SOUTH CITY HOMES, INC., PETITIONER, VS. REPUBLIC OF THE PHILIPPINES AND COURT OF APPEALS, RESPONDENTS.

South City Homes versus Republic of the Philippines

The Case

This is a petition for review brought by South City Homes, Incorporated against the Republic of the Philippines and the Court of Appeals, arising from an application for registration of a strip of land discovered between two lots the corporation already owned. The case matters because it gathers in one decision three rules a reviewee must command: the nature of a canal under the Friar Lands Act, the strict requirements of acquisitive prescription, and the doctrine that tacking of possession demands privity, which a deed does not supply as to land outside its calls.

Procedural History

South City Homes applied for registration of the disputed lot before the trial court, which granted the application in 1984 under the Property Registration Law. The Republic appealed, and a special division of the Court of Appeals reversed the trial court, with two members dissenting. South City Homes then came to the Supreme Court by petition for review, insisting that the reversal was erroneous.

Facts

South City Homes owned two adjoining lots in Biñan, Laguna: Lot 2381, with an area of 36.672 square meters, and Lot 2386-A, with an area of 32,011 square meters. Both traced their origin to purchases from the Friar Lands Division of the Bureau of Lands in 1910, and both eventually passed to the corporation, Lot 2381 by assignment in 1981 and Lot 2386-A by purchase from the Garcia spouses in 1981.

In 1983, a survey by the Bureau of Lands revealed a strip of land between the two lots, with an area of 613 square meters, now identified as Lot 5005 of the Biñan Estate. The corporation sought its registration in 1984, and the trial court decreed registration in its name.

Before the Supreme Court, the corporation argued either that the strip had really formed part of its two lots but was omitted because of the inaccuracies of the old cadastral surveys, or that it had acquired the strip by prescription through uninterrupted possession in the concept of owner, by itself and its predecessors in interest, for more than forty years. The Republic answered that the strip used to be a canal that could not have been appropriated by the buyers of the adjacent lots, that the technical descriptions of those lots excluded it, and that the possession shown was insufficient in manner and length.

Issues

• Whether or not Lot 5005 formed part of Lots 2381 and 2386-A and was merely omitted from their technical descriptions because of survey inaccuracies.
• Whether or not Section 19 of the Friar Lands Act barred the corporation and its predecessors in interest from acquiring exclusive rights over the strip as a canal.
• Whether or not the corporation acquired Lot 5005 by acquisitive prescription, counting the possession of its predecessors in interest.

Applicable Provisions

Section 19 of the Friar Lands Act, Act Number 1120, provides:

No purchaser or lessee under this Act shall acquire any exclusive rights to any canal, ditch, reservoir, or other irrigation works, or to any water supply upon which such irrigation works are or may be dependent, but all of such irrigation works and water supplies shall remain under the exclusive control of the Government of the Philippine Islands and be administered under the direction of the Chief of the Bureau of Public Lands for the common benefit of those interest dependent upon them.

The Republic invoked this provision to show that no exclusive right could arise over the canal, but the Court held it inapplicable once the canal had ceased to be a canal.

Article 1138 of the Civil Code provides:

(1) The present possessor may complete the period necessary for prescription by tacking his possession to that of his grantor or predecessor-in-interest.

This is the provision on which the corporation's claim of more than forty years of possession depended, and its requirement of privity defeated that claim.

Article 1135 of the Civil Code provides:

In case the adverse claimant possesses by mistake an area greater, or less, than that expressed in his title, prescription shall be based on the possession.

This provision fixed the start of the corporation's own possession at 1981, when it occupied the strip believing it part of the two lots it had bought.

Ruling

On the first issue, the Court held that the strip was not part of the two lots. The technical descriptions of Lots 2381 and 2386-A did not include it, and the corporation could not rely on the old survey while itself insisting that the old surveys were inaccurate. If there had been no canal at the time of the survey, the strip would have been included in one of the adjoining lots, but it was not; the filling of the canal with silt and dirt segregated a third and separate lot, and its area of 613 square meters was not negligible enough to fall within any allowable margin of error.

On the second issue, the Court rejected the Court of Appeals' reading of Section 19. The appellate court had said that the filled-up canal remained a canal, but the Supreme Court disagreed: a canal without water is not a canal, and the status of a canal is not perpetual. Section 19 therefore did not apply and could not defeat the corporation's claim, whether as part of the two lots or as a separate lot.

On the third issue, the Court held that prescription had not been established. The testimony of the corporation's two witnesses was essentially hearsay and inherently inadequate, and the claim of adverse ownership was not exclusive but shared by the predecessors in interest. The length of possession was also insufficient. Tacking under Article 1138 requires privity of contract or relationship between the previous and present possessors, and none existed as to Lot 5005, because neither deed conveyed it and the two lots did not include it. As the Court put it, a deed in itself creates no privity as to land outside its calls, and privity is not created by the bare taking of possession of land previously occupied by the grantor. Following Article 1135, the corporation's possession began only in 1981, so when it filed its application in 1983 it had possessed the lot for less than three years, far short of the ten years required in good faith or the thirty years required in bad faith or for public land. Having so ruled, the Court found it unnecessary to determine whether the land was patrimonial or part of the public domain, and distinguished the Director of Lands case because there prescription had been clearly and indubitably established.

Doctrine

A canal without water is not a canal; its status is not perpetual, and Section 19 of the Friar Lands Act ceases to apply once the canal has disappeared, so it cannot defeat a claim to the dried-up bed.

Tacking of possession under Article 1138 of the Civil Code requires privity of contract or relationship between the previous and present possessors. A deed creates no privity as to land outside its calls, and the bare taking of possession of land previously occupied by the grantor does not create privity; the grantee's possession is counted only from the time it actually began.

Under Article 1135 of the Civil Code, one who possesses by mistake an area greater than that expressed in his title prescribes only on the basis of his own possession, not that of his grantor.

Disposition

The petition was denied, with costs against South City Homes, and the reversal by the Court of Appeals stood.

Remember This

Memorize the line that a deed creates no privity as to land outside its calls, so possession of the omitted strip cannot be tacked to the grantor's. Examiners use this case to test prescription and tacking under Articles 1135 and 1138 of the Civil Code, and the rule that a canal without water is no longer a canal under the Friar Lands Act.