Santos vs. Manalili

Findings of fact of administrative agencies, which have acquired expertise in matters within their jurisdiction, are accorded great respect and even finality when supported by substantial evidence, and courts will not reweigh such evidence or substitute their judgment for that of the agency, particularly where, as here, the administrative determination was approved by the Office of the President. A sale of real property evidenced solely by an unnotarized, unregistered private deed is not binding on third persons and cannot defeat the rights of one who purchased the same property from the government through regular administrative proceedings and holds a duly issued Torrens title.

A 4,608-square-meter parcel of land in the District of Toril, Davao City, originally formed part of the "Furukawa Plantation" owned by a Japanese national. After the war, the land was turned over to the Philippine government and administered by the National Abaca and Other Fibers Corporation, and thereafter by the respondent Board of Liquidators (BOL), the government agency tasked with disposing of such properties to qualified applicants. The dispute centered on which of two claimants — Reynaldo Manalili or Rodolfo Santos — held a superior right to purchase and possess the property from the government.

• The Property and Governing Agency: The subject land, measuring 4,608 square meters in the District of Toril, Davao City, originally formed part of the "Furukawa Plantation," a Japanese-owned property. Following the war, the land was transferred to the Philippine government and placed under the administration of the National Abaca and Other Fibers Corporation, subsequently succeeded by the Board of Liquidators (BOL).

• Manalili's Application and Purchase: On August 6, 1970, Reynaldo Manalili filed an application to purchase the property with the BOL, appending an Occupant's Affidavit. The application was favorably acted upon. On March 27, 1972, the BOL required Manalili to pay a 10% downpayment of ₱1,865.28. Manalili subsequently declared the land for taxation purposes. After nine years, the BOL issued a Certification of Full Payment endorsing the sale. On December 16, 1981, the BOL executed a Deed of Absolute Sale in Manalili's favor, which was approved by the Office of the President on December 21, 1981. On January 6, 1982, TCT No. T-86414 was issued in Manalili's name.

• Santos's Protest and BOL Investigation: On March 25, 1981 — nine years after Manalili had already made his downpayment and after a Certification of Full Payment had been issued — Rodolfo Santos wrote an undated letter to the BOL protesting Manalili's application. Land Examiner Ildefonso S. Carrillo was tasked to investigate and issued a Memorandum recommending formal investigation. On October 7, 1981, the BOL's Alien Property Unit reported that Santos "was not actually occupying the lot and that he only hired certain Abalahin and Lumaad to plant bananas and coconut trees and maintain a vegetable garden thereon presumably to establish a bona-fide occupancy over the lot." The Unit recommended dismissal of Santos's protest and approval of the sale to Manalili. Meanwhile, Manalili, through counsel, reported Santos's illegal entry to the barrio captain.

• Conflicting Claims of Possession: The Manalilis presented evidence that: Reynaldo Manalili had filed an Occupant's Affidavit as early as 1970; they administered the land before leaving for Manila in 1972; after relocating to Manila, they appointed an administrator to oversee the land and the improvements and crops (bananas and coconut trees) they had planted; and they paid real estate taxes on the land even before the sale. Santos, by contrast, claimed to have purchased the land in February 1969 from Ernesto Abalahin, who had allegedly acquired rights from one Col. Agsalud, a guerrilla veteran who supposedly occupied the lot from 1956 to 1959. Santos and his witnesses (Ernesto Abalahin and Corenelio Mundan) testified that Santos introduced improvements and continuously occupied the land. However, the supposed Deed of Absolute Sale between Santos and Abalahin did not sufficiently identify the lot, was not notarized, and was unregistered. No proof was presented of Col. Agsalud's title or the transfer of rights to Abalahin. Evidence showed that Abalahin entered the land without permission only in 1981, and in 1982, Santos, Abalahin, and one Lumaad illegally cut trees on the land, prompting the Manalilis to report their unlawful entry.

• The Trial Court's Decision: The RTC dismissed Santos's complaint and ordered him to vacate the land, deliver possession to the Manalilis, pay ₱20,000.00 in damages, ₱10,000.00 in attorney's fees, and the costs of suit. The Court of Appeals affirmed in toto.

• Better Right of Possession: Petitioner argued that he had established a superior right of possession by proving continuous occupation and cultivation of the land from February 1969 onward, predicated on his purchase from Ernesto Abalahin, who in turn derived rights from Col. Agsalud, a guerrilla veteran who had occupied the property from 1956 to 1959.

• Fraudulent Sale: Petitioner contended that the sale to Manalili was surreptitious and fraudulent, discovered by him only in 1981, and that his protest triggered an investigation by a BOL land examiner whose September 1981 report allegedly corroborated his actual occupancy and improvements as against Manalili, who was never in possession.

• Prior and Superior Possession: Respondent Manalili countered that he had established a better right of possession through his Occupant's Affidavit filed as early as 1970, his administration of the land, the appointment of an overseer after his relocation to Manila, and the continuous payment of real estate taxes even before the sale.

• Regularity of Administrative Proceedings: Respondent maintained that Santos's protest was duly investigated by the BOL, that the Alien Property Unit's findings were supported by evidence, and that the sale was approved by no less than the Office of the President, thereby carrying a presumption of regularity that Santos failed to overcome.

• Better Right of Possession: Whether the Court of Appeals erred in upholding the Manalilis' superior right of possession over the subject land.

• Validity of the Sale and Alleged Fraud: Whether the Court of Appeals erred in finding that the sale to Manalili was not fraudulent and that petitioner's protest was duly investigated.

• Better Right of Possession: The Manalilis' superior right of possession was affirmed on the basis of preponderant evidence. As early as 1970, Reynaldo Manalili had filed an Occupant's Affidavit with the BOL, administered the land, planted crops, and paid real estate taxes. The Manalilis' subsequent absence from Davao did not diminish their possession, as possession may be exercised through agents pursuant to Article 524 of the Civil Code. Petitioner's contrary claim of ownership — tracing to an unproven right of Col. Agsalud, conveyed through an unnotarized, unregistered private deed that failed to sufficiently identify the property — was legally insufficient. A sale of land appearing only in a private deed cannot bind third persons if not embodied in a public instrument and registered, as held in Secuya vs. Vda. de Selma, 326 SCRA 244 (2000). The evidence further showed that petitioner's entry and cultivation occurred only in 1981, after the administrative sale was already substantially complete.

• Validity of the Sale and Alleged Fraud: The sale to Manalili was valid and no fraud was established by the requisite quantum of proof. Petitioner's protest, belatedly filed nine years after Manalili's application and only after a Certification of Full Payment had been issued, was duly investigated. The BOL's Alien Property Unit found that petitioner was not an actual occupant and had merely arranged for others to cultivate the land to fabricate a bona fide occupancy. The BOL's recommendation to dismiss the protest and approve the sale was formally acted upon and approved by the Office of the President. The presumption of regularity in the performance of official duty under Rule 131, Section 3(m) of the Rules of Court applied, and petitioner failed to overcome it with clear and convincing evidence, as required for allegations of fraud under Maestrado vs. CA, 327 SCRA 678 (2000). The factual findings of an administrative agency, supported by substantial evidence and affirmed by the Office of the President, are entitled to great weight and finality, consistent with Vicente Villaflor vs. Court of Appeals, 280 SCRA 297 (1997).

• Finality of Administrative Findings: Factual findings of administrative agencies, which by reason of their special knowledge and expertise are in a better position to pass judgment on matters within their jurisdiction, are accorded great respect, if not finality, by the courts when supported by substantial evidence, even if such evidence is not overwhelming or merely preponderant. The reviewing court will not reweigh the evidence or substitute its own judgment for that of the administrative body. This principle applies with heightened force where the administrative determination has been affirmed by the Office of the President.

• Presumption of Regularity of Official Acts: Under Rule 131, Section 3(m) of the Rules of Court, official duty is presumed to have been regularly performed. A party alleging fraud or irregularity in administrative proceedings bears the burden of overcoming this presumption with clear and convincing evidence. The BOL's recommendation and the Office of the President's approval were both clothed with this presumption, which petitioner failed to rebut.

• Proof of Fraud: Fraud must be established by clear and convincing evidence. Mere allegations, unsupported by credible proof, are insufficient to invalidate a government sale of public land.

• Sale of Land — Private Instrument vs. Public Instrument: A sale of real property evidenced solely by a private, unnotarized, and unregistered deed is not binding on third persons. For a sale of land to bind third parties, it must be embodied in a public instrument and recorded in the Registry of Deeds.

• Possession Through Agents: Possession need not be exercised personally by the owner or holder. Under Article 524 of the Civil Code, possession may be exercised in one's own name or through another, and rights of possession may be exercised through agents. The physical absence of the Manalilis from the property did not negate their possession, as they maintained an overseer.

• "It is a settled rule in this jurisdiction that factual findings of an administrative agency deserve utmost respect, more so, when, as here, they are supported by substantial evidence, albeit such evidence may not be overwhelming or merely preponderant. By reason of their special knowledge and expertise on matters falling under their jurisdiction, administrative agencies are in a better position to pass judgment thereon, and their findings of fact relative thereto are generally accorded great respect, if not finality, by the courts. It is not the task of this Court to weigh once more the evidence submitted before administrative bodies and to substitute its own for that of the latter." — This passage encapsulates the controlling standard of judicial review for administrative factual determinations, forming the ratio decidendi for affirming the lower courts.

• "A sale of a piece of land appearing in a private deed cannot be considered binding on third persons if it is not embodied in a public instrument and recorded in the Registry of Deeds." — This statement applies the doctrine from Secuya vs. Vda. de Selma to the factual context, underlining why petitioner's private, unnotarized deed could not defeat Manalili's Torrens title.

• Secuya vs. Vda. de Selma, 326 SCRA 244 (2000): Applied as controlling authority for the rule that a sale of land effected through a private, unnotarized, and unregistered deed is not binding on third persons. The Court invoked this to reject petitioner's claim predicated on the private Deed of Absolute Sale with Abalahin.

• Maestrado vs. CA, 327 SCRA 678 (2000): Followed for the evidentiary standard that fraud must be established by clear and convincing evidence, which petitioner failed to satisfy in challenging the BOL's proceedings and the sale to Manalili.

• Vicente Villaflor vs. Court of Appeals, 280 SCRA 297 (1997): Cited as authority for the principle that factual findings of administrative agencies are entitled to great weight and finality when supported by substantial evidence, and that appellate courts should not reweigh such evidence.

• Alo vs. Rocamora, 6 Phil. 197: Cited in support of the rule that possession may be exercised through agents, as articulated in Tolentino's Commentaries.

• Article 524, Civil Code: Possession may be exercised in one's own name or in that of another. Applied to recognize that the Manalilis' physical absence from the land, having appointed an administrator, did not constitute abandonment or loss of possession.

• Rule 131, Section 3(m), Rules of Court — Disputable Presumptions: The presumption that official duty has been regularly performed was applied to the BOL's recommendation and the Office of the President's approval of the sale. Petitioner failed to overcome this presumption.

Associate Justice Artemio V. Panganiban (Chairman, Third Division), Associate Justice Angelina Sandoval-Gutierrez, Associate Justice Renato C. Corona, and Associate Justice Conchita Carpio Morales concurred.

N/A — The decision was unanimous, with no dissenting opinions recorded.