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Republic of the PhilippinesSUPREME COURTManila

EN BANC

G.R. No. 11095 December 16, 1916

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

Attorney-General Avancea for appellant.

Provincial Fiscal Enaje for appellee.

ARAULLO, J.:

In representation of the municipal corporation of Tigbauan, Province of Iloilo, the president of said municipality applied for the registration in the propert

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 presentedtherewith. 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 asconcerned 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, an

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 theGovernment, 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 theadjudication and registration of the parcels Nos. 6 and 7, together with their respective improvements, and disallowed the adverse claim of the Director o

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 netrial 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 ofTacloban 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 intoaccount 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, throuthe 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 aregistration 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 thsame.

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 cafor its own use from the canebreaks growing on said two parcels of land; that it had subsequently planted thereon caas espinas, which were alreadyyielding 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 thenorth, 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.

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 aresurrounded by the public lands, as shown by the plan presented by the applicant, and the persons whom one of these witnesses designated as adjacentproperty owners are mere occupants of the lands situated around the parcels, as also so stated in the plan itself.

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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 tothe municipality and intended for public service, such as might induce the presumption that the land had been granted to the municipality; nor that the latt

had used these parcels forrecognized public purposes. Therefore, under the rule laid down by this Supreme Court in several decisions, among others thecase 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 inot 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 b

granted, according to economic principles, to municipal corporations which, on account of their special conditions, the idiosyncrasy and character of thefunctions which they exercise, and, because of the administrative mission which they have to fulfill in the name of the Government and in representation the people who elected them, can not engage in agriculture and other industries nor can they attend to the administration of agricultural land and giveparticular 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, tomeet a public necessity, and therefore must be land which would have been originally granted by the State for such purposes. In other words, the landssusceptible 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 caa espina trees now yielding productdo 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 municipal

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 aforecitedthat 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 theconfirmation of its claim of alleged right is said parcels and for the issuance of a certificate of title therefore; and consequently neither may saidmunicipality, 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

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 areexcluded 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 PhilippineCommission, the Governor-General is authorized to reserve for public uses the public lands comprised within certain boundaries, whether they belong tothe Insular Government or to provincial or municipal governments. This provision unquestionably shows that the municipalities or municipal corporation

of these Islands cannot appropriate to themselves public or Government lands without a prior grant from the Government and without reservation in themanner 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 ownersh

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 availthemselves 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 relati

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 theapplicant municipality must be denied, whereby we sustain the adverse claim filed in connection therewith by the Director of Lands in representation of tGovernment of the Philippine Islands. No special finding is made in regard to costs. So ordered.

Torres, Johnson, Carson and Trent, JJ., concur.

Moreland J., concurs in the result.

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EN BANC

G.R. No. L-29788 August 30, 1972

RAFAEL S. SALAS, in his capacity as Executive Secretary; CONRADO F. ESTRELLA, in his capacity as Governor of the Land Authority; andLORENZO 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 hiscapacity as Mayor of the City of Manila; and the CITY OF MANILA, respondents-appellees.

Office of the Solicitor General Felix V. Makasiar, Assistant Solicitor-General Antonio A. Torres, Solicitor Raul I. Goco and Magno B. Pablo & CiprianoA. Tan, Legal Staff, Land Authority for petitioners-appellants.

Gregorio A. Ejercito and Felix C. Chavez for 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, thdispositive 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 itsproperty without due process and payment of just compensation. Respondent Executive Secretary and Governor of the Land Authority are herebyrestrained 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 inthe 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

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 Surve

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 211920, 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, tCity of Manila sold portions of the aforementioned parcel of land in favor of Pura Villanueva. As a consequence of the transactions Original Certificate oTitle 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 lieuthereof 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 squaremeters, 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 Excellencthe President of the Philippines to consider the feasibility of declaring the City property bounded by Florida, San Andres, and Nebraska Streets, underTransfer 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 AntoniJ. Villegas on September 21, 1960, with the information that the same resolution was, on the same date, transmitted to the Senate and House ofRepresentatives of the Congress of the Philippines. 3

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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 explanatorynote 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 matterof 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 declarin

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 thisproperty has been occupied for a long time by the present occupants thereof and since said occupants have expressed their willingness to buy the saidproperty, 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 NicanoYiguez 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 oralienable 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 211960, 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 ofland 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 areready 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.

The Bill having been passed by the House of Representatives, the same was thereafter sent to the Senate where it was thoroughly discussed, as evidencedby 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 whichwe 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 FourthDistrict 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.

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 communalproperty, 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 thesame on installment basis to the tenants or bona fide occupants thereof and to individuals, in the order mentioned: Provided, That no down payment shalbe required of tenants orbona fide occupants who cannot afford to pay such down payment: Provided, further, That no person can purchase more than onlot: Provided, furthermore, That if the tenant orbona 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

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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 ejectmenproceedings pending in court against any such tenant or bona fide occupant shall be dismissed upon motion of the defendant: Provided, That anydemolition order directed against any tenant or bona fide occupant shall be lifted.

Sec. 3. Upon approval of this Act, if the tenant orbona fide occupant is in arrears in the payment of any rentals, the amount legally due shall be liquidatedand 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 dafull 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 shallsucceed 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 theprovisions 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 JoseV. Yap of the Land Authority (which succeeded the Land Tenure Administration) addressed a letter, dated February 18, 1965, to Mayor Antonio Villegasfurnishing 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 thproperty in question and informed the Land Authority that his office would interpose no objection to the implementation of said law, provided that itsprovisions 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 thenDeputy 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 thknowledge 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 hcapacity as the City Mayor of Manila and the City of Manila as a duly organized public corporation, brought an action for injunction and/or prohibitionwith preliminary injunction to restrain, prohibit and enjoin the herein appellants, particularly the Governor of the Land Authority and the Register of Deeof 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 Judgthe parties waived the presentation of further evidence and submitted the case for decision. On September 23, 1968, judgment was rendered by the trialcourt declaring Republic Act No. 4118 unconstitutional and invalid on the ground that it deprived the City of Manila of its property without due process olaw 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.

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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 owneby 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 thelaws of Spain, the former sovereign; that upon the establishment of a pueblo, the administrative authority was required to allot and set aside portions of th

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 assigningthese lands some lots were earmarked for strictly public purposes, and ownership of these lots (for public purposes) immediately passed to the newmunicipality; that in the case of common lands or "legua comunal", there was no such immediate acquisition of ownership by the pueblo, and the landthough 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 a

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 Manby 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 usufructover 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 itsterritory or to administer purely local affairs in a given political subdivision, and the extent of its authority is strictly delimited by the grant of powerconferred 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 mertransfer 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 conclusiveupon 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 theattention 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 a

communal, the Courts certainly owe it to a coordinate branch of the Government to respect such determination and should not interfere with theenforcement 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 wasregistered 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 allpersons including the Insular Government and all the branches there ... There is nothing in the said certificate of title indicating that the land wascommunal' land as contended by the respondents. The erroneous assumption by the Municipal Board of Manila that the land in question was communalland 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 hav

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 publicdomain', transfer them from one classification to another and declare them disposable or not. Such power does not, however, extend to properties which aowned 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 patrimonialproperty. Art. 424 of the same code provides that properties for public use consist of provincial roads, city streets, municipal streets, the squares, fountain

public waters, promenades and public works for public service paid for by said province, cities or municipalities. All other property possessed by any ofthem is patrimonial. Tested by this criterion the Court finds and holds that the land in question is patrimonial property of the City of Manila.

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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 iThis 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 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 mu

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 poweIt 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 o

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 orpatrimonial property. It is true that the City of Manila as well as its predecessor, the Ayuntamiento de Manila, could validly acquire property in itscorporate or private capacity, following the accepted doctrine on the dual character public and private of a municipal corporation. And when itacquires property in its private capacity, it acts like an ordinary person capable of entering into contracts or making transactions for the transmission of tit

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 ownershipand 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 orcorporate funds, the presumption is that such land came 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 propertit 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 publicdomain for use as communal lands. The Spanish law provided that the usufruct of a portion of the public domain adjoining municipal territory might begranted by the Government for communal purposes, upon proper petition, but, until granted, no rights therein passed to the municipalities, and, in anyevent, 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 territofor 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 othethe 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) (Emphasi

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 thoseacquired 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 fogovernmental 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 itscreation 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

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,MunicipCorporations, 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 contromust 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, thelegislature can transfer its administration and disposition to an agency of the National Government to be disposed of according to its discretion. Here it di

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 withoutcompensation to the city, was not violative of the due process clause of the American Federal Constitution. The Supreme Court of Minnessota inMonagham 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 thright 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 orto 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 suc

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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 thecity 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 fopublic 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 andwithout 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 Yu24 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 isallowed. 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 mannertrench upon the constitution as will hereafter be shown. Republic Act No. 4118 was intended to implement the social justice policy of the Constitution an

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 afollows:

Approval of this bill will implement the policy of the administration of "land for the landless" and the Fifth Declaration of Principles of the Constitutionwhich 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 oflegislation 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 intdisposable alienable land of the State and placing it under the disposal of the Land Tenure Administration violates the provisions of Article III (Secs. 1and 2) of the Constitution which ordain that "private property shall not be taken for public use without just compensation, and that no person shall bedeprived 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 patrimoniproperty 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 iit 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 beggithe 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 fun

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 theState 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 Governmentthrough the Director of Lands, represented by the Solicitor General, in the cadastral proceedings did not contest the claim of the City of Manila that theland 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 resolutio

of September 20, 1960, the Municipal Board, presided by then Vice-Mayor Antonio Villegas, requested "His Excellency the President of the Philippines consider the feasibility of declaring the city property bounded by Florida, San Andres and Nebraska Streets, under Transfer Certificate of Title Nos. 2554and 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 actualoccupants 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 itsclaim 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 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, nopresumption 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 vDirector of Lands, 24 Phil. 193). The conclusion of the respondent court that Republic Act No. 4118 converted a patrimonial property of the City of Maninto 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

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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 tomake 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. Thesubdivision of the land and conveyance of the resulting subdivision lots to the occupants by Congressional authorization does not operate as an exercise o

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 approveresolution. 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 CityMayor. 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 subdivisioand 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 saidlaw provided that its provisions are strictly complied with." The foregoing sequence of events, clearly indicate a pattern of regularity and observance of d

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 othe 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 th

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 Courtspossess 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 N

4118 without any obstacle from the respondents. Without costs.

Concepcion, C.J., Makalintal, Zaldivar, Castro, Fernando, Teehankee and Antonio, JJ., concur.

Barredo and Makasiar, JJ., took no part.

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EN BANC

G.R. No. L-14518 August 29, 1960

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

Antonio Pandes for appellants.

Reyes and Dy-Liacco for 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 fo"Cancellation of Title and Reconveyance ", alleging that they (plaintiffs) have been since time immemorial, in actual possession as owners, respectively,

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 ofland 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 publicdomain, and that the Director of Lands was without jurisdiction in entertaining the application for, and in granting the free patent; that plaintiffs were nev

informed nor had they any knowledge of the survey of the said lands or of the proceedings instituted by Cecilia Nelayan; and that the latter, who very weknew 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. Theyfurther 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 ownershipover 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 theproceedings 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 sufficie

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. Overplaintiff'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 andfrom 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 patentalready 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 againstthe 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 registrationproceedings 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 th

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 aninterest. 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 provideunder 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, orafter 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, inste

of having been ordered dismissed outright.

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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 insecuring 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

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 f

confirmation of title, except when prevented by war or force majeure. These shall be conclusively presumed to have performed all the conditions essentiato 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 longeravailable 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. Appelleesevidently overlook that this period has been extended from time to time by the legislature, the latest prorogation being by Republic Act No. 2061, whichextends 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 Nelay

or the government.

Plaintiffs' allegation that they have been in continued possession of the properties in dispute since time immemorial as owners thereofis 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 parof 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 beany 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. (OCho vs. Director of Lands, 75 Phil., 890 892, Citing Cario 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, aregiven 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:

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 No926, 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 rightto 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, Valenti

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 shoulbe 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, beyonthe 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 hhad 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 possessio

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 lackingonly 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 ofReyes, 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 andupon 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 thappellee 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 similarreasons, 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 startedonly during the Spanish regime.

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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 orinterestin (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 ofdefendant 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 Phi

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. Nodiscussion 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 thereconveyance 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 inthe 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 thiappeal against appellee Cecilia Nelayan.

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

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THIRD DIVISION

G.R. No. 149750. June 16, 2003]

AURORA ALCANTARA-DAUS, Petitioner, v. Spouses HERMOSO and SOCORRO DE LEON, Respondents.

D E C I S I O N

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 tsale, 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, 2001Resolution 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 petitioners 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:

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. 478and 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 OriginaCertificate 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 theearly 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 lthem 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] Hermosos brothers and sisters, to Atty. Juan and his sisters, when in truth and in fact, no such conveyances were everintended 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. Theydiscovered that the land in question was sold by x x x Rodolfo de Leon to [Petitioner] Aurora Alcantara. They demanded annulment of the document andreconveyance 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

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On August 23, 1994, the RTC (Branch 48) of Urdaneta, Pangasinan[6rendered its Decision[7in 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 ofExtrajudicial 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 hclaim -- 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 areguilty of laches?[9

The Courts 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,[10upon a meeting of the minds[11on the offer and the acceptance thereof based on

subject matter, price and terms of payment.[12At this stage, the sellers ownership of the thing sold is not an element in the perfection of the contract ofsale.

The contract, however, creates an obligation on the part of the seller to transfer ownership and to deliver the subject matter of the contract.[13It is duringthe 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 sellers 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 o

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 th

contract and the consequent transfer of ownership would depend on whether he subsequently acquired ownership of the land in accordance with Article1434 of the Civil Code.[17Therefore, we need to resolve the issue of the authenticity and the due execution of the Extrajudicial Partition and Quitclaim i

his favor.

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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 claimsthat 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 Notarialdocuments, however, may be presented in evidence without further proof of their authenticity, since the certificate of acknowledgment is prima facieevidence of the execution of the instrument or document involved.[19 To contradict facts in a notarial 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 conflictwith that of the RTC. While normally this Court does not review factual issues,[21this rule does not apply when there is a conflict between the holdings the CA and those of the trial court,[22as 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 Leon[23 with his purported signature on the Deed of Extrajudicial Partition with Quitclaim[24will 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 tosustain the authenticity of this document. He can hardly be expected to dispute the authenticity of the very Deed he notarized.[26 For this reason, histestimony 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. Weare 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 registration29

covers it, the disputedland cannot be acquired by prescription regardless of petitioners 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.[30Rodolfo de Leon alleged that the land had been allocated to him by his brother Hermoso de Leon inMarch 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 cas

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.

[34Since laches is an equitable doctrine, its application is controlled by equitable considerations.[35It cannot be used to defeat justice or to perpetuatefraud and injustice.[36 Thus, the assertion of laches to thwart the claim of respondents is foreclosed, because the Deed upon which petitioner bases herclaim is a forgery.

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

SO ORDERED.

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SECOND DIVISION

G.R. No. 155206 October 28, 2003

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

D E C I S I O N

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 theDecision1dated 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 motifor 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 Zuluetasfailed 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 anOctober 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 covere

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 themortgage 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)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, BlockNo. 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 III7, 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 Pla

Block VII; 1, 5, 8, 15, 26 and 27 (New Plan) Block VI (Old Plan) Block VIII; 7, 12 and 20 (New Plan) Block VII (Old Plan) Block II; 1, 4 and 6 (NewPlan) 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

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 andBlock 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 overZuluetas 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 t

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 issuedcancelling TCT No. 21926; TCT No. 23553 cancelled TCT No. 21925; and TCT No. 23554 cancelling TCT No. 21924, all in the name of defendantGSIS.1awphi1.nt

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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 righand interests over the excluded lots. Plaintiff Eduardo Santiagos 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, acomplaint for reconveyance of real estate against the GSIS. Spouses Alfeo and Nenita Escasa, Manuel III and Sylvia G. Urbano, and Marciana P. Gonzal

and the heirs of Mamerto Gonzales moved to be included as intervenors and filed their respective answers in intervention. Subsequently, the petitioner, adefendant 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. Sub

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