**Facts:**
1. Block 494 in the Talayan Village in Quezon City was part of the Sta. Mesa Heights Subdivision, originally registered under J.M. Tuason Co., Inc.
2. J.M. Tuason sold lots in the 1950s, with Block 503 designated as an open space, but Block 494 remained undeveloped.
3. The Quezon City Council directed subdivision owners to transfer open spaces to the government in 1962.
4. In compliance, J.M. Tuason made a Deed of Donation to the Quezon City government for Block 494, among other spaces, but the deed was neither notarized nor accepted legally by the city.
5. Block 494 became a site for community development. However, due to unpaid taxes by J.M. Tuason, it was sold in a tax delinquency sale in 1996, and J.M. Tuason was the highest bidder.
6. J.M. Tuason transferred Block 494 to Talayan Holdings, Inc., and Equitable Banking Corporation financed improvements with a loan secured against the property.
7. In 1998, HATVI sued to annul the sale, cancel titles, and accept the donation, arguing its status as an open space unavailable for commerce.
8. The RTC ruled that Block 494 was private property, dismissing HATVI’s complaint.
9. HATVI appealed to the Court of Appeals, which upheld the RTC decision but held J.M. Tuason and THI accountable for damages.
10. The case was elevated to the Supreme Court.
**Issues:**
1. Whether Block 494 was properly reserved as an open space, rendering it beyond commercial disposition.
2. Whether J.M. Tuason and THI should be estopped from asserting ownership over Block 494.
3. Whether Equitable Bank was a mortgagee in good faith.
4. Whether J.M. Tuason and THI were owners in bad faith liable for damages regarding constructions on Block 494.
**Court’s Decision:**
1. **Block 494 as Open Space:** The Court determined that during Talayan’s development in the 1950s, the applicable law did not require Block 494 to be open space, and legally, it remained private property due to improper donation acceptance.
2. **Estoppel:** The Court found no basis for estoppel against J.M. Tuason or THI since the transaction nature was transparent under existing legal frameworks, specifically noting that HATVI knew or should have known about its purchase status during the tax delinquency sale.
3. **Equitable Bank as Mortgagee:** The Court upheld that the bank’s actions aligned with good banking practice, relying on registered titles for security verification.
4. **J.M. Tuason and THI Bad Faith:** The Court reversed the CA’s finding that J.M. Tuason and THI were in bad faith regarding improvements on the land.
**Doctrine:**
– **Status of Land in Delinquency Sales:** Properties acquired through tax delinquency sales, unless legally designated otherwise, remain within the commerce of man, encumbrance-free if not annotated.
– **Donation Requirements:** For land donations to be effective, proper execution and acceptance are critical, failing which the property remains private.
**Class Notes:**
– **Elements for Property Designation:** Analyze subdivision plans against contemporaneous legal standards to determine property classification.
– **Mortgagee Verification Standards:** Highlight that reliance on a clear certificate of title suffices in assessing property ownership legitimacy for banks.
**Historical Background:**
This case reflects broader problems from post-war suburban developments and regulatory gaps in Philippine property law in the mid-20th century, especially in delineating public vs. private spaces in residential subdivisions during urban expansion.
Leave a Reply