Capitol Subdivision vs.

Negros Occidental
GR No. L-16257; 31 January 1963

Facts:
- Lot 378 is part of Hacienda Madalagan, registered under Agustin and Pilar Amenabar, covered
by an OCT issued in 1916.
- The Amenabars sold the Hacienda to Benares for P300K, payable in instalments.
- The OCT was cancelled, and TC under Benares was issued.
- Benares mortgaged the Hacienda including Lot 378 to Bacolod-Murcia
- Benares again mortgaged the Hacienda, including the lot to PNB subject to the first mortgage.
- These transactions were recorded in the RD.
- The mortgage in favor of PNB was foreclosed and PNB acquired the Hacienda including the lot.
- TCT under Benares was cancelled and another TCT was issued in the name of PNB.
- PNB later agreed to sell the Hacienda to the son Benares, Carlos for P400K, payable in annual
installments, subject to the condition that the title will remain w/ PNB until full payment.
- Thereafter, Carlos transferred his rights to Capitol which completed the payment.
- PNB executed a DOAS and TCT was issued under Capitol.
- Despite the acquisition of the Hacienda in 1934 by PNB it did not take possession of the property
for Benares claimed to be entitled to retain it under an alleged right of lease.
- For this reason, the deed of promise to sell, executed by PNB in favor of Carlos contained a
caveat emptor stipulation.
- Capitol took steps to take possession of the Hacienda and it was discovered that the lot was the
land occupied by the Provincial Hospital of Negros Occidental.
- Not satisfied with the explanations given by officials, Capitol sought to recover the lot.
- Defendant maintained that it had acquired the lot in 1924-1925 through expropriation
proceedings and that it began the construction of the provincial hospital thereon.
- They further claimed that for some reason beyond their comprehension, title was never
transferred in its name and it was placed in its name only for assessment purposes.

Issue & Ruling: Whether the defendant acquired the lot in the expropriation proceedings. NO.

Several circumstances indicate that the expropriation had not been consummated. First,
were the entries in the docket pertaining to the expropriation case refer only to its filing and the
publication in the newspaper of the notices. Second, there was no deed of assignment and TCT in
favor of Negros as regards Lot 378. Third, the property was mortgaged to Bacolod-Murcia Lot
378 could not have been expropriated w/o the intervention of Bacolod and yet, the latter was not
made a party in the expropriation proceedings. And fourth, a second mortgage was constituted in
favor of PNB, which would not have accepted the mortgage had Lot 378 not belong to the
mortgagor. Neither could said lot have been expropriated w/o PNBs knowledge and participation.

Furthermore, in the deed executed by PNB promising to sell the Hacienda to Carlos, it was
explicitly stated that some particular lots had been expropriated by the Provincial Government of
Negros Occidental, thus indicating, by necessary implication, that Lot 378 had not been
expropriated.