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epttblic of tbe ftbilippinen

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FIRST DIVISION

REPUBLIC OF THE G.R. No. 236381

PHILIPPINES,
Petitioner, Present:

- versus - PERALTA, CJ, Chairperson,

CAGUIOA,
SIXTO SUNDIAM, L & F J. REYES, JR.,
MARKETING, INC., JOSE MA. LAZARO-IAVIER, and
LOPEZ, ROSENDO D. BONDOC, LOPEZ, JJ
AUGUSTO F. DEL ROSARIO, and
LIBERTY ENGINEERING Promulgated:
CORPORATION,
Respondents. AUG 2 7 2020
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
DECISION

CAGUIOA, J.:

Before the Court is the Petition I under Rule 45 of the Rules of Court
filed by petitioner Republic of the Philippines (Republic), represented by the
Office of the Solicitor General (OSG), assailing the Decision2 dated
December 19, 2017 of the Court of Appeals3 in CA-G.R. CV No. 107773
affirming the Order4 dated Octo~er 7, 2015 of the Regional Trial Comi of
Angeles City, Branch 56 (RTC) in Civil Case No. 79-3209, dismissing the
revers10n complaint filed by the Republic on the ground of equitable
estoppel.

The Facts and Antecedent Proceedings

The CA Decision narrates the facts of the case as follows:

In a Complaint dated [October 16, 1979] filed before then Court of
First Instance of Pampanga [(CFI)], the Republic, through the [OSG],
alleged that a portion of the Fort Stotstenberg Military Reservation in
Pampanga, now Clark Air Force Base, was surveyed, segregated and

1
Rollo, pp. 10-38, excluding Annexes.
~ ld. at 39-49. Penned by Associate Justice Rodi! V. Zalameda (now a Member of the Court), with
Associate Justices Japar B. Dimaampao and Renato C. Francisco concurring.
' Seveilth Division.
4
Rollo, pp. 94-97. Penned by Judge lrin Zenaida S. Buan.
 ,1

Decision 2 G.R. No. 236381

designated as Lot 727, Psd-528, Angeles Cadastre, in favor of one Jose P.

Henzon. It was further subdivided into seven (7) lots, including Lot 727-
G, allegedly without the approval or signature of the Director of Lands.

On [October 27, 1967], Lot No. 727-G was fu1iher subdivided into
63 lots, known as Csd-11198 and approved by the Director of Lands. One
of the registered owners thereof, Sixta Sundiam [(Sundiam)], [respondent]
herein, caused the registration of Lot No. 986 and thus, [Original
Certificate of Title (OCT)] No. 80 was issued. Later on, Sundiam sold the
said prope11y to [respondent] L & F Marketing, Inc. [(L & F, Inc.)], which
in turn sold the same, until the property passed on to [respondent] Libe11y
Engineering Corporation [(Liberty Corp.)], now under [Transfer
Ce11ificate of Title (TCT)] No. 34959. However, it was later on discovered
that the said lot is within the Clark Air Force Base, a military reservation,
prompting the Republic to file a reversion case to declare the titles on the
said property null and void.

After the CFI issued summons, [respondents] Jose Ma. Lopez,

Rosendo D. Bondoc, Augusto F. de! Rosario and Liberty [Corp.], as
transferees of the property, filed an Urgent Motion praying that the comi
direct the Republic to furnish them a copy of the sketch plan showing the
disputed lot being within the Clark Air Force Base. The CFI granted the
same through an Order dated [March 10, 1980], suspending the filing of
the Answer until the said sketch plan had been furnished [respondents].

The Republic, however, failed to comply, hence, the CFI ordered

the case be sent to the archives via an Order dated [April 30, 1982]. A year
thereafter, the Republic filed a Motion to Declare Defendants in Default
but the CFI issued an Order on [February 17, 1983] holding in abeyance
action thereon pending motion from the Republic for the revival of the
case.

Now, after twenty-four (24) years, the Republic, through the OSG,
filed a Manifestation and Motion before the [RTC] praying for the revival
of the case and the service of summons through publication on
[respondents] Sundiam and L & F, Inc.

[Respondent] Liberty [Corp.] filed a Motion to Dismiss, arguing

that the Republic's cause of action was already barred by prescription and
laches. Moreover, the disputed property had already passed on to innocent
purchasers for value, including Libe1iy [Corp.] The Republic opposed the
same and maintained that neither prescription nor laches would bar its
claims.

On [October 7, 2015], the [RTC] rendered the assailed Order

dismissing the Complaint of the Republic, the dispositive portion of which
states:

xxxx

WHEREFORE, m view of the above

considerations, the motion to dismiss is hereby granted.
The complaint is DISMISSED.

xxxx

SO ORDERED.
Decision 3 G.R. No. 236381

x x xx

The Republic sought a reconsideration, but the same was denied in

an Order dated [March 15, 2016.]

xxxx

The Republic filed its Notice of Appeal which was given due
course by the [RTC]. Hence, the xx x Appeal [to the CA.] 5

[Petitioner, then, filed an appeal to the CA, raising the sole issue
that the RTC erred in applying the doctrine of equitable estoppel against
the Government to bar it from recovering land covered by a military
reservation. ]6

Ruling of the CA

In its Decision dated December 19, 201 7, the CA denied the

Republic's appeal. The CA agreed with the RTC's disquisition that the
Republic is guilty of laches. 7

The CA admitted that:

x x x [It] is aware that prescription does not run against the
government. When the govenm1ent is the real party in interest, and is
proceeding mainly to asse1i its own rights and recover its own property,
there can be no defense on the ground of laches or limitation. And,
[j]urisprudence also recognizes the State's immunity from estoppel as a
result of the mistakes or errors of its officials and agents. 8

However, the CA pointed out that the disputed property, which the
Republic has alleged to be within the Clark Air Base,9 a military reservation,
had already passed on to several third persons .10 The CA stated that it is only
fair and reasonable to apply the equitable principle of estoppel by laches
against the government to avoid an injustice to i1mocent purchasers for
value. 11 Further, the CA expressed that it adheres to the Court's ruling in
Republic v. Umali, 12 that the government cannot institute reversion
proceedings against transferees in good faith and for value, upholding the
indefeasibility of a Torrens title. 13

The dispositive portion of the CA Decision states:

WHEREFORE, premises considered, the instant Appeal is hereby
DENIED. Accordingly, the assailed Order dated [October 7, 2015] issued
by Branch 56, Regional Trial Court of Angeles City is AFFIRMED in
toto.

Rollo, pp. 40-43 .

Id. at 43.
Id. at 45.
s· Id. at 44. Citations omitted.
9
Clark Air Force Base in some parts of the rollo .
10 See rollo, pp. 46, 47.
11
Id. at 47. Citations omitted.
12 G.R. No. 80687, April 10, 1989, 171 SCRA 647.
n Rollo, pp. 47-48.
 '
Decision 4 G.R. No. 236381

SO ORDERED. 14

Hence, the instant Petition, without the Republic seeking

reconsideration of the CA Decision. Respondent Liberty Engineering
Corporation filed a Comment/Opposition 15 dated July 20, 2018.

The Issue

The Petition raises the sole issue: whether the CA erred in a question
of law in ruling that the Republic is guilty of estoppel by laches. 16

The Court's Ruling

The Petition is impressed with merit.

The Republic's interest in reversion cases is statutorily recognized.

Section 101 of Commonwealth Act No. 141, 17 as amended, or the Public
Land Act provides: "All actions for the reversion to the Government of lands
of the public domain or improvements thereon shall be instituted by the
Solicitor-General or the officer acting in his stead, in the proper courts, in
the name of the Commonwealth of the Philippines." Since this reversion
case was filed in 1979, the Complaint was verified by the then Director of
Lands, Ramon N. Casanova. 18 The Court takes judicial notice that the Clark
Air Base was transferred in 1993 to the Bases Conversion and Development
Authority by virtue of Proclamation No. 163, 19 series of 1993.

Pursuant to Article 1431 of the Civil Code, "[t]hrough estoppel an

admission or representation is rendered conclusive upon the party making it,
and cannot be denied or disproved as against the person relying thereon."
Article 1433, in tum, classifies estoppel as either in pais (by conduct) or by
deed. The classification is based on the common classification of estoppels
into equitable and technical estoppel. 20 In addition to estoppel in pais and by
deed or record, estoppel may be by laches. 21 Thus, laches is but a form of
estoppel. It is in the concept of laches that estoppel is to be understood in
this ruling of the Court.

14
Id. at 48.
15
Id. at 159-179.
16
Id. at 17.
17
AN ACT TO AMEND AND COMPILE THE LAWS RELATIVE TO LANDS OF THE PUBLIC DOMAIN, November
7, 1936.
18
Rollo, p. 81.
19
CREATING AND DESIGNATING THE AREA COVERED BY THE CLARK SPECIAL ECONOMIC ZONE AND
TRANSFERRING THESE LANDS TO THE BASES CONVERSION AND D EVELOPMENT AUTHORITY PURSUANT
TO REPUBLIC ACT NO. 7227, April 3, 1993.
20
Desiderio P. Jurado, COMMENTS AND JURISPRUDENCE ON OBLIGATIONS AND CONTRACTS ( 1987 Ninth Rev.
Ed.), p. 621.
21
"A party may be estopped or barred from raising a question in different ways and for different reasons.
Thus we speak of estoppel in pais, or estoppel by deed or by record, and of estoppel by !aches." Tijam
v. Sibonghanoy, No. L-21450, April 15, 1968, 23 SCRA 29, 35.
 Decision 5 G.R. No . 23638 1

In a general sense, laches is the failure or neglect, for an unreasonable

and unexplained length of time, to do that which, by exercising due
diligence, could or should have been done earlier. Stated differently, it is
negligence or omission to asse1i a right within a reasonable time, warranting
a presumption that the paiiy entitled to assert it either has abandoned it or
declined to assert it. 22 The doctrine of laches or of "stale demands" is based
upon grounds of public policy which requires, for the peace of society, the
discouragement of stale claims, and is not a mere question of time but is
principally a question of the inequity or unfairness of permitting a right or
claim to be enforced or asserted. 23

The four elements of the equitable defense of laches as held by the

Court in Go Chi Gun v. Co Cho24 are: (1) conduct on the part of the
defendant, or of one under whom he claims, giving rise to the situation of
which complaint is made and for 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 and 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 on which he bases
his suit; and (4) injury or prejudice to the defendant in the event relief is
accorded to the complainant, or the suit is not held to be barred. 25

The scope of the application of estoppel is, however, limited by

Article 1432 of the Civil Code, which provides:

ART. 1432. The principles of estoppel are hereby adopted insofar

as they are not in conflict with the provisions of this Code, the Code of
Commerce, the Rules of Court and special laws.

As well, jurisprudence on whether laches may bar the government

from instituting a reversion case has been consistent. In the 1926 case of
Government of the United States of America v. The Judge of the Court of
First Instance ofPampanga, 26 it was ruled that:

The contention that the petitioner was guilty of laches in not taking
timely advantage of the various other remedies available may be best
answered by quoting the language of the ~upreme Court of the United
States in the case of United States vs. Des Moines Navigation & Railroad
Company, 142 U.S., 510 (citing U.S . vs. Nashville, Chattanoga and St.
Louis Railway Company, 118 U. S., 120; U. S. vs. Insley, 130 U. S., 263):
"When the government is the real party in interest, and is proceeding
simply to assert its own rights and recover its own property, there can be
no defense on the ground of laches or limitation." xx x27

22
Tijam v. Sibonghanoy, id. at 35.
23 Id.
24
96 Phil. 622 ( 1955).
25
Id. at 637.
26 49 Phil. 495 ( 1926).
27
Id. at 500.
Decision 6 G.R. No. 236381

This doctrine is the general rule and has been reiterated in, among others,
Land Bank of the Philippines v. Republic, 28 Reyes v. Court of Appeals29 and
Republic v. Court ofAppeals.30

However, in the case of Estate of the Late Jesus S. Yujuico v.

Republic, 31 the Court cited the following instance when estoppel by laches
may be raised as a defense against the State or its agents:

Assuming that the Parafiaque RTC has jurisdiction over the

reversion case, still the lapse of almost three decades in filing the instant
case, the inexplicable lack of action of the Republic and the inquiry this
would cause constrain us to rule for petitioners. While it may be true that
estoppel does not operate against the state or its agents,32 deviations have
been allowed. In Jvfanila Lodge No. 761 v. Court ofAppeals, we said:

"Estoppels against the public are little favored.

They should not be invoked except in rare and unusual
circumstances, and may not be invoked where they would
operate to defeat the effective operation of a policy adopted
to protect the public. They must be applied with
circumspection and should be applied only in those special
cases where the interests of justice clearly require it.
Nevertheless, the government must not be allowed to
deal dishonorably or capriciously with its citizens, and
must not play an ignoble part or do a shabby thing; and
subject to limitations x x x, the doctrine of equitable
estoppel may be invoked against public authorities as
well as against private individuals." 33 (Emphasis
supplied.)

Equitable estoppel may be invoked against public authorities when

as in this case, the lot was already alienated to innocent buyers for value
and the government did not undertake any act to contest the title for an
umeasonable length of time.

In Republic v. Court of Appeals, where the title of an innocent

purchaser for value who relied on the clean certificates of the title was
sought to be cancelled and the excess land to be reverted to the
Government, we ruled that " [i]t is only fair and reasonable to apply the
equitable principle of estoppel by laches against the government to
avoid an injustice to innocent purchasers for value (emphasis
supplied)."34 xx x

xxxx

28
G.R. No. I 50824, February 4, 2008, 543 SCRA 453, 468.
29
G.R. No. 94524, September 10, 1998, 295 SCRA 296,313.
30
G.R. No. 79582, April 10, 1989, 171 SCRA 721,734.
31
G.R. No. 168661 , October 26, 2007, 537 SCRA 5 I 3.
32 Citing Manila Lodge No. 761 v. Court (4Appea!s, Nos. L-4100 I & L-4 IO I2, September 30, 1976, 73
SCRA 162, 186.
33
Citing 31 CJS 675-676, cited in Republic v. Court o_/Appeals, G.R. No. 116111 , January 21, 1999, 301
SCRA 366, 377.
34
Citing Republic v. Court ofAppea!s, id. at 379.
i,

Decision 7 G.R. No. 236381

Republic v. Court of Appeals is reinforced by our ruling in

Republic v. Umali, 35 where, in a reversion case, we held that even if the
original grantee of a patent and title has obtained the same tlu·ough fraud,
reversion will no longer prosper as the land had become private land and
the fraudulent acquisition cannot affect the titles of innocent purchasers
for value.36

From the foregoing, it thus is clear that only innocent purchasers for
value (IPV) are afforded the right to raise the equitable principle of estoppel
by laches in their defense against the government to avoid injustice to them.

However, it should be noted that the party who claims the status of an
IPV has the burden of proving such assertion, and the invocation of the
ordinary presumption of good faith, i.e., that everyone is presumed to act in
good faith, 37 is not enough. 38 To be sure, proof of good faith is, as it should
be, required of the party asserting it. Stated differently, the party who seeks
the protection of the Torrens system has the obligation to prove his good
faith as a purchaser for value. This requirement should be applied without
exception because only the IPV is insulated from any fraud perpetrated upon
the registered owner which results in the latter being divested of his title
(i.e., he loses ownership) to the contested property and recognizing the same
in the name of the IPV.

The determination of whether respondents are indeed IPV s can only

proceed from a factual inquiry to be conducted by the RTC. As the instant
proceedings stand, no evidence has been adduced by the parties on this
factual issue because the Republic's complaint for reversion was dismissed
without reception of evidence. Without evidence proving that respondents
are indeed IPVs, laches cannot be applied to bar the Republic from pursuing
the present reversion case against them. A remand to the RTC for reception
of evidence is thus in order.

WHEREFORE, the Petition is hereby GRANTED. Accordingly, the

Decision dated December 19, 20 17 of the Cami of Appeals in CA-G.R. CV
No. 107773 is REVERSED and SET ASIDE. The Complaint for reversion
and cancellation of title filed by the Republic of the Philippines in Civil Case
No. 79-3209 with the Regional Trial Court of Angeles City, Branch 56 is
REINSTATED and the said Regional Trial Court is directed to hear and
resolve the case with immediate dispatch.

35 Supra note 12, at 65 3.

36 Estate ofthe late Jesus S. Yujuico v. Republic, supra note 31, at 529-532.
37 Article 527 of the C ivil Code states: "Good faith is always presumed, and upon him who al leges bad
faith on the part of a possessor rests the burden of proof."
38 See Nobleza v. Nuega, G.R. No. 193038, March 11, 20 15, 752 SCRA 602, 61 1, citing Raymundo v.
Bandong, G.R. No . 171250, July 4, 2007, 526 SCRA 5 14,529 further citing Potenciano v. Reynoso,
G.R. No. 140707, April 22, 2003, 401 SCRA 39 1, 40 1. See also Baltazar v. Court of Appeals, No. L-
78728, December 8, 1988, 168 SCRA 354, 367 and Santos v. Court of Appeals, G.R. No. 90380,
September 13, 1990, 189 SCRA 550, 559.
 J • • ,

Decision 8 G.R. No. 236381

SO ORDERED.

WE CONCUR:

A ARO-JAVIER

CERTIFICATION

Pursuant to Section 13, A1iicle VIII of the Constitution, I ce1iify that

the conclusions in the above Decision had been reached in consultation
before the case was assigned to the writer of the opinion of the Comi's
Division.