G.R. Nos. L-24557, L-24469 and L-24481 July 31, 1968
CITY OF MANILA, petitioner-appellee, vs. TARLAC DEVELOPMENT CORPORATION, oppositor-appellant; CITY OF MANILA, petitioner-appellee, vs. MANILA LODGE NO. 761, BENEVOLENT AND PROTECTIVE ORDER OF ELKS, INC., oppositor-appellant; CITY OF MANILA, petitioner-appellee, vs. ARMY AND NAVY CLUB OF MANILA, oppositor-appellant.

FACTS

The City of Manila reclaimed two parcels of land from Manila Bay under Act 1360 and registered them under its name (OCT No. 1909). On July 13, 1911, the City sold one parcel to the Benevolent and Protective Order of Elks (BPOE), and on September 20, 1918, it sold the second parcel to the Army and Navy Club of Manila. Both deeds contained conditions, including a stipulation that the City had the option to repurchase the properties for public purposes only, at any time after fifty years from the dates of sale, upon reimbursement of the original price plus the value of improvements. These conditions were annotated on the respective transfer certificates of title.
In 1961, Mayor Arsenio Lacson informed BPOE of the City’s intent to exercise its repurchase option. The City Fiscal, however, opined that the City had no cause of action because the 50-year stipulation was void for exceeding the 10-year period for conventional redemption under Article 1508 of the Spanish Civil Code of 1889. Relying on this opinion, BPOE (in 1963) and the Army and Navy Club filed separate petitions for the cancellation of the annotated repurchase rights. The City of Manila, having been notified, did not oppose these petitions. The lower court granted the petitions and ordered the cancellation of the annotations.
Subsequently, on November 9, 1963, BPOE sold its parcel to Tarlac Development Corporation for P4,700,000. On June 10, 1964, the City of Manila filed petitions for the reannotation of the cancelled entries. The lower court granted the petitions on November 19, 1964, ordering the reannotation. BPOE, Tarlac Development Corporation, and the Army and Navy Club appealed.

ISSUE

Whether the lower court’s 1963 orders cancelling the annotations of the City’s repurchase rights constitute res judicata, thereby barring the 1964 orders for reannotation.

RULING

No, the 1963 cancellation orders do not constitute res judicata and do not bar the reannotation.
The 1963 orders were judgments by consent, based on the concordant views of the City officials (through the City Fiscal’s opinion) and the appellants that the 50-year repurchase stipulation was void. A consent judgment is essentially a contract acknowledged in court. However, municipal officers cannot, by their consent, validate an agreement or stipulation they had no legal power to make. If the officers lacked the authority to agree to the cancellation of a legally valid condition, the resulting consent judgment is void. The want of power to consent can always be shown to avoid such a judgment. Therefore, the 1963 orders of cancellation, being based on the City officials’ unauthorized agreement to treat the valid repurchase stipulation as void, are not conclusive and do not bar the City from seeking reannotation to protect its rights.
The Court affirmed the 1964 orders for reannotation on the certificates of title of BPOE (and its successor Tarlac) and the Army and Navy Club. It reserved the right for Tarlac Development Corporation to initiate a separate action to clarify its rights, particularly regarding its claim of being a purchaser in good faith, as those factual and legal questions were not fully elucidated in the present proceedings. The reannotation was ordered as a preventive measure to protect the City’s eventual rights against future transferees.