MEMORANDUM FOR THE PETITIONER

Submitted by: Bagui, Princess Melody B. Labro, Jerueh L. Macalinga, Princess Joie C. JD2 Submitted to: Atty. D. Gasgonia

SUPREME COURT Manila, Philippines

MUNICIPALITY OF MALOLOS, BULACAN and BULACAN SCHOOL DISTRICT, Petitioner, Case No. 051819 versus For: Appeal from Order of Dismissal of RTC of Obando, Branch IX JUAN SANTOS, Respondent. x--------------------------------------------------------------x MEMORANDUM COMES NOW PETITIONERS, through SOLICITOR GENERAL and unto this Honorable Court, most respectfully submit the following memorandum: PREFATORY STATEMENT This is an appeal from an order of dismissal of RTC of Obando, Branch IX.

STATEMENT OF FACTS Spouses Pedro and Maria were the registered owners of a parcel of land. Sometime in 1940, the Municipaility of Malolos (Municipality) allegedly bought the land from Pedro and had the land in its name in the Municipal Assessors office under Tax Declaration No. 31954 from 1940 to 1988 for purposes of exemption from real estate taxes. Since then, it continually occupied the land openly and publicly in the concept of an owner through adverse possession until 1988 when it donated the land as a school site to Bulacan School District (BSD). In 1973, respondent Juan, grandchild of Pedro, took possession of the lot. Juan petitioned for the reconstitution of the Original Certificate of Title (OCT) of his grand parents land in favor of Pedro and Maria. This was granted by the trial court. Claiming the ownership to the land where the Malolos Elementary School was situated through a deed of extrajudicial settlement and a favorable judgment declaring his fathers ownership over the land, Juan claimed ownership of the property. Juan also sent letters to the Municipality and proposed to BSD its offer to sell the land. Juan Likewise requested payment of the rentals for the use of the land since 1960. BSD, in its reply, argued that it owned the land where the school was situated by virtue of the deed of donation executed by the Municipality.

ISSUE
I.

WHETHER OR NOT JUAN IS THE RIGHTFUL OWNER OF THE DISPUTED PROPERTY

II.

ASSUMING JUAN OWNED THE PROPERTY, WHETHER OR NOT A USUFRUCT EXISTS IN FAVOR OF MALOLOS.

ARGUMENTS I. JUAN IS THE RIGHTFUL OWNER Petitioner BSD strongly asserts that the Municipality of Malolos had continuous, open, and adverse possession in the concept of an owner over the disputed lot since 1940 until 1988 or for about 48 years. Significantly, it maintains that Tax Declaration No. 31954 covering the disputed lot in the name of the Municipality of Malolos contains an annotation certifying that said lot was under voucher No. 69, August, 1940 accounts. The corresponding Transfer Title No. 4812 has been issued by the Register of Deeds Office of the Treasurer of the Municipality of Malolos, Bulacan on August 3, 1940. When petitioner received the lot as donation from the Municipality on December 21, 1988, it possessed the subject lot also in the concept of an owner and continued to introduce improvements on the lot. Consequently, when respondent instituted the instant case in 1993, petitioner and its predecessor-in-interest Municipality of Malolos had possessed the subject lot for a combined period of about fifty two (52) years. Petitioner strongly avers that Pedro, the original owner of subject lot, sold it to the Municipality. At the very least it asserts that said Pedro allowed the Municipality to enter, possess, and enjoy the lot without protest. In fact, Pedro neither protested nor questioned the cancellation of his Tax Declaration No. 30235 covering the disputed lot and its substitution by Tax Declaration No. 31954 in the name of the Municipality on account of his sale of the lot to the latter. In the same vein, when Pedro and his spouse died, their children Antonio, Rafael, and Francisco who succeeded them also did not take any steps to question the ownership and possession by the Municipality of the

disputed lot until they died on June 8, 1990, June 12, 1991, and October 22, 1957, respectively. Petitioner maintains that significantly, respondent and his siblings succeeding their father Francisco as the alleged owners, from his death on October 22, 1957also did not take any action to recover the questioned lot from 1957 until 1993 when the instant suit was commenced. Petitioner avers that if they were really the owners of said lot, they would not have waited 52 long years to institute the suit assuming they have a cause of action against the Municipality or petitioner. It must be noted that a reconstitution proceeding is one in rem and is thus binding to the whole world. While assuming that laches has set in so far as it pertains to the portion of Lot 6849, specifically Lot 6849-A where the Municipality and petitioner DECS had constructed the existing school, such does not hold true for the totality of Lot 6849 as explained above. Indeed, the reconstitution proceeding being one in rem, the consequent issuance of OCT No. RO-18971 in lieu of the lost or destroyed OCT No. 2563 is valid. Anent the issue of non-notification, we agree with the observation of the courts a quo that even granting arguendo that petitioner was not notified about the reconstitution proceeding, such deficiency is not jurisdictional as to nullify and prevail over the final disposition of the trial court in a proceeding in rem. It may be deduced from the facts of the case that the reconstitution was granted after due notice, publication, and hearing. Thus, the respondent had complied with the mandatory and jurisdictional requirements set by Sections 9 and 10 of Republic Act No. 26. As an effect of such compliance, the whole world is charged with the knowledge of the application for reconstitution, and invites them to take part in the case and assert and prove their rights over the property subject thereof.

More so, while petitioner strongly asserts that the certification in Tax Declaration No. 31954 attesting to the payment of the disputed lot under Municipal Voucher No. 69 and the issuance of TCT No. 4812, which was never disputed nor controverted by respondent, should have been given evidentiary weight by the trial and appellate courts as the presumptions of regularity and validity of such official act have not been overcome, such documents cannot defeat the registered title of respondent. It was held in Director of Lands vs. Intermediate Appellate Court,195 SCRA 38 (1991), that tax declarations and realty tax payments are not conclusive evidence of ownership. Although they are proof that the holder had a claim over the property and indicates possession, they only became strong evidence of ownership when they were accompanied by proof of actual possession of the property or supported by other effective proof. In Llanes v. Republic, the Court held that tax declarations are good indicia of possession in the concept of an owner, for no one in his right mind would be paying taxes for a property that is not in his actual or constructive possession. However, in the case at bench there is lack proof of occupation and possession. What is categorically required by law is open, continuous, exclusive, and notorious possession and occupation under a bona fide claim of ownership since June 12, 1945 or earlier. Moreso, in Reyes vs. Sierra, 93 SCRA 472 (1979) where the trial courts findings that since the land registration applicant and his father has been in continuously paying taxes, that fact constitutes strong corroborating evidence of applicants adverse possession, does not carry much weight. Mere failure of the owner to pay taxes does not warrant a conclusion that there was abandonment of a right to the property. The payment of taxes on property does not alone constitute sufficient evidence of a title. Between a clear showing of ownership evidenced by a registered title and a certification in a tax declaration, albeit done in an official capacity, the former holds as

the latter is only persuasive evidence. Indeed, tax declarations in land cases per se do not constitute ownership without other substantial pieces of evidence. The records do not show and petitioner has not given any cogent explanation why the Deed of Conveyance in favor of the Municipality of Daraga, Albay and TCT No. 4812 were not presented. With clear and affirmative defenses set up by petitioner and Municipality of Daraga, Albay, it is incumbent for them to present these documents. Therefore, the unmistakable inference is that there was indeed no sale and conveyance by Juan of Lot 6849 in favor of the Municipality. Consequently, the TCTs cancelling OCT No. RO-18971 covering Lot Nos. 6849-A, 6849-B, 6849-C, 6849-D, and 6849-E were likewise validly issued. Hence, it is Juan Santos who is the rightful owner of the disputed land. II. A USUFRUCT EXISTS IN FAVOR OF MALOLOS 1. ORIGIN OF USUFRUCT In recent cases, the Court held that it is well settled that the rule of imprescriptibility of registered lands does not only applies to the registered owner but extends to the heirs of the registered owner as well. Recently in Mateo vs. Diaz, the Court held that prescription is unavailing not only against the registered owner, but also against his hereditary successors because the latter step into the shoes of the decedent by operation of law and are the continuation of the personality of their predecessor-ininterest. Hence, respondent, as heirs of Pedro Santos, the registered owner, cannot be barred by prescription from claiming the property. In view of the foregoing, usufruct existed since 1940, the time when Malolos Elementary School was constructed on a portion of the disputed lot. As provided in

Article 562 of the new Civil Code and reiterated by the Supreme Court in the case of Eleizegui v. Manila Lawn Tennis Club1, Usufruct is a real right, of a temporary nature, which authorizes its holder to enjoy all the benefits which result from the normal enjoyment of anothers property, with the obligation to return, at the designated time, either the same thing, or in special cases, its equivalent. In accordance with Article 563, usufruct is constituted by law, by the will of private persons expressed in acts inter vivos or in a last will and testament, and by prescription. Therefore, to constitute a valid usufruct, all the requirements of the law must be complied with. A usufruct over a real property, being a real right, must be duly registered in order to bind innocent third parties. Hence, Juan caused Lot No. 6849 to be subdivided into five lots. The subdivided lots were issued Transfer Certificate of Titles, TCT No. T-83946; TCT No. T-84049; TCT No. T-83948; TCT No. T-83949; and TCT No. T-83950. Consequently, it must be held that Bulacan School District (BSD), who occupy the land of Juan at his tolerance or permission, without any contract between them, are necessarily bound by an implied promise that the former will vacate the property upon demand. The status of the BSD is analogous to that of a lessee or tenant whose term of lease has expired but whose occupancy continues by tolerance of the owner. In such case, the unlawful deprivation or withholding of possession is to be counted from the date of the demand to vacate. Upon the refusal to vacate the property, the owners cause of action accrues.2 Hence, the usufruct which had therefore existed is a jus in re aliena, as reiterated by the Court in the case of Locsin vs. Valenzuela. 3

2. RULES GOVERNING THE TERMS AND CONDITIONS OF THE

1 2 3 2 Phil. 309 Heirs of Nieto vs. Municipality of Meycuayan, Bulacan, G.R. no. 150654. December 13, 2007 G.R. no. 51333 and 52289. February 19, 1991

USUFRUCT The rules governing the terms and conditions of the usufruct are the following: a. Art. 605. Usufruct cannot be constituted in favor of a town, corporation, or association for more than fifty years. If it has been constituted, and before the expiration of such period the town is abandoned, or the corporation or association is dissolved, the usufruct shall be extinguished by reason thereof; b. Art. 578. The usufructuary of an action to recover real property or a real right, or any movable property, has the right to bring the action and to oblige the owner thereof to give him the authority for this purpose and to furnish him whatever proof he may have. If in consequence of the enforcement of the action he acquires the thing claimed, the usufruct shall be limited to the fruits, the dominion remaining with the owner. The Supreme Court held in the case of Calicdan vs. Cendana,4notwithstanding the invalidity of the donation, we find that respondent has become the rightful owner of the land by extraordinary acquisitive prescription. Prescription is another mode of acquiring ownership and other real rights over immovable property. It is concerned with the lapse of time in the manner and under conditions laid down by law, namely, that the possession should be in the concept of an owner, public, peaceful, uninterrupted and adverse. Acquisitive prescription is either ordinary or extraordinary. Ordinary acquisitive prescription requires possession in good faith and with just title for ten years. In extraordinary prescription ownership and other real rights over immovable property are acquired through uninterrupted adverse possession thereof for thirty years without need of title or of good faith. c. Art. 572. The usufructuary may personally enjoy the thing in usufruct, lease it to another, or alienate his right of usufruct, even by a gratuitous title; but all the contracts he may enter into as such usufructuary shall terminate upon the
4 G.R. no. 155080, February 5, 2004

expiration of the usufruct, saving leases of rural lands, which shall be considered as subsisting during the agricultural year;
d. Section 44 of Act No. 496. An action to recover possession of a registered land

never prescribes in view of the effect that no title to registered land in derogation of that of a registered owner shall be acquired by adverse possession. It follows that an action by the registered owner to recover a real property registered under the Torrens System does not prescribe.
e. Art. 568. If the usufructuary has leased the lands or tenements given in usufruct,

and the usufruct should expire before the termination of the lease, he or his heirs and successors shall receive only the proportionate share of the rent that must be paid by the lessees; f. Art. 570. Whenever a usufruct is constituted on the right to receive a rent or periodical pension, whether in money or in fruits, or in the interest on bonds or securities payable to bearer, each payment due shall be considered as the proceeds of fruits of such right. Whenever it consists in the enjoyment of benefits accruing from a participation in any industrial or commercial enterprise, the date of the distribution of which is not fixed, such benefits shall have the same character. In either case they shall be distributed as civil fruits, and shall be applied in the manner prescribed in the preceding article. 3. LACHES The rights and actions can be lost by delay and by the effect of delay as the equitable defense of laches does not concern itself with the character of the defendants title, but only with plaintiffs long inaction or inexcusable neglect to bar the latters action as it would be inequitable and unjust to the defendant.

Laches is defined as the failure or neglect, for an unreasonable and unexplained length of time, to do that whichby the exercise of due diligencecould or should have been done earlier. Verily, laches serves to deprive a party guilty of it to any judicial remedies. Its elements are: (1) conduct on the part of the defendant, or of one under whom the defendant claims, giving rise to the situation which the complaint seeks a remedy; (2) delay in asserting the complainant's rights, the complainant having had knowledge or notice of the defendant's conduct as having been afforded an opportunity to institute a suit; (3) lack of knowledge or notice on the part of the defendant that the complainant would assert the right in which the defendant bases the suit; and (4) injury or prejudice to the defendant in the event relief is accorded to the complainant, or the suit is not held barred. The elements of laches, although applicable to imprescriptible actions, must be proven positively as held by this Honorable Court in the case of Felix Gochan and Sons Realty Corporation. It must therefore be established by the presentation of evidence of the same and not established by mere allegations. This was further reiterated by the Court in the case of Santiago vs. Court of Appeals wherein it held that no absolute rule exists as to what constitutes laches but rather to be determined according to its particular circumstances, or simply put on a case to case basis. In the case at bar, the presence of laches is evidentiary from the presentation of facts. The first element is present in that in 1940, the Malolos Elementary School was constructed on a portion of the disputed lot. This fact was further supported with the testimony of Mrs. Antonio Millar, a retired government employee and resident of Bagumbayan, Malolos, Bulacan since 1955. Such continuous and adverse possession therefore of the disputed lot commenced since from 1940 to 1988 when said lot was donated to the BSD. This followed the introduction of additional buildings and improvements on the disputed lot in continuously being used for public education. It can

therefore be inferred that the total period of exclusive and complete utilization of the lot was more than fifty-two (52) years. As to the second element of laches, neither respondent nor his predecessors-ininterest exhibited any act evidencing that they indeed protected their rights of ownership. No action was ever taken, whether administrative or judicial, nor did respondent questioned or protested Malolos or petitioners adverse occupation of the disputed portion of the lot. Again, it is emphasized that as early as 1940, a school building was already constructed over a portion of the disputed lot. Respondent testified that he came to know of said lot only in 1973 when he was 23 years old and took possession of it since. Contrarily, however, also as respondent testified, he only came to know in 1991 of the school, now BSD, to have been built on the same lot. In lieu of this, this Honorable Court had previously held in the parallel case of DepEd vs. Onate, that, common experience tells us that one who owns a property and takes possession of it cannot fail to discover and know that an existing elementary school was built and standing on the lot from the time that the owner starts possessing a property. Assuming arguendo, that respondent indeed only came to know of such encroachment or occupation in 1991, his rights cannot be better than that of his predecessors-in-interest since respondents right over the lot originated from them. It is here that we invoke the principle of the spring cannot rise higher than its source which therefore implies that respondent cannot have better rights over said lot than his predecessors-in-interest. The latter and respondent had 52 years to assert their right of ownership and therefore their inaction and delay in doing so is excessive and unjustified.

The third element of laches may be inferred from the the fact that petitioner did not know nor anticipate that their possession and occupancy of the portion of the disputed lot would later be questioned. Petitioners introduction of improvements and further construction of additional school buildings and facilities on the school site proves such contention. Petitioner had no reason to believe that respondent would assert any right over the lot after the lapse of such long occupation supported by a tax declaration and registration with the Municipality as certified and testified by the Municipal Assessors Office. Finally, the last element is likewise proven by the antecedent facts that clearly show grave prejudice to the government, in general, and to petitioner, in particular, if the instant action is not barred without even considering the cost of the construction of the school buildings and facilities and the deleterious effect on the school children and affected school teachers and personnel if said portion of the lot would be returned to respondent. 4. NON-EXTINGUISHMENT OF THE USUFRUCT In continuance of the above argument, it is undisputed that the application of laches is addressed to the sound discretion of the court as its application is controlled by equitable considerations. In the case at bar, application of the principle of laches would, as a consequence, actually subvert the ends of justice more than promote it as it is unjust for the State and the affected citizenry to suffer after respondent and his predecessors-ininterest had slept on their rights for 52 years. It is therefore apparent that despite the valid title over the disputed lot, respondent cannot now take possession over the same on the ground of laches. The case of De Vera-

Cruz v. Miguel supports this argument in that the principle reiterated is as follows: The law provides that no title to registered land in derogation of that of the registered owner can be acquired by prescription or adverse possession. Nonetheless, while it is true that a Torrens Title is indefeasible and imprescriptible, the registered landowner may lose his right to recover the possession of his registered property by reason of laches. In essence, there is a host of jurisprudence that hold that prescription and laches could not apply to registered land covered by the Torrens system and that such equitable principle may not prevail against a specific provision of law, since equity, which has been defined as justice outside legality is applied in the absence of and not against statutory law or rules of procedure (Mateo vs. Diaz; G.R. No. 137305; January 17, 2002; 374 SCRA 33). However, an exception is hereby presented in the case at bar in the full consideration of the pertinent circumstances affecting the possession and ownership of the parties. CONCLUSION The case at bar is no more than a simple determination of ownership and a contiguous question of who, as a result, is a mere beneficiary holder. Ownership of the subject property evidently lies with herein respondent in view of the Transfer Certificate of Titles issued in his name. RELIEFS WHEREFORE, premises considered, it is most respectfully prayed unto this Honorable Court that the instant petition be. Other reliefs, just and equitable, are likewise prayed for.