Philippine Supreme Court Jurisprudence > Year 2016 > November 2016 Decisions > 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.:

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.

SO ORDERED.¹⁴chanroblesvirtuallawlibrary

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.

Aggrieved by the trial court's decision, the Republic of the Philippines, represented by the MCIAA, sought recourse before the Court of Appeals. On April 10, 2014,¹⁵ the appellate court denied MCIAA's appeal and affirmed the trial court's decision.¹⁶chanrobleslaw

The CA opined that indeed, laches has already set in as correctly appreciated by the lower court. Twenty-eight (28) years is a long time for the government to remain silent despite the fact that respondent already fenced the entire property with hollow blocks. When the government built the Matumbo Road which traversed the property, the area was already fenced. This should have alerted the petitioner that some other entity is laying claim and possession over the subject property. Moreover, even assuming that there was a valid expropriation, the record is bereft of any evidence that the government had fully paid the just compensation for the properties it expropriated.

MCIAA filed a motion for reconsideration, but it was denied in the Resolution¹⁷ dated March 19, 2015.

Hence, this petition for review on certiorari raising following issues:ChanRoblesVirtualawlibrary

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

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.

MCIAA insists that it should be adjudged the real and lawful owner of Lot No. 2498, having validly acquired it through expropriation. MCIAA submits that although it was not able to prove full payment of the just compensation considering the lapse of time since 1967, such inability does not detract from the fact that the expropriation case was concluded and had gained finality by virtue of the Order issued on January 7, 1967. Assuming arguendo that the original owner of the expropriated land has not been paid for his land, MCIAA insists that such fact does not affect the propriety of the decision made in the expropriation proceedings awarding the land to the expropriator.

On the other hand, respondent corporation points out that MCIAA failed to present any credible evidence that there was a valid judgment of expropriation or payment of just compensation. It reiterates that MCIAA failed to adduce evidence that its predecessor-in-interest did not comply with the law on reconstitution of title. Finally, it claims that the petition has failed to show any reversible error in the assailed judgment to warrant the exercise of the court's appellate jurisdiction.

We find the petition to be unmeritorious.

At the outset, the Court has consistently held that the lower court's findings of fact, particularly when affirmed by the CA, are final and conclusive upon the Court. In this, as well as in other appeals, the Court, not being a trier of facts, does not review their findings, especially when they are supported by the records or based on substantial evidence.¹⁹ It is not the function of the Court to analyze or weigh evidence all over again, unless there is a showing that the findings of the lower courts are absolutely devoid of support or are glaringly erroneous as to constitute palpable error or grave abuse of discretion.²⁰ However, We have carefully perused the records yet We found no ground to apply the exception in the instant case because the findings and conclusions of the appellate court are in full accord with those of the trial court.

Whether just compensation over the property was paid.

The right of eminent domain is usually understood to be an ultimate right of the sovereign power to appropriate any property within its territorial sovereignty for a public purpose. The nature and scope of such power has been comprehensively described as follows:²¹

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.²²chanroblesvirtuallawlibrary

The 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

Corollarily, the Government, which is the condemnor, has the burden of proving all the essentials necessary to show the right of condemnation. It has the burden of proof to establish that it has complied with all the requirements provided by law for the valid exercise of the power of eminent domain such as the payment of just compensation.²⁴chanrobleslaw

However, in the instant case, MCIAA is silent as to proving the payment of just compensation. During trial, MCIAA failed to present any evidence of full payment of the just compensation for the property. The only evidence on record consists of the Order of the Court, dated July 8, 1964 (Exhibit "B"), placing the government in possession of Lot No. 2498, among others, after depositing P32,869.17, and the Order dated January 7, 1967 (Exhibit "A") declaring the reasonable value of the lots at P1.50 per square meter.²⁵cralawred Other than these two Orders, MCIAA failed to produce any proof of payment of just compensation. Even MCIAA's own witness, Michael Bacarias, admitted during cross-examination, that he has no personal knowledge on whether or not just compensation was fully paid by MCIAA in favor of Godinez, and whether Lot No. 2498 was actually devoted for public use.²⁶chanrobleslaw

Even assuming arguendo that the government deposited the amount of P32,869.17 as partial payment for the 27 lots subject of the expropriation case, no evidence were presented to prove that subsequent payment for the lots was made based on the adjusted rate of P1.50 per square meter. Thus, considering MCIAA's failure to prove payment either by documentary of testimonial evidence, it can be logically surmised that there was indeed no actual payment of just compensation.

The pertinent portion of the court a quo's decision is noteworthy, to wit:ChanRoblesVirtualawlibrary

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.

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

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

Whether laches has set in against the government.

Laches is the failure or neglect, for an unreasonable 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 has either abandoned it or has declined to assert it. It has also been defined as such neglect or omission to assert a right taken in conjunction with the lapse of time and other circumstances causing prejudice to an adverse party, as will operate as a bar in equity.²⁹chanrobleslaw

We have ruled in Catholic Bishop of Balanga v. Court of Appeals,³⁰ that:ChanRoblesVirtualawlibrary

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.

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

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.

In the case of APO Fruits Corporation, et al. v. Land Bank of the Philippines,³² just compensation has been defined as "the full and fair equivalent of the property taken from its owner by the expropriator." However, in order for the payment to be "just," it must be real, substantial, full, and ample.³³ The Court, in Estate of Salud Jimenez v. Philippine Export Processing Zone,³⁴ stressed that not only must the payment be fair and correctly determined, but also, the payment should be made within a "reasonable time" from the taking of the, property. It succinctly explained that without prompt payment, compensation cannot be considered "just" inasmuch as the property owner is being made to suffer the consequences of being immediately deprived of the land while being made to wait for a decade or more before actually receiving the amount necessary to cope with the loss.³⁵ Thus, once just compensation is finally determined, the expropriator must immediately pay the amount to the lot owner. Clearly, in this case, the government's delay in the payment of the just compensation for over 30 years is no longer reasonable as contemplated by the law.

Thus, MCIAA's neglect or omission to assert a supposed right for more than thirty (30) years is too long a time as to warrant the presumption that it had abandoned such right to expropriate the subject property. No evidence was presented to show that MCIAA ever took any action, administrative or judicial, nor did it question or protest the corporation's occupation of the subject lot until its filing of the complaint in 1996, or more than 30 years. There was no evidence to show that MCIAA had even apprised defendant of its right and of its intention to assert it.

The application of laches is addressed to the sound discretion of the court as its application is controlled by equitable considerations.³⁶ In the instant case, with the foregoing considerations, it is but just for MCIAA to face the consequence of its negligence or passivity after it had slept on its rights for more than 30 years. Clearly, the inaction of MCIAA for over 30 years has reduced its right to regain possession of the subject property to a stale demand. Indeed, the law helps the vigilant but not those who sleep on their rights.³⁷ For time is a means of destroying obligations and actions, because time runs against the slothful and contemners of their own rights.³⁸chanrobleslaw

Whether respondent has a valid title over Lot No. 2498

The issue of whether or not the corporation acted in bad faith in the acquisition of the title of the subject Lot No. 2498 is immaterial considering that the government did not complete the expropriation process by its failure to pay just compensation. It failed to perfect its title over the subject lot. Even assuming that the corporation was in bad faith, MCIAA will not have a better title over the subject property because in the first place, MCIAA has no title to speak of. It would have been a different story if MCIAA actually acquired title over the subject property. In such a case, even if the corporation's title was registered first, it would be the Republic's title or right of ownership that shall be upheld.

In Cabuhat v. Court of Appeals,³⁹ We have said that even if the procurement of a certificate of title was tainted with fraud and misrepresentation, such defective title may be the source of a completely legal and valid title in the hands of an innocent purchaser for value. Thus, 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 whether the title has been regularly or irregularly issued. This is contrary to the evident purpose of the law as 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 behind the certificate to determine the condition of the property. They are only charged with notice of the liens and encumbrances on the property that are noted on the certificate.

During cross-examination, Tirso S. Limbonhai, recalled that while he can rely solely upon the face of a Torrens Certificate of the Title and to dispense with the need of inquiring further, he nonetheless diligently sought to inquire, investigate and verify the status of the subject property, and conducted an ocular inspection of the subject property. He, however, found the title and the subject property to be clean.⁴⁰ Thus, considering that he purchased said subject lot on the assurance that Godinez' title thereto is clean and valid, he should not run the risk of being told later that his acquisition was invalid.

In Peralta v. Heirs of Bernardino, Abalon,⁴¹ citing Tenio-Obsequio v. Court of Appeals,⁴² We explained the purpose of the Torrens system and its legal implications to third persons dealing with registered land, as follows:ChanRoblesVirtualawlibrary

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.

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.

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.

Verily, in civil cases, the party having the burden of proof must establish his case by a preponderance of evidence. Preponderance of evidence is the weight, credit, and value of the aggregate evidence on either side, and is usually considered to be synonymous with the term greater weight of the evidence or greater weight of the credible evidence. Preponderance of evidence is a phrase that means, in the last analysis, probability of the truth. It is evidence that is more convincing to the court as worthy of belief than that which is offered in opposition thereto.⁴⁴ In the case at bar, MCIAA failed to dispense its burden of proving by clear and convincing evidence that it has a right to have the TCT issued in the name of respondent corporation cancelled.

WHEREFORE, the petition is hereby DENIED. The Court AFFIRMS the Decision promulgated on April 10, 2014 by the Court of Appeals.

SO ORDERED.chanRoblesvirtualLawlibrary

Perez, Reyes, and Leonen,^***JJ., concur.
Velasco, Jr., (Chairperson), J., on official leave.

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).

⁴⁴O�o v. Lim, 628 Phil. 418, 430 (2010).