G.R. No. 120262. July 17, 1997]

PHILIPPINE AIRLINES, INC., petitioner, vs. COURT OF APPEALS and LEOVIGILDO A.

PANTEJO, respondents.

DECISION

REGALADO, J.:

In this appeal by certiorari, petitioner Philippine Airlines, Inc. (PAL) seeks to set aside the
decision of respondent Court of Appeals,i[1] promulgated on December 29, 1994, which affirmed
the award for damages made by the trial court in favor of herein private respondent Leovegildo
A. Pantejo.

On October 23, 1988, private respondent Pantejo, then City Fiscal of Surigao City, boarded a
PAL plane in Manila and disembarked in Cebu City where he was supposed to take his
connecting flight to Surigao City. However, due to typhoon Osang, the connecting flight to
Surigao City was cancelled.

To accommodate the needs of its stranded passengers, PAL initially gave out cash assistance of
P100.00 and, the next day, P200.00, for their expected stay of two days in Cebu. Respondent
Pantejo requested instead that he be billeted in a hotel at PALs expense because he did not have
cash with him at that time, but PAL refused. Thus, respondent Pantejo was forced to seek and
accept the generosity of a co-passenger, an engineer named Andoni Dumlao, and he shared a
room with the latter at Sky View Hotel with the promise to pay his share of the expenses upon
reaching Surigao.

On October 25, 1988 when the flight for Surigao was resumed, respondent Pantejo came to know
that the hotel expenses of his co-passengers, one Superintendent Ernesto Gonzales and a certain
Mrs. Gloria Rocha, an auditor of the Philippine National Bank, were reimbursed by PAL. At this
point, respondent Pantejo informed Oscar Jereza, PALs Manager for Departure Services at
Mactan Airport and who was in charge of cancelled flights, that he was going to sue the airline
for discriminating against him. It was only then that Jereza offered to pay respondent Pantejo
P300.00 which, due to the ordeal and anguish he had undergone, the latter declined.

On March 18, 199l, the Regional Trial Court of Surigao City, Branch 30, rendered judgment in
the action for damages filed by respondent Pantejo against herein petitioner, Philippine Airlines,
Inc., ordering the latter to pay Pantejo P300.00 for actual damages, P150,000.00 as moral
damages, P100,000.00 as exemplary damages, P15,000.00 as attorneys fees, and 6% interest
from the time of the filing of the complaint until said amounts shall have been fully paid, plus
costs of suit.ii[2] On appeal, respondent court affirmed the decision of the court a quo, but with
the exclusion of the award of attorneys fees and litigation expenses.

The main issue posed for resolution is whether petitioner airlines acted in bad faith when it failed
and refused to provide hotel accommodations for respondent Pantejo or to reimburse him for
hotel expenses incurred by reason of the cancellation of its connecting flight to Surigao City due
to force majeure.

To begin with, it must be emphasized that a contract to transport passengers is quite different in
kind and degree from any other contractual relation, and this is because of the relation which an
air carrier sustains with the public. Its business is mainly with the travelling public. It invites
people to avail of the comforts and advantages it offers. The contract of air carriage, therefore,
generates a relation attended with a public duty. Neglect or malfeasance of the carriers
employees naturally could give ground for an action for damages.iii[3]
In ruling for respondent Pantejo, both the trial court and the Court of Appeals found that herein
petitioner acted in bad faith in refusing to provide hotel accommodations for respondent Pantejo
or to reimburse him for hotel expenses incurred despite and in contrast to the fact that other
passengers were so favored.

In declaring that bad faith existed, respondent court took into consideration the following factual
circumstances:

1. Contrary to petitioners claim that cash assistance was given instead because of non-availability
of rooms in hotels where petitioner had existing tie-ups, the evidence shows that Sky View
Hotel, where respondent Pantejo was billeted, had plenty of rooms available.

2. It is not true that the P300.00 paid to Ernesto Gonzales, a co-passenger of respondent, was a
refund for his plane ticket, the truth being that it was a reimbursement for hotel and meal
expenses.

3. It is likewise not denied that said Gonzales and herein respondent came to know about the
reimbursements only because another passenger, Mrs. Rocha, informed them that she was able to
obtain the refund for her own hotel expenses.

4. Petitioner offered to pay P300.00 to private respondent only after he had confronted the
airlines manager about the discrimination committed against him, which the latter realized was
an actionable wrong.

5. Service Voucher No. 199351, presented by petitioner to prove that it gave cash assistance to
its passengers, was based merely on the list of passengers already given cash assistance and was
purportedly prepared at around 10:00 A.M. of October 23, 1988. This was two hours before
respondent came to know of the cancellation of his flight to Surigao, hence private respondent
could not have possibly refused the same.iv[4]

It must be stressed that these factual findings, which are supported by substantial evidence, are
binding, final and conclusive upon this Court absent any reason, and we find none, why this
settled evidential rule should not apply.

Petitioner theorizes that the hotel accommodations or cash assistance given in case a flight is
cancelled is in the nature of an amenity and is merely a privilege that may be extended at its own
discretion, but never a right that may be demanded by its passengers. Thus, when respondent
Pantejo was offered cash assistance and he refused it, petitioner cannot be held liable for
whatever befell respondent Pantejo on that fateful day, because it was merely exercising its
discretion when it opted to just give cash assistance to its passengers.

Assuming arguendo that the airline passengers have no vested right to these amenities in case a
flight is cancelled due to force majeure, what makes petitioner liable for damages in this
particular case and under the facts obtaining herein is its blatant refusal to accord the so-called
amenities equally to all its stranded passengers who were bound for Surigao City. No compelling
or justifying reason was advanced for such discriminatory and prejudicial conduct.

More importantly, it has been sufficiently established that it is petitioners standard company
policy, whenever a flight has been cancelled, to extend to its hapless passengers cash assistance
or to provide them accommodations in hotels with which it has existing tie-ups. In fact,
petitioners Mactan Airport Manager for departure services, Oscar Jereza, admitted that PAL has
an existing arrangement with hotels to accommodate stranded passengers,v[5] and that the hotel
bills of Ernesto Gonzales were reimbursedvi[6] obviously pursuant to that policy.

Also, two witnesses presented by respondent, Teresita Azarcon and Nerie Bol, testified that
sometime in November, 1988, when their flight from Cebu to Surigao was cancelled, they were
billeted at Rajah Hotel for two nights and three days at the expense of PAL.vii[7] This was never
denied by PAL.

Further, Ernesto Gonzales, the aforementioned co-passenger of respondent on that fateful flight,
testified that based on his previous experience hotel accommodations were extended by PAL to
its stranded passengers either in Magellan or Rajah Hotels, or even in Cebu Plaza. Thus, we view
as impressed with dubiety PALs present attempt to represent such emergency assistance as being
merely ex gratia and not ex debito.

While petitioner now insists that the passengers were duly informed that they would be
reimbursed for their hotel expenses, it miserably and significantly failed to explain why the other
passengers were given reimbursements while private respondent was not. Although Gonzales
was subsequently given a refund, this was only so because he came to know about it by accident
through Mrs. Rocha, as earlier explained.

Petitioner could only offer the strained and flimsy pretext that possibly the passengers were not
listening when the announcement was made. This is absurd because when respondent Pantejo
came to know that his flight had been cancelled, he immediately proceeded to petitioners office
and requested for hotel accommodations. He was not only refused accommodations, but he was
not even informed that he may later on be reimbursed for his hotel expenses. This explains why
his co-passenger, Andoni Dumlao, offered to answer for respondents hotel bill and the latter
promised to pay him when they arrive in Surigao. Had both known that they would be
reimbursed by the airline, such arrangement would not have been necessary.

Respondent Court of Appeals thus correctly concluded that the refund of hotel expenses was
surreptitiously and discriminatorily made by herein petitioner since the same was not made
known to everyone, except through word of mouth to a handful of passengers. This is a sad
commentary on the quality of service and professionalism of an airline company, which is the
countrys flag carrier at that.

On the bases of all the foregoing, the inescapable conclusion is that petitioner acted in bad faith
in disregarding its duties as a common carrier to its passengers and in discriminating against
herein respondent Pantejo. It was even oblivious to the fact that this respondent was exposed to
humiliation and embarrassment especially because of his government position and social
prominence, which altogether necessarily subjected him to ridicule, shame and anguish. It
remains uncontroverted that at the time of the incident, herein respondent was then the City
Prosecutor of Surigao City, and that he is a member of the Philippine Jaycee Senate, past Lt.
Governor of the Kiwanis Club of Surigao, a past Master of the Mount Diwata Lodge of Free
Masons of the Philippines, member of the Philippine National Red Cross, Surigao Chapter, and
past Chairman of the Boy Scouts of the Philippines, Surigao del Norte Chapter.viii[8]

It is likewise claimed that the moral and exemplary damages awarded to respondent Pantejo are
excessive and unwarranted on the ground that respondent is not totally blameless because of his
refusal to accept the P100.00 cash assistance which was inceptively offered to him. It bears
emphasis that respondent Pantejo had every right to make such refusal since it evidently could
not meet his needs and that was all that PAL claimed it could offer.

His refusal to accept the P300.00 proffered as an afterthought when he threatened suit was
justified by his resentment when he belatedly found out that his co-passengers were reimbursed
for hotel expenses and he was not. Worse, he would not even have known about it were it not for
a co-passenger who verbally told him that she was reimbursed by the airline for hotel and meal
expenses. It may even be said that the amounts, the time and the circumstances under which
those amounts were offered could not salve the moral wounds inflicted by PAL on private
respondent but even approximated insult added to injury.

The discriminatory act of petitioner against respondent ineludibly makes the former liable for
moral damages under Article 21 in relation to Article 2219 (10) of the Civil Code.ix[9] As held in
Alitalia Airways vs. CA, et al.,x[10] such inattention to and lack of care by petitioner airline for the
interest of its passengers who are entitled to its utmost consideration, particularly as to their
convenience, amount to bad faith which entitles the passenger to the award of moral damages.

Moral damages are emphatically not intended to enrich a plaintiff at the expense of the
defendant. They are awarded only to allow the former to obtain means, diversion, or amusements
that will serve to alleviate the moral suffering he has undergone due to the defendants culpable
action and must, perforce, be proportional to the suffering inflicted.xi[11] However, substantial
damages do not translate into excessive damages.xii[12] Except for attorneys fees and costs of suit,
it will be noted that the Court of Appeals affirmed point by point the factual findings of the lower
court upon which the award of damages had been based.xiii[13] We, therefore, see no reason to
modify the award of damages made by the trial court.

Under the peculiar circumstances of this case, we are convinced that the awards for actual, moral
and exemplary damages granted in the judgment of respondent court, for the reasons
meticulously analyzed and thoroughly explained in its decision, are just and equitable. It is high
time that the travelling public is afforded protection and that the duties of common carriers, long
detailed in our previous laws and jurisprudence and thereafter collated and specifically
catalogued in our Civil Code in 1950, be enforced through appropriate sanctions.

We agree, however, with the contention that the interest of 6% imposed by respondent court
should be computed from the date of rendition of judgment and not from the filing of the
complaint. The rule has been laid down in Eastern Shipping Lines, Inc. vs. Court of Appeals, et
al.xiv[14] that:

When an obligation, not constituting a loan or forbearance of money, is breached, an interest on

the amount of damages awarded may be imposed at the discretion of the court at the rate of 6%
per annum. No interest, however, shall be adjudged on unliquidated claims or damages except
when or until the demand can be established with reasonable certainty. Accordingly, where the
demand is established with reasonable certainty, the interest shall begin to run from the time the
claim is made judicially or extrajudicially (Art. 1169, Civil Code) but when such certainty cannot
be so reasonably established at the time the demand is made, the interest shall begin to run only
from the date the judgment of the court is made (at which time the quantification of damages
may be deemed to have been reasonably ascertained). The actual base for the computation of
legal interest shall, in any case, be on the amount finally adjudged.

This is because at the time of the filing of the complaint, the amount of damages to which
plaintiff may be entitled remains unliquidated and not known, until it is definitely ascertained,
assessed and determined by the court, and only after the presentation of proof thereon.xv[15]

WHEREFORE, the challenged judgment of respondent Court of Appeals is hereby

AFFIRMED, subject to the MODIFICATION regarding the computation of the 6% legal rate of
interest on the monetary awards granted therein to private respondent.

SO ORDERED.

Romero, and Puno, JJ., concur.

Mendoza, J., no part.

Torres, Jr., J., on official leave.

SECOND DIVISION
[G.R. No. 127473. December 8, 2003]

PHILIPPINE AIRLINES, INC., petitioner, vs. COURT OF APPEALS, JUDY AMOR, JANE
GAMIL, minors GIAN CARLO AMOR represented by ATTY. OWEN AMOR, and CARLO
BENITEZ represented by JOSEPHINE BENITEZ, respondents.

DECISION

AUSTRIA-MARTINEZ, J.:

Before us is a petition for review on certiorari under Rule 45 of the Rules of Court seeking the
reversal of the decision1[1] dated August 12, 1996, in CA-G.R. CV No. 383272[2] and the
Resolution dated November 15, 1996 denying the motion for reconsideration of Philippine
Airlines, Inc. (petitioner for brevity).

Private respondents Judy Amor, Jane Gamil, minor Gian Carlo Amor, represented by his father,
Atty. Owen Amor, and, minor Carlo Benitez, represented by his mother, Josephine Benitez, filed
with the Regional Trial Court (Branch 53), Sorsogon, Sorsogon, a complaint3[3] for damages
against petitioner due to the latters failure to honor their confirmed tickets.

In support of their claim, private respondents presented evidence establishing the following facts:

Private respondent Judy Amor purchased three confirmed plane tickets for her and her infant
son, Gian Carlo Amor as well as her sister Jane Gamil for the May 8, 1988, 7:10 a.m. flight, PR
178, bound for Manila from defendants branch office in Legaspi City. Judy Amor, a dentist and a
member of the Board of Directors of the Sorsogon Dental Association, was scheduled to attend
the National Convention of the Philippine Dental Association from May 8 to 14, 1988 at the
Philippine International Convention Center. 4[4]

On May 8, 1988, Judy with Gian, Jane and minor Carlo Benitez, nephew of Judy and Jane,
arrived at the Legaspi Airport at 6:20 a.m. for PR 178. Carlo Benitez was supposed to use the
confirmed ticket of a certain Dra. Emily Chua.5[5] They were accompanied by Atty. Owen Amor
and the latters cousin, Salvador Gonzales who fell in line at the check-in counter with four
persons ahead of him and three persons behind him6[6] while plaintiff Judy went to the office of
the station manager to request that minor plaintiff Carlo Benitez be allowed to use the ticket of
Dra. Chua.7[7] While waiting for his turn, Gonzales was asked by Lloyd Fojas, the check-in clerk
on duty, to approach the counter. Fojas wrote something on the tickets which Gonzales later read

Penned by Justice Conrado Vasquez, Jr. and concurred in by Justices Arturo B. Buena and
1[1]
Jose C. Dela Rama.

Entitled, Judy Amor, et al., Plaintiffs-Appellees, vs. Philippine Airlines, Inc., Defendant-
2[2]
Appellant.

3[3] Docketed as Civil Case No. 5390.

4[4] TSN, Judy Amor, October 4, 1989, pp. 6, 10-11.

5[5] Id., pp. 3-4, 6, 23-24.

6[6] Id., pp. 4-6; TSN, Salvador Gonzales, September 27, 1879, pp. 6-8.

7[7] TSN, Judy Amor, October 4, 1989, pp. 5-6.

as late check-in 7:05. When Gonzales turn came, Fojas gave him the tickets of private
respondents Judy, Jane and Gian and told him to proceed to the cashier to make arrangements.8[8]

Salvador then went to Atty. Amor and told him about the situation. Atty. Amor pleaded with
Fojas, pointing out that it is only 6:45 a.m., but the latter did not even look at him or utter any
word. Atty. Amor then tried to plead with Delfin Canonizado and George Carranza, employees
of petitioner, but still to no avail. Private respondents were not able to board said flight. The
plane left at 7:30 a.m., twenty minutes behind the original schedule.9[9]

Private respondents went to the bus terminals hoping to catch a ride for Manila. Finding none,
they went back to the airport and tried to catch an afternoon flight.10[10] Unfortunately, the 2:30
p.m. flight, PR 278, was cancelled due to aircraft situation.11[11] Private respondents were told to
wait for the 5:30 p.m. flight, PR 180. They checked-in their bags and were told to hand in their
tickets. Later, a PAL employee at the check-in counter called out the name of private respondent
minor Carlo Benitez. Plaintiff Judy approached the counter and was told by the PAL personnel
that they cannot be accommodated. Fojas who was also at the counter then removed the boarding
passes inserted in private respondents tickets as well as the tags from their luggages.12[12]

Manuel Baltazar, a former Acting Manager of petitioner in Legaspi City in May 1988, testified
that based on his investigation, the private respondents, although confirmed passengers, were not
able to board PR 178 in the morning of May 8, 1988 because there were go-show or waitlisted
and non-revenue passengers who were accommodated in said flight. He also noted that there was
overbooking for PR 178.13[13]

On the other hand, petitioner contends that private respondents are not entitled to their claim for
damages because they were late in checking-in for PR 178; and that they were only chance or
waitlisted passengers for PR 180 and were not accommodated because all confirmed passengers
of the flight had checked-in. In support thereof, petitioner presented Lloyd Fojas, who testified,
as follows:

In the morning of May 8, 1988, he was on duty at the check-in counter of the Legaspi Airport.
He was the one who attended to the tickets of private respondents which were tendered by
Salvador Gonzales at 7:05 a.m. when the counter was already closed. The clock at the check-in
counter showed that it was already 7:05 and so he told Gonzales that they are already late and
wrote late check-in, 7:05 on private respondents tickets. The flight was scheduled to leave at
7:10 a.m. and checking-in is allowed only until 30 minutes before departure time. At the time
private respondents went to the check-in counter, passengers were already leaving the pre-
departure area and going towards the plane and there were no more passengers in the check-in
area, not even waitlisted passengers. The baggages of the passengers have been loaded in the
aircraft. Gonzales left and later came back with Atty. Amor who pleaded that plaintiffs be
accommodated in the flight. He told Atty. Amor to go to his supervisor to re-book the tickets

8[8] TSN, Salvador Gonzales, September 27, 1989, pp. 6-10.

9[9] TSN, Owen Amor, September 28, 1989, pp. 5-9.

10[10] TSN, Judy Amor, October 4, 1989, pp. 12-13.

11[11] TSN, Lloyd Fojas, November 29, 1989, p. 20.

12[12] TSN, Judy Amor, October 4, 1980, pp. 49-50.

13[13] TSN, October 25, 1980, pp. 30, 56-57.

because there were no more boarding passes and it was already time for boarding the plane. Atty.
Amor then left the counter. 14[14]

On cross-examination, Fojas testified that he did not know how many waitlisted or non-revenue
passengers were accommodated or issued boarding passes in the 7:00 a. m. and in the afternoon
flight of May 8, 1988.15[15]

After trial, the RTC rendered judgment upholding the evidence presented by private respondents,
the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered:

(a) ordering the defendant to reimburse the plaintiffs the amount of P1,171.60
representing the purchase price of the four (4) plane tickets;

(b) condemning the defendant to pay plaintiffs Judy Amor and Jane Gamil the
amount of P250,000.00 each as moral damages, P200,000.00 as exemplary
damages, plus P100,000.00 as actual damages;

(c) for the defendant to pay plaintiffs the amount of P30,000.00 as attorneys fees,
plus P500.00 for every appearance, or a total of P10,500.00 for 21 actual
appearance (sic) in court, P2,000.00 as incidental litigation expenses, and to pay
the cost of the suit.

SO ORDERED.16[16]

Aggrieved, petitioner appealed to the Court of Appeals (CA for brevity) which affirmed the
judgment of the trial court in toto and denied petitioners motion for reconsideration.

Hence, the present petition of PAL, raising the following issues:

WHETHER PRIVATE RESPONDENTS WERE LATE CHECKED-IN PASSENGERS AND

WHETHER THE FAILURE OF AN AIRLINE TO ACCOMMODATE A PASSENGER WHO
CHECKED IN LATE IS ACTIONABLE SO AS TO ENTITLE THEM TO DAMAGES.

II

ASSUMING ARGUENDO THAT PETITIONER IS LIABLE, WHETHER THE AMOUNT OF

DAMAGES AWARDED TO PRIVATE RESPONDENTS IS EXCESSIVE,
UNCONSCIONABLE AND UNREASONABLE.17[17]

In support of the first issue, petitioner argues:

(1) While ordinarily, the findings of the CA are accepted as conclusive by this Court, there
are instances when the Court may make its own findings such as when the appellate court based
its findings on speculation, surmises or conjectures. The appellate court erroneously gave too

14[14] TSN, November 29, 1989, pp. 4-19.

15[15] TSN, January 24, 1990, pp. 15-16.

16[16] Records, p. 251.

17[17] Rollo, p. 23.

much reliance on the testimony of Baltazar who is a disgruntled former employee and relative of
private respondent Amor. He was not present at the time of the incident. Baltazar merely
interpreted the flight manifest and made a lot of speculations which is undeserving of attention
and merit.

(2) Its employees are adequately trained and service oriented that they would not dare violate
company rules and regulations. They are aware of the drastic consequences that may befall them
as what happened to Baltazar.

(3) As to PR 180, private respondents were merely waitlisted in said flight hence it was
known to them that their accommodation in said flight was dependent upon the failure of any
confirmed passenger to check-in within the regulation check-in time. Unfortunately for them, all
the confirmed passengers on PR 180 checked-in on time.

In support of the second issue, petitioner contends:

(1) The award of actual, moral and exemplary damages to private respondents have no
factual nor legal basis at all. Its failure to accommodate private respondents on Flights PR 178,
278 and 180 was not motivated by bad faith or malice but due to a situation which private
respondents brought upon themselves. It had exerted utmost and sincere effort to lessen the
agony and predicament of private respondents. They immediately made protective bookings for
private respondents on the 2:30 p.m. flight, PR 278, which unfortunately was cancelled due to
aircraft situation. Upon cancellation of PR 278, they made special arrangements to enable private
respondents to have first priority in PR 180 in case of a no show confirmed passenger.

(2) To award damages to a passenger who checked-in late would place a premium or reward
for breach of contract that would encourage passengers to intentionally check-in late with the
expectation of an award of damages.

(3) Moral and exemplary damages as well as attorneys fees are not recoverable in damage
suits predicated on breach of contract of carriage unless there is evidence of fraud, malice or bad
faith on the part of the carrier. Even assuming arguendo that petitioner is liable for damages, the
amounts awarded in favor of private respondents are excessive, unreasonable and
unconscionable. The primary object of an award of damages in a civil action is compensation or
indemnity or to repair the wrong that has been done. Damages awarded should be equal to, and
commensurate with, the injury sustained.

(4) It was erroneous to award damages in favor of Jane Gamil when she never appeared
before the trial court to prove her claim for damages.

In their Comment, private respondents stress that the fact they were not late in checking-in for
PR 178 has been substantially established in the hearing before the trial court and affirmed by the
CA. They maintain that, contrary to the assertion of petitioner, they have established their case
not only by a preponderance of evidence but by proof that is more than what is required by law
justifying the factual findings of the trial court and the CA.

Private respondents point out that since the issues raised by this petition are factual and do not
fall under exceptional circumstances, there is nothing left to be reviewed or examined by the
Supreme Court.

As to the damages awarded, private respondents contend that the amounts awarded are not
excessive, unconscionable or unreasonable because of the high-handed, malicious, dictatorial
and savage act of petitioners employee which caused them untold mental anguish, excruciating
pain, public contempt and ridicule, sleepless nights and other forms of moral suffering.
In its Reply, petitioner reiterates its earlier points and questions once more the credibility of
private respondents witnesses, particularly Atty. Owen Amor, Salvador Gonzales and Manuel
Baltazar who are related to the respondents by blood or affinity.

In their Rejoinder, private respondents aver that the findings of facts of the courts a quo were
based not only on the testimonies of their witnesses but also on petitioners own employee, Lloyd
Fojas, who testified that there were non-revenue, go-show and waitlisted passengers who were
accommodated in PR 178. They reiterate their position that where there is a question regarding
the credibility of witnesses, the findings of trial courts are generally not disturbed by appellate
courts. Finally, as to the damages awarded, private respondents claim that there was substantial
basis in awarding such amounts.

Evidently, in resolving the two issues raised in the present petition, it is inevitable and most
crucial that we first determine the question whether or not the CA erred in upholding the RTC
ruling that private respondents were late in checking-in. Both issues call for a review of the
factual findings of the lower courts.

In petitions for review on certiorari under Rule 45 of the Rules of Court, the general rule is that
only questions of law may be raised by the parties and passed upon by this Court.18[18] Factual
findings of the appellate court are generally binding on us especially when in complete accord
with the findings of the trial court.19[19] This is because it is not our function to analyze or weigh
the evidence all over again.20[20] However, this general rule admits of exceptions, to wit:

(a) where there is grave abuse of discretion; (b) when the finding is grounded entirely on
speculations, surmises or conjectures; (c) when the inference made is manifestly mistaken,
absurd or impossible; (d) when the judgment of the Court of Appeals was based on a
misapprehension of facts; (e) when the factual findings are conflicting; (f) when the Court of
Appeals, in making its findings, went beyond the issues of the case and the same are contrary to
the admissions of both appellant and appellee; (g) when the Court of Appeals manifestly
overlooked certain relevant facts not disputed by the parties and which, if properly considered,
would justify a different conclusion; and, (h) where the findings of fact of the Court of Appeals
are contrary to those of the trial court, or are mere conclusions without citation of specific
evidence, or where the facts set forth by the petitioner are not disputed by the respondent, or
where the findings of fact of the Court of Appeals are premised on the absence of evidence and
are contradicted by the evidence on record.21[21]

Petitioner invokes exception (b).

As to the first issue: Whether or not private respondents checked-in on time for PR 178. The
determination of this issue is necessary because it is expressly stipulated in the airline tickets
issued to private respondents that PAL will consider the reserved seat cancelled if the passenger
fails to check-in at least thirty minutes before the published departure time.22[22]

Vicente vs. Planters Development Bank, G.R. No. 136112, January 28, 2003; Almira vs.
18[18]
Court of Appeals, G.R. No. 115966, March 20, 2003.

Lantin vs. Court of Appeals, G.R. No. 127141, April 30, 2003; Sevilla vs. Sevilla, G.R. No.
19[19]
150179, April 30, 2003.

20[20] Potenciano vs. Reynoso, G.R. No. 140707, April 22, 2003.

Twin Towers Condominium Corp. vs. Court of Appeals, G.R. No. 123552, February 27,
21[21]
2003.

22[22] Exhibits A to D.
After a careful review of the records, we find no reason to disturb the affirmance by the CA of
the findings of the trial court that the private respondents have checked-in on time; that they
reached the airport at 6:20 a.m., based on the testimonies of private respondent Judy Amor, and
witnesses Salvador Gonzales and Atty. Owen Amor who were consistent in their declarations on
the witness stand and corroborated one anothers statements; and that the testimony of petitioners
lone witness, Lloyd Fojas is not sufficient to overcome private respondents evidence.

We have repeatedly held that the truth is established not by the number of witnesses but by the
quality of their testimonies.23[23] In the present case, it cannot be said that the quality of the
testimony of petitioners lone witness is greater than those of the private respondents. Fojas
testified that when respondents went to the check-in counter, there were no more persons in that
area since all the passengers already boarded the plane.24[24] However, the testimonies of Manuel
Baltazar and Judy Amor together with the manifest, Exhibits E, E-1 and E-2, point to the fact
that many passengers were not able to board said flight, including confirmed passengers, because
of overbooking.25[25]

It is a well-entrenched principle that absent any showing of grave abuse of discretion or any
palpable error in its findings, this Court will not question the probative weight accorded by the
lower courts to the various evidence presented by the parties. As we explained in Superlines
Transportation Co. Inc., vs. ICC Leasing & Financing Corporation:26[26]

The Court is not tasked to calibrate and assess the probative weight of evidence adduced by the
parties during trial all over againSo long as the findings of facts of the Court of Appeals are
consistent with or are not palpably contrary to the evidence on record, this Court shall decline to
embark on a review on the probative weight of the evidence of the parties.27[27] (Emphasis
supplied)

It is also well established that findings of trial courts on the credibility of witnesses is entitled to
great respect and will not be disturbed on appeal except on very strong and cogent grounds. 28[28]
Petitioner failed to demonstrate that the trial court committed any error in upholding the
testimonies of private respondents witnesses. We find that the CA committed no reversible error
in sustaining the findings of facts of the trial court.

Private respondents who had confirmed tickets for PR 178 were bumped-off in favor of non-
revenue passengers. Witness Manuel Baltazar, a former Acting Manager of petitioner, evaluated
the manifest for PR 178 and found that there were non-revenue passengers allowed to go on
board. He specifically identified the family of Labanda, a certain Mr. Luz, petitioners former
branch manager, and, a certain Mr. Moyo. 29[29] Although petitioner had every opportunity to
refute such testimony, it failed to present any countervailing evidence. Instead, petitioner merely
focused on assailing the credibility of Baltazar on the ground that he was a disgruntled employee
and a relative of private respondents. Apart from the bare allegations in petitioners pleadings, no

23[23] People vs. Caloza, Jr., G.R. No. 138404-86, January 28, 2003.

24[24] TSN, November 29, 1989, pp. 13-16.

TSN, October 25, 1989, pp. 56-57; October 4, 1989, pp. 5-7; and September 28, 1989, pp.
25[25]
32-33.

26[26] G.R. No. 150673, February 28, 2003.

27[27] Ibid.

28[28] Bayne Adjusters and Inc. vs. Court of Appeals, 323 SCRA 231, 236 (2000).

29[29] TSN, October 25, 1989, pp. 33, 35-36.

evidence was ever presented in court to substantiate its claim that Baltazar was a disgruntled
employee that impelled him to testify against petitioner.

As to his relationship with private respondents, this Court has repeatedly held that a witness
relationship to the victim does not automatically affect the veracity of his or her testimony.30[30]
While this principle is often applied in criminal cases, we deem that the same principle may
apply in this case, albeit civil in nature. If a witness relationship with a party does not ipso facto
render him a biased witness in criminal cases where the quantum of evidence required is proof
beyond reasonable doubt, there is no reason why the same principle should not apply in civil
cases where the quantum of evidence is only preponderance of evidence.

As aptly observed by the CA which we hereby adopt:

Ironically for the defendant, aside from appellants assumption that Baltazar could be a
disgruntled former employee of their company and could be biased (which same reason could be
attributed to Lloyd Fojas) due to a distant relationship with the plaintiff, it offered no proof or
evidence to rebut, demean and contradict the substance of the testimony of Baltazar on the
crucial point that plaintiffs-appellees were bumped off to accommodate non-revenue, waitlisted
or go-show passengers. On this fact alone, defendants position weakens while credibly
establishing that indeed plaintiffs arrived at the airport on time to check-in for Flight PR 178.
Further emphasis must be made that Lloyd Fojas even affirmed in court that he can not recall
how many PR 178 boarding passes he had at the check-in counter because management has
authority to accommodate in any flight and correspondingly issue boarding passes to non-
revenue passengers (pages 15-16, TSN, January 24, 1990).31[31]

Indeed, petitioner, through its lone witness Fojas, could only answer during his examination on
the witness stand that he is unable to recall the circumstances recommending the issuances of
boarding passes to waitlisted and that it is the management which has the authority to issue
boarding passes to non-revenue passengers.32[32] Even in the afternoon flight, PR 180, Fojas
could not squarely deny that confirmed paying passengers were bumped-off in favor of non-
revenue ones.33[33]

The CA likewise correctly concluded that there was overbooking in the morning flight on the
basis of the testimony of private respondents witness Manuel Baltazar, to wit:

ATTY. CALICA:

Q- There was a memorandum order of the PAL prohibiting overbooking. Are you aware of
CAB Regulation No. 7 on boarding passengers?

WITNESS:

A- Yes.

ATTY. CALICA:

Q- You will agree with me that this regulation allows only overbooking by 10%?

30[30] Roca vs. Court of Appeals, G.R. No. 114917, 350 SCRA 414, 421 (2001).

31[31] Rollo, p. 10.

32[32] TSN, January 24, 1990, pp. 15-16.

33[33] TSN, November 29, 1989, pp. 22-23.

WITNESS:

A- Yes, that is a government regulation and the company regulation is different.

COURT:

Q- But in the morning flight of May 8, 1988, granting that the government regulation allows
only 10% overbooking, can you tell the Court from the manifest itself whether it exceeded the
10% overbooking allowed by the regulation reckoning from the 109 passenger seater?

WITNESS:

A- With the capacity of 109, 10% of it will be 10 or 11, so if we add this it will not exceed
120 passengers.

COURT:

Q- In that flight how many were confirmed?

WITNESS:

Q- In that flight those passengers that were confirmed have a total of 126.

COURT:

Q- Even if when allowed the government regulation of overbooking, you will still exceed the
allowable overbooking number?

WITNESS:

A- Yes.34[34] (Emphasis supplied)

This fact of overbooking, again, was not adequately refuted by petitioners evidence.

The appellate court aptly sustained the trial court in giving probative weight to the testimony of
private respondent Judy Amor that there were other passengers who were not accommodated in
flight PR 178, to wit:

Q: And how about you, what did you do when you arrived at the Legaspi Airport at 6:20
while Salvador Gonzales was at the check-in counter to pay the tickets?

A: I went to the Office of the OIC Manager at the right side of the Legaspi Terminal.

Q: Who was that Manager?

A: I was able to know his name as Delfin Canonizado.

Q: There were also people there near the table of Mr. Canonizado, do you know what were
they doing?

34[34] TSN, October 25, 1989, pp. 56-57.

A: They were making complaints also because they were also scheduled for flight on that
day. They were not accommodated.35[35] (Emphasis supplied)

We have noted an inconsistency in the testimony of private respondents witness, Salvador

Gonzales in the direct and cross-examinations. In his direct testimony, Gonzales stated that while
he was waiting in line at the check-in counter, with four persons still ahead of him, Lloyd Fojas
asked him to approach the counter, took private respondents tickets and wrote something on
them. It was only later on when his turn came, that he found out that what Fojas wrote on the
tickets was late check-n 7:05. On cross-examination, Gonzales testified that it was only after the
four persons ahead of him were accommodated that Fojas wrote on the tickets late check-in 7:05.
However, upon clarificatory questions propounded by the trial court, Gonzales was able to
clarify that Fojas had written the time on the ticket before the four persons ahead of him were
entertained at the counter.36[36] Understandably, the lower courts found no cogent reason to
discredit the testimony of witness Gonzales.

We have held in an earlier case that a witness may contradict himself on the circumstances of an
act or different acts due to a long series of questions on cross-examination during which the mind
becomes tired to such a degree that the witness does not understand what he is testifying about,
especially if the questions, in their majority are leading and tend to make him ratify a former
contrary declaration.37[37]

In fine, the findings of fact of the trial court, as sustained by the CA, have to be respected. As we
have consistently held, trial courts enjoy the unique advantage of observing at close range the
demeanor, deportment and conduct of witnesses as they give their testimonies. Thus, assignment
to declarations on the witness stand is best done by them who, unlike appellate magistrates, can
weigh firsthand the testimony of a witness.38[38]

Anent the second issue as to whether or not the damages awarded are excessive, we rule in the
affirmative. The Court of Appeals committed an error in sustaining the ruling of the trial court
requiring petitioner to reimburse private respondents the amount of four plane tickets, including
the ticket for private respondent minor Carlo Benitez.

As admitted by private respondent Judy in her testimony, the only confirmed tickets for the
morning flight (PR 178) are the tickets for herself, her infant son, Gian Carlo and her sister Jane
Gamil. They had another ticket which Judy bought for a certain Dra. Emily Chua who backed
out and whose ticket they had intended to be transferred to Carlo Benitez.39[39] Although it is
clearly stated in the ticket that the same is non-transferrable,40[40] Judy testified that a PAL
employee issued another ticket in the name of Carlo Benitez in lieu of the ticket issued for Dra.
Chua. However, an examination of the ticket issued, Exhibit C, discloses that it does not state
therein the flight number or time of departure. Consequently, in the absence of competent
evidence, private respondent Carlo Benitez complaint should be dismissed.

We find no justifiable reason that warrants the award of P100,000.00 as actual damages in favor
of all private respondents. Article 2199 of the Civil Code, provides that actual or compensatory

35[35] TSN, October 4, 1989, pp. 5-7.

36[36] TSN, September 27, 1989, pp.6-8, 24-25.

37[37] People vs. Limob. G.R. No. 24810, 49 Phil. 94, 99-100 (1926).

38[38] Tugade vs. Court of Appeals. G.R. No. 120874, July 31, 2003.

39[39] TSN, October 4, 1989, p. 23.

40[40] Exhibits C, 3.
damages may only be given for such pecuniary loss suffered by him as he has duly proved. We
explained in Chan vs. Maceda41[41] that:

A court cannot rely on speculations, conjectures or guesswork as to the fact and amount of
damages, but must depend upon competent proof that they have been suffered by the injured
party and on the best obtainable evidence of the actual amount thereof. It must point out specific
facts which could afford a basis for measuring whatever compensatory or actual damages are
borne.42[42]

All that was proved by herein private respondents was the amount of the purchase price of the
plane tickets of private respondents Judy, Jane and Gian Carlo. Only said amounts should
therefore be considered in awarding actual damages. As borne by the records, private respondent
Judy Amor paid P466.00 each for her ticket and that of Jane; while she paid P46.60 for her infant
Gian Carlo.43[43] The amount of actual damages should therefore be reduced to P978.60, payable
to private respondent Judy Amor.

As to moral damages.

It should be stressed that moral damages are not intended to enrich a plaintiff at he expense of
the defendant but are awarded only to allow the former to obtain means, diversion or
amusements that will serve to alleviate the moral suffering he has undergone due to the
defendants culpable action.44[44] We emphasized in Philippine National Bank vs. Court of
Appeals that moral damages are not punitive in nature but are designed to somehow alleviate the
physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded
feelings, moral shock, social humiliation and similar injury unjustly caused to a person. We have
held that even though moral damages are incapable of pecuniary computation, it should
nevertheless be proportional to and in approximation of the suffering inflicted. And, to be
recoverable, such damage must be the proximate result of a wrongful act or omission the factual
basis for which is satisfactorily established by the aggrieved party. 45[45]

In the case at bar, private respondent Judy Amor testified that she felt ashamed when the plane
took off and they were left at the airport since there were many people there who saw them
including dentists like her. She also related that she missed the Philippine Dental Convention
scheduled on the 8th of May, 1988 where she was supposed to attend as a dentist and officer of
the Sorsogon Dental Association. They tried to look for buses bound for Manila but missed those
scheduled in the morning. They went back to the airport but still failed to take an afternoon
flight. Hence, she was forced to take a bus that evening for Manila which did not allow her to
sleep that night.46[46] Private respondent Judy however did not miss the whole convention as she
was able to leave on the night of the first day of the week-long convention.

41[41] G.R. No. 142591, April 3, 2003.

42[42] Ibid.

43[43] Exhibits A, 1; B, 2; D, 4.

44[44] Philippine Airlines vs. Court of Appeals, G.R. No. 120262, 275 SCRA 621, 630 (1997).

45[45] G.R. No. 12 6908, January 16, 2003.

46[46] TSN, October 4, 1980, pp. 10-12, 16-17.

While there is no hard and fast rule for determining what would be a fair amount of moral
damages, generally, the amount awarded should be commensurate with the actual loss or injury
suffered.47[47]

The CA erred in upholding the trial courts award of moral damages based on Judy Amors claim
that there was a denigration of her social and financial standing. Private respondent Judy failed to
show that she was treated rudely or disrespectfully by petitioners employees despite her stature
as a dentist. As we held in Kierulf vs. Court of Appeals48[48]

The social and financial standing of Lucila cannot be considered in awarding moral damages.
The factual circumstances prior to the accident show that no rude and rough reception, no
menacing attitude, no supercilious manner, no abusive language and highly scornful reference
was given her. The social and financial standing of a claimant of moral damages may be
considered in awarding moral damages only if he or she was subjected to contemptuous
conduct despite the offenders knowledge of his or her social and financial standing.49[49]
(Emphasis supplied)

Nevertheless, we hold that private respondent Judy Amor is entitled to moral damages. In a
number of cases, we have pronounced that air carriage is a business possessed with special
qualities. In Singson vs. Court of Appeals,50[50] we explained that:

A contract of air carriage is a peculiar one. Imbued with public interest, common carriers are
required by law to carry passengers safely as far as human care and foresight can provide, using
the utmost diligence of a very cautious person, with due regard for all the circumstances. A
contract to transport passengers is quite different in kind and degree from any other contractual
relation. And this because its business is mainly with the traveling public. It invites people to
avail of the comforts and advantages it offers. The contract of carriage, therefore, generates a
relation attended with a public duty. Failure of the carrier to observe this high degree of care and
extraordinary diligence renders it liable for any damage that may be sustained by its
passengers.51[51]

As the lower courts have found, evidence positively show that petitioner has accommodated
waitlisted and non-revenue passengers and had overbooked more than what is allowed by law, to
the prejudice of private respondents who had confirmed tickets. Overbooking amounts to bad
faith52[52] and therefore petitioner is liable to pay moral damages to respondent Judy Amor.

Considering all the foregoing, we deem that the award of P250,000.00 as moral damages in favor
of private respondent Judy Amor is exorbitant. Where the damages awarded are far too excessive
compared to the actual losses sustained by the aggrieved party, the same should be reduced to a

47[47] Del Rosario vs. Court of Appeals, G.R. No. 118325, 267 SCRA 158, 173 (1997).

48[48] G.R. No. 99301, 269 SCRA 433 (1997).

49[49] Id., at p. 446.

50[50] G.R. No. 119995, 282 SCRA 149 (1997).

Id., at p. 153. See also Philippine Airlines vs. Court of Appeals, G.R. No. 120262, 275
51[51]
SCRA 621, 626 (1997).

52[52] Zalamea vs. Court of Appeals, 228 SCRA 23, 31 (1993).

more reasonable amount.53[53] We find the amount of P100,000.00 to be sufficient, just and
reasonable.

We consider the award of actual damages in favor of private respondent Jane Gamil to be
inappropriate considering the testimony of Judy Amor that she was the one who paid for the
tickets.54[54] Likewise, the appellate court erred in sustaining the award of moral damages in
favor of Jane Gamil as she never testified in court. It has been held that where the plaintiff fails
to take the witness stand and testify as to his social humiliation, wounded feelings and anxiety,
moral damages cannot be recovered.55[55]

As to the award of exemplary damages, Article 2234 of the Civil Code provides that the claimant
must show that he would be entitled to moral, temperate or compensatory damages before the
court may consider the question whether or not exemplary damages should be awarded.

Consequently, private respondent Jane Gamil, not being entitled to actual and moral damages, is
not entitled to exemplary damages.

The award of exemplary damages in favor of private respondent Judy Amor is warranted in this
case.56[56] Waitlisted and non-revenue passengers were accommodated while private respondent
Judy Amor who had fully paid her fare and was a confirmed passenger was unduly deprived of
enplaning. Petitioner was guilty of overbooking its flight to the prejudice of its confirmed
passengers. This practice cannot be countenanced especially considering that the business of air
carriage is imbued with public character. We have ruled that where in breaching the contract of
carriage, the airline is shown to have acted in bad faith, as in this case,57[57] the award of
exemplary damages in addition to moral and actual damages is proper.58[58] However, as in the
matter of the moral damages awarded by the trial court, we consider the amount of P200,000.00
as exemplary damages to be far too excessive. The amount of P25,000.00 is just and proper.

We find the award of attorneys fees in this case to be in order since it is well settled that the same
may be awarded when the defendants act or omission has compelled the plaintiff to litigate with
third persons or to incur expenses to protect his interest.59[59]

WHEREFORE, we affirm the decision of the Court of Appeals with the following
MODIFICATIONS:

1. Petitioner is ordered to pay private respondent Judy Amor the amount of P978.60 as and
for actual damages; P100,000.00 as moral damages; P25,000.00 as exemplary damages; and
attorneys fees in the amount of P30,000.00 plus P500.00 for every appearance of private

Radio Communications of the Phils., Inc. vs. Rodriguez, G.R. No. 83768, 182 SCRA 899,
53[53]
907 (1990).

54[54] TSN, October 4, 1989, pp. 10-11.

Pan American World Airways vs. Intermediate Appellate Court, G.R No. 68988, June 21,
55[55]
1990, 186 SCRA 687, 690 (1990).

56[56] Del Rosario vs. Court of Appeals, G.R. No. 118325, 267 SCRA 158, 173 (1997).

57[57] See Note 52.

58[58] Singson vs. Court of Appeals, G.R. No. 119995, 282 SCRA 149, 163 (1997).

59[59] Id., p. 165.

respondents lawyer, or a total of P10,500.00 for 21 actual appearances in court; P2,000.00 as
incidental litigation expenses; and costs of suit.

2. The claim for damages of private respondent Jane Gamil is DENIED for lack of
evidence.

3. The complaint of private respondent Carlo Benitez is DISMISSED for lack of cause of
action.

No pronouncement as to costs.

SO ORDERED.

Puno, (Chairman), Quisumbing, Callejo, Sr., and Tinga, JJ., concur.

G.R. No. 176043 January 15, 2014

SPOUSES BERNADETTE and RODULFO VILBAR, Petitioners,

vs.
ANGELITO L. OPINION, Respondent.

DECISION

DEL CASTILLO, J.:

"Registration is the operative act which gives validity to the transfer or creates a lien upon the
land."1 Before this Court is a Petition for Review on Certiorari2 of the May 26, 2006 Decision3
of the Court of Appeals (CA) in CA-G.R. CV No. 84409 which affirmed the January 31, 2005
Decision4 of the Regional Trial Court (RTC), Branch 255, Las Piñas City in Civil Case No. 98-
0302, an accion reinvindicatoria case filed by respondent Angelito L Opinion (Opinion) against
petitioner-spouses Bernadette and Rodulfo Vilbar (spouses Vilbar) and others.

Also assailed is the CA' s December 22, 2006 Resolution5 which denied spouses Vilbar's Motion
for Reconsideration.6

Factual Antecedents

Spouses Vilbar claimed that on July 10, 1979, they and Dulos Realty and Development
Corporation (Dulos Realty), entered into a Contract to Sell7 involving a 108-square meter lot
designated as Lot 20-B located in Airmen’s Village, Las Piñas City and covered by Transfer
Certificate of Title (TCT) No. S-39849 for ₱19,440.00. Lot 20-A which is also covered and
embraced by the same certificate of title is the subject of another Contract to Sell between Elena
Guingon (Elena) and Dulos Realty. Sometime in August 1979, spouses Vilbar took possession of
Lot 20-B in the concept of owners and exercised acts of ownership thereon with the permission
of Dulos Realty after making some advance payment.8

Upon full payment of the purchase price for Lot 20, or on June 1, 1981, Dulos Realty executed a
duly notarized Deed of Absolute Sale9 in favor of spouses Vilbar and their co-purchaser Elena.
Dulos Realty also surrendered and delivered the owner’s duplicate copy of TCT No. S-39849
covering Lot 20 to the buyers and new owners of the property. However, spouses Vilbar and
Elena were not able to register and transfer the title in their names because Dulos Realty
allegedly failed to have the lot formally subdivided despite its commitment to do so, until its
President, Juan B. Dulos (Juan), died without the subdivision being accomplished.10
Spouses Vilbar and Dulos Realty also executed a Contract to Sell11 dated July 10, 1979 covering
Lot 21, Block 4 of Airmen’s Village, with an area of 216 square meters and covered by TCT No.
S-39850 amounting to ₱128,880.00. To pay for the balance of the purchase price amounting to
₱99,216.00, spouses Vilbar obtained a housing loan from the Development Bank of the
Philippines (DBP) secured by a real estate mortgage12 over the said lot. Dulos Realty facilitated
the approval of the loan, the proceeds of which were immediately paid to it as full payment of
the purchase price.13

In 1991, the spouses Vilbar were able to pay the loan in full and DBP issued the requisite
Cancellation of Mortgage14 on March 25, 1991. Thereafter, DBP surrendered TCT No. 36777 /
T-17725-A issued by the Registry of Deeds of Pasay City in the name of Bernadette Vilbar to the
spouses Vilbar.15 The spouses Vilbar have been in actual, open and peaceful possession of Lot
21 and occupy the same as absolute owners since 1981.

In contrast, Opinion claimed that he legally acquired Lots 20 and 21 through extra-judicial
foreclosure of mortgage constituted over the said properties by Otilio Gorospe, Sr. and Otilio
"Lito" Gorospe, Jr. (Gorospes) in his favor. Opinion alleged that on January 12, 1995, the
Gorospes borrowed ₱440,000.00 and, to secure the loan, executed a Deed of Real Estate
Mortgage16 over the subject lots covered by TCT Nos. T-44796 (Lot 21)17 and T-44797 (Lot
20).18 The Gorospes defaulted, prompting Opinion to file a Petition for Extra-Judicial
Foreclosure of Real Estate Mortgage19 dated October 17, 1995 with the Office of the Notary
Public of Las Piñas City. Subsequently, the subject properties were sold at a public auction
where Opinion emerged as the highest bidder. A Certificate of Sale20 was issued in his favor on
December 18, 1995 and subsequently annotated on the TCTs of the properties. The Gorospes
failed to redeem the properties within the reglementary period resulting in the eventual
cancellation of their titles. Thus, TCT No. T-59010 (Lot 21)21 and TCT No. T-59011 (Lot 20)22
in the name of Opinion were issued on January 22, 1997 by the Registry of Deeds of Las Piñas
City.

On February 13, 1997, Opinion filed a Petition for Issuance of a Writ of Possession23 against the
Gorospes with the RTC of Las Piñas City, Branch 253, docketed as LRC Case No. LP-162.
Branch 253 initially issued a Writ of Possession and spouses Vilbar and Elena were served with
a notice to vacate the premises. However, the writ was quashed when spouses Vilbar filed an
urgent motion for the quashal of the writ and presented their title to Lot 21, while Elena
presented the Deed of Absolute Sale executed by Dulos Realty covering Lot 20. Consequently,
Opinion filed a Complaint for Accion Reinvindicatoria with Damages24 docketed as Civil Case
No. 98-0302 and raffled to Branch 255 of the RTC of Las Piñas City for him to be declared as
the lawful owner and possessor of the subject properties and for his titles to be declared as
authentic. He likewise prayed for the cancellation of the titles of spouses Vilbar and Elena.25

During trial, spouses Vilbar presented the Absolute Deed of Sale26 executed by Dulos Realty in
their favor and the owner’s duplicate copy of TCT No. S-3984927 covering Lot 20. With respect
to Lot 21, spouses Vilbar presented the real estate mortgage28 they executed in favor of DBP;
the official receipts29 issued by DBP showing that they had paid the amortizations for the
housing loan; the Cancellation of Mortgage30 issued by DBP as proof that they have fully paid
the loan; tax declarations31 and receipts32 to show that the property’s tax declaration under the
name of Dulos Realty had been cancelled and a new one had been issued in their name in 1987
and that they have been paying the real property taxes on the property since 1980. The spouses
Vilbar also presented TCT No. 36777/T-17725-A33 issued by the Registry of Deeds of Pasay
City on May 22, 1981, as proof of their ownership of Lot 21.

Opinion, on the other hand, justified the legality of his claim over the properties by tacking his
rights on the rights passed on to him by the Gorospes. He traced his rights over the properties by
claiming that Gorospe, Sr. was the former chairman of the Board of Directors and Chief
Executive Officer (CEO) of Dulos Realty. He was offered substantial benefits and privileges by
Dulos Realty as compensation for the positions he held, including a residential house and lot in
Airmen’s Village, Las Piñas City valued at ₱180,000.00 and various allowances. However,
Dulos Realty was not able to give to Gorospe, Sr. the promised allowances despite repeated
demands. Thus, Gorospe, Sr. was constrained to file a Complaint for Sum of Money, Specific
Performance and Damages34 dated May 12, 1981 with the then Court of First Instance (CFI) of
Manila. Subsequently, Juan signed a compromise agreement and based thereon the trial court
rendered a Decision35 dated April 1, 1982 ordering Dulos Realty to pay Gorospe, Sr. the total
amount of ₱578,000.00. A Writ of Execution and Alias Writ of Execution were issued by the
trial court in its Orders36 dated May 7, 1982 and September 30, 1983, respectively. Dulos Realty
filed several cases challenging the validity of the compromise agreement and seeking to nullify
the writs of execution, as well as the consequent levy and public auction sale of its properties.37
One of the cases it filed was Civil Case No. 88-280038 seeking the nullification, cancellation and
reconveyance of title on the ground, among others, that during the auction sale its properties
were undervalued. All of its efforts, however, proved futile. Meanwhile, real properties of Dulos
Realty were levied on October 31, 1984, which included Lots 20 and 21 covered by TCT Nos. S-
39849 and S-39850, respectively.39 The disputed properties were eventually sold at public
auction on June 24, 1985 where Gorospe, Sr. emerged as the highest bidder.40 On June 2, 1987,
the Registry of Deeds of Pasay City issued TCT Nos. 117331 (Lot 20)41 and 117330 (Lot 21)42
in the name of Gorospe, Sr. and his wife. Upon the death of Gorospe, Sr.’s wife, the Gorospes
transferred the titles in their names resulting in the issuance of TCT Nos. T-44797 (Lot 20)43
and T-44796 (Lot 21)44 by the Registry of Deeds of Las Piñas City.

During the course of the trial, Opinion likewise stated under oath that prior to the execution of
the real estate mortgage between him and the Gorospes, he was given copies of the titles to the
properties which he verified with the Registry of Deeds to be authentic45 and that he inspected
the subject properties and learned that there were occupants.46 Opinion stated that he was
informed by the Gorospes that the occupants, spouses Vilbar and Elena, were mere tenants
renting from them.47 Opinion admitted that he neither talked to the occupants nor made any
inquiries as to the nature of their occupation over the subject properties;48 he did not inquire
further to determine whether there was a pending controversy;49 and, that he merely relied on
the statements of Gorospe, Sr. regarding the tenancy of the occupants without having been
shown any contract of lease, proof of rental payments, or even an electric bill statement.50

It was only after his Writ of Possession was quashed when he learned that spouses Vilbar and
Elena are also claiming ownership over the properties, prompting him to make a more thorough
investigation.51 Opinion stated that despite the discovery of the adverse claims over the
properties mortgaged to him, he did not ask Gorospe, Sr. why there are other claimants to the
subject properties.52 When asked about what he learned after investigating said claims, he
declared that the titles of the spouses Vilbar are spurious because they contain discrepancies with
the originals on file with the Registry of Deeds. According to Opinion, spouses Vilbar’s titles do
not have entries indicating the titles from which they were derived.53 To bolster his claim,
Opinion also presented a 2nd Indorsement54 dated May 11, 1988 issued by the Registry of
Deeds of Pasay City which states that TCT No. 36777 of the spouses Vilbar is presumed to be
not validly issued.55 Upon clarification, however, Opinion admitted that he made no further
follow-up with the Registry of Deeds to determine the final outcome of the investigation on the
title of the spouses Vilbar.56

Ruling of the Regional Trial Court

On January 31, 2005, the trial court rendered its Decision57 in favor of Opinion declaring that he
lawfully acquired the disputed properties and that his titles are valid, the sources of which having
been duly established.58 The dispositive portion of the Decision reads:

WHEREFORE, the foregoing considered, judgment is hereby rendered in favor of plaintiff

Angelito L. Opinion, and against defendants Sps. Bernadette and Rodulfo Vilbar, including
defendants Otilio Gorospe, Sr., Otilio Gorospe, Jr. and Elena Guingon, ordering the said
defendants to immediately turn over possession of Lots 20 and 21, both of Block 4, located at
Airmen’s Village, Las Piñas City, to the herein plaintiff being the registered owner thereof per
TCT Nos. T-59010 and T-59011 issued in his name.
Likewise, the above defendants are hereby directed to pay to the herein plaintiff the sum of
₱100,00.00 as and by way of attorney’s fees, including the cost of suit.

SO ORDERED.59

The trial court, in ruling for Opinion, ratiocinated that there was no doubt that Opinion’s
predecessors-in-interest likewise acquired title to the properties through lawful means.60 Titles
originally in the name of Dulos Realty were cancelled after implementation and execution of the
April 1, 1982 Decision of the CFI in favor of Gorospe, Sr. and new titles were issued in his
name.61 The trial court noted that when a new title for Lot 21 was issued in the name of
Gorospe, Sr. on June 2, 1987, there was no indication that the title of Dulos Realty was already
cancelled by Bernadette Vilbar’s TCT No. 36777 purporting to have been issued on May 22,
1981.62 As to Lot 20, the trial court noted that the supposed Deed of Absolute Sale dated June 1,
1981 in favor of defendants Bernadette Vilbar and Guingon was not annotated on TCT No.
39849. Thus, when this was cancelled by the subsequent titles, the property was not subject to
any lien or encumbrance whatsoever pertaining to said purported Deed of Absolute Sale.63 The
trial court also opined that the efforts of Dulos Realty to question and annul the earlier rulings of
the then Intermediate Appellate Court and Supreme Court did not prosper thereby strengthening
the validity of the title of the Gorospes.64 Further, the trial court found the mortgage in favor of
Opinion, and the subsequent extrajudicial foreclosure thereof to be in order.65

As to spouses Vilbars’ evidence, the trial court found their title to Lot 21 questionable as there
was no showing that it came from TCT No. 39850 issued in the name of Dulos Realty.66 The
Contract to Sell of the spouses Vilbar can hardly serve as basis for the transfer of Lot 21 in their
favor. Besides, the same was not even annotated on the title of Dulos Realty.67 The trial court
also found the issuance of TCT No. 36777 questionable because there was no proof that the
purchase price was already paid considering that only a Contract to Sell was available. As a
result, spouses Vilbar only had an inchoate right over the property.68 The trial court went on to
state:

Definitely, defendants Sps. Vilbar cannot readily claim that they acquired Lot 21 in good faith
and for value. Based on the documents they presented, they cannot assert ignorance or allege that
they were not aware that the purchase price for Lot 21, including any interest they may have in
Lot 20, has not been duly settled at the time TCT No. 36777 for Lot 21 was issued in their favor
or even when the Deed of Absolute Sale dated 01 June 1981 for Lot 20 was executed.

The payments supposedly made by the defendants Sps. Vilbar to the DBP only establishes the
fact that they have not complied with what they obligated themselves with insofar as the above
contracts to sell are concerned. More importantly, there is nothing in the records which would
show that these contracts have been superseded by another deed to justify the transfer, among
others, of TCT No. 39850 registered in the name of the defendant Dulos Realty to the defendants
Sps. Vilbar, or the execution of a deed of sale involving Lot 20 covered by TCT No. 39849.
Needless to state, the fact that a mortgage contract was allegedly entered into by the defendants
Sps. Vilbar with the DBP does not, by itself, result in a conclusive presumption that they have a
valid title to Lot 21. Instead, this begs more questions than answers since the said mortgage was
entered into on 21 May 1981, or a day after TCT No. 36777 was issued in favor of the
defendants Sps. Vilbar. Added to this, the herein defendants failed to establish the basis for the
issuance of their said title even when their contracts to sell indicate that the purchase price for
Lot 21 would be paid on installments over a long period of time.

As to the tax declarations and real property tax payments made by the defendants Sps. Vilbar for
Lot 21 the same are of no moment. It has been held that tax declarations are not conclusive
proofs of ownership, let alone of the private character of the land – at best, they are merely
‘indicia of a claim of ownership.’ (Seville v. National Development Company, 351 SCRA 112)
However, and with the plaintiff presenting convincing evidence of the basis and validity of his
acquisition of the subject lots, such "indicia" in favor of the defendants Sps. Vilbar had been
effectively impugned or refuted.
Moreso, the possession of the alleged original owner’s copy of TCT No. 39849 for Lot 20 by the
defendants Sps. Vilbar or the execution of a deed of sale in favor of defendants Bernadette
Vilbar and Guingon over the same cannot ripen into ownership thereof. It must be stressed that
no subsequent title was issued in favor of the said defendants even when they have the above
documents with them. On the other hand, the plaintiff eventually secured a title over Lot 20 after
consolidating his ownership with respect thereto.

The fact that the defendants Sps. Vilbar are in possession of the subject lots cannot persuade the
Court to rule in their favor. This is more settled insofar as Lot 20 is concerned. Having a valid
title thereto, the claim of the plaintiff cannot just be ignored. It is a fundamental principle in land
registration that a certificate of title serves as evidence of an indefeasible and incontrovertible
title to the property in favor of the person whose name appears therein. (Vda. De Retuerto vs.
Barz, 372 SCRA 712)69

Further, the trial court gave much credence to the 2nd Indorsement dated May 11, 1988 from the
Registry of Deeds of Pasay City which provided that TCT No. 36777 is presumed not to be
validly issued considering that no inscription exists at the back of the original title (TCT No. S-
39850) showing that a Deed of Sale between Dulos Realty and spouses Vilbar had been
registered. The discrepancy in the entries, or lack of it, in the TCTs in the custody of the spouses
Vilbar and the Registry of Deeds of Las Piñas City70 also tilted the balance against the said
spouses.

Aggrieved, the spouses Vilbar appealed to the CA on February 22, 2005.71

Ruling of the Court of Appeals

On May 26, 2006, the CA promulgated its Decision72 affirming the Decision of the RTC. The
CA agreed with the trial court’s ruling that Opinion validly acquired title over Lots 20 and 21
through a valid mortgage, extrajudicial foreclosure, and eventual consolidation proceedings
instituted over the said properties.73 The CA went on to state that there was no doubt as to the
validity of the title of Opinion’s predecessors-in-interest, the Gorospes, because the same was
affirmed by the Supreme Court in a case involving the said properties.74 In contrast, spouses
Vilbar’s TCT No. 36777 does not state the title from which it was derived.75 Spouses Vilbar’s
title becomes even more dubious in light of the aforementioned 2nd Indorsement issued by the
Registry of Deeds of Pasay City, which they failed to refute.76 The CA further stated that
acquisitive prescription will not set in because spouses Vilbar lacked the prerequisite just title,
while the tax declaration is not a conclusive evidence of ownership.77 As to Lot 20, the CA
ratiocinated that the spouses Vilbar never registered the property in their names despite the lapse
of several years, while Opinion was able to register the same property in his name. Being the
registered owner, Opinion’s title thus takes precedence over the unregistered claim of ownership
of spouses Vilbar.78

Lastly, the CA opined that it is the registration that binds the whole world and that mere
possession of the properties in question cannot defeat the right of Opinion as registered owner of
the property. Since the sale claimed by the spouses Vilbar was never registered, it cannot bind
Opinion.79

The spouses Vilbar moved for reconsideration of the CA Decision which was denied in a
Resolution dated December 22, 2006. Hence, this Petition.

Issues

Petitioners raise the following issues:

A.
THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN FINDING THAT THE
RESPONDENT ANGELITO OPINION HAS A BETTER TITLE AND/OR HAS
PREFERENCE OVER THE SUBJECT PROPERTIES IDENTIFIED AS LOTS 20 AND 21.

B.

THE COURT OF APPEALS SERIOUSLY ERRED WHEN IT OVERLOOKED THE FACT

THAT OTILIO GOROSPE, AS STOCKHOLDER AND CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER OF DULOS REALTY AND RESPONDENT OPINION’S
PREDECESSOR-IN-INTEREST, ACTED IN BAD FAITH WHEN HE LEVIED ON
EXECUTION AND WHEN HE PURCHASED IN AN AUCTION SALE THE TWO LOTS
SUBJECT OF THE INSTANT CASE ALREADY SOLD AND DELIVERED TO THE
PETITIONERS BY DULOS REALTY.

C.

THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED WHEN IT OVERLOOKED

THE FACT THAT X X X RESPONDENT OPINION WAS LIKEWISE A PURCHASER IN
BAD FAITH.

D.

THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED WHEN IT OVERLOOKED

THAT THE PETITIONERS SPOUSES VILBAR ARE THE OWNERS OF LOT[S] 21 AND 20
UPON DELIVERY THEREOF.

E.

THE COURT OF APPEALS ERRED IN ASSUMING THAT TCT NO. 36777 WAS NOT
VALIDLY ISSUED IN FAVOR OF THE PETITIONERS.80

The pivotal issue to be resolved is: who between the parties has a better right over Lots 20 and
21?

Petitioners contend that they are the rightful owners and possessors of the contested properties
through a valid sale perfected in 1981. They maintain that Gorospe, Sr., the predecessor-in-
interest of Opinion, did not acquire ownership over Lots 20 and 21 because at the time of the
levy and execution, said properties were no longer owned by Dulos Realty. Gorospe, Sr. could
not, therefore, validly pass any rights to Opinion which the former did not have in the first
place.81

Our Ruling

The Court finds no merit in the Petition.

Respondent Opinion’s predecessor-in-
interest is an innocent third party
purchaser in the public auction sale,
absent proof to the contrary.

This Court notes that Dulos Realty, the former owner and common predecessor of the parties
herein, contracted with the spouses Vilbar for the sale and transfer of Lots 20 and 21 on July 10,
1979. As early as August 1979, the spouses Vilbar were already in peaceful and actual
possession of the subject properties and have been exercising acts of ownership and dominion
over their portion of Lot 20 and the entire Lot 21 despite the fact that the purchase price of the
lots have not yet been paid in full. Admittedly, all these took place before Gorospe, Sr. filed his
Complaint for Sum of Money, Specific Performance and Damages against Dulos Realty on May
12, 1981; prior to the issuance of the Writ of Execution and Alias Writ of Execution by the trial
court on May 7, 1982 and September 30, 1983, respectively;82 prior to the levy of the properties
of Dulos Realty on October 31, 1984 to answer for the judgment favorable to Gorospe, Sr. in
said collection/specific performance case; and prior to the public auction sale held on June 24,
1985. However, the Court also notes that the sale of Lot 20 was not annotated on the original title
in the name of Dulos Realty, while only a Contract to Sell was executed between the spouses
Vilbar and Dulos Realty as regards Lot 21 which makes the issuance of the title in the name of
Bernadette Vilbar questionable. What makes spouses Vilbar’s title over Lot 21 even more
doubtful is the 2nd Indorsement issued by the Registry of Deeds of Pasay City which states that
Bernadette Vilbar’s title over said lot is presumed to be not validly issued.

The spouses Vilbar contend that Gorospe, Sr. acted in bad faith when he levied on the disputed
properties and bought them at public auction. However, this Court cannot treat as significant the
alleged fact that Gorospe, Sr. was the Chief Executive Officer and Chairman of the Board of
Directors of Dulos Realty at the time the transactions with the spouses Vilbar were entered into
by the company. Evidence on record shows that the Deed of Absolute Sale dated June 1, 1981
covering Lot 20, as well as the Contract to Sell over Lot 21, was signed by Juan as President of
Dulos Realty. Simply, spouses Vilbar cannot ascribe bad faith on the part of Gorospe, Sr. absent
clear and convincing proof that he had knowledge of the said spouses’ transactions with the
company. As far as the Court is concerned, the evidence presented shows that Gorospe, Sr. had
no knowledge of the transactions between Dulos Realty and the spouses Vilbar because it was
Juan who executed and signed the documents. More importantly, the aforementioned Deed of
Absolute Sale and Contract to Sell were not registered and annotated on the original titles in the
name of Dulos Realty. Under land registration laws, the said properties were not encumbered
then, and third parties need only to rely on the face of the duly issued titles. Consequently, the
Court finds no bad faith on Gorospe, Sr.’s part when he bought the properties at public auction
free from liens and encumbrances.

It is worth stressing at this point that bad faith cannot be presumed. "It is a question of fact that
must be proven"83 by clear and convincing evidence. "[T]he burden of proving bad faith rests on
the one alleging it."84 Sadly, spouses Vilbar failed to adduce the necessary evidence. Thus, this
Court finds no error on the part of the CA when it did not find bad faith on the part of Gorospe,
Sr.

Furthermore, the Court recognizes "[t]he settled rule that levy on attachment, duly registered,
takes preference over a prior unregistered sale. This result is a necessary consequence of the fact
that the [properties] involved [were] duly covered by the Torrens system which works under the
fundamental principle that registration is the operative act which gives validity to the transfer or
creates a lien upon the land."85 As aptly observed by the trial court:

To say the least, there is no reason to doubt that the predecessors-in-interest of the plaintiff
(Opinion) with respect to the said properties, the defendants Gorospes, likewise acquired the
same through lawful means. Indeed, and as acknowledged by both plaintiff Opinion and
defendants Sps. Vilbar, the defendant Dulos Realty previously owned the above parcels of land
under TCT Nos. 39849 and 39850. However, the said titles were cancelled after the Decision
dated 01 April 1982 rendered in favor of defendant Otilio Gorospe, Sr. was implemented or
executed. Consequently, TCT Nos. 117330 and 117331 were issued in the name of defendant
Otilio Gorospe, Sr. Later on, the foregoing titles were cancelled owing to the death of the wife of
defendant Otilio Gorospe, Sr., the late Leonor Gorospe, and TCT Nos. 44796 and 44797 were
issued to defendants Gorospes as surviving heirs. These two titles then became the subject of the
mortgage agreement that defendants Gorospes executed in favor of plaintiff Opinion on 12
January 1995.

The Court notes that when TCT No. 117330 dated 02 June 1987 for Lot 21 in the name of
defendant Otilio Gorospe, Sr. was issued to cancel TCT No. 39850 for the same lot registered in
favor of the defendant Dulos Realty there was no mention whatsoever that the latter title was
already cancelled by TCT No. 36777 supposedly issued on 22 May 1981 to defendant Bernadette
Vilbar. This being so, the subsequent cancellation of TCT No. 117330 by TCT No. 44796 dated
09 January 1995 for Lot 21 could not be affected by the supposed existence of the title of
defendants Spouses Vilbar.

As to Lot 20, it is also noteworthy that the supposed Deed of Absolute Sale dated 01 June 1981
in favor of defendants Bernadette Vilbar and Guingon was not annotated on TCT No. 39849.
Thus, when this was cancelled by TCT No. 117331 and, later on, by TCT No. 44797 also dated
09 January 1995, it was not subject to any lien or encumbrance whatsoever pertaining to the
claim of the above defendants over the same.86 (Emphasis supplied)

In effect, Gorospe, Sr. acquired through lawful means a valid right to the properties, and he and
his son had a legal right to mortgage the same to Opinion. As a consequence, the Goropes
transmitted property rights to Opinion, who, in turn, acquired valid rights from the Gorospes.

Respondent Opinion is a Buyer in Good Faith.

This Court also treats Opinion as a buyer in good faith. Admittedly, Opinion stated that prior to
the execution of the mortgage, he only went to Lots 20 and 21 once and saw that the properties
had occupants. He likewise admitted that he never talked to the spouses Vilbar and Guingon to
determine the nature of their possession of the properties, but merely relied on the representation
of Gorospe, Sr. that the occupants were mere tenants. He never bothered to request for any kind
of proof, documentary or otherwise, to confirm this claim. Nevertheless, this Court agrees with
the CA that Opinion is not required to go beyond the Torrens title, viz:

Contrary to the [Spouses Vilbar’s] claim, [Opinion] was never remiss in his duty of ensuring that
the Gorospes had clean title over the property. [Opinion] had even conducted an investigation.
He had, in this regard, no reason not to believe in the assurance of the Gorospes, more so that the
claimed right of [Spouses Vilbar] was never annotated on the certificate of title covering lot 20,
because it is settled that a party dealing with a registered land does not have to inquire beyond
the Certificate of Title in determining the true owner thereof, and in guarding or protecting his
interest, for all that he has to look into and rely on are the entries in the Certificate of Title.87

Inarguably, Opinion acted in good faith in dealing with the registered owners of the properties.
He relied on the titles presented to him, which were confirmed by the Registry of Deeds to be
authentic, issued in accordance with the law, and without any liens or encumbrances.88

Besides, assuming arguendo that the Gorospes’ titles to the subject properties happened to be
fraudulent, public policy considers Opinion to still have acquired legal title as a mortgagee in
good faith. As held in Cavite Development Bank v. Spouses Lim:89

There is, however, a situation where, despite the fact that the mortgagor is not the owner of the
mortgaged property, his title being fraudulent, the mortgage contract and any foreclosure sale
arising therefrom are given effect by reason of public policy. This is the doctrine of ‘the
mortgagee in good faith’ based on the rule that all persons dealing with property covered by a
Torrens Certificate of Title, as buyers or mortgagees, are not required to go beyond what appears
on the face of the title. The public interest in upholding the indefeasibility of a certificate of title,
as evidence of the lawful ownership of the land or of any encumbrance thereon, protects a buyer
or mortgagee who, in good faith, relied upon what appears on the face of the certificate of title.90

Respondent Opinion was proven to be in good faith when he dealt with the Gorospes and relied
on the titles presented to him. Spouses Vilbar, on the other hand, failed to present substantial
evidence to prove otherwise.

Proofs of ownership of spouses Vilbar

over Lots 20 and 21 are insufficient to
conclude real ownership, thus, they
cannot be considered as owners of
subject lots.
In support of their claim of ownership, spouses Vilbar presented the following documentary
evidence: (1) Contracts to Sell; (2) Deed of Absolute Sale over Lot 20; (3) Real Estate Mortgage
Agreement with DBP over Lot 21 with reference to the spouses Vilbar as owners of the said
property covered by TCT No. 36777; (4) Cancellation of Mortgage issued by the DBP in favor
of the spouses Vilbar in connection with Lot 21; (5) various original Official Receipts issued by
Dulos Realty in favor of the spouses Vilbar for installment payments of the purchase price of the
lots in question; (6) various original Official Receipts issued by the DBP in favor of the spouses
Vilbar for payment of loan amortizations; (7) owner’s duplicate copy of TCT No. 36777 in the
name of Bernadette Vilbar; (8) owner’s duplicate copy of TCT No. S-39849 in the custody of the
spouses Vilbar; and, (9) tax declarations and receipts.

A review of these documents leads the Court to the same inescapable conclusion reached by the
trial court.1âwphi1 With regard to Lot 20, spouses Vilbar brag of a Deed of Absolute Sale
executed by Dulos Realty in their favor and aver that they have the owner’s copy of TCT No. S-
39849 and are presently enjoying actual possession of said property. However, these are not
sufficient proofs of ownership. For some unknown reasons, the spouses Vilbar did not cause the
transfer of the certificate title in their name, or at the very least, annotate or register such sale in
the original title in the name of Dulos Realty. This, sadly, proved fatal to their cause. Time and
time again, this Court has ruled that "a certificate of title serves as evidence of an indefeasible
and incontrovertible title to the property in favor of the person whose name appears therein."91
Having no certificate of title issued in their names, spouses Vilbar have no indefeasible and
incontrovertible title over Lot 20 to support their claim. Further, it is an established rule that
"registration is the operative act which gives validity to the transfer or creates a lien upon the
land."92 "Any buyer or mortgagee of realty covered by a Torrens certificate of title x x x is
charged with notice only of such burdens and claims as are annotated on the title."93 Failing to
annotate the deed for the eventual transfer of title over Lot 20 in their names, the spouses Vilbar
cannot claim a greater right over Opinion, who acquired the property with clean title in good
faith and registered the same in his name by going through the legally required procedure.

Spouses Vilbar’s possession of the owner’s copy of TCT No. 39849 is of no moment. It neither
cast doubt on Gorospe Sr.’s TCT No. 117331 from which Opinion’s TCT No. T-59011 covering
Lot 20 emanated nor bar Gorospe Sr. from transferring the title over Lot 20 to his name. It
should be recalled that Gorospe Sr. acquired Lots 20 and 21 thru forced sale. Under Section
10794 of Presidential Decree No. 1529,95 Gorospe Sr. could have the TCTs of said lots
cancelled and transferred to his name even if the previous registered owner (Dulos Realty)
refused or neglected to surrender the owner’s copy thereof. In Valbuena v. Reyes,96 it was held
that:

[W]here one acquires a valid deed or title to a property as a result of execution sale, tax sale, or
any sale to enforce a lien, after the expiration of the period, if any, allowed by law for
redemption, when said new owner goes to court and the office of the register of deeds to have his
deed recorded and have a new certificate of title issued in his name, it is sufficient for purposes
of notifying the former owner to surrender his certificate of title and show cause why it should
not be cancelled, that the notification is effected by mail or by publication as the court may
order; and if despite such notification by mail or by publication, he fails to appear and surrender
his certificate of title, the court may validly order the cancellation of that certificate of title and
the issuance of a new one in favor of the new owner.97

Here, it is clear that Gorospe Sr. was able to secure TCT No. 117331,98 which was marked as
Exhibit "N." Said title explicitly provides that it cancelled TCT No. 39849. Hence, having been
superseded by TCT No. 117331, spouses Vilbar’s possession of TCT No. 39849 is of no
consequence. It may not be amiss to state at this point that spouses Vilbar’s claim that Dulos
Realty conveyed to them Lot 20 on June 1, 1981 is incongruous with Dulos Realty’s filing of a
complaint for reconveyance against Gorospe Sr. on January 4, 1990. We simply find it difficult
to understand why Dulos Realty would seek recovenyance of Lot 20 from Gorospe Sr. if, indeed,
it had already sold the same almost a decade earlier to spouses Vilbar as evidenced by the latter’s
Deed of Absolute Sale99 dated June 1, 1981. (This complaint docketed as Civil Case No. 88-
2800 though was dismissed for failure to prosecute.)100

With respect to Lot 21, the Court is likewise puzzled as to why spouses Vilbar’s TCT No. 36777
does not indicate where it came from. The issuance of the said title also becomes suspect in light
of the fact that no Deed of Absolute Sale was ever presented as basis for the transfer of the title
from Dulos Realty. In fact, the spouses Vilbar do not even know if a Deed of Absolute Sale over
Lot 21 was executed in their favor. As the evidence extant on record stands, only a Contract to
Sell which is legally insufficient to serve as basis for the transfer of title over the property is
available. At most, it affords spouses Vilbar an inchoate right over the property. Absent that
important deed of conveyance over Lot 21 executed between Dulos Realty and the spouses
Vilbar, TCT No. 36777 issued in the name of Bernadette Vilbar cannot be deemed to have been
issued in accordance with the processes required by law. In the same manner, absent the
corresponding inscription or annotation of the required transfer document in the original title
issued in the name of Dulos Realty, third parties are not charged with notice of said burden
and/or claim over the property. The aforementioned flaws in the title (TCT No. 36777) of
spouses Vilbar is aggravated by the 2nd Indorsement dated May 11, 1988 of the Registry of
Deeds of Pasay City which provides that TCT No. 36777 is presumed not to have been validly
issued considering that no inscription or annotation exists at the back of the original title (TCT
No. S-39850) showing that a deed of sale between Dulos Realty and spouses Vilbar had been
registered, coupled with the established material discrepancies in the certificate of title in the
custody of the Registry of Deeds of Las Piñas City and the title presented by the spouses Vilbar.

Simply, the spouses Vilbar were not able to present material evidence to prove that TCT No.
36777 was issued in accordance with the land registration rules.

In addition, the real estate mortgage entered into by the spouses Vilbar with the DBP does not,
by itself, result in a conclusive presumption that they have a valid title to Lot 21. The basic fact
remains that there is no proof of conveyance showing how they acquired ownership over Lot 21
justifying the issuance of the certificate of title in their name.

With respect to the tax declarations, the trial court aptly declared, thus:

As to the tax declarations and real property tax payments made by the defendants Sps. Vilbar for
Lot 21 the same are of no moment. It has been held that tax declarations are not conclusive
proofs of ownership, let alone of the private character of the land – at best, they are merely
‘indicia of a claim of ownership.’ (Seville v. National Development Company, 351 SCRA 112)
However, and with the plaintiff presenting convincing evidence of the basis and validity of his
acquisition of the subject lots, such "indicia" in favor of the defendant Sps. Vilbar had been
effectively impugned or refuted.101

WHEREFORE, the instant Petition for Review on Certiorari is hereby DENIED. The Decision
dated May 26 2006 of he Court of Appeals in CA-G.R CV No. 84409 affirming the Decision
dated January 31, 2005 of the Regional Trial Court Branch 255 Las Piñas City in Civil Case No.
98-0302 is hereby AFFIRMED.

No pronouncement as to costs.

SO ORDERED.

MARIANO C. DEL CASTILLO

Associate Justice

WE CONCUR:

CASE DIGEST
1. Aguirre –
a. People vs Concepcion;
b. Development Bank of the Phils vs NLRC 183 SCRA 328 and 242 SCRA 59

2. Alip –
a. Rose Packing Co. Inc. vs CA (167 SCRA 309);
b. Banco Filipino vs NLRC 188 SCRA 700

3. Apelado –
a. BPI Investment Corp. vs. Court of Appeals, 377 SCRA 117;
b. Republic vs Peralta 150 SCRA 37

4. Aurelia -
a. Central Bank of the Philippines vs. CA (139 SCRA 46);
b. J.L. Bernardo Construction vs Court of Appeals 324 SCRA 24

5. Bajado –
a. Bonnevie vs. CA (125 SCRA122);
b. Manabat vs Laguna Federation of Facomas, Inc. 19 SCRA 621

6. Bajas –
a. Pajuyo vs. CA (430 SCRA 492);
b. China Banking Corporation vs Lichauco 46 Phil 460

7. Batalla –
a. Producers Bank of the Philippines vs. CA (397 SCRA 651);
b. Soriano vs Galit 411 SCRA 631

8. Cabidog –
a. Quintos and Ansaldo vs. Beck (69 Phil. 108);
b. Dilag vs Heirs of Resurreccion 70 Phil 650 (1940)

9. Catilogo –
a. Yong Chan Kim vs. People of the Philippines (193 SCRA 344);
b. People’s Bank and Trust Co, vs. Dahican Lumber Co., 20 SCRA 84 (1967)

10. Cinco –
a. Consolidated Bank and Trust Corporation vs Court of Appeals (356 SCRA 671);
b. Cosio and de Rama vs Palileo 17 SCRA 196 (1966)

11. Costibolo –
a. David vs. Court of Appeals (310 SCRA 710);
b. Land Bank of the Philippines vs Poblete 691 SCRA vs 613 (2013);
c. IFC Service Leasing and Acceptance Corp. vs. Nera, 19 SCRA 181 [1967]

12. Cu –
a. Colinares vs. Court of Appeals (339 SCRA 609);
b. Soriano vs Bautista 6 SCRA 946

13. Dacallos –
a. People vs. Puig (563 SCRA 564);
b. Bucton vs Rural Bank of El Salvador, Inc., et al., GR No. 179625, February 24, 2014
14. Demetria –
a. BPI Family Bank vs. Franco (538 SCRA 184);
b. Philippine Sugar estates Development Co. vs. Poizat, 48 Phil 536 (1945)

15. Diloy –
a. De Lima vs. Laguna Tayabas Co. (160 SCRA 70);
b. Tan vs Valdehueza 66 SCRA 61 (1975)

16. Domingo –
a. Phil. Airlines vs. Court of Appeals (275 SCRA 621);
b. Vilbar vs Opinion 713 SCRA 428 (2014)

17. Eljera –
a. Ching vs. Nicdao (522 SCRA 316);
b. Ereña vs Querrer-Kauffman, 192 SCRA 298 (2006)

18. Elumba –
a. Phil. Phosphate Fertilizer Corp. vs. Kamalig Resources, Inc. (540 SCRA 139);
b. Bank of Commerce vs San Pablo, Jr. (522 SCRA 713 (2007)

19. Eslira –
a. De la Paz vs. L&J Developent Company (734 SCRA 364);
b. Homeowners Savings and Loan Bank vs Felonia 717 SCRA 359 (2014)

20. Espia –
a. Nacar vs. Gallery Frames and/or Felipe Bordey, Jr. (703 SCRA 439);
b. Arguelles vs Malarayat Rural Bank Inc, 719 SCRA 563 (2014);

21. Germo –
a. Ligutan vs. Court of Appeals (376 SCRA 560);
b. Development Bank of the Philippines vs CA 331 SCRA 267 (2000);
c. Cerna vs. Court of Appeals, 220 SCRA 517 [1993]

22. Granados –
a. Silos vs. Philippine National Bank (G.R. 181045, July 2, 2014);
b. Development Bank of the Philippines vs CA 249 SCRA 331 (1995);
c. Friend vs. Development Bank of the Phils., 476 SCRA 453 [2005]

23. Hidalgo –
a. Solidbank Corporation vs. Permanent Homes, Incorporated (625 SCRA 275);
b. Rizal Commercial Banking Corporation vs CA 289 SCRA 292 (1998);
c. Cabral vs. Evangelista, 28 SCRA 1000 [1969]

24. Lacaba –
a. Polotan vs. Court of Appeals (296 SCRA 247);
b. PNB vs Marañon 700 SCRA 297 (2013);
c. Jaca vs. Davao Lumber Co., 113 SCRA 107 [1982]

25. Liao –
 a. Briones vs. Cammayo (41 SCRA 404);
b. Republic Planters Bank vs Sarmiento 537 SCRA 303 (2007);
c. Allied Banking Corporation vs. Salas, 168 SCRA 414 [1988]

26. Macayan –
a. First Metro Investment Corp. vs. Este Del Sol Mountain Reserve, Inc. (369 SCRA 99);
b. Prudential Bank vs Alviar 464 SCRA 353 (2005);
c. Northern Motors, Inc. vs. Coquia, 68 SCRA 374 [1975]

27. Manalo –
a. Tan vs. Court of Appeals (367 SCRA 571);
b. Roxas vs CA 221 SCRA 729 (1993);
c. Acme Shoe Rubber & Plastic Corp. vs. Court of Appeals, 260 SCRA 714 [1996]

28. Manaog –
a. Liliam Law vs. Olympic Sawmill Co. (129 SCRA 439);
b. Rural Bank of Toboso, Inc. vs Agtoto 646 SCRA 288 (2011);
c. Northern Motors, Inc. vs. Coquia, 66 SCRA 415 [1975]

29. Marcha –
a. Asian Cathay Finance and Leasing Corporation vs. Gravador (623 SCRA 517);
b. Agbada vs Inter-Urban Developers, Inc., 389 SCRA 430 (2002);
c. Tsai vs. Court of Appeals, 366 SCRA 324 [2001]

30. Mendova –
a. Herrera vs. Petrophil Corporation (146 SCRA 385);
b. Ingles vs Estrada 695 SCRA 285 (2013);
c. Tolentino vs. Baltazar, 1 SCRA 822 [1961]

31. Obiña –
a. Advocates for Truth in Lending, Inc. vs. Bangko Sentral Monetary Board (288 SCRA 530);
b. PNB vs Rabat 344 SCRA 706 (2000);
c. Garrido vs. Tuason, 24 SCRA 727 [1968]

32. Ramos –
a. Land Bank of the Phils. vs. Ong (636 SCRA 266);
b. Lim vs DBP 700 SCRA 210 (2013);
c. Phil. National Bank vs. Manila Investment and Construction, Inc., 38 SCRA 462 [1971]

33. Romulo –
a. Spouses Solangonvs Salazar (GR No. 125944, June 29, 2001);
b. Delos Santos vs Metropilitan Bank and Trust Company 684 SCRA 410 (2012);
c. Dy, Jr. vs. Court of Appeals, 198 SCRA 826 [1991]

34. Sablan –
a. Private Development Corporation of the Philippines vs IAC (213 SCRA 282);
b. United Coconut Planters Bank vs Spouses Beluso 530 SCRA 567 (2007);
c. Servicewide Specialists, Inc. vs. Intermediate Appellate Court, 174 SCRA 80 [1989]

35. Tan –
a. BPI vs Court of Appeals (51 SCRA 188, May 10, 1994);
b. Hi- cement Corporation vs Insular Bank of Asia and America 534 SRA 269 (2007);
c. Filipinas Marble Corp. vs. Intermediate Appellate Court, 142 SCRA 180 [1986]
36. Tiunayan –
 a. CA Agro-Industrial Development Corp. vs CA(March 3, 1993);
b. BPI Family Savings Bank, Inc. vs Vda. De Cosculluela 493 SCRA 472 (2006);
c. Serra vs. Rodriguez, 56 SCRA 538 [1974]

37. Vino –
a. Southern Motors vs Barbosa (99 Phil 263);
b. Floresca vs Lindo Jr. 648 SCRA 772;
c. Dizon vs. Gaborro, 83 SCRA 688 [1978)

38. Yanson –
a. South City Homes, Inc. vs BA Finance Corp. (GR No. 135462, December 7, 2001);
b. Maglaque vs Planters Development Bank 307 SCRA 156 (1999);
c. Malayan Bank vs. Lagrama, 357 SCRA 429 [2001]

39. Zeta –
a. Asiatic Petroleum vs Hizon (45 Phil 534);
b. Phil Veterans Bank vs Monillas 550 SCRA 252 (2008);
c. St. Dominic Corp. vs. Intermediate Appellate Court (151 SCRA 577 [1987])

CA-G.R. CV 33842; Presiding Justice Nathaniel P. De Pano, Jr., ponente; Associate Justices
i[1]
Artemon de Luna and Ramon U. Mabutas, Jr. concurring; Annex A, Petition; Rollo, 48.

ii[2] Petition, 3; Rollo, 30.

Zulueta, et al. vs. Pan American World Airways, Inc., L-28589, February 29, 1972, 43
iii[3]
SCRA 397.

iv[4] Rollo, 52-57.

v[5] Ibid., 54.

vi[6] Ibid., 57.

vii[7] Ibid., 52.

viii[8] Ibid., 58.

Sibal vs. Notre Dame of Greater Manila, et al., G.R. No. 75093, February 23, 1990, 182
ix[9]
SCRA 538.

x[10] G.R. No. 77011, July 24, 1990, 187 SCRA 763.

xi[11] Philtranco Service Enterprises, Inc., et al. vs. CA, et al., G.R. No. 120553, June 17, 1997.

xii[12] National Power Corporation, et al. vs. CA, et al., G.R. No. 113103, June 13, 1997.
xiii[13] Meneses, et al. vs. CA, et al., G.R. No. 82220, July 14, 1995, 246 SCRA 162.

xiv[14] G.R. No. 97412, July 12, 1994, 234 SCRA 78.

Korean Airlines Co., Ltd. vs. Court of Appeals, et al., G.R. No. 114061, August 3, 1994,
xv[15]
234 SCRA 717.