Republic of the Philippines vs. Hon. Intermediate Appellate Court and City of Zamboanga

Enemy properties taken over by the United States under the Philippine Property Act of 1946 and required to be transferred to the Republic of the Philippines belong to the Republic by statutory transfer and are not subject to escheat under Rule 91 in favor of the city or municipality where they are situated; the absence of records or a formal deed of transfer does not defeat Republic ownership.

The Republic of the Philippines, represented by the Board of Liquidators, asserts ownership of the disputed parcel as among enemy properties taken over by the United States under the Philippine Property Act of 1946, an American enactment providing for transfer of such properties to the Republic. The City of Zamboanga is the political subdivision where the land is situated and the respondent in the escheat proceedings. Rule 91 of the Rules of Court governs escheat proceedings for properties of deceased persons leaving no heirs and assigns real estate to the municipality or city where it is located. The case requires determining whether such enemy properties fall under that escheat rule or belong to the Republic by virtue of the Philippine Property Act of 1946.

The property in dispute was among the lands taken over by the United States Government under the Philippine Property Act of 1946, an enactment of the American Congress. It was registered in 1930 under Transfer Certificate of Title No. 9509 of the Register of Deeds of Zamboanga in the name of Kantiro Koyama, a Japanese national who had not been heard from since the end of World War II. Under Section 3 of the Philippine Property Act of 1946, the land was supposed to be transferred to the Republic of the Philippines, but the transfer was never made, and the property remained registered in Koyama’s name. Nevertheless, the lot has since 1978 been covered by Tax Declaration No. 42644 in the name of the Republic of the Philippines, with the Board of Liquidators as administrator.

Earlier, in 1976, the Republic of the Philippines filed escheat proceedings against the property. It claimed that the registered owner had been absent for the past ten years or more and therefore might be presumed dead for the purpose of appointing his successor. It also alleged that he left no heirs or persons entitled to the property and that the State should inherit the same in accordance with Rule 91 of the Rules of Court. After the required publications, a hearing was held at which the City of Zamboanga did not appear, and no claim or opposition was filed by any party. The Solicitor General allowed the appearance of the Board of Liquidators as administrator of the disputed land, and the City Fiscal of Zamboanga City did not object.

• Ownership as Successor-in-Interest: Petitioner maintained that there was a mere oversight on the part of the American government in omitting to transfer the disputed land to the Republic of the Philippines; that neglect should not divest the Republic of property which, under the spirit and intendment of the Philippine Property Act of 1946, should belong to it as successor-in-interest of the United States.

• Practical Administration and Use: Respondent City of Zamboanga argued that the land has an area of only 4,533 square meters and that, for all practical purposes, it can be better administered and used by the city authorities.

• Escheat under Rule 91: Whether the disputed property, taken from an enemy national as a result of World War II and required to be transferred to the Republic of the Philippines under the Philippine Property Act of 1946, is subject to escheat under Rule 91 of the Rules of Court in favor of the City of Zamboanga.
• Ownership Despite Lack of Transfer Records: Whether the absence of records or a formal deed of transfer from the United States to the Republic of the Philippines prevents the Republic from being declared the legal owner of the property under the Philippine Property Act of 1946.

• Escheat under Rule 91: No. Rule 91 does not cover properties taken from enemy nationals as a result of World War II and required to be transferred to the Republic under the Philippine Property Act of 1946; such properties belong to the Philippine government by the transfer authorized and required by that Act, not by escheat.
• Ownership Despite Lack of Transfer Records: Yes. The lack of records or a formal deed does not negate the transfer; the Court presumed the transfer was made, and Section 3 of the Philippine Property Act of 1946 legally effected the transfer to the Republic.

• Escheat under Rule 91: Rule 91 permits escheat of ordinary real properties whose owners may be presumed dead and left no heirs, in favor of the political subdivisions where they are located. The disputed land, however, was among enemy properties taken over by the United States under the Philippine Property Act of 1946 and required to be transferred to the Republic. The Act’s obvious purpose was to turn over to the Philippine government all enemy properties situated in its territory that had been seized and were being held by the United States, which then exercised sovereignty over the Philippines. The transfer of such properties was one of the acts by which the United States acknowledged the Philippines’ elevation to sovereign statehood on July 4, 1946. Because the property belongs to the Philippine government by virtue of that statutory transfer, it is not subject to escheat in favor of the City of Zamboanga under Rule 91.
• Ownership Despite Lack of Transfer Records: The City did not deny that there was mere inadvertence on the part of the American government in omitting to transfer the disputed land to the Republic. Although there were no records of the transfer, the Court presumed that it was made, since the lack of records would run counter to the mandate of the Philippine Property Act of 1946, which intended to vest title in the Philippines to enemy properties found in its territory. It was more reasonable to suppose that the President of the United States, or the person acting under his authority, complied with rather than neglected and violated Section 3, based on the presumption of regularity of official functions. In the extreme, Section 3 legally effected the transfer, to be evidenced later by the formality of a corresponding deed; the lack of such deed did not mean that no transfer was made. Otherwise, the dubious conclusion would follow that the property is still owned and subject to disposition by the United States. The City’s argument that it could better administer and use the land addressed a pragmatic question, not the legal question of ownership; if the City should have the property, it would require a transfer from the Republic, to which it belongs and which has the power to dispose of it.

• Escheat under Rule 91 is limited to ordinary properties of deceased persons without heirs — Rule 91 allows escheat of real or personal property of a person who died intestate, leaving no heir or person entitled to the same, and assigns real estate to the municipality or city where it is situated for the benefit of public schools and public charitable institutions and centers. The Court applied this rule only to ordinary real properties whose owners may be presumed dead and left no heirs. It held that the rule does not cover properties taken from enemy nationals as a result of World War II and required to be transferred to the Republic under the Philippine Property Act of 1946; such properties belong to the Philippine government by the transfer authorized and required by that Act, not by escheat.
• Philippine Property Act of 1946 vested enemy properties in the Republic — Section 3 of the Philippine Property Act of 1946 required the transfer to the Republic of the Philippines of all property vested in or transferred to the President of the United States, the Alien Property Custodian, or a designated officer or agency under the Trading with the Enemy Act, as amended, located in the Philippines at the time of vesting, after satisfaction of claims, costs, and expenses. The Court held that the Act intended to vest title in the Philippines to enemy properties found in its territory and that the disputed land belongs to the Philippine government by virtue of that transfer, not by escheat.
• Presumption of regularity of official functions — Official acts are presumed to have been regularly performed. The Court applied this presumption to suppose that the President of the United States, or the person acting under his authority, complied with Section 3 of the Philippine Property Act of 1946 rather than neglected or violated it, despite the absence of records of the transfer. The Court further stated that Section 3 legally effected the transfer, to be evidenced later by a formal deed.

• "We hold that where it comes to ordinary real properties the owners of which may be presumed dead and left no heirs, the same may be escheated, conformably to Rule 91 of the Rules of Court, in favor of the political subdivisions in which they are located. The said Rule, however, does not cover properties taken from enemy nationals as a result of World War II and required to be transferred to the Republic of the Philippines by the United States in accordance with its own enactment commonly known as the Philippine Property Act of 1946. Such properties, including the land in dispute, belong to the Philippine government not by virtue of the escheat proceedings but on the strength of the transfer authorized and required by the said Act." — This is the ratio decidendi: it distinguishes ordinary escheat under Rule 91 from enemy properties covered by the Philippine Property Act of 1946 and locates Republic ownership in the statutory transfer.
• "While it is true that there are no records of such transfer, we may presume that such transfer was made. The lack of such records does not mean that it was not made as this would run counter to the mandate of the Philippine Property Act of 1946, which, to repeat, intended to vest title in the Philippines enemy properties found in its territory." — This passage establishes the presumption that the required transfer was made despite the absence of records and ties that presumption to the Act’s purpose of vesting enemy properties in the Philippines.
• "In the extreme, we can even say that this section legally effected the transfer, to be evidenced later by the formality of the corresponding deed, and that the lack of such deed does not mean that no transfer was made. Otherwise, we would have to face the dubious conclusion that the said property is still owned and so still subject to disposition by the United States." — This states the Court’s alternative holding that Section 3 of the Philippine Property Act of 1946 itself operated to transfer the property, with a deed merely evidentiary.
• "Perhaps so; but surely that is not the point. We are dealing here not with the pragmatic question of who can benefit more from the disputed property but with the legal question of who is its legal owner. That is the point." — This rejects the City’s practical-administration argument and confines the inquiry to legal ownership.

• Section 3, Philippine Property Act of 1946 — Provides that all property vested in or transferred to the President of the United States, the Alien Property Custodian, or any such officer or agency as the President may designate under the Trading with the Enemy Act, as amended, which was located in the Philippines at the time of such vesting, or the proceeds thereof, and which shall remain after satisfaction of claims, costs, and expenses of administration, shall be transferred by the President of the United States to the Republic of the Philippines. The Court held that this provision required the transfer of the disputed enemy property to the Republic and intended to vest title in the Philippines; the lack of a deed or records did not negate the transfer.
• Section 3, Rule 91, Rules of Court — Provides for hearing and judgment in escheat proceedings: upon satisfactory proof that the order was published and that the person died intestate, seized of property in the Philippines, leaving no heir or person entitled to the same, and no sufficient cause shown to the contrary, the court shall adjudge that the estate shall escheat and shall assign real estate to the municipality or city where it is situated, for the benefit of public schools and public charitable institutions and centers. The Court held that this rule applies to ordinary properties whose owners may be presumed dead and left no heirs, but does not cover enemy properties required to be transferred to the Republic under the Philippine Property Act of 1946.

Yap (Chairman), Narvasa, Melencio-Herrera, Feliciano, Gancayco, and Sarmiento, JJ., concur.