Heirs of Mario Malabanan vs Republic of the Philippines

704 SCRA 561

Nature of Action: Motions for reconsideration of the parties on the CAs denial of application of
petitioners for the registration of a parcel of land

Case Decisions:

RTC: Granted the petition Malabanan’s application for Land Registration

OSG: contested the RTC Decision

CA: Reversed RTC Decision, dismissed the application for registration of Malabanan

SC: Petition for Motion for Reconsideration DENIED

FACTS:

1. On Feb 20, 1998, Mario Malabanan applied for land registration for his 71,324 sqm; He presented
the following proof:

a) CENRO Certification dated June 2001, attesting that the land is classified as alienable and
disposable as of March 1982;

b) his claim that he bought the parcel of land from Eduardo Velazco who claims that land is
occupied by his predecessors; presented Tax Declaration issued in 1948;

c) He further attests that he has been in open, continuous, uninterrupted, public and adverse
possession and occupation of the land for more than 30 years.

2. The court approves the application for land registration

3. The OSG contested the decision claiming the following:

a) The land should have been declared alienable and disposable prior to June 12, 1945, citing
the case of Herbieto

b) The 30 year period can run against the state (public land), but this has to be so after the
land has been declared alienable and disposable

c) Malabanan failed to prove that the property belonged to the alienable and disposable land
of public domain

4. The CA reversed the RTC ruling and dismissed the application for registration of Malabanan based
on the following:

a) Sec 24 (1) of Property Reigstration Decree:

i. Any period of possession PRIOR to the classification of the land as alienable and
disposable was inconsequential and SHOULD BE EXCLUDED from the computation of
the period of possession (therefore Malabanan is in open possession of alienable and
disposable land for 16 years only - since 1982 cert)
5. To appeal the CA’s decision, petitioners filed for MR before the SC depending on:

a) the Naguit Doctrine, where the property involved is an agricultural land, any possession
thereof prior to its declaration as alienable and disposable COULD be counted in the
reckoning period of possession to perfect title under the Public Land Act and the PRD ;

b) The ruilung of Republic v TAN properties inc, that the property ipso facto converted into
private property by reason of the open, continuous, exclusive and notorious possession by
their predecessors in interest of an alienable land of the public domain for 30 years. WHAT
IS ESSENTIAL IS THAT THE PROPERTY has been CONVERTED into PRIVATE PROPERTY
through PRESCRIPTION at the time of application REGARDLESS if the said land was
previously classified as publick domain or NOT.

c) The mere reclassification of land as alienable or disposable opened it to acquisitive

prescription under the Civil Code (10 yrs if with title; 30 years if without title)

6. The Supreme Court held affirmed the denial

ISSUES: WON Malabanan’s possession of the land has ripened to ownership (by prescription)

WON the heirs can register the land

HELD:

The SC dismised the petition for MR on the grounds that Malabanan is not qualified to register
the land. The court laid down the following principles for land acquisition and registration:

1. Under Sec 14 (1) of PD 1529 - those who have been in an open, continuous, exclusive
and notorious possession and occupation of alienable and disposable land since June 12,
1945; this presupposes an existing right, and the idea of prescription. Under this guide, the
land need not to be alienable and disposible during the entire period of possession (it is
enough that possession commenced on or before June 1945); Since a Tax Dec issued in
1948 was presented, Malabanan was not able to substantiate his claim that he is in open
possession since 1945 (thus there is a need to determine the reclassification of the land to
alienable and disposable)

2. Under Sec 14 (2) of the same, the prescription period of acquiring ownership over
PATRIMONIAL PROPERTY, there must be an express declaration that such property is
already patrimonial. In the case at bar, the reckoning point is the reclassification of the land
to alienable and disposable on March 1982. Here, prescription has not yet been met as at
the time of application of registration, Malabanan is in possession of alienable and
disposable land for merely still 16 years.

Basis of the above provisions/Ratio:

 1. Regalian Doctrine - a legal concept that espouses that the STATE is the source of any
asserted right to ownership of land, meaning that all lands of the public domain belong to the
state and are INALIENABLE, may not be alienated or disposed

2. Classification of Land: Public dominion if: for public use; intended for public service of for
the development of national wealth; Private Ownership if owned by private persons

3. PUBLIC DOMINION:

a) 1935 Consti: Agricultural, Timber and Mineral (Mining) 1935 Const

b) 1973 Const: Agri, Timber, Inustrial or commercial, Residentail, Resettlement,

Grazing Land

c) 1987 Consti: Agri, Timber, Mining and National Parks

4. EXCEPTION to the REGALIAN DOCTRINE: Only agricultural lands of the public domain may
be alienated; and this must be done through a POSITIVE ACT OF THE EXECUTIVE DEPARTMENT or
until Congress or the President declares that the state no longer intends the land to be used for
public service/devt of national wealth. Until such time, REGALIAN Doctrine is applicable.

5. Land belonging to the state that is for neither public use or public service forms part of
the Patrimonial Property of the State

6. Land that does not belong to the patrimonial property of the state, is of private
ownership

ASSOCIATED INSURANCE AND SURETY CO. Vs ISABEL IYA

GR No L-10837-38

Nature of Action: Appeal over RTC decision

Facts:

1 .Sps. Adriano and Lucia Valino, owners and possessors of a house constructed on a lot in Grace Park
Subd. Caloocan supported by a tax declaration;

2. To be granted a credit line to purchase rice from NARIC, they executed a CHATTEL MORTGAGE over
the house as a guarantee for a bond amounting to P11,000 with Assoc. Insurance and Surety Co.;

3. This CM was duly registered in the CM registry;

4. The reason why there is no REM is that the lot where the house was constructed upon is still under
the name of the developer, as it was still being amortized by Spouses;

5. Subsequent to the CM registration, the spouses were able to settle balance with developer and a
TCT was issued in October 1952;

6. SPS., having failed to pay obligations with NARIC, the surety company compelled to call upon the
undertaking; and proceeded to foreclose the CM; The property was auctioned and was awarded to
the Assoc Insuarance on Dec 26, 1952

7. In 1953, Assoc learned that Sps secured a loan with defendant IYAand executed a REM over the lot
covered by the TCT and the improvement thereon.

8. ASSOC (Surety Company) instituted a civil case against Sps. Valino and third party mortgagee IYA
praying for exclusion of the house from the REM executed in favor of IYA

9. Defendant IYA claimed that REM does not exclude the improvement and she has acquired real right
over the house and lot; as such the CM is null and void, rendering the auction sale null and void as
well.

10. In a separate civil action IYA filed a complaint against the VALINOS and ASSOC stating that the
contract of mortgage executed by spouses secured the loan IYA granted to spouses with
corresponding interest and terms of payment;

11. She avers that with the REM, ASSOC is barred from claiming rights over the building

12. Now defendant ASSOC in its answer to IYA’s complaint insisted on its right over the building,
claiming that at the time of execution of the CM over the house, the lot is NOT under the name of SPS
VALINO and is therefore considered a personal property

13. The two cases were jointly heard in CFI, where the court ruled in favor of ASSOC:

ASSOC CM was preferred and superior over the REM subsequently executed in favor of
IYA.Residential building was therefore ordered to be excluded from the foreclosure IYA prayed for;
Instead, she can exercise the right of a junior encumbrance.

ISSUE: There is no question over Iya’s right over the land by REM; However, as the building has
been subject of two mortgages, issue is to which of these encumbrances should receive preference
over the other
 RULING: The portion of the decision of the lower court in the two cases appealed from holding
the rights of the surety company over the building superior to that of IYA, and excluding the building
from the foreclosure prayed for by the latter is REVERSED and appelant IYA’s right to foreclose not
only the land but also the building is recognized. (THEREFORE, REM over CM)

Ratio:

Article 415 enumerates the immovalble property; while it is true that real estate connotes
land and building constructed thereon, and it is obvious that the building is included, it must be
treated as separate and distinct from the land; ART 415 contemplates that a building in itself is
an immovable property, irrespective of whether or not said building and land on which it is
adhered to belong to the same owner.

Why? To hold the building as personal, and divested of its character, is to cloak the building
with an uncertain status made dependent on the ownership of land; The execution of CM
covering the said building is invalid; the act of registering the CM produced no effect for where
the interest conveyed is in the nature of real property.

GAVINO TUMALAD vs Alberta Vicencio and Emiliano Simeon

GR No. L-30173

Nature of Action: Appeal of defendnats to the court for ejectment ruling

Facts:

1. Vicencio and Simeon, executed a CM over a house built on rental lot

From Madrigal and Company, in favor of Tumalad.

2. The CM was executed to guarantee a loan payable in one year with 12% interest rate.; registered in
the ROD of Manila in September 1955

3. Failure of payment of mortgage resulted to Extrajudicial foreclosure of property and the house was
sold at a public auction to the highest bidder. Tumalad won the bid as he was the highest bidder

4. Certificate of Sale was issued and the plaintiff (TUMALAD) now filed an action for ejectment against
the defendants as now, Tumalad is the proper owner.

ISSUE: WON the subject matter of the mortgage (house of strong materials) be the object of a CM

WON the CM was null and void ab initio because only personal properties can be subject of a
CM

Court Decisions:

MTC: Defendants to vacate the premises and ordered te defendant to pay rent until the
premises is completely vacated; Appealed - also dismissed

Course of action of Defendants- appellants:

 Appeal and filed a Motion to Dismiss based on the grounds:

1. The MTC did not have jurisdiction to try the case because the issue involved is ownership
and there is no allegation of prior possession

2. There was a failure to prove prior demand pursuant to Sec 2 Rule 72 of the Rules of
Court

CA: Dismissed, decision against defendants, ordering them to pay jointly and seveerally the
former monthly rent, et. Al,; Motion for dismissal of the appeal, execution of the bond and
withdrawal of deposited rentals was denied for the reason that the liability therefor was
disclaimed and still being litigated

SC Ruling:

The motion was dismissed in view of the foregoing:

1. The defendant- apellants have no cause of action and motion was prematurely filed.

2. The general doctrine is that buildings are considered as immovalble properties; the
exception to this when through stipulation, parties may agree to treat as personal property
those by nature would be real property.

3. This is anchored on the principle of ESTOPPEL.

Why did the court recognize the CM over the building when jurisprudence has held that a building is
necessary incorporated to the land, and may be distinct and separate and is expressly indicted in Art
415 as immovable?

1. The view that parties to a deed of chattel mortgage may agree to consider a house as
personal property for the purposes of said contract, “is good only insofar as the contracting parties
are concerned. It is based, partly upon the principle of estoppel” (Evangelista vs Alto Surety)

2. The case is of that of a building on a rented land; this is held to be a personal property, not
only because of the deed of mortgage considered it as such, but BECAUSE the object placed on land
by one who had only a temporary right to the same does not become immobilized by attachment
(DAVAO Sawmill Co. Inc vs Castillo)

3. The contract executed by the defendants, expressly designated as Chattel Mortage specifically
provides that the mortgagor voluntarily CEDES, SELLS and TRANSFERS by way of Chattel Mortgage,
the property together with its leasehold rights over the lot on which it is constructed and
participation.

Points to remember:
 * Estoppel does not apply to question of law. WON the property is personal or real is a question
of law, which is for the courts to decide and NOT for the parties to determine; The parties CANNOT
and SHOULD not be allowed to change the qualification to such property

In the case at bar, the defendants - appellants were the ones who executed the CM, and
specifically conveyed the building as personal property, are the very same party that questions the
qualification of the property (real, not personal), and the validity of CM

Simply, estoppel is the principle where one cannot deny what one has previously asserted.

* Redemption - debtor-mortgagor, at any time within one year from and after the date of
auction sale may redeem the property sold at EJF sale;

The rentals receivable from tenants, although, may be collected by the purchaser during the
redemption period, do not belong to him, but still to the debtor/mortgagor.

The mortgagor is entitled to remain in possession during the redemption period of property and
to collect rents.

* Fraud does not render the contract void, merely voidable.

PRUDENTIAL BANK vs Hon. Panis, CFI Zambales, et al

GR L-50008

Nature of Action: Review on certiorari of CFI decision that the deedds of REM executed by respondent
spouses in favor of petitioner bank is null and void

Facts:

On November 1971, plaintiff spouses Magcale secured a loan from Prudential Bank amounting
to P70K; this was secured by REM over the 2 storey-residential building; registered in Zambales

Note that the structure was described asL Building with warehouse spaces, generally
constructed of mixed hard wood and concrete material and the only improvement of the lot.

Conveyance of building by way of mortgage includes the right of occupancy on the lot

Upon execution of the REM on building, an application for Sales Patent is currently being
proicecessed by mortgagors and for issuance by the Bureau of Lands; Mortgagee bank is AWARE
of this deficiency

On May 1973, an additional loan was granted by Prudential bank to spouses, in the amount of P20K;
this was secured by REM over same properties, registered in Olongapo City

On April 1973, a Miscellaneous Sales Patent was issued, possessory rights over which were mortgaged
to defendant Prudential Bank in favor of palintiff; Failure to fulfill the obligation to bank, an EJF was
commenced. The auction sale proceeded with Bank as the highest bider, despite written request from
plaintiffs through counsel to desist from going with the scheduled public auction.

CFI declared the deeds of REM null and void

On December 1978, petitoner bank filed a Motion for Reconsideration

ISSUES: WON the Deeds of REM are valid

WON the supervening issuance in favor of private respondents of Miscellaneous Sales

Patents and the covering OCT P-2554 on May 1972 have the effect of invalidating the Deeds of REM

Summarily, the issue is: Whether or Not a valid REM can be constituted on the building erected on the
land belonging to another. (YES)

Ruling:

The Supreme Court modified the CFI ruling declaring the REM of 70k is valid but the ruling of REM of
20k is null and void.

Ratio:

Article 415 of CC, provides that the inclusion of building, separate and distinct from the land, in said
provision can only mean that a building is by itself and immovable property.

It is true that a mortgage of land necessarily includes, in the absence of stipulation of the
improvements theren, buildings by itelf may be mortgaged apart from the land on which it is built.
Still, by virtue of REM, even if dealt with separately and apart from land.

The first REM of 70K is valid because it was executed and registered in the ROD Zambales prior to the
issuance of the Misc. Sales Patent; this is so because it was executed before the governement was
divested of its title to the land. It is an established principle that a REM for the building will considered
immovable property even if dealt with separately and apart from Land (Leung Yee vs Strong
Machinery Co); and that possessory rights over said properties before title is vested on the grantee
may be validly transferred or conveyed as in Deed of Mortgage (Vda. De Bautist vs Marcos)

In this light, it is evident that the mortgage executed on his own building which was erected on the
land belonging to the governement is to all intents and purposes a valid mortgage.

The Second REM of 20K is null and void as it was executed and registered in the ROD, post
issuance of the Misc. Sales Patent. Note that the second loan was granted in May, where the Misc.
Sales Patent was issued in April.
 Misc. Sales Patents are land acquired through the Public Land Act, and the mortgage falls the
prohibitions stated in Secs 121, 122 and 234 of Public Land Act, and is therefore null and void.
Secretary of DENR vs YAP

GR No 167707

Nature of Action: Petition for review on certiorari of the decision of CA affirming the RTC decision

Decisions:

RTC: Granted the petition for declaratory relief filed by respondents-claimants Mayor Yap; and
ordered survey and titling of Boracay

CA: Affirmed the RTC Decision

Facts:
April 14 1976, DENR approved the National Reservation Survey of Boracay, which identified several
lots as being occupied or claimed by named persons

Nov 10 1978, PD 1801 issued by Pres Marcos declared Boracay island as a tourist zone and marine
reserve. This Proc 1801 precluded them from filing an application for a judicial confrimation of
imperfect title

Subsequently, respondents-claimants Mayor Jose Yap, et. Al, alleged that Proc No. 1801 and PTA
Circular raised doubts on their right to secure titles over their occupied lands. They claim that they
tehmselves or through their predecessors-ininterest had been in open, continuous, exclusive and
notorious possession and occupation in Boracay since June 12, 1945. This claim is supported by tax
payments made thereon the properties.

The Proc did not place Boracay beyond the commerce of man as the proclamation classified the island
as Tourist Zone; The respondent claimants aver that through the Public Land Act, they had the right to
register the lots under their name through judicial confirmation of imperfect titles.

OSG opposed the petition for declaratory relief, contends that Boracay was an unclassified land of
public doamain. It formed part of the mass of lands classified as PUBLIC FORESTS, by virtue of PD
705.

In 2006, PGMA issued Proc No. 1064, opening the island partially into a forest reserve, and
recognizing that Boracay is a tourist (Boracay is a reserved forest and agricultural land)

ISSUE: WON unclassifed lands of public domain are automatically deemed agricultural land and
may therefore be classifed as alienable and disposable.

Ruling:

No. The claimants may not be granted judicial confirmation of imperfect title anchored on the three
laws and executive acts (Phil Bill 1902, Proc 1801 and Proc 1064

The Court upholds the Regalian principle and the power of the executive to reclassify lands of public
dominion. All lands not otherwise appearing to be clearly within private ownership are presumed to
belong to the state. Thus, all lands that have not been acquired from the government, either by
purchase or grant, belong to the state as part of the inalienable public domain.

To prove that the land subject of an application for registration is alienable, the applicant must
establish the existence of a positve act of the government (Executive Order, Procalamation or
Congress legislation, administrative actions and investigative reports of the Bureu of Lands); Without
such, we rever to the Regalian doctrine.

In the case at bar, Prior to Proc No 1064, Boracay had never been expressly and administratively
classified under any grand divisions; It is therefore unclassified land of the public domain.

Take note also that in PD 705, exception is for lands already covered by existing titles, Boracay was an
unclassified land of public domain- categorized all unclassfied lands of public domain as public forest.

Where a forest, is defined, as a mass of lands of the public domain which has not been the subject of
present system of classification for the determination of which lands are needed for forest purpose or
not.

The court reieterates the two requisites for judicial confirmation of imperfect or incomplete title:

1. Open, continuous, exclusive and notorious possession and occupation of the subject land by
himself or through his predecessors-in interest under a bonafide claim of ownership since time
immemorial or June 12, 1945

2. The classifcation of the land as alienable and disposble land of public domain.