JOSE O. BARRIOS (DECEASED) (SUBSTITUTED BY SON JOSELITO BARRIOS), PETITIONER, VS. COURT OF APPEALS, HERACLEO B. VILLACIN, JR. AND VICENTE B. VILLACIN, RESPONDENTS.

Appeal by certiorari to review the Decision of the
respondent Court of Appeals^[1]
in CA-G.R. No. 38142-R entitled “Jose O. Barrios versus Heracleo B. Villacin, Jr. and
Vicente B. Villacin” and from its order denying
the motion for reconsideration of the petitioner.

Originally, there were two (2) cases appealed to the Court of
Appeals:  1.  CA-G.R. No. 38138-R (Civil Case No. 223)
entitled “Jose O. Barrios v. Apolonia Vda. de Alegre, et al.,”;
and 2.  CA-G.R. No. 38142-R (Civil Case
No. 229) entitled “Jose O. Barrios v. Heracleo
B. Villacin, Jr. and Vicente Villacin.”
Both are ordinary actions for the recovery of possession of a parcel of land,
damages and attorney’s fees originating from the Court of First Instance of Negros Occidental where they were tried jointly on the
ground that the land in controversy is the same, although different portions
thereof were respectively claimed by the two (2) sets of defendants, and the
issues raised therein are identical.

In a decision dated May 12, 1966 as modified on June 16, 1966,
the trial court found the defendants in the said two cases as possessors in bad
faith and ordered them to vacate the premises and to pay the plaintiff
(petitioner herein) damages, which in the case of the present respondents is
the sum of P18,000.00 per year from 1964 until they vacate the property.

On appeal by both the defendants, the Court of Appeals, in a
decision dated May 15, 1970,
affirmed the findings of the trial court in Civil Case No. 223 entitled
“Jose Barrios v. Apolonia Vda.
de Alegre, et al.” dec­laring the defendants
possessors in bad faith, but reversed that in Civil Case No. 229 entitled
“Jose O. Barrios v. Heracleo B. Villacin, Jr. and Vicente Villacin.”
The Appellate Court now found the respondents Villacins
possessors in good faith and ordered the petitioner to exercise the options
available to him under Article 448 of the New Civil Code, that is, either to
appropriate the improvements introduced by the said defendants on the area in
controversy and to pay the value thereof in the amount of P22,000.00, or to
compel these defendants (respondents herein) to pay the reasonable price of
that area.

Petitioner now comes to Us seeking the review only of the
decision of the Court of Appeals in CA-G.R. No. 38142-R (Civil Case No. 229).

In said Civil Case No. 229 entitled “Jose O. Barrios v. Heracleo B. Villacin, Jr. and
Vicente B. Villacin,” the following facts
appear:

A certain Lorenza Montaño
was the original registered owner of a large tract of land with an area of
188,212 sq. meters, more or less, situated in Barrio Mabini,
Cadiz, Negros
Occidental.  Her ownership was evidenced
by Original Certificate of Title No. F-1670 entered under her name pursuant to
Free Patent V-4415 issued to her on June
13, 1956.

However, prior to March
25, 1960, the area in controversy was part of the forestal zone.  This
notwithstanding and before its release from the forestal
zone, a certain Graciano Lamis
entered the same and from then on, was known to be in continuous and
uninterrupted possession and occupation thereof, continuing the cultivation of
the land begun by the Alegres (defendants in Civil
Case No. 223).  On March 25, 1960, that area was released from the forestal zone and declared part of the disposable patrimony
of the State.

On September 6, 1962,
Lorenza Montaño sold her
land to the petitioner herein as a consequence of which her Original
Certificate of Title was cancelled and in lieu thereof Transfer Certificate of
Title No. T-33012 was issued in the name of petitioner, Jose O. Barrios, by the
Register of Deeds of Negros Occidental.

On March 27, 1963,
Graciano Lamis sold his
rights over the area in controversy to a certain Virgilio
Butaz. 
However, on March 5, 1964, Lamis repurchased
the same from Butaz, and on the same day, Lamis sold all his rights and interests in the controverted area and all the improvements found therein to
respondents Villacins, the sale being unsupported by
any kind of evidence of title of the vendor, Lamis.

Meanwhile, petitioner received information that his land was
being sold by one Valentine Botas, whom he
erroneously thought to be the vendor, to Mayor Heracleo
Villacin, Sr. of Cadiz
City and the father of herein
respondents.  On March 31, 1964, petitioner thru his lawyer, sent
a letter to Mayor Villacin informing the latter of
the true ownership of the land, to wit,

“Bacolod City

March 31, 1964

The Honorable

Mayor Heracleo
Villacin

Cadiz,
Negros Occidental

Dear Mayor Villacin:

Last week, my client Mr. Jose O. Barrios informed me that he
received an information that you bought from a certain Valentine Botas a piece of land located at Barrio Mabini,
Cadiz, Negros
Occidental.  That incidentally, the land
sold to you by this person who professes to be the owner thereof is Lot No. 209
covered by Transfer Certificate of Title No. T-33012 issued in the name of my
client, Mr. Jose O. Barrios.  Hence this
letter.

To protect your rights and interest, I suggest that you make an
inquiry from the Office of the Register of Deeds, Bacolod City,
about the description and ownership of the property sold to you by this
Valentine Botas. 
Otherwise, you will be left holding an empty bag.

I am sending you a photostatic copy of
Transfer Certificate of Title No. T-33012 issued in the name of Mr. Barrios to
help guide you in deter­mining whether the land sold to you by Mr. Valentine Botas located at Barrio Mabini,
Cadiz, is the very one described therein or not.  May you be guided accordingly.

Yours truly,

(SGD.)
RAYMUNDO M. LOZADA, JR.”

(p. 14, Rollo, Exhibit B)

Despite this letter, the mayor’s men using
tractors bearing the mayor’s initials, entered and occupied, on April 7, 1964,
nine (9) hectares of the middle portion of the petitioner’s property and
threatened petitioner’s encargado, Bienvenido Cartagena with bodily
harm unless he vacates the premises.

On April 15, 1964,
another letter was sent by the petitioner reiterating his ownership and
demanding that the mayor vacate the premises, to wit:

“Bacolod City

April 15, 1964

The Honorable

Mayor Heracleo
Villacin

Cadiz,
Negros Occidental

Dear Mayor Villacin:

I have been informed by Mr. Jose O. Barrios that his land situated
at Barrio Mabini, Cadiz,
Negros Occidental, is being worked by your men with
the use of two tractors.  This is
lamentable because notwithstanding my letter to you dated March 31, 1964, in which you were fully apprised
of the ownership of the land as evidenced by Transfer Certificate of Title No.
T-33012 issued in the name of Mr. Jose O. Barrios, you persisted in forcibly
entering the place with intent to gain. 
Consequently, this is manifestly an act done in bad faith.

Please consider this letter as a demand to vacate the premises
immediately and to return to the owner the peaceful possession and occupation
thereof.  We will be expecting your wise
judgment to guide you in this matter before we will be forced, much to our
regret, to invoke the law to protect the rights and interests of our client.

Yours truly,

(SGD.)
RAYMUNDO M. LOZADA, JR.”

(p. 15, Rollo, Exhibit C)

There being non-compliance with said demand, petitioner
filed.  Civil Case No. 472 before the
Municipal Court against the Mayor for forcible entry.  The inferior court dismissed the complaint
upon agreement of the parties and for the purpose of filing the proper pleading
before the competent court; and on July 16, 1965, petitioner filed Civil Case
No. 229 in the Court of First Instance of Silay City,
Negros Occidental against Mayor Villacin,
the complaint later amended to include the sons of the Mayor, Heracleo Jr. and Vicente, as the real defendants.

In his brief, petitioner makes the following assignment of
errors, to wit:

I.   The Court of Appeals erred in holding the
respondent buyers and possessors in good faith of the land in dispute.

II.  The Court of Appeals erred in ordering
petitioner to exercise the option under Article 448 of the New Civil Code
either by appropriating the improvements introduced by the respondents or to
compel them to pay the price of the land.

III. The Court of
Appeals erred in disregarding the letters sent to respondent’s father, Mayor Heracleo Villacin advising him of
the ownership of the land in dispute.

After perusal of this assignment of errors and considering that
all are closely related, We deem that the lone issue presented to Us is whether
or not the Court of Appeals was correct in interpreting the facts and
circumstances attending the possession of the Villacins
of the area in question as constituting possession in good faith.

At the very outset, We must hold that there is no merit to the
contention of the respondents Villacins that the
aforesaid issue is a question of fact, the finding of the Court of Appeals
being binding on this Court.  True,
except for some exceptions, findings of facts made by the Court of Appeals are
conclusive on this Court.  But in the
case at bar, whether or not the facts, as found by the Court of Appeals, are
constitutive of possession in good faith or possession in bad faith, is a
question of law which may properly be brought before Us.

The Court of Appeals in imputing good faith to respondents Villacins declared, and We quote:

“Consequently, considering that portion B of the plan Exhibit
F had been in the possession of Graciano Lamis publicly and continuously since time immemorial,
without anyone disturbing him in his possession, and considering further that
this particular parcel was released from the forestal
zone only on March 5, 1960, defendants Villacins had
certainly no reason to suspect that such land could have been included in the
free patent of Lorenza Montaño
issued in 1956.  Under these circumstances,
when they bought the rights of Lamis over that land
on March 5, 1964, they must
have done so in good faith.  This is
especially so in view of the fact that the evidence has not clearly proved the
bad faith of said defendants.”

(p. 38, Rollo)

We do not agree.  Several
facts, as disclosed by the records and taken together, are reasonably
suspicious to have put the respondents Villacins in
inquiry as to the alleged rights of the vendor, Lamis,
over the area in controversy.

Firstly, when respondents bought the land from Lamis, the latter could not and did not at any time produce
any title or application to said land.

Well settled is the rule that,

“The law protects to a greater degree a purchaser who buys
from the registered owner himself.  Corollarily, it requires a higher degree of prudence from
one who buys from a person who is not the registered owner, altho
the land object of the transaction is registered.  While one who buys from the registered owner
does not have to look behind the certificate of title, one who buys from one
who is not the registered owner is expected to examine not only the Certificate
of Title but all factual circumstances necessary for him to determine if there
are any flaws in the title of the transferor, or in his capacity to transfer
the land.”^[2]

If such a degree of prudence is required of a purchaser of
registered land from one who shows a Certificate of Title but who appears not
to be the registered owner, more so should the law require the utmost caution
from a purchaser of registered land from one who could not show any title nor
any evidence of his capacity to transfer the land.  Failing to exercise caution of any kind
whatsoever, as in the case of the respondents Villacins,
is tantamount to bad faith.

Secondly, petitioner sent letters to the father of the
respondents informing him of the true ownership of the aforesaid land.  The Court of Appeals in disregarding this
fact said, to wit:

“The registered letter dated March 31, 1964 xxx is not proof that herein defendants Villacins were also apprised of the information supposedly
given by said plaintiff to the Mayor.  It
will be observed that Mayor Villacin is not a party
to this case and is a person different from the herein two defendants Villacins.  Moreover,
such advise, was given after defendants Villacins had
already bought the rights of Lamis over the controverted area on March
5, 1964.”

(p. 21, Rollo)

We deem this untenable.  In
the normal course of daily life, it is very probable, if not decidedly certain,
that sons and father had occasion to talk about the aforesaid letters
containing this information.  It must be
noted that it was never controverted in the trial
that men of the mayor entered the premises of the petitioner and that land
tractors bearing the initials of the mayor were used.  This being so, the mayor had knowledge that
his sons bought the land and it is difficult for Us to imagine that he withheld
the information of the true ownership of the land from his sons, unless he was
not acting in their interest, which is quite remote.  Learning of this information, the more must
We require of the respondents that exercise of prudence required by law in
inquiring as to the status of the land they bought.  But instead, they did nothing but took
possession of the land and started planting sugar cane thereon.  Of a case similarly situated, the Supreme
Court ruled:

“Defendant’s bad faith began after the warning given in a
letter by the plaintiff’s daughter in March 1909, for after having received it,
she then had ground to doubt that Sotera and Juan Caño could transfer any title of possession in the
following December.”^[3]

Thirdly, respondents herein knew of the case of forcible entry
brought by petitioner against their father, Mayor Villacin,
Sr., under the impression that the latter was the vendee.  Such knowledge was a warning to them that the
land they bought is subject to the claim of other parties, but again they
continued in their possession of the land and planting thereon.

Considering these facts, We are constrained to hold that the
respondents cannot now come to this Court claiming the benefit of being
purchasers of registered land in good faith.

Art. 526 of the New Civil Code is clear.

‘”Art. 526:  He is
deemed a possessor in good faith who is not aware that there exists in his
title or mode of acquisition any flaw which inva­lidates it.

He is deemed a possessor in bad faith who possesses in any case
contrary to the foregoing.”

In interpreting the above quoted provision, We have repeatedly
ruled that if circumstances exist that require a prudent man to investigate,
and he does not, he is deemed to have acted in mala
fide.  A party’s mere refusal to
believe that a defect exists or his willful closing of his eyes to the
possibility of the existence of a defect in his vendor’s title will not make
him an innocent purchaser for value, if it afterwards develops that the title
was in fact defective.^[4]
Similarly, a buyer of registered land who fails to act with the diligence of a
prudent man cannot be a purchaser in good faith.^[5]

Lastly, as a special defense in the proceedings below,
respondents Villacins alleged the non-efficacy and
nullity of the title of Lorenza Montaño
from which the title of the petitioner stemmed. 
We need not pass upon this.  The
Court of Appeals is correct in holding that this is a collateral attack on a
Torrens Title which under our laws and estab­lished jurisprudence is not
permitted and cannot be legally done.^[6]

Premises considered, We now apply Art. 449, 450, 451 and 452, New
Civil Code.

Art. 449.  He who builds,
plants or sows in bad faith on the land of another, loses that is built,
planted, or sown without right to indemnity.

Art. 450.  The owner of the
land on which anything has been built, planted or sown in bad faith may demand
the demolition of the work, or that the planting or sowing be removed, in order
to replace things in their former condition at the expense of the person who
built, planted or sowed; or he may compel the builder or planter to pay the
price of the land and the sower the proper rent.

Art. 451.  In the cases of
the two preceding articles, the landowner is entitled to damages from the
builder, planter or sower.

Art. 452.  The builder,
planter, or sower in bad faith is entitled to
reimbursement for the necessary expenses of the preservation of the land.

As the records show that the Villacins
planted sugar cane which is harvested every crop year and, therefore, cannot be
considered as a necessary expense for the preservation of the land, they are
not entitled to any such reimbursement of amount expended by them.

The records also indicate that the parties, at the pre-trial
hearing, agreed to the payment of liquidated damages to the prevailing party
the amount of P18,000.00 per year until the final adjudication of the case
(Record on Appeal, pp. 37-38), which the trial court incorporated in its
modified Decision dated June 16, 1966, ordering the Villacins
to pay liquidated damages of P18,000.00 per year beginning 1964.  (Record on Appeal, pp. 84-90).  We hold that the amount agreed as liquidated
damages, complies with Art. 451 of the New Civil Code.

WHEREFORE, the decision of the Court of Appeals is
reversed and another one is entered declaring the Villacins
to be purchasers and possessors in bad faith without right to indemnity to that
built, planted or sown by them on the land, further ordering said respondents
to restore possession of the land to the petitioner and to pay to the
petitioner liquidated damages in the amount of P18,000.00 per year beginning
1964 until the time said land is restored to the possession of the
petitioner.  The respondents Villacins shall also pay the petitioner the amount of
P3,000.00 for and as attorney’s fees plus costs.  The Villacins‘
liability under this judgment is declared joint and several.

SO ORDERED.

Teehankee, (Chairman), Makasiar, Muñoz Palma, Martin, and Fernandez, JJ., concur.

^[1]
Special Third Division, penned by Justice Jose B. Rodriguez, concurred by
Justices Nicasio A. Yatco
and Manuel P. Barcelona.

^[2] Revilla v. Galindez, 107 Phil.
480 (1960)

^[3]
Ortiz v. Fuentebella, 27 Phil. 537 (1914)

^[4]
Leung Lee v. Strong, 37 Phil. 644 (1918)

^[5]
RFC v. Javillonar, 107 Phil. 664 (1960)

^[6] Lagunia v. Valsoby, 31
Phil. 390 (1915); Domingo v. Ongsisko et al.,
55 Phil. 390 (1930); Sorsogon v. Makalintal, L-1692, February
24, 1948, 45 O.G. 3819; Baldoz v.
Papa, et al., L-18150, July 30, 1965;
Malaguit v. Alipio
et al., L-18596, September 30, 1964.