[G.R. No. L-68533. May 23, 1986.

DIRECTOR OF LANDS and DIRECTOR OF FOREST DEVELOPMENT, Petitioners, v.

MARIANO FUNTILAR, MAGDALENA FUNTILAR, HEIRS OF FELIPE ROCETE and
INTERMEDIATE APPELLATE COURT (Third Civil Cases Division), Respondents.

In 1972, Mariano Funtilar, Magdalena Funtilar, and the Heirs of Felipe Rocete applied
for the registration of a parcel of land.

The land was part of the property originally belonging to one Candida Fernandez whose
ownership and possession began sometime during her lifetime and extended until 1936
when she died.

The present applicants are the grandchildren of Candida Fernandez. In 1936, after the
death of Candida Fernandez, her real property was declared in the name of the "Heirs
of Candida Fernandez under Tax Declaration No. 9622.

The parcel of land was forfeited in favor of the government for failure to pay real estate
taxes in 1940 or 1941. However, the same was redeemed in 1942 by Vitaliano Aguirre,
one of the three children of Candida Fernandez, who was then the administrator of the
property.

The evidence shows Vitaliano’s public and continuous possession.

The heirs of Candida Fernandez later partitioned the property among themselves. The
particular lot now disputed in this petition was adjudicated in favor of the applicants-
respondents. Shortly after the partition, in 1948, the new owners declared their share
for taxation purposes. Tax Declaration 91 for that year indicated the land as 12
hectares. This declaration was followed by another one, Tax Declaration No. 2021, in
1958.

An ocular inspection conducted by the trial court found more than one hundred (100)
coconut trees with ages over thirty (30) years old, out of a total of more or less one
thousand four hundred (1,400) coconut trees on the land.

The Director of Lands and Director of Forest Development filed an opposition alleging
that neither applicants nor their predecessor-in-interest possessed sufficient title to the
land, not having acquired the same under any of the recognized Spanish titles under
the Royal Decree of February 13, 1894; that neither applicants, nor their predecessors
have been in open, continuous, exclusive and notorious possession and occupation of
the land for at least thirty (30) years immediately preceding the filing of the
application; and that the land is a portion of the public domain belonging to the
Republic of the Philippines.

Trial court rendered its decision adjudicating the land to applicants as follows: jgc:chanrobles.com.ph
"WHEREFORE, and in view of the foregoing, the applicants, namely MARIANO FUNTILAR
MAGDALENA FUNTILAR and the HEIRS OF FELIPE ROCETE are hereby declared owners
pro-indiviso of the parcel of land described

Government oppositors: the land in question was certified as alienable and disposable
only on September 3, 1953. They, therefore, conclude that herein applicants could not
have been in possession of said land for more than 30 years. There is no evidence
presented by the government, however, that said land in question was part of the
forest zone. For that matter, during the hearing, the Director of Forestry and the
Director of Lands manifested in writing that they have no evidence in support of their
opposition. They have not presented plans or sketches to show that the land in question
is part of the communal forest.

ISSUE: THE trial court erred in HOLDING THAT APPLICANTS-RESPONDENTS HAVE NOT
MET THE REQUIREMENTS OF POSSESSION FOR AT LEAST THIRTY (30) YEARS
IMMEDIATELY PRECEDING THE FILING OF THEIR APPLICATION IN 1972 AS TO ENTITLE
THEM TO REGISTRATION.

RULING:
The first issue raised refers to identity.

Petitioners allege that the identity of the land sought to be registered has not been
established. We sustain the contrary finding. Survey Plan Psu-215779 of the property,
showing its boundaries and total area, clearly identifies and delineates the extent of the
land. The petitioners cite the insufficiency of such a survey to identify the land. The
petitioners overlook the fact that no survey would at all be possible where the identity
of the land is not first properly established. More importantly, without such
identification, no opposition, even its own, to the application for registration could be
interposed. Encroachment on or adverse possession of property could not be justly
claimed.

The petitioners cite differences in the description of the land boundaries, as well as in
the land area stated in the tax declarations submitted in evidence by applicants-
respondents. They allege that these do not refer to one and the same property.

A careful examination of the record shows a misinterpretation of the evidence

as to the identification of the land.

However, the applicants-respondents have satisfactorily explained the

discrepancy. Tax Declaration Nos. 91 and 2021 followed in tax payments from
1948 to 1958 and beyond were made prior to the survey of the property in
1965. Tax Declaration Nos. 3757 and 2662 were made subsequent thereto and, hence,
account for the difference in area stated. Such differences are not uncommon as
early tax declarations are, more often than not, based on approximation or
estimation rather than on computation. More so, if the land as in this case was
merely inherited from a predecessor and was still held in common. Differences
in boundaries described in required municipal forms may also occur with
changes in boundary owners, changes of names of certain places, a certain
natural boundary being known by more than one name or by plain error.
Neither was it uncommon then to designate the nearest, most visible natural landmarks
such as mountains, creeks, rivers, etc. to describe the location or situation of the
boundaries of properties in the absence of knowledge of technical methods of
measuring or determining boundaries with accuracy, especially where as in this case,
the same were made merely by humble farm people. Certain discrepancies, if logically
explained later, do not make doubtful, the identification of the property as made,
understood and accepted by the parties to the case.

It is respondents’ contention that the land in question was originally owned by Candida
Fernandez; forfeited in favor of the government for non-payment of taxes;
subsequently repurchased by Vitaliano Aguirre in a tax delinquency sale and finally
adjudicated in favor of applicants in 1948. Petitioners, however, allege that the
relationship of the land sold at auction with the land subject of registration has not
been established, since the final deed of sale in favor of Aguirre and the survey plan
Psu-215779 refer to two different parcels of land.

The difference in boundary descriptions has already been explained. Anent the disparity
in land area, it must be noted that the property mentioned in the final deed of sale
issued by the provincial treasurer at the delinquency auction sale was the property
originally owned by Candida Fernandez. The parcel of land sought to be registered and
identified by Survey Plan Psu-215779 is a part of that property. The surveyed land
resulted from the partition of Candida’s property among her heirs. Adjudicated in favor
of herein respondents was 22.6773 hectares thereof, the rest having gone to Emilio
Aguirre, a son of Candida whose property bounds the parcel of land in dispute on the
south. Such fact is revealed by the testimony of Mariano Funtilar on direct examination,
to wit:
chanrob1es virtual 1aw library

The petitioners contend that the private respondents have failed to establish possession
for at least thirty years to entitle them to confirmation of imperfect title and registration
under the law. The petitioners also fault the respondents reliance on the 1944 tax
delinquency sale, forgetting that possession must still be proved.

We are satisfied from the evidence that long before her death in 1936, Candida
Fernandez already possessed the disputed property. This possession must be
tacked to the possession of her heirs, through administrator Vitaliano Aguirre,
and later to the possession of the private respondents themselves, who are
Candida’s grandchildren.

The fact of possession is bolstered by the forfeiture in 1940 of the land in

favor of the government. It would be rather absurd under the circumstances of
this case to rule that the government would order the forfeiture of property for
nonpayment of real estate taxes if the property is forest land.

It is also reasonable to rule that the heirs of Candida Fernandez redeemed the property
because they wanted to keep the land of the deceased in the possession of their family,
thus continuing prior possession. From 1936 and earlier up to 1972 is more than the
required period. As a matter of fact, the applicants’ witnesses testified to their
personal knowledge of more than 50 years possession.
More important is the petitioners’ allegation that the property sought to be
registered was unclassified public forest until September 15, 1953 when L C
Project No. 16-0, L C Map No. 1634 declared it alienable and disposable.

It was rather sweeping for the appellate court to rule that after an applicant files his
application for registration, the burden shifts totally to the government to prove that
the land forms part of the unclassified forest zone. The ruling in Heirs of Amunategui v.
Director of Forestry, (126 SCRA 69) governs applications for confirmation of imperfect
title. The applicant shoulders the burden of overcoming the presumption that the land
sought to be registered forms part of the public domain.

The private respondents tried their best to present the necessary evidence. A
certification issued by then District Forester Fernando Roy on September 27, 1972
reads:chanrob1es virtual 1aw library

x          x           x

". . . said parcel of land falls within the Alienable and Disposable LC Project No. 16-D,
LC-Map No. 1634 certified" (not classified) "on September 15, 1953, by the Director of
Forestry. In view thereof, this office interposes no objection in behalf of the Director of
Forestry for the registration and/or confirmation of title on the property mentioned
therein without prejudice to such action, the Director of Lands and other government
entities may deem proper to take on the premises." cralaw virtua1aw library

to which, the then District Land Officer of the Bureau of Lands, Land District No. IV-2 in
Lucena City, in a communication dated March 16, 1973 responded: jgc:chanrobles.com.ph

"1. the parcel of land subject of this registration was originally claimed by Emilio
Aguirre and A. Fernandez and the herein applicants have acquired the rights and
interest therein thru predecessors-in-interest; and

2 that said parcel of land has not been disposed of, reserved, leased, applied for or
granted as homestead or otherwise alienated by the government." cralaw virtua1aw library

"In view of the above findings, and basing from the report of the investigation
submitted thereon by a representative of this office, and considering that this Agency
has no evidence to support the opposition of the Government, it is further informed that
this office interposes no opposition in the confirmation of the rights to and interest on
the parcel of land particularly described under Plan Psu-215779 in favor of the herein
applicants." cralaw virtua1aw library

The Regalian doctrine which forms the basis of our land laws and, in fact, all laws
governing natural resources is a revered and long standing principle. It must, however,
be applied together with the constitutional provisions on social justice and land reform
and must be interpreted in a way as to avoid manifest unfairness and injustice.

Every application for a concession of public land has to be viewed in the light of its
peculiar circumstances. A strict application of the Heirs of Amunategui v. Director of
Forestry (supra) ruling is warranted whenever a portion of the public domain is in
danger of ruthless exploitation, fraudulent titling, or other questionable practices. But
when an application appears to enhance the very reasons behind the enactment of Act
496, as amended, or the Land Registration Act, and Commonwealth Act 141, as
amended, or the Public Land Act, then their provisions should not be made to stand in
the way of their own implementation.

The land sought to be registered was declared alienable and disposable 33

years ago. It is not forest land. It has been possessed and cultivated by the
applicants and their predecessors for at least three generations. The attempts
of humble people to have disposable lands they have been tilling for
generations titled in their names should not only be viewed with an
understanding attitude but should, as a matter of policy, be encouraged. We
see no strong reason to reverse the findings of the trial court and the
appellate court.

WHEREFORE, the petition is hereby DISMISSED for lack of merit. The decision of the
respondent appellate court is AFFIRMED.

SO ORDERED.

[G.R. No. 116111. January 21, 1999.]

REPUBLIC OF THE PHILIPPINES, (Represented by the Acting Commissioner of

Land Registration), Petitioner, v. COURT OF APPEALS, Spouses CATALINO
SANTOS and THELMA BARRERO SANTOS, ST. JUDE’S ENTERPRISES, INC.,
Spouses DOMINGO CALAGUIAN and FELICIDAD CALAGUIAN, VIRGINIA DELA
FUENTE and LUCY MADAYA, Respondents.

Is the immunity of the government from laches and estoppel absolute? May it still
recover the ownership of lots sold in good faith by a private developer to innocent
purchasers for value, notwithstanding its approval of the subdivision plan and its
issuance of separate individual certificates of title thereto?

FACTS:
"Defendant St. Jude’s Enterprises, Inc. is the registered owner of a parcel of land
located in Caloocan City with TCT No. 22660 on July 25, 1966.

1966 defendant St. Jude’s Enterprises, Inc. subdivided the lot under subdivision plan as
a result Register of Deeds of Caloocan City cancelled TCT No. 22660 and in lieu thereof
issued Certificates of Title Nos. 23967 up to 24068 inclusive, all in the name of
defendant St. Jude’s Enterprises, Inc.

The subdivision of lot 865-B-1 [which was] covered [by] TCT No. 22660 was later found
to have expanded and enlarged from its original area of 40,523 square meters to
42,044 square meters or an increase of 1,421 square meters. This expansion or
increase in area was confirmed by the Land Registration Commission [to have been
made] on the northern portion of Lot 865-B-1.

" St. Jude’s Enterprises, Inc. sold the lots to some private defendants.

" In 1985, Solicitor General Estelito Mendoza filed] an action seeking . . . the annulment
and cancellation of Transfer Certificates of Title (TCT).

"Defendants Virgina dela Fuente and Lucy Madaya were declared in default for failure to
file their respective answers within the reglementary period.

St. Jude’s Enterprises, Inc. interposed defenses, among others, that the cause of
action of plaintiff is barred by prior judgment; that the subdivision plan submitted
having been approved by the LRC, the government is now in estoppel to question the
approved subdivision plan; and the plaintiff’s allegation that the area of the subdivision
increased by 1,421 square meters is without any basis in fact and in law."

Trial Court: the trial court dismissed the Complaint. While the plaintiff
sufficiently proved the enlargement or expansion of the area of the disputed
property, it presented no proof that Respondent St. Jude Enterprises, Inc. ("St.
Jude") had committed fraud when it submitted the subdivision plan to the
Land Registration Commission (LRC) for approval. Because the plan was presumed
to have been subjected to investigation, study and verification by the LRC, there was no
one to blame for the increase in the area "but the plaintiff[,] for having allowed and
approved the subdivision plan." Thus, the court concluded, the government was already
"in estoppel to question the approved subdivision plan." cralaw virtua1aw library

". . . [S]ustaining the position taken by the government would certainly lead to
disastrous consequences. Buyers in good faith would lose their titles.
Adjoining owners who were deprived of a portion of their lot would be forced
to accept the portion of the property allegedly encroached upon. Actions for
recovery will be filed right and left[;] thus instead of preserving the integrity of
the Torrens System it would certainly cause chaos rather than stability. Finally, if only
to strengthen the Torrens System and in the interest of justice, the boundaries of the
affected properties of the defendants should not be disturbed and the status quo should
be maintained." 8

Appellate Court:

Citing several cases 9 upholding the indefeasibility of titles issued under the
Torrens system, the appellate court affirmed the trial court. It berated
petitioner for bringing the suit only after nineteen (19) years had passed since
the issuance of St. Jude’s title and the approval of the subdivision plan.

The Issues

Whether or not the government is estopped from questioning the approved

subdivision plan which expanded the areas covered by the transfer certificates
of title in question;
"2. Whether or not the Court of Appeals erred when it did not consider the Torrens
System as merely a means of registering title to land;

The Court’s Ruling

First Issue: chanrob1es virtual 1aw library

Estoppel Against the Government

The general rule is that the State cannot be put in estoppel by the mistakes or
errors of its officials or agents. 13 However, like all general rules, this is also
subject to exceptions,

"Estoppel against the public are little favored. They should not be invoked except in
rare and unusual circumstances and may not be invoked where they would
operate to defeat the effective operation of a policy adopted to protect the
public. They must be applied with circumspection and should be applied only in those
special cases where the interests of justice clearly require it. Nevertheless, the
government must not be allowed to deal dishonorably or capriciously with its citizens,
and must not play an ignoble part or do a shabby thing; and subject to limitations . . .,
the doctrine of equitable estoppel may be invoked against public authorities as
well as against private individuals." cralaw virtua1aw library

In the case at bar, for nearly twenty years (starting from the issuance of St.
Jude’s titles in 1966 up to the filing of the Complaint in 1985), petitioner failed
to correct and recover the alleged increase in the land area of St. Jude.

Its prolonged inaction strongly militates against its cause, as it is tantamount

to laches, which means "the 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 a presumption that the party entitled to
assert it either has abandoned it or declined to assert it."

The Court notes private respondents’ argument that, prior to the subdivision, the
surveyors erred in the original survey of the whole tract of land covered by TCT No.
22660, so that less than the actual land area was indicated on the title. Otherwise, the
adjoining owners would have complained upon the partition of the land in accordance
with the LRC-approved subdivision plan. As it is, Florencio Quintos, the owner of the
9,146 square-meter Quintos Village adjoining the northern portion of St. Jude’s
property (the portion allegedly "expanded"), even attested on August 16, 1973 that
"there [was] no overlapping of boundaries as per my approved plan (LRC) PSD 147766
dated September 8, 1971." 20 None of the other neighboring owners ever complained
against St. Jude or the purchasers of its property. It is clear, therefore, that there was
no actual damage to third persons caused by the resurvey and the subdivision. chanrobles virtual lawlibrary

Significantly, the other private respondents — Spouses Santos, Spouses Calaguian,

Dela Fuente and Madaya — bought such "expanded" lots in good faith, relying on
the clean certificates of St. Jude, which had no notice of any flaw in them
either. It is only fair and reasonable to apply the equitable principle of
estoppel by laches against the government to avoid an injustice to the
innocent purchasers for value.

Likewise time-settled is the doctrine that where innocent third persons, relying
on the correctness of the certificate of title, acquire rights over the property,
courts cannot disregard such rights and order the cancellation of the
certificate. Such cancellation would impair public confidence in the certificate
of title, for everyone dealing with property registered under the Torrens
system would have to inquire in every instance whether the title has been
regularly issued or not. This would be contrary to the very purpose of the law,
which is to stabilize land titles. Verily, all persons dealing with registered land may
safely rely on the correctness of the certificate of title issued therefor, and the law or
the courts do not oblige them to go behind the certificate in order to investigate again
the true condition of the property. They are only charged with notice of the liens and
encumbrances on the property that are noted on the certificate.

When private respondents-purchasers bought their lots from St. Jude, they did not
have to go behind the titles thereto to verify their contents or search for hidden defects
or inchoate rights that could defeat their rights to said lots. Although they were bound
by liens and encumbrances annotated on the titles, private respondents-purchasers
could not have had notice of defects that only an inquiry beyond the face of the titles
could have satisfied. 23 The rationale for this presumption has been stated thus: 24

"The main purpose of the Torrens System is to avoid possible conflicts of title
to real estate and to facilitate transactions relative thereto by giving the public
the right to rely upon the face of a Torrens Certificate of Title and to dispense
with the need of inquiring further, except when the party concerned had
actual knowledge of facts and circumstances that should impel a reasonably
cautious man to make such further inquiry (Pascua v. Capuyoc, 77 SCRA 78).
Thus, where innocent third persons relying on the correctness of the certificate thus
issued, acquire rights over the property, the court cannot disregard such rights
(Director of Land v. Abache, Et Al., 73 Phil. 606)." cralaw virtua1aw library

In another case, 25 this Court further said: jgc:chanrobles.com.ph

"The Torrens System was adopted in this country because it was believed to be the
most effective measure to guarantee the integrity of land titles and to protect their
indefeasibility once the claim of ownership is established and recognized. If a person
purchases a piece of land on the assurance that the seller’s title thereto is valid, he
should not run the risk of being told later that his acquisition was ineffectual after all.
This would not only be unfair to him. What is worse is that if this were permitted, public
confidence in the system would be eroded and land transactions would have to be
attended by complicated and not necessarily conclusive investigations and proof of
ownership. The further consequence would be that land conflicts could be even more
abrasive, if not even violent. The Government, recognizing the worthy purposes of the
Torrens System, should be the first to accept the validity of titles issued thereunder
once the conditions laid down by the law are satisfied." [Emphasis supplied.]
Petitioner never presented proof that the private respondents who had bought their lots
from St. Jude were buyers in bad faith. Consequently, their claim of good faith prevails.
A purchaser in good faith and for value is one who buys the property of another without
notice that some other person has a right to or an interest in such property; and who
pays a full and fair price for the same at the time of such purchase or before he or she
has notice of the claims or interest of some other person. 26 Good faith is the honest
intention to abstain from taking any unconscientious advantage of another. 27

The discrepancy in the figures could have been caused by the inadvertence or
the negligence of the surveyors. There is no proof, though, that the land area
indicated was intentionally and fraudulently increased. The property originally
registered was the same property that was subdivided. It is well-settled that
what defines a piece of titled property is not the numerical data indicated as
the area of the land, but the boundaries or "metes and bounds" of the
property specified in its technical description as enclosing it and showing its
limits.

Petitioner miserably failed to prove any fraud, either on the part of Private Respondent
St. Jude or on the part of land registration officials who had approved the subdivision
plan and issued the questioned TCTs. Other than its peremptory statement in the
Complaint that the "expansion" of the area was "motivated by bad faith with intent to
defraud, to the damage and prejudice of the government and of public interest,"
petitioner did not allege specifically how fraud was perpetrated to cause an increase in
the actual land size indicated. Nor was any evidence proffered to substantiate the
allegation. That the land registration authorities supposedly erred or committed an
irregularity was merely a conclusion drawn from the "table survey" showing that the
aggregate area of the subdivision lots exceeded the area indicated on the title of the
property before its subdivision. Fraud cannot be presumed, and the failure of petitioner
to prove it defeats its own cause. chanrobles lawlibrary : chanrobles.com

Second Issue: chanrob1es virtual 1aw library

The Torrens System

True, the Torrens system is not a means of acquiring titles to lands; it is merely a
system of registration of titles to lands. 30 Consequently, land erroneously included in a
Torrens certificate of title is not necessarily acquired by the holder of such certificate.
31

But in the interest of justice and equity, neither may the titleholder be made to
bear the unfavorable effect of the mistake or negligence of the State’s agents,
in the absence of proof of his complicity in a fraud or of manifest damage to
third persons. First, the real purpose of the Torrens system is to quiet title to
land to put a stop forever to any question as to the legality of the title, except
claims that were noted in the certificate at the time of the registration or that
may arise subsequent thereto.

Second, as we discussed earlier, estoppel by laches now bars petitioner from

questioning private respondents’ titles to the subdivision lots. Third, it was
never proven that Private Respondent St. Jude was a party to the fraud that
led to the increase in the area of the property after its subdivision. Finally,
because petitioner even failed to give sufficient proof of any error that might
have been committed by its agents who had surveyed the property, the
presumption of regularity in the performance of their functions must be
respected. Otherwise, the integrity of the Torrens system, which petitioner purportedly
aims to protect by filing this case, shall forever be sullied by the ineptitude and
inefficiency of land registration officials, who are ordinarily presumed to have regularly
performed their duties.

We cannot, therefore, adhere to the petitioner’s submission that, in filing this suit, it
seeks to preserve the integrity of the Torrens system. To the contrary, it is rather
evident from our foregoing discussion that petitioner’s action derogates the very
integrity of the system. Time and again, we have said that a Torrens certificate is
evidence of an indefeasible title to property in favor of the person whose name appears
thereon.

[G.R. No. L-28658. October 18, 1979.]

VICENTE C. REYES, applicant-appellee, v. FRANCISCO SIERRA, EMILIO

SIERRA, ALEJANDRA SIERRA, FELIMON SIERRA, AURELIO SIERRA,
CONSTANCIO SIERRA, CIRILO SIERRA and ANTONIA SANTOS, Oppositors-
Appellants.

In 1961, Vicente Reyes filed an application for registration of his title to a parcel of land
situated in Antipolo, Rizal.

He declared that he acquired the land by inheritance from his father who died sometime
in 1944. Applicant is one of the heirs of the deceased Vicente Reyes Sr. but the other
heirs executed a deed of quit claim in favor of the applicant.

The notice of initial hearing was published in the Official Gazette, and a copy thereof
was posted in a conspicuous place in the land in question and in the municipal building
of Antipolo, Rizal.

An opposition was filed by the Director of Lands, Francisco Sierra and Emilio Sierra.

TRIAL COURT: declares Vicente Reyes the true and rightful owner of the land covered
by Plan.

ISSUE: The lower court erred in holding that applicant had been in constructive
possession of the land from April 19, 1926
1aw library
RULING:

The land applied for was originally owned by Basilia Beltran’s parents, and upon their
death in 1894, Basilia inherited the property. On April 19, 1926, Basilia Beltran, a
widow, borrowed from applicant’s father, Vicente Reyes, Sr. the amount of P100.00 and
secured the loan with the piece of land in question.

"SA KAALAMAN NANG LAHAT NA BUMASA AT NAKAKITA NITONG KASULATAN: chanrob1es virtual 1aw library

Since the execution of the document, Vicente Reyes, Sr. began paying the
realty taxes up to the time of his death in 1944, after which, his children
continued paying the taxes. Basilia Beltran died in 1938 before Reyes could
recover from the loan.

Applicant, relied on his belief that the property belongs to his father who bought the
same from Basilia Beltran, as borne out by his testimony during the trial on direct

From testimony of applicant, it is evident that he considered the document as contract

of Sale and not as a mortgage. Oppositors contended that the words "isinangla," "na
ipananagutan sa inutang na halagang isang daang piso," "Kahit isangla o ipagbili," etc.,
manifest that the document should be treated as a mortgage, antichresis, or pactum
commissorium and not as an absolute sale or pacto de retro sale. (p. 28, Brief,
Oppositors-Appellants)

RULING: The Court is of the opinion is a mortgage contract. The intention of

the parties at the time of the execution of the contract must prevail, that is,
the borrowing and lending of money with security. The use of the word Debt
(utang) in an agreement helps to point out that the transaction was intended
to be a loan with mortgage, because the term "utang" implies the existence of
a creditor-debtor relationship. The Court has invariably upheld the validity of
an agreement or understanding whereby the lender of money has taken a
deed to the land as security for repayment of the loan. Thus: jgc:chanrobles.com.ph

"The fact that the real transaction between the parties was a borrowing and lending,
will, whenever, or however, it may appear, show that a deed. absolute on its face was
intended as a security for money; and whenever it can be ascertained to be a security
for money, it is only a mortgage, however artfully it may be disguised." (Villa v.
Santiago, 38 Phil. 163)

"The whole case really turns on the question of whether the written instrument in
controversy was a mortgage or a conditional sale . . . The real intention of the
parties at the time the written instrument was made must govern in the
interpretation given to it by the courts . . . The correct test, where it can be
applied, is the continued existence of a debt or liability between the parties. If
such exists, the conveyance may be held to be merely a security for the debt
or an indemnity against the liability." (Cuyugan v. Santos, 34 Phil. 112)

The Cuyugan Case quoted some provisions in Jones’ Commentaries on Evidence, vol. 3,
paragraphs 446-447 which are likewise applicable to the facts of the case at bar: jgc:chanrobles.com.ph
“To show that instruments apparently absolute are only securities. . . " cralaw virtua1aw library

"Same — Real intention of the parties to be ascertained. . . . As we have shown in the

preceding section, the intention of the parties must govern; and it matters not what
peculiar form the transaction may have taken. The inquiry always is, Was a security for
the loan of money or other property intended? . . . A debt owing to the mortgagee, or a
liability incurred for the grantor, either pre-existing or created at the time the deed is
made, is essential to give the deed the character of a mortgage. The relation of debtor
and creditor must appear. The existence of the debt is one on the tests. . . . In
construing the deed to be a mortgage, its character as such must have existed from its
very inception, — created at the time the conveyance was made." cralaw virtua1aw library

If the instrument is in its essence a mortgage, the parties cannot by any

stipulations, however express and positive, render it anything but a mortgage
or deprive it of the essential attributes belonging to a mortgage in equity." cralaw virtua1aw library

Concerning the legal effects of such contract, Pomeroy observes: chanrobles virtualawlibrary chanrobles.com:chanrobles.com.ph

". . . Whenever a deed absolute on its face is thus treated as a mortgage, the parties
are clothed with all the rights, are subject to all liabilities, and are entitled to all the
remedies of ordinary mortgagors and mortgagees. The grantee may maintain an
action for the foreclosure of the grantor equity of redemption; the grantor may
maintain an action to redeem and to compel a reconveyance upon his payment
of the debt secured. If the grantee goes into possession, and as such is liable
to account for the rents and profits." cralaw virtua1aw library

Obviously, from the nature of the transaction, applicant’s predecessor-in-interest is

a mere mortgagee, and ownership of the thing mortgaged is retained by
Basilia Beltran, the mortgagor. The mortgagee, however, may recover the
loan, although the mortgage document evidencing the loan was non-
registrable being a purely private instrument. Failure of mortgagor to redeem
the property does not automatically vest ownership of the property to the
mortgagee, which would grant the latter the right to appropriate the thing
mortgaged or dispose of it. This violates the provision of Article 2088 of the
New Civil Code, which reads: jgc:chanrobles.com.ph

"The creditor cannot appropriate the things given by way of pledge or

mortgage, or dispose by them. Any stipulation to the contrary is null and
void."cralaw virtua1aw library

The act of applicant in registering the property in his own name upon mortgagor’s
failure to redeem the property would amount to a pactum commissorium which is
against good morals and public policy.

In declaring applicant as the "true and rightful owner of the land in question," the trial
court held that applicant and his predecessor-in-interest acquired ownership over the
property by means of prescription having been in constructive possession of the land
applied for since 1926, applying Arts. 1134 and 1137 of the New Civil Code: jgc:chanrobles.com.ph

"Art. 1134. — Ownership and other real rights over immovable property are acquired by
ordinary prescription through possession of ten years.

"Art. 1137. — Ownership and other real rights over immovable also prescribe through
uninterrupted adverse possession thereof for thirty years, without need of title or good
faith."
cralaw virtua1aw library

Applicant in his testimony on cross-examination, admitted that he and his father did not
take possession of the property but only made use of the same for the purpose of
spending vacation there, which practice they discontinued for the last 23 years.
Possession of the property must be in the concept of an owner. This is a fundamental
principle of the law of prescription in this jurisdiction. In the case at bar, the possession
of applicant was not adverse, nor continuous. chanrobles.com.ph : virtual law library

An applicant for registration of title must prove his title and should not rely on the
absence or weakness of the evidence of the oppositors. For purposes of prescription,
there is just title when adverse claimant came into possession of the property through
one of the modes recognized by law for the acquisition of ownership (Art. 1129, New
Civil Code). Just title must be proved and is never presumed (Art. 1131, New Civil
Code). Mortgage does not constitute just title on the part of the mortgagee since
ownership is retained by the mortgagor. When possession is asserted to convert itself
into ownership, a new right is sought to be created, and the law becomes more
exacting and requires positive proof of title. Applicant failed to present sufficient
evidence to prove that he is entitled to register the property. The trial court’s finding
that since applicant and his father had been continuously paying the realty taxes, that
fact "constitutes strong corroborating evidence of applicant’s adverse possession," does
not carry much weight. Mere failure of the owner to pay the taxes does not warrant a
conclusion that there was abandonment of a right to the property. The payment of
taxes on property does not alone constitute sufficient evidence of title. (Elumbaring v.
Elumbaring, 12 Phil. 389)

The belief of applicant that he owns the property in question which he inherited from
his father cannot overthrow the fact that the transaction is a mortgage. The doctrine
"once a mortgage always a mortgage" has been firmly established whatever be its
form. (Macapinlac v. Gutierrez Rapide, supra) The parties cannot by any stipulation,
however express and positive, render it anything but a mortgage. No right passes to
applicant except that of a mortgage since one cannot acquire a right from another who
was not in possession thereof. A derivative right cannot rise higher than its source.

Applicant having failed to show by sufficient evidence a registrable title to the land in
question, the application for registration should be dismissed.

SO ORDERED.

G.R. No. L-67399 November 19, 1985

REPUBLIC OF THE PHILIPPINES (The Director of Lands), petitioner,
vs.
THE INTERMEDIATE APPELLATE COURT and AVELINO LEYCO, LEANDRO LEYCO, ZARA
LEYCO, JUSTINA LEYCO and FELIPA LEYCO, represented by LEANDRO
LEYCO, respondents.

Marinduque, Avelino, Leandro, Justina, Zara and Felipa all surnamed LEYCO applied for judicial
confirmation at the CFI of their title to two (2) parcels of land.

The Director of lands for the Republic of the Philippines opposed the petition.

Respondent applicants' alleged possession from 1962 up to the filing of their application for
registration in 1976 — about 14 years only — does not constitute possession under claim of
ownership so as to entitle them to a State grant under Section 48(b) of the Public Land Act.

Respondent applicants failed to establish conclusively that they and their predecessor-in-interest
were in continuous possession and occupancy of the lots in question under bona fide claim of
ownership. Even the alleged long-time possession by respondent applicants' mother, Fausta de
Jesus, who claimed to have entered into possession of the land in question in 1911 until her death in
1962, does not appear to be indubitable. (unquestionable)

The tax declarations presented as evidence by respondent applicants are not by themselves
conclusive proof of their alleged possession under claim of ownership over the lots in question. The
earliest tax declaration is dated 1927 while the others are recent tax declarations.

Tax declarations presented by respondent applicants herein reveals a number of discrepancies that
cast serious doubts on respondents' claim over the lots in question:

1. Tax Declaration No. 5319 dated 1928 (Exh. M-8) declared in the name of Fausta de Jesus with an
area of 23.0000 hectares, specifies its boundaries as follows:

North: Sapa East: Florencio Corral South: Fausta de Jesus West: Mar.

In 1949, Fausta de Jesus filed Tax Declaration No. 475 (Exh. M-7) which cancelled Tax Declaration
475 (Exh. M-7) which cancelled Tax Declaration No. 5319 over the same parcel of land. A close
examination, however, of Tax Declaration No. 475 shows that the listing of the adjoining owners
therein was at variance with what was previously stated in Tax Declaration No. 5319, thus:

North. Brook East: Aurelia de Jesus South: Seashore (before Fausta de Jesus)
West: Hrs. of Florencio Corral

This anomaly in the listing of adjoining owners in the two aforestated tax declarations over
the same parcel of land only reveals the flaw that apparently attended the acquisition of the
lots in question by respondent applicants and their predecessor-in-interest.

2. Under Tax Declaration No. 5321 dated 1941 (Exh. 0-8), respondent applicants' predecessor-in-
interest, Fausta de Jesus, declared a parcel of land in her name with an area of 88.0637 hectares.

Later, in 1949, Fausta de Jesus filed Tax Declaration No. 476 (Exh. 0-7) which cancelled Tax
Declaration No. 5321 over the same parcel of land. However, under Tax Declaration No. 476, the
total area of the land declared was only 85.0637 hectares (84.0637 as erroneously stated in Tax
Declaration No. 476).

Again, the foregoing disparity in the size of the land as declared in the two tax declarations is
a clear indication that respondent applicants herein and their predecessor-in-interest were
uncertain and contradictory as to the exact or actual size of the land they purportedly
possessed.

Likewise, it is noteworthy to mention that six years after Fausta de Jesus filed Declaration No.
476 in 1949, Tax Declaration No. 2779 was filed — cancelling Tax Declaration No. 476 —
showing this time a whopping land area of 119.1231 hectares. As to how Fausta de Jesus
managed to increase her landholdings in so short a span of time intrigues one no end,
considering that from 1949 up to her death in 1962, she listed Manila as her place of
residence.

3. Tax Declaration No. 3432 (1966), 665 (1966), and 4022 (1958) presented as Exhibits 0-2, 0-3,

and 0-4, respectively, show that of the total declared area of 119.1231 hectares, only about 19.1231
hectares were planted to coconuts and the remaining 100.000,00 hectares were cogonal or
uncultivated lands.

The unjustifiable award of this vast tract of land — which are cogon lands and therefore pasture
lands still forming part of the public domain and released by the Bureau of Lands for disposition — to
the respondent applicants herein, who are undeserving, is tantamount to putting a premium on
absentee landlordism.

The record shows that even the taxes due o the litigated lots were not paid regularly. As per
certification of the municipal treasurer of Buenavista, Marinduque, it was shown that the taxes due
on the land registered in the name of Fausta de Jesus were paid only from 1949 until 1957 —
an indication that respondent applicants and their predecessor-in-interest did not pay taxes
to the government from 1928 to 1940, and from 1958 until July 6, 1978 when the respondent
applicants closed their evidence — a total of 32 years. The respondent applicants presented
their evidence on April 19, 1977, October 12, 1977, March 29, 1978 and July 6, 1978.

The testimonies of respondent applicants' alleged overseers and hired tenants should not be
accorded weight and significance; because it is only natural for the overseers and hired tenants to
testify as they did in respondent applicants' favor as they stand to benefit from a decision favorable
to their supposed landlords and benefactors.

But even granting that the witnesses presented by herein respondent applicants were indeed bona
fide overseers and tenants or workers of the land in question, it appears rather strange why only
about 3,000 coconut trees and some fruit trees were planted (2,000 coconut trees on Lot 1 which is
119 hectares. and 1,000 coconut trees on Lot 2 which is 19 hectares) on the vast tract of land
subject of the instant petition. In a practical and scientific way of planting, a one- hectare land
can be planted to about 144 coconut trees. In the instant case, if the hired tenants and
workers of respondent applicants managed to plant only 3,000 coconut trees, it could only
mean that about only 25 hectares out of the 138 hectares claimed by herein respondent
applicants were cleared, cultivated and planted to coconut trees and fruit trees. Once
planted, a coconut is left to grow and need not be tended or watched. This is not what the law
considers as possession under claim of ownership. On the contrary, it merely
showed casual or occasional cultivation of portions of the land in question. In short,
possession is not exclusive nor notorious, much less continuous, so as to give rise to a
presumptive grant from the government.
Moreover, respondent applicants herein have not shown nor clearly their right to inherit from
their predecessor-in-interest. The observation of the Solicitor General on this point is thus well
taken:

Even assuming that applicants' deceased mother acquired registerable title over the
parcels in question, applicants cannot be said to have acquired the same right proper
for registration. They have not presented any evidence of value to prove that
they have the right to inherit whatever portion of the properties left by Fausta
de Jesus. They have first to show their right to succeed Fausta, testate or
intestate; to establish who Fausta's legal heirs are or that applicants. and no
other, are Fausta's sole heirs. But all these should be threshed out in a proper
proceeding, certainly not in a land registration case.

Finally, this is a clear case of land-grabbing of over 100 hectares of land, which could be divided
among the landless and the poor to defuse the seething unrest among the underprivileged. At this
point in time in our country's history, land-grabbing by the powerful, moneyed and influential
absentee claimants should not be tolerated nor condoned if only to avoid fanning further the fires of
discontent, dissidence or subversion which menacingly threaten the very survival of our nation.

WHEREFORE, THE PETITION IS HEREBY GRANTED. THE DECISION OF THE RESPONDENT

INTERMEDIATE APPELLATE COURT IS HEREBY REVERSED AND SET ASIDE. NO COSTS.

SO ORDERED.

Concepcion Jr., Escolin, Cuevas and Alampay, JJ., concur.

Aquino (Chairman), J., took no part.