G.R. No. L-24557 - City of Manila vs. Tarlac Development Corporation

Two parcels of land, reclaimed from the Bay of Manila, were originally given to the City of Manila by virtue of Act 1360 (enacted 26 June 1905).
These parcels were registered under the Land Registration Act in the name of the City of Manila, as reflected in the Original Certificate of Title No. 1909.

On 13 July 1911, the City of Manila conveyed one parcel to the Benevolent and Protective Order of Elks (BPOE), subject to conditions including:

Exemption from real property contributions for ten years from 20 February 1909.
The City’s obligation to complete and maintain an adjacent breakwater and protective cover.
Prohibition on establishing a public pier on the breakwater.
The City’s reserved right to repurchase the property “for public purposes only” any time after fifty years from 13 July 1911, provided it pays the original purchase price plus the value of the improvements.

These conditions were annotated as entry No. 4608/T-1635 in the transferee’s Transfer Certificate of Title Nos. 2195 and 67488.

On 20 September 1918, the City of Manila conveyed the second parcel to the Army and Navy Club of Manila with conditions similar in nature, which included:

A ten-year exemption from real property contributions upon certification by the City’s engineer.
Prohibition on constructing a pier adjacent to the property.
Limiting use solely for social or recreational club purposes, subject to approval by U.S. authorities then administrating the Philippine Islands.
A reserved right for the City to repurchase the property after fifty years from 20 September 1918, under terms similar to the first conveyance.

The foregoing conditions were annotated as entry No. 18115/T-9332 in the club’s Transfer Certificate of Title Nos. 9332 and, later, 51988 following the cancellation and replacement resulting from corporate reorganization.

On 14 April 1961, then-Mayor Arsenio Lecson notified the BPOE that the City of Manila would exercise its repurchase right over the land conveyed in 1911.
Later in 1961, the city fiscal prepared to institute court action to compel reconveyance, although expressing the view that the City’s repurchase option was limited by a ten‐year period per Article 1508 of the Civil Code (now Article 1606).
In January and April 1963, petitions for cancellation of the City’s repurchase right annotation were filed respectively by the BPOE and the Army and Navy Club, invoking the fiscal’s opinion.
Without opposition from the City, the lower court granted these petitions, and the Register of Deeds accordingly cancelled the annotations.

On 10 June 1964, the City of Manila filed petitions for the reannotation of the entries that were cancelled by the 1963 order.
The Land Registration Court, by its order dated 19 November 1964, mandated the reannotation of the entries on the certificates of title, including those held by the BPOE/Tarlac Development Corporation and the Army and Navy Club.
The reannotation order is contested on the ground that the 1963 cancellation, being a judgment by consent reached without proper municipal authority, should be considered void and not res judicata.

Central to the dispute is whether the City’s reserved right to repurchase the property, effectively its power of eminent domain, can be curtailed or altered by a contract or judgment entered without full legal authority.
The deletion of the stipulation securing a purchase price based on the original sale is argued to prejudice the City by effectively forcing it to pay market value rather than the established contractual price, amounting to a “donation” of the difference.

Did the officials of the City of Manila have the power to consent to and effect the cancellation (via a judgment by consent) of the annotation that reserved the City’s right to repurchase the property for public purposes?
Is such cancellation, effected without proper statutory authority, void?

Can the 1963 order of cancellation be deemed res judicata despite being a judgment by consent reached by officials lacking the power to bind the City?
Does the consensual nature of the judgment allow it to have finality in subsequent reannotation proceedings?

Given the alleged voidness of the 1963 cancellation order, should the Land Registration Court’s subsequent order reannotating the entries be sustained?
How does the inherent power of eminent domain affect the validity of the original contractual stipulation and its cancellation?

Is Tarlac Development Corporation, as a purchaser in good faith from the BPOE, entitled to hold the property free from the City’s reserved rights?
How should future disputes regarding title or rights be addressed in light of the reannotation order?