THIRD DIVISION
G.R. No. 217956, November 16, 2016
REPUBLIC OF THE PHILIPPINES, REPRESENTED BY MACTAN-CEBU INTERNATIONAL AIRPORT AUTHORITY (MCIAA), Petitioner, v. LIMBONHAI AND SONS, Respondent.
D E C I S I O N
PERALTA,**J.:
Before us is a petition for review on certiorari of the Court of Appeals Decision1 dated April 10, 2014 and its Resolution2 dated March 19, 2015, affirming the Decision3 of the Regional Trial Court of Lapu-Lapu City, Branch 53, which dismissed the complaint for cancellation of title in Civil Case No. 4575-L, entitled "Republic of the Philippines, represented by Mactan-Cebu International Airport Authority v. Limbonhai and Sons Corporation."
The facts are as follows:
chanRoblesvirtualLawlibraryIsidro Godinez (Godinez) was the original owner of Lot No. 2498, a 6,343-square-meter property situated in Barrio Pusok, Lapu-Lapu City. Sometime in the 1960s, the said lot was among 27 lots, covering more or less 36 hectares, which were the subjects of an expropriation case filed before the then Court of First Instance (CFI) of Cebu by the government against several lot owners in Civil Case No. R-8103 entitled "Republic of the Philippines, plaintiff v. Amparo Zosa, et al."4chanrobleslaw
In an Order5 dated July 8, 1964, the CFI ordered the government to take possession of the subject property upon deposit of the amount provisionally fixed by the court at P32,869.17, representing partial payment of the expropriated lots. The court further stated that the sum is subject to amendment or increase based on the report of the commissioners appointed by the court to appraise the value of the lots. Subsequently, on January 7, 1967, the CFI issued an Order6 fixing the reasonable value of the lots, including Lot No. 2498, at P1.50 per square meter.
Sometime in 1967, however, Godinez caused the judicial reconstitution of the Original Certificate of Title (OCT) covering Lot No. 2498. Consequently, OCT No. RO-0608 was issued in the name of Godinez.7 Later, Godinez sold the property to Tirso S. Limbonhai under his former name Sy Tiong. Thus, on May 17,1967, OCT No. RO-0608 was cancelled and Transfer Certificate of Title (TCT) No. T-13178 was issued in the name of Tirso S. Limbonhai, under his former name Sy Tiong. After a decade, Tirso S. Limbonhai, transferred the property to respondent corporation, Limbonhai and Sons. As a consequence, TCT No. T-1317 was cancelled, and in lieu thereof, TCT No. 82789 was issued in the name of respondent corporation.
Thereafter, in 1996 petitioner filed a Complaint for Cancellation of Title10 before the Regional Trial Court (RTC), Lapu-Lapu City, claiming that it was the transferee and owner of subject Lot No. 2498 because it was one of the several parcels of land allegedly expropriated by the government for airport purposes in Civil Case No. 8103 entitled "Republic of the Philippines, plaintiff v. Amparo Zosa, et al." It also averred that its predecessor-in-interest had been in the material, continuous and uninterrupted and adverse possession of said lot, which was later transferred to Mactan-Cebu International Airport Authority (MCIAA), by virtue of its charter, Republic Act No. (RA) 6958.11chanrobleslaw
MCIAA insisted that respondent corporation's claim of ownership over Lot No. 2498 has no basis in fact and law because the same lot had already been expropriated by the government as early as 1967. It added that the corporation merely holds the certificate of title in trust and is under legal obligation to surrender the same for cancellation so that a new certificate of title can be issued in the name of the MCIAA.
For its part, respondent corporation countered, among other things, that there was no valid expropriation of Lot No. 2498 since even after more than Twenty-Nine (29) years from the order of expropriation became final and executory, no payment of just compensation was ever made, and the same lot was never used for the purpose for which it was intended. It, likewise, insisted that the reconstitution of the title of Lot No. 2498 in favor of its predecessor-in-interest is valid, and cannot be disturbed without violating the principle of res judicata. Respondent also claimed that the reconstituted title cannot be disturbed, in the absence of a showing that the land registration court had not acquired jurisdiction over the case and that there was actual fraud in securing the title.12chanrobleslaw
On May 27, 2004, the trial court rendered a Decision13 in favor of respondent corporation and dismissed the complaint for cancellation of title for lack of merit, thus:ChanRoblesVirtualawlibrary
WHEREFORE, in light of the foregoing considerations, judgment is hereby rendered in favor of the defendant and against the plaintiff. Consequently, the above-entitled case is hereby dismissed for lack of merit.The lower court found that although expropriation proceedings were initiated by the government to acquire the subject property, the process did come into fruition and the property was never used for the intended purpose. The RTC likewise reasoned that MCIAA's action was already barred by prescription and laches.
SO ORDERED.14chanroblesvirtuallawlibrary
MCIAA argues that laches does not apply when the government sues as a sovereign or asserts governmental rights. MCIAA asserts that by the clear and unequivocal disposition of the CFI judgment that title to Lot No. 2498 is granted to the Republic of the Philippines, the reconstituted OCT No. RO-0608 issued to the predecessor-in-interest of respondent conferred no enforceable rights upon the latter as the same lot has already been expropriated by the government as early as January 1967.I.
WHETHER THE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR IN HOLDING THAT LACHES HAS SET IN THIS CASE AGAINST THE REPUBLIC.II.
WHETHER THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN FINDING THAT RESPONDENT HAS A VALID TITLE OVER LOT NO. 2498.18chanroblesvirtuallawlibrary
x x x It is an indispensable attribute of sovereignty; a power grounded in the primary duty of government to serve the common need and advance the general welfare. Thus, the right of eminent domain appertains to every independent government without the necessity for constitutional recognition. The provisions found in modern constitutions of civilized countries relating to the taking of property for the public use do not by implication grant the power to the government, but limit the power which would, otherwise, be without limit. Thus, our own Constitution provides that "[p]rivate property shall not be taken for public use without just compensation." Furthermore, the due process and equal protection clauses act as additional safeguards against the arbitrary exercise of this governmental power.22chanroblesvirtuallawlibraryThe exercise of the right of eminent domain, whether directly by the State or by its authorized agents, is necessarily in derogation of private rights. It is one of the harshest proceedings known to the law. Consequently, when the sovereign delegates the power to a political unit or agency, a strict construction will be given against the agency asserting the power. The authority to condemn is to be strictly construed in favor of the owner and against the condemnor. When the power is granted, the extent to which it may be exercised is limited to the express terms or clear implication of the statute in which the grant is contained.23chanrobleslaw
There is no question of the existence of the expropriation case of which Lot No. 2498 was among the 27 lots involved. Plaintiff has however shown no evidence that compensation has at all been paid for Lot No. 2498, nor has evidence been shown that plaintiff and its predecessors-in-interest ever used the property for any purpose.Needless to say that in an expropriation case, an essential element of due process is that there must be just compensation whenever private property is to be taken for public use. Accordingly, Section 9, Article III, of our Constitution mandates: "Private property shall not be taken for public use without just compensation." Clearly, without full payment of just compensation, there can be no transfer of title from the landowner to the expropriator.28chanrobleslaw
It is clear that, though the expropriation of Lot No. 2498 was initiated, the government did not follow through with the expropriation of this particular lot, probably because there was no more need for it, considering that the property is located about five (5) kilometers from the airport. This explains why Lot No. 2498 has been continuously possessed by defendant and it predecessors-in-interest.
x x x27chanroblesvirtuallawlibrary
That principle of laches is a creation of equity which, as such, is applied not really to penalize neglect or sleeping upon one's right, but rather to avoid recognizing a right when to do so would result in a clearly inequitable situation. As an equitable defense, laches does not concern itself with the character of the defendant's title, but only with whether or not by reason of the plaintiff's long inaction or inexcusable neglect, he should be barred from asserting this claim at all, because to allow him to do so would be inequitable and unjust to the defendant.Corollarily, based on the foregoing, the government's inaction in paying the just compensation for the property for more than 30 years is fatal to their cause of action as laches has indeed already set in.
The doctrine of laches or stale demands is based upon grounds of public policy which requires, for the peace of society, the discouragement of stale claims and... is principally a question of the inequity or unfairness of permitting a right or claim to be enforced or asserted.
The time-honored rule anchored on public policy is that relief will be denied to a litigant whose claim or demand has become "stale" or who has acquiesced for an unreasonable length of time, or who has not been vigilant or who has slept on his rights either by negligence, folly or inattention. In other words, public policy requires, for the peace of society, the discouragement of claims grown stale for non-assertion; thus laches is an impediment to the assertion or enforcement of a right which has become, under the circumstances, inequitable or unfair to permit.31chanroblesvirtuallawlibrary
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 has actual knowledge of facts and circumstances that should impel a reasonably cautious man to make such further inquiry. Where innocent third persons, relying on the correctness of the certificate of title thus issued, acquire rights over the property, the court cannot disregard such rights and order the total cancellation of the certificate. The effect of such an outright cancellation would be to 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 as to whether the title has been regularly or irregularly issued by the court. Every person dealing with registered land may safely rely on the correctness of the certificate of title issued therefor and the law will in no way oblige him to go beyond the certificate to determine the condition of the property.Moreover, MCIAA never presented proof that the corporation or its predecessors-in-interest who had bought the subject lot from Godinez were buyers in bad faith. Nowhere in the records does it show that the respondent was in bad faith. We have held that the determination of bad faith is evidentiary in nature. Thus, an allegation of bad faith must be substantiated by clear and convincing evidence as jurisprudence dictates that bad faith cannot be presumed.43 Consequently, since MCIAA failed to present any iota of evidence that the corporation or its predecessors-in-interest were in bad faith in the acquisition of the subject property, their claim of good faith, thus, prevails.
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 numerous and complex than they are now and possibly also 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.
Endnotes:
** Acting Chairperson per Special Order No. 2395 dated October 19, 2016.
*** Designated Additional Member in lieu of Associate Justice Francis H. Jardeleza, per Raffle dated November 16, 2016.
1 Penned by Associate Justice Edgardo L. Delos Santos, with Associate Justices Marilyn B. Lag Yap and Jhosep Y. Lopez, concurring.
2Rollo, pp. 44-45.
3 Records, pp. 156-161.
4Id at 158.
5Id. at 92-93.
6Rollo, pp. 46-49.
7 Records, p. 11.
8Id. at 13.
9Id. at p. 15.
10Id. at 1-6.
11AN ACT CREATING THE MACTAN-CEBU INTERNATIONAL AIRPORT AUTHORITY, TRANSFERRING EXISTING ASSETS OF THE MACTAN INTERNATIONAL AIRPORT AND THE LAHUG AIRPORT TO THE AUTHORITY, VESTING THE AUTHORITY WITH POWER TO ADMINISTER AND OPERATE THE MACTAN INTERNATIONAL AIRPORT AND THE LAHUG AIRPORT, AND FOR OTHER PURPOSES.
12Rollo, pp. 60-64.
13 Records, pp. 156-161.
14Id. at 161.
15Supra note 1.
16Rollo, pp. 31-42.
17Id. at 44-45.
18Id. at 16.
19FGU Insurance Corporation v. Court of Appeals, 494 Phil. 342, 355 (2005).
20Id. at 356.
21Jesus is Lord Christian School Foundation, Inc. v. Municipality (now City) of Pasig, Metro Manila, 503 Phil. 845 (2005).
22Id. at 862, quoting Heirs of Alberto Suguitan v. City of Mandaluyong, 384 Phil. 676, 687-688 (2000). (Emphasis ours)
23Id.
24Id. at 862-863.
25cralawred Records, p. 158.
26Id. at 80-82.
27 Emphasis ours.
28Republic v. Lim, 500 Phil. 652, 665 (2005).
29Salandanan v. Court of Appeals, 353 Phil. 115, 120 (1998).
30 332 Phil. 206 (1996).
31Catholic Bishop of Balanga v. CA, supra, at 219-220. (Emphasis ours; citations omitted)
32 647 Phil. 251, 271 (2010), citing Land Bank of the Philippines v. Orilla, 578 Phil. 663, 676 (2008).
33Apo Fruits Corporation, et al. v. Land Bank of the Philippines, supra.
34 402 Phil. 271, 295 (2001); Land Bank of the Philippines v. Court of Appeals, 327 Phil. 1047, 1054 (1996), quoting Municipality of Makati v. Court of Appeals, 268 Phil. 215 (1990).
35Id. at 222.
36Insurance of the Philippine Islands Corporation v. Spouses Gregorio, 658 Phil. 36, 42 (2011).
37Salandanan v. Court of Appeals, supra note 29, at 121.
38Id.
39 418 Phil. 451, 456 (2001).
40Rollo, pp. 105-109.
41 G.R. No. 183448, June 30, 2014, 727 SCRA 477, 490.
42 300 Phil. 588, 597-598 (1994).
43See Arenas v. Court of Appeals, 399 Phil. 372 (2000).
44Oño v. Lim, 628 Phil. 418, 430 (2010).