REPUBLIC OF THE PHILIPPINES, PLAINTIFF AND APPELLANT, VS. AYALA Y CIA AND/OR HACIENDA CALATAGAN, ET AL., DEFENDANTS AND APPELLANTS; MIGUEL TOLENTINO, ET AL., INTERVENORS AND APP…

In an amended complaint dated May
12, 1960 filed in the Court of First Instance of Batangas (Civil Case No. 373) against Ayala y Cia., Alfonso Zobel, Antonio Dizon, Lucia Dizon, Ruben Dizon, Adelaida D. Reyes, Consolacion D. Degollacion, Artemio Dizon and Zenaida Dizon, the plaintiff
Republic of the Philippines sought the annulment of titles allegedly obtained by
the defendants over portions of the territorial waters of the public domain. It
was alleged that the defendant company caused the survey and preparation of a
composite plan of Hacienda Calatagan, increasing its
area from 9,652.5833 hectares (as evidenced by TCT No. 722) to 12,000 hectares,
by taking or including therein lands of public dominion. Thus, plaintiff also
prayed for recovery of possession of such areas in excess of those covered by
TCT No. 722, and for which fishpond permits were already issued in favor of bona
fide applicants; for damages in the sum of P500,000.00,
and for a restraining order to enjoin defendants from exercising further acts of
ownership. Miguel Tolentino and 22 others alleged
holders of fishpond permits issued by the Bureau of Fisheries over the areas
supposedly outside the boundaries of Hacienda Calatagan, were allowed to intervene in the case and make
demand for recovery of possession of said areas, and claim for damages for the
deprivation of possession thereof allegedly by the illegal acts of
defendants.

Defendant, while admitting that
there really existed a difference between the area (of the Hacienda) as
appearing in TCT No. 722 and the plan prepared by the commissioned private
surveyor for the company, contend that the excess (of area) was insignificant in
nature and attributable to the inaccuracy of the magnetic survey that was used
in the preparation of the plan upon which OCT No. 20 (and later, TCT 722) was
based.

After trial, during which the
parties presented documentary and testimonial evidence, the court rendered
judgment annulling TCT No. T-9550 of the Register of Deeds of Batangas, issued to defendants Dizons covering Lots 360, 362, 363 and 182, as well as other
subdivision titles issued to Ayala y Cia. and/or Hacienda de Calatagan over the areas outside its private property
covered by TCT No. 722, and ordering defendants Dizons
to vacate Lot No. 360 in favor of intervenor Miguel
Tolentino, and all the defendants to pay said intervenor, jointly and severally compensatory damages in
the sum of P3,000.00 a year per hectare of Lot 360,
until he is placed in possession thereof. Defendants were also restrained from
exercising acts of ownership over said Lots 360, 362, 1363, and 182 of
Psd-40891. This ruling was based upon the finding that the disputed areas form
part of the navigable water, or are portions of the sea, beach and foreshores of
the bay. However, as the intervenors, other than
Miguel Tolentino, failed to establish with
particularity the lots allegedly covered by their respective permits or to name
the present possessors or occupants thereof, and as Ayala y Cia., Alfonso Zobel, and the Dizons were the only ones impleaded as parties-defendants, the judgment was made
effective exclusively against them. Thus, Lot No. 360, included in TCT No.
T-9550 in the name of the Dizons, and proved by intervenor Miguel Tolentino to be
the portion covered by the fishpond permit issued to him, was ordered by the
court delivered to said intervenor. As a consequence
of this decision, a writ of preliminary mandatory injunction, to place the
plaintiff and intervenor in possession of the disputed
properties, was issued by the court. However, by order of May 3, 1961 the same
was set aside on the ground that in the issuance thereof the defendants were not
given their day in court. The motion for reconsideration of this order was
denied on October 5, 1962, for the reason, among others,
that as defendants have always been in possession of the stream in
question, to order delivery of such possession to the other parties at this
stage of the proceeding will result in injuries and promote confusion. Both
parties appealed directly to this Court: the plaintiff and jntervenors claiming that the court erred in not awarding
damages to the plaintiff State; in holding that the
areas claimed by the intervenors other than Miguel
Tolentino were not duly identified; and in suspending
the writ of preliminary mandatory injunction which had been executed and served
by the Provincial Sheriff. Defendants, on the other hand, claim that the trial
court was in error in finding that Lots 360, 362, 363, and 182 of Psd-40891 are
outside the boundaries of Hacienda Calatagan, as
delimited in TCT 722, and in ordering for their reversion to the public
dominion; in annulling TCT No. T-9550 issued to defendants Dizons, and in ordering the latter to deliver possession of
Lot 360 to intervenor Miguel Tolentino; in ordering defendants to pay said intervenor compensatory damages, and in not declaring the
defendants Dizons entitled to reimbursement of all
necessary expenses made on the properties in question.

We have gone over the evidence
presented in this case and found no reason to disturb the factual findings of
the trial court. It has been established that certain areas originally portions
of the navigable water or of the foreshores of the bay were converted into
fishponds or sold by defendant company to third
persons. There is also no controversy as to the fact that the said defendant was
able to effect these sales after it has obtained a
certificate of title (TCT No. 722) and prepared a “composite plan” wherein the
aforesaid foreshore areas appeared to be parts of Hacienda Calatagan. Defendants-appellants do not deny that there is
an excess in area between those delimited as boundaries of the hacienda in TCT
No. 722 and the plan prepared by its surveyor. This, however, was justified by
claiming that it could have been caused by the system (magnetic survey) used in
the preparation of the original titles, and anyway, the excess in area (526
hectares, according to defendants) is within the allowable margin given to a
magnetic survey.

But even assuming for the sake of
argument that this contention is correct, the fact remains that the areas in
dispute (those covered by permits issued by the Bureau of Fisheries) were found
to be portions of the foreshore, beach, or of the navigable water itself. And, it is an elementary principle of law that said
areas not being capable of registration, their inclusion hi a certificate of
title does not convert the same into properties of private ownership or confer
title on the registrant.^[1]
In the present case, as the lots covered by TCT No. T-9550 issued in the names
of defendants Dizons (and which were purchased by the
latter from defendants Ayala y Cia., and/or Alfonso
Zobel) were found to be portions of the foreshore or
of the territorial waters, the lower court committed no error in rendering
judgment against said defendants and ordering the reversion of said properties
to the public dominion.

However, as we have ruled in the
case of Dizon, et al. vs. Rodriguez, etc.,
et al.^[2] there being no showing
defendants Dizons are not purchasers in good faith and
for value, they have a right to retention of the property until they are
reimbursed of the necessary expenses on the land, which must properly be
established and determined. It also follows that as such possessors in good
faith, the defendants Dizons cannot also be held
liable for damages allegedly suffered by other parties on account of their
possession of the property.

In view of the foregoing, the
revocation of the writ of preliminary mandatory injunction previously issued by
the lower court, and the suspension of the delivery of possession of the
properties to plaintiff and intervenor Tolentino, were in order.

Wherefore, thus modified, the decision of
the lower court appealed from is hereby affirmed. No costs.

So
ordered.

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

^[1] 98 Phil. 942, Dizon, et al. vs. Bayona, et al.,
also L—20300—01 & L—20355—56, Dizon, et al. vs.
Rodriguez. etc., et al., April 30, 1965.

^[2] Said purchasers who relied on
the efficacy of their certificates of title, cannot be considered prossessors in bad faith until after the legality of their
sad titles has been finally determined.