G.R. No. 163130 September 7, 2007
San Roque Realty and Development Corporation, petitioner, vs. Republic of the Philippines (through the Armed Forces of the Philippines), respondent.

FACTS

The Republic of the Philippines, through the AFP, filed a case seeking the cancellation of Transfer Certificates of Title (TCT) Nos. 128197 and 128198 registered in the name of San Roque Realty and Development Corporation (SRRDC). The subject lands, originally part of Lot No. 933 in Lahug, Cebu City, were expropriated in 1940 by the then Commonwealth government for military purposes under Civil Case No. 781. The government deposited the provisional compensation and, after a condemnation decision was rendered, entered and used the properties. However, the original owners filed a notice of appeal, and the titles were never formally transferred to the government. Decades later, the land was subdivided, and SRRDC acquired titles to the disputed parcels.

ISSUE

The core issue is whether the 1940 expropriation proceeding was valid and consummated, thereby vesting ownership in the Republic and rendering SRRDC’s subsequent titles null and void.

RULING

The Supreme Court ruled in favor of the Republic and ordered the cancellation of SRRDC’s titles. The legal logic rests on the completion and consummation of the expropriation process. Expropriation involves two stages: first, the determination of the government’s authority and the property’s necessity; second, the determination of just compensation. The 1940 decision, which condemned the properties and fixed compensation, constituted a final adjudication of the first stage and a determination of liability for the second. The government’s act of depositing the provisional compensation and its subsequent entry, possession, and use of the land for military purposes for over half a century constituted a clear taking. This physical possession and utilization, coupled with the owners’ failure to actually perfect their appeal or withdraw the deposited funds, consummated the expropriation. Ownership passed to the state upon such taking, notwithstanding the lack of formal titling. Consequently, the land ceased to be part of the commerce of man. SRRDC, as a successor-in-interest, could not acquire better rights than the original owners, who had already lost ownership. Its titles, derived from a source that no longer had ownership to convey, were therefore void. The Court emphasized that the State’s long-standing, open, and continuous possession was the best evidence of ownership, superseding the technical absence of a registered title in its name.