BISHOP OF CALBAYOG, Mons. Miguel F. Acebedo, applicant-appellant, vs.THE DIRECTOR OF LANDS and THE MUNICIPALITY OF CATARMAN, SAMAR, oppositors-appellees.

MAKALINTAL, J.:p

This is an appeal from the decision of the Court of First Instance of Samar in Land Registration Case No. 3448 involving three parcels of land located in Catarman, Samar (denominated as Lots 1, 2 and 3), titles to which were sought to be confirmed and registered in favor of the Bishop of Calbayog. The lower court adjudicated Lot 2 in favor of the Municipality of Catarman and declared the eastern portion of Lot 1, and the portions of Nalazon street and Anunciacion street traversing said Lot 1 and Lot 2, as public plaza and public thoroughfares, respectively, and hence not subject to registration.

The petition for registration was filed by the Bishop of Calbayog, as a corporation sole, on March 27, 1953, alleging open, continuous, exclusive and notorious possession, since the Spanish regime, of three parcels of land known as Lot 1 and 2 in the survey plan Exhibit D, dated September 14-15, 1951, and Lot 3 in the survey plan Exhibit E, the first two lots situated in the poblacion of Catarman, Samar, and the third in barrio Cawayan.

Opposition to the application was filed by the Director of Lands with respect to the three lots on October 1, 1953, and by the Municipality of Catarman with respect to Lot 2 during the survey thereof.

On October 15, 1955 the lower court issued an order of general default except as against the aforementioned oppositors. In the same order the Municipality of Catarman was given 5 days from notice within which to submit in proper form its opposition with respect to Lot 2. Copy of the order of general default was received by the municipal secretary on October 18, 1955, and on October 21 the Municipality of Catarman filed its formal opposition as ordered. On November 28, 1956 it filed an amended opposition, including therein the eastern portion of Lot 1 and portions of Nalazon street and Anunciacion street traversing said Lot 1. A second amended opposition was filed on June 15, 1957, particularly describing Lot 1 and Lot 2 and alleging that the eastern portion of Lot 1, being a municipal plaza, was registrable in favor of the municipality.

After initial hearing the lower court, in an order dated June 15, 1957, denied the amendment on the ground that the proper procedure, which was by means of petition for relief from the order of general default, had not been resorted to.

After trial on the merits the lower court rendered its decision on April 18, 1964 (1) ordering the applicant to segregate from Lot I Nalazon street and Anunciacion street as public thoroughfares and the eastern portion of Lot 1, beginning from Nalazon street up to Mendiola street, as public plaza of the Municipality of Catarman; (2) confirming the imperfect title of the applicant over the remaining portion of Lot 1, with all the improvements existing thereon, and ordering that the same be registered in the name of the Bishop of Calbayog as a corporation sole; (3) adjudicating Lot 2, together with all the improvements existing thereon, except the portion of Nalazon street along the eastern boundary of the lot, in favor of the Municipality of Catarman; and (4) confirming the applicant's title over Lot 3 and ordering that the same be registered in the name of the Bishop of Calbayog.

The Bishop of Calbayog appealed.

The evidence discloses the following pertinent facts: The survey plan presented by the applicant as Exhibit D, which was executed on September 14-15, 1951, shows that the entire area of Lot 1 is 17,571 square meters, more o less. It is bounded on the north by a provincial road (now Rizal St.), on the east by Mendiola St., on the south by Bonifacio St., and on the west by a national road (Trece Martires del 1900 St.). Opposite Lot 1 to the northwest is Lot 2, which has an area of approximately 4,707 square meters. It is bounded by the provincial road (Rizal St.) on the south, on the west by the national road (Trece Martires del 1900 St.), on the north by Blumentrit St. and on the east by a municipal lot.

The survey plan does not contain any other information or markings. But from the undisputed actual observation by the lower court as well as from the description given by the witnesses for both parties, Nalazon St., which traverses the entire length of the poblacion from south to north, crosses Jacinto and Real streets and cuts across Lot 1 from Bonifacio St. to Rizal St., passing immediately in front of the church and the convent. It extends across Lot 2 along its eastern boundary from Rizal St. to Blumentrit St. Thus, from actual observation Lot 2 appears bounded on the east by Nalazon St. and not by the municipal lot as described in the survey plan. With respect to Lot 1, Nalazon St. divides the lot into the western portion, which forms about 2/3 of the entire area, and the eastern portion which comprises the other 1/3. All the permanent improvements on Lot 1, which include the Roman Catholic church, the belfry and convent, the St. Michael Academy building and a nun's residence, are found on the western portion. Lot 2 has no permanent improvements. The eastern portion of Lot 1, the area in contention, is an empty space except for concrete benches along the perimeter. A partly cemented path runs across this lot from east to west leading up to the front or entrance of the church and appears to be an extension of Anunciacion St., which runs from the bank of the Catarman river up to Mendiola St. In the middle of this path, half-way between Mendiola St. and the church, is a statue of the Sacred Heart of Jesus.

The Roman Catholic Church relies on the testimony of its witnesses to prove its ownership. Mariano Singzon, 59 years old and one-time municipal councilor of Catarman and also counsel in this case for the applicant, was the principal witness. The following is his testimony: Prior to 1910 the portions of Nalazon and Anunciacion streets traversing Lot 1 and Lot 2 were merely trails used by the parishioners in going to and from the church. A retracing (Exhibit M) of a survey plan of the poblacion of Catarman executed in 1909 shows that Anunciacion St. stopped at Calle Garfil (now Mendiola St.) and that there was no other street traversing Lot 1. According to Atty. Singzon, Nalazon St. was opened and improved by the municipality sometime in 1910 or 1911. Anunciacion St. was opened only about 2 years before the trial of the case. In 1920, the municipality planted acacia trees on both sides of Nalazon St. inside Lot 1 and along Mendiola St. bordering Lot 1 but these trees were recently cut down upon order of the priest, Fr. Ricalde, and all that remain are stumps. The statue of the Sacred Heart found in the middle of Anunciacion St. was put up in 1927, but the base of the statue had been standing on that site even before 1905. The Roman Catholic Church had made no improvements on this eastern portion of Lot 1, which at present is being used as a public playground, although a bandstand stood there for about three years after it was constructed in 1926 by the members of an orchestra which was organized by a Fr. Ranera and which used to give musical performances on the bandstand. On the feast of Corpus Christi the parishioners would construct an altar on this lot and hold the procession there.

With respect to Lot 2, although the Church had made no improvements thereon, around the turn of the century there were camarins on this lot which were used as stables for the horses and cows owned by a

1Yumi- cases LTD

Fr. Troquillo. In 1933 the municipal council passed a resolution (Exhibit G) asking the Bishop of Calbayog, then Mons. Hacbang, to donate a small portion of this lot for the construction of a monument in honor of the Trece Martires del 1900, but this request was denied by the Bishop. Gonzalo Olmedo, the municipal secretary of Catarman in 1933 whose signature appears on Exhibit G, testified as to the authenticity of the resolution and even pointed to the western portion of Lot 2 as the subject matter of the request. Mons. Desoloc, who acted as private secretary to the Bishop at that time, testified that the writing on the lower right hand corner of Exhibit G, which reads "cont. negativ" is the handwriting of the Bishop and was meant to impart an order that the request contained in the resolution be denied. In 1949 Mayor Eusebio Moore of Catarman and Fr. Ortega asked him, Atty. Singzon, to draft a contract of exchange between Lot 2 and a lot owned by the municipality, but the exchange did not materialize because the lot intended to be bartered by the municipality had no title, although he (the witness) found a copy of a tax declaration (Exhibit F) for Lot 2 dated May 8, 1948 in the name of the Roman Catholic Church. This tax declaration describes Lot 2 as being bounded by Trece Martires del 1900 on the west, Nalazon St. (instead of the municipal lot as described in Exhibit D) on the east, Blumentrit St. on the north and Rizal St. on the south.

The testimony of Atty. Singzon was corroborated by Candido Franzuela, a 63 year-old resident of Catarman and brother of Fr. Franzuela of the same municipality as well as Salvadora Olmedo, an 82 year-old local resident, who died after giving her direct testimony. Franzuela confirmed the existence on Lot 2 of camarins used as stables for the cattle owned by the church. He remembered that sometime in 1927 a group of Chinese asked permission from the parish priest to use the lot as a football ground, which they did for 2 years. On cross-examination he admitted that before Nalazon St. was extended there was no visible boundary between Lot 2 claimed by the Church and the municipal lot on which a public school building used to stand. Salvadora Olmedo also testified that when she was yet schooling a certain Fr. Troquillo had camarins on Lot 2 which he used as stables for his cows and horses and that whenever she and her classmates wanted to gather flowers on this lot they asked permission from the priest.

The case for oppositors was presented by the following witnesses:

1. Martin Evangelista, 65 years old and former municipal treasurer of Catarman, declared that as property custodian of the municipality before his retirement, he knew that Lot 2 was owned by the municipality. This lot was fenced by the municipality first with bamboos and then with barbed wire because the municipal prisoners were planting camotes on this lot. On February 21, 1952 Fr. Franquela personally handed to him a letter (Exhibit 1) asking that he be allowed to use a portion of Lot 2 as playground for the students of St. Michael Academy. He endorsed the letter to the municipal council of Catarman, which passed Resolution No. 19 (Exhibit 3), declaring Lot 2 as temporary public playground until such time that the municipality was ready to construct a permanent improvement thereon.

2. Eusebio Moore, 54, mayor of Catarman since 1948, declared that Lot 2 was owned by the municipality because when he was in the elementary grades he attended classes in a public school building located on the municipal lot next to Lot 2 and did school gardening on Lot 2. When he was in Grade 6, as leader of the school football team he invited the Chinese team to play and he was the one who asked permission from the municipal president to use Lot 2 as their football ground. When he assumed office in 1948 he had the lot fenced and planted to fruit trees and during fiestas temporary sheds would be put up for rent to itinerant merchants. It was Fr. Ortega who went to see him in 1949 regarding the fencing of Lot 2 by the municipality and together they discussed the matter with Atty. Singzon, the lawyer for the Church, and the latter suggested to him that Lot 2 be exchanged with another lot owned by the municipality and

he replied that it was up to the municipal council to decide. In 1950 he had the lot declared for taxation purposes. The tax declaration (Exhibit 5) covers the entire area of Lot 2 claimed by the applicant as well as the uncontested municipal lot, from Trece Martires del 1900 on the west to Mendiola St. on the east, Blumentrit St. on the north and Rizal St. on the south. This tax declaration was marked on the reverse side as newly issued because according to him the old tax declaration could not be located as the public records had been destroyed during the war. Mayor Moore denied the authenticity of Resolution No. 19 (Exh. G) sent by the municipal council to the Bishop in 1933 on the ground that the document is in Spanish, language not spoken either by the municipal secretary who certified as to the correctness of the resolution or by the municipal president, who supposedly dictated its text. The witness produced the affidavits of Pelayo Saldo, municipal councilor in 1933 and one of those listed as present when the resolution was taken up, to the effect that Lot 2 is owned by the municipality. He also produced a similar affidavit executed by Antonio Oladive, a former municipal president of Catarman. To further buttress the municipality's position the mayor produced a letter dated February 29, 1952 by Matias Rodriguez, representing the Northern Samar Academy, requesting that Lot 2 be used as playground for the school. The mayor disclosed that he, the mayor, had been president of the Northern Samar Academy. Nalazon St. and Anunciacion St., according to Mayor Moore, are cleaned and maintained by the municipality. With respect to the eastern portion of Lot 1 the same had always been regarded as owned by the municipality because the municipal building used to face this lot, although when he assumed the office of Mayor he had the backyard of the municipal building improved and the stairway transferred there.

3. Gaudencio Camposano, a 75 year-old resident of Catarman, testified that a bandstand was constructed on the eastern portion of Lot 1 in 1905 and it was not only the orchestra organized by Fr. Ranera that used to play there but also the municipal band. He also testified that when he was attending school in 1905 the school garden was located inside Lot 2, which he believed to be in the possession of the municipality because nobody owned it and when he became acting mayor he required the prisoners to clear Lot 2 and had it planted to camotes and bananas.

The conclusion that may be drawn from the evidence on record is that Lot 2, called the "town plaza" by oppositor, is a public plaza and that Nalazon St., traversing Lot I and Lot 2, is a public thoroughfare and should therefore be excluded from the application for registration filed by the Church.

Admittedly Nalazon St. was originally merely a trail used by the parishioners in going to and from the church. But since 1910, when it was opened and improved as a public thoroughfare by the municipality, it had been continuously used as such by the townspeople of Catarman without objection from the Church authorities. The acacia trees along both sides of the street were planted by the municipality in 1920, although these trees were cut down recently upon order of the priest. There is no proof that the Church merely tolerated and limited the use of this street for the benefit of its parishioners, considering that the street traverses the entire length of the poblacion from south to north and that Lot 1, on which the church stands, is located almost at the center of the poblacion. The street does not stop on Lot I but extends north toward the sea, passing along the lot occupied by the Central Elementary School and the Northern Samar General Hospital. Thus it is clear that Nalazon St. inside Lot 1 is used by the residents not only in going to the church but to the public school and the general hospital north of Lot 1.

With respect to Lot 2, there is no evidence that either the Church or the municipality exercised clear acts of ownership or of exclusive possession over this lot. It is true that there were witnesses who testified that around the turn of the century there were camarins inside this lot used as stables for the horses and cows owned by a Fr. Troquillo. But these witnesses likewise testified that this lot had been used also as a

2Yumi- cases LTD

playground as well as a school garden by the students of the public school located on the adjoining municipal lot. This lot still serves as a public playground up to the present. The municipality also makes use of this lot during town fiestas by constructing temporary sheds which are rented to itinerant vendors. In 1949 the municipality constructed a fence around this lot because the prisoners planted it to camotes. The Church, however, objected to the putting up of the fence.

All these facts only show that neither the Church nor the municipality possessed Lot 2 exclusively. While it may be true that as late as 1933 the municipality acknowledged the ownership of the Church over Lot 2 and in 1949 the Church declared this lot for tax purposes, the continuous use thereof enjoyed by the residents of Catarman is admitted by all the witnesses. Thus, even the witness for the applicant testified that the Church had made no improvements on Lot 2 and that the same had been used primarily as playground for schoolchildren. The municipality stands on the same footing as the Church. The tax declaration in its name was issued only in 1950, when the present dispute was already imminent. The letters of Fr. Franzuela and Mr. Matias Rodriguez asking permission to use this lot as a playground are not proof of municipal ownership, since after all the municipal government may be considered the administrator of public property, that is, property for public use.

In the case of Harty vs. Municipality of Victoria, 13 Phil. 152, involving the question as to the ownership of a parcel of land which surrounded the parish church of the town, this Court said:

Even though all the remaining space of land which now forms the great plaza of the town of Victoria had been owned by the said Tañedo, it must be presumed that he waived his right thereto for the benefit of the townspeople, since from the creation or establishment of the town, down to the present day, all the residents, including the curate of said town, have enjoyed the free use of said plaza.

xxx xxx xxx

That both the curates and the gobernadorcillos of said town procured fruit trees and plants to be set out in the plaza, does not constitute an act of private ownership, but evidences the public use thereof, or perhaps the intention to improve or embellish the said plaza for the benefit of the townspeople.

xxx xxx xxx

Certain it is that the plaintiff has not proven that the Catholic Church or the parish of Victoria was the owner or proprietor of the said extensive piece of land which now forms the public plaza of said town, nor that it was in possession thereof under the form and conditions required by law, inasmuch as it has been fully proven that said plaza has been used without let or hindrance by the public and the residents of the town of Victoria ever since its creation.

Since neither the Church nor the municipality could present positive proof of ownership or exclusive possession for an appreciable period of time and the only indubitable fact is the free and continuous use of Lot 2 by the residents of Catarman, coupled with the fact that the town has no public plaza to speak of other than this disputed parcel of land, there is a strong presumption that the same was segregated as a public plaza upon the founding of the municipality of Catarman.

The municipality, as has been heretofore noted, was declared in default with respect to Lot 1, and the default was never lifted. Indeed the amended opposition of the municipality which purported to include the eastern portion of said lot, was denied by the lower court. In any event, the municipality failed to establish its allegation with respect to the said portion of Lot 1 and to the portion of Anunciacion St. within this lot. This portion is only a path which is cemented from the corner of Mendiola St. to the monument of the Sacred Heart, and asphalted from the monument to the front of the church. There is no evidence that this path was planted to acacia trees, unlike Nalazo St. and Mendiola St., where acacia stumps were observed by the lower court. The explanation offered by Mayor Moore as to the presence of this religious monument in the middle of a public thoroughfare that the residents of Catarman are religious is not convincing. The statue was enthroned only in 1927, when the separation of church and state was already a confirmed legal principle. The statue was even recently improved with the construction of a platform beneath it. Its location shows that the path leading to it and to the front of the church is not an extension of Anunciacion St. but was opened mainly for the benefit of the parishioners. The eastern portion of Lot 1 itself is used for religious functions, such as the feast of Corpus Christi and the procession held on the occasion. It is admitted by the municipality that the Church does not ask for a permit whenever it uses this lot for such activities.

On the other hand, there is no evidence that the municipality uses this lot for its official activities to support its claim that this lot is a municipal plaza. The circumstance that the municipal band used to perform weekly on the "kiosko" found on this lot sometime in 1927 does not constitute an act of exclusive possession which could be the basis of a title. Moreover, the "kiosko" stood only for three years and the municipality has not adduced any evidence that it continued to use the lot after the "kiosko" was demolished.

For the foregoing reasons, the appealed decision is hereby modified in the sense that Lot 2, being a public plaza, and Nalazon St., traversing Lot 1 and Lot 2, being a public thoroughfare, are not subject to registration; and that the title of the Bishop of Calbayog with respect to the entire area of Lot 1, except the portion covered by Nalazon St., and to Lot 3, is confirmed and ordered registered in his name, as corporation sole. In all other respects the decision appealed from is affirmed. No pronouncement as to costs.

3Yumi- cases LTD

REPUBLIC OF THE PHILIPPINES, Represented by the DIRECTOR OF LANDS, petitioner, vs.HON. PEDRO SAMSON ANIMAS, in his capacity as Judge of CFI South Cotabato, Branch I, General Santos City, ISAGANI DU TIMBOL and the REGISTER OF DEEDS OF GENERAL SANTOS CITY, respondent.

ESGUERRA, J.:p

Petition to review the order of the Court of First Instance of South Cotabato, Branch I, General Santos City, dated June 22, 1973, dismissing the complaint in its Civil Case No. 1253, entitled "Republic of the Philippines, Plaintiff, vs. Isagani Du Timbol and the Register of Deeds of General Santos City, Defendants", instituted by the plaintiff to declare null and void Free Patent No. V-466102 and Original Certificate of Title (O.C.T.) No. P-2508 based thereon issued in the name of defendant Isagani Du Timbol; to order the aforesaid defendant to surrender the owner's duplicate of O.C.T. No. P-2508 and the defendant Register of Deeds to cancel the same; to decree the reversion of the land in question to the mass of public domain, and granting such further relief as may be just and equitable in the premises.

The land covered by the free patent and title in question was originally applied for by Precila Soria, who on February 23, 1966, transferred her rights to the land and its improvements to defendant Isagani Du Timbol who filed his application therefor on February 3, 1969, as a transferee from Precila Soria.

On December 12, 1969, free Patent No. V-466102 was issued by the President of the Philippines for the land in question, and on July 20, 1970, after transmittal of the patent to the Register of Deeds of General Santos City, Original Certificate of Title (O.C.T.) No. P-2508 was issued in the name of defendant Isagani Du Timbol.

On August 5, 1971, the Republic of the Philippines, at the instance of the Bureau of Forestry, filed a complaint in the Court of First Instance of Cotabato, Branch I, General Santos City (Civil Case No. 1253), to declare free patent No. V-466102 and Original Certificate of Title No. P-2508 in the name of defendant Isagani Du Timbol null and void ab initio and to order the reversion of the land in question to the mass of public domain. The action is based on the ground that the land covered thereby is a forest or timber land which is not disposable under the Public Land Act; that in a reclassification of the public lands in the vicinity where the land in question is situated made by the Bureau of Forestry on March 7, 1958, the said land was plotted on Bureau of Forestry map L.C. 700 to be inside the area which was reverted to the category of public forest, whereas the application for free patent by Isagani Du Timbol was filed on June 3, 1969, or more than eleven years thereafter; that the said patent and title were obtained fraudulently as private respondent Isagani Du Timbol never occupied and cultivated the land applied for.

Invoking the case of Ramirez vs. Court of Appeals (G.R. No. L-28591, 30 SCRA 207-301), holding that a certificate of title fraudulently secured is not null and void ab initio, unless the fraud consisted in misrepresenting that the land covered by the application is part of the public domain when it is not, the respondent court dismissed the complaint on the ground that Certificate of Title based on the patent had became indefeasible in view of the lapse of the one-year period prescribed under Section 38 of the Land

Registration Act for review of a decree of title on the ground of fraud. From this order of June 22, 1973, dismissing the complaint, plaintiff Republic of the Philippines has appealed to this Court for review.

After careful deliberation, this Court grants the petition on the ground that the area covered by the patent and title is not disposable public land, it being a part of the forest zone and, hence the patent and title thereto are null and void.

The defense of indefeasibility of a certificate of title issued pursuant to a free patent does not lie against the state in an action for reversion of the land covered thereby when such land is a part of a public forest or of a forest reservation. As a general rule, timber or forest lands are not alienable or disposable under either the Constitution of 1935 or the Constitution of 1973. Although the Director of Lands has jurisdiction over public lands classified as agricultural under the constitution, or alienable or disposable under the Public Land Act, and is charged with the administration of all laws relative thereto, mineral and timber lands are beyond his jurisdiction. It is the Bureau of Forestry that has jurisdiction and authority over the demarcation, protection, management, reproduction, occupancy and use of all public forests and forest reservations and over the granting of licenses for the taking of products therefrom, including stone and earth (Section 1816 of the Revised Administrative Code). That the area in question is a forest or timber land is clearly established by the certification made by the Bureau of Forest Development that it is within the portion of the area which was reverted to the category of forest land, approved by the President on March 7, 1958. When the defendant Isagani Du Timbol filed his application for free patent over the land in question on June 3, 1969, the area in question was not a disposable or alienable public land but a public forest. Titles issued to private parties by the Bureau of Lands when the land covered thereby is not disposable public land but forest land are void ab initio. In Gatchalian vs. Pavilen, et al., L-17619, Oct. 31, 1962, 6 SCRA p. 508, 512, this Court said:

And if it be true that the Bureau of Lands had no jurisdiction to issue a patent because the land involved was still inalienable forest land when granted, then it may be plausibly contended that the patent title would be ab initio void, subject to attack at any time by any party adversely affected. (Gatchalian vs. Pavilen, et al., L-17619, Oct. 31, 1962, supra, citing Civil Code Arts. 1409 and 1421; Vaño vs. Insular Gov't., 41 Phil. 161; Aderable vs. Director of Forestry, L-13663, March 25, 1960).

A patent is void at law if the officer who issued the patent had no authority to do so (Knight vs. Land Ass., 142 U.S. 161, 12 Sup. Ct., 258, 35L ED. 974; emphasis supplied). If a person obtains a title under the Public Land Act which includes, by mistake or oversight, lands which cannot be registered under the Torrens System, or when the Director of Lands did not have jurisdiction over the same because it is a public forest, the grantee does not, by virtue of said certificate of title alone, become the owner of the land illegally included. (See Ledesma vs. Municipality of Iloilo, 49 Phil. 769)

The case of Ramirez vs. Court of Appeals, G. R. No. L-28591, Oct. 31, 1969, 30 SCRA 297, relied upon by respondent Court in dismissing this case, is not controlling. In that case no forest land was involved but agricultural public land which was first covered by a patent issued to one party and later registered under the Torrens System by the other party. The litigation was between private parties where the party who registered it under Act No. 496 sought the nullity of the title of the patentee under the Public Land Act. In the case at bar the party seeking the nullity of the title and reversion of the land is the state itself which is specifically authorized under Section 101 of the Public Land Act to initiate such proceedings as an attribute of sovereignty, a remedy not available to a private individual.

4Yumi- cases LTD

The complaint alleges in its paragraph 8 that applicant Isagani Du Timbol was never in possession of the property prior to his filing the application, contrary to the provisions of law that the applicant must have been in possession or cultivation thereof for at least 30 years; that the applicant, after diligent search by the Acting Chief of the Survey-Party, Francisco R. Alcones, in South Cotabato, could not be contacted because he is a resident of Davao City; that there are no existing signs of improvements found in the area in question as it is not under cultivation but covered with grasses, bushes and small trees; that it is being used as ranch for grazing cows by the heirs of Hermogenes Chilsot; that no monuments were placed on the area surveyed which goes to show that there was no actual survey thereof; that the property in question is inside the ranch of the heirs of Hermogenes Chilsot under Pasture Lease Agreement No. 1244 and, therefore, inside the forest zone; and that said ranch has a fence around it to show that other persons could not enter and cultivate the same, and that the signature of then Acting District Land Officer Elias de Castro of South Cotabato has been forged to facilitate the issuance of patent in favor of Isagani Du Timbol.

The above alleged circumstances are indicative of fraud in the filing of the application and obtaining title to the land, and if proven would override respondent Judge's order dismissing the case without hearing. The misrepresentations of the applicant that he had been occupying and cultivating the land and residing thereon are sufficient grounds to nullify the grant of the patent and title under Section 91 of the Public Land Law which provides as follows:

That statements made in the application shall be considered as essential conditions or parts of any concession, title or permit issued on the basis of such application, and any false statement thereon or omission of facts, changing, or modifying the consideration of the facts set forth in such statement, and any subsequent modification, alteration, or change of the material facts set forth in the application shall ipso facto produce the cancellation of the concession, title or permit granted. ...

A certificate of title that is void may be ordered cancelled. A title will be considered void if it is procured through fraud, as when a person applies for registration of the land under his name although the property belongs to another. In the case of disposable public lands, failure on the part of the grantee to comply with the conditions imposed by law is a ground for holding such title void (Director of Lands vs. Court of Appeals, et al., G.R. No. L-17696, May 19, 1966, 17 SCRA, 71, 79-80; emphasis supplied). The lapse of the one year period within which a decree of title may be reopened for fraud would not prevent the cancellation thereof, for to hold that a title may become indefeasible by registration, even if such title had been secured through fraud or in violation of the law, would be the height of absurdity. Registration should not be a shield of fraud in securing title. (J. M. Tuason & Co., Inc. vs. Macalindog, L-15398, December 29, 1962, 6 SCRA 938, page 38).

Considering that it is the state is seeking the cancellation of the title of respondent Isagani Du Timbol, said title has not become indefeasible for prescription cannot be invoked against the state. A title founded on fraud may be cancelled, notwithstanding the lapse of one year from the issuance thereof, through a petition filed in court by the Solicitor General, (Sumail vs. Court of First Instance of Cotabato, 51 O.G. p. 2414 Phil. L-8278. 96 Phil. 946: Eugenio, et al., vs. Perdido, et al., G. R. No. L-7083, May 19, 1955; De los Santos vs. Roman Catholic Church of Midsayap G.R. No. L-6088, Feb. 24, 1954, 94 Phil. 405).

Public land fraudulently included in patents or certificates of title may be recovered or reverted to the state in accordance with Section 101 of the Public Land Act (Director of Lands vs. Jugado et al., G.R. No. L-14707, May 23, 1961). Prescription does not lie against the state in such cases for the Statute of

Limitations does not run against the state (Article 1108, paragraph 4 of the New Civil Code). The right of reversion or reconveyance to the state is not barred prescription (Republic of the Philippines vs. Ramona Ruiz, et al., G.R. No. L-23712, April 29, 1968, 23 SCRA 348. People vs. Ramos, G.R. No. L-15484, Jan. 31, 1963, 47 SCRA 12; Government of the Philippines vs. Monte de Piedad 35 Phil. 728; 751-753).

Even granting that the title of private respondent Isagani Du Timbol can no longer be reopened under the Land Registration Act, the land covered thereby may be reconveyed to the state in an action for reconveyance under Section 101 of Commonwealth Act 141 (Public Land Act), for the remedy of reconveyance is adequately covered by the prayer of the complaint for the grant of such other relief as may be just and equitable in the premises.

FOR ALL THE FOREGOING, the order of the respondent court, dated June 22, 1973, dismissing the complaint, and that of September 29, 1973, denying the motion for its reconsideration, both issued in Civil Case No. 1253 of the respondent court, are hereby annulled and set aside. The respondent court shall proceed to hear said Civil Case and render judgment thereon accordingly.

Costs against respondent Isagani Du Timbol.

Ignacio v. Director of Lands[G.R. No. L-12958. May 30, 1960.]First Division, Montemayor (J): 8 concur

Facts: Faustino Ignacio, on 25 January 1950, filed an application for the registration of a parcel of land (mangrove), adjoining a parcel of land that Ignacio has previously acquired from the Government by virtue of a free patent title in 1936, situated in barrio Gasac, Navotas, Rizal, with an area of 37,877 sq.m.. Later, he amended his application by alleging among others that he owned the parcel applied for by right of accretion; the parcel being formed by accretion and alluvial deposits caused by the action of the Manila Bay which borders it on the sourtwest. He also claims that he had occupied the land since 1935, planting it with api-api trees, and that his possession has been continuous, adverse and public for a period of 20 years until said possession was disturbed by Valeriano. To the application, the Director of Lands, Laureano Valeriano and Domingo Gutierrez filed oppositions. Gutierrez later withdrew his opposition. The Director of Lands claimed the parcel applied for as a portion of the public domain, being a foreshore land covered by the ebb and flow of the tide. In his turn, Valeriano alleged that he was holding the land by virtue of a permit granted him by the Bureau of Fisheries, issued on 13 January 1947, and approved by the President. After hearing, the CFI Rizal dismissed Ignacio’s application for the registration of the parcel of land, holding it to form part of the public domain.

The Supreme Court affirmed the appealed decision, with costs.

1. Article 457 NCC does not apply as it covers accretion on banks of riversArticle 457 of the New Civil Code (Article 366, Old Civil Code), which provides that "to the owners of lands adjoining the banks of rivers belong the accretion which they gradually receive from the effects of the current of the waters." This is inapplicable as it refers to accretion or deposits on the banks of rivers, while the accretion in the present case was caused by action of the Manila Bay.

2. Article 1, 4 and 5 of the Law of Waters apply (accretion formed by the sea) as bay is part of the seaArticles 1, 4 and 5 of the Law of Waters are applicable, referring to accretions formed by the sea. Manila

5Yumi- cases LTD

Bay is a part of the sea, being a mere indentation of the same. As defined, bay is an opening into the land where the water is shut in on all sides except at the entrance; an inlet of the sea; an arm of the sea, distinct from a river, a bending or curbing of the shore of the sea or of a lake.

3. Application of Law of Waters on lands bordering Manila Bay; casesThe Supreme Court has in some cases applied the Law of Waters on Lands bordering Manila Bay; such as the cases of Ker & Co. vs. Cauden, 6 Phil., 732, involving a parcel of land bounded on the sides by Manila Bay, where it was held that such land formed by the action of the sea is property of the State; Francisco vs. Government of P.I., 28 Phil., 505, involving a land claimed by a private person and subject to the ebb and flow of the tides of the Manila Bay.

4. Interpretation of Article 4 of the Law of Waters of 1866; Declaration that land is not necessary for purposes of public utility, etc., lies with the executive and possibly the legislative departmentsArticle 4 of the Law of Waters of 1866 provides that when a portion of the shore is no longer washed by the waters of the sea and is not necessary for purposes of public utility, or for the establishment of special industries, or for coastguard service, the government shall declare it to be the property of the owners of the estates adjacent thereto and as an increment thereof. We believe that only the executive and possibly the legislative departments have the authority and the power to make the declaration that any land so gained by the sea, is not necessary for purposes of public utility, or for the establishment of special industries, or for coast-guard service. If no such declaration has been made by said departments, the lot in question forms part of the public domain." (Natividad vs. Director of Lands [CA], 37 OG 2905)

5. Court are not in position to determine if land are used as specified in Article 4 of the Law of WatersThe courts are neither primarily called upon, nor indeed in a position to determine whether any public land are to be used for the purposes specified in Article 4 of the Law of Waters (Vicente Joven y Monteverde v. Director of Lands (93 Phil. 134).

6. Public domain not subject to ordinary prescriptionLand of the public domain is not subject to ordinary prescription. "The occupation or material possession of any land formed upon the shore by accretion, without previous permission from the proper authorities, although the occupant may have held the same as owner for seventeen years and constructed a wharf on the land, is illegal and is a mere detainer, inasmuch as such land is outside of the sphere of commerce; it pertains to the national domain; it is intended for public uses and for the benefit of those who live nearby. (Insular Government vs. Aldecoa & Co., 19 Phil., 505)

THE MUNICIPALITY OF TIGBAUAN, petitioner-appellee, vs. THE DIRECTOR OF LANDS, objector-appellant.

ARAULLO, J.:

In representation of the municipal corporation of Tigbauan, Province of Iloilo, the president of said municipality applied for the registration in the property registry of a tract of land situate within said town, barrio of Supa, and composed of seven parcels described in the application and the plans presented therewith. The application was based on the claim that the municipality had acquired the land by continuous possession since time immemorial, and was opposed by the Director of the Bureau of

Lands, through the Attorney-General in representation of the Government of the Philippine Islands, in so far as concerned the registration of the parcels Nos. 1, 6, and 7, on the ground that the first of these was a public square in the public use of said municipality, and that the other two were property of the Government of the United States under the control and administration of the Government of the Philippine Islands.

The applicant withdrew in favor of the Insular Government its application for the registration of the parcel No. 1, as being a public square of the municipality of Tigbauan, but maintained its claim with respect to the other two parcels, Nos. 6 and 7. The Director of Lands, in representation of the Government, maintained his also. After trial and the introduction of evidence by both parties, the Court of First Instance of Iloilo on April 14, 1915, rendered judgment (subsequently supplemented by an order of the 16th of the same month) in which he held that the application was entitled to the adjudication and registration of the parcels Nos. 6 and 7, together with their respective improvements, and disallowed the adverse claim of the Director of Lands, represented by the Attorney-General, in respect to these same parcels. The objector excepted to this judgment and asked for its annulment and a new trial on the grounds that the judgment and order were contrary to law and to the rule laid down by this Supreme Court in the case of Municipality of Tacloban vs. Director of Lands (18 Phil. Rep., 201), and were unsupported by the evidence.

This motion for a new trial was overruled, the court holding that, in adjudicating the parcels Nos. 6 and 7 to the applicant municipality, he had taken into account sections 38 and 41 of the Code of Civil Procedure, relative to prescription. The objector excepted to this ruling and appealed the case to us, through the proper bill of exceptions. He alleges that the trial court erred in applying to said lots or parcels Nos. 6 and 7 the provisions of sections 38 and 41 of the Code of Civil Procedure, which regulate prescription, and in denying on this account a new trial; and that it likewise erred in decreeing the adjudication and registration of said parcels in favor of the applicant disallowing the adverse claim filed in respect thereto.lawphi1.net

In the applicant's plan, Exhibit A (record, p. 36), and in the one containing a drawing of said two parcels, Nos. 6 and 7, there is a note which reads thus:

The lands around these parcels are public lands. The names of the persons appearing on (the plan of) these parcels are those of the present occupants of the same.

From the testimony of the municipal president of Tigbauan, Constantino B. Benedicto, and from that of a resident of this same municipality, Francisco de Paula Tina, the former 42 and the latter 56 years of age, it appears that, since the time of the Spanish Government, the municipality was wont to gather cane for its own use from the canebreaks growing on said two parcels of land; that it had subsequently planted thereon cañas espinas, which were already yielding product at the time this testimony was given (March, 1915); and that these witnesses had known of these facts ever since their early childhood. They further testified that the municipality's possession of the parcels of land in question had been continuous, and that no one had opposed the same or claimed any right, title or interest in said land. The first of these witnesses, Benedicto, designated the boundaries of the parcel No. 6 as follows: On the north, Francisco Gotera; on the east, Paulo Totay; on the south, Ignacio Totay; and on the west Benito Totay. The boundaries of the parcel No. 7 as being: on the north, public lands; on the southeast, Ignacio Totay; on the southwest, Nicolas Guimbal and public lands; and on the northeast, Francisco Garda.

6Yumi- cases LTD

There is no proof that said parcels were private property at any time prior to the possession mentioned by the two above-named witnesses. They are surrounded by the public lands, as shown by the plan presented by the applicant, and the persons whom one of these witnesses designated as adjacent property owners are mere occupants of the lands situated around the parcels, as also so stated in the plan itself.

Said parcels are public or government lands, as shown by the evidence. It was neither established in the record that this land had been granted by the Government to the municipality of Tigbauan to form a part of its municipal assets or estate; nor that there was erected thereon any building belonging to the municipality and intended for public service, such as might induce the presumption that the land had been granted to the municipality; nor that the latter had used these parcels for recognized public purposes. Therefore, under the rule laid down by this Supreme Court in several decisions, among others the case of Municipality of Tacloban vs. Director of Lands (18 Phil. Rep., 201), it is evident that the applicant municipality cannot be held to be the owner of said two parcels of land or to be entitled to enter them in its name in the property registry.

In the decision above cited the following considerations appears:itc@a1f

The mere fact that a municipality continued to collect revenues or rentals from the residents who occupy any parcel of land comprised within its district is not proof that the said municipality is the proprietor of such realty; at the most, it might be considered to be a usufructuary of the land in question, but without the right to enter it in the property registry.

The benefit granted by section 54 of Act No. 926, for the purpose of fostering agriculture and increasing the wealth of the country, can not be deemed to be granted, according to economic principles, to municipal corporations which, on account of their special conditions, the idiosyncrasy and character of the functions which they exercise, and, because of the administrative mission which they have to fulfill in the name of the Government and in representation of the people who elected them, can not engage in agriculture and other industries nor can they attend to the administration of agricultural land and give particular attention to strictly private business, without serious detriment to the interests of the community.

In another decision of this Supreme Court, in the case of Municipality of Luzuriaga vs. Director of Lands and Roman Catholic Bishop of Jaro (24 Phil. Rep., 193), cited in the aforementioned decision, and also in the case of Municipality of Catbalogan vs. Director of Lands (17 Phil. Rep., 216), we said:

It is apparent from these quotations that, as we have said before, in order that the municipality may rely upon a presume grant from the State in its favor, the land concerning which the grant is to be presumed must have been used by the municipality for the purposes specified in said quotations, namely, to meet a public necessity, and therefore must be land which would have been originally granted by the State for such purposes. In other words, the lands susceptible of this presumption cannot be agricultural or communal lands; they must be lands which the municipality itself can exclusively own, i. e., they must be lands used to meet a public necessity.

The mere facts that during many years the municipality of Tigbauan has been cutting can from the cane brakes which have been growing on said two parcels land from the time of the Spanish Government, and the further fact that it is subsequently planted thereon caña espina trees now yielding product, do not

prove that the municipality is the owner of these parcels, but only that it has been enjoying their usufruct, which does, not give it the right to have them entered as its own in the property registry.

As the property in question is agricultural land, aside from the possible presumption that the government might have granted it to the applicant municipality to enable this latter to meet public needs, it cannot be understood, in accordance with the holding made by this court in the first of the decisions aforecited, that this corporation was accorded the benefits allowed by Act No. 926, section 54, to wit, those of applying to the Court of Land Registration for the confirmation of its claim of alleged right is said parcels and for the issuance of a certificate of title therefore; and consequently neither may said municipality, in order to obtain said title, allege the right of prescription provided for in sections 38 and 41 of the Code of Civil Procedure, for section 55 of Act No. 926 clearly prescribes that all persons claiming title to government lands who do come not within the classes specified in the section 55 are excluded from the benefits of Chapter VI of said Act which comprises these two sections. On the other hand, pursuant to Act No. 648 of the Philippine Commission, the Governor-General is authorized to reserve for public uses the public lands comprised within certain boundaries, whether they belong to the Insular Government or to provincial or municipal governments. This provision unquestionably shows that the municipalities or municipal corporations of these Islands cannot appropriate to themselves public or Government lands without a prior grant from the Government and without reservation in the manner and by the procedure specified in said Act No. 648 and in the Act cited, No. 627. It is also evident that municipalities cannot acquire the ownership of public lands through prescription, as provided in the aforementioned sections 38 and 41 of the Code of Civil Procedure, nor do they need to avail themselves of this means for acquiring the same. Therefore, the trial court erred in taking account of the provisions of the two sections above cited for the purpose of decreeing the adjudication and registration of said parcels of land in the applicant's behalf.

For the foregoing reasons we reverse the judgment and order appealed from the latter in the part thereof that is complementary of the former and relative to the two parcels of land Nos. 6 and 7 described in the application and hold that the adjudication and registration of these parcels in behalf of the applicant municipality must be denied, whereby we sustain the adverse claim filed in connection therewith by the Director of Lands in representation of the Government of the Philippine Islands. No special finding is made in regard to costs. So ordered.

RAFAEL S. SALAS, in his capacity as Executive Secretary; CONRADO F. ESTRELLA, in his capacity as Governor of the Land Authority; and LORENZO GELLA, in his capacity as Register of Deeds of Manila, petitioners-appellants, vs.HON. HILARION U. JARENCIO, as Presiding Judge of Branch XXIII, Court of First Instance of Manila; ANTONIO J. VILLEGAS, in his capacity as Mayor of the City of Manila; and the CITY OF MANILA, respondents-appellees.

ESGUERRA, J.:p

This is a petition for review of the decision of the Court of First Instance of Manila, Branch XXIII, in Civil Case No. 67946, dated September 23, 1968, the dispositive portion of which is as follows:

WHEREFORE, the Court renders judgment declaring Republic Act No. 4118 unconstitutional and invalid in that it deprived the City of Manila of its property without due process and payment of just compensation. Respondent Executive Secretary and Governor of the Land Authority are hereby

7Yumi- cases LTD

restrained and enjoined from implementing the provisions of said law. Respondent Register of Deeds of the City of Manila is ordered to cancel Transfer Certificate of Title No. 80876 which he had issued in the name of the Land Tenure Administration and reinstate Transfer Certificate of Title No. 22547 in the name of the City of Manila which he cancelled, if that is feasible, or issue a new certificate of title for the same parcel of land in the name of the City of Manila. 1

The facts necessary for a clear understanding of this case are as follows:

On February 24, 1919, the 4th Branch of the Court of First Instance of Manila, acting as a land registration court, rendered judgment in Case No. 18, G.L.R.O. Record No. 111, declaring the City of Manila the owner in fee simple of a parcel of land known as Lot No. 1, Block 557 of the Cadastral Survey of the City of Mani1a, containing an area of 9,689.8 square meters, more or less. Pursuant to said judgment the Register of Deeds of Manila on August 21, 1920, issued in favor of the City of Manila, Original Certificate of Title No. 4329 covering the aforementioned parcel of land. On various dates in 1924, the City of Manila sold portions of the aforementioned parcel of land in favor of Pura Villanueva. As a consequence of the transactions Original Certificate of Title No. 4329 was cancelled and transfer certificates of title were issued in favor of Pura Villanueva for the portions purchased by her. When the last sale to Pura Villanueva was effected on August 22, 1924, Transfer Certificate of Title No. 21974 in the name of the City of Manila was cancelled and in lieu thereof Transfer Certificate of Title (TCT) No. 22547 covering the residue thereof known as Lot 1-B-2-B of Block 557, with an area of 7,490.10 square meters, was issued in the name of the City of Manila.

On September 21, 1960, the Municipal Board of Manila, presided by then Vice-Mayor Antono J. Villegas, adopted a resolution requesting His Excellency, the President of the Philippines to consider the feasibility of declaring the City property bounded by Florida, San Andres, and Nebraska Streets, under Transfer Certificate of Title Nos. 25545 and 22547, containing a total area of 7,450 square meters as a patrimonial property of the City of Manila for the purpose of reselling these lots to the actual occupants thereof. 2

The said resolution of the Municipil Board of the City of Manila was officially transmitted to the President of the Philippines by then Vice-Mayor Antonio J. Villegas on September 21, 1960, with the information that the same resolution was, on the same date, transmitted to the Senate and House of Representatives of the Congress of the Philippines. 3

During the First Session of the Fifth Congress of the Philippines, House Bill No. 191 was filed in the House of Representatives by then Congressman Bartolome Cabangbang seeking to declare the property in question as patrimonial property of the City of Manila, and for other purposes. The explanatory note of the Bill gave the grounds for its enactment, to wit:

In the particular case of the property subject of this bill, the City of Manila does not seem to have use thereof as a public communal property. As a matter of fact, a resolution was adopted by the Municipal Board of Manila at its regular session held on September 21, 1960, to request the feasibility of declaring the city property bounded by Florida, San Andres and Nebraska Streets as a patrimonial property of the City of Manila for the purpose of reselling these lots to the actual occupants thereof. Therefore, it will be to the best interest of society that the said property be used in one way or another. Since this property has been occupied for a long time by the present occupants thereof and since said occupants have expressed their willingness to buy the said property, it is but proper that the same be sold to them. 4

Subsequently, a revised version of the Bill was introduced in the House of Representatives by Congressmen Manuel Cases, Antonio Raquiza and Nicanor Yñiguez as House Bill No. 1453, with the following explanatory note:

The accompanying bill seeks to convert one (1) parcel of land in the district of Malate, which is reserved as communal property into a disposable or alienable property of the State and to provide its subdivision and sale to bona fide occupants or tenants.

This parcel of land in question was originally an aggregate part of a piece of land with an area of 9,689.8 square meters, more or less. ... On September 21, 1960, the Municipal Board of Manila in its regular session unanimously adopted a resolution requesting the President of the Philippines and Congress of the Philippines the feasibility of declaring this property into disposable or alienable property of the State. There is therefore a precedent that this parcel of land could be subdivided and sold to bona fide occupants. This parcel of land will not serve any useful public project because it is bounded on all sides by private properties which were formerly parts of this lot in question.

Approval of this bill will implement the policy of the Administration of land for the landless and the Fifth Declaration of Principles of the Constitution, which states that the promotion of Social Justice to insure the well-being and economic security of all people should be the concern of the State. We are ready and willing to enact legislation promoting the social and economic well-being of the people whenever an opportunity for enacting such kind of legislation arises.

In view of the foregoing consideration and to insure fairness and justice to the present bona fide occupants thereof, approval of this Bill is strongly urged. 5

The Bill having been passed by the House of Representatives, the same was thereafter sent to the Senate where it was thoroughly discussed, as evidenced by the Congressional Records for May 20, 1964, pertinent portion of which is as follows:

SENATOR FERNANDEZ: Mr. President, it will be re called that when the late Mayor Lacson was still alive, we approved a similar bill. But afterwards, the late Mayor Lacson came here and protested against the approval, and the approval was reconsidered. May I know whether the defect in the bill which we approved, has already been eliminated in this present bill?

SENATOR TOLENTINO: I understand Mr. President, that that has already been eliminated and that is why the City of Manila has no more objection to this bill.

SENATOR FERNANDEZ: Mr. President, in view of that manifestation and considering that Mayor Villegas and Congressman Albert of the Fourth District of Manila are in favor of the bill. I would not want to pretend to know more what is good for the City of Manila.

SENATOR TOLENTINO: Mr. President, there being no objection, I move that we approve this bill on second reading.

PRESIDENT PRO-TEMPORE: The biII is approved on second reading after several Senetors said aye and nobody said nay.

8Yumi- cases LTD

The bill was passed by the Senate, approved by the President on June 20, 1964, and became Republic Act No. 4118. It reads as follows:

Lot I-B-2-B of Block 557 of the cadastral survey of the City of Manila, situated in the District of Malate, City of Manila, which is reserved as communal property, is hereby converted into disposal or alienable land of the State, to be placed under the disposal of the Land Tenure Administration . The Land Tenure Administration shall subdivide the property into small lots, none of which shall exceed one hundred and twenty square meters in area and sell the same on installment basis to the tenants or bona fide occupants thereof and to individuals, in the order mentioned: Provided, That no down payment shall be required of tenants or bona fide occupants who cannot afford to pay such down payment: Provided, further, That no person can purchase more than one lot: Provided, furthermore, That if the tenant or bona fide occupant of any given lot is not able to purchase the same, he shall be given a lease from month to month until such time that he is able to purchase the lot: Provided, still further, That in the event of lease the rentals which may be charged shall not exceed eight per cent per annum of the assessed value of the property leased: And provided, finally, That in fixing the price of each lot, which shall not exceed twenty pesos per square meter, the cost of subdivision and survey shall not be included.

Sec. 2. Upon approval of this Act no ejectment proceedings against any tenant or bona fide occupant of the above lots shall be instituted and any ejectment proceedings pending in court against any such tenant or bona fide occupant shall be dismissed upon motion of the defendant: Provided, That any demolition order directed against any tenant or bona fide occupant shall be lifted.

Sec. 3. Upon approval of this Act, if the tenant or bona fide occupant is in arrears in the payment of any rentals, the amount legally due shall be liquidated and shall be payable in twenty-four equal monthly installments from the date of liquidation.

Sec. 4. No property acquired by virtue of this Act shall be transferred, sold, mortgaged, or otherwise disposed of within a period of five years from the date full ownership thereof has been vested in the purchaser without the consent of the Land Tenure Administration.

Sec. 5. In the event of the death of the purchaser prior to the complete payment of the price of the lot purchased by him, his widow and children shall succeed in all his rights and obligations with respect to his lot.

Sec. 6. The Chairman of the Land Tenure Administration shall implement and issue such rules and regulations as may be necessary to carry out the provisions of this Act.

Sec. 7. The sum of one hundred fifty thousand pesos is appropriated out of any funds in the National Treasury not otherwise appropriated, to carry out the purposes of this Act.

Sec. 8. All laws or parts of laws inconsistent with this Act are repealed or modified accordingly.

Sec. 9. This Act shall take effect upon its approval.

Approved, June 20, 1964.

To implement the provisions of Republic Act No. 4118, and pursuant to the request of the occupants of the property involved, then Deputy Governor Jose V. Yap of the Land Authority (which succeeded the

Land Tenure Administration) addressed a letter, dated February 18, 1965, to Mayor Antonio Villegas, furnishing him with a copy of the proposed subdivision plan of said lot as prepared for the Republic of the Philippines for resale of the subdivision lots by the Land Authority to bona fide applicants. 6

On March 2, 1965, the City Mayor of Manila, through his Executive and Technical Adviser, acknowledged receipt of the proposed subdivision plan of the property in question and informed the Land Authority that his office would interpose no objection to the implementation of said law, provided that its provisions be strictly complied with. 7

With the above-mentioned written conformity of the City of Manila for the implementation of Republic Act No. 4118, the Land Authority, thru then Deputy Governor Jose V. Yap, requested the City Treasurer of Manila, thru the City Mayor, for the surrender and delivery to the former of the owner's duplicate of Transfer Certificate of Title No. 22547 in order to obtain title thereto in the name of the Land Authority. The request was duly granted with the knowledge and consent of the Office of the City Mayor. 8

With the presentation of Transfer Certificate of Title No. 22547, which had been yielded as above stated by the, City authorities to the Land Authority, Transfer Certificate of Title (T.C.T. No. 22547) was cancelled by the Register of Deeds of Manila and in lieu thereof Transfer Certificate of Title No. 80876 was issued in the name of the Land Tenure Administration (now Land Authority) pursuant to the provisions of Republic Act No. 4118. 9

But due to reasons which do not appear in the record, the City of Manila made a complete turn-about, for on December 20, 1966, Antonio J. Villegas, in his capacity as the City Mayor of Manila and the City of Manila as a duly organized public corporation, brought an action for injunction and/or prohibition with preliminary injunction to restrain, prohibit and enjoin the herein appellants, particularly the Governor of the Land Authority and the Register of Deeds of Manila, from further implementing Republic Act No. 4118, and praying for the declaration of Republic Act No. 4118 as unconstitutional.

With the foregoing antecedent facts, which are all contained in the partial stipulation of facts submitted to the trial court and approved by respondent Judge, the parties waived the presentation of further evidence and submitted the case for decision. On September 23, 1968, judgment was rendered by the trial court declaring Republic Act No. 4118 unconstitutional and invalid on the ground that it deprived the City of Manila of its property without due process of law and payment of just compensation. The respondents were ordered to undo all that had been done to carry out the provisions of said Act and were restrained from further implementing the same.

Two issues are presented for determination, on the resolution of which the decision in this case hinges, to wit:

I. Is the property involved private or patrimonial property of the City of Manila?

II. Is Republic Act No. 4118 valid and not repugnant to the Constitution?

I.As regards the first issue, appellants maintain that the land involved is a communal land or "legua comunal" which is a portion of the public domain owned by the State; that it came into existence as such when the City of Manila, or any pueblo or town in the Philippines for that matter, was founded under the laws of Spain, the former sovereign; that upon the establishment of a pueblo, the administrative

9Yumi- cases LTD

authority was required to allot and set aside portions of the public domain for a public plaza, a church site, a site for public buildings, lands to serve as common pastures and for streets and roads; that in assigning these lands some lots were earmarked for strictly public purposes, and ownership of these lots (for public purposes) immediately passed to the new municipality; that in the case of common lands or "legua comunal", there was no such immediate acquisition of ownership by the pueblo, and the land though administered thereby, did not automatically become its property in the absence of an express grant from the Central Government, and that the reason for this arrangement is that this class of land was not absolutely needed for the discharge of the municipality's governmental functions.

It is argued that the parcel of land involved herein has not been used by the City of Manila for any public purpose and had not been officially earmarked as a site for the erection of some public buildings; that this circumstance confirms the fact that it was originally "communal" land alloted to the City of Manila by the Central Government not because it was needed in connection with its organization as a municipality but simply for the common use of its inhabitants; that the present City of Manila as successor of the Ayuntamiento de Manila under the former Spanish sovereign merely enjoys the usufruct over said land, and its exercise of acts of ownership by selling parts thereof did not necessarily convert the land into a patrimonial property of the City of Manila nor divest the State of its paramount title.

Appellants further argue that a municipal corporation, like a city is a governmental agent of the State with authority to govern a limited portion of its territory or to administer purely local affairs in a given political subdivision, and the extent of its authority is strictly delimited by the grant of power conferred by the State; that Congress has the exclusive power to create, change or destroy municipal corporations; that even if We admit that legislative control over municipal corporations is not absolute and even if it is true that the City of Manila has a registered title over the property in question, the mere transfer of such land by an act of the legislature from one class of public land to another, without compensation, does not invade the vested rights of the City.

Appellants finally argue that Republic Act No. 4118 has treated the land involved as one reserved for communal use, and this classification is conclusive upon the courts; that if the City of Manila feels that this is wrong and its interests have been thereby prejudiced, the matter should be brought to the attention of Congress for correction; and that since Congress, in the exercise of its wide discretionary powers has seen fit to classify the land in question as communal, the Courts certainly owe it to a coordinate branch of the Government to respect such determination and should not interfere with the enforcement of the law.

Upon the other hand, appellees argue by simply quoting portions of the appealed decision of the trial court, which read thus:

The respondents (petitioners-appellants herein) contend, among other defenses, that the property in question is communal property. This contention is, however, disproved by Original Certificate of Title No. 4329 issued on August 21, 1920 in favor of the City of Manila after the land in question was registered in the City's favor. The Torrens Title expressly states that the City of Manila was the owner in 'fee simple' of the said land. Under Sec. 38 of the Land Registration Act, as amended, the decree of confirmation and registration in favor of the City of Manila ... shall be conclusive upon and against all persons including the Insular Government and all the branches there ... There is nothing in the said certificate of title indicating that the land was 'communal' land as contended by the respondents. The erroneous assumption by the

Municipal Board of Manila that the land in question was communal land did not make it so. The Municipal Board had no authority to do that.

The respondents, however, contend that Congress had the power and authority to declare that the land in question was 'communal' land and the courts have no power or authority to make a contrary finding. This contention is not entirely correct or accurate. Congress has the power to classify 'land of the public domain', transfer them from one classification to another and declare them disposable or not. Such power does not, however, extend to properties which are owned by cities, provinces and municipalities in their 'patrimonial' capacity.

Art. 324 of the Civil Code provides that properties of provinces, cities and municipalities are divided into properties for public use and patrimonial property. Art. 424 of the same code provides that properties for public use consist of provincial roads, city streets, municipal streets, the squares, fountains, public waters, promenades and public works for public service paid for by said province, cities or municipalities. All other property possessed by any of them is patrimonial. Tested by this criterion the Court finds and holds that the land in question is patrimonial property of the City of Manila.

Respondents contend that Congress has declared the land in question to be 'communal' and, therefore, such designation is conclusive upon the courts. The Courts holds otherwise. When a statute is assailed as unconstitutional the Courts have the power and authority to inquire into the question and pass upon it. This has long ago been settled in Marbury vs. Madison, 2 L. ed. 60, when the United States Supreme Court speaking thru Chief Justice Marshall held:

... If an act of the legislature, repugnant to the constitution, is void, does it, notwithstanding its validity, bind the courts, and oblige them to give effect? It is emphatically the province and duty of the judicial department to say what the law is ... So if a law be in opposition to the constitution; if both the law and the constitution apply to a particular case, so that the court must either decide that case conformable to the constitution, disregarding the law, the court must determine which of these conflicting rules governs the case. This is of the very essence of unconstitutional judicial duty.

Appellees finally concluded that when the courts declare a law unconstitutional it does not mean that the judicial power is superior to the legislative power. It simply means that the power of the people is superior to both and that when the will of the legislature, declared in statutes, stands in opposition to that of the people, declared in the Constitution, the judges ought to be governed by the Constitution rather than by the statutes.

There is one outstanding factor that should be borne in mind in resolving the character of the land involved, and it is that the City of Manila, although declared by the Cadastral Court as owner in fee simple, has not shown by any shred of evidence in what manner it acquired said land as its private or patrimonial property. It is true that the City of Manila as well as its predecessor, the Ayuntamiento de Manila, could validly acquire property in its corporate or private capacity, following the accepted doctrine on the dual character public and private of a municipal corporation. And when it acquires property in its private capacity, it acts like an ordinary person capable of entering into contracts or making transactions for the transmission of title or other real rights. When it comes to acquisition of land, it must have done so under any of the modes established by law for the acquisition of ownership and other real rights. In the absence of a title deed to any land claimed by the City of Manila as its own, showing that it was acquired with its private or corporate funds, the presumption is that such land came

10Yumi- cases LTD

from the State upon the creation of the municipality (Unson vs. Lacson, et al., 100 Phil. 695). Originally the municipality owned no patrimonial property except those that were granted by the State not for its public but for private use. Other properties it owns are acquired in the course of the exercise of its corporate powers as a juridical entity to which category a municipal corporation pertains.

Communal lands or "legua comunal" came into existence when a town or pueblo was established in this country under the laws of Spain (Law VII, Title III, Book VI, Recopilacion de las Leyes de Indios). The municipalities of the Philippines were not entitled, as a matter of right, to any part of the public domain for use as communal lands. The Spanish law provided that the usufruct of a portion of the public domain adjoining municipal territory might be granted by the Government for communal purposes, upon proper petition, but, until granted, no rights therein passed to the municipalities, and, in any event, the ultimate title remained in the sovereign (City of Manila vs. Insular Government, 10 Phil. 327).

For the establishment, then, of new pueblos the administrative authority of the province, in representation of the Governor General, designated the territory for their location and extension and the metes and bounds of the same; and before alloting the lands among the new settlers, a special demarcation was made of the places which were to serve as the public square of the pueblo, for the erection of the church, and as sites for the public buildings, among others, the municipal building or the casa real, as well as of the lands whick were to constitute the common pastures, and propios of the municipality and the streets and roads which were to intersect the new town were laid out, ... . (Municipality of Catbalogan vs. Director of Lands, 17 Phil. 216, 220) (Emphasis supplied)

It may, therefore, be laid down as a general rule that regardless of the source or classification of land in the possession of a municipality, excepting those acquired with its own funds in its private or corporate capacity, such property is held in trust for the State for the benefit of its inhabitants, whether it be for governmental or proprietary purposes. It holds such lands subject to the paramount power of the legislature to dispose of the same, for after all it owes its creation to it as an agent for the performance of a part of its public work, the municipality being but a subdivision or instrumentality thereof for purposes of local administration. Accordingly, the legal situation is the same as if the State itself holds the property and puts it to a different use (2 McQuilin,Municipal Corporations, 3rd Ed., p. 197, citing Monagham vs. Armatage, 218 Minn. 27, 15 N. W. 2nd 241).

True it is that the legislative control over a municipal corporation is not absolute even when it comes to its property devoted to public use, for such control must not be exercised to the extent of depriving persons of their property or rights without due process of law, or in a manner impairing the obligations of contracts. Nevertheless, when it comes to property of the municipality which it did not acquire in its private or corporate capacity with its own funds, the legislature can transfer its administration and disposition to an agency of the National Government to be disposed of according to its discretion. Here it did so in obedience to the constitutional mandate of promoting social justice to insure the well-being and economic security of the people.

It has been held that a statute authorizing the transfer of a Municipal airport to an Airport Commission created by the legislature, even without compensation to the city, was not violative of the due process clause of the American Federal Constitution. The Supreme Court of Minnessota in Monagham vs. Armatage, supra, said:

... The case is controlled by the further rule that the legislature, having plenary control of the local municipality, of its creation and of all its affairs, has the right to authorize or direct the expenditures of money in its treasury, though raised, for a particular purpose, for any legitimate municipal purpose, or to order and direct a distribution thereof upon a division of the territory into separate municipalities ... . The local municipality has no such vested right in or to its public funds, like that which the Constitution protects in the individual as precludes legislative interferences. People vs. Power, 25 Ill. 187; State Board (of Education) vs. City, 56 Miss. 518. As remarked by the supreme court of Maryland in Mayor vs. Sehner, 37 Md. 180: "It is of the essence of such a corporation, that the government has the sole right as trustee of the public interest, at its own good will and pleasure, to inspect, regulate, control, and direct the corporation, its funds, and franchises."

We therefore hold that c.500, in authorizing the transfer of the use and possession of the municipal airport to the commission without compensation to the city or to the park board, does not violate the Fourteenth Amendment to the Constitution of the United States.

The Congress has dealt with the land involved as one reserved for communal use (terreno comunal). The act of classifying State property calls for the exercise of wide discretionary legislative power and it should not be interfered with by the courts.

This brings Us to the second question as regards the validity of Republic Act No. 4118, viewed in the light of Article III, Sections 1, subsection (1) and (2) of the Constitution which ordain that no person shall be deprived of his property without due process of law and that no private property shall be taken for public use without just compensation.

II .

The trial court declared Republic Act No. 4118 unconstitutional for allegedly depriving the City of Manila of its property without due process of law and without payment of just compensation. It is now well established that the presumption is always in favor of the constitutionality of a law (U S. vs. Ten Yu, 24 Phil. 1; Go Ching, et al. vs. Dinglasan, et al., 45 O.G. No. 2, pp. 703, 705). To declare a law unconstitutional, the repugnancy of that law to the Constitution must be clear and unequivocal, for even if a law is aimed at the attainment of some public good, no infringement of constitutional rights is allowed. To strike down a law there must be a clear showing that what the fundamental law condemns or prohibits, the statute allows it to be done (Morfe vs. Mutuc, et al., G.R. No. L-20387, Jan. 31, 1968; 22 SCRA 424). That situation does not obtain in this case as the law assailed does not in any manner trench upon the constitution as will hereafter be shown. Republic Act No. 4118 was intended to implement the social justice policy of the Constitution and the Government program of "Land for the Landless". The explanatory note of House Bill No. 1453 which became Republic Act No. 4118, reads in part as follows:

Approval of this bill will implement the policy of the administration of "land for the landless" and the Fifth Declaration of Principles of the Constitution which states that "the promotion of social justice to insure the well-being and economic security of all people should be the concern of the State." We are ready and willing to enact legislation promoting the social and economic well-being of the people whenever an opportunity for enacting such kind of legislation arises.

The respondent Court held that Republic Act No. 4118, "by converting the land in question which is the patrimonial property of the City of Manila into disposable alienable land of the State and placing it under

11Yumi- cases LTD

the disposal of the Land Tenure Administration violates the provisions of Article III (Secs. 1 and 2) of the Constitution which ordain that "private property shall not be taken for public use without just compensation, and that no person shall be deprived of life, liberty or property without due process of law". In support thereof reliance is placed on the ruling in Province of Zamboanga del Norte vs. City of Zamboanga, G.R. No. 2440, March 28, 1968; 22 SCRA 1334, which holds that Congress cannot deprive a municipality of its private or patrimonial property without due process of law and without payment of just compensation since it has no absolute control thereof. There is no quarrel over this rule if it is undisputed that the property sought to be taken is in reality a private or patrimonial property of the municipality or city. But it would be simply begging the question to classify the land in question as such. The property, as has been previously shown, was not acquired by the City of Manila with its own funds in its private or proprietary capacity. That it has in its name a registered title is not questioned, but this title should be deemed to be held in trust for the State as the land covered thereby was part of the territory of the City of Manila granted by the sovereign upon its creation. That the National Government, through the Director of Lands, represented by the Solicitor General, in the cadastral proceedings did not contest the claim of the City of Manila that the land is its property, does not detract from its character as State property and in no way divests the legislature of its power to deal with it as such, the state not being bound by the mistakes and/or negligence of its officers.

One decisive fact that should be noted is that the City of Manila expressly recognized the paramount title of the State over said land when by its resolution of September 20, 1960, the Municipal Board, presided by then Vice-Mayor Antonio Villegas, requested "His Excellency the President of the Philippines to consider the feasibility of declaring the city property bounded by Florida, San Andres and Nebraska Streets, under Transfer Certificate of Title Nos. 25545 and 25547, containing an area of 7,450 square meters, as patrimonial property of the City of Manila for the purpose of reselling these lots to the actual occupants thereof." (See Annex E, Partial Stipulation of Facts, Civil Case No. 67945, CFI, Manila, p. 121, Record of the Case) [Emphasis Supplied]

The alleged patrimonial character of the land under the ownership of the City of Manila is totally belied by the City's own official act, which is fatal to its claim since the Congress did not do as bidden. If it were its patrimonial property why should the City of Manila be requesting the President to make representation to the legislature to declare it as such so it can be disposed of in favor of the actual occupants? There could be no more blatant recognition of the fact that said land belongs to the State and was simply granted in usufruct to the City of Manila for municipal purposes. But since the City did not actually use said land for any recognized public purpose and allowed it to remain idle and unoccupied for a long time until it was overrun by squatters, no presumption of State grant of ownership in favor of the City of Manila may be acquiesced in to justify the claim that it is its own private or patrimonial property (Municipality of Tigbauan vs. Director of Lands, 35 Phil. 798; City of Manila vs. Insular Government, 10 Phil. 327; Municipality of Luzuriaga vs. Director of Lands, 24 Phil. 193). The conclusion of the respondent court that Republic Act No. 4118 converted a patrimonial property of the City of Manila into a parcel of disposable land of the State and took it away from the City without compensation is, therefore, unfounded. In the last analysis the land in question pertains to the State and the City of Manila merely acted as trustee for the benefit of the people therein for whom the State can legislate in the exercise of its legitimate powers.

Republic Act No. 4118 was never intended to expropriate the property involved but merely to confirm its character as communal land of the State and to make it available for disposition by the National Government: And this was done at the instance or upon the request of the City of Manila itself. The

subdivision of the land and conveyance of the resulting subdivision lots to the occupants by Congressional authorization does not operate as an exercise of the power of eminent domain without just compensation in violation of Section 1, subsection (2), Article III of the Constitution, but simply as a manifestation of its right and power to deal with state property.

It should be emphasized that the law assailed was enacted upon formal written petition of the Municipal Board of Manila in the form of a legally approved resolution. The certificate of title over the property in the name of the City of Manila was accordingly cancelled and another issued to the Land Tenure Administration after the voluntary surrender of the City's duplicate certificate of title by the City Treasurer with the knowledge and consent of the City Mayor. To implement the provisions of Republic Act No. 4118, the then Deputy Governor of the Land Authority sent a letter, dated February 18, 1965, to the City Mayor furnishing him with a copy of the "proposed subdivision plan of the said lot as prepared for the Republic of the Philippines for subdivision and resale by the Land Authority to bona fide applicants." On March 2, 1965, the Mayor of Manila, through his Executive and Technical Adviser, acknowledged receipt of the subdivision plan and informed the Land Authority that his Office "will interpose no objection to the implementation of said law provided that its provisions are strictly complied with." The foregoing sequence of events, clearly indicate a pattern of regularity and observance of due process in the reversion of the property to the National Government. All such acts were done in recognition by the City of Manila of the right and power of the Congress to dispose of the land involved.

Consequently, the City of Manila was not deprived of anything it owns, either under the due process clause or under the eminent domain provisions of the Constitution. If it failed to get from the Congress the concession it sought of having the land involved given to it as its patrimonial property, the Courts possess no power to grant that relief. Republic Act No. 4118 does not, therefore, suffer from any constitutional infirmity.

WHEREFORE, the appealed decision is hereby reversed, and petitioners shall proceed with the free and untrammeled implementation of Republic Act No. 4118 without any obstacle from the respondents. Without costs.

EUGENIA NELAYAN, ET AL., plaintiffs-appellants, vs.CECILIA NELAYAN, ET AL., defendants-appellees.

REYES, J.B.L., J.:

On December 15, 1952, plaintiffs filed versus Cecilia Nelayan and the Director of Lands a complaint with the Court of First Instance of Camarines Sur for "Cancellation of Title and Reconveyance ", alleging that they (plaintiffs) have been since time immemorial, in actual possession as owners, respectively, of various parcels of land described therein; that such possession has been public, uninterrupted and in the concept of owner; that on October 23, 1952, Original Certificate of Title No. 518 was issued in the name of defendant Cecilia Nelayan as a result of her application for free patent over the parcels of land in dispute; that said certificate of title is null and void with respect to the parcels claimed by plaintiffs, as the same were no longer part of the public domain, and that the Director of Lands was without jurisdiction in entertaining the application for, and in granting the free patent; that plaintiffs were never informed nor had they any knowledge of the survey of the said lands or of the proceedings instituted by

12Yumi- cases LTD

Cecilia Nelayan; and that the latter, who very well knew that said parcels of land were being possessed by the plaintiffs as owners thereof, is guilty of fraud in failing to notify them of the said proceedings. Plaintiffs, therefore, prayed that Original Certificate of Title No. 518 be annulled and that they be declared owners of the parcels of land in question. They further asked for such other relief as the court might deem just and equitable.

Answering the complaint, defendant Cecilia Nelayan denied all material allegations of the complaint, and by way of special defense, asserted ownership over the disputed parcels, having been in continuous, peaceful, public, adverse and material possession over it for a period of over 50 years. Defendant Director of Lands, in his answer, likewise denied the material allegations of the complaint and attested, as special defense, to the regularity of the proceedings leading to the issuance in Cecilia's favor of the certificate of title in question.

On February 11, 1957, defendant Cecilia Nelayan filed a motion to dismiss the complaint on the ground that (1) the complaint failed to state facts sufficient to constitute a cause of action and (2) that the lower court had no jurisdiction to annul or set aside the certificate of title already issued to her. Over plaintiff's objections, the lower court ordered the dismissal of the case for lack of jurisdiction (Order of April 30, 1957). From this order of dismissal and from the orders denying their motions for reconsideration and another motion for leave to amend the complaint so as to add a specific prayer for reconveyance, 36 3 plaintiffs interposed the present appeal to the Court of Appeals, that certified the same to us, because it involves only questions of law.

Appellants contend, while appellees deny (1) that the Court of First Instance of Camarines Sur, notwithstanding the certificate of title under free patent already issued to defendant Nelayan, still had the right to exercise its jurisdiction to try the case; (2) that the complaint stated good cause of action against the defendant; and lastly, (3) that the lower court erred in denying plaintiffs' motion for leave to accept the amended complaint.

Pertinent to the first issue is the rule that once a patent is issued, the land acquires the character of registered property under section 122 of Act No. 496, and is, therefore, deemed brought within the operation of the said Land Registration Act (see Tomas Roco, et al., vs. Juan Gimeda,* 55 Off. Gaz. [37] 7922). It follows that after issuance of the patent, an aggrieved party is accorded the same or similar remedies as are extended in ordinary registration proceedings after entry of the decree of confirmation or registration. One of such remedies may be found under section 38 of Act 496, which, in part provides:

. . . subject, however, to the right of any person deprived of land or of any estate or interest therein by decree of registration obtained by fraud to file in the competent Court of First Instance a petition for review within one year after entry of the decree provided no innocent purchaser for value has acquired an interest. Upon expiration of said term of one year, every decree of certificate of title issued in accordance with this section shall be incontrovertible. . . .

In Diwaling Sumail vs. Court of First Instance of Cotabato, et al., 96 Phil., 946; 51 Off. Gaz.[5] 2413, this Court opined that the one-year period provided under section 38 should, in the case of public land grants (patents), be counted from the issuance of the patent by the Government under the Public Land Act (C.A. 141). Free Patent No. V-2371 was issued only on October 9, 1952, while the complaint in the case at bar was filed on December 15, 1952, or after a period of only two months and six days. Having been filed in

due time, the case should have been given its regular course by the lower court, instead of having been ordered dismissed outright.

Neither is the complaint insufficient in stating a cause of action. Among other matters, it contains allegations to the effect that the plaintiffs have been, since time immemorial, in possession as owners of the disputed parcels of land, but that through actual fraud, defendant Cecilia Nelayan succeeded in securing for herself the certificate of title in question. Defendants-appellees must base their claim of ownership or right of action on Section 48 (B) of the Public Land Act, providing that:

Those who by themselves or through their predecessors in interest have been in the open, continuous, exclusive and notorious possession and occupation of agricultural lands of the public domain, under a bona fide claim of acquisition of ownership for at least thirty years immediately filing of the application for confirmation of title, except when prevented by war or force majeure. These shall be conclusively presumed to have performed all the conditions essential to a Government grant and shall be entitled to certificate of title under the provisions of this chapter. (As amended by Republic Act No. 1942, June 22, 1957)1

under which they may ask for the judicial confirmation of their imperfect or incomplete title; but which course of action, appellees argue, is no longer available to the appellants because section 48, in connection with section 47 of the Public Land Act ceased to become operative on the day following December 31, 1938, the original period fixed in the said Act within which possessors or occupants of public lands could avail of its benefits. Appellees evidently overlook that this period has been extended from time to time by the legislature, the latest prorogation being by Republic Act No. 2061, which extends the terms of its effectivity until December 31, 1968.

There is likewise no merit in appellees' contention that the complaint does not aver sufficient facts of ownership to hold against either the appellee Nelayan or the government.

Plaintiffs' allegation that they have been in continued possession of the properties in dispute since time immemorial as owners thereof is a sufficient averment of private ownership.2 It should be remembered that possession since time immemorial carries the presumption that the land had never been part of the public domain or that it had been a private property even before the Spanish conquest. And so, we said in one case

... All lands that were not acquired from the Government, either by purchase or by grant, belong to the public domain. An exception to the rule would be any land that should have been in the possession of an occupant and of his predecessors in interest since time immemorial for such possession would justify the presumption that the land had never been part of the public domain or that it had been a private property even before the Spanish conquest. (Oh Cho vs. Director of Lands, 75 Phil., 890 892, Citing CariNo vs. Insular Government, 212 U.S. 449, 53 L. ed. 394). (Emphasis supplied).

Whether this presumption should hold as a fact or not is a question appropriately determinable only after the parties have already adduced, or at least, are given the opportunity to adduce, their respective evidence.

The ruling of this Court in Susi vs. Razon, and Director of Lands, 48 Phil., 424, 428 (reaffirmed in Mesina vs. Pineda, 108 Phil., 251; 58 Off. Gaz [25] 4603), is also conclusive in favor of appellants herein. It said:

13Yumi- cases LTD

In favor of Valentin Susi, there is moreover, the presumption juris et de jure established in paragraph (b) of section 45 of Act No. 2874, amending Act No. 926, that all the necessary requirements for a grant by the Government were complied with, for he has been in actual and physical possession, personally and through his predecessors, of an agricultural land of the public domain openly, continuously, exclusively and publicly since July 26, 1894, with a right to a certificate of title to said land under the provisions of Chapter VIII of said Act. So that when Angela Razon applied for the grant in her favor, Valentin Susi had already acquired, by operation of law, not only a right to grant, but a grant of the Government for it is not necessary that certificate of title should be issued in order that said grant may be sanctioned by the courts, an application therefor is sufficient, under the provisions of section 47 of Act No. 2874. If by a legal fiction, Valentin Susi had acquired the land in question by a grant of the State, it had already at least by presumption, of Valentin Susi, beyond the control of the Director of Lands. Consequently, in selling the land in question to Angela Razon, the Director of Lands disposed of a land over which he had no longer any title or control, and the sale thus made was void and of no effect, and Angela did not thereby acquire any right.

The Director of Lands contends that the land in question being of the public domain, the plaintiff-appellee cannot maintain an action to recover possession thereof.

If, as above-stated, the land, the possession of which is in dispute, had already become, by operation of law, private property of the plaintiff, there lacking only the judicial sanction of his title, Valentin Susi has the right to bring an action to recover the possession thereof and hold it.

The case of Reyes, et al., vs. Rodriguez, et al., 62 Phil., 771, cited by the appellees, is not the authority to the contrary. In said case, there was a trial and upon the evidence at hand, it did not appear that the appellant really had any title or interest in the land in question, presumed or proven, to hold against the appellee or the government. The presumption of ownership could not likewise hold because appellants' possession was neither alleged nor proven to be since time immemorial. In fact, the averment made there, that the claimant's possession started in 1883, was not even believed by the Court. For similar reasons, Li Seng Giap and Co. vs. Director of Lands, 59 Phil., 687 does not govern the case at bar, considering that the possession therein averred started only during the Spanish regime.

It may not be amiss to state, furthermore, that the remedial provisions of section 38 of the Land Registration Act, prescribing a mode by which a decree may be set aside upon petition by private individuals, are expressly made applicable even to those who may have been deprived merely of an estate or interest in (not necessarily ownership of) the land.

The fraud averred by plaintiffs is actual fraud, consisting in the alleged concealment from the plaintiffs of the proceedings leading to the issuance of defendant Nelayan of the questioned free patent, notwithstanding her knowledge that the land covered under her application was being possessed by the appellants as the owners thereof. This is fraud as contemplated under section 38 of the Land Registration Act (Angelo vs. Director of Lands, et al., 49 Phil., 838).

The third issue, presented by the parties in this appeal, is whether or not the amended complaint should have been admitted by the court a quo. No discussion is called for, since in substance and in contents, the original complaint (which has been captioned "For Cancellation of Title and Reconveyance"), as shown in the preceding discussion, contains sufficient averments for either the cancellation of defendant Nelayan's title or the reconveyance of the property, thereby negating further need for an amendment.

As authorized by the Rules (Section 9, Rule 15, Rules of Court; see also Section 1, Rule 2, ibid), plaintiff may allege causes of action in the alternative, be they compatible with each other or not, to the end that the real matter in the controversy may be resolved and determined.

Wherefore the order of dismissal appealed from is hereby set aside, and the case ordered remanded to the lower court for further proceedings. Costs in this appeal against appellee Cecilia Nelayan.

Paras, C.J., Bengzon, Padilla, Bautista Angelo, Labrador, Concepcion, Barrera and Gutierrez David, JJ., concur.

AURORA ALCANTARA-DAUS, petitioner, vs. Spouses HERMOSO and SOCORRO DE LEON, respondents.

PANGANIBAN, J.:

While a contract of sale is perfected by mere consent, ownership of the thing sold is acquired only upon its delivery to the buyer. Upon the perfection of the sale, the seller assumes the obligation to transfer ownership and to deliver the thing sold, but the real right of ownership is transferred only “by tradition” or delivery thereof to the buyer.

The Case

Before us is a Petition for Review[1] under Rule 45 of the Rules of Court, seeking to set aside the February 9, 2001 Decision and the August 31, 2001 Resolution of the Court of Appeals[2](CA) in CA-GR CV No. 47587. The dispositive portion of the assailed Decision reads as follows:

“WHEREFORE, premises considered, the decision of the trial court is hereby REVERSED, and judgment rendered:

1. Declaring null and void and of no effect, the [D]eed of [A]bsolute [S]ale dated December 6, 1975, the [D]eed of [E]xtra-judicial [P]artition and [Q]uitclaim dated July 1, 1985, and T.C.T. No. T-31262;

2. Declaring T.C.T. No. 42238 as valid and binding;

3. Eliminating the award of P5,000.00 each to be paid to defendants-appellees.”[3]

The assailed Resolution[4] denied petitioner’s Motion for Reconsideration.

The Facts

The antecedents of the case were summarized by the Regional Trial Court (RTC) and adopted by the CA as follows:

“This is a [C]omplaint for annulment of documents and title, ownership, possession, injunction, preliminary injunction, restraining order and damages.

“[Respondents] alleged in their [C]omplaint that they are the owners of a parcel of land hereunder described as follows, to wit:

14Yumi- cases LTD

‘A parcel of land (Lot No. 4786 of the Cadastral Survey of San Manuel) situated in the Municipality of San Manuel, Bounded on the NW., by Lot No. 4785; and on the SE., by Lot Nos. 11094 & 11096; containing an area of Four Thousand Two Hundred Twelve (4,212) sq. m., more or less. Covered by Original Certificate of Title No. 22134 of the Land Records of Pangasinan.’

which [Respondent] Hermoso de Leon inherited from his father Marcelino de Leon by virtue of a [D]eed of [E]xtra-judicial [P]artition. Sometime in the early 1960s, [respondents] engaged the services of the late Atty. Florencio Juan to take care of the documents of the properties of his parents. Atty. Juan let them sign voluminous documents. After the death of Atty. Juan, some documents surfaced and most revealed that their properties had been conveyed by sale or quitclaim to [Respondent] Hermoso’s brothers and sisters, to Atty. Juan and his sisters, when in truth and in fact, no such conveyances were ever intended by them. His signature in the [D]eed of [E]xtra-judicial [P]artition with [Q]uitclaim made in favor of x x x Rodolfo de Leon was forged. They discovered that the land in question was sold by x x x Rodolfo de Leon to [Petitioner] Aurora Alcantara. They demanded annulment of the document and reconveyance but defendants refused x x x.x x x

“[Petitioner] Aurora Alcantara-Daus [averred] that she bought the land in question in good faith and for value on December 6, 1975. [She] has been in continuous, public, peaceful, open possession over the same and has been appropriating the produce thereof without objection from anyone.”[5]

On August 23, 1994, the RTC (Branch 48) of Urdaneta, Pangasinan[6] rendered its Decision[7] in favor of herein petitioner. It ruled that respondents’ claim was barred by laches, because more than 18 years had passed since the land was sold. It further ruled that since it was a notarial document, the Deed of

Extrajudicial Partition in favor of Rodolfo de Leon was presumptively authentic.

Ruling of the Court of Appeals

In reversing the RTC, the CA held that laches did not bar respondents from pursuing their claim. Notwithstanding the delay, laches is a doctrine in equity and may not be invoked to resist the enforcement of a legal right.

The appellate court also held that since Rodolfo de Leon was not the owner of the land at the time of the sale, he could not transfer any land rights to petitioner. It further declared that the signature of Hermoso de Leon on the Deed of Extrajudicial Partition and Quitclaim -- upon which petitioner bases her claim -- was a forgery. It added that under the above circumstances, petitioner could not be said to be a buyer in good faith.

Hence, this Petition.[8]

The Issues

Petitioner raises the following issues for our consideration:

“1. Whether or not the Deed of Absolute Sale dated December 6, 1975 executed by Rodolfo de Leon (deceased) over the land in question in favor of petitioner was perfected and binding upon the parties therein?

“2. Whether or not the evidentiary weight of the Deed of Extrajudicial Partition with Quitclaim, executed by [R]espondent Hermoso de Leon, Perlita de Leon and Carlota de Leon in favor of Rodolfo de Leon was overcome by more than [a] preponderance of evidence of respondents?

“3. Whether or not the possession of petitioner including her predecessor-in-interest Rodolfo de Leon over the land in question was in good faith?

“4. And whether or not the instant case initiated and filed by respondents on February 24, 1993 before the trial court has prescribed and respondents are guilty of laches?”[9]

The Court’s Ruling: The Petition has no merit.

First Issue: Validity of the Deed of Absolute Sale

Petitioner argues that, having been perfected, the Contract of Sale executed on December 6, 1975 was thus binding upon the parties thereto.

A contract of sale is consensual. It is perfected by mere consent,[10] upon a meeting of the minds[11] on the offer and the acceptance thereof based on subject matter, price and terms of payment.[12] At this stage, the seller’s ownership of the thing sold is not an element in the perfection of the contract of sale.

The contract, however, creates an obligation on the part of the seller to transfer ownership and to deliver the subject matter of the contract.[13] It is during the delivery that the law requires the seller to have the right to transfer ownership of the thing sold.[14] In general, a perfected contract of sale cannot be challenged on the ground of the seller’s non-ownership of the thing sold at the time of the perfection of the contract.[15]

Further, even after the contract of sale has been perfected between the parties, its consummation by delivery is yet another matter. It is through tradition or delivery that the buyer acquires the real right of ownership over the thing sold.[16]

Undisputed is the fact that at the time of the sale, Rodolfo de Leon was not the owner of the land he delivered to petitioner. Thus, the consummation of the contract and the consequent transfer of ownership would depend on whether he subsequently acquired ownership of the land in accordance with Article 1434 of the Civil Code.[17] Therefore, we need to resolve the issue of the authenticity and the due execution of the Extrajudicial Partition and Quitclaim in his favor.

Second Issue: Authenticity of the Extrajudicial Partition

Petitioner contends that the Extrajudicial Partition and Quitclaim is authentic, because it was notarized and executed in accordance with law. She claims that there is no clear and convincing evidence to set aside the presumption of regularity in the issuance of such public document. We disagree.

As a general rule, the due execution and authenticity of a document must be reasonably established before it may be admitted in evidence.[18] Notarial documents, however, may be presented in evidence without further proof of their authenticity, since the certificate of acknowledgment is prima facie evidence of the execution of the instrument or document involved.[19] To contradict facts in a notarial

15Yumi- cases LTD

document and the presumption of regularity in its favor, the evidence must be clear, convincing and more than merely preponderant.[20]

The CA ruled that the signature of Hermoso de Leon on the Extrajudicial Partition and Quitclaim was forged. However, this factual finding is in conflict with that of the RTC. While normally this Court does not review factual issues,[21] this rule does not apply when there is a conflict between the holdings of the CA and those of the trial court,[22] as in the present case.

After poring over the records, we find no reason to reverse the factual finding of the appellate court. A comparison of the genuine signatures of Hermoso de Leon[23] with his purported signature on the Deed of Extrajudicial Partition with Quitclaim[24] will readily reveal that the latter is a forgery. As aptly held by the CA, such variance cannot be attributed to the age or the mechanical acts of the person signing.[25]

Without the corroborative testimony of the attesting witnesses, the lone account of the notary regarding the due execution of the Deed is insufficient to sustain the authenticity of this document. He can hardly be expected to dispute the authenticity of the very Deed he notarized.[26] For this reason, his testimony was -- as it should be --minutely scrutinized by the appellate court, and was found wanting.

Third Issue :Possession in Good Faith

Petitioner claims that her possession of the land is in good faith and that, consequently, she has acquired ownership thereof by virtue of prescription. We are not persuaded.

It is well-settled that no title to registered land in derogation of that of the registered owner shall be acquired by prescription or adverse possession.[27] Neither can prescription be allowed against the hereditary successors of the registered owner, because they merely step into the shoes of the decedent and are merely the continuation of the personality of their predecessor in interest.[28] Consequently, since a certificate of registration[29] covers it, the disputed land cannot be acquired by prescription regardless of petitioner’s good faith.

Fourth Issue: Prescription of Action and Laches

Petitioner also argues that the right to recover ownership has prescribed, and that respondents are guilty of laches. Again, we disagree.

Article 1141 of the New Civil Code provides that real actions over immovable properties prescribe after thirty years. This period for filing an action is interrupted when a complaint is filed in court.[30] Rodolfo de Leon alleged that the land had been allocated to him by his brother Hermoso de Leon in March 1963,[31] but that the Deed of Extrajudicial Partition assigning the contested land to the latter was executed only on September 16, 1963.[32] In any case, the Complaint to recover the land from petitioner was filed on February 24, 1993,[33] which was within the 30-year prescriptive period.

On the claim of laches, we find no reason to reverse the ruling of the CA. Laches is based upon equity and the public policy of discouraging stale claims.[34] Since laches is an equitable doctrine, its application is controlled by equitable considerations.[35] It cannot be used to defeat justice or to

perpetuate fraud and injustice.[36] Thus, the assertion of laches to thwart the claim of respondents is foreclosed, because the Deed upon which petitioner bases her claim is a forgery.

WHEREFORE, the Petition is DENIED and the assailed Decision AFFIRMED. Costs against petitioners

GOVERNMENT SERVICE INSURANCE SYSTEM, petitioner, vs. EDUARDO M. SANTIAGO, substituted by his widow ROSARIO ENRIQUEZ VDA. DE SANTIAGO, respondent.

CALLEJO, SR., J.:

Before the Court is the petition for review on certiorari filed by the Government Service Insurance System (GSIS), seeking to reverse and set aside the Decision[1] dated February 22, 2002 of the Court of Appeals (CA) in CA-G.R. CV No. 62309 and its Resolution dated September 5, 2002 denying its motion for reconsideration.

The antecedent facts of the case, as culled from the assailed CA decision and that of the trial court, are as follows:

Deceased spouses Jose C. Zulueta and Soledad Ramos obtained various loans from defendant GSIS for (the) period September, 1956 to October, 1957 in the total amount of P3,117,000.00 secured by real estate mortgages over parcels of land covered by TCT Nos. 26105, 37177 and 50365. The Zuluetas failed to pay their loans to defendant GSIS and the latter foreclosed the real estate mortgages dated September 25, 1956, March 6, 1957, April 4, 1957 and October 15, 1957.

On August 14, 1974 , the mortgaged properties were sold at public auction by defendant GSIS submitting a bid price of P5,229,927.84. Not all lots covered by the mortgaged titles, however, were sold. Ninety-one (91) lots were expressly excluded from the auction since the lots were sufficient to pay for all the mortgage debts. A Certificate of Sale (Annex “F,” Records, Vol. I, pp. 23-28) was issued by then Provincial Sheriff Nicanor D. Salaysay.

The Certificate of Sale dated August 14, 1974 had been annotated and inscribed in TCT Nos. 26105, 37177 and 50356, with the following notations: “(T)he following lots which form part of this title (TCT No. 26105) are not covered by the mortgage contract due to sale to third parties and donation to the government: 50-H-5-C-9-J-65-H-8, 50-H-5-C-9J-M-7; 50-H-5-C-9-J-65-H-5; 1 lots Nos. 1 to 13, Block No. 1 –-6,138 sq.m. 2. Lots Nos. 1 to 11, Block No. 2 –4,660 sq.m. 3. Lot No. 15, Block No. 3 –487 sq.m. 4. Lot No. 17, Block No. 4 –263 sq.m. 5. Lot No. 1, Block No. 7 – 402 sq.m. 6. Road Lots Nos. 1, 2, 3, & 4 – 2,747 sq.m.”

In another “NOTE: The following lots in the Antonio Subdivision were already released by the GSIS and therefore are not included in this sale, namely: LOT NO. 1, 6, 7, 8, 9, 10, and 13 (Old Plan) Block I; 1, 3, 4, 5, 7, 8 and 10 (Old Plan) Block II; 3, 10, 12 and 13 (New Plan) Block I (Old Plan) Block III; 7, 14 and 20 (New Plan) Block III (Old Plan) Block V; 13 and 20 (New Plan) Block IV (Old Plan) Block VI; 1, 2, 3 and 10 (New Plan) Block V (Old Plan) Block VII; 1, 5, 8, 15, 26 and 27 (New Plan) Block VI (Old Plan) Block VIII; 7,

16Yumi- cases LTD

12 and 20 (New Plan) Block VII (Old Plan) Block II; 1, 4 and 6 (New Plan) Block VIII (Old Plan) Block X; 5 (New Plan) Block X (Old Plan) Block ZXII; 6 (New Plan) Block XI (Old Plan) Block XII; 1, Block 9; 12 Block 1; 11 Block 2; 19 Block 1; 10 Block 6; 23 Block 3.”

And the lots on “ADDITIONAL EXCLUSION FROM PUBLIC SALE” are “LOTS NO. 6 Block 4; 2 Block 2; 5 Block 5; 1, 2 and 3 Block 11, 1, 2, 3 and 4 Block 10; 5 Block 11 (New); 1 Block 3; 5 Block 1; 15 Block 7; 11 Block 9; 13 Block 5; 12 Block 5; 3 Block 10; 6.”

On November 25, 1975 , an Affidavit of Consolidation of Ownership (Annex “G,” Records, Vol. I, pp. 29-31) was executed by defendant GSIS over Zulueta’s lots, including the lots, which as earlier stated, were already excluded from the foreclosure.

On March 6, 1980 , defendant GSIS sold the foreclosed properties to Yorkstown Development Corporation which sale was disapproved by the Office of the President of the Philippines . The sold properties were returned to defendant GSIS.

The Register of Deeds of Rizal cancelled the land titles issued to Yorkstown Development Corporation. On July 2, 1980, TCT No. 23552 was issued cancelling TCT No. 21926; TCT No. 23553 cancelled TCT No. 21925; and TCT No. 23554 cancelling TCT No. 21924, all in the name of defendant GSIS.

After defendant GSIS had re-acquired the properties sold to Yorkstown Development Corporation, it began disposing the foreclosed lots including the excluded ones.

On April 7, 1990 , representative Eduardo Santiago and then plaintiff Antonio Vic Zulueta executed an agreement whereby Zulueta transferred all his rights and interests over the excluded lots. Plaintiff Eduardo Santiago’s lawyer, Atty. Wenceslao B. Trinidad, wrote a demand letter dated May 11, 1989 (Annex “H,” Records, Vol. I, pp. 32-33) to defendant GSIS asking for the return of the eighty-one (81) excluded lots.[2]

On May 7, 1990 , Antonio Vic Zulueta, represented by Eduardo M. Santiago, filed with the Regional Trial Court (RTC) of Pasig City , Branch 71, a complaint for reconveyance of real estate against the GSIS. Spouses Alfeo and Nenita Escasa, Manuel III and Sylvia G. Urbano, and Marciana P. Gonzales and the heirs of Mamerto Gonzales moved to be included as intervenors and filed their respective answers in intervention. Subsequently, the petitioner, as defendant therein, filed its answer alleging inter alia that the action was barred by the statute of limitations and/or laches and that the complaint stated no cause of action. Subsequently, Zulueta was substituted by Santiago as the plaintiff in the complaint a quo. Upon the death of Santiago on March 6, 1996 , he was substituted by his widow, Rosario Enriquez Vda. de Santiago, as the plaintiff.

After due trial, the RTC rendered judgment against the petitioner ordering it to reconvey to the respondent, Rosario Enriquez Vda. de Santiago, in substitution of her deceased husband Eduardo, the seventy-eight lots excluded from the foreclosure sale. The dispositive portion of the RTC decision reads:

WHEREFORE, judgment is hereby rendered in favor of plaintiff and against the defendant:

1. Ordering defendant to reconvey to plaintiff the seventy-eight (78) lots released and excluded from the foreclosure sale including the additional exclusion from the public sale, namely:

a. Lot Nos. 1, 6, 7, 8, 0, 10, 13, Block I (Old Plan).b. Lot Nos. 1, 3, 4, 5, 7, 8 and 10, Block II (Old Plan).c. Lot Nos. 3, 10, 12, and 13, Block I (New Plan), Block III (Old Plan),d Lot Nos. 7, 14 and 20, Block III (New Plan), Block V (Old Plan).e. Lot Nos. 13 and 20, Block IV (New Plan), Block VI (Old Plan).f Lot Nos. 1, 2, 3 and 10, Block V (New Plan), Block VII (Old Plan).g Lot Nos. 1, 5, 8, 15, 26 and 27, Block VI (New Plan), Block VIII (Old Plan).h.Lot Nos. 7 and 12, Block VII (New Plan), Block II (Old Plan).i. Lot Nos. 1, 4 and 6, Block VIII (New Plan), Block X (Old Plan).j. Lot 5, Block X (New Plan), Block XII (Old Plan).k. Lot 6, Block XI (New Plan), Block XII (Old Plan).l. Lots 2, 5, 12 and 15, Block I.m. Lots 6, 9 and 11, Block 2.n. Lots 1, 5, 6, 7, 16 and 23, Block 3.o. Lot 6, Block 4.p. Lots 5, 12, 13 and 24, Block 5.q. Lots 10 and 16, Block 6.r. Lots 6 and 15, Block 7.s Lots 13, 24, 28 and 29, Block 8.t.Lots 1, 11, 17 and 22, Block 9.u. Lots 1, 2, 3 and 4, Block 10.v. Lots 1, 2, 3 and 5 (New), Block 11.

2. Ordering defendant to pay plaintiff, if the seventy-eight (78) excluded lots could not be reconveyed, the fair market value of each of said lots.

3. Ordering the Registry of Deeds of Pasig City to cancel the land titles covering the excluded lots in the name of defendant or any of its successors-in-interest including all derivative titles therefrom and to issue new land titles in plaintiff’s name.

4. Ordering the Registry of Deeds of Pasig City to cancel the Notices of Lis Pendens inscribed in TCT No. PT-80342 under Entry No. PT-12267/T-23554; TCT No. 81812 under Entry No. PT-12267/T-23554; and TCT No. PT-84913 under Entry No. PT-12267/T-23554.

5. Costs of suit.[3]

The petitioner elevated the case to the CA which rendered the assailed decision affirming that of the RTC. The dispositive portion of the assailed decision reads:

WHEREFORE, premises considered, the herein appeal is DISMISSED for lack of merit. The Decision of December 17, 1997 of Branch 71 of the Regional Trial Court of Pasig City is hereby AFFIRMED.[4]

The petitioner moved for a reconsideration of the aforesaid decision but the same was denied in the assailed CA Resolution of September 5, 2002 .

The petitioner now comes to this Court alleging that:

THE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR IN RULING THAT A) PETITIONER WAS GUILTY OF BAD FAITH WHEN IN TRUTH AND IN FACT, THERE WAS NO SUFFICIENT GROUND TO SUPPORT SUCH CONCLUSION; AND B) THERE WAS NO PRESCRIPTION IN THIS CASE.[5]

In its petition, the petitioner maintains that it did not act in bad faith when it erroneously included in its certificate of sale, and subsequently consolidated the titles in its name over the seventy-eight lots (“subject lots”) that were excluded from the foreclosure sale. There was no proof of bad faith nor could fraud or malice be attributed to the petitioner when it erroneously caused the issuance of certificates of title over the subject lots despite the fact that these were expressly excluded from the foreclosure sale.

The petitioner asserts that the action for reconveyance instituted by the respondent had already prescribed after the lapse of ten years from November 25, 1975 when the petitioner consolidated its ownership over the subject lots. According to the petitioner, an action for reconveyance based on

17Yumi- cases LTD

implied or constructive trust prescribes in ten years from the time of its creation or upon the alleged fraudulent registration of the property. In this case, when the action was instituted on May 7, 1990 , more than fourteen years had already lapsed. Thus, the petitioner contends that the same was already barred by prescription as well as laches.

The petitioner likewise takes exception to the holding of the trial court and the CA that it (the petitioner) failed to apprise or return to the Zuluetas, the respondent’s predecessors-in-interest, the seventy-eight lots excluded from the foreclosure sale because the petitioner had no such obligation under the pertinent loan and mortgage agreement.

The petitioner’s arguments fail to persuade.

At the outset, it bears emphasis that the jurisdiction of this Court in a petition for review on certiorari under Rule 45 of the Rules of Court, as amended, is limited to reviewing only errors of law. This Court is not a trier of facts. Case law has it that the findings of the trial court especially when affirmed by the CA are binding and conclusive upon this Court. Although there are exceptions to the said rule, we find no reason to deviate therefrom.[6] By assailing the findings of facts of the trial court as affirmed by the CA, that it acted in bad faith, the petitioner thereby raised questions of facts in its petition.

Nonetheless, even if we indulged the petition and delved into the factual issues, we find the petition barren of merit.

That the petitioner acted in bad faith in consolidating ownership and causing the issuance of titles in its name over the subject lots, notwithstanding that these were expressly excluded from the foreclosure sale was the uniform ruling of the trial court and appellate court. As declared by the CA:

The acts of defendant-appellant GSIS in concealing from the Zuluetas [the respondent’s predecessors-in-interest] the existence of these lots, in failing to notify or apprise the spouses Zulueta about the excluded lots from the time it consolidated its titles on their foreclosed properties in 1975, in failing to inform them when it entered into a contract of sale of the foreclosed properties to Yorkstown Development Corporation in 1980 as well as when the said sale was revoked by then President Ferdinand E. Marcos during the same year demonstrated a clear effort on its part to defraud the spouses Zulueta and appropriate for itself the subject properties. Even if titles over the lots had been issued in the name of the defendant-appellant, still it could not legally claim ownership and absolute dominion over them because indefeasibility of title under the Torrens system does not attach to titles secured by fraud or misrepresentation. The fraud committed by defendant-appellant in the form of concealment of the existence of said lots and failure to return the same to the real owners after their exclusion from the foreclosure sale made defendant-appellant holders in bad faith. It is well-settled that a holder in bad faith of a certificate of title is not entitled to the protection of the law for the law cannot be used as a shield for fraud.[7]

The Court agrees with the findings and conclusion of the trial court and the CA. The petitioner is not an ordinary mortgagee. It is a government financial institution and, like banks, is expected to exercise greater care and prudence in its dealings, including those involving registered lands.[8] The Court’s ruling in Rural Bank of Compostela v. CA[9] is apropos:

Banks, indeed, should exercise more care and prudence in dealing even with registered lands, than private individuals, for their business is one affected with public interest, keeping in trust money belonging to their depositors, which they should guard against loss by not committing any act of negligence which amounts to lack of good faith by which they would be denied the protective mantle of land registration statute, Act [No.] 496, extended only to purchasers for value and in good faith, as well as to mortgagees of the same character and description.[10]

Due diligence required of banks extend even to persons, or institutions like the petitioner, regularly engaged in the business of lending money secured by real estate mortgages.[11]

In this case, the petitioner executed an affidavit in consolidating its ownership and causing the issuance of titles in its name over the subject lots despite the fact that these were expressly excluded from the foreclosure sale. By so doing, the petitioner acted in gross and evident bad faith. It cannot feign ignorance of the fact that the subject lots were excluded from the sale at public auction. At the least, its act constituted gross negligence amounting to bad faith. Further, as found by the CA, the petitioner’s acts of concealing the existence of these lots, its failure to return them to the Zuluetas and even its attempt to sell them to a third party is proof of the petitioner’s intent to defraud the Zuluetas and appropriate for itself the subject lots.

On the issue of prescription, generally, an action for reconveyance of real property based on fraud prescribes in four years from the discovery of fraud; such discovery is deemed to have taken place upon the issuance of the certificate of title over the property. Registration of real property is a constructive notice to all persons and, thus, the four-year period shall be counted therefrom.[12] On the other hand, Article 1456 of the Civil Code provides:

Art. 1456. If property is acquired through mistake or fraud, the person obtaining it is, by force of law, considered a trustee of an implied trust for the benefit of the person from whom the property comes.

An action for reconveyance based on implied or constructive trust prescribes in ten years from the alleged fraudulent registration or date of issuance of the certificate of title over the property.[13]

The petitioner’s defense of prescription is untenable. As held by the CA, the general rule that the discovery of fraud is deemed to have taken place upon the registration of real property because it is “considered a constructive notice to all persons” does not apply in this case. The CA correctly cited the cases of Adille v. Court of Appeals[14] and Samonte v. Court of Appeals,[15] where this Court reckoned the prescriptive period for the filing of the action for reconveyance based on implied trust from the actual discovery of fraud.

In ruling that the action had not yet prescribed despite the fact that more than ten years had lapsed between the date of registration and the institution of the action for reconveyance, the Court in Adille ratiocinated:

It is true that registration under the Torrens system is constructive notice of title, but it has likewise been our holding that the Torrens title does not furnish a shield for fraud. It is therefore no argument to say that the act of registration is equivalent to notice of repudiation, assuming there was one, notwithstanding the long-standing rule that registration operates as a universal notice of title.

18Yumi- cases LTD

For the same reason, we cannot dismiss private respondents’ claims commenced in 1974 over the estate registered in 1955. While actions to enforce a constructive trust prescribes in ten years, reckoned from the date of the registration of the property, we, as we said, are not prepared to count the period from such a date in this case. We note the petitioner’s sub rosa efforts to get hold of the property exclusively for himself beginning with his fraudulent misrepresentation in his unilateral affidavit of extrajudicial settlement that he is “the only heir and child of his mother Feliza with the consequence that he was able to secure title in his name [alone].” Accordingly, we hold that the right of the private respondents commenced from the time they actually discovered the petitioner’s act of defraudation. According to the respondent Court of Appeals, they “came to know [of it] apparently only during the progress of the litigation.” Hence, prescription is not a bar.[16]

The above ruling was reiterated in the more recent case of Samonte. In this case, as established by the CA, the respondent actually discovered the fraudulent act of the petitioner only in 1989:

... [T]he prescriptive period of the action is to be reckoned from the time plaintiff-appellee (then Eduardo M. Santiago) had actually discovered the fraudulent act of defendant-appellant which was, as borne out by the records, only in 1989. Plaintiff-appellee Eduardo M. Santiago categorically testified (TSN of July 11, 1995, pp. 14-15) that he came to know that there were 91 excluded lots in Antonio Village which were foreclosed by the GSIS and included in its consolidation of ownership in 1975 when, in 1989, he and Antonio Vic Zulueta discussed it and he was given by Zulueta a special power of attorney to represent him to recover the subject properties from GSIS. The complaint for reconveyance was filed barely a year from the discovery of the fraud.[17]

Following the Court’s pronouncements in Adille and Samonte, the institution of the action for reconveyance in the court a quo in 1990 was thus well within the prescriptive period. Having acted in bad faith in securing titles over the subject lots, the petitioner is a holder in bad faith of certificates of title over the subject lots. The petitioner is not entitled to the protection of the law for the law cannot be used as a shield for frauds.[18]

Contrary to its claim, the petitioner unarguably had the legal duty to return the subject lots to the Zuluetas. The petitioner’s attempts to justify its omission by insisting that it had no such duty under the mortgage contract is obviously clutching at straw. Article 22 of the Civil Code explicitly provides that “every person who, through an act of performance by another, or any other means, acquires or comes into possession of something at the expense of the latter without just or legal ground, shall return the same to him.”

WHEREFORE, the petition is DENIED for lack of merit. The assailed Decision dated February 22, 2002 and Resolution dated September 5, 2002 of the Court of Appeals in CA-G.R. CV No. 62309 are AFFIRMED IN TOTO. Costs against the petitioner. SO ORDERED.

REYNALDO, TELESFORO, REMEDIOS, ALFREDO and BELEN, all surnamed AGUIRRE, VICENTA, HORACIO and FLORENCIO, all surnamed MAGTIBAY and LEONILA, CECILIA, ANTONIO, and VENANCIO, all

surnamed MEDRANO, and ZOSIMA QUIAMBAO, petitioners, vs. COURT OF APPEALS and ELIAS, JOSE, ARSENIA and ROGELIO, all surnamed BALITAAN, and MARIA ROSALES, respondents.

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 Decision[1] dated July 26, 1995 rendered by the Court of Appeals in CA-G.R. CV No. 42350 which set aside the Decision[2] dated April 28, 1992 of the Regional Trial Court of Batangas City (Branch 2) in Civil Case No. 202,[3] and declared private respondents Heirs of Tiburcio Balitaan, as owners of the parcel of unregistered land with an approximate area of 1,695 square meters, located at Aplaya, Bauan, Batangas.

The facts of the case are as follows:

In his lifetime, Leocadio Medrano was the owner and possessor of a parcel of residential land, situated in Aplaya, Bauan, Batangas, containing an area of 2,611 square meters.[4] The parcel of land was conjugal property, having been acquired by Leocadio during his first marriage with one Emiliana Narito. Their union begot four children, namely: (a) Gertrudes Medrano, now deceased, represented in this case by her children, herein petitioners Telesforo, Reynaldo, Remedios, Alfredo, and Belen, all surnamed Aguirre; (b) Isabel Medrano, likewise deceased, represented by her children, herein petitioners Vicenta, Horacio, and Florencio, all surnamed Magtibay; (c) Placido Medrano, also deceased, represented by his only child, herein petitioner Zosima Quiambao; and (d) Sixto Medrano.

After the death of his first wife, Leocadio contracted a second marriage with Miguela Cariño. Their union bore four children, herein co-petitioners, namely: Venancio, Leonila, Antonio and Cecilia, all surnamed Medrano.

Upon the death of Leocadio on March 19, 1945, the surviving heirs agreed that Sixto should manage and administer the subject property.

Sixto died on May 17, 1974. It was only after his death that petitioners heard rumors that Sixto had, in fact, sold significant portions of the estate of Leocadio. It appears that on September 7, 1953, Sixto, without the knowledge and consent of the petitioners, executed an Affidavit of Transfer of Real Property stating therein that he was the only heir of Leocadio.[5] Sixto declared that Leocadio died on September 16, 1949, instead of the actual date of his death on March 19, 1945. With the use of said affidavit and a survey plan,[6] Tax Declaration No. 40105 in the name of Leocadio was cancelled and Tax Declaration No. 44984 was issued in the name of Sixto.[7] On August 29, 1957, Sixto sold to Maria Bacong a 160- square meter portion of the subject land.[8] On September 28, 1959, Sixto sold to Tiburcio Balitaan a 1,695 square meter portion of the same land.[9] Sometime in November 1967, Maria Bacong sold her property to Rosendo Bacong.[10]

Petitioners demanded the reconveyance of the portions sold by Sixto but Tiburcio Balitaan, Maria Bacong and Rosendo Bacong refused to do so. Hence, petitioners filed against them before the Regional Trial Court of Batangas (Branch 2), a complaint for Declaration of Nullity of Documents, Partition, Malicious Prosecution and Damages, docketed as Civil Case No. 202.[11]

19Yumi- cases LTD

In their Answer, Maria Bacong and Rosendo Bacong contend that petitioners have no cause of action because they acquired their property thru a valid deed of sale dated August 29, 1957, executed by Sixto and, alternatively, petitioners’ cause of action, if any, was barred by prescription and laches.[12]

In his Answer, Tiburcio Balitaan contends that petitioners have no cause of action since petitioners were well-aware of the sale of the property to him by Sixto; and that he was an innocent purchaser for value, in possession and enjoyment of the land in the concept of absolute owner, peacefully and publicly. He further echoed the contention of Maria and Rosendo Bacong that any cause of action petitioners may have was barred by prescription and laches.[13]

Maria Bacong died during the pendency of the suit in the trial court and she was substituted by her surviving heirs, namely, Lorenza, Elena, Felipa, Manuel, Marilou, Ricardo, Medel, Monchito and Milag, all surnamed Medrano.[14] Tiburcio Balitaan also died and was substituted by his heirs, herein private respondents, namely: his wife, Maria Rosales and their four children: Elias, Jose, Arsenia and Rogelio, all surnamed Balitaan.[15]

On July 28, 1989, petitioners and Rosendo Bacong, for himself and as attorney-in-fact of the heirs of Maria Bacong, entered into a compromise agreement to settle the case between them.[16] The compromise agreement, as approved by the trial court, provided that Rosendo Bacong and the heirs of Maria Bacong agreed to pay P30,000.00 to petitioners in recognition of petitioners’ ownership of a 269-square meter portion[17] and in consideration of which, petitioners recognized the full ownership, rights, interest and participation of the former over said land.[18] The area of the subject land is thus reduced to 2,342 square meters (2,611 square meters minus 269 square meters).

After trial on the merits, the trial court rendered judgment dated April 28, 1992, ruling that private respondents did not dispute, by any evidence, the falsity of the Affidavit of Transfer, as well as the fact that Sixto had co-owners to the property. It found that private respondents’ affirmative defense of laches and/or prescription are unavailing against a property held in co-ownership as long as the state of co-ownership is recognized. Consequently, the trial court upheld the sale made by Sixto in favor of private respondents only to the extent that Sixto is entitled to by virtue of his being a co-owner.[19]

In determining the area that Sixto could have validly sold to private respondents, the trial court, in its decision, provided for the manner of partition among the parties, based on the memorandum submitted by petitioners, thus:

For the four (4) children of the first marriage, namely:

(1) Gertrudes, who is already dead represented by her children Tefesforo, Reynaldo, Remedios, Alfredo and Belen, all surnamed Aguirre – 399.42 square meters; (2) Isabel Medrano, who is already dead, represented by the plaintiffs, her children Vicenta, Horacio and Florencio, all surnamed Magtibay – 399.42 square meters;

(3) Placido Medrano (dead), represented by his only child Zosima Medrano – 399.42 square meters; and (4) Sixto Medrano – 399.42 square meters only which he had the right to dispose of in favor of Tiburcio Balitaan and Maria Rosales.

The above consist of undivided interest, shares and participations from the inheritance or succession to the conjugal estate of Leocadio Medrano and Emiliana Narito.

For the children of the second marriage their shares in the inheritance from the property of Leocadio Medrano are as follows:

(1) To Venancio Medrano - 138.32 square meters(2) To Leonila Medrano - 138.32 square meters(3) To Antonio Medrano - 138.32 square meters(4) To Cecilia Medrano - 138.32 square meters with all the above consisting of undivided shares, interest and participation in the estate.

For the defendants Maria Rosales, surviving spouse of the deceased Tiburcio Balitaan and their Children, an area of 399.42 square meters, the only area and extent which Sixto Medrano could have legally dispensed of in their favor.[20]

Thus, the dispositive portion of the trial court’s decision reads as follows:

WHEREFORE, in view of the foregoing, the Court renders judgment in favor of the plaintiffs and against the defendants, to wit:

(a) Ordering the partition of the property in question among the plaintiffs and the defendants; and

(b) Ordering the parties, plaintiffs and defendants, to make a partition among themselves by proper instruments of conveyance and to submit before this Court a project of partition should the parties be able to agree for the confirmation of the Court within two (2) months upon receipt of this decision, otherwise this Court will be constrained to appoint commissioners to make the partition in accordance with law.

All other claims not having been duly proved are ordered dismissed.

SO ORDERED.[21]

Aggrieved, private respondents appealed to the Court of Appeals.[22]

On July 26, 1995, the appellate court rendered judgment recognizing the validity of the sale only with respect to the undivided share of Sixto Medrano as co-owner; but nonetheless, declaring respondents as absolute owners of 1,695 square meters of the subject property, reasoning that:

. . . Defendants-appellees have been in possession, in the concept of owner, of the entire parcel of land sold to Tiburcio Balitaan by Sixto Medrano for more than ten years, seventeen years to be exact (1958-1975). Relying on the affidavit of transfer (Exhibit “B”) the tax declaration (Exhibit “C”) and the survey plan (Exhibit “D”) shown to him by Sixto Medrano which indicate the latter as owner of the property in dispute, Tiburcio Balitaan believed transfer to him was effected. (TSN, April 17, 1991, pp. 14-17) and thus, entered the property as owner (Ibid. at p. 13) Tiburcio Balitaan, believing himself as the lawful transferee, in addition, caused Tax Declaration No. 51038 to be issued in his name (Exhibits “6”, “6-A”, “6-B”, and “6-C”). Thus, although the sale of the co-owned property is only valid as to the undivided share of Sixto Medrano, defendants, by virtue of their open, adverse and uninterrupted possession from

20Yumi- cases LTD

1958 (Exhibit “G”) to 1975, obtained title to the entire property and not just Sixto’s undivided share. This is pursuant to Article 1134 (1957a) of the New Civil Code which provides that:

Ownership and other real rights over immovable property are acquired by ordinary prescription through possession of ten years.. . .

Plaintiffs did not at all inquire as to the status of their property all this time and thus have been remiss of their duties as owners of the property. Plaintiffs waited until Sixto’s death to learn more about their property. Even though the co-ownership is to be preserved in accordance with the wishes of the deceased, the plaintiffs should have taken it upon themselves to look into the status of the property once in a while, to assure themselves that it is managed well and that they are receiving what is due them as co-owners of the parcel of land or to at least manifest their continued interest in the property as normal owners would do. But the plaintiffs did not show any interest in the way Sixto Medrano was managing the property which in effect gave the latter carte blanche powers over the same. Such passivity is aggravated by the fact that one of the plaintiffs resides a mere 600 meters away from the disputed property (TSN, April 17, 1991, p. 13). By not showing any interest, the plaintiffs have, in fact, slept on their rights and thus, cannot now exercise a stale right.[23]

Petitioners sought reconsideration[24] but the appellate court denied it in a Resolution dated October 5, 1995.[25]

In their present recourse, petitioners take exception from the appellate court’s findings that respondents have been in possession, in the concept of owner of the entire parcel of land sold to Tiburcio Balitaan by Sixto Medrano for seventeen years (1958-1975), relying on the Affidavit of Transfer and Tax Declaration No. 51038 in the name of Sixto; and that Tiburcio acquired ownership of the whole property from Sixto through ordinary prescription for ten years.

Petitioners submit that Tiburcio Balitaan was not a purchaser in good faith and for value since there are enough circumstances which should have put him on guard and prompted him to be more circumspect and inquire further about the true status of Sixto Medrano’s ownership; that during his lifetime, Tiburcio was a neighbor of petitioners and was well-aware that Sixto had other siblings but Tiburcio chose to rely on the Affidavit of Transfer executed by Sixto Medrano declaring that he was the only heir of Leocadio; that the Court of Appeals should not have faulted them for failing to inquire about the status of the disputed property until after the death of Sixto Medrano; that they are not guilty of laches.

It is settled that in the exercise of the Supreme Court’s power of review, the findings of facts of the Court of Appeals are conclusive and binding on the Supreme Court.[26] The exceptions to this rule are: (1) when the findings are grounded entirely on speculation, surmises or conjectures; (2) when the inference made is manifestly mistaken, absurd or impossible; (3) when there is grave abuse of discretion; (4) when the judgment is based on a misapprehension of facts; (5) when the findings of fact are conflicting; (6) when in making its findings the Court of Appeals went beyond the issues of the case, or its findings are contrary to the admissions of both the appellant and the appellee; (7) when the findings are contrary to the trial court; (8) when the findings are conclusions without citation of specific evidence on which they are based; (9) when the facts set forth in the petition as well as in the petitioner’s main and reply briefs are not disputed by the respondent; (10) when the findings of fact are premised on the supposed absence of evidence and contradicted by the evidence on record; and (11) when the Court of Appeals

manifestly overlooked certain relevant facts not disputed by the parties, which, if properly considered, would justify a different conclusion.[27] Exceptions (4), (7), (10) and (11) are present in the instant case.

We find the petition meritorious.[28] We agree with the petitioners that the Court of Appeals committed a reversible error in upholding the claim of petitioners that they acquired ownership of the subject property through prescription.

Acquisitive prescription of real rights may be ordinary or extraordinary. Ordinary acquisitive prescription requires possession of things in good faith and with just title for the time fixed by law;[29] without good faith and just title, acquisitive prescription can only be extraordinary in character. Regarding real or immovable property, ordinary acquisitive prescription requires a period of possession of ten years,[30] while extraordinary acquisitive prescription requires an uninterrupted adverse possession of thirty years.[31]

Ordinary acquisitive prescription demands that possession be “in good faith”, which consists in the reasonable belief that the person from whom the thing is received has been the owner thereof and could thereby transmit that ownership.[32] There is “just title” when the adverse claimant comes into possession of the property through any of the modes recognized by law for the acquisition of ownership or other real rights, but that the grantor is neither the owner nor in a position to transmit the right.[33]

Article 1130 of the Civil Code states that the “title for prescription must be true and valid.” In Doliendo vs. Biarnesa,[34] we elucidated on this provision, thus:

We think that this contention is based on a misconception of the scope and effect of the provisions of this article of the Code in its application to “ordinary prescription.” It is evident that by a “titulo verdadero y valido” in this connection we are not to understand a “titulo que por si solo tiene fuerza de transferir el dominio sin necesidad de la prescricion” (a title which of itself is sufficient to transfer the ownership without the necessity of the lapse of the prescription period); and we accept the opinion of a learned Spanish law writer who holds that the “titulo verdadero y valido” as used in this article of the code prescribes a “titulo Colorado” and not merely “putativo;” a “titulo Colorado” being one ‘which a person has when he buys a thing, in good faith, from one whom he believes to be the owner,’ and a “titulo putativo” “being one which is supposed to have preceded the acquisition of a thing, although in fact it did not, as might happen when one is in possession of a thing in the belief that it had been bequeathed to him.” (Viso Derecho Civil, Parte Segunda, p. 541)[35]

The requirements for ordinary acquisitive prescription as hereinabove described have not been met in this case.

It must be remembered that the burden of proving the status of a purchaser in good faith lies upon him who asserts that status. It is not sufficient to invoke the ordinary presumption of good faith, that is, that everyone is presumed to have acted in good faith, since the good faith that is here essential is integral with the very status that must be established.[36]

After a careful examination of the records, we find that private respondents failed to discharge the burden of proof that Tiburcio Balitaan was a purchaser in good faith. It is undisputed that Tiburcio practically lived his entire lifetime in the area where the property in dispute is located and had been a neighbor of petitioners. He knew that Sixto Medrano had other siblings because his son, Dr. Elias

21Yumi- cases LTD

Balitaan, is the godson by baptism of spouses Jose Aguirre and Gertrudes Medrano, the latter being a deceased sister of Sixto. Thus, Tiburcio was not a complete stranger to the Medrano clan. Yet, he deliberately chose to close his eyes to said facts and despite his personal knowledge to the contrary, he purchased the disputed property from Sixto on the basis of the misrepresentation of the latter in his Affidavit of Transfer that he is the sole surviving heir of Leocadio. A purchaser cannot close his eyes to facts which should put a reasonable man upon his guard, and then claim that he acted in good faith under the belief that there was no defect in the title of the vendor.[37]

Since the disputed property is an unregistered land, Tiburcio as buyer thereof did so at his peril. Private respondents’ claim that Tiburcio bought the land in good faith, that is, without notice that some other person has a right to or interest in the property, would not protect them if it turns out, as it actually did in this case, that the seller, Sixto Medrano, did not own the entire property at the time of the sale, but only an undivided portion of the land as a co-owner. Private respondents failed to show that the petitioners were notified of the subject sale or that respondents gave their consent to the sale. Not being in “good faith”, the ten-year period required for ordinary acquisitive prescription does not apply.

Even the thirty-year period under extraordinary acquisitive prescription has not been met in this case. Private respondents claim to have been in possession, in the concept of owner, of the entire parcel of land sold to Tiburcio Balitaan by Sixto Medrano for only seventeen years (1958-1975).

In addition, as we have enunciated in Salvador vs. Court of Appeals,[38] to wit:

This Court has held that the possession of a co-owner is like that of a trustee and shall not be regarded as adverse to the other co-owners but in fact as beneficial to all of them. Acts which may be considered adverse to strangers may not be considered adverse insofar as co-owners are concerned. A mere silent possession by a co-owner, his receipt of rents, fruits or profits from the property, the erection of buildings and fences and the planting of trees thereon, and the payment of land taxes, cannot serve as proof of exclusive ownership, if it is not borne out by clear and convincing evidence that he exercised acts of possession which unequivocably constituted an ouster or deprivation of the rights of the other co-owners.

Thus, in order that a co-owner’s possession may be deemed adverse to the cestui que trust or the other co-owners, the following elements must concur: (1) that he has performed unequivocal acts of repudiation amounting to an ouster of the cestui que trust or the other co-owners; (2) that such positive acts of repudiation have been made known to the cestui que trust or the other co-owners; and (3) that the evidence thereon must be clear and convincing.[39] (Emphasis supplied)

Tested against these guidelines, respondents failed to present competent evidence that the acts of Sixto adversely and clearly repudiated the existing co-ownership among the heirs of Leocadio Medrano.

Private respondents’ reliance on the tax declaration in the name of Sixto Medrano is unworthy of credit since we have held on several occasions that tax declarations by themselves do not conclusively prove title to land.[40] Further, private respondents failed to show that the Affidavit executed by Sixto to the effect that he is the sole owner of the subject property was known or made known to the other co-heirs of Leocadio Medrano.

Neither can we subscribe to the appellate court’s view that petitioners are guilty of laches. Laches is the negligence or omission to assert a right within a reasonable time, warranting a presumption that the party entitled to assert it has abandoned it or declined to assert it.[41] It does not involve mere lapse or passage of time, but is principally an impediment to the assertion or enforcement of a right, which has become under the circumstances inequitable or unfair to permit.[42] The rule that each co-owner may demand at any time the partition of the common property implies that an action to demand partition is imprescriptible or cannot be barred by laches.[43]

We have consistently held that if a co-owner sells the whole property as his, the sale will affect only his own share but not those of the other co-owners who did not consent to the sale.[44] Article 493 of the Civil Code provides:

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

It clearly provides that the sale or other disposition affects only the seller’s share pro indiviso, and the transferee gets only what corresponds to his grantor’s share in the partition of the property owned in common. Since a co-owner is entitled to sell his undivided share, a sale of the entire property by one co-owner without the consent of the other co-owners is not null and void; only the rights of the co-owner/seller are transferred, thereby making the buyer a co-owner of the property.[45] Accordingly, we held in Bailon-Casilao vs. Court of Appeals:

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

The proper action in cases like this is not for the nullification of the sale or for the recovery of possession of the thing owned in common from the third person who substituted the co-owner or co-owners who alienated their shares, but the DIVISION of the common property as if it continued to remain in the possession of the co-owners who possessed and administered it [Mainit v. Bandoy, supra].

Thus, it is now settled that the appropriate recourse of co-owners in cases where their consent were not secured in a sale of the entire property as well as in a sale merely of the undivided shares of some of the co-owners is an action for PARTITION under Rule 69 of the Revised Rules of Court. Neither recovery of possession nor restitution can be granted since the defendant buyers are legitimate proprietors and possessors in joint ownership of the common property claimed [Ramirez v. Bautista, supra].[46]

It is clear therefore that the deed of sale executed by Sixto Medrano in favor of Tiburcio Balitaan is a valid conveyance only insofar as the share of Sixto Medrano in the co-ownership is concerned. Thus, the respondent court erred in declaring the ownership of the entire 1,695-square meter property sold by Sixto, in favor of the private respondents.

22Yumi- cases LTD

The next question is what is the area of the pro indiviso share pertaining to Sixto Medrano that was sold to private respondents? The trial court endeavored to determine the same by ascertaining the inheritance of each of the heirs of Leocadio. However, the manner of partition as set out by the trial court in the text of its decision needs to be amended so as to conform to the laws on intestate succession under the Old Civil Code absent any allegation or showing that Leocadio left any last will and testament.

It is not disputed that the 2,342-square meter property was a conjugal property of Leocadio and Emiliana. Upon the death of Emiliana, which occurred many years before the death of Leocadio in 1945, both deaths occurring before the enactment of the New Civil Code in 1950, all the four children of the first marriage and the four children of the second marriage shall share equally. The subject property should have been divided into eight equal parts, pursuant to Articles 921 and 931 of the old Civil Code,[47] or 292.75 square meters each. The respective heirs of the now deceased children of Leocadio inherit by way of representation the respective shares of their respective parents, pursuant to Articles 933 and 934 of the Old Civil Code.[48]

At the time of death of Leocadio in 1945, Miguela was entitled only to the usufruct of the land pursuant to Article 834 of the Old Civil Code,[49] which provides that “[i]f only one legitimate child or descendant survives, the widower or widow shall have the usufruct of the third available for betterment, such child or descendant to have the naked ownership until, on the death of the surviving spouse, the whole title is merged in him”.

Thus, to recapitulate, each of the heirs of Leocadio should inherit 292.75 square meters, pro-indiviso (2,342 square meters ¸ 8 = 292.75 square meters) after deducting from the original 2,611 square meters of the subject property the 269 square meters ceded to the heirs of Maria Bacong in a compromise agreement among the petitioners and the heirs of Maria Bacong. The deceased children of Leocadio are represented by their respective heirs by right of representation under Articles 933 and 934 of the Old Civil Code.

Accordingly, the undivided shares of Leocadio’s eight children or their heirs by right of representation, upon the death of Leocadio in 1945 are as follows:

(1) Venancio Medrano - 292.75 square meters(2) Leonila Medrano - 292.75 square meters(3) Antonio Medrano - 292.75 square meters(4) Cecilia Medrano - 292.75 square meters(5) Heirs of Gertrudes M. Aguirre, Telesforo, Reynaldo, Remedios, Alfredo and Belen, all surnamed Aguirre- - 292.75 square meters(6) Heirs of Isabel M. Magtibay, Vicenta, Horacio and Florencio, all surnamed Magtibay - 292.75 square meters(7) Heirs of Placido Medrano, plaintiff Zosima Medrano Quimbao - 292.75 square meters(8) Sixto Medrano - 292.75 square meters

During the pendency of the case in the trial court but after the death of Sixto, petitioners sold 460 square meters to one Mateo Castillo. Consequently, the 460 square meters should be charged against the shares of petitioners only and should not affect the 292.75 square meters undivided share of Sixto Medrano which he had sold in 1959.[50] Accordingly, 460 square meters divided by 7 equals 65.71 square meters. Deducting said area from 292.75 square meters, the final undivided share of each of the

seven heirs of Leocadio should be 227.04 square meters (292.75 - 65.71 = 227.04) and that pertaining to Sixto in 292.75 square meters.

Thus, the manner of partition set forth by the trial court in its decision should be amended, as follows:

(1) Gertrudes M. Aguirre, deceased, represented by her children, herein petitioners Telesforo, Reynaldo, Remedios, Alfredo and Belen, all surnamed Aguirre - 227.04 square meters (2) Isabel M. Magtibay, deceased, represented by her children, herein petitioners Vicenta, Horacio and Florencio, all surnamed Magtibay - 227.04 square meters (3) Placido Medrano, deceased, represented by his only child, Placido Medrano - 227.04 square meters (4) Private respondents Maria Rosales and heirs of Tiburcio Balitaan, namely: Elias, Jose, Arsenia and Rogelio all surnamed Balitaan (in lieu of Sixto Medrano) - 292.75 square meters (5) Venancio Medrano - 227.04 square meters(6) Leonila Medrano - 227.04 square meters(7) Antonio Medrano - 227.04 square meters (8) Cecilia Medrano - 227.04 square meters (9) Rosendo Bacong - 269 square meters (10) Mateo Castillo - 460 square meters

WHEREFORE, we GRANT the petition. The assailed decision of the Court of Appeals in CA-G.R. CV No. 42350, dated July 26, 1995, is REVERSED and SET ASIDE. The decision of the Regional Trial Court is REINSTATED with the following MODIFICATIONS:

The sale in favor of private respondents is declared VALID but only insofar as the 292.75 square meters undivided share of Sixto Medrano in the subject property is concerned.

Let the parcel of land, located at Aplaya, Bauan, Batangas, consisting of 2,611 square meters, be partitioned and distributed as determined by the Court in the text of herein decision. Accordingly, let the records of the case be remanded to the Regional Trial Court of Batangas City (Branch 2) in Civil Case No. 202 for further appropriate proceedings under Rule 69 of the Rules of Court.

No pronouncement as to costs. SO ORDERED.

SOLEDAD CALICDAN, represented by her guardian GUADALUPE CASTILLO, petitioner, vs. SILVERiO CENDAÑA, substituted by his legal heir CELSA CENDAÑA-ALARAS, respondent.

YNARES-SANTIAGO, J.:

This petition for review seeks the reversal of the April 4, 2002 decision of the Court of Appeals in CA-G.R. CV No. 67266,[1] which set aside the November 12, 1996 decision of the Regional Trial Court of Dagupan City, Branch 44 in Civil Case No. D-10270.[2]

The instant controversy involves a 760 square meter parcel of unregistered land located in Poblacion, Mangaldan, Pangasinan. The land was formerly owned by Sixto Calicdan, who died intestate on November 4, 1941. He was survived by his wife, Fermina, and three children, namely, petitioner Soledad, Jose and Benigno, all surnamed Calicdan.[3]

On August 25, 1947, Fermina executed a deed of donation inter vivos whereby she conveyed the land to respondent Silverio Cendaña,[4] who immediately entered into possession of the land, built a fence

23Yumi- cases LTD

around the land and constructed a two-storey residential house thereon sometime in 1949, where he resided until his death in 1998.[5]

On June 29, 1992, petitioner, through her legal guardian Guadalupe Castillo, filed a complaint for “Recovery of Ownership, Possession and Damages” against the respondent, alleging that the donation was void; that respondent took advantage of her incompetence in acquiring the land; and that she merely tolerated respondent’s possession of the land as well as the construction of his house thereon.[6]

In his “Answer with Motion to Dismiss”, respondent alleged, by way of affirmative defenses, that the land was donated to him by Fermina in 1947; and that he had been publicly, peacefully, continuously, and adversely in possession of the land for a period of 45 years. Moreover, he argued that the complaint was barred by prior judgment in the special proceedings for the “Inventory of Properties of Incompetent Soledad Calicdan”, where the court decreed the exclusion of the land from the inventory of properties of the petitioner.[7]

On November 12, 1996, the trial court rendered a decision in favor of the petitioner, the dispositive portion of which reads as follows:

WHEREFORE, judgment is rendered in favor of plaintiff and against the defendant as follows:

1. Ordering defendant Silverio Cendaña to vacate the land in question and surrender ownership and possession of the same to plaintiff; and

2. Ordering defendant to pay plaintiff P20,000.00 as moral damages, P20,000.00 as exemplary damages, P10,000.00 by way of attorney’s fees and other litigation expenses, plus cost of suit.

SO ORDERED.[8]

On appeal by the respondent, the Court of Appeals reversed the trial court’s decision and declared that the donation was valid. Furthermore, it held that petitioner lost her ownership of the property by prescription.

Hence, the instant petition for review on the following issues:

(1) whether or not the donation inter vivos is valid; and

(2) whether or not petitioner lost ownership of the land by prescription.

As a rule, our jurisdiction in cases brought from the Court of Appeals is limited to the review and revision of errors of law allegedly committed by the appellate court. This is because its findings of fact are deemed conclusive and we are not duty-bound to analyze and weigh all over again the evidence already considered in the proceedings below.[9]

The rule, however, admits of the following exceptions:

(1) when the findings are grounded on speculation, surmises or conjectures;

(2) when the inference made is manifestly mistaken, absurd or impossible;

(3) when there is grave abuse of discretion in the appreciation of facts;

(4) when the factual findings of the trial and appellate courts are conflicting;

(5) when the Court of Appeals, in making its findings, has gone beyond the issues of the case and such findings are contrary to the admissions of both appellant and appellee;

(6) when the judgment of the appellate court is premised on a misapprehension of facts or when it has failed to consider certain relevant facts which, if properly taken into account, will justify a different conclusion;

(7) when the findings of fact are conclusions without citation of specific evidence upon which they are based; and

(8) when findings of fact of the Court of Appeals are premised on the absence of evidence but are contradicted by the evidence on record.[10]

In the case at bar, the factual findings of the trial court and the Court of Appeals are conflicting; thus, we are constrained to review the findings of facts.

The trial court found the donation of the land void because Fermina was not the owner thereof, considering that it was inherited by Sixto from his parents. Thus, the land was not part of the conjugal property of the spouses Sixto and Fermina Calicdan, because under the Spanish Civil Code, the law applicable when Sixto died in 1941, the surviving spouse had a right of usufruct only over the estate of the deceased spouse. Consequently, respondent, who derived his rights from Fermina, only acquired the right of usufruct as it was the only right which the latter could convey.

After a review of the evidence on record, we find that the Court of Appeals’ ruling that the donation was valid was not supported by convincing proof. Respondent himself admitted during the cross examination that he had no personal knowledge of whether Sixto Calicdan in fact purchased the subject land from Felomino Bautista. Pertinent portions of his testimony read:

Q. And Sixto Calicdan inherited this property from his parents? A. No, sir.

Q. What do you mean by no? A. To my knowledge and information, Sixto Calicdan bought the property from his cousin, I think Flaviano or Felomino Bautista.

Q. So, in other words, you have no personal knowledge about how Sixto Calicdan acquired this property? A. I think it was by purchase.

Q. According to information, so you have no actual personal knowledge how Sixto Calicadan acquired this property? A. Yes, because when the property was bought by my uncle, I was not yet born, so information only.

24Yumi- cases LTD

Q. So when you were born, you came to know already that Sixto Calicdan is the owner of this property?

A. Yes, thru the son of Felomino Bautista who is now, I think, in Baguio.

Q. You have not seen any document to show that Sixto Calicdan purchased the property from one Felomino Bautista? A. None, sir.[11]

In People v. Guittap,[12] we held that:

Under Rule 130, Section 36 of the Rules of Court, a witness can testify only to those facts which he knows of his own personal knowledge, i.e., which are derived from his own perception; otherwise, such testimony would be hearsay. Hearsay evidence is defined as “evidence not of what the witness knows himself but of what he has heard from others.” The hearsay rule bars the testimony of a witness who merely recites what someone else has told him, whether orally or in writing. In Sanvicente v. People, we held that when evidence is based on what was supposedly told the witness, the same is without any evidentiary weight for being patently hearsay. Familiar and fundamental is the rule that hearsay testimony is inadmissible as evidence.

The Court of Appeals thus erred in ruling based on respondent’s bare hearsay testimony as evidence of the donation made by Fermina.

Notwithstanding the invalidity of the donation, we find that respondent has become the rightful owner of the land by extraordinary acquisitive prescription.

Prescription is another mode of acquiring ownership and other real rights over immovable property. It is concerned with lapse of time in the manner and under conditions laid down by law, namely, that the possession should be in the concept of an owner, public, peaceful, uninterrupted and adverse. Acquisitive prescription is either ordinary or extraordinary. Ordinary acquisitive prescription requires possession in good faith and with just title for ten years. In extraordinary prescription ownership and other real rights over immovable property are acquired through uninterrupted adverse possession thereof for thirty years without need of title or of good faith.[13]

The good faith of the possessor consists in the reasonable belief that the person from whom he received the thing was the owner thereof, and could transmit his ownership.[14] For purposes of prescription, there is just title when the adverse claimant came into possession of the property through one of the modes recognized by law for the acquisition of ownership or other real rights, but the grantor was not the owner or could not transmit any right.[15]

Assuming arguendo that ordinary acquisitive prescription is unavailing in the case at bar as it demands that the possession be “in good faith and with just title,”[16] and there is no evidence on record to prove respondent’s “good faith”, nevertheless, his adverse possession of the land for more than 45 years aptly shows that he has met the requirements for extraordinary acquisitive prescription to set in.

The records show that the subject land is an unregistered land. When the petitioner filed the instant case on June 29, 1992, respondent was in possession of the land for 45 years counted from the time of the donation in 1947. This is more than the required 30 years of uninterrupted adverse possession without just title and good faith. Such possession was public, adverse and in the concept of an owner. Respondent fenced the land and built his house in 1949, with the help of Guadalupe’s father as his

contractor. His act of cultivating and reaping the fruits of the land was manifest and visible to all. He declared the land for taxation purposes and religiously paid the realty taxes thereon.[17] Together with his actual possession of the land, these tax declarations constitute strong evidence of ownership of the land occupied by him. As we said in the case of Heirs of Simplicio Santiago v. Heirs of Mariano Santiago:[18]

Although tax declarations or realty tax payment of property are not conclusive evidence of ownership, nevertheless, they are good indicia of possession in the concept of owner, for no one in his right mind would be paying taxes for a property that is not in his actual or constructive possession. They constitute at least proof that the holder has a claim of title over the property. The voluntary declaration of a piece of property for taxation purposes manifests not only one’s sincere and honest desire to obtain title to the property and announces his adverse claim against the State and all other interested parties, but also the intention to contribute needed revenues to the Government. Such an act strengthens one’s bona fide claim of acquisition of ownership.

Moreover, the deed of donation inter vivos, albeit void for having been executed by one who was not the owner of the property donated, may still be used to show the exclusive and adverse character of respondent’s possession. Thus, in Heirs of Segunda Maningding v. Court of Appeals,[19] we held:

Even assuming that the donation propter nuptias is void for failure to comply with formal requisites, it could still constitute a legal basis for adverse possession. With clear and convincing evidence of possession, a private document of donation may serve as basis for a claim of ownership. In Pensader v. Pensader we ruled that while the verbal donation under which the defendant and his predecessors-in-interest have been in possession of the lands in question is not effective as a transfer of title, still it is a circumstance which may explain the adverse and exclusive character of the possession. (Underscoring ours) In sum, the Court of Appeals correctly ordered the dismissal of Civil Case No. D-10270 before the Regional Trial Court of Dagupan City, Branch 44, and declared respondent the rightful owner of the subject property, not on the basis of the Deed of Donation Inter Vivos, which is hereby declared void, but on extraordinary acquisitive prescription.

WHEREFORE, in view of the foregoing, the petition is DENIED. The Decision of the Court of Appeals dated April 4, 2002 in CA-G.R. CV No. 67266, which ordered the dismissal of Civil Case No. D-10270 before the Regional Trial Court of Dagupan City, Branch 44, is AFFIRMED. SO ORDERED.

REPUBLIC OF THE PHILIPPINES, petitioner, vs. THE HONORABLE COURT OF APPEALS and CORAZON NAGUIT, respondents.

TINGA, J.:

This is a Petition for Review on Certiorari under Rule 45 of the 1997 Rules of Civil Procedure, seeking to review the Decision[1] of the Sixth Division of the Court of Appeals dated July 12, 2000 in CA-G.R. SP No. 51921. The appellate court affirmed the decisions of both the Regional Trial Court (RTC),[2] Branch 8, of Kalibo, Aklan dated February 26, 1999, and the 7th Municipal Circuit Trial Court (MCTC)[3] of Ibajay-

25Yumi- cases LTD

Nabas, Aklan dated February 18, 1998, which granted the application for registration of a parcel of land of Corazon Naguit (Naguit), the respondent herein.

The facts are as follows:

On January 5, 1993, Naguit, a Filipino citizen, of legal age and married to Manolito S. Naguit, filed with the MCTC of Ibajay-Nabas, Aklan, a petition for registration of title of a parcel of land situated in Brgy. Union, Nabas, Aklan. The parcel of land is designated as Lot No. 10049, Cad. 758-D, Nabas Cadastre, AP – 060414-014779, and contains an area of 31,374 square meters. The application seeks judicial confirmation of respondent’s imperfect title over the aforesaid land.

On February 20, 1995, the court held initial hearing on the application. The public prosecutor, appearing for the government, and Jose Angeles, representing the heirs of Rustico Angeles, opposed the petition. On a later date, however, the heirs of Rustico Angeles filed a formal opposition to the petition. Also on February 20, 1995, the court issued an order of general default against the whole world except as to the heirs of Rustico Angeles and the government.

The evidence on record reveals that the subject parcel of land was originally declared for taxation purposes in the name of Ramon Urbano (Urbano) in 1945 under Tax Declaration No. 3888 until 1991.[4] On July 9, 1992, Urbano executed a Deed of Quitclaim in favor of the heirs of Honorato Maming (Maming), wherein he renounced all his rights to the subject property and confirmed the sale made by his father to Maming sometime in 1955 or 1956.[5] Subsequently, the heirs of Maming executed a deed of absolute sale in favor of respondent Naguit who thereupon started occupying the same. She constituted Manuel Blanco, Jr. as her attorney-in-fact and administrator. The administrator introduced improvements, planted trees, such as mahogany, coconut and gemelina trees in addition to existing coconut trees which were then 50 to 60 years old, and paid the corresponding taxes due on the subject land. At present, there are parcels of land surrounding the subject land which have been issued titles by virtue of judicial decrees. Naguit and her predecessors-in-interest have occupied the land openly and in the concept of owner without any objection from any private person or even the government until she filed her application for registration.

After the presentation of evidence for Naguit, the public prosecutor manifested that the government did not intend to present any evidence while oppositor Jose Angeles, as representative of the heirs of Rustico Angeles, failed to appear during the trial despite notice. On September 27, 1997, the MCTC rendered a decision ordering that the subject parcel be brought under the operation of the Property Registration Decree or Presidential Decree (P.D.) No. 1529 and that the title thereto registered and confirmed in the name of Naguit.[6]

The Republic of the Philippines (Republic), thru the Office of the Solicitor General (OSG), filed a motion for reconsideration. The OSG stressed that the land applied for was declared alienable and disposable only on October 15, 1980, per the certification from Regional Executive Director Raoul T. Geollegue of the Department of Environment and Natural Resources, Region VI.[7] However, the court denied the motion for reconsideration in an order dated February 18, 1998.[8]

Thereafter, the Republic appealed the decision and the order of the MCTC to the RTC, Kalibo, Aklan, Branch 8. On February 26, 1999, the RTC rendered its decision, dismissing the appeal.[9]

Undaunted, the Republic elevated the case to the Court of Appeals via Rule 42 of the 1997 Rules of Civil Procedure. On July 12, 2000, the appellate court rendered a decision dismissing the petition filed by the Republic and affirmed in toto the assailed decision of the RTC.

Hence, the present petition for review raising a pure question of law was filed by the Republic on September 4, 2000.[10]

The OSG assails the decision of the Court of Appeals contending that the appellate court gravely erred in holding that there is no need for the government’s prior release of the subject lot from the public domain before it can be considered alienable or disposable within the meaning of P.D. No. 1529, and that Naguit had been in possession of Lot No. 10049 in the concept of owner for the required period.[11]

Hence, the central question for resolution is whether is necessary under Section 14(1) of the Property Registration Decree that the subject land be first classified as alienable and disposable before the applicant’s possession under a bona fide claim of ownership could even start.

The OSG invokes our holding in Director of Lands v. Intermediate Appellate Court[12] in arguing that the property which is in open, continuous and exclusive possession must first be alienable. Since the subject land was declared alienable only on October 15, 1980, Naguit could not have maintained a bona fide claim of ownership since June 12, 1945, as required by Section 14 of the Property Registration Decree, since prior to 1980, the land was not alienable or disposable, the OSG argues.

Section 14 of the Property Registration Decree, governing original registration proceedings, bears close examination. It expressly provides:

SECTION 14. Who may apply.— The following persons may file in the proper Court of First Instance an application for registration of title to land, whether personally or through their duly authorized representatives:

(1) those who by themselves or through their predecessors-in-interest have been in open, continuous, exclusive and notorious possession and occupation of alienable and disposable lands of the public domain under a bona fide claim of ownership since June 12, 1945, or earlier.

(2) Those who have acquired ownership over private lands by prescription under the provisions of existing laws. . . . .

There are three obvious requisites for the filing of an application for registration of title under Section 14(1) – that the property in question is alienable and disposable land of the public domain; that the applicants by themselves or through their predecessors-in-interest have been in open, continuous, exclusive and notorious possession and occupation, and; that such possession is under a bona fide claim of ownership since June 12, 1945 or earlier.

Petitioner suggests an interpretation that the alienable and disposable character of the land should have already been established since June 12, 1945 or earlier. This is not borne out by the plain meaning of Section 14(1). “Since June 12, 1945,” as used in the provision, qualifies its antecedent phrase “under a bonafide claim of ownership.” Generally speaking, qualifying words restrict or modify only the words or phrases to which they are immediately associated, and not those distantly or remotely located.[13] Ad proximum antecedents fiat relation nisi impediatur sentencia.

26Yumi- cases LTD

Besides, we are mindful of the absurdity that would result if we adopt petitioner’s position. Absent a legislative amendment, the rule would be, adopting the OSG’s view, that all lands of the public domain which were not declared alienable or disposable before June 12, 1945 would not be susceptible to original registration, no matter the length of unchallenged possession by the occupant. Such interpretation renders paragraph (1) of Section 14 virtually inoperative and even precludes the government from giving it effect even as it decides to reclassify public agricultural lands as alienable and disposable. The unreasonableness of the situation would even be aggravated considering that before June 12, 1945, the Philippines was not yet even considered an independent state.

Instead, the more reasonable interpretation of Section 14(1) is that it merely requires the property sought to be registered as already alienable and disposable at the time the application for registration of title is filed. If the State, at the time the application is made, has not yet deemed it proper to release the property for alienation or disposition, the presumption is that the government is still reserving the right to utilize the property; hence, the need to preserve its ownership in the State irrespective of the length of adverse possession even if in good faith. However, if the property has already been classified as alienable and disposable, as it is in this case, then there is already an intention on the part of the State to abdicate its exclusive prerogative over the property.

This reading aligns conformably with our holding in Republic v. Court of Appeals.[14] Therein, the Court noted that “to prove that the land subject of an application for registration is alienable, an applicant must establish the existence of a positive act of the government such as a presidential proclamation or an executive order; an administrative action; investigation reports of Bureau of Lands investigators; and a legislative act or a statute.”[15] In that case, the subject land had been certified by the DENR as alienable and disposable in 1980, thus the Court concluded that the alienable status of the land, compounded by the established fact that therein respondents had occupied the land even before 1927, sufficed to allow the application for registration of the said property. In the case at bar, even the petitioner admits that the subject property was released and certified as within alienable and disposable zone in 1980 by the DENR.[16]

This case is distinguishable from Bracewell v. Court of Appeals,[17] wherein the Court noted that while the claimant had been in possession since 1908, it was only in 1972 that the lands in question were classified as alienable and disposable. Thus, the bid at registration therein did not succeed. In Bracewell, the claimant had filed his application in 1963, or nine (9) years before the property was declared alienable and disposable. Thus, in this case, where the application was made years after the property had been certified as alienable and disposable, the Bracewell ruling does not apply.

A different rule obtains for forest lands,[18] such as those which form part of a reservation for provincial park purposes[19] the possession of which cannot ripen into ownership.[20] It is elementary in the law governing natural resources that forest land cannot be owned by private persons. As held in Palomo v. Court of Appeals,[21] forest land is not registrable and possession thereof, no matter how lengthy, cannot convert it into private property, unless such lands are reclassified and considered disposable and alienable.[22] In the case at bar, the property in question was undisputedly classified as disposable and alienable; hence, the ruling in Palomo is inapplicable, as correctly held by the Court of Appeals.[23]

It must be noted that the present case was decided by the lower courts on the basis of Section 14(1) of the Property Registration Decree, which pertains to original registration through ordinary registration proceedings. The right to file the application for registration derives from a bona fide claim of ownership

going back to June 12, 1945 or earlier, by reason of the claimant’s open, continuous, exclusive and notorious possession of alienable and disposable lands of the public domain.

A similar right is given under Section 48(b) of the Public Land Act, which reads:

Sec. 48. The following described citizens of the Philippines, occupying lands of the public domain or claiming to own any such land or an interest therein, but those titles have not been perfected or completed, may apply to the Court of First Instance of the province where the land is located for confirmation of their claims and the issuance of a certificate of title therefor, under the Land Registration Act, to wit:xxx xxx xxx

(b) Those who by themselves or through their predecessors in interest have been in open, continuous, exclusive, and notorious possession and occupation of agricultural lands of the public domain, under a bona fide claim of acquisition of ownership, for at least thirty years immediately preceding the filing of the application for confirmation of title except when prevented by war or force majeure. These shall be conclusively presumed to have performed all the conditions essential to a Government grant and shall be entitled to a certificate of title under the provisions of this chapter.

When the Public Land Act was first promulgated in 1936, the period of possession deemed necessary to vest the right to register their title to agricultural lands of the public domain commenced from July 26, 1894. However, this period was amended by R.A. No. 1942, which provided that the bona fide claim of ownership must have been for at least thirty (30) years. Then in 1977, Section 48(b) of the Public Land Act was again amended, this time by P.D. No. 1073, which pegged the reckoning date at June 12, 1945. This new starting point is concordant with Section 14(1) of the Property Registration Decree.

Indeed, there are no material differences between Section 14(1) of the Property Registration Decree and Section 48(b) of the Public Land Act, as amended. True, the Public Land Act does refer to “agricultural lands of the public domain,” while the Property Registration Decree uses the term “alienable and disposable lands of the public domain.” It must be noted though that the Constitution declares that “alienable lands of the public domain shall be limited to agricultural lands.”[24] Clearly, the subject lands under Section 48(b) of the Public Land Act and Section 14(1) of the Property Registration Decree are of the same type.

Did the enactment of the Property Registration Decree and the amendatory P.D. No. 1073 preclude the application for registration of alienable lands of the public domain, possession over which commenced only after June 12, 1945? It did not, considering Section 14(2) of the Property Registration Decree, which governs and authorizes the application of “those who have acquired ownership of private lands by prescription under the provisions of existing laws.”

Prescription is one of the modes of acquiring ownership under the Civil Code.[25] There is a consistent jurisprudential rule that properties classified as alienable public land may be converted into private property by reason of open, continuous and exclusive possession of at least thirty (30) years.[26] With such conversion, such property may now fall within the contemplation of “private lands” under Section 14(2), and thus susceptible to registration by those who have acquired ownership through prescription. Thus, even if possession of the alienable public land commenced on a date later than June 12, 1945, and such possession being been open, continuous and exclusive, then the possessor may have the right to register the land by virtue of Section 14(2) of the Property Registration Decree.

27Yumi- cases LTD

The land in question was found to be cocal in nature, it having been planted with coconut trees now over fifty years old.[27] The inherent nature of the land but confirms its certification in 1980 as alienable, hence agricultural. There is no impediment to the application of Section 14(1) of the Property Registration Decree, as correctly accomplished by the lower courts.

The OSG posits that the Court of Appeals erred in holding that Naguit had been in possession in the concept of owner for the required period. The argument begs the question. It is again hinged on the assertion—shown earlier to be unfounded—that there could have been no bona fide claim of ownership prior to 1980, when the subject land was declared alienable or disposable.

We find no reason to disturb the conclusion of both the RTC and the Court of Appeals that Naguit had the right to apply for registration owing to the continuous possession by her and her predecessors-in-interest of the land since 1945. The basis of such conclusion is primarily factual, and the Court generally respects the factual findings made by lower courts. Notably, possession since 1945 was established through proof of the existence of 50 to 60-year old trees at the time Naguit purchased the property as well as tax declarations executed by Urbano in 1945. Although tax declarations and realty tax payment of property are not conclusive evidence of ownership, nevertheless, they are good indicia of the possession in the concept of owner for no one in his right mind would be paying taxes for a property that is not in his actual or at least constructive possession. They constitute at least proof that the holder has a claim of title over the property. The voluntary declaration of a piece of property for taxation purposes manifests not only one’s sincere and honest desire to obtain title to the property and announces his adverse claim against the State and all other interested parties, but also the intention to contribute needed revenues to the Government. Such an act strengthens one’s bona fide claim of acquisition of ownership.[28]

Considering that the possession of the subject parcel of land by the respondent can be traced back to that of her predecessors-in-interest which commenced since 1945 or for almost fifty (50) years, it is indeed beyond any cloud of doubt that she has acquired title thereto which may be properly brought under the operation of the Torrens system. That she has been in possession of the land in the concept of an owner, open, continuous, peaceful and without any opposition from any private person and the government itself makes her right thereto undoubtedly settled and deserving of protection under the law.

WHEREFORE, foregoing premises considered, the assailed Decision of the Court of Appeals dated July 12, 2000 is hereby AFFIRMED. No costs. SO ORDERED.

SPOUSES IGNACIO PALOMO and TRINIDAD PASCUAL, and CARMEN PALOMO VDA. DE BUENAVENTURA, petitioners, vs.THE HONORABLE COURT OF APPEALS, THE REPUBLIC OF THE PHILIPPINES, FAUSTINO J. PERFECTO, RAFFY SANTILLAN, BOY ARIADO, LORENZO BROCALES, SALVADOR DOE, and other DOES, respondents.

ROMERO, J.:

The issue in the case at bar pertains to ownership of 15 parcels of land in Tiwi, Albay which form part of the "Tiwi Hot Spring National Park." The facts of the case are as follows.

On June 13, 1913, then Governor General of the Philippine Islands, William Cameron Forbes issued Executive Order No. 40 which reserved for provincial park purposes some 440,530 square meters of land

situated in Barrio Naga, Municipality of Tiwi, Province of Albay pursuant to the provisions of Act 648 of the Philippine Commission. 1

Subsequently, the then Court of First Instance of Albay, 15th Judicial District, United States of America, ordered the registration of 15 parcels of land covered by Executive Order No. 40 in the name of Diego Palomo on December 9, 1916; 2 December 28, 3 and January 17, 1917. 4 Diego Palomo donated these parcels of land consisting of 74,872 square meters which were allegedly covered by Original Certificates of Title Nos. 513, 169, 176 and 173 5 to his heirs, herein petitioners, Ignacio and Carmen Palomo two months before his death in April 1937. 6

Claiming that the aforesaid original certificates of title were lost during the Japanese occupation, Ignacio Palomo filed a petition for reconstitution with the Court of First Instance of Albay on May 30, 1950. 7 The Register of Deeds of Albay issued Transfer Certificates of Title Nos. 3911, 3912, 3913 and 3914 sometime in October 1953. 8

On July 10, 1954 President Ramon Magsaysay issued Proclamation No. 47 converting the area embraced by Executive Order No. 40 into the "Tiwi Hot Spring National Park," under the control, management, protection and administration of the defunct Commission of Parks and Wildlife, now a division of the Bureau of Forest Development. The area was never released as alienable and disposable portion of the public domain and, therefore, is neither susceptible to disposition under the provisions of the Public Land Law (CA 141) nor registrable under the Land Registration Act (Act No. 496).

The Palomos, however, continued in possession of the property, paid real estate taxes thereon 9 and introduced improvements by planting rice, bananas, pandan and coconuts. On April 8, 1971, petitioner Carmen vda. de Buenaventura and spouses Ignacio Palomo and Trinidad Pascual mortgaged the parcels of land covered by TCT 3911, 3912, 3913 and 3914 to guarantee a loan of P200,000 from the Bank of the Philippine Islands.

In May 7, 1974 petitioner Carmen vda. de Buenaventura and spouses Ignacio Palomo and Trinidad Pascual filed Civil Case No. T-143 before the then Court of First Instance of Albay for Injunction with damages against private respondents Faustino J. Perfecto, Raffy Santillan, Boy Ariado, Lorenzo Brocales, Salvador Doe and other Does who are all employees of the Bureau of Forest Development who entered the land covered by TCT No. 3913 and/or TCT 3914 and cut down bamboos thereat, totally leveling no less than 4 groves worth not less than P2,000.00.

On October 11, 1974, the Republic of the Philippines filed Civil Case No. T-176 for annulment and cancellation of Certificates of Title involving the 15 parcels of land registered in the name of the petitioners and subject of Civil Case T-143. Impleaded with the petitioners as defendants were the Bank of the Philippine Islands, Legazpi Branch and the Register of Deeds of Albay.

The case against the Bank of Philippine Islands was dismissed because the loan of P200,000 with the Bank was already paid and the mortgage in its favor cancelled.

A joint trial of Civil Case T-143 and T-176 was conducted upon agreement of the parties and on July 31, 1986, the trial court rendered the following decision:

WHEREFORE, premises considered, judgment is hereby rendered:

28Yumi- cases LTD

IN CIVIL CASE No. T-143, in favor of the defendants and against the plaintiffs, dismissing the complaint for injunction and damages, as it is hereby DISMISSED.

Costs against the plaintiffs.

In CIVIL CASE No. T-176, in favor of the plaintiffs and against the defendants:

(1) Declaring null and void and no force and effect the Order dated September 14, 1953, as well as the Original Certificate of Titles Nos. 153, 10 169, 173 and 176 and Transfer Certificates of Titles Nos. 3911, T-3912, T-3913, and T-3914, all of the Register of Deeds of Albay and all transactions based on said titles.

(2) Forfeiting in favor of the plaintiff Government any and all improvements on the lands in question that are found therein and introduced by the defendants;

(3) Declaring Lot Nos. 1, 2, 3, 4, 5, 6, 7 8, 9,10, 11 and 12, Plan II-9299 and Lots 1, 21, 11 3 and 4 of Plan II-9205 as part of the Tiwi Hot Spring National Park;

(4) and Finally, the Register of Deeds of Albay is hereby ordered to cancel the alleged Original Certificates of Titles Nos. 513, 169, 173 and 176, Transfer Certificates of Title Nos. T-3911, T-3912, T-3913 and T-3914.

Costs against the defendants.

So Ordered. 12

The court a quo in ruling for the Republic found no sufficient proof that the Palomos have established property rights over the parcels of land in question before the Treaty of Paris which ended the Spanish-American War at the end of the century. The court further stated that assuming that the decrees of the Court of First Instance of Albay were really issued, the Palomos obtained no right at all over the properties because these were issued only when Executive Order No. 40 was already in force. At this point, we take note that although the Geodetic Engineer of the Bureau of Lands appointed as one of the Commissioners in the relocation survey of the properties stated in his reamended report that of the 3,384 square meters covered by Lot 2, Plan II-9205, only 1,976 square meters fall within the reservation area, 13 the RTC ordered TCT 3913 covering the entire Lot 21 (sic) Plan II-9205 cancelled.

The petitioners appealed to the Court of Appeals which affirmed in toto the findings of the lower Court; hence this petition raising the following issues:

1. The respondent Court of Appeals committed grave abuse of discretion in affirming in toto the decision of the lower court.

2. The declaration of nullity of the original certificates of title and subsequent transfer certificates of titles of the petitioners over the properties in question is contrary to law and jurisprudence on the matter.

3. The forfeiture of all improvements introduced by the petitioners in the premises in favor of the government is against our existing law and jurisprudence.

The issues raised essentially boil down to whether or not the alleged original certificate of titles issued pursuant to the order of the Court of First Instance in 1916-1917 and the subsequent TCTs issued in 1953 pursuant to the petition for reconstitution are valid.

Petitioners contend that the Treaty of Paris which ended the Spanish-American War at the end of the 19th century recognized the property rights of Spanish and Filipino citizens and the American government had no inherent power to confiscate properties of private citizens and declare them part of any kind of government reservation. They allege that their predecessors in interest have been in open, adverse and continuous possession of the subject lands for 20-50 years prior to their registration in 1916-1917. Hence, the reservation of the lands for provincial purposes in 1913 by then Governor-general Forbes was tantamount to deprivation of private property without due process of law.

In support of their claim, the petitioners presented copies of a number of decisions of the Court of First Instance of Albay, 15th Judicial District of the United States of America which state that the predecessors in interest of the petitioners' father Diego Palomo, were in continuous, open and adverse possession of the lands from 20 to 50 years at the time of their registration in 1916.

We are not convinced.

The Philippines passed to the Spanish Crown by discovery and conquest in the 16th century. Before the Treaty of Paris in April 11, 1899, our lands, whether agricultural, mineral or forest were under the exclusive patrimony and dominion of the Spanish Crown. Hence, private ownership of land could only be acquired through royal concessions which were documented in various forms, such as (1) Titulo Real or Royal Grant," (2) Concesion Especial or Special Grant, (3) Titulo de Compra or Title by Purchase and (4) Informacion Posesoria or Possessory Information title obtained under the Spanish Mortgage Law or under the Royal Decree of January 26, 1889.

Unfortunately, no proof was presented that the petitioners' predecessors in interest derived title from an old Spanish grant. Petitioners placed much reliance upon the declarations in Expediente No. 5, G.L.R.O. Record Decision No. 9820, dated January 17, 1917; Expediente No. 6, G.L.R.O. Record No. 9821, dated December 28, 1916; Expediente No. 7, G.L.R.O. Record No. 9822, dated December 9, 1916; Expediente No. 8, G.L.R.O. Record No. 9823, dated December 28, 1916 and Expediente No. 10, G.L.R.O. Record No. 9868, dated December 9, 1916 of the Court of First Instance of Albay, 15th Judicial District of the United States of America presided by Judge Isidro Paredes that their predecessors in interest were in open, adverse and continuous possession of the subject lands for 20-50 years. 14 The aforesaid "decisions" of the Court of First Instance, however, were not signed by the judge but were merely certified copies of notification to Diego Palomo bearing the signature of the clerk of court.

Moreover, despite claims by the petitioners that their predecessors in interest were in open, adverse and continuous possession of the lands for 20 to 50 years prior to their registration in 1916-1917, the lands were surveyed only in December 1913, the very same year they were acquired by Diego Palomo. Curiously , in February 1913 or 10 months before the lands were surveyed for Diego Palomo, the government had already surveyed the area in preparation for its reservation for provincial park purposes. If the petitioners' predecessors in interest were indeed in possession of the lands for a number of years prior to their registration in 1916-1917, they would have undoubtedly known about the inclusion of these properties in the reservation in 1913. It certainly is a trifle late at this point to argue

29Yumi- cases LTD

that the government had no right to include these properties in the reservation when the question should have been raised 83 years ago.

As regards the petitioners' contention that inasmuch as they obtained the titles without government opposition, the government is now estopped from questioning the validity of the certificates of title which were granted. As correctly pointed out by the respondent Court of Appeals, the principle of estoppel, does not operate against the Government for the act of its agents. 15

Assuming that the decrees of the Court of First Instance were really issued, the lands are still not capable of appropriation. The adverse possession which may be the basis of a grant of title in confirmation of imperfect title cases applies only to alienable lands of the public domain.

There is no question that the lands in the case at bar were not alienable lands of the public domain. As testified by the District Forester, records in the Bureau of Forestry show that the subject lands were never declared as alienable and disposable and subject to private alienation prior to 1913 up to the present. 16 Moreover, as part of the reservation for provincial park purposes, they form part of the forest zone.

It is elementary in the law governing natural resources that forest land cannot be owned by private persons. It is not registrable and possession thereof, no matter how lengthy, cannot convert it into private property, 17 unless such lands are reclassified and considered disposable and alienable.

Neither do the tax receipts which were presented in evidence prove ownership of the parcels of land inasmuch as the weight of authority is that tax declarations are not conclusive proof of ownership in land registration cases. 18

Having disposed of the issue of ownership, we now come to the matter regarding the forfeiture of improvements introduced on the subject lands. It bears emphasis that Executive Order No. 40 was already in force at the time the lands in question were surveyed for Diego Palomo. Petitioners also apparently knew that the subject lands were covered under the reservation when they filed a petition for reconstitution of the lost original certificates of title inasmuch as the blueprint of Survey Work Order Number 21781 of Plan II-9299 approved by the Chief of the Land Registration Office Enrique Altavas in 1953 as a true and correct copy of the Original Plan No. II-9299 filed in the Bureau of Lands dated September 11, 1948 19 contains the following note, "in conflict with provincial reservation." 20 In any case, petitioners are presumed to know the law and the failure of the government to oppose the registration of the lands in question is no justification for the petitioners to plead good faith in introducing improvements on the lots.

Finally, since 1,976 square meters of the 3,384 square meters covered by TCT 3913 fall within the reservation, TCT 3913 should be annulled only with respect to the aforesaid area. Inasmuch as the bamboo groves leveled in TCT 3913 and subject of Civil Case T-143, 21 were within the perimeter of the national park, 22 no pronouncement as to damages is in order.

WHEREFORE, the decision of the Court of Appeals is hereby AFFIRMED with the modification that TCT 3913 be annulled with respect to the 1,976 square meter area falling within the reservation zone.

SO ORDERED.

LEOPOLDO C. LEONARDO, represented by his daughter EMERENCIANA LEONARDO, petitioner, vs. VIRGINIA TORRES MARAVILLA and LEONOR C. NADAL, as Administratrices of the Estate of MARIANO TORRES, as substituted by FE NADAL VENTURINA, respondents.

YNARES-SANTIAGO, J.:

This is a petition for review seeking to set aside the decision[1] dated November 26, 1999 and the resolution[2] dated May 19, 2000 of the Court of Appeals[3] in CA-G.R. CV No. 52932, which affirmed the order[4] of the Regional Trial Court of Pasay City, Branch III, dismissing petitioner’s complaint[5] for “Delivery of Possession of Property, Owner’s Duplicate Certificate of Title, Rentals and Damages,” in Civil Case No. 93-10282.

The instant controversy stemmed from a dispute over a 1,151.80 square meter lot, located in Pasay City, covered by Transfer Certificate of Title No. 2355 (34515),[6] and registered in the name of Mariano Torres y Chavarria, the predecessor-in-interest of respondents. Petitioner claims that he is the lawful owner of the disputed lot, having purchased it on September 29, 1972 from a certain Eusebio Leonardo Roxas,[7] who in turn acquired the same lot by purchase on August 28, 1972 from Mariano Torres y Chavarria.[8]

On September 14, 1972, Eusebio Leonardo Roxas sent a letter-request[9] to the Register of Deed of Pasay City asking for the registration of the deed of sale allegedly executed in his favor by Mariano Torres y Chavarria. The letter was entered in the Register’s Primary Book under Entry No. 55780, Vol. V. The Office of the Register of Deeds, however, did not register the deed as it was awaiting the final disposition of a pending case[10] between Mariano Torres y Chavarria and a certain Francisco E. Fernandez involving title of the lot.[11] Incidentally, the said case was decided in favor of Mariano Torres y Chavarria, which decision became final and executory on September 21, 1972.[12]

On October 6, 1972, petitioner likewise asked the Register of Deeds to register the deeds of sale dated August 28, 1972 and the September 29, 1972 involving Transfer Certificate of Title No. 2355 (34515), and to issue the corresponding transfer certificate of title in his name.[13] Petitioner did not present the owner’s duplicate copy of Transfer Certificate of Title No. 2355 (34515), which remained in the possession of respondents. Petitioner’s letter-request was entered in the Primary Books of the Register of Deeds under Entry No. 55952, V.5, on October 19, 1972. The Register of Deeds, however, certified that the original copy of TCT No. 2355 (34515), could not be retrieved or located in the office of the Register of Deeds of Pasay, hence, the requested registration could not be effected.[14]

On November 13, 1972, petitioner executed an affidavit of adverse claim[15] over TCT No. 2355 (34515) which was entered in the Primary Book under Entry No. 56039, Vol. 5, on November 15, 1972.

On May 18, 1993, the Register of Deeds of Pasay City was able to retrieve the original copy of TCT No. 2355 (34515).[16]

On May 20, 1993, petitioner caused the annotation of his affidavit of adverse claim on TCT No. 2355 (34515),[17] and asked the respondents to deliver possession of the owner’s duplicate copy of TCT No. 2355 (34515). When the latter ignored his demand, petitioner filed on September 6, 1993 a complaint for “Delivery of Possession of Property, Owner’s Duplicate Certificate of Title, Rentals and Damages.”

30Yumi- cases LTD

Petitioner alleged that he filed the case against respondents only in 1993 because he was living abroad.[18]

In their Answer, respondents countered that since 1938 up to the present, the lot in question has been registered in the name of the late Mariano Torres y Chavarria, their predecessor-in-interest, and that they have been in material possession thereof in the concept of owners. In the settlement of the estate of Mariano Torres y Chavarria, who died on August 30, 1974,[19] his widow, Rosario Nadal, and his natural child, Virginia Torres Maravilla, acquired the disputed lot by succession.[20] After the demise of Rosario Nadal, sometime in January 1990, her share in the said lot was inherited by her sister, Leonor Nadal, who was appointed as special administratrix of the estate of Rosario Nadal.[21] Subsequently, Leonor Nadal was also appointed administratrix of the estate of Mariano Torres y Chavarria.[22] Respondents maintain that they have been in open and peaceful possession of the said property and that it was only in 1993 when they came to know of the alleged claim of petitioners over the same property.

Respondents contended further that the deeds of sale dated August 28, 1972 and September 29, 1972 are falsified documents and that the signature of Mariano Torres y Chavarria on the August 28, 1972 deed of absolute sale was a forgery. On February 28, 1994, respondents filed a motion to dismiss[23] the complaint on the grounds of: (1) non-payment of the correct docket fees; (2) prescription; and (3) laches. The motion to dismiss was denied on July 25, 1995.

Meanwhile, Leonor Nadal died on October 23, 1995, and was substituted by Fe Nadal Venturina on January 19, 1996.[24]

On motion of respondents, the trial court reconsidered its order of July 25, 1995, and issued an order on February 1, 1996, dismissing petitioner’s complaint on the ground of prescription and laches.

Dissatisfied, petitioner appealed to the Court of Appeals which affirmed the assailed order on November 26, 1999. The motion for reconsideration was denied on May 19, 2000.

Hence, the instant petition contending that the Court of Appeals erred in holding that:

I THE RIGHT OF PETITIONER TO ENFORCE THE DEEDS (EXHS. 2 AND 4) THROUGH HIS COMPLAINT FILED ON SEPTEMBER 6, 1993 HAD ALREADY PRESCRIBED ON SEPTEMBER 29, 1982 PER ARTICLE 114[4];

II THE TITLE ON THE PROPERTY REMAINED IN THE VENDOR’S (MARIO TORRES) NAME BEFORE AND AFTER THE EXECUTION OF THE DEEDS (EXHS. 2 AND 4);

III IF THE ORIGINAL COPY OF THE TCT WAS LOST/MISSING IN THE FILES OF THE REGISTER OF DEEDS, PETITIONER SHOULD HAVE FILED A PETITION FOR RECONSTITUTION OF THE TITLE;

IV. PETITIONER’S INACTION FOR 21 YEARS TO ENFORCE HIS RIGHTS ON THE DEEDS (EXHS. 2 AND 4) MADE RESPONDENTS BELIVE THAT HE HAD ABANDONED HIS RIGHTS ON THE PROPERTY; and,

V. LACHES HAD OPERATED NOTWITHSTANDING THAT PETITIONER WROTE THE REGISTER OF DEEDS OF PASAY CITY (EXH. 8) AND THE LATTER REPLIED THAT REGISTRATION COULD NOT BE EFFECTED BECAUSE THE TITLE WAS MISSING (EXH. 9).[25]

The issue in the instant case is whether or not petitioner’s action is barred by prescription and laches.

The Court of Appeals ruled that petitioner’s cause of action is founded on the deed of absolute sale allegedly executed by respondents’ predecessor-in-interest on August 28, 1972, which purportedly conveyed the disputed lot to Eusebio Leonardo Roxas, and the deed of sale dated September 29, 1972, whereby the latter sold the same lot to petitioner. Being an action based on written contracts, petitioner’s complaint falls under Article 1144[26] of the Civil Code, which provides that an action upon a written contract shall prescribe in ten years from the time the right of action accrued. Since petitioner brought the instant case only on September 6, 1993, or 21 years from the time his supposed right of action accrued on September 29, 1972, i.e., the date of execution of the contract conveying to him the questioned lot, his action was clearly barred by the statute of limitations.

Petitioner, on the other hand, contends that the applicable provision is Article 1141[27] and not 1144 of the Civil Code because his action is one for recovery of possession of real property which prescribes in thirty years.

The contention is without merit. Petitioner’s action is actually an action for specific performance, i.e., to enforce the deed of absolute sale allegedly executed in his favor. It is a fundamental principle that ownership does not pass by mere stipulation but by delivery. The delivery of a thing constitutes a necessary and indispensable requisite for the purpose of acquiring the ownership of the same by virtue of a contract.[28] Under Article 1498 of the Civil Code, when the sale is made through a public instrument, the execution thereof shall be equivalent to the delivery of the thing which is the object of the contract, if from the deed the contrary does not appear or cannot clearly be inferred. Thus, the execution of the contract is only a presumptive, not conclusive delivery which can be rebutted by evidence to the contrary, as when there is failure on the part of the vendee to take material possession of the land subject of the sale in the concept of a purchaser-owner.[29]

In the case at bar, it is not disputed that the lot in question was never delivered to petitioner notwithstanding the alleged execution of a deed of absolute sale. From 1972 to 1993, petitioner neither had, nor demanded, material possession of the disputed lot. It was the respondents who have been in control and possession thereof in the concept of owners since 1938 up to the present. It follows that ownership of the lot was never transferred to petitioner. Hence, he can not claim that the instant case is an accion reivindicatoria or an action to recover ownership and full possession of the property which, in the first place, never came into his possession for lack of the requisite delivery. Thus, in Danguilan v. Intermediate Appellate Court,[30] where the requisite delivery was not effected, the Court held that:

Since in this jurisdiction it is a fundamental and elementary principle that ownership does not pass by mere stipulation but only by delivery (Civil Code, Art. 1095; Fidelity and Surety Co. v. Wilson, 8 Phil. 51), and the execution of a public document does not constitute sufficient delivery where the property involved is in the actual and adverse possession of third persons (Addison v. Felix, 38 Phil. 404; Masallo v. Cesar, 39 Phil. 134), it becomes incontestable that even if included in the contract, the ownership of the property in dispute did not pass... Not having become the owner for lack of delivery, [one] cannot

31Yumi- cases LTD

presume to recover the property from its present possessors. [The] action, therefore, is not one of revindicacion, but one against [the] vendor for specific performance of the sale ...

Clearly, the case filed by petitioner was an action for specific performance of a written contract of sale which, pursuant to Article 1144 of the Civil Code, prescribes in 10 years from the accrual of the right of action. In a contract of sale, there is a reciprocal obligation to pay the purchase price and the corresponding delivery of the thing sold, which obligations give rise to a right of action in case of breach.[31] Here, petitioner’s right of action for specific performance or rescission arose when delivery of the thing sold was not effected on September 29, 1972, despite the payment of the purchase price. Hence, from 1972 to 1993, when petitioner filed the instant case, 21 years had elapsed barring the institution of petitioner’s action which is definitely beyond the 10 year prescriptive period.

Petitioner’s claim that the prescriptive period was tolled when he registered his adverse claim with the Register of Deeds is untenable. In Garbin v. Court of Appeals, et al.,[32] wherein an action for annulment of a deed of sale was dismissed on the ground of prescription and laches, the Court held that the registration of an adverse claim does not toll the running of the prescriptive period, thus:

x x x the title of the defendant must be upheld for failure or the neglect of the plaintiffs for an unreasonable and unexplained length of time of more than fifteen (15) years since they registered their adverse claim, or for a period of more than three (3) decades since the execution of the deed of sale in their favor upon which their adverse claim is based, to do that which, by exercising diligence, could or should have been done earlier. For it is this negligence or omission to assert a right within reasonable time that is construed that plaintiffs had abandoned their right to claim ownership under the deed of sale, or declined to assert it. Thus, when a person slept on his rights for 28 years from the time of the transaction, before filing the action, amounts to laches which cannot be excused even by ignorance resulting from inexcusable negligence (Vda. de Lima v. Tiu, 52 SCRA 516 [1970]).

In the same vein, the annotation on May 20, 1993 of the November 13, 1972 affidavit of adverse claim on TCT No. 2355 (34515) afforded no protection to petitioner for the same reason that said belated assertion of his alleged right over the property is barred by prescription and laches.

Moreover, the affidavit of adverse claim registered by petitioner in 1972 was ineffective. The law enforced at the time petitioner filed an adverse claim was Section 110, of Act 496,[33] also known as the Land Registration Act, (now Section 70[34] of P.D. No. 1529, or the Property Registration Decree[35]), which stated:

Sec. 110. Whoever claims any part or interest in registered land adverse to the registered owner, arising subsequent to the date of the original registration, may, if no other provision is made in this Act for registering the same, make a statement in writing setting forth fully his alleged right or interest, and how or under whom acquired, and a reference to the volume and page of the certificate of title of the registered owner, and a description of the land in which the right or interest is claimed.

The statement shall be signed and sworn to, and shall state the adverse claimant's residence and designate a place at which all notices may be served upon him. This statement shall be entitled to registration as an adverse claim, and the court, upon a petition of any party in interest, shall grant a speedy hearing upon the question of the validity of such adverse claim and shall enter such decree therein as justice and equity may require. If the claim is adjudged to be invalid, the registration shall be

cancelled. If in any case the court after notice and hearing shall find that a claim thus registered was frivolous or vexatious, it may tax the adverse claimant double or treble costs in its discretion.

In Junio v. De los Santos, et al.,[36] an action for cancellation of an adverse claim, the Court ruled that the procedure for registration of voluntary instruments, like a deed of sale, is laid down in Section 57[37] of Act 496. But where the vendor refused to deliver to the vendee the owner’s duplicate certificate of title, which title must be presented in order that the deed of conveyance may be registered and the corresponding transfer certificate of title may be issued,[38] the vendee may file with the Register of Deeds an adverse claim under Section 110 of Act No. 496. For an adverse claim to be valid, it must be shown that a demand was made on the vendor and that the latter refused to surrender the owner’s duplicate certificate of title.[39]

In instant case, it was not shown that Mariano Torres y Chavarria, the registered owner of the disputed lot, refused to surrender the owner’s duplicate certificate of title, nor that petitioner demanded the surrender thereof. In the affidavit of adverse claim registered by petitioner he merely stated: “9. That in the meantime the herein (VENDEE) LEOPOLDO C. LEONARDO has no means to get or secure the aforementioned Owner[’]s Duplicate Copy of Title No. 2355 (34515) Pasay City Registry Office, from the said Parties, he (Leopoldo C. Leonardo) hereby requests the Register of Deeds of Pasay City to annotate whatever rights and interest on the ORIGINAL CERTIFICATE OF TITLE No. 2355 (34515), Pasay Registry Office, in the name of MARIANO C. TORRES as a Notice of Adverse Claim(s) in favor of LEOPOLDO C. LEONARDO to any third party/ies;” For lack of the requisite unjustified refusal of the registered owner to surrender the owner’s duplicate certificate of title, the affidavit of adverse claim registered by petitioner is not valid.

Likewise, there is no merit in petitioner's assertion that the prescriptive period should commence to run only on May 18, 1993 when the original copy of Transfer Certificate of Title No. 2355 (34515) was retrieved by the Register of Deeds. The loss of the original title will not prevent petitioner’s pursuit to enforce his right. Otherwise stated, the recovery of the original title or the reconstitution thereof is not the only means by which petitioner could protect his right. Under Article 1155 of the Civil Code - “[t]he prescription of actions is interrupted when they are filed in court, when there is a written extrajudicial demand by the creditors, and when there is any written acknowledgement of the debt by the debtor.” Petitioner therefore may pursue either judicial or extrajudicial means manifesting his interest in the questioned property in order to interrupt the prescriptive period.

Certainly, petitioner’s action filed on September 6, 1993 is barred by the 10 year prescriptive period from the accrual of his alleged right of action on September 29, 1972. In the same vein, said action is barred by laches having allowed 21 years to lapse before enforcing his alleged right. Laches is defined as failure or neglect for an unreasonable and unexplained length of time, to do that which, by exercising due diligence could or should have been done earlier. It is negligence or omission to assert a right within a reasonable time, warranting presumption that the party entitled to assert it has abandoned it or has declined to assert it.[40] Tempus enim modus tollendi obligationes et actiones, quia tempus currit contra desides et sui juris contemptores – For time is a means of dissipating obligations and actions, because time runs against the slothful and careless of their own rights.[41]

WHEREFORE, in view of all the foregoing, the instant petition is DENIED. The November 26, 1999 decision and the May 19, 2000 resolution of the Court of Appeals in CA-G.R. CV No. 52932, which

32Yumi- cases LTD

sustained the February 1, 1996 order of the Regional Trial Court of Pasay City, Branch III, dismissing petitioner’s complaint in Civil Case No. 93-10282 on the ground of prescription and laches, is AFFIRMED.

SO ORDERED.

REPUBLIC OF THE PHILIPPINES, petitioner, vs.THE HONORABLE COURT OF APPEALS AND REPUBLIC REAL ESTATE CORPORATION, respondents, CULTURAL CENTER OF THE PHILIPPINES, intervenor.

G.R. No. 105276 November 25, 1998

PASAY CITY AND REPUBLIC REAL ESTATE CORPORATION, petitioners, vs. COURT OF APPEALS and REPUBLIC OF THE PHILIPPINES, respondents.

PURISIMA, J.:

At bar are two consolidated petitions for review on certiorari under Rule 45 of the Revised Rules of Court. Here, the Court is confronted with a case commenced before the then Court of First Instance (now Regional Trial Court) of Rizal in Pasay City, in 1961, more than 3 decades back, that has spanned six administrations of the Republic and outlasted the tenure of ten (10) Chief Justices of the Supreme Court.

In G.R. No. 103882, the Republic of the Philippines, as petitioner, assails the Decision, dated January 29, 1992 and Amended Decision, dated April 28, 1992, of the Court of Appeals 1 which affirmed with modification the Decision of the former Court of First Instance of Rizal (Branch 7, Pasay City) in Civil Case No. 2229-P, entitled "Republic of the Philippines vs. Pasay City and Republic Real Estate Corporation".

The facts that matter are, as follows:

Republic Act No. 1899 ("RA 1899"), which was approved on June 22, 1957, authorized the reclamation of foreshore lands by chartered cities and municipalities. Section I of said law, reads:

Sec. 1. Authority is hereby granted to all municipalities and chartered cities to undertake and carry out at their own expense the reclamation by dredging, filling, or other means, of any foreshore lands bordering them, and to establish, provide, construct, maintain and repair proper and adequate docking and harbor facilities as such municipalities and chartered cities may determine in consultation with the Secretary of Finance and the Secretary of Public Works and Communications.

On May 6, 1958, invoking the a forecited provision of RA 1899, the Pasay City Council passed Ordinance No. 121, for the reclamation of Three Hundred (300) hectares of foreshore lands in Pasay City, empowering the City Mayor to award and enter into reclamation contracts, and prescribing terms and conditions therefor. The said Ordinance was amended on April 21, 1959 by Ordinance No. 158, which authorized the Republic Real Estate Corporation ("RREC") to reclaim foreshore lands of Pasay City under certain terms and conditions.

On April 24, 1959, Pasay City and RREC entered into an Agreement 2 for the reclamation of the foreshore lands in Pasay City.

On December 19, 1961, the Republic of the Philippines ("Republic") filed a Complaint 3 for Recovery of Possession and Damages with Writ of Preliminary Preventive injunction and Mandatory Injunction,

docketed as Civil Case No. 2229-P before the former Court of First Instance of Rizal, (Branch 7, Pasay City).

On March 5, 1962, the Republic of the Philippines filed an Amended Complaint 4 questioning subject Agreement between Pasay City and RREC (Exhibit "P") on the grounds that the subject-matter of such Agreement is outside the commerce of man, that its terms and conditions are violative of RA 1899, and that the said Agreement was executed without any public bidding.

The Answers 5 of RREC and Pasay City, dated March 10 and March 14, 1962, respectively, averred that the subject-matter of said Agreement is within the commerce of man, that the phrase "foreshore lands" within the contemplation of RA 1899 has a broader meaning than the cited definition of the term in the Words and Phrases and in the Webster's Third New International Dictionary and the plans and specifications of the reclamation involved were approved by the authorities concerned.

On April 26,1962, Judge Angel H. Mojica, (now deceased) of the former Court of First Instance of Rizal (Branch 7, Pasay City) issued an Order 6 the dispositive portion of which was to the following effect:

WHEREFORE, the court hereby orders the defendants, their agents, and all persons claiming under them, to refrain from "further reclaiming or committing acts of dispossession or dispoilation over any area within the Manila Bay or the Manila Bay Beach Resort", until further orders of the court.

On the following day, the same trial court issued a writ of preliminary injunction 7 which enjoined the defendants, RREC and Pasay City, their agents, and all persons claiming under them "from further reclaiming or committing acts of dispossession."

Thereafter, a Motion to Intervene 8, dated June 27, 1962, was filed by Jose L. Bautista, Emiliano Custodio, Renato Custodio, Roger de la Rosa, Belen Gonzales, Norma Martiner, Emilia E. Paez, Ambrosio R. Parreno, Antolin M. Oreta, Sixto L. Orosa, Pablo S. Sarmiento, Jesus Yujuico, Zamora Enterprises, Inc., Industrial and Commercial Factors, Inc., Metropolitan Distributors of the Philippines, and Bayview Hotel, Inc. stating inter alia that they were buyers of lots in the Manila Bay area being reclaimed by RREC, whose rights would be affected by whatever decision to be rendered in the case. The Motion was granted by the trial court and the Answer attached thereto admitted. 9

The defendants and the intervenors then moved to dismiss 10 the Complaint of the Republic, placing reliance on Section 3 of Republic Act No. 5187, which reads:

Sec. 3. Miscellaneous Projects

xxx xxx xxx

m. For the construction of seawall and limited access highway from the south boundary of the City of Manila to Cavite City, to the south, and from the north boundary of the City of Manila to the municipality of Mariveles, province of Bataan, to the north, including the reclamation of the foreshore and submerged areas: Provided, That priority in the construction of such seawalls, highway and attendant reclamation works shall be given to any corporation and/or corporations that may offer to undertake at its own expense such projects, in which case the President of the Philippines may, after competitive didding, award contracts for the construction of such project, with the winning bidder shouldering all costs thereof, the same to be paid in terms of percentage fee of the contractor which shall not exceed

33Yumi- cases LTD

fifty percent of the area reclaimed by the contractor and shall represent full compensation for the purpose, the provisions of the Public Land Law concerning disposition of reclaimed and foreshore lands to the contrary notwithstanding: Provided, finally, that the foregoing provisions and those of other laws, executive orders, rules and regulations to the contrary notwithstanding, existing rights, projects and/or contracts of city or municipal governments for the reclamation of foreshore and submerged lands shall be respected. . . . . (emphasis ours).

Since the aforecited law provides that existing contracts shall be respected, movants contended that the issues raised by the pleadings have become "moot, academic and of no further validity or effect."

Meanwhile, the Pasay Law and Conscience Union, Inc. ("PLCU") moved to intervene 11, alleging as legal interest in the matter in litigation the avowed purpose of the organization for the promotion of good government in Pasay City. In its Order of June 10, 1969, the lower court of origin allowed the said intervention 12.

On March 24, 1972, the trial court of origin came out with a Decision, disposing, thus:

WHEREFORE, after carefully considering (1) the original complaint, (2) the first Amended Complaint, (3) the Answer of Defendant Republic Real Estate Corporation to the first Amended Complaint, (4) the Answer of Defendant Pasay City to the first Amended Complaint, (5) the Second Amended Complaint, (6) the Answer of Defendant Republic Real Estate Corporation to the Second Amended Complaint, (7) the Answer of Defendant Pasay City to the Second Amended Complaint, (8) the Memorandum in Support of Preliminary Injunction of Plaintiff, (9) the Memorandum In Support of the Opposition to the Issuance of Preliminary Injunction of Defendant Pasay City and Defendant Republic Real Estate Corporation, (10) the Answer in Intervention of Intervenors Bautista, et. al., (11) Plaintiff's Opposition to Motion to Intervene, (12) the Reply to Opposition to Motion to Intervene of Intervenors Bautista, et. al., (13) the Stipulation of Facts by all the parties, (14) the Motion for Leave to Intervene of Intervenor Pasay Law and Conscience Union, Inc., (15) the Opposition to Motion For Leave to Intervene of Intervenors Bautista, et. al., (16) the Reply of Intervenor Pasay Law and Conscience Union, Inc., (17) the Supplement to Opposition to Motion to Intervene of Defendant Pasay City and Republic Real Estate Corporation (18) the Complain in Intervention of Intervenor Pasay Law and Conscience Union, Inc., (19) the Answer of Defendant Republic Real Estate Corporation, (20) the Answer of Intervenor Jose L. Bautista, et. al., to Complaint in Intervention, (21) the Motion to Dismiss of Defendant Republic Real Estate Corporation, and Intervenors Bautista, et. al., (22) the Opposition of Plaintiff to said Motion to Dismiss, (23) the Opposition of Intervenor Pasay Law and Conscience Union, Inc., (24) the Memorandum of the Defendant Republic Real Estate Corporation, (25) the Memorandum for the Intervenor Pasay Law and Conscience Union, Inc., (26) the Manifestation of Plaintiff filed by the Office of the Solicitor General, and all the documentary evidence by the parties to wit: (a) Plaintiff's Exhibits "A" to "YYY- 4", (b) Defendant Republic Real Estate Corporation's Exhibits "1-RREC" to "40-a" and (c) Intervenor Pasay Law and Conscience Union, Inc's., Exhibits "A-PLACU" to "C-PLACU", the Court hereby:

(1) Denies the "Motion to Dismiss" filed on January 10, 1968, by Defendant Republic Real Estate Corporation and Intervenors Bautista, et. al., as it is the finding of this Court that Republic Act No. 5187 was not passed by Congress to cure any defect in the ordinance and agreement in question and that the passage of said Republic Act No. 5187 did not make the legal issues raised in the pleadings "moot, academic and of no further validity or effect;" and

(2) Renders judgment:

(a) dismissing the Plaintiff's Complaint;

(b) Dismissing the Complaint in Intervention of Intervenor Pasay Law and Conscience Union, Inc.,

(c) Enjoining Defendant Republic Real Estate Corporation and Defendant Pasay City to have all the plans and specifications in the reclamation approved by the Director of Public Works and to have all the contracts and sub-contracts for said reclamation awarded by means of, and only after, public bidding; and

(d) Lifting the preliminary Injunction issued by the Court on April 26, 1962, as soon as Defendant Republic Real Estate Corporation and Defendant Pasay City shall have submitted the corresponding plans and specifications to the Director of Public Works, and shall have obtained approval thereof, and as soon as the corresponding public bidding for the award to the contractor and sub-contractor that will undertake the reclamation project shall have been effected.

No pronouncement as to costs.

SO ORDERED. (See Court of Appeals' Decision dated January 28, 1992; pp. 6-8)

Dissatisfied with the said judgment, the Republic appealed therefrom to the Court of Appeals. However, on January 11, 1973, before the appeal could be resolved, Presidential Decree No. 3-A issued, amending Presidential Decree No. 3, thus:

Sec. 1. Section 7 of Presidential Decree No. 3, dated September 26, 1972, is hereby amended by the addition of the following paragraphs:

The provisions of any law to the contrary notwithstanding, the reclamation of areas under water, whether foreshore or inland, shall be limited to the National Government or any person authorized by it under a proper contract.

All reclamations made in violation of this provision shall be forfeited to the State without need of judicial action.

Contracts for reclamation still legally existing or whose validity has been accepted by the National Government shall be taken over by the National Government on the basis of quantum meruit, for proper prosecution of the project involved by administration.

On November 20, 1973, the Republic and the Construction Development Corporation of the Philippines ("CDCP") signed a Contract 13 for the Manila-Cavite Coastal Road Project (Phases I and II) which contract included the reclamation and development of areas covered by the Agreement between Pasay City and RREC. Then, there was issued Presidential Decree No. 1085 which transferred to the Public Estate Authority ("PEA") the rights and obligations of the Republic of the Philippines under the contract between the Republic and CDCP.

34Yumi- cases LTD

Attempts to settle amicably the dispute between representatives of the Republic, on the one hand, and those of Pasay City and RREC, on the other, did not work out. The parties involved failed to hammer out a compromise.

On January 28, 1992, the Court of Appeals came out with a Decision 14 dismissing the appeal of the Republic and holding, thus:

WHEREFORE, the decision appealed from is hereby AFFIRMED with the following modifications:

1. The requirement by the trial court on public bidding and submission of RREC's plans specification to the Department Public Works and Highways in order that RREC may continue the implementation of the reclamation work is deleted for being moot and academic;

2. Ordering the plaintiff-appellant to turn over to Pasay City the ownership and possession over all vacant spaces in the twenty-one hectare area already reclaimed by Pasay City and RREC at the time it took over the same. Areas thereat over which permanent structures has (sic) been introduced shall, including the structures, remain in the possession of the present possessor, subject to any negotiation between Pasay City and the said present possessor, as regards the continued possession and ownership of the latter area.

3. Sustaining RREC's irrevocable option to purchase sixty (60%) percent of the Twenty-One (21) hectares of land already reclaimed by it, to be exercised within one (1) year from the finality of this decision, at the same terms and condition embodied in the Pasay City-RREC reclamation contract, and enjoining appellee Pasay City to respect RREC's option.

SO ORDERED.

On February 14, 1992, Pasay City and RREC presented a Motion for Reconsideration of such Decision of the Court of Appeals, contending, among others, that RREC had actually reclaimed Fifty-Five (55) hectares, and not only Twenty-one (21) hectares, and the respondent Court of Appeals erred in not awarding damages to them, movants.

On April 28, 1992, the Court of Appeals acted favorably on the said Motion for Reconsideration, by amending the dispositive portion of its judgment of January 28, 1992, to read as follows:

WHEREFORE, the dispositive portion of our Decision dated January 28, 1992 is hereby AMENDED to read as follows:

1. The requirement by the trial court on public bidding and the submission of the RREC's plans and specification to the Department of Public Works and Highways in order that RREC may continue the implementation of the reclamation work is deleted for being moot and academic.

2. Ordering plaintiff-appellant to turn over to Pasay City the ownership and possession of the above enumerated lots (1 to 9).

3. Sustaining RREC's irrevocable option to purchase sixty (60%) percent of the land referred to in No. 2 of this dispositive portion, to be exercised within one (1) year from the finality of this Decision, at the same

terms and condition embodied in the Pasay City-RREC reclamation contract, and enjoining Pasay City to respect RREC's irrevocable option.

SO ORDERED.

From the Decision and Amended Decision of the Court of Appeals aforementioned, the Republic of the Philippines, as well as Pasay City and RREC, have come to this Court to seek relief, albeit with different prayers.

On September 10, 1997, the Court commissioned the former thirteenth Division of Court of Appeals to hear and receive evidence on the controversy. The corresponding Commissioner's Report, dated November 25, 1997, was submitted and now forms part of the records.

On October 11, 1997, the Cultural Center of the Philippines ("CCP") filed a Petition in Intervention, theorizing that it has a direct interest in the case being the owner of subject nine (9) lots titled in its (CCP) name, which the respondent Court of Appeals ordered to be turned over to Pasay City. The CCP, as such intervenor, was allowed to present its evidence, as it did, before the Court of Appeals, which evidence has been considered in the formulation of this disposition.

In G.R. No. 103882, the Republic of the Philippines theorizes, by way of assignment of errors, that:

I THE COURT OF APPEALS ERRED IN UPHOLDING THE VALIDITY OF PASAY CITY ORDINANCE NO. 158 DATED APRIL 21, 1959 AND THE RECLAMATION CONTRACT ENTERED INTO BETWEEN PASAY CITY AND RREC;

II THE COURT OF APPEALS ERRED IN FINDING THAT RREC HAD RECLAIMED 55 HECTARES AND IN ORDERING THE TURN-OVER TO PASAY CITY OF THE OWNERSHIP AND POSSESSION OF NINE (9) LOTS TITLED IN THE NAME OF CCP.

In G.R. No. 105276, the petitioners, Pasay City and RREC, contend, that:

I THE COURT OF APPEALS ERRED IN NOT DECLARING PRESIDENTIAL DECREE NO. 3-A UNCONSTITUTIONAL;

II THE COURT OF APPEALS ERRED IN NOT AWARDING DAMAGES IN FAVOR OF PASAY CITY AND RREC.

Let us first tackle the issues posed in G.R. No. 103882.

On the first question regarding the validity of Pasay City Ordinance No. 158 dated April 21, 1959 and the Agreement dated April 24, 1959 between Pasay City and RREC, we rule in the negative.

Sec. 1 of RA 1899, reads:

Sec. 1. Authority is hereby granted to all municipalities and chartered cities to undertake and carry out at their own expense the reclamation by dredging, filling, or other means, of any foreshore lands bordering them, and to establish, provide, construct, maintain and repair proper and adequate docking and harbor facilities as such municipalities and chartered cities may determine in consultation with the Secretary of Finance and the Secretary of Public Works and Communications.

35Yumi- cases LTD

It is the submission of the petitioner, Republic of the Philippines, that there are no foreshore lands along the seaside of Pasay City 15; that what Pasay City has are submerged or offshore areas outside the commerce of man which could not be a proper subject matter of the Agreement between Pasay City and RREC in question as the area affected is within the National Park, known as Manila Bay Beach Resort, established under Proclamation No. 41, dated July 5, 1954, pursuant to Act No. 3915, of which area it (Republic) has been in open, continuous and peaceful possession since time immemorial.

Petitioner faults the respondent court for unduly expanding what may be considered "foreshore land" through the following disquisition:

The former Secretary of Justice Alejo Mabanag, in response to a request for an opinion from the then Secretary of Public Works and Communications as to whether the term, "foreshore areas" as used in Section I of the immediately aforequoted law is that defined in Webster's Dictionary and the Law of Waters so as to make any dredging or filling beyond its prescribed limit illegal, opined:

According to the basic letter of the Director of Public Works, the law of Waters speaks of "shore" and defines it thus: "that space movement of the tide. Its interior or terrestrial limit in the line reached by highest equinoctial tides."

Webster's definition of foreshore reads as follows:

That part of the shore between high water and low-water marks usually fixed at the line to which the ordinary means tide flows: also, by extension, the beach, the shore near the water's edge.

If we were to be strictly literal the term foreshore or foreshore lands should be confined to but a portion of the shore, in itself a very limited area. (p. 6, Intervenors-appellees' brief).

Bearing in mind the (Webster's and Law of Waters) definitions of "shore" and of foreshore lands, one is struck with the apparent inconsistency between the areas thus described and the purpose to which that area, when reclaimed under the provision of Republic Act No. 1899, shall be devoted. Section I (of said Law) authorizes the construction thereat of "adequate docking and harbor facilities". This purpose is repeated in Sections 3 and 4 of the Act.

And yet, it is well known fact that foreshore lands normally extend only from 10 to 20 meters along the coast. Not very much more if at all. In fact certain parts in Manila bordering on Manila Bay, has no foreshore to speak of since the sea washes the sea wall.

It does not seem logical, then, that Congress had in mind. Webster's limited concept of foreshore when it enacted Republic Act No. 1899, unless it intends that the wharves, piers, docks, etc. should be constructed parallel to the shore, which is impractical.

Since it is to be presumed that Congress could not have intended to enact an ineffectual measure not one that would lead to absurd consequences, it would seem that it used "foreshore" in a sense wider in scope that defined by Webster. . . .

To said opinion on the interpretation of the R.A. 1899, plaintiff-appellant could not offer any refutation or contrary opinion. Neither can we. In fact, the above construction is consistent with the "rule on context" in statutory construction which provides that in construing a statute, the same must be

construed as a whole. The particular words, clauses and phrases should not be studied as detached and isolated expressions, but the whole and every part of the statute must be considered in fixing the meaning of any of its parts in order to produce a harmonious whole ( see Araneta vs. Concepcion, 99 Phil. 709). There are two reasons for this. Firstly, the force and significance of particular expressions will largely depend upon the connection in which they are found and their relation to the general subject-matter of the law. The legislature must be understood to have expressed its whole mind on the special object to which the legislative act is directed but the vehicle for the expressions of that meaning is the statute, considered as one entire and continuous act, and not as an agglomeration of unrelated clauses. Each clause or provision will be illuminated by those which are cognate to it and by the general tenor of the whole statute and thus obscurities end ambiguities may often be cleared up by the most direct and natural means. Secondly effect must be given, if it is possible, to every word and clause of the statute, so that nothing shall be left devoid of meaning or destitute of force. To this end, each provision of the statute should be read in the light of the whole. For the general meaning of the legislature, as gathered from the entire act, may often prevail over the construction which would appear to be the most natural and obvious on the face of a particular clause. If is by this means that contradiction and repugnance between the different parts of the statute may be avoided. (See Black, Interpretation of Laws, 2nd Ed., pp. 317-319).

Resorting to extrinsic aids, the "Explanatory Note" to House Bill No. 3830, which was subsequently enacted as Republic Act No. 1899, reads:

In order to develop and expand the Maritime Commerce of the Philippines, it is necessary that harbor facilities be correspondingly improved and, where necessary, expanded and developed. The national government is not in a financial position to handle all this work. On the other hand, with a greater autonomy many chartered cities and provinces are financially able to have credit position which will allow them to undertake these projects. Some cities, such as the City of Bacolod under R.A. 161, has been authorized to reclaim foreshore lands bordering it.

Other cities end provinces have continuously been requesting for authority to reclaim foreshore lands on the basis of the Bacolod City pattern, and to undertake work to establish, construct on the reclaimed area and maintain such port facilities as may be necessary. In order not to unduly delay the undertaking of these projects, and inorder to obviate the passage of individual pieces of legislation for every chartered city and province, it is hereby recommended that the accompanying bill be approved. It covers Authority for All chartered cities and provinces to undertake this work. . . . (emphasis supplied)

Utilizing the above explanatory note in interpreting and construing the provisions of R.A. 1899, then Secretary of Justice Mabanag opined:

It is clear that the "Bacolod City pattern" was the basis of the enactment of the aforementioned bill of general application. This so-called "Bacolod City pattern" appears to be composed of 3 parts, namely: Republic Ad No. 161, which grants authority to Bacolod City to undertake or carry out . . . the reclamation . . . of any [sic] carry out the reclamation project conformably with Republic Act No. 161; and Republic Act No. 1132 authorizing Bacolod City to contract indebtedness or to issue bonds in the amount not exceeding six million pesos to finance the reclamation of land in said city.

Republic Act No. 161 did not in itself specify the precise space therein referred to as "foreshore" lands, but it provided that docking and harbor facilities should be erected on the reclaimed portions thereof,

36Yumi- cases LTD

while not conclusive would indicate that Congress used the word "foreshore" in its broadest sense. Significantly, the plan of reclamation of foreshore drawn up by the Bureau of Public Works maps out an area of approximately 1,600,000 square meters, the boundaries of which clearly extend way beyond Webster's limited concept of the term "foreshore". As a contemporaneous construction by that branch of the Government empowered to oversee at least, the conduct of the work, such an interpretation deserves great weight. Finally, Congress in enacting Republic Act No. 1132 (supplement to RA 161), tacitly confirmed and approved the Bureau's interpretation of the term 'foreshore' when instead of taking the occasion to correct the Bureau of over extending its plan, it authorized the city of Bacolod to raise the full estimated cost of reclaiming the total area covered by the plan. The explanatory note to House Bill No. 1249 which became Republic Act No. 1132 states among the things:

The Bureau of Public Works already prepared a plan for the reclamation of about 1,600,000 square meters of land at an estimated costs of about P6,000,000.00. The project is self-supporting because the proceeds from the sales or leases of lands so reclaimed will be more than sufficient to cover the cost of the project.

Consequently, when Congress passed Republic Act No. 1899 in order to facilitate the reclamation by local governments of foreshore lands on the basis of the Bacolod City pattern and in order to obviate the passage of individual pieces of legislation for every chartered city and provinces requesting authority to undertake such projects, the lawmaking body could not have had in mind the limited area described by Webster as "foreshore" lands. . . . .

If it was really the intention of Congress to limit the area to the strict literal meaning of "foreshore" lands which may be reclaimed by chartered cities and municipalities, Congress would have excluded the cities of Manila, Iloilo, Cebu, Zamboanga and Davao from the operation of RA 1899 as suggested by Senator Cuenco during the deliberation of the bill considering that these cities do not have 'foreshore' lands in the strict meaning of the term. Yet, Congress did not approve the proposed amendment of Senator Cuenco, implying therefore, that Congress intended not to limit the area that may be reclaimed to the strict definition of "foreshore" lands.

The opinion of the then Secretary of Justice Mabanag, who was at that time the chief law officer and legal adviser of the government and whose office is required by law to issue opinions for the guidance of the various departments of the government, there being then no judicial interpretation to the contrary, is entitled to respect (see Bengzon vs. Secretary of Justice and Insular Auditor, 68 Phil. 912).

We are not unmindful of the Supreme Court Resolution dated February 3, 1965 in Ponce vs. Gomez (L-21870) and Ponce vs. City of Cebu (L-2266), by a unanimous vote of six (6) justices (the other five (5) members deemed it unnecessary to express their view because in their opinion the questions raised were not properly brought before the court), which in essence applied the strict dictionary meaning of "foreshore lands" as used in RA 1899 in the case of the city of Cebu. But this was promulgated long after the then Secretary of Justice Mabanag rendered the above opinion on November 16, 1959 and long after RREC has started the subject reclamation project.

Furthermore, as held by the lower court, Congress, after the Supreme Court issued the aforementioned Resolution, enacted RA 5187. In Sec. 3 (m) of said law, Congress appropriated money "for the construction of the seawall and limited access highway from the South boundary of the city of Manila to Cavite City, to the South, and from the North boundary of the city of Manila to the municipality of

Mariveles, province of Bataan, to the North (including the reclamation of foreshore and submerged areas . . . provided . . . that . . . existing projects and/or contracts of city or municipal governments for the reclamation of foreshore and submerged lands shall be respected . . ." This is a clear manifestation that Congress in enacting RA 1899, did not intend to limit the interpretation of the term "foreshore land" to its dictionary meaning.

It is presumed that the legislature was acquainted with and had in mind the judicial construction given to a former statute on the subject, and that the statute on the subject, and that the statute was enacted having in mind the judicial construction that the prior enactment had received, or in the light of such existing judicial decisions as have direct bearing upon it (see 50 Am. Jur., Sec. 321, pp. 312-313). But notwithstanding said interpretation by the Supreme Court of RA 1899 in the Ponce cases, Congress enacted a law covering the same areas previously embraced in a RA 1899 (as mentioned earlier, cities without foreshore lands which were sought to be excluded from the operation of RA 1899 were not excluded), providing that respect be given the reclamation of not only foreshore lands but also of submerged lands signifying its non-conformity to the judicial construction given to RA 1899. If Congress was in accord with the interpretation and construction made by the Supreme Court on RA 1899, it would have mentioned reclamation of "foreshore lands" only in RA 5187, but Congress included "submerged lands" in order to clarify the intention on the grant of authority to cities and municipalities in the reclamation of lands bordering them as provided in RA 1899. It is, therefore, our opinion that it is actually the intention of Congress in RA 1899 not to limit the authority granted to cities and municipalities to reclaim foreshore lands in its strict dictionary meaning but rather in its wider scope as to include submerged lands.

The Petition is impressed with merit.

To begin with, erroneous and unsustainable is the opinion of respondent court that under RA 1899, the term "foreshore lands" includes submerged areas. As can be gleaned from its disquisition and rationalization aforequoted, the respondent court unduly stretched and broadened the meaning of "foreshore lands", beyond the intentment of the law, and against the recognized legal connotation of "foreshore lands". Well entrenched, to the point of being elementary, is the rule that when the law speaks in clear and categorical language, there is no reason for interpretation or construction, but only for application. 16 So also, resort to extrinsic aids, like the records of the constitutional convention, is unwarranted, the language of the law being plain and unambiguous. 17 Then, too, opinions of the Secretary of Justice are unavailing to supplant or rectify any mistake or omission in the law. 18 To repeat, the term "foreshore lands" refers to:

The strip of land that lies between the high and low water marks and that is alternately wet and dry according to the flow of the tide. (Words and Phrases, "Foreshore")

A strip of land margining a body of water (as a lake or stream); the part of a seashore between the low-water line usually at the seaward margin of a low-tide terrace and the upper limit of wave wash at high tide usually marked by a beach scarp or berm. (Webster's Third New International Dictionary)

The duty of the court is to interpret the enabling Act, RA 1899. In so doing, we cannot broaden its meaning, much less widen the coverage thereof. If the intention of Congress were to include submerged areas, it should have provided expressly. That Congress did not so provide could only signify the exclusion of submerged areas from the term "foreshore lands".

37Yumi- cases LTD

Neither is there any valid ground to disregard the Resolution of this Court dated February 3, 1965 in Ponce v. Gomez (L-21870) and Ponce v. City of Cebu (L-22669) despite the enactment of Republic Act No. 5187 ("RA 5187"), the relevant portion of which, reads:

Sec. 3. Miscellaneous Projects

xxx xxx xxx

m. For the construction of seawall and limited access highway from the south boundary of the City of Manila to Cavite City, to the south, and from the north boundary of the City of Manila to the municipality of Mariveles, province of Bataan, to the north, including the reclamation of the foreshore and submerged areas: Provided, That priority in the construction of such seawalls, highway and attendant reclamation works shell be given to any corporation and/or corporations that may offer to undertake at its own expense such projects, in which case the President of the Philippines may, after competitive bidding, award contracts for the construction of such projects, with the winning bidder shouldering all costs thereof, the same to be paid in terms of percentage fee of the contractor which shall not exceed fifty percent of the area reclaimed by the contractor and shall represent full compensation for the purpose, the provisions of the Public Land Law concerning disposition of reclaimed and foreshore lands to the contrary notwithstanding: Provided, finally, that the foregoing provisions and those of other laws, executive orders, rules and regulations to the contrary notwithstanding, existing rights, projects and/or contracts of city or municipal governments for the reclamation of foreshore and submerged lands shall be respected. . . . .

There is nothing in the foregoing provision of RA 5187 which can be interpreted to broaden the scope of "foreshore lands." The said law is not amendatory to RA 1899. It is an Appropriations Act, entitled � "AN ACT APPROPRIATING FUNDS FOR PUBLIC WORKS, SYNCHRONIZING THE SAME WITH PREVIOUS PUBLIC WORKS APPROPRIATIONS."

All things viewed in proper perspective, we reiterate what was said in Ponce v. Gomez (L-21870) and Ponce v. City of Cebu (L-22669) that the term "foreshore" refers to "that part of the land adjacent to the sea which is alternately covered and left dry by the ordinary flow of the tides." As opined by this Court in said cases:

WHEREAS, six (6) members of the Court (Justices Bautista Angelo, Concepcion, Reyes, Barrera, Dizon and Jose P. Bengzon) opine that said city ordinance and contracts are ultra vires and hence, null and void, insofar as the remaining 60% of the area aforementioned, because the term "foreshore lands" as used in Republic Act No. 1899 should be understood in the sense attached thereto by common parlance ; (emphasis ours)

The aforesaid ruling was applied by then Secretary of Justice Claudio Teehankee, in his opinion dated December 22, 1966, in a case with analogous facts as the present one, to wit:

December 22, 1966

The Secretary of Agriculture

and Natural Resources

Diliman, Quezon City

Sir:

xxx xxx xxx

I. Facts

1. On January 19, 1961, pursuant to the provisions of Republic Act No. 1899, the Municipality of Navotas enacted Ordinance No. 1 authorizing the Municipal Mayor to enter into a reclamation contract with Mr. Chuanico.

2. On March 15, 1961, a reclamation contract was concluded between the Municipality of Navotas, represented by the Municipal Mayor, and Mr. Chuanico in accordance with the above ordinance. Thereunder, Mr. Chuanico shall be the attorney-in-fact of the Municipality in prosecuting the reclamation project and shall advance the money needed therefor; that the actual expenses incurred shall be deemed a loan to the Municipality; that Mr. Chuanico shall have the irrevocable option to buy 70% of the reclaimed area at P7.00 per square meter; that he shall have the full and irrevocable powers to do any and all things necessary and proper in and about the premises," including the power to hire necessary personnel for the prosecution of the work, purchase materials and supplies, and purchase or lease construction machineries and equipment, but any and all contracts to be concluded by him in behalf of the Municipality shall be submitted to public bidding.

xxx xxx xxx

3. On March 16, 1961, the Municipal Council of Navotas passed Resolution No. 22 approving and ratifying the contract.

xxx xxx xxx

III. Comments

1. The above reclamation contract was concluded on the basis of Navotas Ordinance No. 1 which, in turn, had been enacted avowedly pursuant to Republic Act No. 1899. This being so, the contract, in order to be valid, must conform to the provisions of the said law.

By authorizing local governments "to execute by administration any reclamation work," (Republic Act No. 1899 impliedly forbids the execution of said project by contract. Thus, in the case or Ponce et al. vs. Gomez (February 3, 1966), five justices of the Supreme Court voted to annul the contract between Cebu Development Corporation and Cebu City for the reclamation of foreshore lands because "the provisions of said . . . contract are not . . . in accordance with the provisions of Republic Act No. 1899," as against one Justice who opined that the contract substantially complied with the provisions of the said law. (Five Justices expressed no opinion on this point.)

Inasmuch as the Navotas reclamation contract is substantially similar to the Cebu reclamation contract, it is believed that the former is likewise fatally defective.

38Yumi- cases LTD

2. The Navotas reclamation project envisages the construction of a channel along the Manila Bay periphery of that town and the reclamation of approximately 650 hectares of land from said channel to a seaward distance of one kilometer. In the basic letter it is stated that "practically, all the 650 hectares of lands proposed to be reclaimed under the agreement" do not constitute foreshore lands and that "the greater portion of the area . . . is in fact navigable and presently being used as a fishing harbor by deep-sea fishing operators as well as a fishing ground of sustenance fisherman. Assuming the correctness of these averments, the Navotas reclamation contract evidently transcends the authority granted under Republic Act No. 1899, which empowers the local governments to reclaim nothing more than "foreshore lands, i.e., "that part of the land adjacent to the see which is alternately covered and left dry by the ordinary flow of the tides." (26 C.J. 890.) It was for this reason that in the cited case Ponce case, the Supreme Court, by a vote of 6-0 with five Justices abstaining, declared ultra vires and void the contractual stipulation for the reclamation of submerged lands off Cebu City, and permanently enjoined its execution under Republic Act No. 1899.

xxx xxx xxx

In accordance with the foregoing, I have the honor to submit the view that the Navotas reclamation contract is not binding and should be disregarded for non-compliance with law.

Very truly yours,

(SGD) CLAUDIO TEEHANKEE

Secretary of Justice

The said opinion of Justice Secretary Teehankee who became Associate Justice, and later Chief Justice, of this Court, did, in our considered view, supersede the earlier opinion of former justice Secretary Alejo Mabanag, aforestated, as the cases, in connection with which subject opinions were sought, were with similar facts. The said Teehankee opinion accords with RA 1899.

It bears stressing that the subject matter of Pasay City Ordinance No. 121, as amended by Ordinance No. 158, and the Agreement under attack, have been found to be outside the intendment and scope of RA 1899, and therefore ultra vires and null and void.

What is worse, the same Agreement was vitiated by the glaring absence of a public bidding.

Obviously, there is a complete dearth of evidence to prove that RREC had really reclaimed 55 hectares. The letter of Minister Baltazar Aquino relied upon by RREC is no proof at all that RREC had reclaimed 55 hectares. Said letter was just referring to a tentative schedule of work to be done by RREC, even as it required RREC to submit the pertinent papers to show its supposed accomplishment, to secure approval by the Ministry of Public Works and Highways to the reclamation plan, and to submit to a public bidding all contracts and sub-contracts for subject reclamation project but RREC never complied with such requirements and conditions sine qua non.

No contracts or sub-contracts or agreements, plans, designs, and/or specifications of the reclamation project were presented to reflect any accomplishment. Not even any statement or itemization of works accomplished by contractors or subcontractors or vouchers and other relevant papers were introduced to describe the extent of RREC's accomplishment. Neither was the requisite certification from the City

Engineer concerned that "portions of the reclamation project not less than 50 hectares in area shall have been accomplished or completed" obtained and presented by RREC.

As a matter of fact, no witness ever testified on any reclamation work done by RREC, and extent thereof, as of April 26, 1962. Not a single contractor, sub-contractor, engineer, surveyor, or any other witness involved in the alleged reclamation work of RREC testified on the 55 hectares supposedly reclaimed by RREC. What work was done, who did the work, where was it commenced, and when was it completed, was never brought to light by any witness before the court. Certainly, onus probandi was on RREC and Pasay City to show and point out the as yet unidentified 55 hectares they allegedly reclaimed. But this burden of proof RREC and Pasay City miserably failed to discharge.

So also, in the decision of the Pasay Court of First Instance dismissing the complaint of plaintiff-appellant, now petitioner Republic of the Philippines, the lifting of the writ of Preliminary Injunction issued on April 26, 1962 would become effective only "as soon as Defendant Republic Real Estate Corporation and Defendant Pasay City shall have submitted the corresponding plans and specifications to the Director of Public Work, and shall have obtained approval thereof, and as soon as corresponding public bidding for the award to the contractor and sub-contractor that will undertake the reclamation project shall have been effected." (Rollo, pp. 127-129, G.R. No. 103882)

From the records on hand, it is abundantly clear that RREC and Pasay City never complied with such prerequisites for the lifting of the writ of Preliminary Injunction. Consequently, RREC had no authority to resume its reclamation work which was stopped by said writ of preliminary injunction issued on April 26, 1962.

From the Contract for Dredging Work, dated November 26, 1960, marked Exhibit "21-A" for RREC before the lower court, and Exhibit "EE" for CCP before the Court of Appeals, it can be deduced that only on November 26, 1960 did RREC contract out the dredging work to C and A Construction Company, Inc., for the reclamation of the 55 hectares initially programmed to be reclaimed by it. But, as stated by RREC itself in the position paper filed with this Court on July 15, 1997, with reference to CDCP's reclamation work, mobilization of the reclamation team would take one year before a reclamation work could actually begin. Therefore, the reclamation work undertaker by RREC could not have started before November 26, 1961.

Considering that on April 26, 1962 RREC was enjoined from proceeding any further with its reclamation work, it had barely five (5) months, from November, 1961 to April, 1962, to work on subject reclamation project. It was thus physically impossible for RREC to reclaim 55 hectares, with the stipulated specifications and elevation, in such a brief span of time. In the report of RREC (Exhibit "DD" for CCP), it was conceded that due to the writ of preliminary injunction issued on April 26, 1962, C and A Construction Co., Inc. had suspended its dredging operation since May, 1962.

The "graphical report" on the Pasay Reclamation project, as of April 30, 1962, attached to the Progress Report marked Exhibit "DD", is a schematic representation of the work accomplishment referred to in such Progress Report, indicating the various elevations of the land surface it embraced, ranging from 0.00 meters to the highest elevation of 2.5 meters above MLLW. Such portrayal of work accomplished is crucial in our determination of whether or not RREC had actually "reclaimed" any land as under its Contract for Dredging Work with C and A Construction Company (Exhibit "EE", the required final elevation for a completely reclaimed land was 3.5 meters above MLLW, as explicitly provided in said

39Yumi- cases LTD

Contract for Dredging Work. So, the irresistible conclusion is when the work on subject RREC-Pasay City reclamation project stopped in April, 1962 in compliance with the writ of preliminary injunction issued by the trial court of origin, no portion of the reclamation project worked on by RREC had reached the stipulated elevation of 3.5 meters above MLLW. The entire area it worked on was only at sea level or 0.00 meter above MLLW. In short, RREC had not yet reclaimed any area when the writ of preliminary injunction issued in April 1962.

On this point, the testimonies of Architect Ruben M. Protacio, Architect and Managing partner of Leandro V. Locsin and partners, Architect and City Planner Manuel T. Mañoza, Jr. of Planning Resources and Operation System, Inc., Rose D. Cruz, Executive Assistant, Office of the President, from 1966 to 1970, and Dr. Lucrecia Kasilag, National Artist and member of CCP Advisory Committee, come to the fore. These credible, impartial and knowledgeable witnesses recounted on the witness stand that when the construction of the Main Building of the Cultural Center of the Philippines (CCP) began in 1966, the only surface land available was the site for the said building (TSN, Sept. 29, 1997, pages 8, 14 and 50), what could be seen in front of and behind it was all water (TSN, Sept. 29, 1997 pages 127-128). When the CCP Main Building was being constructed, from 1968 to 1969, the land above sea level thereat was only where the CCP Main Building was erected and the rest of the surroundings were all under water, particularly the back portion fronting the bay. (TSN, Sept. 13, 1997, pp. 181, 182, 185, 186, 188). Dr. Lucrecia R. Kasilag stressed that on April 16, 1966, during the ground breaking for the CCP Main Building, it was water all around (TSN, Sept. 30, 1997, pp. 320, 324, 325).

There was indeed no legal and factual basis for the Court of Appeals to order and declare that "the requirement by the trial court on public bidding and the submission of RREC's plans and specification to the Department of Public Works and Highways in order that RREC may continue the implementation of the reclamation work is deleted for being moot and academic." Said requirement has never become moot and academic. It has remained indispensable, as ever, and non-compliance therewith restrained RREC from lawfully resuming the reclamation work under controversy, notwithstanding the rendition below of the decision in its favor.

Verily, contrary to what the Court of Appeals found, RREC had not reclaimed any area with the prescribed elevation of 3.5 meters above MLLW, so much so that in 1978, it (RREC) opted to file with the former Ministry of Public Highways, a claim for compensation of P30,396,878.20, for reclamation work allegedly done before the CDCP started working on the reclamation of the CCP grounds. On September 7, 1979, RREC asked the Solicitor General to settle its subject claim for compensation at the same amount of P30,396,878.20. But on June 10, 1981, guided by the cost data, work volume accomplished and other relevant information gathered by the former Ministry of Public Highways, the Solicitor General informed RREC that the value of what it had accomplished, based on 1962 price levels, was only P8,344,741.29, and the expenses for mobilization of equipment amounted to P2,581,330.00. The aforesaid evaluation made by the government, through the then Minister of Public Highways, is factual and realistic, so much so that on June 25, 1981, RREC, in its reply letter to the Solicitor General, stated:

We regret that we are not agreeable to the amount of P10,926,071.29, based on 1962 cost data, etc., as compensation based on quantum meruit. The least we would consider is the amount of P10,926,071.29 plus interest at the rate of 6% per annum from 1962 to the time of payment. We feel that 6% is very much less than the accepted rate of inflation that has supervened since 1962 to the present, and even less than the present legal rate of 12% per annum. 19

Undoubtedly, what RREC claimed for was compensation for what it had done, and for the dredge fill of 1,558,395 cubic meters it used, on subject reclamation project.

Respondent Court likewise erred in ordering the turn-over to Pasay City of the following titled lots, to wit:

LOT NO. BUILDING AREA OCT/TCT 42 Gloria Maris 9,516 sq.m. OCT 159 in the Restaurant name of GSIS

3 Asean Garden 76,299 sq.m. OCT 10251 in the name of CCP

12 Folk Arts Theater 1.7503 hec. TCT 18627 in the and PICC parking name of CCP

Space 22 landscaped with 132,924 sq.m. TCT 75676 in the

sculpture of Asean name of CCP

Artists-site of

Boom na Boom

23 open space, back 34,346 sq.m. TCT 75677 in the

of Philcite name of CCP

24 Parking space for 10,352 sq.m. TCT 75678 in the

Star City, CCP, name of CCP

Philcite

25 open space 11,323 sq.m. TCT 75679 in the

occupied by Star name of CCP

City

28 open space, 27,689 sq.m. TCT 75684 in the

beside PICC name of CCP

29 open space, 106,067 sq.m. TCT 75681 in the

leased by El name of CCP

Shaddai

We discern no factual basis nor any legal justification therefor. In the first place, in their answer to the Complaint and Amended Complaint below, RREC and Pasay City never prayed for the transfer to Pasay

40Yumi- cases LTD

City of subject lots, title to which had long become indefeasible in favor of the rightful title holders, CCP and GSIS, respectively.

The annotation of a notice of lis pendens on the certificates of title covering the said lots is of no moment. It did not vest in Pasay City and RREC any real right superior to the absolute ownership thereover of CCP and GSIS. Besides, the nature of the action did not really warrant the issuance of a notice of lis pendens.

Sec. 14 of Rule 13, Revised Rules of Civil Procedure, reads:

Sec. 14. Notice of lis pendens. In an action affecting the title or the right of possession of real properly, the plaintiff and the defendant, when affirmative relief is claimed in his answer, may record in the office of the registry of deeds of the province in which the property is situated a notice of the pendency of the action. Said notice shall contain the names of the parties and the object of the action or defense, and a description of the property in that province affected thereby. Only from the time of filing such notice for record shall a purchaser, or encumbrancer of the property affected thereby, be deemed to have constructive notice of the pendency of the action, and only of its pendency against the parties designated by their real names.

The notice of lis pendens herein above mentioned may be cancelled only upon order of the court, after proper showing that the notice is for the purpose of molesting the adverse party, or that it is not necessary to protect the rights of the party who caused it to be recorded.

Under the aforecited provision of law in point, a notice of lis pendens is necessary when the action is for recovery of possession or ownership of a parcel of land. In the present litigation, RREC and Pasay City, as defendants in the main case, did not counterclaim for the turnover to Pasay City of the titled lots aforementioned.

What is more, a torrens title cannot be collaterally attacked. The issue of validity of a torrens title, whether fraudulently issued or not, may be posed only in an action brought to impugn or annul it. (Halili vs. National Labor Relations Commission, 257 SCRA 174, Cimafranca vs. Intermediate Appellate Court, 147 SCRA 611.) Unmistakable, and cannot be ignored, is the germane provision of Section 48 of P.D. 1529, that a certificate of title can never be the subject of a collateral attack. It cannot be altered, modified, or cancelled except in a direct proceeding instituted in accordance with law.

Although Pasay City and RREC did not succeed in their undertaking to reclaim any area within subject reclamation project, it appearing that something compensable was accomplished by them, following the applicable provision of law and hearkening to the dictates of equity, that no one, not even the government, shall unjustly enrich oneself/itself at the expense of another 20, we believe; and so hold, that Pasay City and RREC should be paid for the said actual work done and dredge-fill poured in, worth P10,926,071.29, as verified by the former Ministry of Public Highways, and as claimed by RREC itself in its aforequoted letter dated June 25, 1981.

It is fervently hoped that long after the end of our sojourn in this valley of tears, the court, for its herein historic disposition, will be exalted by the future generations of Filipinos, for the preservation of the national patrimony and promotion of our cultural heritage. As writer Channing rightly puts it: "Whatever expands the affections, or enlarges the sphere of our sympathies . Whatever makes us feel our relation to

the universe and all that it inherits in time and in eternity, and to the great and beneficent cause of all, must unquestionably refine our nature, and elevate us in the scale of being."

WHEREFORE:

In G.R. No. 103882, the Petition is GRANTED; the Decision, dated January 28, 1992, and Amended Decision, dated April 28, 1992, of the Court of Appeals, are both SET ASIDE; and Pasay City Ordinance No. 121, dated May 6, 1958, and Ordinance No. 158, dated April 21, 1959, as well as the Reclamation Agreements entered into by Pasay City and Republic Real Estate Corporation (RREC) as authorized by said city ordinances, are declared NULL and VOID for being ultra vires, and contrary to Rep. Act 1899.

The writ of preliminary injunction issued on April 26, 1962 by the trial court a quo in Civil Case No. 2229-P is made permanent and the notice of lis pendens issued by the Court of Appeals in CA G.R. CV No. 51349 ordered CANCELLED. The Register of Deeds of Pasay City is directed to take note of and annotate on the certificates of title involved, the cancellation of subject notice of lis pendens.

The petitioner, Republic of the Philippines, is hereby ordered to pay Pasay City and Republic Real Estate Corporation the sum of TEN MILLION NINE HUNDRED TWENTY-SIX THOUSAND SEVENTY-ONE AND TWENTY-NINE CENTAVOS (P10,926,071.29) PESOS, plus interest thereon of six (6%) percent per annum from May 1, 1962 until full payment, which amount shall be divided by Pasay City and RREC, share and share alike.

In G.R. No. 105276, the Petition is hereby DENIED for lack of merit.

No pronouncement as to costs.

SO ORDERED.

G.R. No. L-4012 March 25, 1908

MAXIMO CORTES Y PROSPERO, petitioner-appellant, vs.THE CITY OF MANILA, respondent-appellee.

TORRES, J.:

On the 26th of September, 1906, Maximo Cortes filed a written application for the registration of a parcel of land owned by him, free of all incumbrances, situated in Calle Aguilar, corner of Calle Cecilia in the district of Binondo, this city, together with the buildings erected thereon, which land has an area of 1,172.21 square meters, its boundaries being stated in the application. The land was acquired by the applicant by purchase from Higinio Francisco y Prospero, according to a deed of sale dated July 3, 1894, recorded in the registry of property, no other person having any title to or interest therein, and the property was assessed, for the purpose of taxation of the last fiscal year, at $1,444, United States currency. The buildings erected thereon were paid for by the applicant with his own money, and the application is accompanied by the deed of sale, plan, and technical description of the land.

The examiner of titles reported, in due course, that the said building lot was attached by reason of certain proceedings instituted against the applicant for reason and rebellion, yet, inasmuch as the land was acquired by him more than ten years previously, he could be considered the real owner thereof by prescription; but that, in order to obtain title, it was necessary for him to show that said attachment had

41Yumi- cases LTD

been discharged or canceled, for which reason he considered the title of the applicant to be defective and that it could not be registered.

Against the claim of the applicant the attorney for the city of Manila objected and reproduced the verbal opposition offered in the case, alleging that both the plan and the technical description exhibited contained errors; that there was an excess in the measurement which affected the interests of the city, and that, should the application be granted, an area of 33.40 square meters of the Meisic Creek would become the property of Maximo Cortes, when, as a matter of fact, the said creek was one of public use and belonged to the city of manila. For these reasons he asked that the registration applied for be denied in so far as it affected the Meisic Creek, with costs against the applicant.

Upon an examination of the evidence adduced, the judge rendered his decision on the 11th of March, sustaining the opposition of the city of Manila, and ordering that the said land, including its walls, be adjudicated and registered in favor of the applicant upon presentation of an amended description, showing the measurements of the property, including its walls but excluding therefrom the rest of the land shown in Exhibit A.

The applicant asked that the case be reopened on account of his having discovered very important proof; to this end he filed an affidavit stating that he had learned the whereabouts of the original owner of the land, who was better informed with respect to its conditions and location; but, as said motion was overruled, he excepted to the judgment and also moved for a new trial on the ground that the decision of the court was contrary to law and to the weight of the evidence. This motion was likewise denied and exception taken.

The dominion of the applicant, Maximo Cortes, over the land or building lot acquired by him from Higinio Francisco y Prospero, according to the public deed executed before a notary on the 3rd of July, 1894, registered in the registry of property, is unquestionable and has been fully proven; and, in view of the validity of his title, the city attorney had to limit his opposition to the registration simply to its effect upon the Meisic Creek. The court, upon previous declaration of general default, then ordered the adjudication and registration of the title of the applicant, Cortes, to said building lot upon submitting an amended description of the land.

It having been satisfactorily shown that the portion of land included in the technical description presented by the applicant, situated between the lot to which said instrument refers and the bed of the Meisic Creek, has been gradually formed by alluvion, as the result of the current in the said stream, it can not be denied that said portion of land with an area of 33.40 square meters, belongs by right accretion to the owner of the land referred to in the instrument of the 3rd of July, 1894, exhibited by the applicant.

The Law of Waters, promulgated by royal decree of the 3d of August, 1866, and extended to these Islands by a royal decree dated April 8, 1873, provides in article 84 that The accretion resulting from the gradual deposit by or sedimentation from the waters belongs to the owners of land bordering on streams, torrents, lakes, and rivers.

Article 366 of the Civil Code provides that The accretions which banks of rivers may gradually received from the effects of the currents belong to the owners of the estates bordering thereon.

There is no evidence whatever to prove that the addition to the said property was made artificially by the owner; therefore, the facts alleged and proven in the proceedings must stand. The increase or accretion which in a latent, incessant, and spontaneous manner is received by the land from the effects of the current depositing, in the course of time, sediment and alluvial matter along the shore, is undeniably the work of nature and lawfully belongs to the owner of the property; and from the fact that all or almost the whole area of said increased portion is soft and unsettled, one is naturally convinced that it was formed by alluvion, and that for such reason it appertains to the owner of the land bordering thereon by virtue of the right of accretion recognized by the law.

The reason therefore is quite evident because, if lands bordering on streams are exposed to floods and other damage due to destructive force of the waters, and if by virtue of law they are subject to incumbrances and various kinds of easements, it is only just that such risks or dangers as may prejudice the owners thereof should in some way be compensated by the right of accretion.

And, although the acts of possession exercised over the bordering land are always understood legally to cover that portion added to the property by accretion, in this case shrubs have been planted there, which furnish additional proof that Maximo Cortes has exercised rights of ownership and possession over the whole area of the property the registration of which he requests.

For the reasons above set forth it is our opinion that the judgment appealed from should be reversed, as we do hereby reverse the same, and that the court below should direct that the land to which the appellant refers be recorded in the registry of property in accordance with the law, including that portion of the same added by accretion up to the water line of the Meisic River, without any special ruling as to costs. So ordered.

G.R. No. L-48480 July 30, 1943

FABIAN B. S. ABELLERA, petitioner, vs.MEYNARDO M. FAROL, ET AL., respondents.

BOCOBO, J.:

Whether in a cadastral case, the judge may upon motion of adverse claimants order the cancellation of the claimant's answer and keep the latter from introducing evidence to prove his ownership because the case is barred by a prior judgment, is the legal question at issue in this case. An order to that effect issued by the Court of First Instance of La Union, is impugned by Fabian B.S. Abellera in a petition for a writ of certiorari.

Abellera, in a previous case concerning the same real estate involved herein, sued Hermegildo Balanag and others who are either the same parties in this case or the latter's predecessors in interest, alleging ownership of the land. But his complaint was dismissed by the Court of First Instance on two grounds: (1) prescription in favor of defendants; and (2) the deed of donation of these lands to him had not been formally accepted according to Article 633 of the Civil Code. Upon appeal to this Court, the judgment of the trial court was affirmed on the second ground aforementioned (Abellera vs. Balanag G.R. No. 11970, promulgated March 22, 1918, and reported in 37 Phil. 865).

It appears in that decision of this Court that after the perfection of the appeal, Abellera executed a public document formally accepting the donation of the land, and presented and deed of acceptance together

42Yumi- cases LTD

with proofs of notification of acceptance to the donor, as ground for new trial. This Court held that this was not newly-discovered evidence, and that Abellera had not acquired title to the hacienda until the execution of the deed of acceptance and the notification thereof to donor. This Court added:

So that whether rights he may have to institute and maintain a new action of ejectment in reliance upon his claim that he has acquired title to the hacienda, since the date of the dismissal of this action, it is clear that the present action was properly dismissed on the ground of failure of proof of title in the plaintiff at the time when the action was instituted and later when judgment of dismissal was entered by the trial court.

In July of 1918, or four months after the above-mentioned decision of this Court, petitioner herein brought another action for recovery of the land against the same defendants in the previous case. The second suit was later dismissed by the Court of First Instance and transferred to cadastral case No. 5 which included the hacienda in question that had in the meantime been subdivided into lots. When the cadastral case came up before the Hon. Meynardo M. Farol at Aringay, La Union, in July 1941, Fabian B.S. Abellera appeared as claimant while Narciso de Guzman and others appeared as adverse claimant. The latter through counsel moved that Abellera's claim over the lots concerned be dismissed on the grounds of res judicata and prescription.

A careful examination of the decision of this Court in the previous case (37 Phil., 865) convinces us that there is no res judicata. We merely held that Abellera had not acquired title to the hacienda until the execution of the deed of acceptance and the notification thereof, and we clearly refused to prevent Abellera from instituting a new action based upon his assertion that he had acquired title to the estate since the dismissal of his original action.

The other ground for the motion for dismissal, prescription, is not involved in the present proceedings.

The next question is: Did the cadastral court, on the ground of res judicata, have any power to entertain the motion to dismiss Abellera's claim and bar him from presenting evidence to prove his ownership of these lots?

Rule 132 of the Rules of Court provides:

These rules shall not apply to land registration, cadastral and election cases, naturalization and insolvency proceedings, and other cases not herein provided for, except by analogy or in a suppletory character and whenever practicable and convenient.

The Rules of Court may be applied in cadastral cases when two conditions are present: (1) analogy or need to supplement the cadastral law, and (2) practicability and convenience.

If the nature and objective of the cadastral scheme are kept in view, a motion to dismiss in a cadastral case on the ground of prior judgment would seem to be out of place. The Government initiates a cadastral case, compelling all claimants in a municipality to litigate against one another regarding their respective claims of ownership. By this plan, all the private lands in a town are registered in one single collective proceeding. Thus, the piece-meal and isolated registration of lands, so inadequate in more ways than one, is avoided. The principal aim is to settle as much as possible all disputes over land and to remove all clouds over land titles, as far a practicable, in a community. To attain this purpose, the cadastral court should allow all claimants ample freedom to ventilate whatever right they may assert

over real estate, permitting them, in keeping with the law of evidence, to offer proofs in support of their allegations. To countenance the contrary opinion, by suppressing the presentation of evidence in support of claims, would but serve to perpetuate conflicts over land, for such stifled affirmations of ownership will fester like wounds unskillfully treated. No sufficient leeway having been give all claimants to demonstrate the strength and consistently of their alleged rights, the stability of decrees of title is jeopardized.

In Haw Pia vs. Roman A. Cruz (G.R. No. 48506), we declared that the Court of First Instance in a cadastral proceeding cannot appoint a receiver because its jurisdiction is special and limited. We declined in that case to apply the new Rules of Court by analogy.

We are, therefore, of the opinion that while in a cadastral case res judicata is available to a claimant in order to defeat the alleged rights of another claimant, nevertheless prior judgment can not set up in a motion to dismiss.

The order appealed from is hereby reversed. Petitioner herein shall in the cadastral proceedings be allowed to present evidence to prove his claim over the lots in question. With costs against the adverse claimants who are respondents herein. So ordered.

Yulo, C.J., Moran and Ozaeta, JJ. concur.

43Yumi- cases LTD