G.R. No. 163130 - San Roque Realty and Development Corp. vs. Republic

The subject parcels of land, identified as Lot Nos. 933-B-3 and 933-B-4, are located at Lahug, Cebu City, Philippines, originally part of Lot No. 933 covered by Transfer Certificate of Title (TCT) No. 11946.
Lot No. 933 was originally owned by Ismael D. Rosales, Pantaleon Cabrera, and Francisco Racaza.

On September 5, 1938, the Commonwealth of the Philippines initiated an expropriation proceeding via Civil Case No. 781 covering the subject parcels among 18 others.
On October 19, 1938, Judge Felix Martinez ordered an initial deposit of P9,500 as a precondition for entry into the lands being expropriated.
On May 14, 1940, a Decision was rendered condemning the parcels of land; however, title to the subject parcels was not transferred to the government.
The land was eventually subdivided, and TCT No. 11946 was cancelled with new titles issued for the subdivided lots, including TCT Nos. 128197 (Lot No. 933-B-3) and 128198 (Lot No. 933-B-4), which were acquired by defendant-appellee San Roque Realty and Development Corporation (SRRDC).

In 1996, plaintiff-appellant Republic of the Philippines, through the Armed Forces of the Philippines (AFP), filed a case alleging ownership of the subject parcels based on the 1938 expropriation decision, seeking the cancellation of TCT Nos. 128197 and 128198.
The Republic argued the defendant had no lawful right to possess the properties as the expropriation was valid and operative.
Defendant-appellee SRRDC claimed to be a buyer in good faith, argued there was no valid expropriation due to lack of legislative approval, non-payment of just compensation, failure to register ownership or annotate the expropriation on title, and continuous possession since 1930.
Various evidences and testimonies were presented on the use of the properties, military reservations, surveys, payments, and title registration highlighting the respective positions of the parties.

The Regional Trial Court (RTC) ruled in favor of SRRDC on August 25, 1998, dismissing the Republic’s complaint and upholding SRRDC’s ownership based on actual possession, title registration, and absence of proof of valid expropriation and compensation.
The Court of Appeals (CA) reversed the RTC decision in August 2003, ruling the expropriation was final due to failure to perfect appeal by original owners, and that laches and estoppel do not apply against the Republic. The CA ordered cancellation of SRRDC’s titles.

SRRDC filed a petition for review before the Supreme Court, assigning errors principally relating to the finality and validity of the expropriation proceedings, the supremacy of Torrens title, laches, and good faith purchaser status.

Whether or not the expropriation proceedings in Civil Case No. 781, including the CFI Decision condemning Lot No. 933, are valid and final, thereby binding SRRDC as successor-in-interest.
Whether the Republic of the Philippines properly completed the expropriation by paying just compensation and registering its ownership or lien over the subject properties.
Whether the Republic is barred by laches from asserting ownership after more than 56 years of inaction and failure to assert its claim.
Whether SRRDC is a buyer in good faith and entitled to protection as an innocent purchaser for value under the Torrens system and existing laws (including PD No. 1529).
The effect of Republic Act No. 9443 confirming the validity of existing Transfer Certificates of Title covering the Banilad Friar Lands Estate, including the subject properties.