Municipality of Legaspi vs. A. L. Ammen Transportation Co., Inc.

A judicially reconstituted certificate of title has the same validity and legal effect as the original thereof, and by express statutory provision is not subject to the encumbrances reserved in cases of extrajudicial reconstitution; where the land covered by such title is already devoted to public use as a road, the registered owner is entitled to due compensation through expropriation rather than to physical restoration of possession.

Respondent A. L. Ammen Transportation Co., Inc. was the registered owner of Lot No. 1114 of the Legaspi Cadastre under a Transfer Certificate of Title that was subsequently lost. Petitioner City of Legaspi, together with the Province of Albay and twenty-four private individuals, occupied portions of the lot, with the city's portion having been devoted to public road purposes as Quezon Avenue since 1947—one of the principal commercial arteries of Legaspi City providing access to the pier area, market, and post office. Republic Act No. 26 governs the reconstitution of lost or destroyed certificates of title, distinguishing between judicial and extrajudicial reconstitution and prescribing different effects as to encumbrances.

Respondent A. L. Ammen Transportation Co., Inc. was the registered owner of Lot No. 1114 of the Legaspi Cadastre, covered by a Transfer Certificate of Title that was subsequently lost. To restore its title, respondent filed a petition for judicial reconstitution before the Court of First Instance of Albay, which granted the petition and issued an order authorizing reconstitution of the title.

Notwithstanding the reconstitution, the City of Legaspi—one of the occupants of portions of the lot—did not surrender possession. The land occupied by the city had been devoted to public road purposes as Quezon Avenue since 1947, serving as a principal commercial artery providing access to and from the pier area, the market, the commercial sector, and the post office of Legaspi City. Twenty-four private individuals likewise occupied portions of the property.

Respondent thereupon filed a complaint for recovery of possession before the Court of First Instance of Albay against the Province of Albay, the Municipality of Legaspi, and the twenty-four private occupants. The CFI dismissed the complaint, and respondent elevated the matter to the Court of Appeals. The appellate court reversed the lower court's judgment, declaring that the reconstituted certificate of title was valid and that respondent was the registered owner of Lot No. 1114. On motion for reconsideration, the Court of Appeals modified its decision by ordering the City of Legaspi to pay ₱200.00 per year as rental beginning January 1948. The City of Legaspi then instituted the present petition for certiorari before the Supreme Court.

The Court of Appeals found as a matter of fact that the fact of reconstitution was not in dispute and that the record of the reconstitution proceeding was not before it, making it unsafe to determine whether the reconstituted title was procured in bad faith or fraudulently. It further noted the presumption of regularity in the granting of the reconstituted title.

• Validity of Reconstituted Title: Petitioner contended that the issues of acquisition or ownership of the lot, its alleged registration through cadastral survey and hearing, and the reconstitution of the title to the land should be examined, implying that the reconstituted title was improperly or fraudulently obtained.
• Direct Attack on Reconstituted Title: Petitioner argued that the proceedings before the lower court constituted a direct attack on the legality of the issuance of the reconstituted title.
• Overwhelming Evidence: Petitioner asserted that there was "overwhelming evidence" to rebut the presumption of legality in the issuance of the reconstituted title.
• Public Interest / Inconvenience of Vacation: Petitioner emphasized that the land in dispute was now a public road (Quezon Avenue), one of the vital arteries of commerce and trade in Legaspi City, and that ordering vacation would cut off access to areas of trade and commerce, adversely affecting the economic potential of the city and its inhabitants and creating serious inconvenience to vehicular and pedestrian traffic.

• Validity of Reconstituted Title: Respondent maintained that the fact of reconstitution was not in dispute and that the reconstituted certificate of title, by statutory provision, has the same validity and legal effect as the original thereof.
• Expropriation as Alternative: Respondent acknowledged that the Court of Appeals had given the petitioner a period of one year within which to expropriate the portion occupied by the road if it did not want to return the portion in question.

• Validity of Reconstituted Title: Whether the fact of reconstitution of respondent's title was in dispute and whether the reconstituted certificate of title is valid and confers ownership.
• Nature of the Lower Court Proceedings: Whether the proceedings before the lower court constituted a direct attack on the legality of the issuance of the reconstituted title.
• Ownership Based on Reconstituted Title: Whether respondent was properly declared the owner of Lot No. 1114 on the basis of the reconstituted title.
• Rebuttal of Presumption of Regularity: Whether there was overwhelming evidence to rebut the presumption of legality in the issuance of the reconstituted title.
• Remedy Regarding Public Road: Whether petitioner should be ordered to vacate the premises and pay damages, given that the land is devoted to public use as a road.

• Validity of Reconstituted Title: Yes. The fact of reconstitution was not in dispute, and under Section 7 of Republic Act No. 26, a reconstituted certificate of title has the same validity and legal effect as the original.
• Nature of the Lower Court Proceedings: No. The proceedings before the lower court were not in the nature of a direct attack on the legality of the issuance of the reconstituted title.
• Ownership Based on Reconstituted Title: Yes. Respondent was properly declared the registered owner of Lot No. 1114 on the basis of the reconstituted title.
• Rebuttal of Presumption of Regularity: No. This assigned error raised a factual question that cannot be inquired into in a petition for review by certiorari.
• Remedy Regarding Public Road: No. Ordering immediate vacation was not the appropriate remedy; the proper solution was for the city to institute expropriation proceedings and pay due compensation, following Alfonso vs. Pasay City.

• Validity of Reconstituted Title: The Court of Appeals found that the fact of reconstitution was not in dispute, and the record of the reconstitution proceeding was not before it, making it unsafe to determine whether the reconstituted title was procured in bad faith or fraudulently. The presumption of regularity in the granting of the reconstituted title prevailed. Section 7 of Republic Act No. 26 expressly provides that reconstituted certificates of title shall have the same validity and legal effect as the originals thereof. The Court relied on Philippine National Bank vs. De la Viña, which held that a judicially reconstituted title, by express provision of Section 10 of Republic Act No. 26, is not subject to the encumbrances reserved under Section 7 for extrajudicially reconstituted titles. The statute would not ordinarily allow reconstitution of liens and encumbrances not noted in the judicially reconstituted owner's certificate of title.

• Nature of the Lower Court Proceedings: The proceedings before the lower court were an action for recovery of possession, not a direct attack on the legality of the reconstituted title. A direct attack on the reconstituted title would require a separate proceeding properly directed at the reconstitution order itself, which was not the case here. The Court of Appeals correctly concluded that the action did not go into the question of acquisition or ownership of the property or the validity of the reconstitution proceedings.

• Ownership Based on Reconstituted Title: Because the reconstituted certificate of title has the same validity and legal effect as the original, respondent's ownership of Lot No. 1114 was established on the basis of the reconstituted title. The Court of Appeals' declaration that respondent was the registered owner was sustained, as the facts as found by the appellate court were not subject to alteration by the Supreme Court.

• Rebuttal of Presumption of Regularity: The fourth assigned error, which alleged "overwhelming evidence" to rebut the presumption of legality in the issuance of the reconstituted title, was factual in nature and therefore could not be inquired into in a petition for review by certiorari, which is limited to questions of law.

• Remedy Regarding Public Road: The land in dispute had been used as a public road (Quezon Avenue) since 1947, and ordering the city to vacate would cut off access to vital areas of trade and commerce, creating serious public inconvenience. The Court applied the doctrine in Alfonso vs. Pasay City, where it was held that while the registered owner could bring an action to recover possession at any time because possession is an attribute of ownership of registered land, restoration of possession was neither convenient nor feasible where the land had been used for road purposes. The only relief available was for the city to make due compensation through expropriation. Respondent itself acknowledged that the Court of Appeals had given the city a period of one year within which to expropriate the portion occupied by the road.

• Validity of Judicially Reconstituted Titles — Under Section 7 of Republic Act No. 26, reconstituted certificates of title have the same validity and legal effect as the originals. Under Section 10 of the same Act, judicially reconstituted titles are not subject to the encumbrances reserved under Section 7 for extrajudicially reconstituted titles. The statute does not ordinarily allow reconstitution of liens and encumbrances not noted in the judicially reconstituted owner's certificate of title. The Court applied this doctrine to sustain respondent's ownership of Lot No. 1114 on the basis of its judicially reconstituted title.

• Jurisdictional Requirements of Reconstitution Proceedings — Reconstitution proceedings are in rem. The cadastral court acquires jurisdiction upon compliance with the required posting of notices and publication in the Official Gazette. Failure to send notice by registered mail to a party does not amount to a jurisdictional defect. The Court relied on Philippine National Bank vs. De la Viña for this proposition.

• Registered Owner's Right to Possession vs. Public Use — A registered owner of land may bring an action to recover possession at any time, as possession is an attribute of ownership, and registered land is not subject to prescription. However, where the land has been devoted to public use such as a road, restoration of possession is neither convenient nor feasible, and the only relief available is for the government entity to pay due compensation through expropriation. The Court applied this doctrine from Alfonso vs. Pasay City to the facts of this case, where Quezon Avenue had been used as a public road since 1947.

• "Unlike in the extrajudicial reconstitution of titles, wherein there is the statutory reservation that the new title 'shall be without prejudice to any party whose right or interest in the property was duly noted in the original, at the time it was lost or destroyed' (Sec. 7, Republic Act; No. 26), a judicially reconstituted title, by express provisions of the statute (Sec. 10, ibid), 'shall not be subject to the encumbrance referred to in section 7' of the Act." — This passage, quoting Philippine National Bank vs. De la Viña, articulates the distinction between judicially and extrajudicially reconstituted titles under Republic Act No. 26 and is the controlling doctrinal basis for the validity of respondent's title.

• "While it may be true that no notice was sent by registered mail to the petitioner bank when the judicial reconstitution of title was sought, such failure, however, did not amount to a jurisdictional defect. The proceedings therein being in rem, the cadastral court acquired jurisdiction to hear and decide the petition for the reconstitution of the owner's title upon compliance with the required posting of notices and publication in the Official Gazette." — This passage establishes the jurisdictional framework for judicial reconstitution proceedings, clarifying that publication and posting suffice for in rem jurisdiction.

• "As registered owner, he could bring an action to recover possession at any time because possession is one of the attributes of ownership of land. However, said restoration of possession by the City of Pasay is neither convenient nor feasible because it is now and has been used for road purposes. So, the only relief available is for the City of Pasay to make due compensation, which it could and should have done years ago since 1925." — This quotation from Alfonso vs. Pasay City sets forth the doctrine balancing a registered owner's right to possession against the public's use of the land as a road, directing expropriation and compensation as the appropriate remedy.

• Philippine National Bank vs. De la Viña, L-14601, August 31, 1960 — Controlling precedent on the distinction between judicially and extrajudicially reconstituted titles under Republic Act No. 26, and on the jurisdictional requirements of in rem reconstitution proceedings. The Court relied on this case to dispose of the first three assigned errors and to establish that a judicially reconstituted title is not subject to the encumbrances reserved for extrajudicial reconstitution.

• Alfonso vs. Pasay City, 106 Phil. 1017 (1960) — Controlling precedent on the remedy available where registered land has been devoted to public road use. The Court applied this case to hold that the city should institute expropriation and pay compensation rather than vacate the property.

• Wright, Jr. vs. Lepanto Consolidated Mining Co., L-18904, July 11, 1964 — Cited in the footnote as a comparative reference (cf.) to Philippine National Bank vs. De la Viña on the jurisdictional requirements of reconstitution proceedings.

• Arches vs. Billanes, L-20452, April 30, 1965 — Cited in the footnote as a comparative reference (cf.) to Philippine National Bank vs. De la Viña on the jurisdictional requirements of reconstitution proceedings.

• Section 7, Republic Act No. 26 — Provides that reconstituted certificates of title shall have the same validity and legal effect as the originals thereof, with a proviso that certificates of title reconstituted extrajudicially shall be without prejudice to any party whose right or interest in the property was duly noted in the original at the time it was lost or destroyed. The Court applied this provision to sustain the validity of respondent's reconstituted title.

• Section 10, Republic Act No. 26 — Provides that a judicially reconstituted title shall not be subject to the encumbrance referred to in Section 7. The Court relied on this provision, as interpreted in Philippine National Bank vs. De la Viña, to establish that respondent's judicially reconstituted title was free of encumbrances not noted therein.

Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Sanchez, and Castro, JJ., concurred. Capistrano, J., took no part.