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Philippine Banking Corporation v.

Lui She
G.R. No. L-17587
12 September 1967

Justina Santos and her sister own a piece of land in Manila, while Wong Heng is a long-time lessee of the
property. Eventually, Justina became the owner of the property. Already in advanced age, Justina trusted
various tasks to Wong including the delivery of rental payments to her property.

In November 1957, in grateful acknowledgement of his personal services, Justina executed a contract of
lease in favor of Wong covering a portion property, and later, the entire property for 50 years with right
to withdraw at any time. In December 1957, Justina executed a contract for option to buy the leased
property with a condition that Wong obtain Philippine Citizenship then pending before the Court of First
Instance of Rizal. However, the application was withdrawn because it was discovered that he was not a
resident of Rizal. In October 1958, Justina filed a petition to adopt Wong and his children in the belief that
adoption would confer him Philippine Citizenship. Discovering there was error, the proceedings were

In November 1958, Justina executed two other contracts extending the lease to 99 years, and fixing the
term of option to buy at 50 years. Both were written in Tagalog. In two wills executed on August 1959,
Justina bade her legatees to respect the contracts entered into with Wong. However, Justina appeared to
have a change of heart, and claimed that the contracts were made through machinations and
inducements practiced by Wong. Thus, Justina directed her executor to secure the annulment of the

In November 1959, a complaint was then filed before the Court of First Instance of Manila on the said
grounds, and asked the court to direct the Register of Deeds of Manila to cancel the registration of the
contracts. Wong denied having taken advantage of the trust and confidence given to him by Justina. The
CFI rendered its decision annulling all the contracts, except the lease contract, and condemned Wong to
pay Justina the unpaid rentals.

Both parties filed an appeal before the Supreme Court. Justina (through Petitioner Philippine Banking
Corporation) maintained that the lease contract should have been annulled as it lacks mutuality, that it
was obtained in violation of the fiduciary relations of the parties, and that her consent was obtained
through undue influence, fraud and misrepresentation.

Whether or not the lease contract is valid, thus, granting rights to Wong.

The Court ruled that the least contract is valid.

The lease contract does not lack mutuality because Wong was never an agent of Justina. The relationship
between the parties were admittedly close, but did not amount to an agency. Actually, it was cited that
the lease contract was made on the basis of the data of Wong given to the lawyer who prepared the
contract, and that Justina told him that whatever Wong wants must be followed. Despite the words
supplied by Wong, it was testified that Justina was unyielding and firm in her decision to follow Wong.
Undue influence cannot stand as well given that the contract was signed in the presence of Justinas close
friend and maid, who could have testified against it. Further, Justinas consent was given freely and
voluntarily as shown by her recited in the Deed of Conditional Option and emphatic avowal gratitude in
the lease contract that Wong saved her and her sister from the fire that destroyed their house during the
liberation of Manila. All told, the lease contract stands to be valid.

However, despite validity of the lease contract, it also gives the clue to a circumvention of the
Constitutional prohibition against transfer of land to aliens. Taken singly, the contracts show nothing that
is necessarily illegal, but considered collectively, they reveal an insidious pattern to subvert by indirection
what the Constitution directly prohibits. To be sure, a lease to an alient for a reasonable period is valid.
So is the option giving an alien the right to buy the property on condition that he is granted Philippine

But if an alien is given not only a lease, but also an option to buy, a piece of land, by virtue of which the
Filipino owner cannot sell or otherwise dispose of his property, this is to last for 50 years, is a virtual
transfer of ownership whereby the owner divests himself in stages not only of the right to enjoy the land
but also the right to dispose of it rights the sum total of which makes up ownership.
Ramirez v. Vda. De Ramirez
G.R. No. L-27952
15 February 1982

Jose Eugenio Ramirez, a Filipino national, died in Spain with only his widow as compulsory heir. His will
was admitted to probate by the Court of First Instance of Manila, Branch X. The administratrix of the
estate submitted a project of partition giving one part of the estate to the widow en pleno dominio in
satisfaction of her legitime while the other part of the free portion to his two grandnephews Roberto
and Jorge Ramirez. Furthermore, one third of the free portion is charged with the widow's usufruct and
the remaining two thirds (2/3) with a usufruct in favor of Wanda Wrobleski.

Jorge and Roberto Ramirez opposed the project of partition, as well as the substitutions provided by the
testator as to the usufructs of the widow and of Wanda. Nonetheless, the lower court approved the
project of partition in its order dated May 1967. Jorge and Roberto appealed before the Supreme Court.

Whether or not the usufruct over real property in favor of Wanda violates the Constitutional prohibition
against ownership of lands by alien.

The Court upheld the validity of the usufruct given to Wanda on the ground that the Constitution covers
not only succession by operation of law, but also testamentary succession. Any alien would be able to
circumvent the prohibition by paying money to a Philippine landowner in exchange for a devise of a piece
of land. In the present case, the usufruct in favor of Wanda, although a real right, does not vest title to
the land in the usufructuary. It is the vesting of title in favor of aliens which is proscribed by the
Cheesman v. IAC
G.R. No. 74833
21 January 1991

Thomas and Criselda Cheesman married in December 1970. In June 1974, a Deed of Sale covering a parcel
of unregistered land and house thereon was executed by Armando Altares in favor of Criselda. Aware of
the deed, Thomas did not object to the transfer being made only to his wife. Also without objection from
his end, tax declarations for the property were issued in the name of Criselda only, while she assumed
exclusive management and administration thereon. However, in February 1981, Thomas and Criselda
separated. In July 1981, Criselda sold the property to Estelita Padilla without the knowledge or consent of

In July 1981, Thomas filed a complaint against Criselda before CFI Olongapo for the annulment of the sale
on the ground that it was executed without his knowledge and consent. In her answer, Criselda alleged
that property was parapheral having purchased the same with Funds exclusively belonging to her; that
Thomas, being an American, was disqualified to have any interest or right of ownership in the land; and
that Estelita was a buyer in good faith. The CFI declared the sale void ab initio, and ordered the delivery
of the property to Thomas as administrator of the conjugal partnership property. However, Estelita filed
a petition for relief on the ground of fraud, mistake or excusable negligence which had seriously impared
her right to present her case adequately. Thus, judgement was set aside, petition for relief was given due
course, and a new judge presided over the case.

Thereafter, a Summary Judgement declared the sale to be valid having satisfactorily overcame the
disputable presumption that all property of the marriage belong to the conjugal property, and that the
property was Criseldas paraphernal property; and said presumption cannot apply to Thomas being an
American citizen, thus disqualified under the Constitution to acquire and own real properties.

Thomas appealed before the IAC but to no avail. Hence, this petition.

Whether or not the property in dispute form part of the conjugal property of Thomas and Criselda.

The Court ruled against Thomas. The Court is settled with the facts as determined the lower and appellate
courts that the funds used by Criselda to purchase the property was money she had earned and saved
prior to her marriage to Thomas, and that Estelita did believe in good faith that Criselda was the sole
owner of the property. Consequently, these determinations of facts will not be here disturbed since the
Court is not a trier of facts and has not reason to disturb them.

In this regard, the Constituiton prohibits the sale to aliens of residential land. Thomas was charged with
the knowledge of this prohibition. Thus, assuming that it was his intention that the property be purchased
by him and Criselda, he acquired no right whatever over the property by virtue of the purchase; and in
attempting to acquire right or interest in land, vicariously or clandestinely, he knowingly violated the
Constitution; the sale as to him is void. In any event, Thomas had no capacity or personality to question
the subsequent sale of the same property by his wife on the theory that in so doing he is merely exercising
the prerogative of a husband in respect of conjugal property.

To sustain such a theory would permit indirect violation of the Constitution. If the property were to be
declared conjugal, this would accord the alien husband a substantial interest and right over the land, as
he would have a decisive vote as to its transfer or disposition. This is a right which the Constitution does
not permit Thomas to have.

As already observed, the finding that that his wife had used her own money to purchase the property
cannot, and will not, at this stage of the proceedings be reviewed and overturned. But even if it were a
fact that said wife had used conjugal funds to make the acquisition, the considerations just set out
militate, on high constitutional grounds, against his recovering and holding the property so acquired or
any part thereof. And whether in such an event, he may recover from his wife any share of the money
used for the purchase or charge her with unauthorized disposition of conjugal funds is not now inquired
into, for the same is purely academic.
Muller v. Muller
G.R. No. 149615
29 August 2006

Helmut and Elena Muller were married in Germany in September 1989, and eventually decided to move
and permanently reside in the Philippines in 1992. Around this time, Helmut inherited a house in Germany
which he sold latter. The proceeds were used to purchase a parcel of land in Antipolo, Rizal. The property
was registered in the name of Elena Muller.

Unfortunately, Helmut and Elena separated. Helmut filed a petition for separation of properties before
the RTC Quezon City. The Court rendered a decision terminating the absolute community between Helmut
and Elena, and ordered the equal partition of properties. As regard the Antipolo property, the Court held
that Helmut cannot recover his funds from the purchase of the said property despite using his paraphernal
funds because it would be in violation of the Constitutional prohibition on ownership of lands by aliens.

Helmut appealed before the CA, which modified the decision. It upheld that Helmut was merely praying
for the reimbursement of the purchase of the property, and not the acquisition or transfer of ownership
to him. It also considered Elenas ownership over the property in trust for Helmut.

Hence, the instant petition where in Elena contends that Helmut is disqualified to own private lands in
the Philippines, which he is aware of, and that his purpose is to obtain exclusive possession, control and
disposition of the property. Helmut however claims he is merely praying for the reimbursement of funds
used to purchase the property; that funds were given to Elena in trust; and that equity demands that
responded should be reimbursed of his funds.

Whether or not Helmut is entitled to reimbursement of funds for the acquisition of the Antipolo property.

The Court ruled against Helmut. He was aware of the Constitutional prohibition when he purchased the
property. He declared the property in the name of Elena because of said prohibition. His attempt at
subsequently asserting or claiming right on the said property cannot be sustained. To allow
reimbursement would in effect permit Helmut to enjoy the fruits of a property which he is not allowed to

Further, there was even no implied trust created. Save for hereditary succession, an aliens disqualification
is absolute. Not even an ownership in trust is allowed. Besides, where the purchase is made in violation
of an existing statute and in evasion of its express provision, no trust result in favor of the party who is
guilty of fraud. To hold otherwise would allow a circumvention of the constitutional prohibition.

Finally, he who seeks equity must do equity, and he who comes into equity must come with clean hands.
Helmut cannot seek reimbursement of funds he used to purchase on the ground of equity where it is clear
that he willingly and knowingly bought the property despite the Constitutional prohibition.
Ting Ho v. Teng Gui
G.R. No. 130115
16 July 2008

In 1947, Felix Ting Ho, Sr. who was married to Leonila Cabasal occupied a parcel of land in Olongapo City
by virtue of the permission granted him by the then US Naval Reservation Office. The couple introduced
improvements on the land including a residential and commercial building, and another residential house
with a bakery.

Felix Sr. executed in October 1958 a Deed of Absolute Sale of the residential and commercial building in
favor of Victoria Cabasal, his sister-in-law, and of the residential house with a bakery in favor of Gregorio
Fontela, an American citizen. In October 1961, the spouses Gregorio and Victoria sold to Vicente Teng Gui
the buildings which were bought from Felix Sr. The tax declarations on the buildings were cancelled and
were registered in the name of Vicente. In October 1968, Felix Sr. executed an Affidavit of Transfer,
Relinquishment and Renouncement of Rights and Interest including improvement on land in favor of
Vicente. On this basis and after election of Filipino citizenship, Vicente filed a miscellaneous sales
application with the Bureau of Lands. Subsequently, the application was granted and Original Certificate
of Title covering the property was issued to Vicente. Despite all of these, Felix Sr. and Leonila continued
to live and were in their custody until their deaths in 1970 and 1978, respectively.

An action of partition was filed by Petitioners Felix Jr. and his brothers and sisters against Vicente over the
parcel of land. They alleged that the properties were titled and tax declared under trust in the name of
Vicente for the benefit of Felix Sr., who being a Chinese citizen, was then disqualified to own public lands
in the Philippines; and that upon his death, Vicente took possession of the same for his own exclusive use
and benefit to their exclusion. On the other hand, Vicente asserted the transactions that took place.

The RTC found that Felix Sr. resorted to a series of simulated transactions in order to preserve the right to
the lot and properties thereon in the hands of the family. Nevertheless, the Court considered the Affidavit
of Transfer as a donation accepted by Vicente from Felix Sr. as assumed under Article 1471 of the Civil
Code. As such, the entire conjugal share of Felix Sr. was awarded to Vicente alone, while the rest of his
siblings share on their mothers share.

On appeal, the CA reversed the decision of RTC by holding that Felix Sr. was never the owner of the land
since he is disqualified under Philippine laws, and that Vicente was the rightful owner of the land by virtue
of the Miscellaneous Sales Patent and OCT issued in his favor as he did not acquire the same from Felix
Sr. However, the CA held the improvements thereon should form part of the estate.

Whether or not the land and improvements thereon should be included in the estate of Felix Sr.

The Court ruled that the land belongs to Vicente, while the improvements thereon forms part of the estate
of Felix Sr. The land does not form part of the estate of Felix Sr. because he was absolutely prohibited
from owning lands being a Chinese citizen. The prohibition against an alien owning lands of the public
domain is absolute, and not even an implied trust can be permitted to arise on equity considerations.

In fact, he was only occupying the land by virtue of a permission granted him by the US Naval Reservation
Office. On the other hand, Vicente became the owner of the land when he was granted Miscellaneous
Sales Patent by the DENR, and when the OCT was issued in his name. Under the law, a certificate of title
issued pursuant to any grant or patent involving public land is as conclusive and indefeasible as any other
certificate of title issued to private lands.

As regards the improvements thereon, the series of transactions were considered simulated in order to
preserve the properties in the hands of the family. However, the RTC erred in relying on Article 1471 of
the Civil Code that the simulated sales were a valid donation because its finding was based on a mere
assumption when the law requires proof. Since Vicente was unable to show evidence that the simulated
sales were intended to be a donation to him by Felix Sr., the Court held that the improvements thereon
shall form part of the estate.
Matthews v. Taylor
G.R. No. 164584
22 June 2009

Benjamin and Joselyn Taylor were married in June 1988. In June 1989, Joselyn bought from Diosa Martin
a parcel of land in Boracay, financed by Benjamin. They introduced improvements thereon and converted
the same into a vacation and tourist resort. However, the couple eventually had a falling out. In June 1992,
Joselyn executed a Special Power of Attorney authorizing Benjamin to maintain, sell, lease and sub-lease,
and otherwise enter into a contract with third parties with respect to the Boracay property.

In July 1992, Joselyn entered into an Agreement of Lease with Philip Matthews involving the Boracay
property. Matthews took possession of the property and renamed the resort as Music Garden Resort. As
such, Benjamin instituted an action for Declaration of Nullity of Agreement of Lease with Damages against
Joselyn and Matthews before RTC, claiming that the agreement was null and void since it was entered
into by Joselyn without his consent. Further, he claimed it was his funds that was used in its acquisition.

The RTC rendered its decision declaring the Agreement of Lease null and void as it considered the Boracay
property as community property of Benjamin and Joselyn. Thus, the consent of the spouses is necessary
to validate any contract involving the property. It was even bolstered by the fact that the property was
purchased and improved through funds provided by Benjamin.

On appeal to the CA, the Court affirmed the conclusions of the RTC, and ruled that if Benjamin was a
willing participant in the agreement, the parties should have used the phrase with my consent instead
of signed in the presence of. Also, the CA noted that Joselyn already prepared an SPA in favor of
Benjamin involving the Boracay property; thus, it was unnecessary for Joselyn to participate in the

Hence, this petition.

Whether or not has the right to nullify the Agreement of Lease.

The Court ruled in the negative.

Under the Constitution, aliens have been disqualified from acquiring lands of the public domain, as well
as private lands. The primary purpose of this constitutional provision is the conservation of the National
Patrimony. Benjamin, being an alien is absolutely prohibited from acquiring private and public lands in the
Philippines. Considering that Joselyn appeared to be the designated vendee in the Dead of Sale of the
Boracay property, she acquired sole ownership thereto.

This is true even if the Court sustain his claim that he provided the funds for such acquisition. By entering
into such contract knowing that it was illegal, no implied trust was created in his favor; no reimbursement
for his expenses can be allowed; and no declaration can be made that the subject property was part of
the conjugal/community property of the spouses. In any event, Benhamin had and has no capacity or
personality to question to subsequent lease of the Boracay property by Joselyn on that theory that he was
merely exercising the prerogative of a husband in respect of conjugal property. To sustain such theory
would countenance indirect controversion of the constitutional prohibition.
Register of Deeds v. Ung Siu Si Temple
G.R. No. L-6776
21 May 1955

The Constitutional ban on ownership of land makes no exception in favor of religious associations.

The Register of Deeds of Rizal refused to accept for record a Deed of Donation executed by Jesus Dy
conveying a parcel of residential land in favor of the unregistered organization Ung Siu Si Temple,
operating through three trustees all of Chinese Nationality. The refusal was elevated before the CFI
Manila, which upheld the action of the Register of Deeds. The Court held that it cannot admit the Deed of
Donation in view of the Constitutional limitation on acquisition of lands in the Philippines by corporations
or associations, which at least sixty per cent of their capital stock must be owned by Filipino citizens.

Hence, this appeal before the Supreme Court was filed by Ung Siu Si Temple claiming that the land was
acquired for religious purposes, and thus authorized and permitted under Act No. 271.

Whether or not the Deed of Donation in favor of Ung Siu Si Temple must be admitted.

The Court ruled in the negative. The provisions of Act No. 271, the law authorizing and permitting religious
organizations to hold land in the Philippines as long as it shall be made in name of three Trustees of such
organizations, must be deemed repealed since it is incompatible with the Constitution already enacted.

The Constitution makes no exception in favor of religious associations. The fact that Ung Siu Si Temple has
no capital stock does not suffice to escape the Constitutional inhibition, since it is admitted that is
members are of foreign nationality. The purpose of the sixty per centum requirement is obviously to
ensure that corporations/associations allowed to acquire agricultural land or to exploit natural resources
shall be controlled by Filipinos, and the spirit of the Constitution demands that in the absence of capital
stock, the controlling membership should be composed of Filipino citizens.
Roman Catholic Apostolic Administrator of Davao, Inc. v. LRC
G.R. No. L-8451
20 December 1957

A corporation sole is merely an administrator and not the owner of the temporalities of the

On October 4, 1954, Mateo L. Rodis, a Filipino citizen and resident of the City of Davao, executed a deed
of sale of a parcel of land located in the same city covered by Transfer Certificate No. 2263, in favor of the
Roman Catholic Apostolic Administrator of Davao Inc.,(RCADI) is corporation sole organized and existing
in accordance with Philippine Laws, with Msgr. Clovis Thibault, a Canadian citizen, as actual incumbent.
Registry of Deeds Davao (RD) required RCADI to submit affidavit declaring that 60% of its members were
Filipino Citizens. As the RD entertained some doubts as to the registerability of the deed of sale, the matter
was referred to the Land Registration Commissioner (LRC) en consulta for resolution. LRC hold that
pursuant to provisions of sections 1 and 5 of Article XII of the Philippine Constitution, RCADI is not qualified
to acquire land in the Philippines in the absence of proof that at leat 60% of the capital, properties or
assets of the RCADI is actually owned or controlled by Filipino citizens. LRC also denied the registration of
the Deed of Sale in the absence of proof of compliance with such requisite. RCADIs Motion for
Reconsideration was denied. Aggrieved, the latter filed a petition for mandamus.

Whether or not the Universal Roman Catholic Apostolic Church in the Philippines, or better still, the
corporation sole named the Roman Catholic Apostolic Administrator of Davao, Inc., is qualified to acquire
private agricultural lands in the Philippines pursuant to the provisions of Article XIII of the Constitution.

RCADI is qualified.

While it is true and We have to concede that in the profession of their faith, the Roman Pontiff is the
supreme head; that in the religious matters, in the exercise of their belief, the Catholic congregation of
the faithful throughout the world seeks the guidance and direction of their Spiritual Father in the Vatican,
yet it cannot be said that there is a merger of personalities resultant therein. Neither can it be said that
the political and civil rights of the faithful, inherent or acquired under the laws of their country, are
affected by that relationship with the Pope. The fact that the Roman Catholic Church in almost every
country springs from that society that saw its beginning in Europe and the fact that the clergy of this faith
derive their authorities and receive orders from the Holy See do not give or bestow the citizenship of the
Pope upon these branches. Citizenship is a political right which cannot be acquired by a sort of radiation.
We have to realize that although there is a fraternity among all the catholic countries and the dioceses
therein all over the globe, the universality that the word catholic implies, merely characterize their faith,
a uniformity in the practice and the interpretation of their dogma and in the exercise of their belief, but
certainly they are separate and independent from one another in jurisdiction, governed by different laws
under which they are incorporated, and entirely independent on the others in the management and
ownership of their temporalities. To allow theory that the Roman Catholic Churches all over the world
follow the citizenship of their Supreme Head, the Pontifical Father, would lead to the absurdity of finding
the citizens of a country who embrace the Catholic faith and become members of that religious society,
likewise citizens of the Vatican or of Italy. And this is more so if We consider that the Pope himself may
be an Italian or national of any other country of the world. The same thing be said with regard to the
nationality or citizenship of the corporation sole created under the laws of the Philippines, which is not
altered by the change of citizenship of the incumbent bishops or head of said corporation sole.

We must therefore, declare that although a branch of the Universal Roman Catholic Apostolic Church,
every Roman Catholic Church in different countries, if it exercises its mission and is lawfully incorporated
in accordance with the laws of the country where it is located, is considered an entity or person with all
the rights and privileges granted to such artificial being under the laws of that country, separate and
distinct from the personality of the Roman Pontiff or the Holy See, without prejudice to its religious
relations with the latter which are governed by the Canon Law or their rules and regulations.
It has been shown before that: (1) the corporation sole, unlike the ordinary corporations which are formed
by no less than 5 incorporators, is composed of only one persons, usually the head or bishop of the
diocese, a unit which is not subject to expansion for the purpose of determining any percentage
whatsoever; (2) the corporation sole is only the administrator and not the owner of the temporalities
located in the territory comprised by said corporation sole; (3) such temporalities are administered for
and on behalf of the faithful residing in the diocese or territory of the corporation sole; and (4) the latter,
as such, has no nationality and the citizenship of the incumbent Ordinary has nothing to do with the
operation, management or administration of the corporation sole, nor effects the citizenship of the
faithful connected with their respective dioceses or corporation sole.

In view of these peculiarities of the corporation sole, it would seem obvious that when the specific
provision of the Constitution invoked by respondent Commissioner (section 1, Art. XIII), was under
consideration, the framers of the same did not have in mind or overlooked this particular form of
corporation. If this were so, as the facts and circumstances already indicated tend to prove it to be so,
then the inescapable conclusion would be that this requirement of at least 60 per cent of Filipino capital
was never intended to apply to corporations sole, and the existence or not a vested right becomes
unquestionably immaterial.
JG Summit Holdings, Inc. v. Court of Appeals
G.R. No. 124293
31 January 2005

On 27 January 1977, the National Investment and Development Corporation (NIDC), a government
corporation, entered into a Joint Venture Agreement (JVA) with Kawasaki Heavy Industries, Ltd. of Kobe,
Japan (Kawasaki) for the construction, operation, and management of the Subic National Shipyard, Inc.
(SNS), which subsequently became the Philippine Shipyard and Engineering Corporation (PHILSECO).
Under the JVA, NIDC and Kawasaki would maintain a shareholding proportion of 60% - 40%, respectively.
One of the provisions of the JVA accorded the parties the right of first refusal should either party sell,
assign or transfer its interest in the joint venture. On 25 November 1986, NIDC transferred all its rights,
title and interest in PHILSECO to the Philippine National Bank (PNB).

More than two months later or on 3 February 1987, by virtue of Administrative Order 14, PNB's interest
in PHILSECO was transferred to the National Government. Meanwhile, on 8 December 1986, President
Corazon C. Aquino issued Proclamation 50 establishing the Committee on Privatization (COP) and the
Asset Privatization Trust (APT) to take title to and possession of, conserve, manage and dispose of non-
performing assets of the National Government. On 27 February 1987, a trust agreement was entered into
between the National Government and the APT by virtue of which the latter was named the trustee of
the National Government's share in PHILSECO. In 1989, as a result of a quasi-reorganization of PHILSECO
to settle its huge obligations to PNB, the National Government's shareholdings in PHILSECO increased to
97.41% thereby reducing Kawasaki's shareholdings to 2.59%. Exercising their discretion, the COP and the
APT deemed it in the best interest of the national economy and the government to privatize PHILSECO by
selling 87.67% of its total outstanding capital stock to private entities.

After a series of negotiations between the APT and Kasawaki, they agreed that the latter's right of first
refusal under the JVA be "exchanged" for the right to top by 5% the highest bid for said shares. They
further agreed that Kawasaki would be entitled to name a company in which it was a stockholder, which
could exercise the right to top. On 7 September 1990, Kawasaki informed APT that Philyards Holdings, Inc.
(PHI) would exercise its right to top by 5%. At the pre-bidding conference held on 28 September 1993,
interested bidders were given copies of the JVA between NIDC and Kawasaki, and of the Asset Specific
Bidding Rules (ASBR) drafted for the 87.67% equity (sic) in PHILSECO of the National Government. The
provisions of the ASBR were explained to the interested bidders who were notified that bidding would be
held on 2 December 1993. At the public bidding on said date, the consortium composed of JG Summit
Holdings, Inc. (JGSMI), Sembawang Shipyard Ltd. of Singapore (Sembawang), and Jurong Shipyard Limited
of Malaysia (Jurong), was declared the highest bidder at P2.03 billion. The following day, the COP
approved the sale of 87.67% National Government shares of stock in PHILSECO to said consortium. It
notified JGSMI of said approval "subject to the right of Kawasaki Heavy Industries, Inc./Philyards Holdings,
Inc. to top JGSMI's bid by 5% as specified in the bidding rules."

On 29 December 1993, JGSMI informed the APT that it was protesting the offer of PHI to top its bid on
the grounds that: (a) the Kawasaki/PHI consortium composed of Kawasaki, Philyards, Mitsui, Keppel, SM
Group, ICTSI and Insular Life violated the ASBR because the last four (4) companies were the losing bidders
(for P1.528 billion) thereby circumventing the law and prejudicing the weak winning bidder; (b) only
Kawasaki could exercise the right to top; (c) giving the same option to top to PHI constituted unwarranted
benefit to a third party; (d) no right of first refusal can be exercised in a public bidding or auction sale, and
(e) the JG Summit Consortium was not estopped from questioning the proceedings. On 2 February 1994,
JGSMI was notified that PHI had fully paid the balance of the purchase price of the subject bidding. On 7
February 1994, the APT notified JGSMI that PHI had exercised its option to top the highest bid and that
the COP had approved the same on 6 January 1994. On 24 February 1994, the APT and PHI executed a
Stock Purchase Agreement. Consequently, JGSMI filed with the Supreme Court a petition for mandamus
under GR 114057. On 11 May 1994, said petition was referred to the Court of Appeals. On 18 July 1995,
the Court of Appeals "denied" for lack of merit the petition for mandamus. JGSMI filed a motion for the
reconsideration of said Decision which was denied on 15 March 1996. JGSMI filed the petition for review
on certiorari.

Whether PHILSECO, as a shipyard, is a public utility and, hence, could be operated only by a corporation
at least 60% of whose capital is owned by Filipino citizens, in accordance with Article XII, Section 10 of
the Constitution.

A shipyard such as PHILSECO being a public utility as provided by law, Section 11 of the Article XII of the
Constitution applies. The provision states that "No franchise, certificate, or any other form of
authorization for the operation of a public utility shall be granted except to citizens of the Philippines or
to corporations or associations organized under the laws of the Philippines at least sixty per centum of
whose capital is owned by such citizens, nor shall such franchise, certificate, or authorization be exclusive
in character or for a longer period than fifty years. Neither shall any such franchise or right be granted
except under the condition that it shall be subject to amendment, alteration, or repeal by the Congress
when the common good so requires. The State shall encourage equity participation in public utilities by
the general public. The participation of foreign investors in the governing body of any public utility
enterprise shall be limited to their proportionate share in its capital, and all the executive and managing
officers of such corporation or association shall be citizens of the Philippines."

The progenitor of this constitutional provision, Article XIV, Section 5 of the 1973 Constitution, required
the same proportion of 60% - 40% capitalization. The JVA between NIDC and Kawasaki entered into on 27
January 1977 manifests the intention of the parties to abide by the constitutional mandate on
capitalization of public utilities. The joint venture created between NIDC and Kawasaki falls within the
purview of an "association" pursuant to Section 5 of Article XIV of the 1973 Constitution and Section 11
of Article XII of the 1987 Constitution. Consequently, a joint venture that would engage in the business of
operating a public utility, such as a shipyard, must observe the proportion of 60%-40% Filipino-foreign
capitalization. Further, paragraph 1.4 of the JVA accorded the parties the right of first refusal "under the
same terms." This phrase implies that when either party exercises the right of first refusal under paragraph
1.4, they can only do so to the extent allowed them by paragraphs 1.2 and 1.3 of the JVA or under the
proportion of 60%-40% of the shares of stock. Thus, should the NIDC opt to sell its shares of stock to a
third party, Kawasaki could only exercise its right of first refusal to the extent that its total shares of stock
would not exceed 40% of the entire shares of stock of SNS or PHILSECO. The NIDC, on the other hand, may
purchase even beyond 60% of the total shares. As a government corporation and necessarily a 100%
Filipino-owned corporation, there is nothing to prevent its purchase of stocks even beyond 60% of the
capitalization as the Constitution clearly limits only foreign capitalization. Kawasaki was bound by its
contractual obligation under the JVA that limits its right of first refusal to 40% of the total capitalization

Thus, Kawasaki cannot purchase beyond 40% of the capitalization of the joint venture on account of both
constitutional and contractual proscriptions. From the facts on record, it appears that at the outset, the
APT and Kawasaki respected the 60%-40% capitalization proportion in PHILSECO. However, APT
subsequently encouraged Kawasaki to participate in the public bidding of the National Government's
shareholdings of 87.67% of the total PHILSECO shares, definitely over and above the 40% limit of its
shareholdings. In so doing, the APT went beyond the ambit of its authority.
Republic v. TAN Properties, Inc.
G.R. No. 154953
26 June 2008

In 1999, TAN Properties filed in the Regional Trial Court an application for the registration of a land,
located at Sto. Tomas, Batangas and with an area of 56.4007 hectares. To support its application, it
submitted two certificates, issued by CENRO and FMS-DENR and both certifying that the land applied for
was alienable and disposable. The Republic of the Philippines, represented by the Director of Lands,
opposed the application on the ground that TAN Properties did not prove that the land was alienable and

Whether or not the applicant proved that, the land is alienable and disposable.

The Court ruled in favor of the Petitioner. It is the burden of the applicant to prove that the land subject
to registration is alienable and disposable and for such the applicant must prove that the DENR Secretary
had approved the land classification and released the land of the public domain as alienable and

In the present case, TAN Properties did not provide the needed proof. For the documents provided by the
company, the Court cited DENR Administrative Order No. 20 (DAO No. 20) and DAO No. 38; DAO No. 20
proves that FMS-DENR has no authority to issue certificates, classifying lands to be alienable and
disposable; and DAO No. 38 provides that CENRO can issue certificates of land classification for lands
having a maximum area of 50 hectares. The land applied for in the case has an area of 56.4007 hectares,
thus CENRO has no jurisdiction over it. It is clear from the aforementioned DAOs that the documents
submitted by T.A.N. Properties did not prove that the land is alienable and disposable.
STRADEC v. Radstock Securities
G.R. No. 178158
4 December 2009

Construction Development Corporation of the Philippines (CDCP) was incorporated in 1966. It was granted
a franchise to construct, operate and maintain toll facilities in the North and South Luzon Tollways and
Metro Manila Expressway. CDCP Mining Corporation (CDCP Mining), an affiliate of CDCP, obtained loans
from Marubeni Corporation of Japan (Marubeni). A CDCP official issued letters of guarantee for the loans
although there was no CDCP Board Resolution authorizing the issuance of such letters of guarantee. CDCP
Mining secured the Marubeni loans when CDCP and CDCP Mining were still privately owned and managed.

In 1983, CDCPs name was changed to Philippine National Construction Corporation (PNCC) in order to
reflect that the Government already owned 90.3% of PNCC and only 9.70% is under private ownership.
Meanwhile, the Marubeni loans to CDCP Mining remained unpaid. On 20 October 2000 and 22 November
2000, the PNCC Board of Directors (PNCC Board) passed Board Resolutions admitting PNCCs liability to
Marubeni. Previously, for two decades the PNCC Board consistently refused to admit any liability for the
Marubeni loans.

In January 2001, Marubeni assigned its entire credit to Radstock Securities Limited (Radstock), a foreign
corporation. Radstock immediately sent a notice and demand letter to PNCC. PNCC and Radstock entered
into a Compromise Agreement. Under this agreement, PNCC shall pay Radstock the reduced amount of
P6,185,000,000.00 in full settlement of PNCCs guarantee of CDCP Minings debt allegedly totaling
P17,040,843,968.00 (judgment debt as of 31 July 2006). To satisfy its reduced obligation, PNCC undertakes
to (1) "assign to a third party assignee to be designated by Radstock all its rights and interests" to the
listed real properties of PNCC; (2) issue to Radstock or its assignee common shares of the capital stock of
PNCC issued at par value which shall comprise 20% of the outstanding capital stock of PNCC; and (3) assign
to Radstock or its assignee 50% of PNCCs 6% share, for the next 27 years, in the gross toll revenues of the
Manila North Tollways Corporation.

Strategic Alliance Development Corporation (STRADEC) moved for reconsideration. STRADEC alleged that
it has a claim against PNCC as a bidder of the National Governments shares, receivables, securities and
interests in PNCC.

Whether or not the Compromise Agreement between PNCC and Radstock is valid in relation to the
Constitution, existing laws, and public policy.

The Compromise Agreement is contrary to the Constitution, existing laws and public policy.

PNCCs toll fees are public funds. PNCC cannot use public funds like toll fees that indisputably form part
of the General Fund, to pay a private debt of CDCP Mining to Radstock. Such payment cannot qualify as
expenditure for a public purpose. The toll fees are merely held in trust by PNCC for the National
Government, which is the owner of the toll fees. Considering that there is no appropriation law passed by
Congress for the compromise amount, the Compromise Agreement is void for being contrary to law,
specifically Section 29(1), Article VI of the Constitution. And since the payment pertains to CDCP Minings
private debt to Radstock, the Compromise Agreement is also void for being contrary to the fundamental
public policy that government funds or property shall be spent or used solely for public purposes.

Radstock is not qualified to own land in the Philippines. Consequently, Radstock is also disqualified to own
the rights to ownership of lands in the Philippines. Radstock cannot own the rights to ownership of any
land in the Philippines because Radstock cannot lawfully own the land itself. Otherwise, there will be a
blatant circumvention of the Constitution, which prohibits a foreign private corporation from owning land
in the Philippines. In addition, Radstock cannot transfer the rights to ownership of land in the Philippines
if it cannot own the land itself. It is basic that an assignor or seller cannot assign or sell something he does
not own at the time the ownership, or the rights to the ownership, are to be transferred to the assignee
or buyer. The third-party assignee under the Compromise Agreement who will be designated by Radstock
can only acquire rights duplicating those which its assignor is entitled by law to exercise. Thus, the assignee
can acquire ownership of the land only if its assignor owns the land. Clearly, the assignment by PNCC of
the real properties to a nominee to be designated by Radstock is a circumvention of the Constitutional
prohibition against a private foreign corporation owning lands in the Philippines. The said circumvention
renders the Compromise Agreement void.
Encinares v. Achero
G.R. No. 161419
25 August 2009

In July 1989, Petitioner Eugenio Encinares filed a complaint for quieting of title and reconveyance against
Respondent Dominga Achero before the Regional Trial Court, alleging that he bought several parcels of
land from Roger Lim, but later discovered that the said property were registered to Dominga under the
Free Patent System. Eugenio asserted that he is the owner and actual possessor of the property which is
covered by tax declaration; and that he had been in actual, continuous, adverse and open possession of
the property for more than 30 years. He further asserted that Dominga caused the registration of one-
half portion of the property to be titled in her name under the Free Patent System by means of fraud,
deceit and machination, claiming that Dominga was able to secure a free patent under her name when
she is not the owner and actual possessor of the property. Dominga denied these allegations and stated
that the free patent was issued under her name after a thorough application before the Bureau of Lands
who, after actual survey by the said bureau, granted her application to register the said property.

The RTC ruled in favor of Eugenio by declaring that the land has been registered through fraud, thus,
another person may file an ordinary civil action for reconveyance of his property when the same had not
been transferred to innocent purchasers for value. Aggrieved, Domingo through her son, Vicente, filed an
appeal before the Court of Appeals. The CA reversed the RTC decision, ruling that the decree of
registration is respected as incontrovertible. Further, it held that Eugenio failed to prove by clear and
convincing evidence his title to the property and the fact of fraud. The tax declaration showed as evidence
by Eugenio proved that the property had not been registered, and that the possession of his predecessors-
in-interest started only in 1951. Thus, he cannot be presumed to have acquired title to property.

Hence, a petition was filed with the Supreme Court. Eugenio asserts that he has proven his actual,
continuous, adverse and open possession of the property in the concept of an owner for more than 30
years. He was also able to prove by preponderance of evidence that he is the actual and true owner of
the property. On the other hand, Dominga averred that the property was given to him by his father-in-
law who was the original claimant of the property; and that it was granted to him by the Bureau of Lands
through a Deed of Ratification and Confirmation of Ownership.

Whether or not Eugenio has a better right over the property.

The Court ruled against Eugenio.

A Free Patent may be issued where the applicant is a natural-born citizen of the Philippines; is not the
owner of more than 12 hectares of land; has continuously occupied and cultivated, either by himself or
through his predecessors-in-interest, an agricultural public subject to disposition for at least 30 years prior
to effectivity of RA 6940, and has paid taxes thereon while the same has not been occupied by any other
person. Once a patent is registered, the land ceases to be part of the public domain and becomes a private
property. However, a title emanating from a free patent which was secure through fraud does not become
indefeasible because the patent where the title sprung is itself void.

In the present case, no actual and extrinsic fraud existed. The Court ruled that a decree of registration
may only be reviewed or reopened on instances of actual and extrinsic fraud because such fraud proceeds
from an intentional deception by means of misrepresentation or concealment of material fact, as well as
it deprives the other parties of their day in court. At least, no convincing proof of such fraud was adduced
by Eugenio, other than his reliance on the tax declarations in his name and in the name of his
predecessors-in-interest. Tax declarations and tax receipts do not conclusively prove ownership. In fact,
Eugenio only filed an opposition against the registration of Free Patent after the same had already been
issued in favor of Dominga, despite the posting of the latters application for free patent.
Metrobank v. Viray
G.R. No. 162218
25 February 2010

Rico Shipping, Inc. and Respondent Edgardo Viray entered into two separate loans with Petitioner
Metrobank in July 1979, another loan in June 1981, and a third loan in September 1981. All of these loans
were remained unpaid despite demands made by Metrobank. Meanwhile, in December 1982, the
government issued Free Patents in favor of Viray over three parcels of land, which was later on granted
and registered under his name in January 1983.

After Metrobank secured a favorable decision for the payment of the loans before the Regional Trial
Court, the RTC issued a writ of execution in March 1984 over the lands owned by Viray. Later on, the City
Sheriff of Cagayan de Oro sold the lots at public auction in favor of Metrobank as the winning bidder,
while a Certificate of Sale was issued to Metrobank. In July 1991, Viray filed an action for annulment of
sale against the sheriff and Metrobank, as well as the nullification of the TCT issued by the Register of
Deeds in favor of Metrobank.

The RTC rendered its decision in favor of Metrobank, ruling that the auction sale was valid since Viray did
not attempt to show interest in redeeming the properties, hence, such right has prescribed. However, the
Court of Appeals reversed the decision by declaring the auction sale conducted by the sheriff as null and
void since the sale was made during the five-year prohibition period in violation of Sec. 118 of CA 141.

Hence, this Petition where Metrobank insists that the five-year prohibition does not apply to any
obligation contracted before the grant or issuance of the free patent or homestead.

Whether or not the auction sale falls within the five-year prohibition laid down in Sec. 118 of CA 141.

YES. The law clearly provides that the lands which have been acquired under free patent or homestead
shall not be encumbered or alienated within five years from the date of issuance fo the patent or be liable
for the satisfaction of any debt contracted prior to the expiration of the period.

In the present case, the three loans were obtained on three separated dates (July 1979, June 1981 and
September 1981), while the free patents issued by the government to Viray was made in December 1982.
The public auction was conducted in October 1984. Clearly, the execution sale occurred less than two
years after the date of the issuance of the patents, thus falling within the five-year prohibition period
provided in law, regardless of the dates when the loans were incurred. The Court ruled that it is not
material whether the debt is contracted before the five-year prohibition period. What is material is that
the debt must be contracted before or prior the expiration of the five-year prohibitory period from the
date of issuance and approval of patent or grant. Such indebtedness has to be reckoned from the date
said obligation was adjudicated and decreed by the court.
Abelgas v. Comia
G.R. No. 163125
18 April 2012

In April 1971, Respondent Sevillano Comia obtained a free patent over a lot in Pinamalayan, Oriental
Mindoro with an area of more than 6,000 square meters. Subsequently, in May 1971, Comia voluntarily
conveyed half of the property to Petitioner Spouses Abelgas through a Deed of Relinquishment,
Renunciation and Quitclaim. In the said deed, it was stated that the subject portion was the sole property
of the spouses, and that it had only been included in the title of Comia for it adjoined his land. Thus, a TCT
was issued over the property, albeit in the name of Comia and Spouses Abelgas. No record was shown as
to how it came about.

Thereafter, Sposues Abelgas used their lots to secure loans with various banks. However, they defaulted
on their obligations, hence, the lots were sold at a public auction wherein the banks. Subsequently, TCTs
were issued in the name of the banks. Comia contested the issuance of these titles, claiming that he was
to sole owner of all the lots, and that the Deed of Relinquishment was fictitious and non-existent. Thus,
he demanded the cancellation of the subsequent titles before the Regional Trial Court, asserting that the
encumbrances in favor of the banks as void ab initio and obtained in bad faith as these were executed
within the period of prohibition under Sec. 118 of CA 141. In answer, Spouses Abelgas asserted that they
had been in possession of the disputed properties.

The Regional Trial Court dismissed the complaint of Comia, finding that the Deed as signed by him
voluntarily relinquished the disputed land in favor of Spouses Abelgas. Also, it upheld the validity of
mortgages since encumbrances made in favor of the banks are exempted according to the amendatory
laws of CA 141. On appeal, the Court of Appeals modified the decision of the RTC. It construed the Deed
executed by Comia as an alienation prohibited by CA 14. The CA found it was made to appear that the
disputed lands adjoined the land of Comia, where in fact, it was purchased by Spouses Abelgas.

Whether or not the Deed of Relinquishment executed by Comia is null and void for being contrary to CA

NO, however not because it was prohibited under the Sec. 118 of CA 141. The Supreme Court ruled that
alienation is an act by which the title to a property is voluntarily resigned by one person to another and
accepted by the later in the forms prescribed by law. In the present case, Comia did not transfer, convey,
or cede the property to Spouses Abelgas, but rather relinquished, renounced and quitclaimed the same.
The voluntary renunciation by Comia was not an act of alienation, but an act of correcting the inclusion of
the property in his free patent. Based on records, Spouses Abelgas already owned the property.

Further, Comia failed to dispute by evidence the presumption that Spouses Abelgas owned the property
prior to the grant of his free patent. In fact, the Deed itself explicitly declared that the disputed property
belonging to the spouses had been included in his free patent because it adjoins his land. Remarkably,
Comia never contested that the spouses had been in actual possession of the disputed property even
before his patent application. Where an application has illegally included portions of an adjoining land
that does not form part of the applicants homestead, the title issued by virtue thereof should be
cancelled. Since there is no alienation to begin with, the five-year prohibition under Sec. 118 of CA 141 is
not applicable.
Seminary of San Carlos v. Municipality of Cebu
G.R. No. L-4641
13 March 1911

Petitioner Seminary of San Carlos asks for the registration of two pieces of land included in one plan
located in the Cebu City, alleging as its source of title a royal cession from the King of Spain. On the other
hand, Respondent Municipality of Cebu denies the title of the Seminary and alleges in itself ownership of
the disputed land by stating that its title is based upon possession, and for the period required by law to
effect a title by prescription.

The disputed land is claimed by the Seminary is claimed to be a portion of one of the public squares of the
Municipality. As asserted by the Municipality, the land must be awarded to them since it appears clearly
that the disputed land there is a well-defined boundary separating from the public square the land upon
which stands the church belonging to the seminary, and the lands lie between the church and the iron
fence, and do not therefore, extend into the plaza.

In the trial court, the trial court rendered a decision in favor of the Seminary, declaring it the owner of the
disputed land and ordering the same registered in its name. The trial court ruled that the portion of
disputed land occupied by the Municipality as public plaza is land described in the submitted evidence of
the Seminary, while the Municipality presented no paper title that it owned the disputed land. A motion
for new trial was made by the Municipality to no avail. Hence, this petition filed by the Municipality,
claiming that it acquired the disputed land by adverse possession.

Whether or not the Municipality acquired the disputed land by virtue of adverse possession or

NO. As correctly ruled by the trial court, the disputed land now occupied by the Municipality as a public
plaza is the land described in the Seminarys evidence such as the Royal Cession of the land to the
Seminary, which includes not only the church building itself, but also the land where the church stands.
The land so stands extends to that of the land being claimed by the Municipality as the public plaza. To
this end, the Municipality presented no paper title on the land so occupied as a public plaza.

Further, the Court took cognizance of the document executed by the Political and Military Governor of
Cebu in June 1869, where the official certified that part of the disputed land belongs to the Seminary. This
instrument conclusively characterizes the occupation of the disputed land, and renders untenable the
position of the Municipality that its possession was adverse and should be made the basis of prescriptive
title under the Civil Code.

The Civil Code provides that any express or implied recognition or acknowledgement which the possessor
may make with regard to the right of the owner amount to an interruption of the continuity of possession.
As political and military governor of Cebu, all acts and words of his giving color to that possession are
binding upon the Municipality and conclusive as to the guilty thereof.
Ceniza v. CA
G.R. No. L-46345
30 January 1990

When Hacienda de Mandaue was subdivided for resale in 1929, Jose Ceniza and Vicente Dabon jointly
purchased Lot 627 on installment basis, and agreed for convenience that the land be registered in the
name of Vicente in February 1939. Since then, Jose, Vicente and their heirs have possessed their
respective portion of the land.

In 1954, Vicente died and his seven children succeeded to his possession of a portion of the land. In
November 1961, Lot 627 was divided into 3 parts upon the request of Jacinta Dabon and Restituto Ceniza
(Lot 627-ABC). However, the children of Vicente refused to convey Lots 627-B and C to Restituto, claiming
that Vicente was the sole and exclusive owner of Lot 627. Thus, Restituto and brother Jesus filed a
complaint for reconveyance of the disputed property in June 1967. In their answer, the Vicente children
alleged the Jose childrens right of action had already prescribed. However, the Jose children held that
Vicente held the land in trust for them as co-owners, hence, their action was imprescriptible.

The trial court rendered judgment in favor of the Jose children, finding that there existed a co-ownership
among the parties. On appeal, however, the decision was reversed, ruling that the Jose childrens right of
action had prescribed after the lapse of 20 years from the date of registration of land on February 1939
in Vicentes name.

Whether or not the registration of title in the name of one of the co-owners constituted a repudiation of
co-ownership for purposes of acquisitive prescription.

NO. Since a trust relation and co-ownership were proven to exist between the predecessors-in-interest of
both parties, the prescription did not run in favor of Vicentes heirs except from the time that they
repudiated the co-ownership and made the repudiation known to the Jose children. As provided under
Par. 5 of Art. 494 of the Civil Code, no prescription shall run in favor of a co-owner or co-heir against his
co-owners or co-heirs so long as he expressly or impliedly recognizes the co-ownership. Further, the
registration of Lot 627 in the name of Vicente created a trust in favor of his co-owner Jose, as such Art.
1452 of the Civil Code provides that if two or more persons agree to purchase property and by common
consent the legal title is taken in the name of one of them for the benefit of all, a trust is created by law
in favor of the others in proportion to the interest of each.

As a general rule, a trustees possession is not adverse and cannot ripen into a title by prescription.
Adverse possession requires the concurrence of the following circumstances:

1) Trustee has performed acts of repudiation amounting to ouster of cestui que trust;
2) Such positive acts of repudiation have made known to the cestui que trust;
3) Evidence thereon should be clear and conclusive.

Above elements are not present in this case since the Jose children have not been ousted from the land.
Even assuming that the Vicente childrens rejection was an act of repudiation, the prescription had not
yet set in when the Jose children instituted the action for reconveyance.
Ramos and Oli v. CA
G.R. No. 111027
3 February 1999

In January 1940, Lucia Bautista, predecessor of Respondent Spouses Rodolfo Bautista and Felisa Lopez, in
the cadastral proceedings involving lots 572 and 579 of the Gattaran Cadastre, was issued OCT Nos. 17811
and 17812. In January 1976, Petitioner Spouses Bernardino Ramos and Rosalia Oli, as buyers of the subject
lots, filed an action for reconveyance with damages against Spouses Bautista. They alleged that they
bought the lots from Pedro Tolentino, claimants of the lots evidenced by two Escritura de Compra
Venta, and were in open, public, adverse, peaceful and continuous pessoon of the disputed lots for not
less than 50 years. Spouses Ramos presented certified copies thereof claiming that the originals were lost
in a fire that gutted the office of their counsel. They failed to present any person who could have witnessed
the execution of the documents and likewise failed to prove that those documents were later registered.
By way of defense, Spouses Bautista argued that acquisitive prescription would no longer be possible since
the lots were already registered under the name of Lucia Bautista.

The trial court dismissed the complaint. It found that Ramos failed to file an answer in the cadastral
proceedings and also failed to avail of any petition to reopen proceedings, hence, laches had set in. It
ruled that a title becomes indefeasible and incontrovertible after the expiration of one year from entry of
the final decree of registration; and that reconveyance may only take place if the land that is claimed to
be wrongfully registered is still registered in the name of the person who procured the wrongful
registration. The decision was affirmed on appeal by the Court of Appeals.

Whether or not Spouses Ramos acquire the disputed lots by prescription.

NO. Unregistered documents bind only the parties thereto and cannot operate against the whole world
because of the basic civil law principle of relativity of contracts which provides that contracts can only
bind the parties who had entered into it, and it cannot favor or prejudice a third person. Thus, failure to
register the "Escritura De Compra Venta" resulted in the sale binding between the vendee and the vendor
alone and cannot bind their successors-in-interest.

Further, under the Cadastral Act, the original certificate of title issued to the original registrant shall have
the same effect of certificates of title granted under the Land Registration Act because no title to
registered land in derogation to that of the registered owner shall be acquired by prescription or adverse
prescription. Therefore, Pedro and Spouses Ramos have no valid claim of ownership over the disputed
lots since they failed to substantiate the nature and extent of Pedros rights over the lots.

Even assuming that the Spouses Ramos are correct in stating that the property was acquired through
mistake or fraud, as they were not able to substantiate, An action for reconveyance of real property
resulting from fraud prescribes in four (4) years from discovery of the fraud. The period is counted from
date of issuance of the original certificate of title which the law considers "constructive notice to all
persons." An action based on implied or constructive trust prescribes in ten (10) years. Failure to avail of
any of the remedies within the prescribed periods foreclosed their claims.
Inattention to titled property does not constitute abandonment for holders of the title have in their favor
the protection of the law.
Heirs of Restar v. Heirs of Cichon
G.R. No. 161720
22 November 2005



Heirs of Navarro v. IAC
G.R. No. 68166
12 February 1997



Chavez v. PEA
G.R. No. 133250
6 May 2003



Chavez v. PEA
G.R. No. 133250
9 July 2002



Chavez v. NHA
G.R. No. 164527
15 August 2007