G.R. No. L-44062 - Mirando vs. Wellington Ty and Bros., Inc.

Shortly after the liberation of Manila from the Japanese Imperial Army, petitioners occupied and lived in the premises of Arellano University at Legarda St., Manila from 1945 to 1950.
To address public health concerns as well as the University’s need for its premises, the then-Mayor of Manila, Manuel dela Fuente, together with Quezon City Mayor Ignacio Santos Diaz, facilitated the relocation of these occupants to designated lots in Quezon City.

The lots in question (Lots 1 and 2, Block No. 3 of Subdivision Plans Psd-3693 and Psd-4264) were originally owned by a Japanese national, Arata Tuitsue. Due to his status as an enemy alien, the property came under the control of the Philippine Alien Property Custodian and later the Philippine Board of Liquidators.
During their occupancy of the new lots, the petitioners constructed their respective residential houses and were charged nominal rentals by the Board of Liquidators. They also filed applications through the Office of the President for the eventual sale of the lots in their favor.

In 1953, with the approval of the President, the Board of Liquidators bartered the disputed parcels with another property owned by the late Carmen Planas.
On December 8, 1964, the administrator of Carmen Planas’ estate sold the lots to private respondents, Wellington Ty & Bros., Inc. The sale was duly registered, giving rise to Transfer Certificate of Title No. 87901 issued by the Register of Deeds of Quezon City.

Following the issuance of title to Wellington Ty & Bros., Inc., the private respondents demanded that petitioners vacate the premises. Petitioners, however, asserted a preferential right to purchase the lots, claiming bona fide occupancy and improvement.
On September 4, 1968, petitioners filed a petition for Declaratory Relief for Cancellation of Title and/or Reconveyance with a Preliminary Injunction before the Court of First Instance of Rizal, Branch XVII, alleging:

Their status as bona fide occupants with constructed residences and nominal rental payments.
Deprivation of their preferential purchase rights due to fraud and misrepresentation on the part of Wellington Ty & Bros., Inc., allegedly in collusion with the Board of Liquidators.

Wellington Ty & Bros., Inc. answered the petition by asserting the indefeasibility of their title under the Land Registration Act, further arguing:

The Philippine Board of Liquidators, represented by the Solicitor General, also filed an answer alleging:

After the lower court rendered its decision, petitioners sought a motion for reconsideration, which was denied.
Petitioners-appellants then appealed, contending errors in the lower court’s decision, specifically regarding the alleged preferential right to purchase under Republic Act No. 3348.
The Court of Appeals initially dismissed the appeal for a technical defect concerning the filing of an appeal bond but later reinstated it upon receiving proof that a cash appeal bond had been paid.
The controversy raised mainly hinged on whether the Board of Liquidators had the authority to dispose of the alien-owned property and whether petitioners’ prior occupancy had conferred a preferential right to purchase.

Whether the Philippine Board of Liquidators, acting with the approval of the President, had the legal authority to dispose of the alien-owned land through a barter transaction and subsequent sale.
Whether the sale of the property to Wellington Ty & Bros., Inc. was valid under the statutory framework governing alien property and subsequent governmental disposals.

Whether the petitioners, as bona fide occupants who had constructed their residences and paid nominal rentals, acquired any preferential right to purchase the lots.
Whether the purported preferential right should be analyzed under Republic Act No. 3348 or under the provisions of the earlier Republic Act No. 477, and if their right was capable of being maintained against a validly executed sale.

Whether the petitioners had a justiciable controversy and a legal interest in bringing a declaratory relief action alleging that the contract of sale violated their rights.
Whether the prerequisites for declaratory relief (justifiable controversy, adverse interests, legal interest, and ripeness) were present in this case.