ESTATE OF THE LATE JESUS S.

YUJUICO, represented by ADMINISTRATORS BENEDICTO

G.R. No. 168661 October 26, 2007

Facts:

n 1973, Fermina Castro filed an application for the registration and confirmation of her title over a
parcel of land with an area of 17,343 square meters covered by plan (LRC) Psu-964 located in the
Municipality of Parañaque, Province of Rizal (now Parañaque City), in the Pasig-Rizal Court of First
Instance (CFI), Branch 22. The application was docketed LRC Case No. N-8239. The application
was opposed by the Office of the Solicitor General (OSG) on behalf of the Director of Lands, and by
Mercedes Dizon, a private party. Both oppositions were stricken from the records since the
opposition of Dizon was filed after the expiration of the period given by the court, and the opposition
of the Director of Lands was filed after the entry of the order of general default. After considering the
evidence, the trial court rendered its April 26, 1974 Decision.

The Director of Lands and Mercedes Dizon did not appeal from the adverse decision of the Pasig-
Rizal CFI. Thus, the order for the issuance of a decree of registration became final, and Decree No.
N-150912 was issued by the Land Registration Commission (LRC).2 Original Certificate of Title
(OCT) No. 10215 was issued in the name of Fermina Castro by the Register of Deeds for the
Province of Rizal on May 29, 1974. 3

The land was then sold to Jesus S. Yujuico, and OCT No. 10215 was cancelled. On May 31,
1974,4 Transfer Certificate of Title (TCT) No. 445863 was issued in Yujuico’s name, who subdivided
the land into two lots. TCT No. 4463865 over Lot 1 was issued in his name, while TCT No. S-
293616 over Lot 2 was issued in the name of petitioner Augusto Y. Carpio.

Annotations at the back of TCT No. 446386 show that Yujuico had, at one time or another,
mortgaged the lot to the Philippine Investments System Organization (PISO) and Citibank, N.A.
Annotations in the title of petitioner Carpio reveal the lot was mortgaged in favor of Private
Development Corporation (PDC), Rizal Commercial Banking Corporation (RCBC) and then
Philippine Commercial and Industrial Bank (PCIB) and the Development Bank of the Philippines
(DBP) to secure various loans.

Sometime in 1977, Presidential Decree No. (PD) 1085 entitled Conveying the Land Reclaimed in the
Foreshore and Offshore of the Manila Bay (The Manila-Cavite Coastal Road Project) as Property of
the Public Estates Authority as well as Rights and Interests with Assumptions of Obligations in the
Reclamation Contract Covering Areas of the Manila Bay between the Republic of the Philippines
and the Construction and Development Corporation of the Philippines (1977) was issued. Land
reclaimed in the foreshore and offshore areas of Manila Bay became the properties of the Public
Estates Authority (PEA), a government corporation that undertook the reclamation of lands or the
acquisition of reclaimed lands. On January 13, 1989, OCT No. SP 02 was issued in favor of PEA.
The PEA also acquired ownership of other parcels of land along the Manila Bay coast, some of
which were subsequently sold to the Manila Bay Development Corporation (MBDC), which in turn
leased portions to Uniwide Holdings, Inc.7
The PEA undertook the construction of the Manila Coastal Road. As this was being planned, Yujuico
and Carpio discovered that a verification survey they commissioned showed that the road directly
overlapped their property, and that they owned a portion of the land sold by the PEA to the MBDC.

On July 24, 1996, Yujuico and Carpio filed before the Parañaque City Regional Trial Court (RTC), a
complaint for the Removal of Cloud and Annulment of Title with Damages docketed as Civil Case
No. 96-0317 against the PEA. On May 15, 1998 the parties entered into a compromise agreement
approved by the trial court in a Resolution dated May 18, 1998. On June 17, 1998, the parties
executed a Deed of Exchange of Real Property, pursuant to the compromise agreement, where the
PEA property with an area of 1.4007 hectares would be conveyed to Jesus Yujuico and petitioner
Carpio in exchange for their property with a combined area of 1.7343 hectares.

On July 31, 1998, the incumbent PEA General Manager, Carlos P. Doble, informed the OSG that the
new PEA board and management had reviewed the compromise agreement and had decided to
defer its implementation and hold it in abeyance following the view of the former PEA General
Manager, Atty. Arsenio Yulo, Jr., that the compromise agreement did not reflect a condition of the
previous PEA Board, requiring the approval of the Office of the President. The new PEA
management then filed a petition for relief from the resolution approving the compromise agreement
on the ground of mistake and excusable negligence.

The petition was dismissed by the trial court on the ground that it was filed out of time and that the
allegation of mistake and excusable negligence lacked basis.

The PEA fared no better in the Court of Appeals (CA), as the petition was dismissed for failure to
pay the required docket fees and for lack of merit.

The matter was raised to the Supreme Court in Public Estates Authority v. Yujuico 8 but PEA’s
petition was denied, upholding the trial court’s dismissal of the petition for relief for having been filed
out of time. The allegation of fraud in the titling of the subject property in the name of Fermina Castro
was not taken up by the Court.

On June 8, 2001, in a Complaint for Annulment and Cancellation of Decree No. N-150912 and its
Derivative Titles, entitled Republic of the Philippines v. Fermina Castro, Jesus S. Yujuico, August Y.
Carpio and the Registry of Deeds of Parañaque City docketed as Civil Case No. 01-0222, filed with
the Parañaque City RTC, respondent Republic of the Philippines, through the OSG, alleged that
when the land registered to Castro was surveyed by Engr. H. Obreto on August 3, 1972 and
subsequently approved by the LRC on April 23, 1973, the land was still a portion of Manila Bay as
evidenced by Namria Hydrographic Map No. 4243, Surveys to 1980; 1st Ed/. January 9/61: Revised
80-11-2; that Roman Mataverde, the then OIC of the Surveys Division, Bureau of Lands, informed
the OIC of the Legal Division that "[w]hen projected on Cadastral Maps CM 14 deg. 13’ N-120 deg,
59’E, Sec.2-A of Parañaque Cadastre (Cad. 299), (LRC) Psu-964 falls inside Manila Bay, outside
Cad. 299"; that then Acting Regional Lands Director Narciso V. Villapando issued a Report dated
November 15, 1973 stating that plan (LRC) Psu-964 is a portion of Manila Bay; that then Officer-in-
Charge, Assistant Director of Lands, Ernesto C. Mendiola, submitted his Comment and
Recommendation re: Application for Registration of Title of FERMINA CASTRO, LRC Case No. N-
8239, dated Dec. 1, 1977, praying that the instant registration case be dismissed; and that Fermina
Castro had no registrable rights over the property.

More significantly, respondent Republic argued that, first, since the subject land was still underwater,
it could not be registered in the name of Fermina Castro. Second, the land registration court did not
have jurisdiction to adjudicate inalienable lands, thus the decision adjudicating the subject parcel of
land to Fermina Castro was void. And third, the titles of Yujuico and Carpio, being derived from a
void title, were likewise void.9

On September 13, 2001, Yujuico and Carpio filed a Motion to Dismiss (With Cancellation of Notice of
Lis Pendens),10 on the grounds that: (1) the cause of action was barred by prior judgment; (2) the
claim had been waived, abandoned, or otherwise extinguished; (3) a condition precedent for the
filing of the complaint was not complied with; and (4) the complaint was not verified and the
certification against forum shopping was not duly executed by the plaintiff or principal party.

On November 27, 2001, respondent Republic filed an Opposition 11 to the motion to dismiss to which
defendants filed a Reply12 on January 14, 2002, reiterating the grounds for the motion to dismiss.

In the August 7, 2002 Order of the RTC,13 Civil Case No. 01-0222 was dismissed. The trial court
stated that the matter had already been decided in LRC Case No. N-8239, and that after 28 years
without being contested, the case had already become final and executory.  The trial court also
1âwphi1

found that the OSG had participated in the LRC case, and could have questioned the validity of the
decision but did not. Civil Case No. 01-0222 was thus found barred by prior judgment.

On appeal to the CA, in CA-G.R. CV No. 76212, respondent Republic alleged that the trial court
erred in disregarding that appellant had evidence to prove that the subject parcel of land used to be
foreshore land of the Manila Bay and that the trial court erred in dismissing Civil Case No. 01-0222
on the ground of res judicata. 14

The CA observed that shores are properties of the public domain intended for public use and,
therefore, not registrable and their inclusion in a certificate of title does not convert the same into
properties of private ownership or confer title upon the registrant.

Further, according to the appellate court res judicata does not apply to lands of public domain, nor
does possession of the land automatically divest the land of its public character.

The appellate court explained that rulings of the Supreme Court have made exceptions in cases
where the findings of the Director of Lands and the Department of Environment and Natural
Resources (DENR) were conflicting as to the true nature of the land in as much as reversion efforts
pertaining foreshore lands are embued with public interest.

The dispositive portion of the CA decision reads,

WHEREFORE, premises considered, the present appeal is hereby GRANTED. The appealed Order
dated August 7, 2002 of the trial court in Civil Case No. 01-0222 is hereby REVERSED and SET
ASIDE. The case is hereby REMANDED to said court for further proceedings and a full-blown trial
on the merits with utmost dispatch.15

Hence, this petition.

Issue:

Whether there is a reversion suit proper in this case?

Whether the present petition estopped by laches?

Held: