ANTONINO DIZON, ADELAIDA D. REYES, CONSOLACION DE DEGOLLACION, ET AL., PETITIONERS, VS. HON. JUAN DE G. RODRIGUEZ, AS SECRETARY OF AGRICULTURE AND NATURAL RESOURCES, HERACLITO M…

These are separate appeals
instituted by Antonino Dizon, et al. (G.R. Nos. L-20300-01) and
the Republic of the Philippines, et al. (G.R.
Nos.
L-20355-56), from a single decision of the Court of Appeals, as modified by its
resolution of August 20, 1962, holding that Lots Nos. 49 and 1 of subdivision
plan Psd-27941 are parts of the navigable portion of the territorial waters and
outside the southern boundary of the Hacienda Calatagan, covered by Transfer Certificate of Title No.
T-722, and declaring the occupants Dizon, et al.
possessors in good faith, entitled to remain therein until reimbursed, by the
intervenor Republic of the
Philippines, of the necessary expenses made
on the lots in the sums of P40,000.00 and P25,000.00,
respectively.

The facts of these cases, briefly
stated, are as follows:

Hacienda Calatagan owned by Alfonso and Jacobo Zobel was originally
covered by TCT No. T-722. In 1938, the Hacienda constructed a pier, called
“Santiago Landing,” about 600 meters long from the shore into the navigable
waters of the Pagaspas Bay, to be used by vessels
loading sugar produced by the Hacienda sugar mill. When the sugar mill ceased
its operation in 1948, the owners of the Hacienda converted the pier into a
fishpond dike and built additional strong dikes enclosing an area of about 30
hectares (of the Bay) and converted the same into a fishpond. The Hacienda
owners also enclosed a similar area of about 37 hectares of the Bay on the other
side of the pier which was also converted into a fishpond.

In 1949, the Zobel s ordered the subdivision of the Hacienda by ordering
the preparation of the subdivision plan Psd-27941 wherein fishpond No. 1 (with
30 hectares) was referred to as Lot No. 1 and fishpond No. 2 (with 37 hectares)
referred to as Lot No. 49. The plan was approved by the Director of Lands, and
the Register of Deeds issued, from TCT No. T-722, TCT. No. 2739 for Lots 49 and
1 in the name of Jacobo Zobel.

In 1950, Jacobo Zobel sold to Antonino Dizon, et al.,
Lot 49 for which said purchasers
obtained at first TCT No. T-2740 and later T-4718.
Lot 1, on the other hand, was
purchased by Carlos Goco, et al., who, in turn, sold
one half thereof to Manuel Sy-Juco, et al. Transfer
Certificate of Title No. 4159 was issued in the names of the Gocos and Sy-Jucos.

On May 24, 1952, Miguel Tolentino filed with the Bureau of Fisheries an application
for ordinary fishpond permit or lease for Lot 49, and an application for a
similar permit, for Lot 1, was filed by his daughter Clemencia Tolentino. The Dizons, Sy-Jucos and Gocos filed a protest with the au of Fisheries, claiming the
properties to be private covered by certificates of title. This protest was
dismissed by the Director of Fisheries, on the ground that the areas applied for
are outside the boundaries of TCT No. of Hacienda Calatagan. This ruling was based the findings of the
committee created by the Secretary Agriculture and Natural Resources to look
into the matter, that Lots 1 and 49 are not originally included within the
boundaries of the hacienda.

On October
1, 1954,
the protestants Dizons, Sy—Tucos, and Gocos filed an
action in the Court of First Instance of Manila (Civ.
Case No. 24237) to restrain the Director of Fisheries from issuing the fishpond
permits applied for by the Tolentinos. The court
dismissed this petition, for non-exhaustion of administrative remedy, it
appearing that petitioners had not appealed from the decision of the Director of
Fisheries to the Secretary of Agriculture and Natural Resources. On appeal to
this Court, the decision of the lower court was sustained (G.R. No. L-8654,
promulgated April 28, 1956). The protestants then filed
an appeal with the Secretary of Agriculture and Natural Resources. This time,
the same was dismissed for being filed out of time.

On August 16, 1956, the Dizons filed Civil Case 135 and the Sy-Jucos and Gocos, Civil Case
136, in the Court of First Instance of Batangas, to
quiet their titles over Lots 49 and 1. Named defendants were the Secretary of
Agriculture and Natural Resources and applicants Tolentinos. The Republic of the Philippines was allowed to
intervene in view of the finding by the investigating committee created by the
respondent Secretary, that the lots were part of the foreshore area before their
conversion into fishponds by the hacienda-owners.

On January 30, 1958, after due
hearing, the Court of First Instance of Batangas
promulgated a joint decision making the finding, among others, that the
subdivision plan Psd-27941 was prepared in disregard of the technical
description stated in TCT No. T-722, because the survey or merely followed the
existing shoreline and placed his monuments on the southwest lateral of Lot 49,
which was the pier abutting into the sea; and made the conclusion that Lots 1
and 49 of Psd-27941 were part of the fore shore lands. As the certificates of
title obtained by petitioners covered lands not subject to registration, the
same were declared null and void, and Lots 1 and 49 were declared properties of
the public domain. Petitioners appealed to the Court of Appeals.

In its decision of October 51,
1961, as well as the re solution of August 20, 1962, the appellate court adopted
the findings of the lower court, that the lots in question are part of the
foreshore area and affirmed the ruling canceling the titles issued to
.plaintiffs. Although in the decision of October 31, 1961, the Court of Appeals
awarded to applicants Tolentinos damages in the amount
of P200.00 per hectare from October 1, 1954, when plaintiffs were notified of
the denial of their protest by the Director of Fisheries, such award was
eliminated in the resolution of August 20, 1962, for the reason that plaintiffs,
who relied on the efficacy of their certificates of title, cannot be considered
possessors in bad faith until after the legality of their said titles has been
finally determined. Appellants were thus declared entitled to retention of the
properties until they are reimbursed by the landowner, the Republic of the
Philippines, of the necessary expenses made on the lands, in the sums of
P40,000.00 (for Lot 49) and P25.000.00 (for Lot 1). It is from this portion of
the decision as thus modified that defendants Tolentinos and the intervenor
Republic of the Philippines appealed (in G. R. Nos. L-20355-56), claiming that
plaintiffs’ possession became in bad faith when they learned of the flaw in
their titles, that is, when their Protest against the applications for lease was
denied by the Director of Fisheries. In addition, the intervenor contends that being such possessors in bad faith,
plaintiffs n not entitled to reimbursement of the expenses made on properties.

In G.R.
Nos.
L-20300-01, plaintiffs Dizon, et al. claim t the
finding that the lots in question are part of the or foreshore area was
erroneous, because from defendants’ own evidence, the same appear to be
marshland their conversion into fishponds. It is noteworthy in connection with
the appeal of plaintiffs that they do not contest the existence of the pier that
was used by the hacienda owners in the loading of their manufactured sugar to
vessels. The fact that said pier jotted out 600 meters to the sea indicates that
the area over which such cemented structure spanned was part of the sea or at
least foreshore land. And, plaintiffs were not able to disprove the testimonial
evidence that the fishponds in question were constructed by enclosing the areas
with dikes, using the pier as one of the ends of the fishponds. ‘It is clear
that the areas thus enclosed and converted into fishponds were really part of
the foreshore. This, and the fact that the subdivision plan Psd-27941 was found
to have been prepared not in accordance with the technical descriptions in TCT
No. T—722 but in disregard of it, support the conclusion reached by both the
lower court and the Court of Appeals that Lots 49 and 1 are actually part of the
territorial waters and belong to the State. And, it is an elementary principle
that the incontestable and indefeasible character of a Torrens certificate of
title does not operate when the land thus covered is not capable of
registration.

On the matter of possession of
plaintiffs-appellants, the ruling of the Court of Appeals must be upheld. There
is no showing that plaintiffs are not purchasers in good faith and for value. As
such title-holders, they have reason to rely on the indefeasible character of
their certificates.

On the issue of good faith of the
plaintiffs, the Court of Appeals reasoned out:

“The concept of possessor in good
faith given in Art. 526 of the Civil Code and when said possession loses this
character under Art. 528, needs to be reconciled with the doctrine of
indefeasibility of a Torrens Title. Such reconciliation can only be achieved by
holding that the possessor with a Torrens Title is not aware of any flaw in his
title which invalidates it until his Torrens Title is declared null and void by
final judgment of the Courts. “Even if the doctrine of indefeasibility of a
Torrens Title not thus reconciled, the result would be the same, considering
third paragraph of Art. 526 which provides that:

ART. 526. * * *

‘Mistake upon a doubtful or
difficult question of taw may be the basis of good faith.’

“The legal question whether
plaintiffs-appellants’ possession in good faith, under their Torrens Titles
acquired in good faith, does not lose this character except in the case and from
the moment their Titles art declared null and void by the Courts, is a difficult
one. Even the members of this Court were for a long time divided, two to one, on
the answer. It was only after several sessions, were the results of exhaustive
researches on both sides were thoroughly discussed, that an undivided Court
finally found the answer given in the next preceding paragraph. Hence, even if
it be assumed for the sake of argument that the Supreme Court would find that
the law is not as we have stated it in the next preceding paragraph and that the
plaintiffs-appellants made a mistake in relying thereon, such mistake on a
difficult question of taw may be the basis of good faith. Hence, their
possession in good faith does not lose this character except in the case and
from the moment their Torrens Titles are declared null and void by the
Courts.”

Under the circumstances of the
case, especially where the subdivision plan was originally approved by the
Director of Lands, we are not ready, to conclude that the above reasoning of the
Court of Appeals on this point is reversible error. Needless to state, as such
occupants in good faith, plaintiffs have the right to the retention of the
property until they are reimbursed of the necessary expenses made on the lands.

With respect to the contention of
the Republic of the Philippines that the order for the reimbursement by it of
such necessary expenses constitutes a judgment against the government in a suit
not consented by it, suffice it to say that the Republic, on its own initiative,
asked and was permitted to intervene in the case and thereby submitted itself to
the jurisdiction of the court.

IN VIEW OF THE FOREGOING
CONSIDERATIONS,
the decision appealed from is hereby affirmed in all respects, without costs.

SO ORDERED.

Bengzon, C.J., Bautista Angelo, Concepcion, Reyes, J.B.L., Paredes, Dizon, Regala, Makalintal and Bengzon, J.P., JJ., concur.