Republic vs. CA (Estoppel) Facts: Defendant St. Jude Enterprises, Inc.

is the registered owner of a parcel of land known as lot 865- B1 of the subdivision plan being a portion of lot 865-B located in Caloocan city containing an area of 40, 623 sq.m . For lot 865-B1 defendant St. Jude Enterprises, Inc. was issued TCT No. 22660 on July 25, 1966. Sometime in March 1966 defendant St. Jude Enterprises, Inc. subdivided lot No. 865-B1 under subdivision plan LRC and as a result thereof the Register of Deeds of Caloocan city cancelled TCT No. 22660 and in lieu thereof issued certificates of titles all in the name of defendant St. Jude Enterprise, Inc. The subdivision of lot 865-B1 was later found to have expanded and enlarged from its original area of 40,523 sq.m or an increase in area was confirmed by the Land Registration Commission on the Northern portion of the lot. Subsequently, defendant St. Jude Enterprise, Inc. sold the lots covered by TCT No. 24013 and 24014 to defendant Sps. Santos to defendant Spouses Calaguian, Fuente and Madaya. Accordingly, these titles were cancelled and said defendants issued series of titles under the name of Sps. Santos then to Sps. Calaguian. Also, TCT No. 13309 issued in the name of Sps. Santos, and other TCTS in the name of Fuente andMadaya containing an area of 350 sq.m. On Jan. 29, 1985, then Solicitor General filed an action seeking annulment and series of cancellation of TCT in the name of Sps. Santos, Calaguian, delaFuente and Madaya. The annulment was principally based on the ground that said CTC were issued on the strength of null and void subdivision plan LRC. The area was expanded as the original area of TCT No. 22660, in the name of St. Jude Enterprise, Inc. from 40, 623 sq.m to 42,044 sq.m upon its subdivision . Defendant Virginia delaFuente and Madaya were declared in default for failure to file their respective answers within the reglementaryperiod.

Defendant Sps. Catalino Santos, St. Jude Enterprise Inc. and Spouses Calaguian filed separate answers to the complaint. Defendant Calaguian and Santos also interposed defences among others that they acquired the lots in question in good faith from their former owner, defendant St. Jude Enterprise Inc., titles issued to the said defendants were incontrovertible, conclusive and indefeasible. After 1 year from the date of issuance of titles by Register of Deeds of Caloocan City. Defendant St. Jude also contended that the cause of action of plaintiff is barred by prior judgment, that the subdivision plan submitted having been approved by LRC, the government is now in estoppel to question the approved subdivision plan; and the plaintiffs allegation that the area of the subdivision increased by 1,421 sq.m is without any basis in fact and law. The trial Court on April 30, 1991 dismissed the complaint and hold that plaintiff did not sufficiently proved the enlargement area of the disputed property and St. Jude did not defraud in submitting the subdivision plan to the LRC for approval. WRONG CORRECT: 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 had committed fraud when it submitted the subdivision plan to the LRC. There was no one to blame for the increase on the area but the plaintiff for having allowed and approved the subdivision plan. The trial court concluded that the government was already in estoppel to question the approved subdivision plan. Their titles could no longer be questioned because under the torrens system, such titles had become absolute and irrevocable. This court also pointed out that in sustaining the position taken by the government would certainly lead to disastrous consequences. Adjoining who were deprived of a portion of 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 so boundaries should be respected and status quo should be maintained. INCOMPLETE COMPLETE: The RTC noted that in sustaining 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]

Issue: Whether or not the government is estopped from questioning the approved subdivision plan which expanded the areas covered by Transfer Certificate of title in question.

Ruling: The SC ruled in the affirmative. The general rule is that the State cannot be put in estoppel by the mistakes or errors of its officials or agents. However, like all general rules it is a subject for exceptions. Estoppel against the public are little favoured 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 dishonourably or capriciously with its citizens and must not apply an ignoble part or do shabby thing, subject to limitations. The doctrine of equitable estoppel may be invoked against public authorities as well as against private individuals. Citing the case, Republic vs. Sandiganbayan, the government in its effort to recover ill-gotten wealth, tried to skirt the application of estoppel against it by invoking a specific constitutional provision. The Court countered that the state is immune from estoppel, but this concept is understood to refer to acts and mistakes of its officials especially those which are irregular, which
peculiar circumstances are absent in the case at bar.

CA affirmed the trial Courts decision and berated petitioner for bringing the suit only after 19 years had passed since the issuance of St. Jude title and the approval of the subdivision plan. The Court also ruled that no torrens title holder shall be at peace with the ownership and possession of his land. For the Commission of Land Registration can question his title anytime it makes a finding to said Torrens title holder. incompleteAND DIFFERENT MEANING

COMPLETE:

The CA affirmed the trial court, berating petitioner for bringing the suit only after
nineteen (19) years had passed since the issuance of St. Judes title and the approval of the subdivision plan. It noted: Rather than make the Torrens system reliable and stable, [its] act of filing the instant suit rocks the system, as it gives the impression to Torrens title holders, like appellees, that their titles to properties can be questioned by the same authority who had approved the same even after a long period of time. In that case, no Torrens title holder shall be at peace with the ownership and possession of his land, for the Commission of land Registration can question his title any time it makes a finding unfavorable to said Torrens title holder.

Although, the states right of action to recover ill-gotten wealth is not vulnerable to estoppel. It is non sequitur to suggest that a contract, freely and is good faith executed between the parties is susceptible to disturbance ad infinitum. A different interpretation will lead to the absurd scenario of permitting a party to unilaterally jettison a compromise agreement which is

supposed to have the authority of res judicata and like any other contract, has the force of law between parties thereto. The Court further declared that real office of equitable norm of estoppel is limited to supplying deficiency in the law, but it should not supplant positive law. In the case at bar, for nearly 20 years (starting from the issuance of St. Jude titles in 1966 up to filing the complaint in 1920), petitioner failed to correct and recover the alleged increase in the land area of St. Jude. It strongly militates against its cause, as it is tantamount to laches which means 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. ALSO, THERE WAS NO ACTUAL DAMAGE TO THIRD PERSONS CAUSED BY THE RESURVEY AND THE SUBDIVISION AS THE ADJOINING OWNERS DID NOT COMPLAIN AND ONE EVEN ATTESTED THAT THERE WAS NO OVERLAPPING OF BOUNDARIES. Significantly, the other private respondents- spouses Santos Calaguian, Delafuente, and Madaya bought such expanded lots in good faith relying on the clean certificate 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. In the doctrine it is settled 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 issued regularly/ 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. In another case,[25] this Court further said: The Torrens System was adopted in this country because it was believed to be 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 sellers 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. 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. Furthermore, it should be stressed that the total area of forty thousand six hundred twenty-three (40,623) square meters indicated on St. Judes original title (TCT No. 22660) was not an exact area. Such figure was followed by the phrase more or less. This plainly means that the land area indicated was not precise. Atty. Antonio H. Noblejas, who became the counsel of St. Jude subsequent to his tenure as Land Registration Commissioner, offers a sensible explanation.

It is undisputed that in the identification of a parcel of land what is controlling are the metes and bounds as set forth in technical description and not the area stated. Thus, no unauthorized expansion of the survey occasioned by the subdivision of lots consequently LRC Circ No. 167 finds no application to bar the processing and registration in due course of transactions involving subdivision of lots of the clients. The discrepancy in the figures could have been caused by the inadvertence or the negligence of surveyors. No proof of fraud was justified as to the land area indicated intentionally. The property originally registered was same as to what was subdivided and what defines a piece of titled property is not the numerical data indicated as the land area but metes and bounds specified in its technical description.

As a general rule, the principle of equitable estoppel states that where one of two innocent persons must suffer a loss, he who by his conduct made the possible loss must bear it. Hence, estoppel by laches now bar the petitioner from questioning private respondents titles to the subdivision lots. Petition is denied, and decisions are hereby affirmed.

Petitioner miserably failed to prove any fraud on the part of private respondent of St. Jude or on part of Land Registration officials nor allege that fraud was perpetrated to cause an increase in the actual land size indicated nor was any evidence proffered to substantiate allegation. Fraud cannot be presumed, and the failure of petitioner to prove it defeats it own
cause. 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 States 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 quite 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. [32] 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 agent 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.[33]