TL;DR

In a decisive ruling, the Supreme Court sided with the Heirs of Mariano, ordering the City of Naga to vacate the disputed five-hectare property. The Court found that the purported 1954 Deed of Donation, the basis of the City’s claim, was legally invalid due to critical defects in its notarization and execution. This means the City’s decades-long occupation, including the City Hall and other government offices built on the land, was deemed unlawful. The decision underscores the strict formal requirements for donating immovable property under Philippine law, ensuring property rights are protected against unenforceable agreements. The Heirs are entitled to regain possession and receive compensation for the City’s use of the land.

Broken Promises and City Hall: Unraveling a Land Dispute Decades in the Making

This case revolves around a long-standing dispute between the Heirs of Jose Mariano and Helen S. Mariano and the City of Naga concerning a five-hectare property in Naga City. The City asserted its right to the land based on a Deed of Donation purportedly executed in 1954 by the landowners, Macario Mariano and Jose Gimenez. This donation was allegedly made in exchange for the City Heights Subdivision, owned by Mariano and Gimenez, being awarded the contract to construct the new Naga City Hall. However, the construction contract was ultimately awarded to a different contractor, Francisco O. Sabaria, casting doubt on the fulfillment of the donation’s conditions. Decades later, the Heirs of Mariano, seeking to reclaim the property, filed an unlawful detainer case against the City. The central legal question before the Supreme Court was whether a valid donation of the land to the City ever occurred, and consequently, who had the rightful claim to possess it.

The Supreme Court meticulously examined the purported Deed of Donation and found it legally deficient. Philippine law, specifically Article 749 of the Civil Code, mandates that donations of immovable property must be executed in a public document to be valid. This requirement is not merely procedural but is essential for the donation’s very existence. Article 749 clearly states:

Art. 749. In order that the donation of an immovable may be valid, it must be made in a public document, specifying therein the property donated and the value of the charges which the donee must satisfy.

The acceptance may be made in the same deed of donation or in a separate public document, but it shall not take effect unless it is done during the lifetime of the donor.

If the acceptance is made in a separate instrument, the donor shall be notified thereof in an authentic form, and this step shall be noted in both instruments.

The Court highlighted a critical flaw in the notarization of the Deed. The acknowledgment before the notary public was not made by the supposed donors, Macario and Gimenez, or the donee, the City of Naga represented by Mayor Imperial. Instead, it was acknowledged by officers of the City Heights Subdivision. Furthermore, Mayor Imperial signed the Deed after it was notarized, making it impossible for him to have acknowledged it before the notary on the date indicated. This defective notarization stripped the document of its public character, reducing it to a private instrument, which is insufficient to effect a valid donation of immovable property. As a private document, the purported Deed of Donation was deemed void and without legal effect from the beginning. The Court emphasized that a void contract cannot be validated by ratification or prescription and cannot be the source of any rights or defenses in legal proceedings, including ejectment cases.

The City attempted to argue that even without a valid donation, ownership automatically vested in it because the land was designated as an open space in the subdivision plan. However, the Court rejected this argument. Referencing the 1948 Subdivision Regulations, which were in effect at the time, the Court clarified that while these regulations required open spaces for parks and recreation, they did not mandate automatic transfer of ownership to the government. In fact, the regulations indicated that a positive act of conveyance or dedication was necessary for the local government to acquire ownership of subdivision roads and open spaces. Moreover, the subject property was designated in the subdivision plan not as a recreational open space, but specifically for the City Hall and market sites, uses that are not consistent with the concept of a non-buildable “open space” as contemplated by subdivision regulations. The Court further clarified that the principle of automatic vesting of ownership, as suggested in the 1991 White Plains case, had been modified by later jurisprudence, which affirmed that subdivision streets and open spaces remain private property until donated to the government or expropriated with just compensation.

The Court also addressed the issue of the City being a builder in good faith. Good faith, in this context, requires an honest belief in the validity of one’s right to the property. The Supreme Court found that the City could not be considered a builder in good faith. The evidence demonstrated that the donation was conditional upon the Subdivision being awarded the City Hall construction contract. When the City awarded the contract to Sabaria instead, it was aware that the condition for the donation was not met. Despite this, the City continued to occupy the property and construct the City Hall, demonstrating a lack of honest belief in the validity of its claim. Consequently, the City was deemed a builder in bad faith, losing any right to indemnity for the improvements it made on the land.

Finally, the Court dismissed the City’s defenses of laches and prescription. Laches, or unreasonable delay in asserting a right, and prescription, the acquisition of rights through the passage of time, were deemed inapplicable. The Court noted that the Heirs’ predecessor-in-interest, Macario Mariano, had made efforts to clarify the status of the property with the City. Furthermore, the Heirs had been involved in legal proceedings to establish their inheritance rights, and their claim was initiated within a reasonable time after discovering the property’s status. Crucially, the Court reiterated the principle that actions to recover possession of registered land are imprescriptible. Since the property remained registered in the names of Mariano and Gimenez, their heirs’ right to recover possession could not be barred by prescription or laches.

In conclusion, the Supreme Court upheld the superior right of possession of the Heirs of Mariano. The City of Naga was ordered to vacate the property, and the RTC’s decision, as modified, was reinstated, compelling the City to pay reasonable compensation for the use of the land and attorney’s fees. The Court emphasized that its ruling was provisional, limited to possession, and did not preclude a separate action to definitively settle the issue of ownership. This case serves as a significant reminder of the stringent legal requirements for donations of real property and the enduring protection afforded to registered landowners under the Torrens system.

FAQs

For inquiries regarding the application of this ruling to specific circumstances, please contact Atty. Gabriel Ablola through gaboogle.com or via email at connect@gaboogle.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Heirs of Mariano vs. City of Naga, G.R. No. 197743, March 12, 2018