G.R. No.

L-8936 October 2, 1915

CONSUELO LEGARDA, with her husband MAURO PRIETO, plaintiffs-appellants,
vs.
N.M. SALEEBY, defendant-appellee.
Singson, Ledesma and Lim for appellants.
D.R. Williams for appellee.

JOHNSON, J.:
From the record the following facts appear:
First. That the plaintiffs and the defendant occupy, as owners, adjoining lots in the district of Ermita in the city of Manila.
Second. That there exists and has existed a number of years a stone wall between the said lots. Said wall is located on
the lot of the plaintiffs.
Third. That the plaintiffs, on the 2nd day of March, 1906, presented a petition in the Court of Land Registration for the
registration of their lot. After a consideration of said petition the court, on the 25th day of October, 1906, decreed that the
title of the plaintiffs should be registered and issued to them the original certificate provided for under the torrens system.
Said registration and certificate included the wall.
Fourth. Later the predecessor of the defendant presented a petition in the Court of Land Registration for the registration of
the lot now occupied by him. On the 25th day of March, 1912, the court decreed the registration of said title and issued
the original certificate provided for under the torrens system. The description of the lot given in the petition of the
defendant also included said wall.
Fifth. Several months later (the 13th day of December, 1912) the plaintiffs discovered that the wall which had been
included in the certificate granted to them had also been included in the certificate granted to the defendant .They
immediately presented a petition in the Court of Land Registration for an adjustment and correction of the error committed
by including said wall in the registered title of each of said parties. The lower court however, without notice to the
defendant, denied said petition upon the theory that, during the pendency of the petition for the registration of the
defendant's land, they failed to make any objection to the registration of said lot, including the wall, in the name of
the defendant.
Sixth. That the land occupied by the wall is registered in the name of each of the owners of the adjoining lots. The wall is
not a joint wall.
Under these facts, who is the owner of the wall and the land occupied by it?
The decision of the lower court is based upon the theory that the action for the registration of the lot of the defendant was
a judicial proceeding and that the judgment or decree was binding upon all parties who did not appear and oppose it. In
other words, by reason of the fact that the plaintiffs had not opposed the registration of that part of the lot on which the
wall was situate they had lost it, even though it had been theretofore registered in their name. Granting that theory to be
correct one, and granting even that the wall and the land occupied by it, in fact, belonged to the defendant and his
predecessors, then the same theory should be applied to the defendant himself. Applying that theory to him, he had
already lost whatever right he had therein, by permitting the plaintiffs to have the same registered in their name, more
than six years before. Having thus lost hid right, may he be permitted to regain it by simply including it in a petition for
registration? The plaintiffs having secured the registration of their lot, including the wall, were they obliged to constantly be
on the alert and to watch all the proceedings in the land court to see that some one else was not having all, or a portion of
the same, registered? If that question is to be answered in the affirmative, then the whole scheme and purpose of the
torrens system of land registration must fail. The real purpose of that system is to quiet title to land; to put a stop forever to
any question of the legality of the title, except claims which were noted at the time of registration, in the certificate, or
which may arise subsequent thereto. That being the purpose of the law, it would seem that once a title is registered the
owner may rest secure, without the necessity of waiting in the portals of the court, or sitting in the "mirador de su casa," to
avoid the possibility of losing his land. Of course, it can not be denied that the proceeding for the registration of land under
the torrens system is judicial (Escueta vs. .Director of Lands, 16 Phil. Rep., 482). It is clothed with all the forms of an
action and the result is final and binding upon all the world. It is an action in rem. (Escueta vs. Director of Lands (supra);
Grey Alba vs.De la Cruz, 17 Phil. rep., 49 Roxas vs. Enriquez, 29 Phil. Rep., 31; Tyler vs. Judges, 175 Mass., 51
American Land Co. vs. Zeiss, 219 U.S., 47.)
While the proceeding is judicial, it involves more in its consequences than does an ordinary action. All the world are
parties, including the government. After the registration is complete and final and there exists no fraud, there are no
innocent third parties who may claim an interest. The rights of all the world are foreclosed by the decree of registration.
The government itself assumes the burden of giving notice to all parties. To permit persons who are parties in the
registration proceeding (and they are all the world) to again litigate the same questions, and to again cast doubt upon the
validity of the registered title, would destroy the very purpose and intent of the law. The registration, under the torrens
system, does not give the owner any better title than he had. If he does not already have a perfect title, he can not have it
registered. Fee simple titles only may be registered. The certificate of registration accumulates in open document a
precise and correct statement of the exact status of the fee held by its owner. The certificate, in the absence of fraud, is
the evidence of title and shows exactly the real interest of its owner. The title once registered, with very few exceptions,
should not thereafter be impugned, altered, changed, modified, enlarged, or diminished, except in some direct proceeding
permitted by law. Otherwise all security in registered titles would be lost. A registered title can not be altered, modified,
enlarged, or diminished in a collateral proceeding and not even by a direct proceeding, after the lapse of the period
prescribed by law.
For the difficulty involved in the present case the Act (No. 496) providing for the registration of titles under the torrens
system affords us no remedy. There is no provision in said Act giving the parties relief under conditions like the present.
There is nothing in the Act which indicates who should be the owner of land which has been registered in the name of two
different persons.
The rule, we think, is well settled that the decree ordering the registration of a particular parcel of land is a bar to future
litigation over the same between the same parties .In view of the fact that all the world are parties, it must follow that
future litigation over the title is forever barred; there can be no persons who are not parties to the action. This, we think, is
the rule, except as to rights which are noted in the certificate or which arise subsequently, and with certain other
exceptions which need not be dismissed at present. A title once registered can not be defeated, even by an adverse,
open, and notorious possession. Registered title under the torrens system can not be defeated by prescription (section
46, Act No. 496). The title, once registered, is notice to the world. All persons must take notice. No one can plead
ignorance of the registration.
The question, who is the owner of land registered in the name of two different persons, has been presented to the courts
in other jurisdictions. In some jurisdictions, where the "torrens" system has been adopted, the difficulty has been settled
by express statutory provision. In others it has been settled by the courts. Hogg, in his excellent discussion of the
"Australian Torrens System," at page 823, says: "The general rule is that in the case of two certificates of title, purporting
to include the same land, the earlier in date prevails, whether the land comprised in the latter certificate be wholly, or only
in part, comprised in the earlier certificate. (Oelkers vs. Merry, 2 Q.S.C.R., 193; Miller vs. Davy, 7 N.Z.R., 155;
Lloyd vs. Myfield, 7 A.L.T. (V.) 48; Stevens vs. Williams, 12 V.L. R., 152; Register of Titles, vs. Esperance Land Co., 1
W.A.R., 118.)" Hogg adds however that, "if it can be very clearly ascertained by the ordinary rules of construction relating
to written documents, that the inclusion of the land in the certificate of title of prior date is a mistake, the mistake may be
rectified by holding the latter of the two certificates of title to be conclusive." (See Hogg on the "Australian torrens
System," supra, and cases cited. See also the excellent work of Niblack in his "Analysis of the Torrens System," page 99.)
Niblack, in discussing the general question, said: "Where two certificates purport to include the same land the earlier in
date prevails. ... In successive registrations, where more than one certificate is issued in respect of a particular estate or
interest in land, the person claiming under the prior certificates is entitled to the estate or interest; and that person is
deemed to hold under the prior certificate who is the holder of, or whose claim is derived directly or indirectly from the
person who was the holder of the earliest certificate issued in respect thereof. While the acts in this country do not
expressly cover the case of the issue of two certificates for the same land, they provide that a registered owner shall hold
the title, and the effect of this undoubtedly is that where two certificates purport to include the same registered land, the
holder of the earlier one continues to hold the title" (p. 237).
Section 38 of Act No. 496, provides that; "It (the decree of registration) shall be conclusive upon and against all persons,
including the Insular Government and all the branches thereof, whether mentioned by name in the application, notice, or
citation, or included in the general description "To all whom it may concern." Such decree shall not be opened by reason
of the absence, infancy, or other disability of any person affected thereby, nor by any proceeding in any court for reversing
judgments or decrees; subject, however, to the right of any person deprived of land or of any estate or interest therein by
decree of registration obtained by fraud to file in the Court of Land Registration a petition for review within one year after
entry of the decree (of registration), provided no innocent purchaser for value has acquired an interest.
It will be noted, from said section, that the "decree of registration" shall not be opened, for any reason, in any court, except
for fraud, and not even for fraud, after the lapse of one year. If then the decree of registration can not be opened
for any reason, except for fraud, in a direct proceeding for that purpose, may such decree be opened or set aside in a
collateral proceeding by including a portion of the land in a subsequent certificate or decree of registration? We do not
believe the law contemplated that a person could be deprived of his registered title in that way.
We have in this jurisdiction a general statutory provision which governs the right of the ownership of land when the same
is registered in the ordinary registry in the name of two persons. Article 1473 of the Civil Code provides, among other
things, that when one piece of real property had been sold to two different persons it shall belong to the person acquiring
it, who first inscribes it in the registry. This rule, of course, presupposes that each of the vendees or purchasers has
acquired title to the land. The real ownership in such a case depends upon priority of registration. While we do not now
decide that the general provisions of the Civil Code are applicable to the Land Registration Act, even though we see no
objection thereto, yet we think, in the absence of other express provisions, they should have a persuasive influence in
adopting a rule for governing the effect of a double registration under said Act. Adopting the rule which we believe to be
more in consonance with the purposes and the real intent of the torrens system, we are of the opinion and so decree that
in case land has been registered under the Land Registration Act in the name of two different persons, the earlier in date
shall prevail.
In reaching the above conclusion, we have not overlooked the forceful argument of the appellee. He says, among other
things; "When Prieto et al. were served with notice of the application of Teus (the predecessor of the defendant) they
became defendants in a proceeding wherein he, Teus, was seeking to foreclose their right, and that of orders, to the
parcel of land described in his application. Through their failure to appear and contest his right thereto, and the
subsequent entry of a default judgment against them, they became irrevocably bound by the decree adjudicating such
land to Teus. They had their day in court and can not set up their own omission as ground for impugning the validity of a
judgment duly entered by a court of competent jurisdiction. To decide otherwise would be to hold that lands with torrens
titles are above the law and beyond the jurisdiction of the courts".
As was said above, the primary and fundamental purpose of the torrens system is to quiet title. If the holder of a certificate
cannot rest secure in this registered title then the purpose of the law is defeated. If those dealing with registered land
cannot rely upon the certificate, then nothing has been gained by the registration and the expense incurred thereby has
been in vain. If the holder may lose a strip of his registered land by the method adopted in the present case, he may lose
it all. Suppose within the six years which elapsed after the plaintiff had secured their title, they had mortgaged or sold their
right, what would be the position or right of the mortgagee or vendee? That mistakes are bound to occur cannot be
denied, and sometimes the damage done thereby is irreparable. It is the duty of the courts to adjust the rights of the
parties under such circumstances so as to minimize such damages, taking into consideration al of the conditions and the
diligence of the respective parties to avoid them. In the present case, the appellee was the first negligent (granting that he
was the real owner, and if he was not the real owner he can not complain) in not opposing the registration in the name of
the appellants. He was a party-defendant in an action for the registration of the lot in question, in the name of the
appellants, in 1906. "Through his failure to appear and to oppose such registration, and the subsequent entry of a default
judgment against him, he became irrevocably bound by the decree adjudicating such land to the appellants. He had his
day in court and should not be permitted to set up his own omissions as the ground for impugning the validity of a
judgment duly entered by a court of competent jurisdiction." Granting that he was the owner of the land upon which the
wall is located, his failure to oppose the registration of the same in the name of the appellants, in the absence of fraud,
forever closes his mouth against impugning the validity of that judgment. There is no more reason why the doctrine
invoked by the appellee should be applied to the appellants than to him.
We have decided, in case of double registration under the Land Registration Act, that the owner of the earliest certificate
is the owner of the land. That is the rule between original parties. May this rule be applied to successive vendees of the
owners of such certificates? Suppose that one or the other of the parties, before the error is discovered, transfers his
original certificate to an "innocent purchaser." The general rule is that the vendee of land has no greater right, title, or
interest than his vendor; that he acquires the right which his vendor had, only. Under that rule the vendee of the earlier
certificate would be the owner as against the vendee of the owner of the later certificate.
We find statutory provisions which, upon first reading, seem to cast some doubt upon the rule that the vendee acquires
the interest of the vendor only. Sections 38, 55, and 112 of Act No. 496 indicate that the vendee may acquire rights and
be protected against defenses which the vendor would not. Said sections speak of available rights in favor of third parties
which are cut off by virtue of the sale of the land to an "innocent purchaser." That is to say, persons who had had a right
or interest in land wrongfully included in an original certificate would be unable to enforce such rights against an "innocent
purchaser," by virtue of the provisions of said sections. In the present case Teus had his land, including the wall,
registered in his name. He subsequently sold the same to the appellee. Is the appellee an "innocent purchaser," as that
phrase is used in said sections? May those who have been deprived of their land by reason of a mistake in the original
certificate in favor of Teus be deprived of their right to the same, by virtue of the sale by him to the appellee? Suppose the
appellants had sold their lot, including the wall, to an "innocent purchaser," would such purchaser be included in the
phrase "innocent purchaser," as the same is used in said sections? Under these examples there would be two innocent
purchasers of the same land, is said sections are to be applied .Which of the two innocent purchasers, if they are both to
be regarded as innocent purchasers, should be protected under the provisions of said sections? These questions indicate
the difficulty with which we are met in giving meaning and effect to the phrase "innocent purchaser," in said sections.
May the purchaser of land which has been included in a "second original certificate" ever be regarded as an "innocent
purchaser," as against the rights or interest of the owner of the first original certificate, his heirs, assigns, or vendee? The
first original certificate is recorded in the public registry. It is never issued until it is recorded. The record notice to all the
world. All persons are charged with the knowledge of what it contains. All persons dealing with the land so recorded, or
any portion of it, must be charged with notice of whatever it contains. The purchaser is charged with notice of every fact
shown by the record and is presumed to know every fact which the record discloses .This rule is so well established that it
is scarcely necessary to cite authorities in its support (Northwestern National Bank vs. Freeman, 171 U.S., 620, 629;
Delvin on Real Estate, sections 710, 710 [a]).
When a conveyance has been properly recorded such record is constructive notice of its contents and all interests, legal
and equitable, included therein. (Grandin vs. Anderson, 15 Ohio State, 286, 289; Orvis vs. Newell, 17 Conn., 97;
Buchanan vs. Intentional Bank, 78 Ill., 500; Youngs vs. Wilson, 27 N.Y., 351; McCabe vs. Grey, 20 Cal., 509;
Montefiore vs. Browne, 7 House of Lords Cases, 341.)
Under the rule of notice, it is presumed that the purchaser has examined every instrument of record affecting the title.
Such presumption is irrebutable. He is charged with notice of every fact shown by the record and is presumed to know
every fact which an examination of the record would have disclosed. This presumption cannot be overcome by proof of
innocence or good faith. Otherwise the very purpose and object of the law requiring a record would be destroyed. Such
presumption cannot be defeated by proof of want of knowledge of what the record contains any more than one may be
permitted to show that he was ignorant of the provisions of the law. The rule that all persons must take notice of the facts
which the public record contains is a rule of law. The rule must be absolute. Any variation would lead to endless confusion
and useless litigation.
While there is no statutory provision in force here requiring that original deeds of conveyance of real property be recorded,
yet there is a rule requiring mortgages to be recorded. (Arts. 1875 and 606 of the Civil Code.) The record of a mortgage is
indispensable to its validity. (Art .1875.) In the face of that statute would the courts allow a mortgage to be valid which had
not been recorded, upon the plea of ignorance of the statutory provision, when third parties were interested? May a
purchaser of land, subsequent to the recorded mortgage, plead ignorance of its existence, and by reason of such
ignorance have the land released from such lien? Could a purchaser of land, after the recorded mortgage, be relieved
from the mortgage lien by the plea that he was a bona fide purchaser? May there be a bona fide purchaser of said
land, bona fide in the sense that he had no knowledge of the existence of the mortgage? We believe the rule that all
persons must take notice of what the public record contains in just as obligatory upon all persons as the rule that all men
must know the law; that no one can plead ignorance of the law. The fact that all men know the law is contrary to the
presumption. The conduct of men, at times, shows clearly that they do not know the law. The rule, however, is mandatory
and obligatory, notwithstanding. It would be just as logical to allow the defense of ignorance of the existence and contents
of a public record.
In view, therefore, of the foregoing rules of law, may the purchaser of land from the owner of the second original certificate
be an "innocent purchaser," when a part or all of such land had theretofore been registered in the name of another, not
the vendor? We are of the opinion that said sections 38, 55, and 112 should not be applied to such purchasers. We do not
believe that the phrase "innocent purchaser should be applied to such a purchaser. He cannot be regarded as an
"innocent purchaser" because of the facts contained in the record of the first original certificate. The rule should not be
applied to the purchaser of a parcel of land the vendor of which is not the owner of the original certificate, or his
successors. He, in nonsense, can be an "innocent purchaser" of the portion of the land included in another earlier original
certificate. The rule of notice of what the record contains precludes the idea of innocence. By reason of the prior registry
there cannot be an innocent purchaser of land included in a prior original certificate and in a name other than that of the
vendor, or his successors. In order to minimize the difficulties we think this is the safe rule to establish. We believe the
phrase "innocent purchaser," used in said sections, should be limited only to cases where unregistered land has been
wrongfully included in a certificate under the torrens system. When land is once brought under the torrens system, the
record of the original certificate and all subsequent transfers thereof is notice to all the world. That being the rule, could
Teus even regarded as the holder in good fifth of that part of the land included in his certificate of the appellants? We think
not. Suppose, for example, that Teus had never had his lot registered under the torrens system. Suppose he had sold his
lot to the appellee and had included in his deed of transfer the very strip of land now in question. Could his vendee be
regarded as an "innocent purchaser" of said strip? Would his vendee be an "innocent purchaser" of said strip? Certainly
not. The record of the original certificate of the appellants precludes the possibility. Has the appellee gained any right by
reason of the registration of the strip of land in the name of his vendor? Applying the rule of notice resulting from the
record of the title of the appellants, the question must be answered in the negative. We are of the opinion that these rules
are more in harmony with the purpose of Act No. 496 than the rule contended for by the appellee. We believe that the
purchaser from the owner of the later certificate, and his successors, should be required to resort to his vendor for
damages, in case of a mistake like the present, rather than to molest the holder of the first certificate who has been guilty
of no negligence. The holder of the first original certificate and his successors should be permitted to rest secure in their
title, against one who had acquired rights in conflict therewith and who had full and complete knowledge of their rights.
The purchaser of land included in the second original certificate, by reason of the facts contained in the public record and
the knowledge with which he is charged and by reason of his negligence, should suffer the loss, if any, resulting from such
purchase, rather than he who has obtained the first certificate and who was innocent of any act of negligence.
The foregoing decision does not solve, nor pretend to solve, all the difficulties resulting from double registration under the
torrens system and the subsequent transfer of the land. Neither do we now attempt to decide the effect of the former
registration in the ordinary registry upon the registration under the torrens system. We are inclined to the view, without
deciding it, that the record under the torrens system, supersede all other registries. If that view is correct then it will be
sufficient, in dealing with land registered and recorded alone. Once land is registered and recorded under the torrens
system, that record alone can be examined for the purpose of ascertaining the real status of the title to the land.
It would be seen to a just and equitable rule, when two persons have acquired equal rights in the same thing, to hold that
the one who acquired it first and who has complied with all the requirements of the law should be protected.
In view of our conclusions, above stated, the judgment of the lower court should be and is hereby revoked. The record is
hereby returned to the court now having and exercising the jurisdiction heretofore exercised by the land court, with
direction to make such orders and decrees in the premises as may correct the error heretofore made in including the land
in the second original certificate issued in favor of the predecessor of the appellee, as well as in all other duplicate
certificates issued.
Without any findings as to costs, it is so ordered.

G.R. No. L-23268 June 30, 1972

PASTOR B. CONSTANTINO and PASTOR CONSTANTINO, JR., plaintiffs-movants-appellees,
vs.
HERMINIA ESPIRITU, defendant, NICANOR B. AVES, purchaser-oppositor-appellant.
David Guevara for plaintiffs-movants-appellees.
Silva & Gonzales for purchaser-oppositor-appellant.
FERNANDO, J.:p
The crucial issue in this appeal from an order of the lower court, one on which no pronouncement has as yet come from
this Tribunal, is the binding effect, if any, of a declaration of nullity of the cancellation of a lis pendens on the rights of an
innocent purchaser for value, who had relied on the title of the vendor, with such cancellation duly noted. The answer
given by the lower court would consider the reliance as misplaced even as to such vendee, if thereafter such cancellation
could be shown to be improper and illegal, resulting in the challenged order requiring that such lis pendens be inscribed in
his title. Hence this appeal, predicated on the contention that a sale, under such circumstances with the vendor's title clear
of such encumbrance, due to such previous cancellation, could not thereafter be saddled with such burden, the
purchaser, appellant Nicanor V. Aves, being a beneficiary of the Torrens system of registration. The teaching to be culled
from authoritative precedents sustains such a stand. Appellant has made out a case for reversal.
The appealed order of December 19, 1963 started with a statement of the case: "The plaintiff Pastor B. Constantino filed
the instant Motion to Reinstate Lis Pendens dated July 17, 1963 and the Amending Motion dated July 23, 1963 praying
[for the] cancellation of lis pendens on the property described in Transfer Certificate of Title No. 32744 effected by the
Register of Deeds of Rizal on September 5, 1960 be declared null and void, and that the said Register of Deeds be
forthwith ordered to reinstate not only on Transfer Certificate of Title No. 32744 but also on Transfer Certificate of Title No.
82798 the lis pendens originally inscribed on said Transfer Certificate of Title No. 32744." 1
Then came a statement of the antecedent facts: "... On December 3, 1959 the plaintiff filed the complaint in this case
against the defendant Herminia Espiritu, praying among other things: 'a) That pending this suit, a writ of preliminary
injunction be issued restraining the defendant, her agents, attorneys, representatives, or any other persons acting in her
behalf, to absolutely abstain from further alienating or otherwise disposing of the property described in Paragraph IV
hereof and that, after trial, the same be made permanent; b) That the defendant be forthwith ordered to execute a deed of
absolute conveyance of the said property in favor of Pastor Constantino, Jr., the beneficiary, free from all liens and
encumbrances; ...Upon a motion to dismiss filed by the defendant, the complaint was ordered dismissed on January 8,
1960. A motion to admit amended complaint was filed by the plaintiff on January 12, 1960, but the same was denied on
February 1. Appeal was taken by the plailitiff from the second order and after said appeal was found to have been filed out
of time, a motion for reconsideration was filed, which was however also denied on March 23. A petition
for mandamus was filed before the Supreme Court to compel this Court to approve the record on appeal filed by the
plaintiff in this case (G.R. No. L-16853). This petition was granted in a decision promulgated on June 29, 1963."2
The appealed order then noted the circumstances indicative of bad faith in the cancellation of such lis pendens: "It is
alleged that while the mandamus proceeding was still pending before the Supreme Court, the defendant on September 5,
1960 fraudulently and in bad faith caused the cancellation of lis pendens on Transfer Certificate of Title No. 32477 by filing
with the Office of the Register of Deeds of Rizal a true copy of the Order dated January 8, 1960, which ordered the
dismissal of the complaint, 'Knowing fully well that this case is still pending in this Court by virtue of
the mandamus proceeding the plaintiffs filed in the Supreme Court [and] the Register of Deeds of Rizal, without first
verifying if the said Order of January 8, 1960 had really become final by requiring the defendant to secure a certificate to
that effect from the Clerk of this Court, illegally cancelled from the said certificate of title the lis pendens inscribed thereon
under Entry No. 88374, L. P. 478, as follows: ...,' and thereafter the defendant executed a purported deed of sale of the
property in favor of one Nicanor B. Aves on December 31, 1960, as a result of which Transfer Certificate of Title No.
32744 was cancelled and, in lieu thereof, Transfer Certificate of Title No. 82798 was issued in favor of said supposed
vendee, ... . Subsequently, or on January 26, 1961, said Nicanor Aves mortgaged the property in favor of the Philippine
Banking Corporation to guarantee the payment of the sum of P30,000.00. These transactions took place while this case
was still (and still is) pending by virtue of the petition for mandamus, which was granted in a decision promulgated on
June 29, 1963."3
The claim of appellant of clear title was next taken up. Thus: "In answer to the plaintiffs' motion, the vendee, Nicanor B.
Aves, admitted being the purchaser of the property but claimed lack of knowledge of the pendency of the litigation
between the plaintiffs and the defendant; that he is an innocent purchaser in good faith and for value and that the sale
was consummated only after the title which appeared to be clean and free from all liens and encumbrances had been
shown to him, and furthermore, after having been assured by the vendor to that effect, that he mortgaged the property as
an exercise of ownership and dominion and, finally, that his title to the property cannot be attacked collaterally in the
present motion."4
After stating that there was bad faith in the cancellation of such lis pendens, the order of the lower court discussed its
legal effect: "The cancellation of the notice of lis pendens is of doubtful validity, considering that its cancellation was based
merely on the Order of January 8, 1960 ..., which is the Order dismissing the original complaint, while there had been
subsequent order after said date. Moreover, such cancellation was made not on express order of the Court but only by
reason of the dismissal of the Complaint contrary to [law]. Such was not done in the cancellation of the lis pendens in
question. The cancellation of the lis pendens was, therefore, improper and illegal."5The dispositive portion of such a
decision was to declare the cancellation null and void and "to inscribe the same lis pendens on Transfer Certificate of Title
No. 82798 [in the name of appellant Nicanor B. Aves]."
Appellant Aves elevated the matter to this Court. He had every reason to. There is, as was pointed out, merit in his
appeal. As an innocent purchaser for value he was well within the mantle of protection that is a distinctive feature of the
Torrens system of registration.
1. A notice of lis pendens, it is to be noted, flows from the conclusive character of a decree in land registration cases. That
is a basic aspect of the Torrens system as stressed in our decisions, beginning with Jones v. The Insular
Government,6 promulgated in 1906. As set forth in the leading case of Legarda v. Saleeby:7 "The real purpose of the
system is to quiet title of land; to put a stop forever to any question of the legality of the title, except claims which were
noted at the time of registration, in the certificate, or which may arise subsequent thereto. That being the purpose of the
law, it would seem that once a title is registered the owner may rest secure, without the necessity of waiting in the portals
of the courts, or sitting in the 'mirador de sucasa,' to avoid the possibility of losing his land." 8 For such title "accumulates in
one document a precise and correct statement of the exact status of the fee held by its owner. The certificate, in the
absence of fraud, is the evidence of title and shows exactly the real interest of its owner. The title once registered, with
very few exceptions, should not thereafter be impugned, altered, changed, modified, enlarged, or diminished, except in
some direct proceeding permitted by law. Otherwise all security in registered titles would be lost." 9 Such a principle
applies not only to the holder of the title but to one who buys it from him for value.
The notice of lis pendens thus serves a useful purpose. Nothing could be more appropriate, considering the reliance that
any person wishing to deal with a holder of a certificate of title could place thereon. If there be anything adverse to the
fullness of his rights then, including the pendency of a suit, the title itself would show it. So we have made clear in our
decisions from Sikatuna v. Guevara, 10 to Jose v. Blue. 11 An excerpt from the opinion of Justice Zaldivar, speaking for the
Court, in Jose v. Blue summarizes the matter neatly: "The notice of lis pendens is an announcement to the whole world
that a particular real property is in litigation, and serves as a warning that one who acquires an interest over said property
does so at his own risk, or that he gambles on the result of the litigation over said property. Since appellant herein bought
the land in question with knowledge of the existing encumbrances thereon, she cannot invoke the right of a purchaser in
good faith, and she could not have acquired better rights than those of her predecessors in interest." 12
2. Appellant Aves would impugn the order for not respecting his rights as an innocent purchaser for value. There he is on
solid ground. Had the lower court yielded deference to controlling decisions of this Court, it would not have decided as it
did. For appellant was an innocent purchaser for value. At the time of the sale the title exhibited to him by the seller had
this entry: "Entry No. 4756/T-No. 32744-[Cancellation of Lis Pendens]: In the order of the Court of First Instance of Rizal,
in Case No. 5924, the opposition of plaintiff and the rejoinder of defendant, finding the ground for dismissal being
meritorious, the complaint in said Case is dismissed, by virtue of which the Lis Pendens inscribed under Entry No.88374,
L. P. 478 is hereby cancelled. Date of the Instrument — Jan. 8, 1960, Date of the inscription — Sept. 5, 1960 — 8:49 a.m.
(Sgd) Jose D. Santos, Register of Deeds."13
It was Justice Moreland who as far back as 1914 stressed: "The peculiar force of a Torrens title [is brought] into play [if the
sale be] to an innocent third person for value." 14 Even a previous sale, according to the same jurist would have "no effect
upon a [later] purchase ... for value and in good faith ... ." 15 The same thought finds expression in a still later opinion of his
in these words: "To repeat, the purpose was to give to the person registering, and to his transferee for value, an
absolutely clean title, one not subject to hidden defects, to undeveloped or inchoate claims, to any sort of restriction,
limitation, or reduction except those [found therein]."16 There has been no deviation on the part of this Court from such an
approach. 17 Only recently in 1967, in Gestosani v. Insular Development Co., Inc., 18Justice Dizon, after stressing the
incontrovertible and indefeasible character of a title stated: "In the instant case the above doctrine should apply with more
reason, considering the fact that the property has passed from the hands of the original registered owner into those of
clearly innocent third parties." 19 A restatement of the doctrine in the latest opinion in point, Maquiling v. Umadhay, 20 this
time from Justice Makalintal, is illuminating. Thus: "However, while the Umadhay spouses cannot rely on the title, the
same not being in the name of their grantor, respondent Crisanta S. Gumban stands on a different footing altogether. At
the time she purchased the land the title thereto was already in the same of her vendors (T.C.T. — 15522). She had the
right to rely on what appeared on the face of said title. There is nothing in the record to indicate that she knew of any
unregistered claims to or equities in the land pertaining to other persons, such as that of herein petitioner, or of any other
circumstances which should put her on guard and cause her to inquire behind the certificate. According to the Court of
Appeals, 'she took all the necessary precautions to ascertain the true ownership of the property, having engaged the
services of a lawyer for the specific purpose and, it was only after said counsel had assured her that everything was in
order did she make the final arrangements to purchase the property.' The appellate court's conclusion that respondent
Crisanta S. Gumban was a purchaser in good faith and for value is correct, and the title she has thereby acquired is good
and indefeasible." 21
In the light of the above, the conclusion is fairly obvious that the appealed order cannot stand.
WHEREFORE, the order of the lower court of December 19, 1963 requiring the inscription of the lis pendens on Transfer
Certificate of Title No. 82798 in the name of Nicanor B. Aves is reversed. With costs against appellees.

G.R. No. 80687 April 10, 1989

REPUBLIC OF THE PHILIPPINES, represented by the DIRECTOR OF LANDS, petitioner,
vs.
HONORABLE MARIANO M. UMALI, in his capacity as Presiding Judge, Regional Trial Court, Fourth Judicial
Region, Branch 23, Trece Martires City, REMEDIOS MICLAT, JUAN C. PULIDO, ROSALINA NAVAL, and the
REGISTER OF DEEDS OF CAVITE, respondents.

CRUZ, J.:
The petitioner seeks reversion of a parcel of land on the ground that the original sale thereof from the government was
tainted with fraud because based on a forgery and therefore void ab initio. The present holders of the property claiming to
be innocent purchasers for value and not privy to the alleged forgery, contend that the action cannot lie against them.
The land in question is situated in Tanza, Cavite, and consists of 78,865 square meters. 1 It was originally purchased on
installment from the government on July 1, 1910 by Florentina Bobadilla, who allegedly transferred her rights thereto in
favor of Martina, Tomasa, Gregorio and Julio, all surnamed Cenizal, in 1922. 2 Tomasa and Julio assigned their shares to
Martina, Maria and Gregorio. 3 In 1971 these three assignees purportedly signed a joint affidavit which was filed with the
Bureau of Lands to support their claim that they were entitled to the issuance of a certificate of title over the said land on
which they said they had already made full payment. 4 On the basis of this affidavit, the Secretary of Agriculture and
Natural Resources executed Deed No. V-10910 (Sale Certificate No. 1280) on September 10, 1971, in favor of the said
affiants. 5 Subsequently, on October 13, 1971, TCT No. 55044 (replacing Bobadilla's OCT No. 180) was issued by the
register of deeds of Cavite in favor of Maria Cenizal, Gregorio Cenizal, and (in lieu of Martina Cenizal) Rosalina Naval,
Luz Naval, and Enrique Naval. 6
When the complaint for reversion was filed on October 10, 1985, the registered owners of the land, following several
transfers, were Remedios Miclat under TCT No. 80392, Juan C. Pulido under TCT No. 80393, and Rosalina, Luz and
Enrique Naval under TCT No. 80394. 7 They were named as defendants and asked to return the property to the State on
the aforestated grounds of forgery and fraud. The plaintiff claimed that Gregorio Cenizal having died on February 25,
1943, and Maria Cenizal on January 8, 1959, they could not have signed the joint affidavit dated August 9, 1971, on which
Deed No. V-10910 (Sale Certificate No. 1280) was based. 8
In their answer, Pulido and the Navals denied any participation in the joint affidavit and said they had all acquired the
property in good faith and for value. By way of affirmative defenses, they invoked estoppel, laches, prescription and res
judicata. 9 For her part, Miclat moved to dismiss the complaint, contending that the government had no cause of action
against her because there was no allegation that she had violated the plaintiff's right, that the government was not the real
party-in-interest because the subject land was already covered by the Torrens system, and that in any event the action
was barred by prescription or laches. 10
The respondent court, in its order dated October 2, 1987, granted the motion. 11 The petitioner, contesting this order, now
insists that it has a valid cause of action and that it is not barred by either prescription or res judicata.
The Court will observe at the outset that the joint affidavit is indeed a forgery. Apart from the fact that two of the supposed
affiants were already dead at the time they were supposed to have signed the sworn statement, even the most cursory
examination of the document will show that the three signatures affixed thereto were written by one and the same
hand. 12 There is no doubt about it. It is indeed difficult to understand how such an obvious forgery could have deceived
the people in the Bureau of Lands who processed the papers of this case and made possible the fraudulent transfer of the
land.
But given such deception, would the sale itself be considered null and void from the start, as the petitioner insists, so as to
make all titles derived therefrom also ineffectual ab initio?
We agree with the contention that there is no allegation in the complaint 13 filed by the petitioner that any one of the
defendants was privy to the forged joint affidavit or that they had acquired the subject land in bad faith. Their status as
innocent transferees for value was never questioned in that pleading. Not having been disproved, that status now accords
to them the protection of the Torrens System and renders the titles obtained by them thereunder indefeasible and
conclusive. The rule will not change despite the flaw in TCT No. 55044.
Section 39 of the Land Registration Act clearly provided:
Sec. 39. Every person receiving a certificate of title in pursuance of a decree of
registration, and every subsequent purchaser of registered land who takes a certificate of
title for value in good faith shall hold the same free of all encumbrance except those
noted on said certificate.
The rulings on this provision are indeed as numerous as they are consistent:
Thus, under Section 44 of P.D. 1529 (then Sec. 39 of the Land Reg. Act), every registered owner
receiving a certificate of title in pursuance of a decree of registration, and every subsequent purchaser of
registered land taking a certificate of title for value and in good faith, shall hold the same free from all
encumbrances except those noted on the certificate and any of the encumbrances which may be
subsisting, and enumerated in the law. Under said provision, claims and liens of whatever character,
except those mentioned by law as existing against the land prior to the issuance of certificate of title, are
cut off by such certificate if not noted thereon, and the certificate so issued binds the whole world,
including the government. 14
xxx xxx xxx
A holder in bad faith is not entitled to the protection of Sec. 39 of the Land Registration Act. 15
xxx xxx xxx
The real purpose of the Torrens System of land registration is to quiet title to land; to put a stop forever to
any question of the legality of the title, except claims which were noted at the time of registration in the
certificate, or which may arise subsequent thereto. That being the purpose of the law, it would seem that
once the title was registered, the owner might rest secure, without the necessity of waiting in the portals
of the court, or sitting in the "mirador de su casa," to avoid the possibility of losing his land. 16
The decision in Piñero v. Director of Lands 17 is not applicable to the present proceeding because the lands involved in
that case had not yet passed to the hands of an innocent purchaser for value. They were still held by the Pineros. The
action for reversion was filed by the government against them as the original transferees of the properties in question.
They were the direct grantees of the free patents issued by the government pursuant to which the corresponding
certificates of title were issued under the Torrens system. The fraud alleged by the government as a ground for the
reversion sought was imputable directly to the Pineros, who could not plead the status of innocent purchasers for value.
The difference between them and the private respondents is that the latter acquired the land in question not by direct
grant but in fact after several transfers following the original sale thereof to Bobadilla in 1910. The presumption is that they
are innocent transferees for value in the absence of evidence to the contrary. The petitioner contends that it was Pedro
Miclat who caused the falsification of the joint affidavit, but that is a bare and hardly persuasive allegation, and indeed,
even if true, would still not prove any collusion between him and the private respondents. The mere fact that Remedios
Miclat was the daughter and heiress of Miclat, without more, would not necessarily visit upon her the alleged sins of her
father.
The Solicitor General also argues that Remedios is an extension of the juridical personality of her father and so cannot
claim to be an innocent purchaser for value because she is charged with knowledge of her father's deceit. Such
conclusion has no basis in fact or law. Moreover, there is evidence that Remedios did not merely inherit the land but
actually purchased it for valuable consideration and without knowledge of its original defect. The agreement to
subdivide, 18 which she presented to show that she had acquired the land for valuable confederation, is more acceptable
than the conjectures of the petitioner. It is also consonant with the presumption of good faith.
The land being now registered under the Torrens system in the names of the private respondents, the government has no
more control or jurisdiction over it. It is no longer part of the public domain or, as the Solicitor General contends — as if it
made any difference — of the Friar Lands. The subject property ceased to be public land when OCT No. 180 was issued
to Florentina Bobadilla in 1910 or at the latest from the date it was sold to the Cenizals in 1971 upon full payment of the
purchase price. As private registered land, it is governed by the provisions of the Land Registration Act, now denominated
the Property Registration Decree, which applies even to the government.
The pertinent provision of the Land Registration Act was Section 122, which read as follows:
Sec. 122. Whenever public lands in the Philippine Islands belonging to the Government of the United
States or to the Government of the Philippine Islands are alienated, granted, or conveyed to persons or to
public or private corporations, the same shall be brought forthwith under the operation of this Act and
shall become registered lands. 19
This should be related to Section 12 of the Friar Lands Act, providing thus:
Sec. 12. . . . upon the payment of the final installment together with all accrued interest, the Government
will convey to such settler and occupant the said land so held by him by proper instrument of conveyance,
which shall be issued and become effective in the manner provided in section one hundred and twenty-
two (Sec. 122) of the Land Registration Act.
The petitioner claims that it is not barred by the statute of limitations because the original transfer of the land was null and
void ab initio and did not give rise to any legal right. The land therefore continued to be part of the public domain and the
action for this reversion could be filed at any time. The answer to that is the statement made by the Court in Heirs
of Tanak Pangawaran Patiwayan v. Martinez 20 that "even if respondent Tagwalan eventually is proven to have procured
the patent and the original certificate of title by means of fraud, the land would not revert back to the State," precisely
because it has become private land. Moreover, the petitioner errs in arguing that the original transfer was null and void ab
initio, for the fact is that it is not so. It was only voidable. The land remained private as long as the title thereto had not
been voided, but it is too late to do that now. As the Court has held in Ramirez vs. Court of Appeals. 21
A certificate of title fraudulently secured is not null and void ab initio, unless the fraud consisted in
misrepresenting that the land is part of the public domain, although it is not. In such case the nullity
arises, not from the fraud or deceit, but from the fact that the land is not under the jurisdiction of the
Bureau of Lands. Inasmuch as the land involved in the present case does not belong to such category,
OCT No. 282-A would be merely voidable or reviewable (Vda. de Cuaycong vs. Vda. de Sengbengco,
110 Phil. 113): (1) upon proof of actual fraud; (2) although valid and effective, until annulled or reviewed in
a direct proceeding therefor (Legarda vs. Saleeby, 31 Phil. 590), not collaterally (Sorongon vs. Makalintal,
80 Phil. 259, 262; Director of Lands vs. Gan Tan, 89 Phil. 184; Henderson vs. Garrido, 90 Phil. 624,630;
Samonte vs. Sambilon, 107 Phil. 198,200); (3) within the statutory period therefor (Sec. 38, Act 496;
Velasco vs. Gochuico 33 Phil. 363; Delos Reyes vs. Paterno, 34 Phil. 420; Snyder vs. Provincial Fiscal,
42 Phil. 761, 764; Reyes vs. Borbon, 50 Phil. 791; Clemente vs. Lukban, 53 Phil. 931; Sugayan vs. Solis,
56 Phil. 276, 279; Heirs of Lichauco vs. Director of Lands, 70 Phil. 69); (4) after which, the title would be
conclusive against the whole world, including the Government (Legarda vs. Saleeby, 31 Phil. 590, 596;
Central Capiz vs. Ramirez, 40 Phil. 883; J. M. Tuason vs. Santiago, 99 Phil. 615).
And as we declared in Municipality of Hagonoy vs. Secretary of Agriculture and Natural Resources: 22
. . . Once a patent is registered and the corresponding certificate of title is issued, the land ceases to be
part of public domain and becomes private property over which the director of Lands has neither control
nor jurisdiction. A public land patent, when registered in the corresponding Register of Deeds, is a
veritable Torrens Title, and becomes as indefeasible as Torrens Title upon the expiration of one (1) year
 from the date of issuance thereof. Said title is, like one issued pursuant to a judicial decree, subject to
review within one (1) year from the date of the issuance of the patent. Beyond said period, the action for
the annulment of the certificate of title issued upon the land grant can no longer be entertained.
(Emphasis supplied).
It is worth observing here that in two earlier cases, the private respondents were challenged by the heirs of Matilde
Cenizal Arguson but both were dismissed and the titles of the registered owners were confirmed by the trial court. 23This
decision was later sustained by this Court. 24 While this is not to say that the present petition is barred by res judicata, as
the government was not a party in these cases, it does suggest that the issue it wants to rake up now has long been
settled. It should not be the subject of further judicial inquiry, especially at this late hour. Litigation must stop at some point
instead of dragging on interminably.
The Torrens system was adopted in this country because it was believed to be the most effective measure to guarantee
the integrity of land titles and to protect their indefeasibility once the claim of ownership is established and recognized. If a
person purchases a piece of land on the assurance that the seller's title thereto is valid, he should not run the risk of being
told later that his acquisition was ineffectual after all. This would not only be unfair to him. What is worse is that if this were
permitted, public confidence in the system would be eroded and land transactions would have to be attended by
complicated and not necessarily conclusive investigations and proof of ownership. The further consequence would be that
land conflicts could be even more numerous and complex than they are now and possibly also more abrasive if not even
violent. The government, recognizing the worthy purposes of the Torrens system, should be the first to accept the validity
of titles issued thereunder once the conditions laid down by the law are satisfied. As in this case.
We find that the private respondents are transferees in good faith and for value of the subject property and that the
original acquisition thereof, although fraudulent, did not affect their own titles. These are valid against the whole world,
including the government.
ACCORDINGLY, the petition is DENIED, without any pronouncement as to costs. It is so ordered.

G.R. No. 107751 June 1, 1995

LETICIA P. LIGON, petitioner,
vs.
COURT OF APPEALS, JUDGE CELIA LIPANA-REYES, Presiding Judge, Branch 81, Regional Trial Court of
Quezon City, Iglesia ni Kristo and the Register of Deeds of Quezon City, respondent.

BELLOSILLO, J.:
This is a petition for review of the decision of the Court of Appeals which affirmed the order of the Regional Trial Court of
Quezon City, Br. 82, granting the motion of respondent of Iglesia ni Kristo to direct petitioner to surrender the owner's
duplicate of the certificates of title in her possession.
On 19 October 1990 respondent Iglesia ni Kristo (INK) filed with the Regional Trial Court of Quezon City a complaint 1 for
specific performance with damages against the Islamic Directorate of the Philippines (IDP) docketed as Civil Case No.
Q90-6937. Respondent INK alleged in its complaint that by virtue of an Absolute Deed of Sale dated 20 April 1989 IDP
sold to it two (2) parcels of land located at Tandang Sora, Barrio Culiat, Quezon City, both of which IDP is the registered
owner. The parties stipulated in the deed of sale that the IDP shall undertake to evict all squatters and illegal occupants in
the property within forty-five (45) days from the execution of the contract.
IDP failed to fulfill this obligation. Hence INK prayed that the trial court order IDP to comply with its obligation of clearing
the subject lots of illegal occupants and to pay damages to INK.
IDP alleged in its answer that it was INK which violated the contract by delaying the payment of the purchase price and
prayed that the contract of sale be rescinded and revoked.
On 15 June 1991 INK filed a motion for partial summary judgment on the ground that there was actually no genuine issue
as to any material fact.
On 12 September 1991 the trial court rendered partial judgment, and on 7 October 1991 an amended partial judgment
granting the reliefs prayed for by INK except the prayer for damages which was to be resolved later.
On 22 January 1992 INK filed a motion in the same case praying that petitioner Leticia Ligon, who was in possession of
the certificates of title over the properties as mortgagee of IDP, be directed to surrender the certificates to the Register of
Deeds of Quezon City for the registration of the Absolute Deed of Sale in its name. INK alleged that the document could
not be registered because of the refusal and/or failure of petitioner to deliver the certificates of title despite repeated
requests.
On 31 January 1992 petitioner Ligon filed an opposition to the motion on the ground that the IDP was not served copy of
the motion, and the ownership of the INK over the property was still in issue since rescission was sought by the IDP as a
counterclaim. She prayed that the motion be denied, but should it be granted, the Register of Deeds be directed after
registration to deliver the owner's duplicate copies of the new certificates of title to her.
On 15 February 1992 petitioner filed a Supplemental Opposition questioning the jurisdiction of the trial court because the
motion involved the registrability of the document of sale, and she was not made a party to the main case.
On 2 March 1992 the trial court granted the motion of INK and ordered petitioner to surrender to INK the owner's copy of
RT-26521 (170567) and RT-26520 (176616) in open court for the registration of the Absolute Deed of Sale in the latter's
name and the annotation of the mortgage executed in favor of petitioner on the new transfer certificates of title to be
issued to INK.2
On 6 April 1992, on motion of petitioner Ligon, the trial court reconsidered its order by directing her to deliver the
certificates of title to the Register of Deeds of Quezon City. 3
Petitioner filed a petition for certiorari with the Court of Appeals seeking the annulment of the two (2) orders. However, on
28 October 1992 the Court of Appeals dismissed the petition and affirmed the orders of the trial court.
Petitioner now comes to us alleging that the trial court erred: (a) in ruling that it had jurisdiction over petitioner; (b) in
upholding the orders of the trial court even as they violated the rule prohibiting splitting of a single cause of action and
forum-shopping; (c) in holding that INK is the owner of the property and entitled to registration of its ownership; and, (d) in
holding that INK has a superior right to the possession of the owner's copies of the certificates of title.
Upon prior leave, the IDP intervened alleging that prior to the issuance by the trial court of the order of 2 March 1992, its
legal Board of Trustees filed a motion for intervention informing said court that the sale of the properties was not executed
by it but was made possible by a fake Board of Trustees, hence, the sale is void. The trial court denied the motion since
jurisdiction over the incident properly belonged to the Securities and Exchange Commission (SEC). Conformably
therewith, IDP brought the matter before the SEC which later declared that the sale of the properties was void. Thus, IDP
banks on this favorable decision in similarly seeking the nullification of the questioned orders of the trial court.
Under our land registration law, no voluntary instrument shall be registered by the Register of Deeds unless the owner's
duplicate certificate is presented together with such instrument, except in some cases or upon order of the court for cause
shown. In case the person in possession of the duplicate certificates refuses or fails to surrender the same to the Register
of Deeds so that a voluntary document may be registered and a new certificate issued, Sec. 107, Chapter 10, of P.D. No.
1529 clearly states:
Sec. 107. Surrender of withheld duplicate certificates. — Where it is necessary to issue a new certificate
of title pursuant to any involuntary instrument which divests the title of the registered owner against his
consent or where a voluntary instrument cannot be registered by reason of the refusal or failure of the
holder to surrender the owner's duplicate certificate of title, the party in interest may file a petition in court
to compel surrender of the same to the Register of Deeds. The court, after hearing, may order the
registered owner or any person withholding the duplicate certificate to surrender the same and direct the
entry of a new certificate or memorandum upon such surrender. If the person withholding the duplicate
certificate is not amenable to the process of the court, or if for any reason the outstanding owner's
duplicate certificate cannot be delivered, the court may order the annulment of the same as well as the
issuance of a new certificate of title in lieu thereof. Such new, certificate and all duplicates thereof shall
contain a memorandum of the annulment of the outstanding duplicate.
Before the enactment of P.D. No. 1529 otherwise known as the Property Registration Decree, the former law, Act No. 496
otherwise known as the Land Registration Act, and all jurisprudence interpreting the former law had established that
summary reliefs such as an action to compel the surrender of owner's duplicate certificate of title to the Register of Deeds
could only be filed with and granted by the Regional Trial Court sitting as a land registration court if there was unanimity
among the parties or there was no adverse claim or serious objection on the part of any party in interest, otherwise, if the
case became contentious and controversial it should be threshed out in an ordinary action or in the case where the
incident properly belonged.4
Under Sec. 2 of P.D. No. 1529, it is now provided that "Courts of First Instance (now Regional Trial Courts) shall have
exclusive jurisdiction over all applications for original registration of titles to lands, including improvements and interest
therein and over all petitions filed after original registration of title, with power to hear and determine all questions arising
upon such applications or petitions." The above provision has eliminated the distinction between the general jurisdiction
vested in the regional trial court and the limited jurisdiction conferred upon it by the former law when acting merely as a
cadastral court. Aimed at avoiding multiplicity of suits the change has simplified registration proceedings by conferring
upon the regional trial courts the authority to act not only on applications for original registration but also over all petitions
filed after original registration of title, with power to hear and determine all questions arising upon such applications or
petitions.5
The principal action filed by INK in Civil Case No. Q-90-6937 before the trial court was for specific performance with
damages based on a document of sale. Such action was well within the exclusive jurisdictions of the Regional Trial
Court.6 When IDP, the defendant in the trial court, did not question the genuineness and validity of said deed of sale and
its obligations thereunder, the summary judgment issued by the court granting the reliefs sought by INK was also an
exercise of its general jurisdiction.
Hence, when INK filed a motion for the issuance of an order from the same court to compel the holder of the duplicate
certificates of title to surrender the same to the Register of Deeds for the registration of the deed of sale subject of the
principal action, the motion was a necessary incident to the main case. When the sale of the property was upheld by the
court in its judgment and the defendant was directed to comply with its terms and conditions, the right of INK to have the
same registered with the Register of Deeds could not be disregarded. To assert and enjoy its right, INK should be allowed
to seek the aid of the court to direct the surrender of the certificates of title. Since Regional Trial Courts are courts of
general jurisdiction, they may therefore take cognizance of this case pursuant to such jurisdiction. 7 Even while Sec. 107
of P.D. 1529 speaks of a petition which can be filed by one who wants to compel another to surrender the certificates of
title to the Register of Deeds, this does not preclude a party to a pending case to include as incident therein the relief
stated under Sec. 107, especially if the subject certificates of title to be surrendered are intimately connected with the
subject matter of the principal action.8 This principle is based on expediency and in accordance with the policy against
multiplicity of suits.
The records of the case show that the subsisting mortgage lien of petitioner appears in the certificates of title Nos. 26520
and 26521. Hence, the order of the trial court directing the surrender of the certificates to the Register of Deeds in order
that the deed of sale in favor of INK can be registered, cannot in any way prejudice her rights and interests as a
mortgagee of the lots. Any lien annotated on the previous certificates of title which subsists should be incorporated in or
carried over to the new transfer certificates of title. This is true even in the case of a real estate mortgage because
pursuant to Art. 2126 of the Civil Code it directly and immediately subjects the property upon which it is imposed, whoever
the possessor may be, to the fulfillment of the obligation for whose security it was constituted. It is inseparable from the
property mortgaged as it is a right in rem — a lien on the property whoever its owner may be. It subsists notwithstanding a
change in ownership; in short, the personality of the owner is disregarded. Thus, all subsequent purchasers must respect
the mortgage whether the transfer to them be with or without the consent of the mortgagee, for such mortgage until
discharged follows the property.9 It is clear therefore that the surrender by petitioner of the certificates of title to the
Register of Deeds as ordered by the trial court will not create any substantial injustice to her. To grant the petition and
compel INK to file a new action in order to obtain the same reliefs it asked in the motion before the trial court is to
encourage litigations where no substantial rights are prejudiced. This end should be avoided. Courts should not be so
strict about procedural lapses that do not really impair the proper administration of justice. The rules are intended to insure
the orderly conduct of litigations because of the higher objective they seek, which is, to protect the parties' substantive
rights. 10
WHEREFORE, the appealed decision of the Court of Appeals dated 28 October 1992 is AFFIRMED.
SO ORDERED.

G.R. No. 100153 August 2, 1994

SPOUSES TOMAS CLOMA AND VICTORIA LUZ CLOMA, petitioners,
vs.
THE HONORABLE COURT OF APPEALS AND MARIANO NOCOM, respondents.
Vicente D. Millora for petitioners.

PUNO, J.:
This is a petition for review on certiorari of the Decision of the respondent Court of Appeals1 in CA-GR CV No. 26373
dated February 22, 1991 which affirmed in toto the Decision2 of the RTC, NCJR, Br. 117, Pasay City in Land Registration
Case No. 3089 dated April 17, 1990.
The trial court and the respondent Court of Appeals had the same findings of fact. We quote the facts, supported by the
evidence of the parties, as carefully related by the appellate court, viz:
Oppositors spouses Tomas Cloma and Victoria Galvez Cloma were the owners of two parcels of land
located at Buendia Extension, San Jose, Pasay City, Metro Manila registered in their names under TCT
Nos. 17138 and 17139 of the Register of Deeds, Pasay City (Exhs. "C", "C-1" to "C-4", "D", "D-1" to "D-4",
respectively) and were declared for taxation purposes also in their names (Exhs. "F", "F-1", "F-2").
Several liens and encumbrances have been annotated on both said TCT Nos. 17138 and 17139 listed as
follows:
ENTRY NOS 81-1369/T-17138 MORTGAGE in favor of PMI
81-1763/T-17136 Colleges, Inc. in the amount of
P1,724,138.00. Date of Instru-
ment: 5/18/81
ENTRY NOS 81-1370/T-17138 DEED OF ASSIGNMENT
81-1764/T-17139 WITH RECOURSE — PMI
College, Inc., in favor of
Cavite & Investment Co., Inc.
(CCIC) Date of Instrument:
5/18/81
ENTRY NOS 81-3655/T-17138 DEED OF ASSIGNMENT
81-3655/T-17139 WITH RECOURSE —
CCIC in favor of
Republic Planter Bank. Date
of Instrument: 6/10/81
ENTRY NOS. 83-42423/T-17138 MORTGAGE in favor of
83-42423/T-17139 PMI College, Inc. in
the amount
P4,000,000.00. Date
of Instrument: 2/3/83
ENTRY NOS. 83-42425/T-17138 DEED OF ASSIGNMENT
83-42425/T-17139 WITH RECOURSE — CCIC
in favor of Republic
Planter Bank. Date
of Instrument: 5/30/83
ENTRY NOS. 84-73999/T-17138 NOTICE OF LEVY ON
84-73999/T-17138 EXECUTION — Affecting
the rights, interest,
etc. of CCIC over the
subject lot by virtue
of a Writ of Execution
issued in Civil Case
No. 4441, RTC, Branch XVI,
Cavity City. Date of
Inscription: 1/17/84
ENTRY NOS. 85-41173/T-171138 CERTIFICATE OF SALE
85-41173/T-171138 OF DELINQUENT
PROPERTY in favor of
Mariano Nocom in the sum of
P100,000.00. Date of
Instrument: 11/27/85 Date of
Inscription: 11/29/85
ENTRY NOS. 88-9780/T-17138 CERTIFICATE OF RE-
DEMPTION IN favor of
Urban Development Bank.
Date of Inscription: 1/19/88
ENTRY NOS. 88-97738/T-17138 NOTICE OF LEVY ON
88-97738/T-17139 EXECUTION — Affecting
the right, interest, etc., which
CCIC may have over the
subject lot by virtue of the
Notice of levy on Execution
issued in Civil Case
No. 5139-P, RTC of Pasay
City entitled "Rodrigo
Caimol, plaintiff, v. Cavite
Credit & Investment Co., Inc.,
et al., defendants. "Date of
Instrument: 1/25/88
ENTRY NOS. 89-10440/T-17138 NOTICE OF LIST PENDENS
89-10440/T-17138 Re: Pending Civil Case No.
6325 in RTC Br. III, Pasay
City entitled "Rodrigo
Caimol, plaintiff v. Cavite
Credit Investment Co., Inc., et
al., defendant. " Date of
Inscription: 2/15/89
Realty taxes on the subject lots for the years 1983 to 1985 were not paid. On June 6, 1985, the City
Treasurer of Pasay City sent notice to the Clomas concerning their tax delinquency (Exh. "Q"). The
Clomas were also furnished under date of June 6, 1985 with a Statement of Account of the total realty tax
arrears then due on their subject properties (Exhs. "N",
"N-1", "N-2"). On July 24, 1985, the City Treasurer sent the Clomas a Second Call and Final Notice (Exh.
"P").
Despite said notices, the Clomas appeared unperturbed and the realty tax arrears remained unpaid.
Finally, on October 21, 1985, the City Treasurer informed the spouses Cloma in a letter that the subject
properties belonging to them have been included in the list of delinquent properties scheduled to be sold
by public auction on November 27, 1985 and that the auction sale will proceed as scheduled if the taxes
due on the lots, penalties and the cost of publication totalling P71,939.82 are not paid on or before
November 26, 1985 (Exh. "O").
Copies of the Notice of Sale of Delinquent Properties which included the subject lots and a great number
of other lots from all over the territorial jurisdiction of Pasay City consisting of eight (8) pages and written
in English but with the instructions of the bidding also appearing in Filipino and Spanish aside from the
English text (Exhs. "J", "J-1" to "J-4"), were posted at the bulletin board located at the entrance of the
Pasay City Market and at the bulletin board at the lobby of the City Hall building per certification of the
chief of the land Tax Division of the Treasurer's office of Pasay City (Exh. "I") which also certified that a
town crier went around the city for three (3) consecutive Saturdays announcing the public auction sale
scheduled to be held on November 27, 1985. The same notice of sale was published in the Metropolitan
Mail a newspaper with circulation in the national capital region, for three (3) consecutive weeks on
November 11, 18 and 25, 1985 (Exhs. "K", "K-1", "L", "M", "M-1").
On November 28, 1985, the City Treasurer informed the Clomas in a letter of that date with copy of the
certificate of sale as enclosure to the effect that a certificate of sale over the subject properties has been
issued to Nocom as the highest bidder in the auction sale conducted by his office and that they (the
Clomas) have until November 26, 1986 within which to redeem said lots (Exh. "T"). The letter was sent by
registered mail (Exh. "T-2") which the Clomas received per the registry return card (Exh. "T-1").
The spouses Cloma failed to redeem the properties within the prescribed period. On November 3, 1986,
Urban Bank of the Philippines made an offer to redeem the subject lots but the offer was cancelled by the
City Treasurer in a deed entitled "Cancellation of Redemption" citing as ground for cancellation that the
redemption was erroneously made and is "null and void" (Exh. "W"). The City Treasurer with prior notice
to the City Auditor by letter dated July 24, 1989 signed by the City Legal Officer of Pasay (Exh. "X") then
had refunded to Urban Bank the payment it made (Exhs. "V", "V-1").
On July 27, 1989, the City Treasurer executed a Final Deed of Sale in favor of the petitioner Exhs. "U",
"U-1"). Thereafter, petitioner Nocom had paid the realty taxes on the properties which became due for the
years 1986 to 1989 (Exhs. "G", "G-1" to "G-5").
On October 5, 1989, petitioner Nocom filed the instant petition in the lower court seeking the cancellation
of TCT Nos. 17138 and 17139 in the names of spouses Cloma and all the liens and encumbrances
annotated thereon and the issuance of new titles in his (Nocom's) name invoking Section 75 of PD 1529
(also known as the Property Registration Decree) and Section 80 of PD No. 464, the Real Property Tax
Code.
Spouses Tomas and Victoria Cloma and PMI Colleges filed a common Answer making admissions and
denials of allegations of the petition and putting up special and affirmative defenses, i.e., the auction sale
was attended by irregularities rendering the entire proceedings null and void; the action is inappropriate
and Section 71 of PD 1539 rather is applicable; the City Treasurer has no authority to conduct the sale
but the City Assessor who is by law empowered to sell tax delinquent properties at public auction;
redemption was made by Urban Bank; the purchase price of P52,856.74 for the two properties is grossly
inadequate and made a tender to refund or reimburse the petitioner's expenses of a cashier's check in the
amount of P150,000.00. They prayed for the dismissal of the petition for lack of merit.
Aside from the spouses Cloma and PMI Colleges, Inc., other parties namely, Republic Planters Bank
(Records, pp. 73-106), Rodrigo Caimol (id., pp. 56-71) and Sandigan Lending Investors, Inc. withdrew
their Opposition and manifested in open court that they are entering into a compromise agreement with
the petitioner. Later, the other oppositor, Sandigan Lending Investors, Inc. filed a manifestation recalling
their announced withdrawal of their opposition. Petitioner Nocom, on his part, manifested his willingness
and conformity for the lien of Sandigan Lending Investors, Inc. annotated on Clomas' titles, to be carried
over to the new titles he is seeking to be issued in his name, in the event his petition is upheld by the
court.
Concerning the oppositors Cloma and PMI Colleges, Inc., a stipulation in lieu of evidence was submitted
by them to the effect that the nature and scope of their testimony would be that no notices of the public
auction sale had reached them and that they have not heard of the existence of the newspaper by the title
of Metropolitan Mail. Except for said offer of testimony no other evidence was presented in support of said
oppositor's claims.
On April 17, 1990, the lower court rendered its Decision in favor of the petitioner Mariano Nocom the
dispositive portion of which reads, thus:
WHEREFORE, judgment is hereby rendered requiring the Register of Deeds of Pasay City to cancel TCT
Nos. 17138 and 17139 in the name of the spouses Tomas Cloma and Victoria Galvez Cloma and to issue
new titles in the name of petitioner Mariano Nocom, free from all existing liens and incumbrances, except
that of the Notice of Levy under Entry
No. 84-73999/T-17138 and 84-73999/T-17139 in favor of Sandigan Lending Investors. Let a writ of
possession be issued requiring the Deputy Sheriff of this Court to place petitioner in possession of the
said properties.
SO ORDERED. (pp. 237-238, Records)
On April 30, 1990, the oppositors Cloma filed their notice of appeal.
On May 3, 1990, petitioner Nocom and oppositors Republic Planters Bank, Rodrigo Caimol and Sandigan
Lending Investors, Inc. submitted to the lower court a Compromise Agreement dated March 30, 1990
where the petitioner agreed and bound himself to pay the claims of said oppositors who in turn,
 manifested acknowledgment and recognition of the tax sale of the City Treasurer issued in favor of the
petitioner (Records, pp. 244-247).
The lower court approved the compromise agreement in its Order dated May 4, 1990. Oppositor Republic
Planters Bank moved to have the judgment dated April 17, 1990 correspondingly modified to include in
said judgment the terms of said compromise agreement. The lower court by an Order dated May 14,
1990 approved the compromise agreement with an injunction to the parties to the agreement to faithfully
comply by the terms and conditions thereof.
As aforestated, the respondent appellate court affirmed the Decision of the trial court.
Undaunted by the two (2) setbacks, petitioners filed the petition at bench where they contend:
(1) The respondent Court of Appeals erred . . . in maintaining that the LRC had jurisdiction to hear the
validity/invalidity of a tax sale and thereafter in ordering the cancellation of petitioners' titles to the
properties in question;
(2) The Land Registration Court does not have the power to issue a writ of possession for a buyer in a
questioned tax sale;
(3) The respondent Court of Appeals erred in affirming as proper/legal the act of the Land Registration
Court in modifying its Decision after your petitioners had already perfected its appeal to make it appear
that the consideration of the tax sale at P52,856.74 for a property valued at P50M is not unconscionable;
(4) The respondent court erred in affirming the Decision of the Land Registration Court which sustained
as legal and proper the act of the City Treasurer in cancelling a redemption annotated on your petitioners'
titles at the time of the execution of the Final Bill of Sale;
(5) Finally, the respondent Court of Appeals committed a grave abuse of discretion in sustaining the
"findings" of the Land Registration Court that the tax sale was regularly held and had complied with the
Real Property Tax Code.
We find no merit in the petition.
We shall first rule on the arguments of petitioners assailing the jurisdiction of the trial court sitting as a land registration
court to cancel their certificates of titles and issue new ones in favor of private respondent. The argument clearly
overlooks the pertinent provisions of PD No. 1529, otherwise known as the Property Registration Decree, viz:
Sec. 75. Application for new certificate upon expiration of redemption period. — Upon the expiration of
the time, if any, allowed by law for redemption after the registered land has been sold on execution, or
taken or sold for the enforcement of a lien of any description, except a mortgage lien, the purchaser at
such sale or anyone claiming under him may petition the court for the entry of a new certificate to him.
Before the entry of a new certificate of title, the registered owner may pursue all legal and equitable
remedies to impeach or annul such proceedings.
xxx xxx xxx
Sec. 108. Amendment and alteration of certificates. — No erasure, alteration, or amendment shall be
made upon the registration book after the entry of a certificate of title or of a memorandum thereon and
the attestation of the same by the Register of Deeds, except by order of the proper Court of First
Instance. A registered owner or other person having an interest in the registered property, . . ., may apply
by petition to the court upon the ground that the registered interests of any description, whether vested,
contingent, expectant or inchoate appearing on the certificate, have terminated and ceased, or that new
interest not appearing upon the certificate have arisen or been created; . . . .; and the court may hear and
determine the petition after notice to all parties interested, and may order the entry or cancellation of a
new certificate, the entry or cancellation of a memorandum upon a certificate, or grant any other relief
upon such terms and conditions, requiring security or bond if necessary, as it may consider proper; . . .
(Italics supplied)
Section 2 of PD 1529 also clearly rejects the thesis of petitioners that the trial court cannot issue a writ of possession to
effectuate the result of a tax sale, thus:
Sec 2. Nature of registration of proceedings; jurisdiction of courts. — . . . . . . . . .
Courts of First Instance shall have exclusive jurisdiction over all applications for original registration of
title, to land, including improvements and interests therein, and over all petitions filed after original
registration of title, with power to hear and determine all questions arising upon such applications or
petitions. . . . (Emphasis supplied)
Obviously, petitioners failed to consider that PD 1529 has long abolished the difference between the general jurisdiction of
a regular court and the limited jurisdiction of a registration court.3
To be sure, it is too late in the day for petitioners to question the jurisdiction of the trial court. The records show that
petitioners did not assail the jurisdiction of the trial court when they filed their Answer containing a prayer for affirmative
reliefs.4 Voluntarily submitting to the jurisdiction of the trial court, petitioners freely participated in all the hearings of the
case and adduced their own evidence. It was only after an adverse judgment that petitioners raised the trial court's
alleged lack of jurisdiction. Our law and policy do not sanction such a somersault. The polestar of Tijam vs.
Sibonghanoy5 still provides good guidance on the issue, viz:
It had been held that a party can not invoke the jurisdiction of a court to secure affirmative relief against
his opponent and, after obtaining or failing to obtain such relief, repudiate or question that same
 jurisdiction (Dean vs. Dean, 136 Or. 694, 86 A.L.R. 79). In the case just cited, by way of explaining the
rule, it was further said that the question whether the court had jurisdiction either of the subject-matter of
the action or of the parties was not important in such cases because the party is barred from such
conduct not because the judgment or order of the court is valid and conclusive as an adjudication, but for
the reason that such a practice can not be tolerated — obviously for reasons of public policy.
Furthermore, it has also been held that after voluntarily submitting a cause and encountering an adverse
decision on the merits, it is too late for the loser to question the jurisdiction or power of the court (Pease
vs. Rathbun-Jones etc., 243 U.S. 273, 61 L. Ed. 715, 37 S. Ct. 283; St. Louis etc. vs. McBride, 141 U.S.
127, 35 L. Ed. 659). And in Littleton vs. Burgess, 16 Wyo. 58, the Court said that it is not right for a party
who has affirmed and invoked the jurisdiction of a court in a particular matter to secure an affirmative
relief, to afterwards deny that same jurisdiction to escape a penalty.
Upon this same principle is what We said in the three cases mentioned in the resolution of the Court of
Appeals of May 20, 1963 (supra) — to the effect that we frown upon the "undesirable practice" of a party
submitting his case for decision and then accepting the judgment, only if favorable, and attacking it for
lack of jurisdiction, when adverse — as well as Pindañgan etc. vs. Dans, et al., G.R. L-14591, September
26, 1962; Montelibano, et al. vs. Bacolod-Murcia Milling Co., Inc., G.R. L-15092; Young Men Labor Union
etc. vs. The Court of Industrial Relations et al., G.R. L-20307, Feb. 26, 1965, and Mejia vs. Lucas, 100
Phil. p. 277. (Emphasis supplied).
We next deal with the action of the trial court, affirmed by the appellate court, which approved the Compromise
Agreement6 of the private respondent and the other oppositors after petitioner, had perfected their appeal. The records
show that in the course of the hearings of the case, oppositors Republic Planters Bank, Rodrigo Caimol and Sandigan
Lending Investors, Inc., had informed the trial court they were willing to compromise with private respondent. The Decision
of the trial court was given on April 17, 1990. Petitioners filed their Notice of Appeal on April 30, 1990. The Compromise
Agreement dated March 30, 1990 but filed on May 3, 1990 was approved by the trial court in a separate Order dated May
4, 1990 and ordered incorporated in its Decision of April 17, 1990.7 Under the Compromise Agreement, the said
oppositors acknowledged the legality of the tax sale in favor of the private respondent; on the other hand, the private
respondent agreed to pay their claims.8
Petitioners posit the submission that the trial court approved the Compromise Agreement "to make it appear that the
consideration of the tax sale at P52,856.74 for a property valued at P50M is not unconscionable." 9 This submission merits
our scant attention. The records do not show that petitioners opposed the approval of the Compromise Agreement in the
trial court. Nor is there an iota of evidence that the value of the properties in question is P50M. Neither is it accurate to
state that the said properties cost private respondent the miniscule sum of P52,876.74. As rightly pointed out by the
respondent appellate court in its Resolution of May 22, 1991:10
Concerning the argument that the property may be conservatively estimated at a value of P50 million
while the consideration in the tax sale was only P100,000.00 in payment of delinquent taxes of only
P52,000.00, and with the other circumstances attendant to the case, that justice and equity demand a
reconsideration of the decision and the dismissal of the petition in LRC No. 3089, this additional argument
also is untenable.
The records show that the petitioner had assumed and paid more than P15 million to persons and entities
to whom appellants have been indebted on the security of said property under the Compromise
Agreement dated May 4, 1990.
And about what the appellants claim that the price in the sale of the property at auction sale, was grossly
inadequate, the trial court correctly ruled, against said argument in its decision, thus:
Oppositors' claim that the tax sale in favor of petitioner is invalid due to gross inadequacy of the price is
bereft of merit. The mortgages and other liens were to be assumed by petitioner, so that in effect, the
purchase price is much more than the price actually paid by the petitioner to the City Treasurer of Pasay
City. Mere inadequacy of the price is not in itself sufficient to nullify a public auction sale. While in ordinary
sales, for reason of equity, a transaction may be invalidated on ground of inadequacy of the price, such
does not follow when the law gives to the owner the right to redeem, as when the sale is made at public
auction, upon the theory that the lesser the price the easier it is for the owner to effect the
redemption (Velasquez vs. Coronel, 5 SCRA 985).
Anyway, the predicament of oppositors was the result of their own negligence. To borrow the words of the
late Justice Claudio Teehankee: "While respondents' plight may merit some sympathy at the pain of
losing their property for tax delinquency, it must be borne in mind that it was primarily due to their neglect
and default in paying their just tax obligation (Heirs of Mariano v. Tajonera vs. Court of Appeals
No. L-26677, March 27, 1981, 103 SCRA 467). So, also in Paguio vs. Ruiz (93 Phil. 306 [1953] citing
another tax sale conducted by the City Treasurer likewise upheld in Valbuena vs. Reyes, 84 Phil. 676),
the Supreme Court said:
Much as we sympathize with the appellee, this is one case where the courts have no option but to apply
the law and give the petitioner the remedy she seeks. The law is positive and leaves us no choice. It is
harsh and drastic but it is a necessary means of insuring the prompt collection of taxes so essential to the
life of the government. (Emphasis supplied).
Needless to state, petitioners' charge that the trial court approved the Compromise Agreement because it "intended" to
cure the alleged unconscionable price of the subject lots has no basis whatsoever.
We next examine the contention that respondent appellate court should not have affirmed the cancellation by the
Treasurer of Pasay City of the redemption made by Urban Bank. This argument was accurately disposed by respondent
appellate court when it ruled, viz:11
The action of the City Treasurer in cancelling the offer of redemption made by Urban Bank is likewise
proper. Urban Bank itself held no lien on the properties sold at public auction which would entitle it to
redeem them. What Urban Bank wanted to redeem was the property embraced by TCT No. 23932 only
but that it inadvertently included the subject lots covered by TCT Nos. 17138 and 17139 in its offer and
the City Legal Officer had ruled that unless Mr. Mariano Nocom who purchased the lots at public auction
would assign his rights thereto, the claim of said bank is baseless (Exh. "X"). The City Treasurer after
cancelling Urban Bank's offer of redemption then had refunded to Urban Bank the redemption money
which said bank accepted.
The ruling satisfied no less than the Urban Bank. If the affected party itself accepts the fairness of this ruling, we see no
reason how petitioners could make any further challenge as to its correctness.
Finally, we consider the contention of petitioners that they were not notified of the public auction sale of the subject lots
and that other irregularities attended the sale in favor of the private respondent. The contention is factual in nature and is
hardly appropriate to be considered in a petition for review on certiorari. The evidence bearing on the issue has been
painstakingly analyzed both by the trial court and the appellate court and their findings coincide to the effect that the claim
of irregularities charged by petitioners has not been proved. We agree that considering the mass of evidence presented
by private respondent, petitioners' simple denial that they did not receive any notice of sale cannot carry the day for them.
No less than the Treasurer of Pasay City, a public official, testified and presented documentary evidence to prove that
every requirement of the law on notice was complied with before the lots of petitioner were sold for non-payment of taxes
for three (3) years. The Statement of Account, dated June 6, 1985 (Exhs. "N", "N-1" and "N-2") was sent to petitioners in
their address. This was followed by another Letter of Demand (Exhs. "Q" and "Q-1") sent on June 6, 1985. Then on July
24, 1985, a Second Call and Final Notice (Exh. "F") was once more sent to petitioners. As all the demands proved futile, a
Notice of Inclusion in the List of Delinquent Real Properties dated on October 21, 1985, (Exh. "O") was also sent to
petitioners. Then the Notice of Sale of Delinquent Properties (Exhs. "J" to "J-4") written in English, Spanish and Tagalog
was posted in three (3) conspicuous public places in Pasay City. The notice was also published in the Metropolitan Mail
for three (3) times in three (3) consecutive weeks (Exhs. "K" and "K-1", "L", "M" and "M-1"). The sale was then made to
private respondent on November 25, 1985. The next day, November 26, 1985, the City Treasurer formally notified
petitioners about the sale, enclosed therewith the Certificate of Sale and advised them that the period of redemption
would expire one (1) year thereafter12 (Exhs. "T", "T-1" to "T-3"). On the face of these overwhelming evidence, petitioners
did not even take the witness stand but instead stipulated that if they would testify they would allege they did not receive
any notice of sale and that they were not aware that Metropolitan Mail is a newspaper of general circulation. Given the
cumulative impact of the testimonial and documentary evidence of the private respondent and buttressed by the
presumption of regularity in the performance of official duty on the part of the City Treasurer of Pasay, the denial of
petitioners that they received notice of the sale is not entitled to credence. Petitioners' claim is too easy to make and its
approbation finds no sanction in our rules of evidence.
IN VIEW WHEREOF, we deny the petition for review on certiorari there being no reversible error in the Decision dated
February 22, 1991 of the respondent court in CA-G.R. CV No. 26373. No costs.
SO ORDERED.

G.R. No. 98920 July 14, 1995

JESUS F. IGNACIO, petitioner,
vs.
THE HON. COURT OF APPEALS (Former First Division), RENATO G. YALUNG and MARINA T.
YALUNG, respondents.

QUIASON, J.:
This is a petition for review on certiorari under Rule 45 of the Revised Rules of Court to set aside the Decision dated
March 4, 1991 of the Court of Appeals in CA-G.R. CV No. 19047, and its Resolution dated April 29, 1991 denying
reconsideration of the decision.
I
On December 24, 1987, petitioner, in consideration of P1,000,000.00, purchased under a pacto de retro contract from
private respondents a house and lot of 624 square meters located at No. 13 Narra Street, Valle Verde III, Pasig, Metro
Manila. The property is covered by Transfer Certificate of Title (TCT) No. 64873 and registered in the name of "Renato G.
Yalung . . . married to Marina Toledano" issued by the Acting Register of Deeds for Metro Manila District II (Province of
Rizal) on December 24, 1987, the very same day the agreement was entered into (Exhs. A and A-1, Records, p. 20).
The agreement was evidenced by a public instrument entitled "Deed of Sale Under Pacto de Retro" executed and duly
signed by petitioner and respondent Renato G. Yalung, with the marital consent of his wife, respondent Marina T. Yalung
(Exhs. B and B-1, Records, pp. 21-22). Therein, the parties agreed that private respondents be granted the right to
repurchase the property sold within 90 days from December 24, 1987, for the same consideration of P1,000,000.00 plus
5% interest thereon. The deed, in pertinent part, reads as follows:
That the VENDOR, for and in consideration of the sum of ONE MILLION PESOS (P1,000,000.00),
Philippine Currency, to him in hand paid and receipt whereof is hereby acknowledged, does hereby
SELL, TRANSFER ,and CONVEY, under PACTO DE RETRO unto the said VENDEE, his heirs and
assigns, above-described property with all the buildings and improvements thereon, free from all liens
and encumbrances whatsoever;
That the VENDOR, in executing this conveyance hereby reserves the right to REPURCHASE, and the
VENDEE, in accepting same hereby obligates himself to RESELL the property herein conveyed within a
period of ninety (90) days from and after the date of this instrument for the same price of ONE MILLION
PESOS (P1,000,000.00), Philippine Currency; PROVIDED, HOWEVER, that if the VENDOR shall fail to
exercise his right to repurchase as herein granted within the period stipulated, then this conveyance shall
become absolute and irrevocable, without the necessity of drawing up a new deed of absolute sale,
subject to the requirements of the law regarding consolidation of ownership of real property (Rollo, p. 69;
Exh. B-1, Records, p. 22).
Private respondents failed to repurchase the property within the 90-day period despite an extension of five days granted
them. (Exh. C, Records, p. 24).
On April 19, 1988, petitioner filed with the Regional Trial Court, Branch 151, Pasig a petition for consolidation of
ownership, entitled "In Re: Petition to Consolidate Ownership Under Pacto de Retro Sale, Jesus F. Ignacio, Petitioner
versus Renato Yalung and Marina T. Yalung, Respondents." The petition was filed as a land registration case and
docketed as LRC Case No. R-3936.
Private respondents filed a Manifestation admitting the execution of the "Deed of Sale under Pacto de Retro." They
claimed, however, that the parties only intended to enter into an equitable mortgage to secure prompt payment of the loan
given them by petitioner. They alleged that the interest rate of the loan was "unconscionable, excessive and
unreasonable" and that notwithstanding the sale, they had remained in actual possession of the property. These
circumstances according to them qualified the agreement as one of equitable mortgage under Articles 1602 (1) and
(2)and 1603 of the Civil Code of the Philippines (Rollo, pp. 37-38). They prayed for the dismissal of the petition or, in the
alternative, for the declaration of the deed of sale as an equitable mortgage (Rollo, p. 38).
After trial, the court a quo rendered on August 9, 1988 a decision granting the petition and upholding the "Deed of Sale
Under Pacto de Retro." It found that both parties clearly and unquestionably intended a sale under pacto de retro, not an
equitable mortgage. It thus ordered the Register of Deeds of Rizal to cancel TCT No. 64873 and issue another transfer
certificate of title in the name of petitioner. The dispositive portion of the decision reads as follows:
WHEREFORE, judgment is hereby rendered in favor of the petitioner and against the respondents,
consolidating the title to that real property covered by Transfer Certificate of Title No. 64873 of the
Register of Deeds for Metro Manila II (Pasig, Metro Manila) in the name of petitioner Jesus F. Ignacio;
declaring null and void said TCT No. 64873; and ordering the Register of Deeds of Rizal to cancel said
TCT No. 64873 and to issue, in lieu thereof, another transfer certificate of title in favor and in the name of
Jesus F. Ignacio (Rollo, p. 174).
Private respondents appealed to the Court of Appeals raising the issue of lack of jurisdiction of the land registration court
over the case.
On March 4, 1991, the Court of Appeals granted the petition and reversed the decision of the trial court. The appellate
court declared that the Regional Trial Court sitting as a land registration court had no jurisdiction over the petition for
consolidation of title, which is an ordinary civil action pursuant to Article 1607 of the Civil Code. The Court of Appeals
dismissed the land registration case "without prejudice to the filing of another action with the proper court" (Rollo, p. 29).
Hence, this petition.
II
There is no dispute that an action for consolidation of ownership for failure of the vendor to redeem the mortgaged
property must be filed as an ordinary civil action, not as a land registration case (Rollo, p. 23).
Generally, an issue properly litigable in an ordinary civil action under the general jurisdiction of the Regional Trial Court
should not be resolved in a land registration proceeding. However in this jurisdiction, the Regional Trial Court also
functions as a land registration court. If the parties acquiesced in submitting the issue for determination in the land
registration proceeding and they were given full opportunity to present their respective sides and evidence, then the
defendants are placed in estoppel to question the jurisdiction of the said court to pass upon the issue (Zuniga v. Court of
Appeals, 95 SCRA 740 [1980]; Florentino v. Encarnacion, Sr., 79 SCRA 192 [1977]; Manalo v. Mariano, 69 SCRA 80
[1976]).
Indeed, a Regional Trial Court is a court of general jurisdiction, and whether a particular issue should be resolved by it in
its limited jurisdiction as a land registration court is not a jurisdictional question. It is a procedural question involving a
mode of practice which may be waived. (Santos v. Ganayo, 116 SCRA 431 [1982]; Manalo v. Mariano, supra, at 89).
In the case at bench, private respondents did not move to dismiss the petition before the land registration court. They, in
fact, filed a Manifestation admitting the due execution and genuineness of the "Deed of Sale Under Pacto de Retro" and
invoking the jurisdiction of the court to declare the said deed as one of equitable mortgage. They went to trial and
presented evidence consisting of documents and the testimony of respondent Renato Yalung (Records, pp. 30-31; TSN,
July 14, 1988, pp. 1-17). It was only after the decision of the land registration court and in their appeal before the Court of
Appeals that they challenged the jurisdiction of the trial court. They are now deemed to have waived their right to question
the jurisdiction of said court.
Moreover, the distinction between the general jurisdiction vested in the Regional Trial Court and its limited jurisdiction
when acting as a land registration court, has been eliminated by P.D. No. 1529, otherwise known as the Property
Registration Decree of 1979 (Quiroz v. Manalo, 210 SCRA 60 [1992]; Philippine National Bank v. International Corporate
Bank, 199 SCRA 508 [1991]; Averia, Jr. v. Caguioa, 146 SCRA 459 [1986]). This amendment was aimed at avoiding
multiplicity of suits and at expediting the disposition of cases. Regional Trial Courts now have the authority to act not only
on applications for original registration but also over all petitions filed after the original registration of title, with power to
hear and determine all questions arising from such applications or petitions. Indeed, the land registration court can now
hear and decide controversial and contentious cases and those involving substantial issues. (Quiroz v. Manalo, supra, at
67; Philippine National Bank v. International Corporate Bank, supra, at 514-515; Vda. de Arceo v. Court of Appeals, 185
SCRA 489 [1990]).
In the instant case, the trial court, although sitting as a land registration court, took cognizance of the petition as an
ordinary civil action under its general jurisdiction. The court did not decide the case summarily, but afforded both petitioner
and private respondents the opportunity to present their respective documentary and testimonial evidence. Ordinary
pleadings and memoranda were likewise filed. The decision of the trial court squarely addressed all the issues raised by
the parties and applied substantive law and jurisprudence.
Reviewing the records, we agree with the trial court that the "Deed of Sale Under Pacto de Retro" cannot be considered
as an equitable mortgage. The mere fact that the price in a pacto de retro sale is not the true value of the property does
not justify the conclusion that the contract is one of equitable mortgage (Belonio v. Novella, 105 Phil. 756 [1959]; Feliciano
v. Limjuco, 41 Phil. 147 [1920]; De Ocampo v. Lim, 38 Phil. 579 [1918]). In a pacto de retro sale, the practice is to fix a
relatively reduced price to afford the vendor a retro every facility to redeem the property. (Vda. de Lacson v. Granada, 1
SCRA 876 [1961]; Belonio v. Novella, supra). Moreover, private respondents have not been in actual possession of the
subject property. They had been leasing it out at the time the deed was executed (Exh. 6, Records, p. 39; TSN, July 14,
1988, p. 12).
Private respondent Renato Yalung, a college degree holder and a businessman for more than 15 years, admitted on
cross-examination that he fully understood the terms of the "Deed of Sale Under Pacto de Retro". (TSN, July 14, 1988,
pp. 10-11). When the terms of a contract clearly show that it is one of sale with right of repurchase, it must be interpreted
according to its literal sense, and held to be such a contract (Ordonez v. Villaroman, 78 Phil. 116 [1947]; Paguio v.
Manlapid, 52 Phil. 534 [1928]).
The records do not show that private respondents have exercised their right to repurchase or at least tendered the
redemption price for the property (cf. State Investment House, Inc. v. Court of Appeals, 215 SCRA 734 [1992]).
WHEREFORE, the petition for certiorari is GRANTED and the Decision dated March 4, 1991 and the Resolution dated
April 29, 1991 of the Court of Appeals in CA-G.R. CV No. 19047 are REVERSED and SET ASIDE. The Decision of the
Regional Trial Court dated August 9, 1988 in LRC Case No. R-3936 is REINSTATED.

G.R. No. 92013 July 25, 1990

SALVADOR H. LAUREL, petitioner,
vs.
RAMON GARCIA, as head of the Asset Privatization Trust, RAUL MANGLAPUS, as Secretary of Foreign Affairs,
and CATALINO MACARAIG, as Executive Secretary, respondents.
G.R. No. 92047 July 25, 1990
DIONISIO S. OJEDA, petitioner,
vs.
EXECUTIVE SECRETARY MACARAIG, JR., ASSETS PRIVATIZATION TRUST CHAIRMAN RAMON T. GARCIA,
AMBASSADOR RAMON DEL ROSARIO, et al., as members of the PRINCIPAL AND BIDDING COMMITTEES ON
THE UTILIZATION/DISPOSITION PETITION OF PHILIPPINE GOVERNMENT PROPERTIES IN JAPAN, respondents.
Arturo M. Tolentino for petitioner in 92013.

GUTIERREZ, JR., J.:

These are two petitions for prohibition seeking to enjoin respondents, their representatives and agents from
proceeding with the bidding for the sale of the 3,179 square meters of land at 306 Roppongi, 5-Chome Minato-ku
Tokyo, Japan scheduled on February 21, 1990. We granted the prayer for a temporary restraining order effective
February 20, 1990. One of the petitioners (in G.R. No. 92047) likewise prayes for a writ of mandamus to compel
the respondents to fully disclose to the public the basis of their decision to push through with the sale of the
Roppongi property inspire of strong public opposition and to explain the proceedings which effectively prevent
the participation of Filipino citizens and entities in the bidding process.
The oral arguments in G.R. No. 92013, Laurel v. Garcia, et al. were heard by the Court on March 13, 1990. After
G.R. No. 92047, Ojeda v. Secretary Macaraig, et al. was filed, the respondents were required to file a comment by
the Court's resolution dated February 22, 1990. The two petitions were consolidated on March 27, 1990 when the
memoranda of the parties in the Laurel case were deliberated upon.
The Court could not act on these cases immediately because the respondents filed a motion for an extension of
thirty (30) days to file comment in G.R. No. 92047, followed by a second motion for an extension of another thirty
(30) days which we granted on May 8, 1990, a third motion for extension of time granted on May 24, 1990 and a
fourth motion for extension of time which we granted on June 5, 1990 but calling the attention of the respondents
to the length of time the petitions have been pending. After the comment was filed, the petitioner in G.R. No.
92047 asked for thirty (30) days to file a reply. We noted his motion and resolved to decide the two (2) cases.
I
The subject property in this case is one of the four (4) properties in Japan acquired by the Philippine government
under the Reparations Agreement entered into with Japan on May 9, 1956, the other lots being:
(1) The Nampeidai Property at 11-24 Nampeidai-machi, Shibuya-ku, Tokyo which has an area of approximately
2,489.96 square meters, and is at present the site of the Philippine Embassy Chancery;
(2) The Kobe Commercial Property at 63 Naniwa-cho, Kobe, with an area of around 764.72 square meters and
categorized as a commercial lot now being used as a warehouse and parking lot for the consulate staff; and
(3) The Kobe Residential Property at 1-980-2 Obanoyama-cho, Shinohara, Nada-ku, Kobe, a residential lot which
is now vacant.
The properties and the capital goods and services procured from the Japanese government for national
development projects are part of the indemnification to the Filipino people for their losses in life and property
and their suffering during World War II.
The Reparations Agreement provides that reparations valued at $550 million would be payable in twenty (20)
years in accordance with annual schedules of procurements to be fixed by the Philippine and Japanese
governments (Article 2, Reparations Agreement). Rep. Act No. 1789, the Reparations Law, prescribes the national
policy on procurement and utilization of reparations and development loans. The procurements are divided into
those for use by the government sector and those for private parties in projects as the then National Economic
Council shall determine. Those intended for the private sector shall be made available by sale to Filipino citizens
or to one hundred (100%) percent Filipino-owned entities in national development projects.
The Roppongi property was acquired from the Japanese government under the Second Year Schedule and listed
under the heading "Government Sector", through Reparations Contract No. 300 dated June 27, 1958. The
Roppongi property consists of the land and building "for the Chancery of the Philippine Embassy" (Annex M-D to
Memorandum for Petitioner, p. 503). As intended, it became the site of the Philippine Embassy until the latter was
transferred to Nampeidai on July 22, 1976 when the Roppongi building needed major repairs. Due to the failure of
our government to provide necessary funds, the Roppongi property has remained undeveloped since that time.
A proposal was presented to President Corazon C. Aquino by former Philippine Ambassador to Japan, Carlos J.
Valdez, to make the property the subject of a lease agreement with a Japanese firm - Kajima Corporation —
which shall construct two (2) buildings in Roppongi and one (1) building in Nampeidai and renovate the present
Philippine Chancery in Nampeidai. The consideration of the construction would be the lease to the foreign
corporation of one (1) of the buildings to be constructed in Roppongi and the two (2) buildings in Nampeidai. The
other building in Roppongi shall then be used as the Philippine Embassy Chancery. At the end of the lease
period, all the three leased buildings shall be occupied and used by the Philippine government. No change of
ownership or title shall occur. (See Annex "B" to Reply to Comment) The Philippine government retains the title
all throughout the lease period and thereafter. However, the government has not acted favorably on this proposal
which is pending approval and ratification between the parties. Instead, on August 11, 1986, President Aquino
created a committee to study the disposition/utilization of Philippine government properties in Tokyo and Kobe,
Japan through Administrative Order No. 3, followed by Administrative Orders Numbered 3-A, B, C and D.
On July 25, 1987, the President issued Executive Order No. 296 entitling non-Filipino citizens or entities to avail
of separations' capital goods and services in the event of sale, lease or disposition. The four properties in Japan
including the Roppongi were specifically mentioned in the first "Whereas" clause.
Amidst opposition by various sectors, the Executive branch of the government has been pushing, with great
vigor, its decision to sell the reparations properties starting with the Roppongi lot. The property has twice been
set for bidding at a minimum floor price of $225 million. The first bidding was a failure since only one bidder
qualified. The second one, after postponements, has not yet materialized. The last scheduled bidding on
February 21, 1990 was restrained by his Court. Later, the rules on bidding were changed such that the $225
million floor price became merely a suggested floor price.
The Court finds that each of the herein petitions raises distinct issues. The petitioner in G.R. No. 92013 objects to
the alienation of the Roppongi property to anyone while the petitioner in G.R. No. 92047 adds as a principal
objection the alleged unjustified bias of the Philippine government in favor of selling the property to non-Filipino
citizens and entities. These petitions have been consolidated and are resolved at the same time for the objective
is the same - to stop the sale of the Roppongi property.
The petitioner in G.R. No. 92013 raises the following issues:
(1) Can the Roppongi property and others of its kind be alienated by the Philippine Government?; and
(2) Does the Chief Executive, her officers and agents, have the authority and jurisdiction, to sell the Roppongi
property?
Petitioner Dionisio Ojeda in G.R. No. 92047, apart from questioning the authority of the government to alienate
the Roppongi property assails the constitutionality of Executive Order No. 296 in making the property available
for sale to non-Filipino citizens and entities. He also questions the bidding procedures of the Committee on the
Utilization or Disposition of Philippine Government Properties in Japan for being discriminatory against Filipino
citizens and Filipino-owned entities by denying them the right to be informed about the bidding requirements.
II
In G.R. No. 92013, petitioner Laurel asserts that the Roppongi property and the related lots were acquired as part
of the reparations from the Japanese government for diplomatic and consular use by the Philippine government.
Vice-President Laurel states that the Roppongi property is classified as one of public dominion, and not of
private ownership under Article 420 of the Civil Code (See infra).
The petitioner submits that the Roppongi property comes under "property intended for public service" in
paragraph 2 of the above provision. He states that being one of public dominion, no ownership by any one can
attach to it, not even by the State. The Roppongi and related properties were acquired for "sites for chancery,
diplomatic, and consular quarters, buildings and other improvements" (Second Year Reparations Schedule). The
petitioner states that they continue to be intended for a necessary service. They are held by the State in
anticipation of an opportune use. (Citing 3 Manresa 65-66). Hence, it cannot be appropriated, is outside the
commerce of man, or to put it in more simple terms, it cannot be alienated nor be the subject matter of contracts
(Citing Municipality of Cavite v. Rojas, 30 Phil. 20 [1915]). Noting the non-use of the Roppongi property at the
moment, the petitioner avers that the same remains property of public dominion so long as the government has
not used it for other purposes nor adopted any measure constituting a removal of its original purpose or use.
The respondents, for their part, refute the petitioner's contention by saying that the subject property is not
governed by our Civil Code but by the laws of Japan where the property is located. They rely upon the rule of lex
situs which is used in determining the applicable law regarding the acquisition, transfer and devolution of the
title to a property. They also invoke Opinion No. 21, Series of 1988, dated January 27, 1988 of the Secretary of
Justice which used the lex situs in explaining the inapplicability of Philippine law regarding a property situated in
Japan.
The respondents add that even assuming for the sake of argument that the Civil Code is applicable, the
Roppongi property has ceased to become property of public dominion. It has become patrimonial property
because it has not been used for public service or for diplomatic purposes for over thirteen (13) years now
(Citing Article 422, Civil Code) and because the intention by the Executive Department and the Congress to
convert it to private use has been manifested by overt acts, such as, among others: (1) the transfer of the
Philippine Embassy to Nampeidai (2) the issuance of administrative orders for the possibility of alienating the
four government properties in Japan; (3) the issuance of Executive Order No. 296; (4) the enactment by the
Congress of Rep. Act No. 6657 [the Comprehensive Agrarian Reform Law] on June 10, 1988 which contains a
provision stating that funds may be taken from the sale of Philippine properties in foreign countries; (5) the
holding of the public bidding of the Roppongi property but which failed; (6) the deferment by the Senate in
Resolution No. 55 of the bidding to a future date; thus an acknowledgment by the Senate of the government's
intention to remove the Roppongi property from the public service purpose; and (7) the resolution of this Court
dismissing the petition in Ojeda v. Bidding Committee, et al., G.R. No. 87478 which sought to enjoin the second
bidding of the Roppongi property scheduled on March 30, 1989.
III
In G.R. No. 94047, petitioner Ojeda once more asks this Court to rule on the constitutionality of Executive Order
No. 296. He had earlier filed a petition in G.R. No. 87478 which the Court dismissed on August 1, 1989. He now
avers that the executive order contravenes the constitutional mandate to conserve and develop the national
patrimony stated in the Preamble of the 1987 Constitution. It also allegedly violates:
(1) The reservation of the ownership and acquisition of alienable lands of the public domain to Filipino citizens.
(Sections 2 and 3, Article XII, Constitution; Sections 22 and 23 of Commonwealth Act 141).i•t•c-aüsl
(2) The preference for Filipino citizens in the grant of rights, privileges and concessions covering the national
economy and patrimony (Section 10, Article VI, Constitution);
(3) The protection given to Filipino enterprises against unfair competition and trade practices;
(4) The guarantee of the right of the people to information on all matters of public concern (Section 7, Article III,
Constitution);
(5) The prohibition against the sale to non-Filipino citizens or entities not wholly owned by Filipino citizens of
capital goods received by the Philippines under the Reparations Act (Sections 2 and 12 of Rep. Act No. 1789);
and
(6) The declaration of the state policy of full public disclosure of all transactions involving public interest
(Section 28, Article III, Constitution).
Petitioner Ojeda warns that the use of public funds in the execution of an unconstitutional executive order is a
misapplication of public funds He states that since the details of the bidding for the Roppongi property
were never publicly disclosed until February 15, 1990 (or a few days before the scheduled bidding), the bidding
guidelines are available only in Tokyo, and the accomplishment of requirements and the selection of qualified
bidders should be done in Tokyo, interested Filipino citizens or entities owned by them did not have the chance
to comply with Purchase Offer Requirements on the Roppongi. Worse, the Roppongi shall be sold for a minimum
price of $225 million from which price capital gains tax under Japanese law of about 50 to 70% of the floor price
would still be deducted.
IV
The petitioners and respondents in both cases do not dispute the fact that the Roppongi site and the three
related properties were through reparations agreements, that these were assigned to the government sector and
that the Roppongi property itself was specifically designated under the Reparations Agreement to house the
Philippine Embassy.
The nature of the Roppongi lot as property for public service is expressly spelled out. It is dictated by the terms
of the Reparations Agreement and the corresponding contract of procurement which bind both the Philippine
government and the Japanese government.
There can be no doubt that it is of public dominion unless it is convincingly shown that the property has become
patrimonial. This, the respondents have failed to do.
As property of public dominion, the Roppongi lot is outside the commerce of man. It cannot be alienated. Its
ownership is a special collective ownership for general use and enjoyment, an application to the satisfaction of
collective needs, and resides in the social group. The purpose is not to serve the State as a juridical person, but
the citizens; it is intended for the common and public welfare and cannot be the object of appropration. (Taken
from 3 Manresa, 66-69; cited in Tolentino, Commentaries on the Civil Code of the Philippines, 1963 Edition, Vol. II,
p. 26).
The applicable provisions of the Civil Code are:
ART. 419. Property is either of public dominion or of private ownership.
ART. 420. The following things are property of public dominion
(1) Those intended for public use, such as roads, canals, rivers, torrents, ports and bridges
constructed by the State, banks shores roadsteads, and others of similar character;
(2) Those which belong to the State, without being for public use, and are intended for some
public service or for the development of the national wealth.
ART. 421. All other property of the State, which is not of the character stated in the preceding
article, is patrimonial property.
The Roppongi property is correctly classified under paragraph 2 of Article 420 of the Civil Code as property
belonging to the State and intended for some public service.
Has the intention of the government regarding the use of the property been changed because the lot has been
Idle for some years? Has it become patrimonial?
The fact that the Roppongi site has not been used for a long time for actual Embassy service does not
automatically convert it to patrimonial property. Any such conversion happens only if the property is withdrawn
from public use (Cebu Oxygen and Acetylene Co. v. Bercilles, 66 SCRA 481 [1975]). A property continues to be
part of the public domain, not available for private appropriation or ownership until there is a formal declaration
on the part of the government to withdraw it from being such (Ignacio v. Director of Lands, 108 Phil. 335 [1960]).
The respondents enumerate various pronouncements by concerned public officials insinuating a change of
intention. We emphasize, however, that an abandonment of the intention to use the Roppongi property for public
service and to make it patrimonial property under Article 422 of the Civil Code must be definiteAbandonment
cannot be inferred from the non-use alone specially if the non-use was attributable not to the government's own
deliberate and indubitable will but to a lack of financial support to repair and improve the property (See Heirs of
Felino Santiago v. Lazaro, 166 SCRA 368 [1988]). Abandonment must be a certain and positive act based on
correct legal premises.
A mere transfer of the Philippine Embassy to Nampeidai in 1976 is not relinquishment of the Roppongi property's
original purpose. Even the failure by the government to repair the building in Roppongi is not abandonment
since as earlier stated, there simply was a shortage of government funds. The recent Administrative Orders
authorizing a study of the status and conditions of government properties in Japan were merely directives for
investigation but did not in any way signify a clear intention to dispose of the properties.
Executive Order No. 296, though its title declares an "authority to sell", does not have a provision in its text
expressly authorizing the sale of the four properties procured from Japan for the government sector. The
executive order does not declare that the properties lost their public character. It merely intends to make the
properties available to foreigners and not to Filipinos alone in case of a sale, lease or other disposition. It merely
eliminates the restriction under Rep. Act No. 1789 that reparations goods may be sold only to Filipino citizens
and one hundred (100%) percent Filipino-owned entities. The text of Executive Order No. 296 provides:
Section 1. The provisions of Republic Act No. 1789, as amended, and of other laws to the contrary
notwithstanding, the above-mentioned properties can be made available for sale, lease or any
other manner of disposition to non-Filipino citizens or to entities owned by non-Filipino citizens.
Executive Order No. 296 is based on the wrong premise or assumption that the Roppongi and the three other
properties were earlier converted into alienable real properties. As earlier stated, Rep. Act No. 1789 differentiates
the procurements for the government sector and the private sector (Sections 2 and 12, Rep. Act No. 1789). Only
the private sector properties can be sold to end-users who must be Filipinos or entities owned by Filipinos. It is
this nationality provision which was amended by Executive Order No. 296.
Section 63 (c) of Rep. Act No. 6657 (the CARP Law) which provides as one of the sources of funds for its
implementation, the proceeds of the disposition of the properties of the Government in foreign countries, did not
withdraw the Roppongi property from being classified as one of public dominion when it mentions Philippine
properties abroad. Section 63 (c) refers to properties which are alienable and not to those reserved for public use
or service. Rep Act No. 6657, therefore, does not authorize the Executive Department to sell the Roppongi
property. It merely enumerates possible sources of future funding to augment (as and when needed) the Agrarian
Reform Fund created under Executive Order No. 299. Obviously any property outside of the commerce of man
cannot be tapped as a source of funds.
The respondents try to get around the public dominion character of the Roppongi property by insisting that
Japanese law and not our Civil Code should apply.
It is exceedingly strange why our top government officials, of all people, should be the ones to insist that in the
sale of extremely valuable government property, Japanese law and not Philippine law should prevail. The
Japanese law - its coverage and effects, when enacted, and exceptions to its provision — is not presented to the
Court It is simply asserted that the lex loci rei sitae or Japanese law should apply without stating what that law
provides. It is a ed on faith that Japanese law would allow the sale.
We see no reason why a conflict of law rule should apply when no conflict of law situation exists. A conflict of
law situation arises only when: (1) There is a dispute over the title or ownership of an immovable, such that the
capacity to take and transfer immovables, the formalities of conveyance, the essential validity and effect of the
transfer, or the interpretation and effect of a conveyance, are to be determined (See Salonga, Private International
Law, 1981 ed., pp. 377-383); and (2) A foreign law on land ownership and its conveyance is asserted to conflict
with a domestic law on the same matters. Hence, the need to determine which law should apply.
In the instant case, none of the above elements exists.
The issues are not concerned with validity of ownership or title. There is no question that the property belongs to
the Philippines. The issue is the authority of the respondent officials to validly dispose of property belonging to
the State. And the validity of the procedures adopted to effect its sale. This is governed by Philippine Law. The
rule of lex situs does not apply.
The assertion that the opinion of the Secretary of Justice sheds light on the relevance of the lex situs rule is
misplaced. The opinion does not tackle the alienability of the real properties procured through reparations nor
the existence in what body of the authority to sell them. In discussing who are capable of acquiring the lots, the
Secretary merely explains that it is the foreign law which should determine who can acquire the properties so
that the constitutional limitation on acquisition of lands of the public domain to Filipino citizens and entities
wholly owned by Filipinos is inapplicable. We see no point in belaboring whether or not this opinion is correct.
Why should we discuss who can acquire the Roppongi lot when there is no showing that it can be sold?
The subsequent approval on October 4, 1988 by President Aquino of the recommendation by the investigating
committee to sell the Roppongi property was premature or, at the very least, conditioned on a valid change in the
public character of the Roppongi property. Moreover, the approval does not have the force and effect of law
since the President already lost her legislative powers. The Congress had already convened for more than a year.
Assuming for the sake of argument, however, that the Roppongi property is no longer of public dominion, there
is another obstacle to its sale by the respondents.
There is no law authorizing its conveyance.
Section 79 (f) of the Revised Administrative Code of 1917 provides
Section 79 (f ) Conveyances and contracts to which the Government is a party. — In cases in
which the Government of the Republic of the Philippines is a party to any deed or other
instrument conveying the title to real estate or to any other property the value of which is in
excess of one hundred thousand pesos, the respective Department Secretary shall prepare the
necessary papers which, together with the proper recommendations, shall be submitted to the
Congress of the Philippines for approval by the same. Such deed, instrument, or contract shall be
executed and signed by the President of the Philippines on behalf of the Government of the
Philippines unless the Government of the Philippines unless the authority therefor be expressly
vested by law in another officer. (Emphasis supplied)
The requirement has been retained in Section 48, Book I of the Administrative Code of 1987 (Executive Order No.
292).
SEC. 48. Official Authorized to Convey Real Property. — Whenever real property of the
Government is authorized by law to be conveyed, the deed of conveyance shall be executed in
behalf of the government by the following:
(1) For property belonging to and titled in the name of the Republic of the Philippines, by the
President, unless the authority therefor is expressly vested by law in another officer.
(2) For property belonging to the Republic of the Philippines but titled in the name of any political
subdivision or of any corporate agency or instrumentality, by the executive head of the agency or
instrumentality. (Emphasis supplied)
It is not for the President to convey valuable real property of the government on his or her own sole will. Any
such conveyance must be authorized and approved by a law enacted by the Congress. It requires executive and
legislative concurrence.
Resolution No. 55 of the Senate dated June 8, 1989, asking for the deferment of the sale of the Roppongi property
does not withdraw the property from public domain much less authorize its sale. It is a mere resolution; it is not a
formal declaration abandoning the public character of the Roppongi property. In fact, the Senate Committee on
Foreign Relations is conducting hearings on Senate Resolution No. 734 which raises serious policy
considerations and calls for a fact-finding investigation of the circumstances behind the decision to sell the
Philippine government properties in Japan.
The resolution of this Court in Ojeda v. Bidding Committee, et al., supra, did not pass upon the constitutionality
of Executive Order No. 296. Contrary to respondents' assertion, we did not uphold the authority of the President
to sell the Roppongi property. The Court stated that the constitutionality of the executive order was not the real
issue and that resolving the constitutional question was "neither necessary nor finally determinative of the
case." The Court noted that "[W]hat petitioner ultimately questions is the use of the proceeds of the disposition
of the Roppongi property." In emphasizing that "the decision of the Executive to dispose of the Roppongi
property to finance the CARP ... cannot be questioned" in view of Section 63 (c) of Rep. Act No. 6657, the Court
did not acknowledge the fact that the property became alienable nor did it indicate that the President was
authorized to dispose of the Roppongi property. The resolution should be read to mean that in case the
Roppongi property is re-classified to be patrimonial and alienable by authority of law, the proceeds of a sale may
be used for national economic development projects including the CARP.
Moreover, the sale in 1989 did not materialize. The petitions before us question the proposed 1990 sale of the
Roppongi property. We are resolving the issues raised in these petitions, not the issues raised in 1989.
Having declared a need for a law or formal declaration to withdraw the Roppongi property from public domain to
make it alienable and a need for legislative authority to allow the sale of the property, we see no compelling
reason to tackle the constitutional issues raised by petitioner Ojeda.
The Court does not ordinarily pass upon constitutional questions unless these questions are properly raised in
appropriate cases and their resolution is necessary for the determination of the case (People v. Vera, 65 Phil. 56
[1937]). The Court will not pass upon a constitutional question although properly presented by the record if the
case can be disposed of on some other ground such as the application of a statute or general law (Siler v.
Louisville and Nashville R. Co., 213 U.S. 175, [1909], Railroad Commission v. Pullman Co., 312 U.S. 496 [1941]).
The petitioner in G.R. No. 92013 states why the Roppongi property should not be sold:
The Roppongi property is not just like any piece of property. It was given to the Filipino people in
reparation for the lives and blood of Filipinos who died and suffered during the Japanese military
occupation, for the suffering of widows and orphans who lost their loved ones and kindred, for
the homes and other properties lost by countless Filipinos during the war. The Tokyo properties
are a monument to the bravery and sacrifice of the Filipino people in the face of an invader; like
the monuments of Rizal, Quezon, and other Filipino heroes, we do not expect economic or
financial benefits from them. But who would think of selling these monuments? Filipino honor and
national dignity dictate that we keep our properties in Japan as memorials to the countless
Filipinos who died and suffered. Even if we should become paupers we should not think of selling
them. For it would be as if we sold the lives and blood and tears of our countrymen. (Rollo- G.R.
No. 92013, p.147)
The petitioner in G.R. No. 92047 also states:
Roppongi is no ordinary property. It is one ceded by the Japanese government in atonement for
its past belligerence for the valiant sacrifice of life and limb and for deaths, physical dislocation
and economic devastation the whole Filipino people endured in World War II.
It is for what it stands for, and for what it could never bring back to life, that its significance today
remains undimmed, inspire of the lapse of 45 years since the war ended, inspire of the passage of
32 years since the property passed on to the Philippine government.
Roppongi is a reminder that cannot — should not — be dissipated ... (Rollo-92047, p. 9)
It is indeed true that the Roppongi property is valuable not so much because of the inflated prices fetched by real
property in Tokyo but more so because of its symbolic value to all Filipinos — veterans and civilians alike.
Whether or not the Roppongi and related properties will eventually be sold is a policy determination where both
the President and Congress must concur. Considering the properties' importance and value, the laws on
conversion and disposition of property of public dominion must be faithfully followed.
WHEREFORE, IN VIEW OF THE FOREGOING, the petitions are GRANTED. A writ of prohibition is issued
enjoining the respondents from proceeding with the sale of the Roppongi property in Tokyo, Japan. The February
20, 1990 Temporary Restraining Order is made PERMANENT.
SO ORDERED.
Melencio-Herrera, Paras, Bidin, Griño-Aquino and Regalado, JJ., concur.
Separate Opinions

CRUZ, J., concurring:

I concur completely with the excellent ponencia of Mr. Justice Gutierrez and will add the following observations
only for emphasis.
It is clear that the respondents have failed to show the President's legal authority to sell the Roppongi property.
When asked to do so at the hearing on these petitions, the Solicitor General was at best ambiguous, although I
must add in fairness that this was not his fault. The fact is that there is -no such authority. Legal expertise alone
cannot conjure that statutory permission out of thin air.
Exec. Order No. 296, which reads like so much legislative, double talk, does not contain such authority. Neither
does Rep. Act No. 6657, which simply allows the proceeds of the sale of our properties abroad to be used for the
comprehensive agrarian reform program. Senate Res. No. 55 was a mere request for the deferment of the
scheduled sale of tile Roppongi property, possibly to stop the transaction altogether; and ill any case it is not a
law. The sale of the said property may be authorized only by Congress through a duly enacted statute, and there
is no such law.
Once again, we have affirmed the principle that ours is a government of laws and not of men, where every public
official, from the lowest to the highest, can act only by virtue of a valid authorization. I am happy to note that in
the several cases where this Court has ruled against her, the President of the Philippines has submitted to this
principle with becoming grace.

PADILLA, J., concurring:

I concur in the decision penned by Mr. Justice Gutierrez, Jr., I only wish to make a few observations which could
help in further clarifying the issues.
Under our tripartite system of government ordained by the Constitution, it is Congress that lays down or
determines policies. The President executes such policies. The policies determined by Congress are embodied in
legislative enactments that have to be approved by the President to become law. The President, of course,
recommends to Congress the approval of policies but, in the final analysis, it is Congress that is the policy -
determining branch of government.
The judiciary interprets the laws and, in appropriate cases, determines whether the laws enacted by Congress
and approved by the President, and presidential acts implementing such laws, are in accordance with the
Constitution.
The Roppongi property was acquired by the Philippine government pursuant to the reparations agreement
between the Philippine and Japanese governments. Under such agreement, this property was acquired by the
Philippine government for a specific purpose, namely, to serve as the site of the Philippine Embassy in Tokyo,
Japan. Consequently, Roppongi is a property of public dominion and intended for public service, squarely falling
within that class of property under Art. 420 of the Civil Code, which provides:
Art. 420. The following things are property of public dominion :
(1) ...
(2) Those which belong to the State, without being for public use, and are intended for some
public service or for the development of the national wealth. (339a)
Public dominion property intended for public service cannot be alienated unless the property is first transformed
into private property of the state otherwise known as patrimonial property of the state. 1 The transformation of
public dominion property to state patrimonial property involves, to my mind, a policy decision. It is a policy
decision because the treatment of the property varies according to its classification. Consequently, it is
Congress which can decide and declare the conversion of Roppongi from a public dominion property to a state
patrimonial property. Congress has made no such decision or declaration.
Moreover, the sale of public property (once converted from public dominion to state patrimonial property) must
be approved by Congress, for this again is a matter of policy (i.e. to keep or dispose of the property). Sec. 48,
Book 1 of the Administrative Code of 1987 provides:
SEC. 48. Official Authorized to Convey Real Property. — Whenever real property of the
Government is authorized by law to be conveyed, the deed of conveyance shall be executed in
behalf of the government by the following:
(1) For property belonging to and titled in the name of the Republic of the
Philippines, by the President, unless the authority therefor is expressly vested by
law in another officer.
(2) For property belonging to the Republic of the Philippines but titled in the name
of any political subdivision or of any corporate agency or instrumentality, by the
executive head of the agency or instrumentality. (Emphasis supplied)
But the record is bare of any congressional decision or approval to sell Roppongi. The record is likewise bare of
any congressional authority extended to the President to sell Roppongi thru public bidding or otherwise.
It is therefore, clear that the President cannot sell or order the sale of Roppongi thru public bidding or otherwise
without a prior congressional approval, first, converting Roppongi from a public dominion property to a state
patrimonial property, and, second, authorizing the President to sell the same.
ACCORDINGLY, my vote is to GRANT the petition and to make PERMANENT the temporary restraining order
earlier issued by this Court.

SARMIENTO, J., concurring:

The central question, as I see it, is whether or not the so-called "Roppongi property' has lost its nature as
property of public dominion, and hence, has become patrimonial property of the State. I understand that the
parties are agreed that it was property intended for "public service" within the contemplation of paragraph (2), of
Article 430, of the Civil Code, and accordingly, land of State dominion, and beyond human commerce. The lone
issue is, in the light of supervening developments, that is non-user thereof by the National Government (for
diplomatic purposes) for the last thirteen years; the issuance of Executive Order No. 296 making it available for
sale to any interested buyer; the promulgation of Republic Act No. 6657, the Comprehensive Agrarian Reform
Law, making available for the program's financing, State assets sold; the approval by the President of the
recommendation of the investigating committee formed to study the property's utilization; and the issuance of
Resolution No. 55 of the Philippine Senate requesting for the deferment of its disposition it, "Roppongi", is still
property of the public dominion, and if it is not, how it lost that character.
When land of the public dominion ceases to be one, or when the change takes place, is a question our courts
have debated early. In a 1906 decision, 1 it was held that property of the public dominion, a public plaza in this
instance, becomes patrimonial upon use thereof for purposes other than a plaza. In a later case, 2 this ruling was
reiterated. Likewise, it has been held that land, originally private property, has become of public dominion upon
its donation to the town and its conversion and use as a public plaza. 3 It is notable that under these three cases, the
character of the property, and any change occurring therein, depends on the actual use to which it is dedicated. 4
Much later, however, the Court held that "until a formal declaration on the part of the Government, through the executive
department or the Legislative, to the effect that the land . . . is no longer needed for [public] service- for public use or for
special industries, [it] continue[s] to be part of the public [dominion], not available for private expropriation or
ownership." 5 So also, it was ruled that a political subdivision (the City of Cebu in this case) alone may declare (under its
charter) a city road abandoned and thereafter, to dispose of it. 6
In holding that there is "a need for a law or formal declaration to withdraw the Roppongi property from public domain to
make it alienable and a land for legislative authority to allow the sale of the property" 7 the majority lays stress to the fact
that: (1) An affirmative act — executive or legislative — is necessary to reclassify property of the public dominion, and (2)
a legislative decree is required to make it alienable. It also clears the uncertainties brought about by earlier interpretations
that the nature of property-whether public or patrimonial is predicated on the manner it is actually used, or not used, and
in the same breath, repudiates the Government's position that the continuous non-use of "Roppongi", among other
arguments, for "diplomatic purposes", has turned it into State patrimonial property.
I feel that this view corresponds to existing pronouncements of this Court, among other things, that: (1) Property is
presumed to be State property in the absence of any showing to the contrary; 8 (2) With respect to forest lands, the same
continue to be lands of the public dominion unless and until reclassified by the Executive Branch of the Government; 9 and
(3) All natural resources, under the Constitution, and subject to exceptional cases, belong to the State. 10
I am elated that the Court has banished previous uncertainties.

FELICIANO, J., dissenting

With regret, I find myself unable to share the conclusions reached by Mr. Justice Hugo E. Gutierrez, Jr.
For purposes of this separate opinion, I assume that the piece of land located in 306 Roppongi, 5-Chome, Minato-ku
Tokyo, Japan (hereinafter referred to as the "Roppongi property") may be characterized as property of public dominion,
within the meaning of Article 420 (2) of the Civil Code:
[Property] which belong[s] to the State, without being for public use, and are intended for some public
service -.
It might not be amiss however, to note that the appropriateness of trying to bring within the confines of the simple
threefold classification found in Article 420 of the Civil Code ("property for public use property "intended for some public
service" and property intended "for the development of the national wealth") all property owned by the Republic of the
Philippines whether found within the territorial boundaries of the Republic or located within the territory of another
sovereign State, is not self-evident. The first item of the classification property intended for public use — can scarcely be
properly applied to property belonging to the Republic but found within the territory of another State. The third item of the
classification property intended for the development of the national wealth is illustrated, in Article 339 of the Spanish Civil
Code of 1889, by mines or mineral properties. Again, mineral lands owned by a sovereign State are rarely, if ever, found
within the territorial base of another sovereign State. The task of examining in detail the applicability of the classification
set out in Article 420 of our Civil Code to property that the Philippines happens to own outside its own boundaries must,
however, be left to academicians.
For present purposes, too, I agree that there is no question of conflict of laws that is, at the present time, before this Court.
The issues before us relate essentially to authority to sell the Roppongi property so far as Philippine law is concerned.
The majority opinion raises two (2) issues: (a) whether or not the Roppongi property has been converted into patrimonial
property or property of the private domain of the State; and (b) assuming an affirmative answer to (a), whether or not there
is legal authority to dispose of the Roppongi property.
I
Addressing the first issue of conversion of property of public dominion intended for some public service, into property of
the private domain of the Republic, it should be noted that the Civil Code does not address the question of who has
authority to effect such conversion. Neither does the Civil Code set out or refer to any procedure for such conversion.
Our case law, however, contains some fairly explicit pronouncements on this point, as Justice Sarmiento has pointed out
in his concurring opinion. In Ignacio v. Director of Lands (108 Phils. 335 [1960]), petitioner Ignacio argued that if the land
in question formed part of the public domain, the trial court should have declared the same no longer necessary for public
use or public purposes and which would, therefore, have become disposable and available for private ownership. Mr.
Justice Montemayor, speaking for the Court, said:
Article 4 of the Law of Waters of 1866 provides that when a portion of the shore is no longer washed by
the waters of the sea and is not necessary for purposes of public utility, or for the establishment of special
industries, or for coast-guard service, the government shall declare it to be the property of the owners of
the estates adjacent thereto and as an increment thereof. We believe that only the executive and possibly
the legislative departments have the authority and the power to make the declaration that any land so
gained by the sea, is not necessary for purposes of public utility, or for the establishment of special
industries, or for coast-guard service. If no such declaration has been made by said departments, the lot
in question forms part of the public domain. (Natividad v. Director of Lands, supra.)
The reason for this pronouncement, according to this Tribunal in the case of Vicente Joven y Monteverde
v. Director of Lands, 93 Phil., 134 (cited in Velayo's Digest, Vol. 1, p. 52).
... is undoubtedly that the courts are neither primarily called upon, nor indeed in a position to determine
whether any public land are to be used for the purposes specified in Article 4 of the Law of Waters.
Consequently, until a formal declaration on the part of the Government, through the executive department
or the Legislature, to the effect that the land in question is no longer needed for coast-guard service, for
public use or for special industries, they continue to be part of the public domain not available for private
appropriation or ownership. (108 Phil. at 338-339; emphasis supplied)
Thus, under Ignacio, either the Executive Department or the Legislative Department may convert property of the State of
public dominion into patrimonial property of the State. No particular formula or procedure of conversion is specified either
in statute law or in case law. Article 422 of the Civil Code simply states that: "Property of public dominion, when no longer
intended for public use or for public service, shall form part of the patrimonial property of the State". I respectfully submit,
therefore, that the only requirement which is legitimately imposable is that the intent to convert must be reasonably clear
from a consideration of the acts or acts of the Executive Department or of the Legislative Department which are said to
have effected such conversion.
The same legal situation exists in respect of conversion of property of public dominion belonging to municipal
corporations, i.e., local governmental units, into patrimonial property of such entities. In Cebu Oxygen Acetylene v.
Bercilles (66 SCRA 481 [1975]), the City Council of Cebu by resolution declared a certain portion of an existing street as
an abandoned road, "the same not being included in the city development plan". Subsequently, by another resolution, the
City Council of Cebu authorized the acting City Mayor to sell the land through public bidding. Although there was no
formal and explicit declaration of conversion of property for public use into patrimonial property, the Supreme Court said:
xxx xxx xxx
(2) Since that portion of the city street subject of petitioner's application for registration of title was
withdrawn from public use, it follows that such withdrawn portion becomes patrimonial property which can
be the object of an ordinary contract.
Article 422 of the Civil Code expressly provides that "Property of public dominion, when no longer
intended for public use of for public service, shall form part of the patrimonial property of the State."
Besides, the Revised Charter of the City of Cebu heretofore quoted, in very clear and unequivocal terms,
states that "Property thus withdrawn from public servitude may be used or conveyed for any purpose for
which other real property belonging to the City may be lawfully used or conveyed."
Accordingly, the withdrawal of the property in question from public use and its subsequent sale to the
petitioner is valid. Hence, the petitioner has a registrable title over the lot in question. (66 SCRA at 484-;
emphasis supplied)
Thus, again as pointed out by Sarmiento J., in his separate opinion, in the case of property owned by municipal
corporations simple non-use or the actual dedication of public property to some use other than "public use" or some
"public service", was sufficient legally to convert such property into patrimonial property (Municipality of Oas v. Roa, 7
Phil. 20 [1906]- Municipality of Hinunganan v. Director of Lands 24 Phil. 124 [1913]; Province of Zamboanga del Norte v.
City of Zamboanga, 22 SCRA 1334 (1968).
I would also add that such was the case not only in respect of' property of municipal corporations but also in respect of
property of the State itself. Manresa in commenting on Article 341 of the 1889 Spanish Civil Code which has been carried
over verbatim into our Civil Code by Article 422 thereof, wrote:
 La dificultad mayor en todo esto estriba, naturalmente, en fijar el momento en que los bienes de dominio
publico dejan de serlo. Si la Administracion o la autoridad competente legislative realizan qun acto en
virtud del cual cesa el destino o uso publico de los bienes de que se trata naturalmente la dificultad
queda desde el primer momento resuelta. Hay un punto de partida cierto para iniciar las relaciones
juridicas a que pudiera haber lugar Pero puede ocurrir que no haya taldeclaracion expresa, legislativa or
administrativa, y, sin embargo, cesar de hecho el destino publico de los bienes; ahora bien, en este
caso, y para los efectos juridicos que resultan de entrar la cosa en el comercio de los hombres,' se
entedera que se ha verificado la conversion de los bienes patrimoniales?
El citado tratadista Ricci opina, respecto del antiguo Codigo italiano, por la afirmativa, y por nuestra parte
creemos que tal debe ser la soluciion. El destino de las cosas no depende tanto de una declaracion
expresa como del uso publico de las mismas, y cuanda el uso publico cese con respecto de
determinados bienes, cesa tambien su situacion en el dominio publico. Si una fortaleza en ruina se
abandona y no se repara, si un trozo de la via publica se abandona tambien por constituir otro nuevo an
mejores condiciones....ambos bienes cesan de estar Codigo, y leyes especiales mas o memos
administrativas. (3 Manresa, Comentarios al Codigo Civil Espanol, p. 128 [7a ed.; 1952) (Emphasis
supplied)
The majority opinion says that none of the executive acts pointed to by the Government purported, expressly or definitely,
to convert the Roppongi property into patrimonial property — of the Republic. Assuming that to be the case, it is
respectfully submitted that cumulative effect of the executive acts here involved was to convert property originally
intended for and devoted to public service into patrimonial property of the State, that is, property susceptible of disposition
to and appropration by private persons. These executive acts, in their totality if not each individual act, make crystal clear
the intent of the Executive Department to effect such conversion. These executive acts include:
(a) Administrative Order No. 3 dated 11 August 1985, which created a Committee to study the disposition/utilization of the
Government's property in Japan, The Committee was composed of officials of the Executive Department: the Executive
Secretary; the Philippine Ambassador to Japan; and representatives of the Department of Foreign Affairs and the Asset
Privatization Trust. On 19 September 1988, the Committee recommended to the President the sale of one of the lots (the
lot specifically in Roppongi) through public bidding. On 4 October 1988, the President approved the recommendation of
the Committee.
On 14 December 1988, the Philippine Government by diplomatic note informed the Japanese Ministry of Foreign Affairs of
the Republic's intention to dispose of the property in Roppongi. The Japanese Government through its Ministry of Foreign
Affairs replied that it interposed no objection to such disposition by the Republic. Subsequently, the President and the
Committee informed the leaders of the House of Representatives and of the Senate of the Philippines of the proposed
disposition of the Roppongi property.
(b) Executive Order No. 296, which was issued by the President on 25 July 1987. Assuming that the majority opinion is
right in saying that Executive Order No. 296 is insufficient to authorize the sale of the Roppongi property, it is here
submitted with respect that Executive Order No. 296 is more than sufficient to indicate an intention to convert the
property previously devoted to public service into patrimonial property that is capable of being sold or otherwise disposed
of
(c) Non-use of the Roppongi lot for fourteen (14) years for diplomatic or for any other public purposes. Assuming (but
only arguendo) that non-use does not, by itself, automatically convert the property into patrimonial property. I respectfully
urge that prolonged non-use, conjoined with the other factors here listed, was legally effective to convert the lot in
Roppongi into patrimonial property of the State. Actually, as already pointed out, case law involving property of municipal
corporations is to the effect that simple non-use or the actual dedication of public property to some use other than public
use or public service, was sufficient to convert such property into patrimonial property of the local governmental entity
concerned. Also as pointed out above, Manresa reached the same conclusion in respect of conversion of property of the
public domain of the State into property of the private domain of the State.
The majority opinion states that "abandonment cannot be inferred from the non-use alone especially if the non-use was
attributable not to the Government's own deliberate and indubitable will but to lack of financial support to repair and
improve the property" (Majority Opinion, p. 13). With respect, it may be stressed that there is no abandonment involved
here, certainly no abandonment of property or of property rights. What is involved is the charge of the classification of the
property from property of the public domain into property of the private domain of the State. Moreover, if for fourteen (14)
years, the Government did not see fit to appropriate whatever funds were necessary to maintain the property in Roppongi
in a condition suitable for diplomatic representation purposes, such circumstance may, with equal logic, be construed as a
manifestation of the crystalizing intent to change the character of the property.
(d) On 30 March 1989, a public bidding was in fact held by the Executive Department for the sale of the lot in Roppongi.
The circumstance that this bidding was not successful certainly does not argue against an intent to convert the property
involved into property that is disposable by bidding.
The above set of events and circumstances makes no sense at all if it does not, as a whole, show at least the intent on
the part of the Executive Department (with the knowledge of the Legislative Department) to convert the property involved
into patrimonial property that is susceptible of being sold.
II
Having reached an affirmative answer in respect of the first issue, it is necessary to address the second issue of whether
or not there exists legal authority for the sale or disposition of the Roppongi property.
The majority opinion refers to Section 79(f) of the Revised Administrative Code of 1917 which reads as follows:
SEC. 79 (f). Conveyances and contracts to which the Government is a party. — In cases in which the
Government of the Republic of the Philippines is a party to any deed or other instrument conveying the
title to real estate or to any other property the value of which is in excess of one hundred thousand pesos,
the respective Department Secretary shall prepare the necessary papers which, together with the proper
recommendations, shall be submitted to the Congress of the Philippines for approval by the same. Such
deed, instrument, or contract shall be executed and signed by the President of the Philippines on behalf
of the Government of the Philippines unless the authority therefor be expressly vested by law in another
officer. (Emphasis supplied)
The majority opinion then goes on to state that: "[T]he requirement has been retained in Section 4, Book I of the
Administrative Code of 1987 (Executive Order No. 292)" which reads:
SEC. 48. Official Authorized to Convey Real Property. — Whenever real property of the Government
is authorized by law to be conveyed, the deed of conveyance shall be executed in behalf of the
government by the following:
(1) For property belonging to and titled in the name of the Republic of the Philippines, by the President,
unless the authority therefor is expressly vested by law in another officer.
(2) For property belonging to the Republic of the Philippines but titled in the name of any political
subdivision or of any corporate agency or instrumentality, by the executive head of the agency or
instrumentality. (Emphasis supplied)
Two points need to be made in this connection. Firstly, the requirement of obtaining specific approval of Congress when
the price of the real property being disposed of is in excess of One Hundred Thousand Pesos (P100,000.00) under the
Revised Administrative Code of 1917, has been deleted from Section 48 of the 1987 Administrative Code. What Section
48 of the present Administrative Code refers to is authorization by law for the conveyance. Section 48 does not purport to
be itself a source of legal authority for conveyance of real property of the Government. For Section 48 merely specifies the
official authorized to execute and sign on behalf of the Government the deed of conveyance in case of such a
conveyance.
Secondly, examination of our statute books shows that authorization by law for disposition of real property of the private
domain of the Government, has been granted by Congress both in the form of (a) a general, standing authorization for
disposition of patrimonial property of the Government; and (b) specific legislation authorizing the disposition of particular
pieces of the Government's patrimonial property.
Standing legislative authority for the disposition of land of the private domain of the Philippines is provided by Act No.
3038, entitled "An Act Authorizing the Secretary of Agriculture and Natural Resources to Sell or Lease Land of the Private
Domain of the Government of the Philippine Islands (now Republic of the Philippines)", enacted on 9 March 1922. The full
text of this statute is as follows:
Be it enacted by the Senate and House of Representatives of the Philippines in Legislature assembled
and by the authority of the same:
SECTION 1. The Secretary of Agriculture and Natural Resources (now Secretary of the Environment and
Natural Resources) is hereby authorized to sell or lease land of the private domain of the Government of
the Philippine Islands, or any part thereof, to such persons, corporations or associations as are, under the
provisions of Act Numbered Twenty-eight hundred and seventy-four, (now Commonwealth Act No. 141,
as amended) known as the Public Land Act, entitled to apply for the purchase or lease or agricultural
public land.
SECTION 2. The sale of the land referred to in the preceding section shall, if such land is agricultural, be
made in the manner and subject to the limitations prescribed in chapters five and six, respectively, of said
Public Land Act, and if it be classified differently, in conformity with the provisions of chapter nine of said
Act: Provided, however, That the land necessary for the public service shall be exempt from the
provisions of this Act.
SECTION 3. This Act shall take effect on its approval.
Approved, March 9, 1922. (Emphasis supplied)
Lest it be assumed that Act No. 3038 refers only to agricultural lands of the private domain of the State, it must be noted
that Chapter 9 of the old Public Land Act (Act No. 2874) is now Chapter 9 of the present Public Land Act (Commonwealth
Act No. 141, as amended) and that both statutes refer to: "any tract of land of the public domain which being neither
timber nor mineral land, is intended to be used for residential purposes or for commercial or industrial purposes other than
agricultural" (Emphasis supplied).i•t•c-aüsl In other words, the statute covers the sale or lease or residential, commercial
or industrial land of the private domain of the State.
Implementing regulations have been issued for the carrying out of the provisions of Act No. 3038. On 21 December 1954,
the then Secretary of Agriculture and Natural Resources promulgated Lands Administrative Orders Nos. 7-6 and 7-7
which were entitled, respectively: "Supplementary Regulations Governing the Sale of the Lands of the Private Domain of
the Republic of the Philippines"; and "Supplementary Regulations Governing the Lease of Lands of Private Domain of the
Republic of the Philippines" (text in 51 O.G. 28-29 [1955]).
It is perhaps well to add that Act No. 3038, although now sixty-eight (68) years old, is still in effect and has not been
repealed. 1
Specific legislative authorization for disposition of particular patrimonial properties of the State is illustrated by certain
earlier statutes. The first of these was Act No. 1120, enacted on 26 April 1904, which provided for the disposition of the
friar lands, purchased by the Government from the Roman Catholic Church, to bona fide settlers and occupants thereof or
to other persons. In Jacinto v. Director of Lands (49 Phil. 853 [1926]), these friar lands were held to be private and
patrimonial properties of the State. Act No. 2360, enacted on -28 February 1914, authorized the sale of the San Lazaro
Estate located in the City of Manila, which had also been purchased by the Government from the Roman Catholic Church.
In January 1916, Act No. 2555 amended Act No. 2360 by including therein all lands and buildings owned by the Hospital
and the Foundation of San Lazaro theretofor leased by private persons, and which were also acquired by the Philippine
Government.
After the enactment in 1922 of Act No. 3038, there appears, to my knowledge, to be only one statute authorizing the
President to dispose of a specific piece of property. This statute is Republic Act No. 905, enacted on 20 June 1953, which
authorized the
President to sell an Identified parcel of land of the private domain of the National Government to the National Press Club
of the Philippines, and to other recognized national associations of professionals with academic standing, for the nominal
price of P1.00. It appears relevant to note that Republic Act No. 905 was not an outright disposition in perpetuity of the
property involved- it provided for reversion of the property to the National Government in case the National Press Club
stopped using it for its headquarters. What Republic Act No. 905 authorized was really a donation, and not a sale.
The basic submission here made is that Act No. 3038 provides standing legislative authorization for disposition of the
Roppongi property which, in my view, has been converted into patrimonial property of the Republic. 2
To some, the submission that Act No. 3038 applies not only to lands of the private domain of the State located in the
Philippines but also to patrimonial property found outside the Philippines, may appear strange or unusual. I respectfully
submit that such position is not any more unusual or strange than the assumption that Article 420 of the Civil Code applies
not only to property of the Republic located within Philippine territory but also to property found outside the boundaries of
the Republic.
It remains to note that under the well-settled doctrine that heads of Executive Departments are alter egos of the President
(Villena v. Secretary of the Interior, 67 Phil. 451 [1939]), and in view of the constitutional power of control exercised by the
President over department heads (Article VII, Section 17,1987 Constitution), the President herself may carry out the
function or duty that is specifically lodged in the Secretary of the Department of Environment and Natural Resources
(Araneta v. Gatmaitan 101 Phil. 328 [1957]). At the very least, the President retains the power to approve or disapprove
the exercise of that function or duty when done by the Secretary of Environment and Natural Resources.
It is hardly necessary to add that the foregoing analyses and submissions relate only to the austere question of existence
of legal power or authority. They have nothing to do with much debated questions of wisdom or propriety or relative
desirability either of the proposed disposition itself or of the proposed utilization of the anticipated proceeds of the property
involved. These latter types of considerations He within the sphere of responsibility of the political departments of
government the Executive and the Legislative authorities.
For all the foregoing, I vote to dismiss the Petitions for Prohibition in both G.R. Nos. 92013 and 92047.
Fernan, C.J., Narvasa, Gancayco, Cortes and Medialdea, JJ., concurring.

Separate Opinions
CRUZ, J., concurring:
I concur completely with the excellent ponencia of Mr. Justice Gutierrez and will add the following observations only for
emphasis.
It is clear that the respondents have failed to show the President's legal authority to sell the Roppongi property. When
asked to do so at the hearing on these petitions, the Solicitor General was at best ambiguous, although I must add in
fairness that this was not his fault. The fact is that there is -no such authority. Legal expertise alone cannot conjure that
statutory permission out of thin air.
Exec. Order No. 296, which reads like so much legislative, double talk, does not contain such authority. Neither does Rep.
Act No. 6657, which simply allows the proceeds of the sale of our properties abroad to be used for the comprehensive
agrarian reform program. Senate Res. No. 55 was a mere request for the deferment of the scheduled sale of tile
Roppongi property, possibly to stop the transaction altogether; and ill any case it is not a law. The sale of the said property
may be authorized only by Congress through a duly enacted statute, and there is no such law.
Once again, we have affirmed the principle that ours is a government of laws and not of men, where every public official,
from the lowest to the highest, can act only by virtue of a valid authorization. I am happy to note that in the several cases
where this Court has ruled against her, the President of the Philippines has submitted to this principle with becoming
grace.

PADILLA, J., concurring:

I concur in the decision penned by Mr. Justice Gutierrez, Jr., I only wish to make a few observations which could help in
further clarifying the issues.
Under our tripartite system of government ordained by the Constitution, it is Congress that lays down or determines
policies. The President executes such policies. The policies determined by Congress are embodied in legislative
enactments that have to be approved by the President to become law. The President, of course, recommends to
Congress the approval of policies but, in the final analysis, it is Congress that is the policy - determining branch of
government.
The judiciary interprets the laws and, in appropriate cases, determines whether the laws enacted by Congress and
approved by the President, and presidential acts implementing such laws, are in accordance with the Constitution.
The Roppongi property was acquired by the Philippine government pursuant to the reparations agreement between the
Philippine and Japanese governments. Under such agreement, this property was acquired by the Philippine government
for a specific purpose, namely, to serve as the site of the Philippine Embassy in Tokyo, Japan. Consequently, Roppongi is
a property of public dominion and intended for public service, squarely falling within that class of property under Art. 420
of the Civil Code, which provides:
Art. 420. The following things are property of public dominion :
(1) ...
(2) Those which belong to the State, without being for public use, and are intended for some public
service or for the development of the national wealth. (339a)
Public dominion property intended for public service cannot be alienated unless the property is first transformed into
private property of the state otherwise known as patrimonial property of the state. 1 The transformation of public dominion
property to state patrimonial property involves, to my mind, a policy decision. It is a policy decision because the treatment
of the property varies according to its classification. Consequently, it is Congress which can decide and declare the
conversion of Roppongi from a public dominion property to a state patrimonial property. Congress has made no such
decision or declaration.
Moreover, the sale of public property (once converted from public dominion to state patrimonial property) must be
approved by Congress, for this again is a matter of policy (i.e. to keep or dispose of the property). Sec. 48, Book 1 of the
Administrative Code of 1987 provides:
SEC. 48. Official Authorized to Convey Real Property. — Whenever real property of the Government is
authorized by law to be conveyed, the deed of conveyance shall be executed in behalf of the government
by the following:
(1) For property belonging to and titled in the name of the Republic of the Philippines, by
the President, unless the authority therefor is expressly vested by law in another officer.
(2) For property belonging to the Republic of the Philippines but titled in the name of any
political subdivision or of any corporate agency or instrumentality, by the executive head
of the agency or instrumentality. (Emphasis supplied)
But the record is bare of any congressional decision or approval to sell Roppongi. The record is likewise bare of any
congressional authority extended to the President to sell Roppongi thru public bidding or otherwise.
It is therefore, clear that the President cannot sell or order the sale of Roppongi thru public bidding or otherwise without a
prior congressional approval, first, converting Roppongi from a public dominion property to a state patrimonial property,
and, second, authorizing the President to sell the same.
ACCORDINGLY, my vote is to GRANT the petition and to make PERMANENT the temporary restraining order earlier
issued by this Court.

SARMIENTO, J., concurring:

The central question, as I see it, is whether or not the so-called "Roppongi property' has lost its nature as property of
public dominion, and hence, has become patrimonial property of the State. I understand that the parties are agreed that it
was property intended for "public service" within the contemplation of paragraph (2), of Article 430, of the Civil Code, and
accordingly, land of State dominion, and beyond human commerce. The lone issue is, in the light of supervening
developments, that is non-user thereof by the National Government (for diplomatic purposes) for the last thirteen years;
the issuance of Executive Order No. 296 making it available for sale to any interested buyer; the promulgation of Republic
Act No. 6657, the Comprehensive Agrarian Reform Law, making available for the program's financing, State assets sold;
the approval by the President of the recommendation of the investigating committee formed to study the property's
utilization; and the issuance of Resolution No. 55 of the Philippine Senate requesting for the deferment of its disposition it,
"Roppongi", is still property of the public dominion, and if it is not, how it lost that character.
When land of the public dominion ceases to be one, or when the change takes place, is a question our courts have
debated early. In a 1906 decision, 1 it was held that property of the public dominion, a public plaza in this instance,
becomes patrimonial upon use thereof for purposes other than a plaza. In a later case, 2 this ruling was reiterated.
Likewise, it has been held that land, originally private property, has become of public dominion upon its donation to the
town and its conversion and use as a public plaza. 3 It is notable that under these three cases, the character of the
property, and any change occurring therein, depends on the actual use to which it is dedicated. 4
Much later, however, the Court held that "until a formal declaration on the part of the Government, through the executive
department or the Legislative, to the effect that the land . . . is no longer needed for [public] service- for public use or for
special industries, [it] continue[s] to be part of the public [dominion], not available for private expropriation or
ownership." 5 So also, it was ruled that a political subdivision (the City of Cebu in this case) alone may declare (under its
charter) a city road abandoned and thereafter, to dispose of it. 6
In holding that there is "a need for a law or formal declaration to withdraw the Roppongi property from public domain to
make it alienable and a land for legislative authority to allow the sale of the property" 7 the majority lays stress to the fact
that: (1) An affirmative act — executive or legislative — is necessary to reclassify property of the public dominion, and (2)
a legislative decree is required to make it alienable. It also clears the uncertainties brought about by earlier interpretations
that the nature of property-whether public or patrimonial is predicated on the manner it is actually used, or not used, and
in the same breath, repudiates the Government's position that the continuous non-use of "Roppongi", among other
arguments, for "diplomatic purposes", has turned it into State patrimonial property.
I feel that this view corresponds to existing pronouncements of this Court, among other things, that: (1) Property is
presumed to be State property in the absence of any showing to the contrary; 8 (2) With respect to forest lands, the same
continue to be lands of the public dominion unless and until reclassified by the Executive Branch of the Government; 9 and
(3) All natural resources, under the Constitution, and subject to exceptional cases, belong to the State. 10
I am elated that the Court has banished previous uncertainties.

FELICIANO, J., dissenting

With regret, I find myself unable to share the conclusions reached by Mr. Justice Hugo E. Gutierrez, Jr.
For purposes of this separate opinion, I assume that the piece of land located in 306 Roppongi, 5-Chome, Minato-ku
Tokyo, Japan (hereinafter referred to as the "Roppongi property") may be characterized as property of public dominion,
within the meaning of Article 420 (2) of the Civil Code:
[Property] which belong[s] to the State, without being for public use, and are intended for some public
service -.
It might not be amiss however, to note that the appropriateness of trying to bring within the confines of the simple
threefold classification found in Article 420 of the Civil Code ("property for public use property "intended for some public
service" and property intended "for the development of the national wealth") all property owned by the Republic of the
Philippines whether found within the territorial boundaries of the Republic or located within the territory of another
sovereign State, is not self-evident. The first item of the classification property intended for public use — can scarcely be
properly applied to property belonging to the Republic but found within the territory of another State. The third item of the
classification property intended for the development of the national wealth is illustrated, in Article 339 of the Spanish Civil
Code of 1889, by mines or mineral properties. Again, mineral lands owned by a sovereign State are rarely, if ever, found
within the territorial base of another sovereign State. The task of examining in detail the applicability of the classification
set out in Article 420 of our Civil Code to property that the Philippines happens to own outside its own boundaries must,
however, be left to academicians.
For present purposes, too, I agree that there is no question of conflict of laws that is, at the present time, before this Court.
The issues before us relate essentially to authority to sell the Roppongi property so far as Philippine law is concerned.
The majority opinion raises two (2) issues: (a) whether or not the Roppongi property has been converted into patrimonial
property or property of the private domain of the State; and (b) assuming an affirmative answer to (a), whether or not there
is legal authority to dispose of the Roppongi property.
I
Addressing the first issue of conversion of property of public dominion intended for some public service, into property of
the private domain of the Republic, it should be noted that the Civil Code does not address the question of who has
authority to effect such conversion. Neither does the Civil Code set out or refer to any procedure for such conversion.
Our case law, however, contains some fairly explicit pronouncements on this point, as Justice Sarmiento has pointed out
in his concurring opinion. In Ignacio v. Director of Lands (108 Phils. 335 [1960]), petitioner Ignacio argued that if the land
in question formed part of the public domain, the trial court should have declared the same no longer necessary for public
use or public purposes and which would, therefore, have become disposable and available for private ownership. Mr.
Justice Montemayor, speaking for the Court, said:
Article 4 of the Law of Waters of 1866 provides that when a portion of the shore is no longer washed by
the waters of the sea and is not necessary for purposes of public utility, or for the establishment of special
industries, or for coast-guard service, the government shall declare it to be the property of the owners of
the estates adjacent thereto and as an increment thereof. We believe that only the executive and possibly
the legislative departments have the authority and the power to make the declaration that any land so
gained by the sea, is not necessary for purposes of public utility, or for the establishment of special
industries, or for coast-guard service. If no such declaration has been made by said departments, the lot
in question forms part of the public domain. (Natividad v. Director of Lands, supra.)
The reason for this pronouncement, according to this Tribunal in the case of Vicente Joven y Monteverde
v. Director of Lands, 93 Phil., 134 (cited in Velayo's Digest, Vol. 1, p. 52).
... is undoubtedly that the courts are neither primarily called upon, nor indeed in a position to determine
whether any public land are to be used for the purposes specified in Article 4 of the Law of Waters.
Consequently, until a formal declaration on the part of the Government, through the executive department
or the Legislature, to the effect that the land in question is no longer needed for coast-guard service, for
 public use or for special industries, they continue to be part of the public domain not available for private
appropriation or ownership. (108 Phil. at 338-339; emphasis supplied)
Thus, under Ignacio, either the Executive Department or the Legislative Department may convert property of the State of
public dominion into patrimonial property of the State. No particular formula or procedure of conversion is specified either
in statute law or in case law. Article 422 of the Civil Code simply states that: "Property of public dominion, when no longer
intended for public use or for public service, shall form part of the patrimonial property of the State". I respectfully submit,
therefore, that the only requirement which is legitimately imposable is that the intent to convert must be reasonably clear
from a consideration of the acts or acts of the Executive Department or of the Legislative Department which are said to
have effected such conversion.
The same legal situation exists in respect of conversion of property of public dominion belonging to municipal
corporations, i.e., local governmental units, into patrimonial property of such entities. In Cebu Oxygen Acetylene v.
Bercilles (66 SCRA 481 [1975]), the City Council of Cebu by resolution declared a certain portion of an existing street as
an abandoned road, "the same not being included in the city development plan". Subsequently, by another resolution, the
City Council of Cebu authorized the acting City Mayor to sell the land through public bidding. Although there was no
formal and explicit declaration of conversion of property for public use into patrimonial property, the Supreme Court said:
xxx xxx xxx
(2) Since that portion of the city street subject of petitioner's application for registration of title was
withdrawn from public use, it follows that such withdrawn portion becomes patrimonial property which can
be the object of an ordinary contract.
Article 422 of the Civil Code expressly provides that "Property of public dominion, when no longer
intended for public use of for public service, shall form part of the patrimonial property of the State."
Besides, the Revised Charter of the City of Cebu heretofore quoted, in very clear and unequivocal terms,
states that "Property thus withdrawn from public servitude may be used or conveyed for any purpose for
which other real property belonging to the City may be lawfully used or conveyed."
Accordingly, the withdrawal of the property in question from public use and its subsequent sale to the
petitioner is valid. Hence, the petitioner has a registrable title over the lot in question. (66 SCRA at 484-;
emphasis supplied)
Thus, again as pointed out by Sarmiento J., in his separate opinion, in the case of property owned by municipal
corporations simple non-use or the actual dedication of public property to some use other than "public use" or some
"public service", was sufficient legally to convert such property into patrimonial property (Municipality of Oas v. Roa, 7
Phil. 20 [1906]- Municipality of Hinunganan v. Director of Lands 24 Phil. 124 [1913]; Province of Zamboanga del Norte v.
City of Zamboanga, 22 SCRA 1334 (1968).
I would also add that such was the case not only in respect of' property of municipal corporations but also in respect of
property of the State itself. Manresa in commenting on Article 341 of the 1889 Spanish Civil Code which has been carried
over verbatim into our Civil Code by Article 422 thereof, wrote:
La dificultad mayor en todo esto estriba, naturalmente, en fijar el momento en que los bienes de dominio
publico dejan de serlo. Si la Administracion o la autoridad competente legislative realizan qun acto en
virtud del cual cesa el destino o uso publico de los bienes de que se trata naturalmente la dificultad
queda desde el primer momento resuelta. Hay un punto de partida cierto para iniciar las relaciones
juridicas a que pudiera haber lugar Pero puede ocurrir que no haya taldeclaracion expresa, legislativa or
administrativa, y, sin embargo, cesar de hecho el destino publico de los bienes; ahora bien, en este
caso, y para los efectos juridicos que resultan de entrar la cosa en el comercio de los hombres,' se
entedera que se ha verificado la conversion de los bienes patrimoniales?
El citado tratadista Ricci opina, respecto del antiguo Codigo italiano, por la afirmativa, y por nuestra parte
creemos que tal debe ser la soluciion. El destino de las cosas no depende tanto de una declaracion
expresa como del uso publico de las mismas, y cuanda el uso publico cese con respecto de
determinados bienes, cesa tambien su situacion en el dominio publico. Si una fortaleza en ruina se
abandona y no se repara, si un trozo de la via publica se abandona tambien por constituir otro nuevo an
mejores condiciones....ambos bienes cesan de estar Codigo, y leyes especiales mas o memos
administrativas. (3 Manresa, Comentarios al Codigo Civil Espanol, p. 128 [7a ed.; 1952) (Emphasis
supplied)
The majority opinion says that none of the executive acts pointed to by the Government purported, expressly or definitely,
to convert the Roppongi property into patrimonial property — of the Republic. Assuming that to be the case, it is
respectfully submitted that cumulative effect of the executive acts here involved was to convert property originally
intended for and devoted to public service into patrimonial property of the State, that is, property susceptible of disposition
to and appropration by private persons. These executive acts, in their totality if not each individual act, make crystal clear
the intent of the Executive Department to effect such conversion. These executive acts include:
(a) Administrative Order No. 3 dated 11 August 1985, which created a Committee to study the disposition/utilization of the
Government's property in Japan, The Committee was composed of officials of the Executive Department: the Executive
Secretary; the Philippine Ambassador to Japan; and representatives of the Department of Foreign Affairs and the Asset
Privatization Trust. On 19 September 1988, the Committee recommended to the President the sale of one of the lots (the
lot specifically in Roppongi) through public bidding. On 4 October 1988, the President approved the recommendation of
the Committee.
On 14 December 1988, the Philippine Government by diplomatic note informed the Japanese Ministry of Foreign Affairs of
the Republic's intention to dispose of the property in Roppongi. The Japanese Government through its Ministry of Foreign
Affairs replied that it interposed no objection to such disposition by the Republic. Subsequently, the President and the
Committee informed the leaders of the House of Representatives and of the Senate of the Philippines of the proposed
disposition of the Roppongi property.
(b) Executive Order No. 296, which was issued by the President on 25 July 1987. Assuming that the majority opinion is
right in saying that Executive Order No. 296 is insufficient to authorize the sale of the Roppongi property, it is here
submitted with respect that Executive Order No. 296 is more than sufficient to indicate an intention to convert the
property previously devoted to public service into patrimonial property that is capable of being sold or otherwise disposed
of
(c) Non-use of the Roppongi lot for fourteen (14) years for diplomatic or for any other public purposes. Assuming (but
only arguendo) that non-use does not, by itself, automatically convert the property into patrimonial property. I respectfully
urge that prolonged non-use, conjoined with the other factors here listed, was legally effective to convert the lot in
Roppongi into patrimonial property of the State. Actually, as already pointed out, case law involving property of municipal
corporations is to the effect that simple non-use or the actual dedication of public property to some use other than public
use or public service, was sufficient to convert such property into patrimonial property of the local governmental entity
concerned. Also as pointed out above, Manresa reached the same conclusion in respect of conversion of property of the
public domain of the State into property of the private domain of the State.
The majority opinion states that "abandonment cannot be inferred from the non-use alone especially if the non-use was
attributable not to the Government's own deliberate and indubitable will but to lack of financial support to repair and
improve the property" (Majority Opinion, p. 13). With respect, it may be stressed that there is no abandonment involved
here, certainly no abandonment of property or of property rights. What is involved is the charge of the classification of the
property from property of the public domain into property of the private domain of the State. Moreover, if for fourteen (14)
years, the Government did not see fit to appropriate whatever funds were necessary to maintain the property in Roppongi
in a condition suitable for diplomatic representation purposes, such circumstance may, with equal logic, be construed as a
manifestation of the crystalizing intent to change the character of the property.
(d) On 30 March 1989, a public bidding was in fact held by the Executive Department for the sale of the lot in Roppongi.
The circumstance that this bidding was not successful certainly does not argue against an intent to convert the property
involved into property that is disposable by bidding.
The above set of events and circumstances makes no sense at all if it does not, as a whole, show at least the intent on
the part of the Executive Department (with the knowledge of the Legislative Department) to convert the property involved
into patrimonial property that is susceptible of being sold.
II
Having reached an affirmative answer in respect of the first issue, it is necessary to address the second issue of whether
or not there exists legal authority for the sale or disposition of the Roppongi property.
The majority opinion refers to Section 79(f) of the Revised Administrative Code of 1917 which reads as follows:
SEC. 79 (f). Conveyances and contracts to which the Government is a party. — In cases in which the
Government of the Republic of the Philippines is a party to any deed or other instrument conveying the
title to real estate or to any other property the value of which is in excess of one hundred thousand pesos,
the respective Department Secretary shall prepare the necessary papers which, together with the proper
recommendations, shall be submitted to the Congress of the Philippines for approval by the same. Such
deed, instrument, or contract shall be executed and signed by the President of the Philippines on behalf
of the Government of the Philippines unless the authority therefor be expressly vested by law in another
officer. (Emphasis supplied)
The majority opinion then goes on to state that: "[T]he requirement has been retained in Section 4, Book I of the
Administrative Code of 1987 (Executive Order No. 292)" which reads:
SEC. 48. Official Authorized to Convey Real Property. — Whenever real property of the Government
is authorized by law to be conveyed, the deed of conveyance shall be executed in behalf of the
government by the following:
(1) For property belonging to and titled in the name of the Republic of the Philippines, by the President,
unless the authority therefor is expressly vested by law in another officer.
(2) For property belonging to the Republic of the Philippines but titled in the name of any political
subdivision or of any corporate agency or instrumentality, by the executive head of the agency or
instrumentality. (Emphasis supplied)
Two points need to be made in this connection. Firstly, the requirement of obtaining specific approval of Congress when
the price of the real property being disposed of is in excess of One Hundred Thousand Pesos (P100,000.00) under the
Revised Administrative Code of 1917, has been deleted from Section 48 of the 1987 Administrative Code. What Section
48 of the present Administrative Code refers to is authorization by law for the conveyance. Section 48 does not purport to
be itself a source of legal authority for conveyance of real property of the Government. For Section 48 merely specifies the
official authorized to execute and sign on behalf of the Government the deed of conveyance in case of such a
conveyance.
Secondly, examination of our statute books shows that authorization by law for disposition of real property of the private
domain of the Government, has been granted by Congress both in the form of (a) a general, standing authorization for
disposition of patrimonial property of the Government; and (b) specific legislation authorizing the disposition of particular
pieces of the Government's patrimonial property.
Standing legislative authority for the disposition of land of the private domain of the Philippines is provided by Act No.
3038, entitled "An Act Authorizing the Secretary of Agriculture and Natural Resources to Sell or Lease Land of the Private
Domain of the Government of the Philippine Islands (now Republic of the Philippines)", enacted on 9 March 1922. The full
text of this statute is as follows:
Be it enacted by the Senate and House of Representatives of the Philippines in Legislature assembled
and by the authority of the same:
SECTION 1. The Secretary of Agriculture and Natural Resources (now Secretary of the Environment and
Natural Resources) is hereby authorized to sell or lease land of the private domain of the Government of
the Philippine Islands, or any part thereof, to such persons, corporations or associations as are, under the
provisions of Act Numbered Twenty-eight hundred and seventy-four, (now Commonwealth Act No. 141,
as amended) known as the Public Land Act, entitled to apply for the purchase or lease or agricultural
public land.
SECTION 2. The sale of the land referred to in the preceding section shall, if such land is agricultural, be
made in the manner and subject to the limitations prescribed in chapters five and six, respectively, of said
Public Land Act, and if it be classified differently, in conformity with the provisions of chapter nine of said
Act: Provided, however, That the land necessary for the public service shall be exempt from the
provisions of this Act.
SECTION 3. This Act shall take effect on its approval.
Approved, March 9, 1922. (Emphasis supplied)
Lest it be assumed that Act No. 3038 refers only to agricultural lands of the private domain of the State, it must be noted
that Chapter 9 of the old Public Land Act (Act No. 2874) is now Chapter 9 of the present Public Land Act (Commonwealth
Act No. 141, as amended) and that both statutes refer to: "any tract of land of the public domain which being neither
timber nor mineral land, is intended to be used for residential purposes or for commercial or industrial purposes other than
agricultural" (Emphasis supplied). In other words, the statute covers the sale or lease or residential, commercial or
industrial land of the private domain of the State.
Implementing regulations have been issued for the carrying out of the provisions of Act No. 3038. On 21 December 1954,
the then Secretary of Agriculture and Natural Resources promulgated Lands Administrative Orders Nos. 7-6 and 7-7
which were entitled, respectively: "Supplementary Regulations Governing the Sale of the Lands of the Private Domain of
the Republic of the Philippines"; and "Supplementary Regulations Governing the Lease of Lands of Private Domain of the
Republic of the Philippines" (text in 51 O.G. 28-29 [1955]).
It is perhaps well to add that Act No. 3038, although now sixty-eight (68) years old, is still in effect and has not been
repealed. 1
Specific legislative authorization for disposition of particular patrimonial properties of the State is illustrated by certain
earlier statutes. The first of these was Act No. 1120, enacted on 26 April 1904, which provided for the disposition of the
friar lands, purchased by the Government from the Roman Catholic Church, to bona fide settlers and occupants thereof or
to other persons. In Jacinto v. Director of Lands (49 Phil. 853 [1926]), these friar lands were held to be private and
patrimonial properties of the State. Act No. 2360, enacted on -28 February 1914, authorized the sale of the San Lazaro
Estate located in the City of Manila, which had also been purchased by the Government from the Roman Catholic Church.
In January 1916, Act No. 2555 amended Act No. 2360 by including therein all lands and buildings owned by the Hospital
and the Foundation of San Lazaro theretofor leased by private persons, and which were also acquired by the Philippine
Government.
After the enactment in 1922 of Act No. 3038, there appears, to my knowledge, to be only one statute authorizing the
President to dispose of a specific piece of property. This statute is Republic Act No. 905, enacted on 20 June 1953, which
authorized the
President to sell an Identified parcel of land of the private domain of the National Government to the National Press Club
of the Philippines, and to other recognized national associations of professionals with academic standing, for the nominal
price of P1.00. It appears relevant to note that Republic Act No. 905 was not an outright disposition in perpetuity of the
property involved- it provided for reversion of the property to the National Government in case the National Press Club
stopped using it for its headquarters. What Republic Act No. 905 authorized was really a donation, and not a sale.
The basic submission here made is that Act No. 3038 provides standing legislative authorization for disposition of the
Roppongi property which, in my view, has been converted into patrimonial property of the Republic. 2
To some, the submission that Act No. 3038 applies not only to lands of the private domain of the State located in the
Philippines but also to patrimonial property found outside the Philippines, may appear strange or unusual. I respectfully
submit that such position is not any more unusual or strange than the assumption that Article 420 of the Civil Code applies
not only to property of the Republic located within Philippine territory but also to property found outside the boundaries of
the Republic.
It remains to note that under the well-settled doctrine that heads of Executive Departments are alter egos of the President
(Villena v. Secretary of the Interior, 67 Phil. 451 [1939]), and in view of the constitutional power of control exercised by the
President over department heads (Article VII, Section 17,1987 Constitution), the President herself may carry out the
function or duty that is specifically lodged in the Secretary of the Department of Environment and Natural Resources
(Araneta v. Gatmaitan 101 Phil. 328 [1957]). At the very least, the President retains the power to approve or disapprove
the exercise of that function or duty when done by the Secretary of Environment and Natural Resources.
It is hardly necessary to add that the foregoing analyses and submissions relate only to the austere question of existence
of legal power or authority. They have nothing to do with much debated questions of wisdom or propriety or relative
desirability either of the proposed disposition itself or of the proposed utilization of the anticipated proceeds of the property
involved. These latter types of considerations He within the sphere of responsibility of the political departments of
government the Executive and the Legislative authorities.
For all the foregoing, I vote to dismiss the Petitions for Prohibition in both G.R. Nos. 92013 and 92047.

G.R. No. L-32266 February 27, 1989

THE DIRECTOR OF FORESTRY, petitioner
vs.
RUPERTO A. VILLAREAL, respondent.
The Solicitor General for petitioner.
Quasha, Asperilla, Ancheta, Valmonte, Pena & Marcos for respondents.

CRUZ, J.:
The basic question before the Court is the legal classification of mangrove swamps, or manglares, as they are commonly
known. If they are part of our public forest lands, they are not alienable under the Constitution. If they are considered
public agricultural lands, they may be acquired under private ownership. The private respondent's claim to the land in
question must be judged by these criteria.
The said land consists of 178,113 square meters of mangrove swamps located in the municipality of Sapian, Capiz.
Ruperto Villareal applied for its registration on January 25, 1949, alleging that he and his predecessors-in-interest had
been in possession of the land for more than forty years. He was opposed by several persons, including the petitioner on
behalf of the Republic of the Philippines. After trial, the application was approved by the Court of First Instance. of
Capiz. 1 The decision was affirmed by the Court of Appeals. 2 The Director of Forestry then came to this Court in a petition
for review on certiorari claiming that the land in dispute was forestal in nature and not subject to private appropriation. He
asks that the registration be reversed.
It should be stressed at the outset that both the petitioner and the private respondent agree that the land is mangrove
land. There is no dispute as to this. The bone of contention between the parties is the legal nature of mangrove swamps
or manglares. The petitioner claims, it is forestal and therefore not disposable and the private respondent insists it is
alienable as agricultural land. The issue before us is legal, not factual.
For a proper background of this case, we have to go back to the Philippine Bill of 1902, one of the earlier American
organic acts in the country. By this law, lands of the public domain in the Philippine Islands were classified into three
grand divisions, to wit, agricultural, mineral and timber or forest lands. This classification was maintained in the
Constitution of the Commonwealth, promulgated in 1935, until it was superseded by the Constitution of 1973. That new
charter expanded the classification of public lands to include industrial or commercial, residential, resettlement, and
grazing lands and even permitted the legislature to provide for other categories. 3 This provision has been reproduced, but
with substantial modifications, in the present Constitution. 4
Under the Commonwealth Constitution, which was the charter in force when this case arose, only agricultural lands were
allowed to be alienated. 5 Their disposition was provided for under C.A. No. 141. Mineral and timber or forest lands were
not subject to private ownership unless they were first reclassified as agricultural lands and so released for alienation.
In the leading case of Montano v. Insular Government, 6 promulgated in 1909, mangrove swamps or manglareswere
defined by the Court as:
... mud flats, alternately washed and exposed by the tide, in which grows various kindred plants which will
not live except when watered by the sea, extending their roots deep into the mud and casting their seeds,
which also germinate there. These constitute the mangrove flats of the tropics, which exist naturally, but
which are also, to some extent cultivated by man for the sake of the combustible wood of the mangrove
and like trees as well as for the useful nipa palm propagated thereon. Although these flats are literally
tidal lands, yet we are of the opinion that they cannot be so regarded in the sense in which that term is
used in the cases cited or in general American jurisprudence. The waters flowing over them are not
available for purpose of navigation, and they may be disposed of without impairment of the public interest
in what remains.
xxx
Under this uncertain and somewhat unsatisfactory condition of the law, the custom had grown of
converting manglares and nipa lands into fisheries which became a common feature of settlement along
the coast and at the same time of the change of sovereignty constituted one of the most productive
 industries of the Islands, the abrogation of which would destroy vested interests and prove a public
disaster.
Mangrove swamps were thus considered agricultural lands and so susceptible of private ownership.
Subsequently, the Philippine Legislature categorically declared, despite the above-cited case, that mangrove swamps
form part of the public forests of this country. This it did in the Administrative Code of 1917, which became effective on
October 1 of that year, thus:
Section 1820. Words and phrase defined. - For the purpose of this chapter 'public forest' includes, except
as otherwise specially indicated, all unreserved public land, including nipa and mangrove swamps, and all
forest reserves of whatever character.
It is noteworthy, though, that notwithstanding this definition, the Court maintained the doctrine in the Montano case when
two years later it held in the case of Jocson v. Director of Forestry: 7
...the words timber land are always translated in the Spanish translation of that Act (Act of Congress) as
terrenos forestales. We think there is an error in this translation and that a better translation would be
'terrenos madereros.' Lumber land in English means land with trees growing on it. The mangler plant
would never be called a tree in English but a bush, and land which has only bushes, shrubs or aquatic
plants growing on it cannot be called 'timber land.
xxx xxx xxx
The fact that there are a few trees growing in a manglare or nipa swamps does not change the general
character of the land from manglare to timber land.
More to the point, addressing itself directly to above-quoted Section 1820, the Court declared:
'In the case of Mapa vs. Insular Government (10 Phil. Rep., 175), this Court said that the phrase
agricultural lands as used in Act No. 926 means those public lands acquired from Spain which are not
timber or mineral lands.
Whatever may have been the meaning of the term 'forestry' under the Spanish law, the Act of Congress
of July 1st 1902, classifies the public lands in the Philippine Islands as timber, mineral or agricultural
lands, and all public lands that are not timber or mineral lands are necessarily agricultural public lands,
whether they are used as nipa swamps, manglares, fisheries or ordinary farm lands.
The definition of forestry as including manglares found in the Administrative Code of 1917 cannot affect
rights which vested prior to its enactment.
These lands being neither timber nor mineral lands, the trial court should have considered them
agricultural lands. If they are agricultural lands, then the rights of appellants are fully established by Act
No. 926.
The doctrine was reiterated still later in Garchitorena Vda. de Centenera v. Obias, 8 promulgated on March 4, 1933, more
than fifteen years after the effectivity of the Administrative Code of 1917. Justice Ostrand declared for a unanimous Court:
The opposition rests mainly upon the proposition that the land covered by the application there are
mangrove lands as shown in his opponent's Exh. 1, but we think this opposition of the Director of Forestry
is untenable, inasmuch as it has been definitely decided that mangrove lands are not forest lands in the
sense in which this phrase is used in the Act of Congress.
No elaboration was made on this conclusion which was merely based on the cases of Montano and Jocson. And in 1977,
the above ruling was reaffirmed in Tongson v. Director of Forestry, 9 with Justice Fernando declaring that the mangrove
lands in litis were agricultural in nature. The decision even quoted with approval the statement of the trial court that:
... Mangrove swamps where only trees of mangrove species grow, where the trees are small and sparse,
fit only for firewood purposes and the trees growing are not of commercial value as lumber do not convert
the land into public land. Such lands are not forest in character. They do not form part of the public
domain.
Only last year, in Republic v. De Porkan, 10 the Court, citing Krivenko v. Register of Deeds, 11 reiterated the ruling in the
Mapa case that "all public lands that are not timber or mineral lands are necessarily agricultural public lands, whether they
are used as nipa swamps, manglares, fisheries or ordinary farm lands.
But the problem is not all that simple. As it happens, there is also a line of decisions holding the contrary view.
In Yngson v. Secretary of Agriculture and Natural Resources, 12 promulgated in 1983, the Court ruled "that the Bureau of
Fisheries has no jurisdiction to dispose of swamp lands or mangrove lands forming part of the public domain while such
lands are still classified as forest lands.
Four months later, in Heirs of Amunategui v. Director of Forestry, 13 the Court was more positive when it held, again
through Justice Gutierrez:
The Heirs of Jose Amunategui maintain that Lot No. 885 cannot be classified as forest land because it is
not thickly forested but is a 'mangrove swamps.' Although conceding that 'mangrove swamp' is included in
the classification of forest land in accordance with Section 1820 of the Revised Administrative Code, the
petitioners argue that no big trees classified in Section 1821 of the said Code as first, second and third
groups are found on the land in question. Furthermore, they contend that Lot 885, even if it is a mangrove
swamp, is still subject to land registration proceedings because the property had been in actual
possession of private persons for many years, and therefore, said land was already 'private land' better
 adapted and more valuable for agricultural than for forest purposes and not required by the public
interests to be kept under forest classification.
The petition is without merit.
A forested area classified as forest land of the public domain does not lose such classification simply
because loggers or settlers may have stripped it of its forest cover. Parcels of land classified as forest
land may actually be covered with grass or planted to crops by kaingin cultivators or other farmers.
'Forested lands' do not have to be on mountains or in out-of-the-way places. Swampy areas covered by
mangrove trees, nipa palms, and other trees growing in brackish or sea water may also be classified as
forest land. The classification is descriptive of its legal nature or status and does not have to be
descriptive of what the land actually looks like. Unless and until the land classsified as 'forest' is released
in an official proclamation to that effect so that it may form part of the disposable agricultural lands of the
public domain, the rules on confirmation of imperfect titles do not apply.'
The view was maintained in Vallarta v. Intermediate Appellate Court, 14 where this Court agreed with the Solicitor
General's submission that the land in dispute, which he described as "swamp mangrove or forestal land," were not private
properties and so not registerable. This case was decided only twelve days after the De Porkan case.
Faced with these apparent contradictions, the Court feels there is a need for a categorical pronouncement that should
resolve once and for all the question of whether mangrove swamps are agricultural lands or forest lands.
The determination of this question is a function initially belonging to the legislature, which has the authority to implement
the constitutional provision classifying the lands of the public domain (and is now even permitted to provide for more
categories of public lands). The legislature having made such implementation, the executive officials may then, in the
discharge of their own role, administer our public lands pursuant to their constitutional duty " to ensure that the laws be
faithfully executed' and in accordance with the policy prescribed. For their part, the courts will step into the picture if the
rules laid down by the legislature are challenged or, assuming they are valid, it is claimed that they are not being correctly
observed by the executive. Thus do the three departments, coordinating with each other, pursue and achieve the
objectives of the Constitution in the conservation and utilization of our natural resources.
In C.A. No. 141, the National Assembly delegated to the President of the Philippines the function of making periodic
classifications of public lands, thus:
Sec. 6. The President, upon the recommendation of the Secretary of Agriculture and Natural Resources,
shall from time to time classify the lands of the public domain into:
(a) Alienable or disposable,
(b) Lumber, and
(c) Mineral lands,
and may at any time and in a like manner transfer such lands from one class to another, for the purposes
of their administration and disposition.
Sec. 7. For the purposes of the administration and disposition of alienable or disposable lands, the
President, upon recommendation by the Secretary of Agriculture and Natural Resources, shall from time
to time declare what lands are open to disposition or concession under this Act.
With particular regard to alienable public lands, Section 9 of the same law provides:
For the purpose of their administration and disposition, the lands of the public domain alienable or open to
disposition shall be classified, according to the use or purposes to which such lands are destined, as
follows:
(a) Agricultural;
(b) Residential, commercial, industrial, or for similar productive purposes;
(c) Educational, charitable, or other similar purposes; and
(d) Reservations for townsites and for public and quasi-public uses.
The President, upon recommendation by the Secretary of Agriculture and Natural Resources, shall from
time to time make the classifications provided for in this section, and may, at any time and in a similar
manner, transfer lands from one class to another.
As for timber or forest lands, the Revised Administrative Code states as follows:
Sec. 1826. Regulation setting apart forest reserves- Revocation of same. - Upon there commendation of
the Director of Forestry, with the approval of the Department Head, the President of the Philippines may
set apart forest reserves from the public lands and he shall by proclamation declare the establishment of
such reserves and the boundaries thereof, and thereafter such forest reserves shall not be entered, sold,
or otherwise disposed of, but shall remain as such for forest uses, and shall be administered in the same
manner as public forest.
The President of the Philippines may in like manner by proclamation alter or modify the boundaries of any
forest reserve from time to time, or revoke any such proclamation, and upon such revocation such forest
reserve shall be and become part of the public lands as though such proclamation had never been made.
Sec. 1827. Assignment of forest land for agricultural purposes. - Lands in public forest, not including
forest reserves, upon the certification of the Director of Forestry that said lands are better adapted and
more valuable for agricultural than for forest purposes and not required by the public interests to be kept
under forest, shall be declared by the Department Head to be agricultural lands.
With these principles in mind, we reach the following conclusion:
Mangrove swamps or manglares should be understood as comprised within the public forests of the Philippines as
defined in the aforecited Section 1820 of the Administrative Code of 1917. The legislature having so determined, we have
no authority to ignore or modify its decision, and in effect veto it, in the exercise of our own discretion. The statutory
definition remains unchanged to date and, no less noteworthy, is accepted and invoked by the executive department.
More importantly, the said provision has not been challenged as arbitrary or unrealistic or unconstitutional assuming the
requisite conditions, to justify our judicial intervention and scrutiny. The law is thus presumed valid and so must be
respected. We repeat our statement in the Amunategui case that the classification of mangrove swamps as forest lands is
descriptive of its legal nature or status and does not have to be descriptive of what the land actually looks like. That
determination having been made and no cogent argument having been raised to annul it, we have no duty as judges but
to apply it. And so we shall.
Our previous description of the term in question as pertaining to our agricultural lands should be understood as covering
only those lands over which ownership had already vested before the Administrative Code of 1917 became effective.
Such lands could not be retroactively legislated as forest lands because this would be violative of a duly acquired property
right protected by the due process clause. So we ruled again only two months ago in Republic of the Philippines vs. Court
of Appeals, 15 where the possession of the land in dispute commenced as early as 1909, before it was much later
classified as timberland.
It follows from all this that the land under contention being admittedly a part of the mangrove swamps of Sapian, and for
which a minor forest license had in fact been issued by the Bureau of Forestry from 1920 to 1950, it must be considered
forest land. It could therefore not be the subject of the adverse possession and consequent ownership claimed by the
private respondent in support of his application for registration. To be so, it had first to be released as forest land and
reclassified as agricultural land pursuant to the certification the Director of Forestry may issue under Section 1827 of the
Revised Administrative Code.
The private respondent invokes the survey plan of the mangrove swamps approved by the Director of Lands, 16 to prove
that the land is registerable. It should be plain, however, that the mere existence of such a plan would not have the effect
of converting the mangrove swamps, as forest land, into agricultural land. Such approval is ineffectual because it is clearly
in officious. The Director of Lands was not authorized to act in the premises. Under the aforecited law, it is the Director of
Forestry who has the authority to determine whether forest land is more valuable for agricultural rather than forestry uses,
as a basis for its declaration as agricultural land and release for private ownership.
Thus we held in the Yngson case:
It is elementary in the law governing the disposition of lands of the public domain that until timber or forest
lands are released as disposable and alienable neither the Bureau of Lands nor the Bureau of Fisheries
has authority to lease, grant, sell or otherwise dispose of these lands for homesteads, sales patents,
leases for grazing or other purposes, fishpond leases and other modes of utilization.
The Bureau of Fisheries has no jurisdiction to administer and dispose of swamp lands or mangrove lands
forming part of the public domain while such lands are still classified as forest land or timber land and not
released for fishery or other purposes.
The same rule was echoed in the Vallarta case, thus:
It is elementary in the law governing natural resources that forest land cannot be owned by private
persons. It is not registerable. The adverse possession which can be the basis of a grant of title in
confirmation of imperfect title cases cannot commence until after the forest land has been declared
alienable and disposable. Possession of forest land, no matter bow long cannot convert it into private
property.'
We find in fact that even if the land in dispute were agricultural in nature, the proof the private respondent offers of
prescriptive possession thereof is remarkably meager and of dubious persuasiveness. The record contains no convincing
evidence of the existence of the informacion posesoria allegedly obtained by the original transferor of the property, let
alone the fact that the conditions for acquiring title thereunder have been satisfied. Nowhere has it been shown that
the informacion posesoria has been inscribed or registered in the registry of property and that the land has been under the
actual and adverse possession of the private respondent for twenty years as required by the Spanish Mortgage
Law. 17 These matters are not presumed but must be established with definite proof, which is lacking in this case.
Significantly, the tax declarations made by the private respondent were practically the only basis used by the appellate
court in sustaining his claim of possession over the land in question. Tax declarations are, of course, not sufficient to
prove possession and much less vest ownership in favor of the declarant, as we have held in countless cases. 18
We hold, in sum, that the private respondent has not established his right to the registration of the subject land in his
name. Accordingly, the petition must be granted.
It is reiterated for emphasis that, conformably to the legislative definition embodied in Section 1820 of the Revised
Administrative Code of 1917, which remains unamended up to now, mangrove swamps or manglares form part of the
public forests of the Philippines. As such, they are not alienable under the Constitution and may not be the subject of
private ownership until and unless they are first released as forest land and classified as alienable agricultural land.
WHEREFORE, the decision of the Court of Appeals is SET ASIDE and the application for registration of title of private
respondent is DISMISSED, with cost against him. This decision is immediately executory.
SO ORDERED.
G.R. No. 69138 May 19, 1992
REPUBLIC OF THE PHILIPPINES (Bureau of Forest Development), petitioner,
vs.
INTERMEDIATE APPELLATE COURT (First Civil Cases Division) and HILARIO P. RAMA, respondents.

GUTIERREZ, JR., J.:

The decision of the trial court in this case declared the disputed parcels of land to be forest land and, therefore,
inalienable. The appellate court sustained the factual finding. The issue raised in this petition refers to the propriety of
awarding necessary expenses to the alleged possessor in good faith with right of retention until the expenses are paid.
In May 1974, Anselmo Logronio, in his official capacity as officer-in-charge of the Bohol Reforestation Project of the
Bureau of Forest Development, bulldozed portions of two (2) parcels of land which he believed to be forest lands located
at Talibon, Bohol, occupied the same, and planted mulberry and other trees.
Soon thereafter, respondent Hilario P. Rama commenced in the then Court of First Instance, now Regional Trial Court of
Bohol, a complaint for recovery of possession, ownership and damages against Logronio alleging that he is the absolute
owner and possessor of the two (2) parcels of land occupied by Logronio. He specifically described the two (2) parcels of
land as follows:
A. A parcel of land, Lot 1, Psu-218360 beginning at a point marked "1" of Lot 1, Psu 218360, being N. 41-
39 E., 15391.24 m. from B.L.L.M. No. 1, Municipality of Carmen, Province of Bohol, thence N. 47-35 W.,
163.40 m. to point 2; S. 67-59 W., 173.82 m. to point 3; N.5-17 E., 250.71 m. to point 4; S. 71-33 E.,
168.51 m. to point 5; S. 82-11 E., 107.55 m. to point 6; S. 0-45 W., 228.32 m. to point 1; point of
beginning . . . containing an area of FIFTY ONE THOUSAND TWO HUNDRED AND TWENTY SIX
(51,226) square meters . . . evidenced by Original Certificate of Title No. 6148 (Free Patent No. 319750)
Office of the Register of Deeds for the Province of Bohol . . . also covered by Tax Dec. No. R-3859 in the
name of Plaintiff . . . assessed at P990.00 . . .
B. A parcel of land (as shown on plant H-154932, LRC Rec. No.), situated in the Barrio of Malitbog,
Municipality of Trinidad, Province of Bohol. Bounded on the H., (sic) along lines 1-2-3 by the property of
Rufino Autida (H-166571), on the E., along lines 4-5-6-7 by Creek; on the S., along lines 7-8-9-10, by the
Marinas Creek 4.00 m. wide; on the W., along line 10-11 by Public Land (Forest Zone), and on the N.,
along lines 11-12-1 by the property of Angel Jumawan . . . containing an area of Ninety Six Thousand
Three Hundred Forty Three (96,343) square meters . . . covered by Tax Dec. No. R-4019 in the name of
Plaintiff . . . with an assessed value of Pl,390.00 . . .
xxx xxx xxx
(Record on Appeal, pp. 54-56)
In his answer, Logronio claimed that the two parcels of land are forest lands and that the questioned acts were performed
by him in the regular and lawful performance of his duties as officer-in-charge of the Bohol Reforestation Project of the
Bureau of Forest Development. He prayed for the dismissal of the complaint.
Petitioner Republic filed a motion for leave to intervene attaching its complaint-in-intervention.
The complaint-in-intervention alleged that Logronio's acts were authorized by the government through the Director of the
Bureau of Forest Development in connection with the reforestation program of the government; that the two (2) subject
parcels of land are located within the timberland Block D, L. C. Project No. 33 of Talibon, Bohol per BF Map L. C. 686
and, therefore, are forest lands; that the said lands were never released by the government as alienable and disposable
lands, hence, are not susceptible of disposition or private appropriation under the provisions of the Public Land Act
(Commonwealth Act No. 41), as amended, nor were the said parcels of land registered under the provisions of the Land
Registration Law (Act No. 496), as amended. It prayed that Free Patent No. 319750 covering the forest portion of the first
lot be declared null and void; that the Register of Deeds be ordered to cancel OCT No. 6148 covering the said forest
portion; that both forest lands be reverted back to the public domain; and that the complaint against Logronio be
dismissed.
The motion was granted and the complaint-in-intervention was admitted by the lower court.
Rama, then, filed an answer to the complaint-in-intervention alleging that the Republic has no cause of action, and is
guilty of estoppel for having caused the issuance of the certificate of title covering the forest land. He claimed that if his
title is to be cancelled, and he is deprived of ownership over the parcels of land, he should be paid by the Republic for all
existing improvements plus whatever expenses he has incurred in connection with the improvement of said lands.
The trial of the case resulted in the following undisputed facts stated in the decision of the lower court:
xxx xxx xxx
1. On parcel A in the complaint. The evidence discloses that Lot 1, Psu-218360, as described in the
complaint, and containing an area of 51,226 square meters, is one of the two lots covered by OCT No.
6148 (Free Patent Title No. 319750) in the name of Hilario Piscos Rama (Exhs. A and A-1) and is,
according to the plaintiff, free from any liens or encumbrances.
Thus, plaintiff Hilario P. Rama, 42 testified that of the two parcels of land mentioned in the complaint, one
parcel was covered by title, as shown by a xerox copy of OCT No. 6148 (Exhs. A and A-1), and by tax
declaration No. R-3859 (Exh. B); that he secured a certification from the Office of the District Forester,
Tagbilaran City, regarding the status of the land covered by OCT 6148 (Exh. C); that he had a plan of the
land covered by OCT No. 6148 (Exh. D); that in the memorandum of encumbrances on OCT No. 6148
(Exh. A-1), Entry No. 3382 referred to a real-estate mortgage executed on 23 November 1967 by Hilario
Piscos Rama and Socorro Regañon in favor of the Development Bank of the Philippines, but the
obligation was already paid, and there was a written release of the mortgage in 1975, which was not yet
registered because when he went to the Registry of Deeds payment was required for registering the
release and he did not have money at that time.
As shown in OCT No. 6148 (Exh. A), the free patent title was given on 13 January 1967, and the
certificate of title was issued on 4 May 1967. Then on 7 November 1967, the Office of the District
Forester, Tagbilaran City, issued Certification No. 57 (Exh. C) to the effect "that according to the records
of this Office, there is no pending case as far as the Bureau of Forestry is concerned, involving the validity
of the title over a parcel of land containing an area of 10.2450 hectares covered by Original Certificate of
Title No. 6148 Free Patent No. 319750 situated in barrio of Malitbog, Municipality of Dagohoy, Province of
Bohol issued by the Register of Deeds of Tagbilaran City on January 13, 1967 in the name of Hilario
Piscos Rama, Filipino, of legal age, married to Socorro Riganon, and resident in Malitbog, Dagohoy,
Bohol."
Meantime, on 11 September 1967, Hipolito Amihan, Forester in Charge of the Bohol Reforestation
Project, Dagohoy, Bohol, addressed a letter to the Administrator, Reforestation Administration, Diliman,
Quezon City, thru the Regional Officer, Cebu City, (Exh. 8), stating that relative to OCT No. 6148 in the
name of Hilario Piscos Rama —
Upon verification of the area in question it is found out that Lot I in an area of 51,226 sq.
m. is within the area of Bohol Reforestation Project, Dagohoy, Bohol. . . .
and recommending "that Lot No. 1 under PSU-21-8360 with an area of 51,226 sq. m. under Free Patent
No. 318750 issued in favor of Mr. Hilario Piscos Rama be cancelled."
On 29 October 1974, Lope D. Reyes, Assistant OIC, Legal Staff, Bureau of Forest Development, Diliman,
Quezon City, sent a memorandum to the OIC Silviculture Division (Exh. 1), requesting that OCT No. 6148
issued in favor of Hilario Piscos Rama "be verified as to whether or not the area is inside a timberland of
alienable or disposable land." And on 22 November 1974, Primo P. Andres, Officer in Charge, Silviculture
Division, Bureau of Forest Development, Diliman, Quezon City, returned by first endorsement (Exh. 2) the
aforesaid memorandum with the information that per verification and control —
1. Lot 1, PSU-218360 is within the Timberland Block-A of LC Project No. 33 of Talibon,
Bohol, per BF Map LC-635, and;
2. Lot 2, PSU-218360, is within the Alienable or Disposable Block-I, of LC Project 33 of
Talibon, Bohol, certified as such on September 7, 1927, per BF Map LC-685.
And the Commissioner's Report (Exh. A-Commissioner) finds
that —
On Lot 1, Psu-218360 and (sic) approximate area of 45,826 sq. m. colored green on the
sketch is inside the Timberland and 5,400 sq. m. more or less is in the Alienable and
Disposable Area.
And the Commissioner, Emmanuel Maboloc, 38, Junior Geodetic Engineer, Bureau of Forest
Development, Region VII, Cebu City, testified to this effect, stating, however, that he did not make
technical descriptions of the portion of the lot within the Bohol Reforestation Project and the portion
outside it, so that, if required, he would have to go to the field again to make such technical descriptions.
(Record on Appeal, pp. 61-65)
xxx xxx xxx
2. On parcel B in the complaint.— . . .
The land is covered by TD No. R-4019 in the name of plaintiff Hilario Piscos Rama (Exh. F) and was
surveyed for the Heirs of German Remarata in 1952, as shown by the technical description (Exh. G) and
plan H-154932 (Exh. H). But the land is not covered by any certificate of title.
On 12 March 1968, the Office of the District Forester, Tagbilaran City, issued Certification No. 90 (Exh. I)
to the effect "that the parcel of land containing an approximate area of 9.6345 hectares situated in Barrio
Malitbog, Municipality of Dagohoy, Province of Bohol, described in the Tax Declaration proposed in the
name of German Remarata, a resident of Bo. Malitbog, Dagohoy, Bohol was verified by a representative
of this Office and was found to be within the Alienable and Disposable Block "1", Land Classification
Project No. 33, Talibon, Bohol, L.C. Map No. 685, certified on September 7, 1927." And on 4 March 1970,
the Office of the District Forester, City of Tagbilaran, thru Acting District Forester Pastor O. Ibarra, issued
Certification No. 101 (Exh. J), which is similarly worded as Certification No. 90 (Exh. I), except that the
proposed tax declaration is in the name of HILARIO PISCOS RAMA.
But on 15 May 1974, the Office of the District Forester, City of Tagbilaran, thru District Forester Pastor O.
Ibarra, sent a letter to Hilario P. Rama (Exh. 4) informing him "that CERTIFICATION NO. 101, issued to
you on March 4, 1970, by the District Forester of Tagbilaran City, is hereby revoked on the ground that
after thorough (sic) investigation by representative of this Office the parcel of land which you claim and
 the subject matter in the above-mentioned CERTIFICATION NO. 101, is found to be within the Bohol
Reforestation Project." And on the same date, a letter to the same effect was sent by District Forester
Ibarra to the Provincial Assessor, City of Tagbilaran (Exh. 5).
The Commissioner's Report (Exh. A-Commissioner) inter alia states:
It was found out that on lot H-154932 an approximate area of 94,719 Sq. M. is inside
Timberland block A, Project No. 33 a part of Bohol Reforestation Project (colored green
on the sketch plan) and only approximately 1,624 Sq. M. is inside the Alienable and
Disposable area colored orange on the sketch plan.
Likewise, Commissioner Maboloc declared that he did not make technical descriptions of the portion of
said lot within the Bohol Reforestation Project and the portion outside it. (Record on Appeal, pp. 66-68)
In view of its findings that the two (2) subject parcels of land are forest lands, the lower court declared as null and void the
Certificate of Title covering the first lot in the name of Rama and ordered him to vacate the said parcel "upon being
reimbursed by the intervenor in the sum of SIX THOUSAND PESOS (P6,000.00) as necessary expenses." As regards the
second parcel of land, the lower court ordered Rama to vacate the same parcel of land "with right to refund from the
intervenor for the necessary expenses in the sum of THREE THOUSAND PESOS (P3,000.00), but without rights of
retention." The dispositive portion of the decision reads:
WHEREFORE, judgment is hereby rendered, as follows:
1. Relative to Lot 1, Psu-218360, (parcel A in the complaint): declaring that portion thereof indicated in the
Commissioner's Report (Exh. A-Commissioner) as having an "approximate area of 45,836 Sq. M. and
shown on the sketch (Exh. B-Commissioner) as timberland and therefore part of the public domain
(colored green, Parcel B in said sketch); declaring null and void Original Certificate of Title No. 6148 in
the name of HILARIO PISCOS RAMA insofar as it includes the aforesaid portion; and ordering the
plaintiff to vacate said portion upon being reimbursed by the intervenor in the sum of SIX THOUSAND
PESOS (P6,000.00) as necessary expenses;
2. Relative to the parcel of land shown on plan H-154932 (parcel B in the complaint): declaring that the
portion thereof indicated in the Commissioner's Report (Exh. A-Commissioner) as having "an approximate
area of 94,719 Sq. M." and shown on the sketch (Exh. B-Commissioner) as timberland and therefore part
of the public domain (colored green, Parcel A in said sketch); declaring null and void Tax Declaration No.
R-4019 (Exh. F) insofar as it includes the aforesaid portion; and ordering the plaintiff to vacate said
portion, with right to refund from the intervenor for the necessary expenses in the sum of THREE
THOUSAND PESOS (P3,000.00), but without right of retention;
3. Dismissing the complaint as against defendant Anselmo Logroño, both in his private and in his official
capacity;
4. Dismissing defendant Logroño's counterclaim; and
5. Ordering the Register of Deeds of the Province of Bohol to annotate the judgment relative to Lot 1,
Psu-2l8360 at the back of Original Certificate of Title No. 6148.
Without pronouncement of costs.
(Record on Appeal, pp. 77-79)
Petitioner Republic appealed the lower court's decision to the then Intermediate Appellate Court, now Court of Appeals,
insofar as it ordered petitioner Republic to pay Rama the necessary expenses with the right of retention over the titled
parcel of land.
The appellate court, however, did not only affirm the questioned decision, but modified it by ruling that as regards the
second parcel which is not covered by any certificate of title, Rama has also the right of retention until the necessary
expenses awarded to him are paid by petitioner Republic.
A motion for reconsideration was denied. Hence, the instant petition.
In a resolution dated March 27, 1985, the Court gave due course to the petition. Because of the reorganization of the
Court after the 1986 political upheaval and subsequent changes caused by retirement of certain Justices, the case could
not be decided until its recent assignment to the undersigned ponente.
On May 5, 1989, we issued another resolution stating therein:
Considering the length of time that this case has remained pending and as a practical measure to ease
the backlog of this Court, the parties shall, within ten (10) days from notice, MANIFEST whether or not
they are still interested in prosecuting this case, or supervening events have transpired which render this
case moot and academic or otherwise substantially affect the same. (Rollo, p. 70)
In response to this resolution, the Solicitor General, representing petitioner Republic, filed on August 4, 1989, a
manifestation stating that he is not aware of any supervening event that may have transpired which would render the case
moot and academic.
As stated earlier, the only issue in this petition is the propriety of awarding necessary expenses with right of retention over
the two (2) parcels of land in favor of the possessor in this case, Rama, until the payment of the necessary expenses by
petitioner Republic on the ground that Rama is a possessor in good faith as defined in Article 526 of the Civil Code.
In ruling that private respondent Rama, the possessor of the two forest lands is entitled to payment of necessary
expenses, the appellate court cited the case of Dizon v. Rodriguez, (13 SCRA 704 [1965]).
The background facts of the Dizon case are as follows:
Hacienda Calatagan owned by Alfonso and Jacobo Zobel was originally covered by TCT No. T-722. In
1938, the Hacienda constructed a pier, called "Santiago Landing," about 600 meters long from the shore
into the navigable waters of the Pagaspas Bay, to be used by vessels loading sugar produced by the
Hacienda sugar mill. When the sugar mill ceased its operation in 1948, the owners of the Hacienda
converted the pier into a fishpond dike and built additional strong dikes enclosing an area of about 30
hectares (of the Bay) and converted the same into a fishpond. The Hacienda owners also enclosed a
similar area of about 37 hectares of the Bay on the other side of the pier which was also converted into a
fishpond.
In 1949, the Zobels ordered the subdivision of the Hacienda by ordering the preparation of the subdivision
plan Psd-27941 wherein fishpond No. 1 (with 30 hectares) was referred to as Lot No. 1 and fishpond No.
2 (with 37 hectares) was referred to as Lot No. 49. The plan was approved by the Director of Lands, and
the Register of Deeds issued, from TCT No. T-722, TCT No. 2739 for lots 49 and 1 in the name of Jacobo
Zobel.
In 1950, Jacobo Zobel sold to Antonino Dizon, et al. Lot 49 for which said purchasers obtained at first
TCT No. T-2740 and later T-4718, Lot 1, on the other hand, was purchased by Carlos Goco, et al., who in
turn, sold one-half thereof to Manuel Sy-Juco, et al. Transfer Certificate of Title No. 4159 was issued in
the names of the Gocos and Sy-Jucos.
On May 24, 1952, Miguel Tolentino filed with the Bureau of Fisheries an application for ordinary fishpond
permit or lease for Lot 49, and an application for a similar permit, for Lot 1, was filed by his daughter
Clemencia Tolentino.
The Dizons, Sy-Jucos, and Gocos filed a protest with the Bureau of Fisheries, claiming the properties to
be private land covered by a certificate of title. This protest was dismissed by the Director of Fisheries, on
the ground that the areas applied for are outside the boundaries of TCT No. T-722 of Hacienda
Calatagan. This ruling was based upon the findings of the committee created by the Secretary of
Agriculture and Natural Resources to look into the matter, that Lots 1 and 49 are not originally included
within the boundaries of the hacienda.
On October 1, 1954, the protestants Dizons, Sy-Jucos, and Gocos filed an action in the Court of First
Instance of Manila (Civ. Case No. 24237) to restrain the Director of Fisheries from issuing the fishpond
permits applied for by the Tolentinos. The court dismissed this petition for non-exhaustion of
administrative remedy, it appearing that petitioners had not appealed from the decision of the Director of
Fisheries to the Secretary of Agriculture and Natural Resources. On appeal to this Court, the decision of
the lower court was sustained (G.R. No. 8654, promulgated April 28, 1956). The protestants then filed an
appeal with the Secretary of Agriculture and Natural Resources. This time, the same was dismissed for
being filed out of time.
On August 16, 1956, the Dizons filed Civil Case 135 and the Sy-Jucos and Gocos, Civil Case 136, in the
Court of First Instance of Batangas, to quiet their titles over Lots 49 and 1. Named defendants were the
Secretary of Agriculture and Natural Resources and applicants Tolentinos. The Republic of the
Philippines was allowed to intervene in view of the finding by the investigating committee created by the
respondent Secretary, that the lots were part of the foreshore area before their conversion into fishponds
by the hacienda-owners.
On January 30, 1958, after due hearing, the Court of First Instance of Batangas promulgated a joint
decision making the finding, among others, that the subdivision plan Psd-27941 was prepared in
disregard of the technical description stated in TCT No. T-722, because the surveyor merely followed the
existing shoreline and placed his monuments on the southwest lateral of Lot 49, which was the pier
abutting into the sea; and made the conclusion that Lots 1 and 49 of Psd-27941 were part of the
foreshore lands. As the certificate of title obtained by petitioners covered lands not subject to registration,
the same were declared null and void, and Lots 1 and 49 were declared properties of the public domain.
Petitioners appealed to the Court of Appeals.
In its decision of October 31, 1961, as well as the resolution of August 20, 1962, the appellate court
adopted the findings of the lower court, that the lots in question are part of the foreshore area and
affirmed the ruling cancelling the titles to plaintiffs. Although in the decision of October 31, 1961, the Court
of Appeals awarded to applicants Tolentinos damages in the amount of P200.00 per hectare from
October 1, 1954, when plaintiffs were notified of the denial of their protest by the Director of Fisheries,
such award was eliminated in the resolution of August 20, 1962, for reason that plaintiffs, who relied on
the efficacy of their certificates of title, cannot be considered possessors in bad faith until after the legality
of their said titles has been finally determined. Appellants were thus declared entitled to retention of the
properties until they are reimbursed by the landowner, the Republic of the Philippines, of the necessary
expenses made on the lands, in the sums of P40,000.00 (for Lot 49) and P25,000.00 (for Lot 1). It is from
this portion of the decision as thus modified that defendants Tolentinos and the intervenor Republic of the
Philippines appealed (in G.R. Nos. L-20355-56), claiming that plaintiffs' possession became in bad faith
when their protest against the application for lease was denied by the Director of Fisheries. In addition,
 the intervenor contends that being such possessors in bad faith, plaintiffs are not entitled to
reimbursement of the expenses made on the properties. (at pp. 705-708; Emphasis supplied)
The appellate court's decision was appealed to us by both the Republic and the Dizons, et al.
We dismissed both appeals.
A comparative study of the present case and the Dizon case shows different circumstances which make the Dizon case
not applicable to the instant case.
In the present case, the parcel of land titled in the name of Hilario P. Rama is covered by an original torrens title issued in
Rama's name on May 4, 1967. Earlier, he applied for the issuance of title based on a patent which was given on January
13, 1967. The fact that he applied for a patent title shows a recognition on his part that the parcel is part of the public
domain. True, government officials caused the issuance of the patent title and the original torrens title covering the land in
Rama's name. However, the well-entrenched principle is that the State cannot be put in estoppel by the mistakes or errors
of its officials or agents. (Republic v. Court of Appeals, 135 SCRA 156 [1985]; and Republic v. Aquino, 120 SCRA 186
[1983])
Considering that the subject parcel of land is forest land, the patent and original certificate of title covering the subject
parcel issued to Rama did not confer any validity to his possession or claim of ownership. (Sunbeam Convenience Foods,
Inc. v. Court of Appeals, 181 SCRA 443 [1990]; Vallarta v. Intermediate Appellate Court, 151 SCRA 679 [1987]; Republic
v. Court of Appeals, 148 SCRA 480 [1987]; Republic v. Court of Appeals, 135 SCRA 156 [1985])
The titles are void ab initio. (Heirs of Amunategui v. Director of Forestry, 126 SCRA 69 [1983]; Republic v. Animas, 56
SCRA 499 [1974]) The titles issued cannot ripen into private ownership. (Director of Forestry v. Muñoz, 23 SCRA 1183
[1968]; Heirs of Amunategui v. Director of Forestry, supra; Vallarta v. Intermediate Appellate Court, supra) In effect,
Rama's possession of the parcel from the beginning was fraudulent and illegal. He was merely a squatter on the parcel.
Under these circumstances, we cannot see any reason why Rama should be considered a possessor in good faith as
defined in Article 526 of the Civil Code.
In the Dizon case, however, the occupants of the parcels of land which were adjudged as part of these ashore or
foreshore area and part of the public domain bought the land from Alfonso and Jacobo Zobel relying on the original
certificate of title covering the parcels. This intervening event constitutes the difference between the Dizon case and
the present case. Dizon, et al. buyers of the foreshore lands were protected by the principle that an innocent buyer of a
registered land may rely on the torrens title of the seller. In the absence of anything to excite suspicion, the buyer is not
obligated to look beyond the certificate to investigate the title of the sellers appearing on the face of the certificate.
(Philippine National Bank v. Court of Appeals, 187 SCRA 735 [1990]; Gonzales v. Intermediate Appellate Court, 157
SCRA 587 [1988]; Philippine National Cooperative Bank v. Carandang-Villalon, 139 SCRA 570 [1985]); Penullar v.
Philippine National Bank, 120 SCRA 171 [1983])
Another distinction between the two (2) cases is in the degree of participation of the parties and the public officials in the
titling of the subject parcels of land. In the present case, respondent Rama was the one who secured a certificate from the
office of the District Forester, Tagbilaran City as regards the status of the parcel of land with his representations that "he
had a plan of the land." It appears, therefore, that it was through the representations of Rama that the land was titled in his
name. Some months later, however, or on November 7, 1967, the Office of the District Forester suspected that the parcel
of land thus titled was forest land. Why this angle was not pursued is not shown in the records. It, however, negates the
good faith of Rama who actively pursued the titling of the parcel in his name.
Good faith which entitles the possessors to necessary expenses with right of retention until reimbursement was explained
in the Dizon case:
On the matter of possession of plaintiffs-appellants, the ruling of the Court of Appeals must be
upheld. There is no showing that plaintiffs are not purchasers in good faith and for value. As such
titleholders, they have reason to rely on the indefeasible character of their certificates.
On the issue of good faith of the plaintiffs, the Court of Appeals reasoned out:
The concept of possessors in good faith given in Art. 526 of the Civil Code and when said
possession loses this Character under Art. 528, needs to be reconciled with the doctrine
of indefeasibility of a Torrens Title. Such reconcialiton can only be achieved by holding
that the possessor with a Torrens Title is not aware of any flaw in his Title which
invalidates it until his Torrens Title is declared null and void by final judgment of the
Courts.
Even if the doctrine of indefeasibility of a Torrens Title were not thus reconciled, the result
would be the same, considering the third paragraph of Art. 526 which provides that:
Art. 526. . . .
Mistake upon a doubtful or difficult question of law may be the basis of good faith.
The legal question whether plaintiffs-appellants' possession in good faith, under their
Torrens Titles acquired in good faith, does not lose this character except in the case and
from the moment their Titles are declared null and void by the Courts, is a difficult one.
Even the members of this Court were for a long time divided, two to one, on the answer.
It was only after several sessions, where the results of exhaustive researches on both
sides were thoroughly discussed, that an undivided Court finally found the answer given
in the next preceding paragraph. Hence, even if it be assumed for the sake of argument
 that the Supreme Court would find that the law is not as we have stated it in the next
preceding paragraph and that the plaintiffs-appellants made a mistake in relying thereon,
such mistake on a difficult question of law may be the basis of good faith. Hence, their
possession in good faith does not lose this character except in the case and from the
moment their Torrens Titles are declared null and void by the Courts.
Under the circumstances of the case, especially where the subdivision plan was originally approved by
the Director of Lands, we are not ready to conclude that the above reasoning of the Court of Appeals on
this point is a reversible error. Needless to state, as such occupants in good faith, plaintiffs have the right
to the retention of the property until they are reimbursed the necessary expenses made on the lands.
With respect to the contention of the Republic of the Philippines that the order for the reimbursement by it
of such necessary expenses constitutes a judgment against the government in a suit not consented to by
it, suffice it to say that the Republic, on its own initiative, asked and was permitted to intervene in the case
and thereby submitted itself voluntarily to the jurisdiction of the court. (at pp. 709-710; Emphasis supplied)
With the foregoing findings, the appellate court's ruling as regards the unregistered parcel of land which is to the effect
that Rama is also entitled to necessary expenses with right of retention until reimbursed of the necessary expenses must
be reversed. His title over the forest land is null and void for the same reasons. There are no special circumstances which
would warrant the application of the Dizon case.
WHEREFORE, the petition is GRANTED. The questioned decision and resolution of the then Intermediate Appellate
Court, now Court of Appeals, are SET ASIDE in so far as they ordered petitioner Republic to pay private respondent
Hilario P. Rama the necessary expenses incurred by him, with right of retention over the two (2) parcels of land adjudged
as forest lands until reimbursed of the necessary expenses. The decision of the then Court of First Instance of Bohol (now
Regional Trial Court of Bohol) in Civil Case No. 2613 is MODIFIED in that the portion of the decision which ordered
petitioner Republic to pay private respondent Hilario P. Rama necessary expenses with right of retention in parcel number
one described in the complaint is DELETED. In all other respects, the questioned decision and resolution are AFFIRMED.
No costs.
SO ORDERED.

G.R. No. 134209 January 24, 2006

REPUBLIC OF THE PHILIPPINES, Petitioner,
vs.
CELESTINA NAGUIAT, Respondent.
DECISION
GARCIA, J.:
Before the Court is this petition for review under Rule 45 of the Rules of Court seeking the reversal of the Decision 1dated
May 29, 1998 of the Court of Appeals (CA) in CA-G.R. CV No. 37001 which affirmed an earlier decision2 of the Regional
Trial Court at Iba, Zambales, Branch 69 in Land Registration Case No. N-25-1.
The decision under review recites the factual backdrop, as follows:
This is an application for registration of title to four (4) parcels of land located in Panan, Botolan, Zambales, more
particularly described in the amended application filed by Celestina Naguiat on 29 December 1989 with the Regional Trial
Court of Zambales, Branch 69. Applicant [herein respondent] alleges, inter alia, that she is the owner of the said parcels of
land having acquired them by purchase from the LID Corporation which likewise acquired the same from Demetria
Calderon, Josefina Moraga and Fausto Monje and their predecessors-in-interest who have been in possession thereof for
more than thirty (30) years; and that to the best of her knowledge, said lots suffer no mortgage or encumbrance of
whatever kind nor is there any person having any interest, legal or equitable, or in possession thereof.
On 29 June 1990, the Republic of the Philippines [herein petitioner]. . . filed an opposition to the application on the ground
that neither the applicant nor her predecessors-in interest have been in open, continuous, exclusive and notorious
possession and occupation of the lands in question since 12 June 1945 or prior thereto; that the muniments of title and tax
payment receipts of applicant do not constitute competent and sufficient evidence of a bona-fide acquisition of the lands
applied for or of his open, continuous, exclusive and notorious possession and occupation thereof in the concept of (an)
owner; that the applicant’s claim of ownership in fee simple on the basis of Spanish title or grant can no longer be availed
of . . .; and that the parcels of land applied for are part of the public domain belonging to the Republic of the Philippines
not subject to private appropriation.
On 15 October 1990, the lower court issued an order of general default as against the whole world, with the exception of
the Office of the Solicitor General, and proceeded with the hearing of this registration case.
After she had presented and formally offered her evidence . . . applicant rested her case. The Solicitor General, thru the
Provincial Prosecutor, interposed no objection to the admission of the exhibits. Later . . . the Provincial Prosecutor
manifest (sic) that the Government had no evidence to adduce. 3
In a decision4 dated September 30, 1991, the trial court rendered judgment for herein respondent Celestina Naguiat,
adjudicating unto her the parcels of land in question and decreeing the registration thereof in her name, thus:
WHEREFORE, premises considered, this Court hereby adjudicates the parcels of land situated in Panan, Botolan,
Zambales, appearing on Plan AP-03-003447 containing an area of 3,131 square meters, appearing on Plan AP-03-
003446 containing an area of 15,322 containing an area of 15,387 square meters to herein applicant Celestina T. Naguiat,
of legal age, Filipino citizen, married to Rommel Naguiat and a resident of Angeles City, Pampanga together with all the
improvements existing thereon and orders and decrees registration in her name in accordance with Act No. 496,
Commonwealth Act No. 14, [should be 141] as amended, and Presidential Decree No. 1529. This adjudication, however,
is subject to the various easements/reservations provided for under pertinent laws, presidential decrees and/or
presidential letters of instructions which should be annotated/ projected on the title to be issued. And once this decision
becomes final, let the corresponding decree of registration be immediately issued. (Words in bracket added)
With its motion for reconsideration having been denied by the trial court, petitioner Republic went on appeal to the CA
in CA-G.R. CV No. 37001.
As stated at the outset hereof, the CA, in the herein assailed decision of May 29, 1998, affirmed that of the trial court, to
wit:
WHEREFORE, premises considered, the decision appealed from is hereby AFFIRMED.
SO ORDERED.
Hence, the Republic’s present recourse on its basic submission that the CA’s decision "is not in accordance with law,
jurisprudence and the evidence, since respondent has not established with the required evidence her title in fee simple or
imperfect title in respect of the subject lots which would warrant their registration under … (P.D. 1529 or Public Land Act
(C.A.) 141." In particular, petitioner Republic faults the appellate court on its finding respecting the length of respondent’s
occupation of the property subject of her application for registration and for not considering the fact that she has not
established that the lands in question have been declassified from forest or timber zone to alienable and disposable
property.
Public forest lands or forest reserves, unless declassified and released by positive act of the Government so that they
may form part of the disposable agricultural lands of the public domain, are not capable of private appropriation. 5 As to
these assets, the rules on confirmation of imperfect title do not apply. 6 Given this postulate, the principal issue to be
addressed turns on the question of whether or not the areas in question have ceased to have the status of forest or other
inalienable lands of the public domain.
Forests, in the context of both the Public Land Act7 and the Constitution8 classifying lands of the public domain into
"agricultural, forest or timber, mineral lands and national parks," do not necessarily refer to a large tract of wooded land or
an expanse covered by dense growth of trees and underbrush. As we stated in Heirs of Amunategui 9-
A forested area classified as forest land of the public domain does not lose such classification simply because loggers or
settlers have stripped it of its forest cover. Parcels of land classified as forest land may actually be covered with grass or
planted to crops by kaingin cultivators or other farmers. "Forest lands" do not have to be on mountains or in out of the way
places. xxx. The classification is merely descriptive of its legal nature or status and does not have to be descriptive of
what the land actually looks like. xxx
Under Section 2, Article XII of the Constitution,10 which embodies the Regalian doctrine, all lands of the public domain
belong to the State – the source of any asserted right to ownership of land.11 All lands not appearing to be clearly of
private dominion presumptively belong to the State.12 Accordingly, public lands not shown to have been reclassified or
released as alienable agricultural land or alienated to a private person by the State remain part of the inalienable public
domain.13 Under Section 6 of the Public Land Act, the prerogative of classifying or reclassifying lands of the public
domain, i.e., from forest or mineral to agricultural and vice versa, belongs to the Executive Branch of the government and
not the court.14 Needless to stress, the onus to overturn, by incontrovertible evidence, the presumption that the land
subject of an application for registration is alienable or disposable rests with the applicant. 15
In the present case, the CA assumed that the lands in question are already alienable and disposable. Wrote the appellate
court:
The theory of [petitioner] that the properties in question are lands of the public domain cannot be sustained as it is directly
against the above doctrine. Said doctrine is a reaffirmation of the principle established in the earlier cases . . . that open,
exclusive and undisputed possession of alienable public land for period prescribed by law creates the legal fiction
whereby the land, upon completion of the requisite period, ipso jure and without the need of judicial or other sanction,
ceases to be public land and becomes private property …. (Word in bracket and underscoring added.)
The principal reason for the appellate court’s disposition, finding a registerable title for respondent, is her and her
predecessor-in-interest’s open, continuous and exclusive occupation of the subject property for more than 30 years.
Prescinding from its above assumption and finding, the appellate court went on to conclude, citing Director of Lands vs.
Intermediate Appellate Court (IAC)16 and Herico vs. DAR,17 among other cases, that, upon the completion of the requisite
period of possession, the lands in question cease to be public land and become private property.
Director of Lands, Herico and the other cases cited by the CA are not, however, winning cards for the respondent, for the
simple reason that, in said cases, the disposable and alienable nature of the land sought to be registered was established,
or, at least, not put in issue. And there lies the difference.
Here, respondent never presented the required certification from the proper government agency or official proclamation
reclassifying the land applied for as alienable and disposable. Matters of land classification or reclassification cannot be
assumed. It calls for proof.18 Aside from tax receipts, respondent submitted in evidence the survey map and technical
descriptions of the lands, which, needless to state, provided no information respecting the classification of the property. As
the Court has held, however, these documents are not sufficient to overcome the presumption that the land sought to be
registered forms part of the public domain.19
It cannot be overemphasized that unwarranted appropriation of public lands has been a notorious practice resorted to in
land registration cases.20 For this reason, the Court has made it a point to stress, when appropriate, that declassification
of forest and mineral lands, as the case may be, and their conversion into alienable and disposable lands need an
express and positive act from the government.21
The foregoing considered, the issue of whether or not respondent and her predecessor-in-interest have been in open,
exclusive and continuous possession of the parcels of land in question is now of little moment. For, unclassified land, as
here, cannot be acquired by adverse occupation or possession; occupation thereof in the concept of owner, however long,
cannot ripen into private ownership and be registered as title.22
WHEREFORE, the instant petition is GRANTED and the assailed decision dated May 29, 1998 of the Court of Appeals in
CA-G.R. CV No. 37001 is REVERSED and SET ASIDE. Accordingly, respondent’s application for original registration of
title in Land Registration Case No. N-25-1 of the Regional Trial Court at Iba, Zambales, Branch 69, is DENIED.
No costs.
SO ORDERED.

G.R. No. 133250 July 9, 2002

FRANCISCO I. CHAVEZ, petitioner,
vs.
PUBLIC ESTATES AUTHORITY and AMARI COASTAL BAY DEVELOPMENT CORPORATION, respondents.
CARPIO, J.:
This is an original Petition for Mandamus with prayer for a writ of preliminary injunction and a temporary restraining order.
The petition seeks to compel the Public Estates Authority ("PEA" for brevity) to disclose all facts on PEA's then on-going
renegotiations with Amari Coastal Bay and Development Corporation ("AMARI" for brevity) to reclaim portions of Manila
Bay. The petition further seeks to enjoin PEA from signing a new agreement with AMARI involving such reclamation.
The Facts
On November 20, 1973, the government, through the Commissioner of Public Highways, signed a contract with the
Construction and Development Corporation of the Philippines ("CDCP" for brevity) to reclaim certain foreshore and
offshore areas of Manila Bay. The contract also included the construction of Phases I and II of the Manila-Cavite Coastal
Road. CDCP obligated itself to carry out all the works in consideration of fifty percent of the total reclaimed land.
On February 4, 1977, then President Ferdinand E. Marcos issued Presidential Decree No. 1084 creating PEA. PD No.
1084 tasked PEA "to reclaim land, including foreshore and submerged areas," and "to develop, improve, acquire, x x x
lease and sell any and all kinds of lands."1 On the same date, then President Marcos issued Presidential Decree No. 1085
transferring to PEA the "lands reclaimed in the foreshore and offshore of the Manila Bay" 2 under the Manila-Cavite
Coastal Road and Reclamation Project (MCCRRP).
On December 29, 1981, then President Marcos issued a memorandum directing PEA to amend its contract with CDCP,
so that "[A]ll future works in MCCRRP x x x shall be funded and owned by PEA." Accordingly, PEA and CDCP executed a
Memorandum of Agreement dated December 29, 1981, which stated:
"(i) CDCP shall undertake all reclamation, construction, and such other works in the MCCRRP as may be agreed
upon by the parties, to be paid according to progress of works on a unit price/lump sum basis for items of work to
be agreed upon, subject to price escalation, retention and other terms and conditions provided for in Presidential
Decree No. 1594. All the financing required for such works shall be provided by PEA.
xxx
(iii) x x x CDCP shall give up all its development rights and hereby agrees to cede and transfer in favor of PEA, all
of the rights, title, interest and participation of CDCP in and to all the areas of land reclaimed by CDCP in the
MCCRRP as of December 30, 1981 which have not yet been sold, transferred or otherwise disposed of by CDCP
as of said date, which areas consist of approximately Ninety-Nine Thousand Four Hundred Seventy Three
(99,473) square meters in the Financial Center Area covered by land pledge No. 5 and approximately Three
Million Three Hundred Eighty Two Thousand Eight Hundred Eighty Eight (3,382,888) square meters of reclaimed
areas at varying elevations above Mean Low Water Level located outside the Financial Center Area and the First
Neighborhood Unit."3
On January 19, 1988, then President Corazon C. Aquino issued Special Patent No. 3517, granting and transferring to
PEA "the parcels of land so reclaimed under the Manila-Cavite Coastal Road and Reclamation Project (MCCRRP)
containing a total area of one million nine hundred fifteen thousand eight hundred ninety four (1,915,894) square meters."
Subsequently, on April 9, 1988, the Register of Deeds of the Municipality of Parañaque issued Transfer Certificates of
Title Nos. 7309, 7311, and 7312, in the name of PEA, covering the three reclaimed islands known as the "Freedom
Islands" located at the southern portion of the Manila-Cavite Coastal Road, Parañaque City. The Freedom Islands have a
total land area of One Million Five Hundred Seventy Eight Thousand Four Hundred and Forty One (1,578,441) square
meters or 157.841 hectares.
On April 25, 1995, PEA entered into a Joint Venture Agreement ("JVA" for brevity) with AMARI, a private corporation, to
develop the Freedom Islands. The JVA also required the reclamation of an additional 250 hectares of submerged areas
surrounding these islands to complete the configuration in the Master Development Plan of the Southern Reclamation
Project-MCCRRP. PEA and AMARI entered into the JVA through negotiation without public bidding. 4 On April 28, 1995,
the Board of Directors of PEA, in its Resolution No. 1245, confirmed the JVA. 5 On June 8, 1995, then President Fidel V.
Ramos, through then Executive Secretary Ruben Torres, approved the JVA. 6
On November 29, 1996, then Senate President Ernesto Maceda delivered a privilege speech in the Senate and
denounced the JVA as the "grandmother of all scams." As a result, the Senate Committee on Government Corporations
and Public Enterprises, and the Committee on Accountability of Public Officers and Investigations, conducted a joint
investigation. The Senate Committees reported the results of their investigation in Senate Committee Report No. 560
dated September 16, 1997.7 Among the conclusions of their report are: (1) the reclaimed lands PEA seeks to transfer to
AMARI under the JVA are lands of the public domain which the government has not classified as alienable lands and
therefore PEA cannot alienate these lands; (2) the certificates of title covering the Freedom Islands are thus void, and (3)
the JVA itself is illegal.
On December 5, 1997, then President Fidel V. Ramos issued Presidential Administrative Order No. 365 creating a Legal
Task Force to conduct a study on the legality of the JVA in view of Senate Committee Report No. 560. The members of
the Legal Task Force were the Secretary of Justice,8 the Chief Presidential Legal Counsel,9 and the Government
Corporate Counsel.10 The Legal Task Force upheld the legality of the JVA, contrary to the conclusions reached by the
Senate Committees.11
On April 4 and 5, 1998, the Philippine Daily Inquirer and Today published reports that there were on-going renegotiations
between PEA and AMARI under an order issued by then President Fidel V. Ramos. According to these reports, PEA
Director Nestor Kalaw, PEA Chairman Arsenio Yulo and retired Navy Officer Sergio Cruz composed the negotiating panel
of PEA.
On April 13, 1998, Antonio M. Zulueta filed before the Court a Petition for Prohibition with Application for the Issuance of a
Temporary Restraining Order and Preliminary Injunction docketed as G.R. No. 132994 seeking to nullify the JVA. The
Court dismissed the petition "for unwarranted disregard of judicial hierarchy, without prejudice to the refiling of the case
before the proper court."12
On April 27, 1998, petitioner Frank I. Chavez ("Petitioner" for brevity) as a taxpayer, filed the instant Petition for
Mandamus with Prayer for the Issuance of a Writ of Preliminary Injunction and Temporary Restraining Order. Petitioner
contends the government stands to lose billions of pesos in the sale by PEA of the reclaimed lands to AMARI. Petitioner
prays that PEA publicly disclose the terms of any renegotiation of the JVA, invoking Section 28, Article II, and Section 7,
Article III, of the 1987 Constitution on the right of the people to information on matters of public concern. Petitioner assails
the sale to AMARI of lands of the public domain as a blatant violation of Section 3, Article XII of the 1987 Constitution
prohibiting the sale of alienable lands of the public domain to private corporations. Finally, petitioner asserts that he seeks
to enjoin the loss of billions of pesos in properties of the State that are of public dominion.
After several motions for extension of time,13 PEA and AMARI filed their Comments on October 19, 1998 and June 25,
1998, respectively. Meanwhile, on December 28, 1998, petitioner filed an Omnibus Motion: (a) to require PEA to submit
the terms of the renegotiated PEA-AMARI contract; (b) for issuance of a temporary restraining order; and (c) to set the
case for hearing on oral argument. Petitioner filed a Reiterative Motion for Issuance of a TRO dated May 26, 1999, which
the Court denied in a Resolution dated June 22, 1999.
In a Resolution dated March 23, 1999, the Court gave due course to the petition and required the parties to file their
respective memoranda.
On March 30, 1999, PEA and AMARI signed the Amended Joint Venture Agreement ("Amended JVA," for brevity). On
May 28, 1999, the Office of the President under the administration of then President Joseph E. Estrada approved the
Amended JVA.
Due to the approval of the Amended JVA by the Office of the President, petitioner now prays that on "constitutional and
statutory grounds the renegotiated contract be declared null and void."14
The Issues
The issues raised by petitioner, PEA15 and AMARI16 are as follows:
I. WHETHER THE PRINCIPAL RELIEFS PRAYED FOR IN THE PETITION ARE MOOT AND ACADEMIC
BECAUSE OF SUBSEQUENT EVENTS;
II. WHETHER THE PETITION MERITS DISMISSAL FOR FAILING TO OBSERVE THE PRINCIPLE
GOVERNING THE HIERARCHY OF COURTS;
III. WHETHER THE PETITION MERITS DISMISSAL FOR NON-EXHAUSTION OF ADMINISTRATIVE
REMEDIES;
IV. WHETHER PETITIONER HAS LOCUS STANDI TO BRING THIS SUIT;
V. WHETHER THE CONSTITUTIONAL RIGHT TO INFORMATION INCLUDES OFFICIAL INFORMATION ON
ON-GOING NEGOTIATIONS BEFORE A FINAL AGREEMENT;
VI. WHETHER THE STIPULATIONS IN THE AMENDED JOINT VENTURE AGREEMENT FOR THE TRANSFER
TO AMARI OF CERTAIN LANDS, RECLAIMED AND STILL TO BE RECLAIMED, VIOLATE THE 1987
CONSTITUTION; AND
VII. WHETHER THE COURT IS THE PROPER FORUM FOR RAISING THE ISSUE OF WHETHER THE
AMENDED JOINT VENTURE AGREEMENT IS GROSSLY DISADVANTAGEOUS TO THE GOVERNMENT.
The Court's Ruling
First issue: whether the principal reliefs prayed for in the petition are moot and academic because of subsequent
events.
The petition prays that PEA publicly disclose the "terms and conditions of the on-going negotiations for a new agreement."
The petition also prays that the Court enjoin PEA from "privately entering into, perfecting and/or executing any new
agreement with AMARI."
PEA and AMARI claim the petition is now moot and academic because AMARI furnished petitioner on June 21, 1999 a
copy of the signed Amended JVA containing the terms and conditions agreed upon in the renegotiations. Thus, PEA has
satisfied petitioner's prayer for a public disclosure of the renegotiations. Likewise, petitioner's prayer to enjoin the signing
of the Amended JVA is now moot because PEA and AMARI have already signed the Amended JVA on March 30, 1999.
Moreover, the Office of the President has approved the Amended JVA on May 28, 1999.
Petitioner counters that PEA and AMARI cannot avoid the constitutional issue by simply fast-tracking the signing and
approval of the Amended JVA before the Court could act on the issue. Presidential approval does not resolve the
constitutional issue or remove it from the ambit of judicial review.
We rule that the signing of the Amended JVA by PEA and AMARI and its approval by the President cannot operate to
moot the petition and divest the Court of its jurisdiction. PEA and AMARI have still to implement the Amended JVA. The
prayer to enjoin the signing of the Amended JVA on constitutional grounds necessarily includes preventing its
implementation if in the meantime PEA and AMARI have signed one in violation of the Constitution. Petitioner's principal
basis in assailing the renegotiation of the JVA is its violation of Section 3, Article XII of the Constitution, which prohibits the
government from alienating lands of the public domain to private corporations. If the Amended JVA indeed violates the
Constitution, it is the duty of the Court to enjoin its implementation, and if already implemented, to annul the effects of
such unconstitutional contract.
The Amended JVA is not an ordinary commercial contract but one which seeks to transfer title and ownership to 367.5
hectares of reclaimed lands and submerged areas of Manila Bay to a single private corporation. It now becomes
more compelling for the Court to resolve the issue to insure the government itself does not violate a provision of the
Constitution intended to safeguard the national patrimony. Supervening events, whether intended or accidental, cannot
prevent the Court from rendering a decision if there is a grave violation of the Constitution. In the instant case, if the
Amended JVA runs counter to the Constitution, the Court can still prevent the transfer of title and ownership of alienable
lands of the public domain in the name of AMARI. Even in cases where supervening events had made the cases moot,
the Court did not hesitate to resolve the legal or constitutional issues raised to formulate controlling principles to guide the
bench, bar, and the public.17
Also, the instant petition is a case of first impression. All previous decisions of the Court involving Section 3, Article XII of
the 1987 Constitution, or its counterpart provision in the 1973 Constitution,18 covered agricultural lands sold to private
corporations which acquired the lands from private parties. The transferors of the private corporations claimed or could
claim the right to judicial confirmation of their imperfect titles19 under Title II of Commonwealth Act. 141 ("CA No. 141"
for brevity). In the instant case, AMARI seeks to acquire from PEA, a public corporation, reclaimed lands and submerged
areas for non-agricultural purposes by purchase under PD No. 1084 (charter of PEA) and Title III of CA No. 141.
Certain undertakings by AMARI under the Amended JVA constitute the consideration for the purchase. Neither AMARI
nor PEA can claim judicial confirmation of their titles because the lands covered by the Amended JVA are newly
reclaimed or still to be reclaimed. Judicial confirmation of imperfect title requires open, continuous, exclusive and
notorious occupation of agricultural lands of the public domain for at least thirty years since June 12, 1945 or earlier.
Besides, the deadline for filing applications for judicial confirmation of imperfect title expired on December 31, 1987. 20
Lastly, there is a need to resolve immediately the constitutional issue raised in this petition because of the possible
transfer at any time by PEA to AMARI of title and ownership to portions of the reclaimed lands. Under the Amended JVA,
PEA is obligated to transfer to AMARI the latter's seventy percent proportionate share in the reclaimed areas as the
reclamation progresses. The Amended JVA even allows AMARI to mortgage at any time the entire reclaimed area to
raise financing for the reclamation project.21
Second issue: whether the petition merits dismissal for failing to observe the principle governing the hierarchy of
courts.
PEA and AMARI claim petitioner ignored the judicial hierarchy by seeking relief directly from the Court. The principle of
hierarchy of courts applies generally to cases involving factual questions. As it is not a trier of facts, the Court cannot
entertain cases involving factual issues. The instant case, however, raises constitutional issues of transcendental
importance to the public.22 The Court can resolve this case without determining any factual issue related to the case. Also,
the instant case is a petition for mandamus which falls under the original jurisdiction of the Court under Section 5, Article
VIII of the Constitution. We resolve to exercise primary jurisdiction over the instant case.
Third issue: whether the petition merits dismissal for non-exhaustion of administrative remedies.
PEA faults petitioner for seeking judicial intervention in compelling PEA to disclose publicly certain information without first
asking PEA the needed information. PEA claims petitioner's direct resort to the Court violates the principle of exhaustion
of administrative remedies. It also violates the rule that mandamus may issue only if there is no other plain, speedy and
adequate remedy in the ordinary course of law.
PEA distinguishes the instant case from Tañada v. Tuvera23 where the Court granted the petition for mandamus even if
the petitioners there did not initially demand from the Office of the President the publication of the presidential decrees.
PEA points out that in Tañada, the Executive Department had an affirmative statutory duty under Article 2 of the Civil
Code24 and Section 1 of Commonwealth Act No. 63825 to publish the presidential decrees. There was, therefore, no need
for the petitioners in Tañada to make an initial demand from the Office of the President. In the instant case, PEA claims it
has no affirmative statutory duty to disclose publicly information about its renegotiation of the JVA. Thus, PEA asserts that
the Court must apply the principle of exhaustion of administrative remedies to the instant case in view of the failure of
petitioner here to demand initially from PEA the needed information.
The original JVA sought to dispose to AMARI public lands held by PEA, a government corporation. Under Section 79 of
the Government Auditing Code,26 the disposition of government lands to private parties requires public bidding. PEA was
under a positive legal duty to disclose to the public the terms and conditions for the sale of its lands. The law
obligated PEA to make this public disclosure even without demand from petitioner or from anyone. PEA failed to make
this public disclosure because the original JVA, like the Amended JVA, was the result of a negotiated contract, not of a
public bidding. Considering that PEA had an affirmative statutory duty to make the public disclosure, and was even in
breach of this legal duty, petitioner had the right to seek direct judicial intervention.
Moreover, and this alone is determinative of this issue, the principle of exhaustion of administrative remedies does not
apply when the issue involved is a purely legal or constitutional question.27 The principal issue in the instant case is the
capacity of AMARI to acquire lands held by PEA in view of the constitutional ban prohibiting the alienation of lands of the
public domain to private corporations. We rule that the principle of exhaustion of administrative remedies does not apply in
the instant case.
Fourth issue: whether petitioner has locus standi to bring this suit
PEA argues that petitioner has no standing to institute mandamus proceedings to enforce his constitutional right to
information without a showing that PEA refused to perform an affirmative duty imposed on PEA by the Constitution. PEA
also claims that petitioner has not shown that he will suffer any concrete injury because of the signing or implementation
of the Amended JVA. Thus, there is no actual controversy requiring the exercise of the power of judicial review.
The petitioner has standing to bring this taxpayer's suit because the petition seeks to compel PEA to comply with its
constitutional duties. There are two constitutional issues involved here. First is the right of citizens to information on
matters of public concern. Second is the application of a constitutional provision intended to insure the equitable
distribution of alienable lands of the public domain among Filipino citizens. The thrust of the first issue is to compel PEA to
disclose publicly information on the sale of government lands worth billions of pesos, information which the Constitution
and statutory law mandate PEA to disclose. The thrust of the second issue is to prevent PEA from alienating hundreds of
hectares of alienable lands of the public domain in violation of the Constitution, compelling PEA to comply with a
constitutional duty to the nation.
Moreover, the petition raises matters of transcendental importance to the public. In Chavez v. PCGG,28 the Court upheld
the right of a citizen to bring a taxpayer's suit on matters of transcendental importance to the public, thus -
"Besides, petitioner emphasizes, the matter of recovering the ill-gotten wealth of the Marcoses is an issue of
'transcendental importance to the public.' He asserts that ordinary taxpayers have a right to initiate and prosecute
actions questioning the validity of acts or orders of government agencies or instrumentalities, if the issues raised
are of 'paramount public interest,' and if they 'immediately affect the social, economic and moral well being of the
people.'
Moreover, the mere fact that he is a citizen satisfies the requirement of personal interest, when the proceeding
involves the assertion of a public right, such as in this case. He invokes several decisions of this Court which have
set aside the procedural matter of locus standi, when the subject of the case involved public interest.
xxx
In Tañada v. Tuvera, the Court asserted that when the issue concerns a public right and the object of mandamus
is to obtain the enforcement of a public duty, the people are regarded as the real parties in interest; and because
it is sufficient that petitioner is a citizen and as such is interested in the execution of the laws, he need not show
that he has any legal or special interest in the result of the action. In the aforesaid case, the petitioners sought to
enforce their right to be informed on matters of public concern, a right then recognized in Section 6, Article IV of
the 1973 Constitution, in connection with the rule that laws in order to be valid and enforceable must be published
in the Official Gazette or otherwise effectively promulgated. In ruling for the petitioners' legal standing, the Court
declared that the right they sought to be enforced 'is a public right recognized by no less than the fundamental law
of the land.'
Legaspi v. Civil Service Commission, while reiterating Tañada, further declared that 'when a mandamus
proceeding involves the assertion of a public right, the requirement of personal interest is satisfied by the mere
fact that petitioner is a citizen and, therefore, part of the general 'public' which possesses the right.'
Further, in Albano v. Reyes, we said that while expenditure of public funds may not have been involved under the
questioned contract for the development, management and operation of the Manila International Container
Terminal, 'public interest [was] definitely involved considering the important role [of the subject contract] . . . in the
economic development of the country and the magnitude of the financial consideration involved.' We concluded
that, as a consequence, the disclosure provision in the Constitution would constitute sufficient authority for
upholding the petitioner's standing.
Similarly, the instant petition is anchored on the right of the people to information and access to official records,
documents and papers — a right guaranteed under Section 7, Article III of the 1987 Constitution. Petitioner, a
former solicitor general, is a Filipino citizen. Because of the satisfaction of the two basic requisites laid down by
decisional law to sustain petitioner's legal standing, i.e. (1) the enforcement of a public right (2) espoused by a
Filipino citizen, we rule that the petition at bar should be allowed."
We rule that since the instant petition, brought by a citizen, involves the enforcement of constitutional rights - to
information and to the equitable diffusion of natural resources - matters of transcendental public importance, the petitioner
has the requisite locus standi.
Fifth issue: whether the constitutional right to information includes official information on on-going negotiations
before a final agreement.
Section 7, Article III of the Constitution explains the people's right to information on matters of public concern in this
manner:
"Sec. 7. The right of the people to information on matters of public concern shall be recognized. Access to
official records, and to documents, and papers pertaining to official acts, transactions, or decisions, as
well as to government research data used as basis for policy development, shall be afforded the citizen, subject to
such limitations as may be provided by law." (Emphasis supplied)
The State policy of full transparency in all transactions involving public interest reinforces the people's right to information
on matters of public concern. This State policy is expressed in Section 28, Article II of the Constitution, thus:
"Sec. 28. Subject to reasonable conditions prescribed by law, the State adopts and implements a policy of full
public disclosure of all its transactions involving public interest." (Emphasis supplied)
These twin provisions of the Constitution seek to promote transparency in policy-making and in the operations of the
government, as well as provide the people sufficient information to exercise effectively other constitutional rights. These
twin provisions are essential to the exercise of freedom of expression. If the government does not disclose its official acts,
transactions and decisions to citizens, whatever citizens say, even if expressed without any restraint, will be speculative
and amount to nothing. These twin provisions are also essential to hold public officials "at all times x x x accountable to
the people,"29 for unless citizens have the proper information, they cannot hold public officials accountable for anything.
Armed with the right information, citizens can participate in public discussions leading to the formulation of government
policies and their effective implementation. An informed citizenry is essential to the existence and proper functioning of
any democracy. As explained by the Court in Valmonte v. Belmonte, Jr.30 –
"An essential element of these freedoms is to keep open a continuing dialogue or process of communication
between the government and the people. It is in the interest of the State that the channels for free political
discussion be maintained to the end that the government may perceive and be responsive to the people's will.
Yet, this open dialogue can be effective only to the extent that the citizenry is informed and thus able to formulate
its will intelligently. Only when the participants in the discussion are aware of the issues and have access to
information relating thereto can such bear fruit."
PEA asserts, citing Chavez v. PCGG,31 that in cases of on-going negotiations the right to information is limited to "definite
propositions of the government." PEA maintains the right does not include access to "intra-agency or inter-agency
recommendations or communications during the stage when common assertions are still in the process of being
formulated or are in the 'exploratory stage'."
Also, AMARI contends that petitioner cannot invoke the right at the pre-decisional stage or before the closing of the
transaction. To support its contention, AMARI cites the following discussion in the 1986 Constitutional Commission:
"Mr. Suarez. And when we say 'transactions' which should be distinguished from contracts, agreements, or
treaties or whatever, does the Gentleman refer to the steps leading to the consummation of the contract, or does
he refer to the contract itself?
Mr. Ople: The 'transactions' used here, I suppose is generic and therefore, it can cover both steps leading
to a contract and already a consummated contract, Mr. Presiding Officer.
Mr. Suarez: This contemplates inclusion of negotiations leading to the consummation of the transaction.
Mr. Ople: Yes, subject only to reasonable safeguards on the national interest.
Mr. Suarez: Thank you."32 (Emphasis supplied)
AMARI argues there must first be a consummated contract before petitioner can invoke the right. Requiring government
officials to reveal their deliberations at the pre-decisional stage will degrade the quality of decision-making in government
agencies. Government officials will hesitate to express their real sentiments during deliberations if there is immediate
public dissemination of their discussions, putting them under all kinds of pressure before they decide.
We must first distinguish between information the law on public bidding requires PEA to disclose publicly, and information
the constitutional right to information requires PEA to release to the public. Before the consummation of the contract, PEA
must, on its own and without demand from anyone, disclose to the public matters relating to the disposition of its property.
These include the size, location, technical description and nature of the property being disposed of, the terms and
conditions of the disposition, the parties qualified to bid, the minimum price and similar information. PEA must prepare all
these data and disclose them to the public at the start of the disposition process, long before the consummation of the
contract, because the Government Auditing Code requires public bidding. If PEA fails to make this disclosure, any
citizen can demand from PEA this information at any time during the bidding process.
Information, however, on on-going evaluation or review of bids or proposals being undertaken by the bidding or review
committee is not immediately accessible under the right to information. While the evaluation or review is still on-going,
there are no "official acts, transactions, or decisions" on the bids or proposals. However, once the committee makes
its official recommendation, there arises a "definite proposition" on the part of the government. From this moment, the
public's right to information attaches, and any citizen can access all the non-proprietary information leading to such
definite proposition. In Chavez v. PCGG,33 the Court ruled as follows:
 "Considering the intent of the framers of the Constitution, we believe that it is incumbent upon the PCGG and its
officers, as well as other government representatives, to disclose sufficient public information on any proposed
settlement they have decided to take up with the ostensible owners and holders of ill-gotten wealth. Such
information, though, must pertain to definite propositions of the government, not necessarily to intra-agency or
inter-agency recommendations or communications during the stage when common assertions are still in the
process of being formulated or are in the "exploratory" stage. There is need, of course, to observe the same
restrictions on disclosure of information in general, as discussed earlier – such as on matters involving national
security, diplomatic or foreign relations, intelligence and other classified information." (Emphasis supplied)
Contrary to AMARI's contention, the commissioners of the 1986 Constitutional Commission understood that the right to
information "contemplates inclusion of negotiations leading to the consummation of the transaction."Certainly, a
consummated contract is not a requirement for the exercise of the right to information. Otherwise, the people can never
exercise the right if no contract is consummated, and if one is consummated, it may be too late for the public to expose its
defects.1âwphi1.nêt
Requiring a consummated contract will keep the public in the dark until the contract, which may be grossly
disadvantageous to the government or even illegal, becomes a fait accompli. This negates the State policy of full
transparency on matters of public concern, a situation which the framers of the Constitution could not have intended. Such
a requirement will prevent the citizenry from participating in the public discussion of any proposedcontract, effectively
truncating a basic right enshrined in the Bill of Rights. We can allow neither an emasculation of a constitutional right, nor a
retreat by the State of its avowed "policy of full disclosure of all its transactions involving public interest."
The right covers three categories of information which are "matters of public concern," namely: (1) official records; (2)
documents and papers pertaining to official acts, transactions and decisions; and (3) government research data used in
formulating policies. The first category refers to any document that is part of the public records in the custody of
government agencies or officials. The second category refers to documents and papers recording, evidencing,
establishing, confirming, supporting, justifying or explaining official acts, transactions or decisions of government agencies
or officials. The third category refers to research data, whether raw, collated or processed, owned by the government and
used in formulating government policies.
The information that petitioner may access on the renegotiation of the JVA includes evaluation reports, recommendations,
legal and expert opinions, minutes of meetings, terms of reference and other documents attached to such reports or
minutes, all relating to the JVA. However, the right to information does not compel PEA to prepare lists, abstracts,
summaries and the like relating to the renegotiation of the JVA.34 The right only affords access to records, documents and
papers, which means the opportunity to inspect and copy them. One who exercises the right must copy the records,
documents and papers at his expense. The exercise of the right is also subject to reasonable regulations to protect the
integrity of the public records and to minimize disruption to government operations, like rules specifying when and how to
conduct the inspection and copying.35
The right to information, however, does not extend to matters recognized as privileged information under the separation of
powers.36 The right does not also apply to information on military and diplomatic secrets, information affecting national
security, and information on investigations of crimes by law enforcement agencies before the prosecution of the accused,
which courts have long recognized as confidential.37 The right may also be subject to other limitations that Congress may
impose by law.
There is no claim by PEA that the information demanded by petitioner is privileged information rooted in the separation of
powers. The information does not cover Presidential conversations, correspondences, or discussions during closed-door
Cabinet meetings which, like internal deliberations of the Supreme Court and other collegiate courts, or executive
sessions of either house of Congress,38 are recognized as confidential. This kind of information cannot be pried open by a
co-equal branch of government. A frank exchange of exploratory ideas and assessments, free from the glare of publicity
and pressure by interested parties, is essential to protect the independence of decision-making of those tasked to
exercise Presidential, Legislative and Judicial power.39 This is not the situation in the instant case.
We rule, therefore, that the constitutional right to information includes official information on on-going negotiationsbefore
a final contract. The information, however, must constitute definite propositions by the government and should not cover
recognized exceptions like privileged information, military and diplomatic secrets and similar matters affecting national
security and public order.40 Congress has also prescribed other limitations on the right to information in several
legislations.41
Sixth issue: whether stipulations in the Amended JVA for the transfer to AMARI of lands, reclaimed or to be
reclaimed, violate the Constitution.
The Regalian Doctrine
The ownership of lands reclaimed from foreshore and submerged areas is rooted in the Regalian doctrine which holds
that the State owns all lands and waters of the public domain. Upon the Spanish conquest of the Philippines, ownership of
all "lands, territories and possessions" in the Philippines passed to the Spanish Crown.42 The King, as the sovereign ruler
and representative of the people, acquired and owned all lands and territories in the Philippines except those he disposed
of by grant or sale to private individuals.
The 1935, 1973 and 1987 Constitutions adopted the Regalian doctrine substituting, however, the State, in lieu of the King,
as the owner of all lands and waters of the public domain. The Regalian doctrine is the foundation of the time-honored
principle of land ownership that "all lands that were not acquired from the Government, either by purchase or by grant,
belong to the public domain."43 Article 339 of the Civil Code of 1889, which is now Article 420 of the Civil Code of 1950,
incorporated the Regalian doctrine.
Ownership and Disposition of Reclaimed Lands
The Spanish Law of Waters of 1866 was the first statutory law governing the ownership and disposition of reclaimed lands
in the Philippines. On May 18, 1907, the Philippine Commission enacted Act No. 1654 which provided for the lease, but
not the sale, of reclaimed lands of the government to corporations and individuals. Later, on November 29, 1919,
the Philippine Legislature approved Act No. 2874, the Public Land Act, which authorized the lease, but not the sale, of
reclaimed lands of the government to corporations and individuals. On November 7, 1936, the National Assembly
passed Commonwealth Act No. 141, also known as the Public Land Act, which authorized the lease, but not the sale,
of reclaimed lands of the government to corporations and individuals. CA No. 141 continues to this day as the
general law governing the classification and disposition of lands of the public domain.
The Spanish Law of Waters of 1866 and the Civil Code of 1889
Under the Spanish Law of Waters of 1866, the shores, bays, coves, inlets and all waters within the maritime zone of the
Spanish territory belonged to the public domain for public use. 44 The Spanish Law of Waters of 1866 allowed the
reclamation of the sea under Article 5, which provided as follows:
"Article 5. Lands reclaimed from the sea in consequence of works constructed by the State, or by the provinces,
pueblos or private persons, with proper permission, shall become the property of the party constructing such
works, unless otherwise provided by the terms of the grant of authority."
Under the Spanish Law of Waters, land reclaimed from the sea belonged to the party undertaking the reclamation,
provided the government issued the necessary permit and did not reserve ownership of the reclaimed land to the State.
Article 339 of the Civil Code of 1889 defined property of public dominion as follows:
"Art. 339. Property of public dominion is –
1. That devoted to public use, such as roads, canals, rivers, torrents, ports and bridges constructed by the State,
riverbanks, shores, roadsteads, and that of a similar character;
2. That belonging exclusively to the State which, without being of general public use, is employed in some public
service, or in the development of the national wealth, such as walls, fortresses, and other works for the defense of
the territory, and mines, until granted to private individuals."
Property devoted to public use referred to property open for use by the public. In contrast, property devoted to public
service referred to property used for some specific public service and open only to those authorized to use the property.
Property of public dominion referred not only to property devoted to public use, but also to property not so used but
employed to develop the national wealth. This class of property constituted property of public dominion although
employed for some economic or commercial activity to increase the national wealth.
Article 341 of the Civil Code of 1889 governed the re-classification of property of public dominion into private property, to
wit:
"Art. 341. Property of public dominion, when no longer devoted to public use or to the defense of the territory,
shall become a part of the private property of the State."
This provision, however, was not self-executing. The legislature, or the executive department pursuant to law, must
declare the property no longer needed for public use or territorial defense before the government could lease or alienate
the property to private parties.45
Act No. 1654 of the Philippine Commission
On May 8, 1907, the Philippine Commission enacted Act No. 1654 which regulated the lease of reclaimed and foreshore
lands. The salient provisions of this law were as follows:
"Section 1. The control and disposition of the foreshore as defined in existing law, and the title to all
Government or public lands made or reclaimed by the Government by dredging or filling or otherwise
throughout the Philippine Islands, shall be retained by the Government without prejudice to vested rights and
without prejudice to rights conceded to the City of Manila in the Luneta Extension.
Section 2. (a) The Secretary of the Interior shall cause all Government or public lands made or reclaimed by the
Government by dredging or filling or otherwise to be divided into lots or blocks, with the necessary streets and
alleyways located thereon, and shall cause plats and plans of such surveys to be prepared and filed with the
Bureau of Lands.
(b) Upon completion of such plats and plans the Governor-General shall give notice to the public that such
parts of the lands so made or reclaimed as are not needed for public purposes will be leased for
commercial and business purposes, x x x.
xxx
(e) The leases above provided for shall be disposed of to the highest and best bidder therefore, subject to
such regulations and safeguards as the Governor-General may by executive order prescribe." (Emphasis
supplied)
Act No. 1654 mandated that the government should retain title to all lands reclaimed by the government. The Act
also vested in the government control and disposition of foreshore lands. Private parties could lease lands reclaimed by
the government only if these lands were no longer needed for public purpose. Act No. 1654 mandated public bidding in
the lease of government reclaimed lands. Act No. 1654 made government reclaimed lands sui generis in that unlike other
public lands which the government could sell to private parties, these reclaimed lands were available only for lease to
private parties.
Act No. 1654, however, did not repeal Section 5 of the Spanish Law of Waters of 1866. Act No. 1654 did not prohibit
private parties from reclaiming parts of the sea under Section 5 of the Spanish Law of Waters. Lands reclaimed from the
sea by private parties with government permission remained private lands.
Act No. 2874 of the Philippine Legislature
On November 29, 1919, the Philippine Legislature enacted Act No. 2874, the Public Land Act. 46 The salient provisions of
Act No. 2874, on reclaimed lands, were as follows:
"Sec. 6. The Governor-General, upon the recommendation of the Secretary of Agriculture and Natural
Resources, shall from time to time classify the lands of the public domain into –
(a) Alienable or disposable,
(b) Timber, and
(c) Mineral lands, x x x.
Sec. 7. For the purposes of the government and disposition of alienable or disposable public lands, the
Governor-General, upon recommendation by the Secretary of Agriculture and Natural Resources, shall
from time to time declare what lands are open to disposition or concession under this Act."
Sec. 8. Only those lands shall be declared open to disposition or concession which have been officially
delimited or classified x x x.
xxx
Sec. 55. Any tract of land of the public domain which, being neither timber nor mineral land, shall be classified
as suitable for residential purposes or for commercial, industrial, or other productive purposes other than
agricultural purposes, and shall be open to disposition or concession, shall be disposed of under the provisions
of this chapter, and not otherwise.
Sec. 56. The lands disposable under this title shall be classified as follows:
(a) Lands reclaimed by the Government by dredging, filling, or other means;
(b) Foreshore;
(c) Marshy lands or lands covered with water bordering upon the shores or banks of navigable lakes or
rivers;
(d) Lands not included in any of the foregoing classes.
x x x.
Sec. 58. The lands comprised in classes (a), (b), and (c) of section fifty-six shall be disposed of to private
parties by lease only and not otherwise, as soon as the Governor-General, upon recommendation by the
Secretary of Agriculture and Natural Resources, shall declare that the same are not necessary for the
public service and are open to disposition under this chapter. The lands included in class (d) may be
disposed of by sale or lease under the provisions of this Act." (Emphasis supplied)
Section 6 of Act No. 2874 authorized the Governor-General to "classify lands of the public domain into x x x alienable or
disposable"47 lands. Section 7 of the Act empowered the Governor-General to "declare what lands are open to disposition
or concession." Section 8 of the Act limited alienable or disposable lands only to those lands which have been "officially
delimited and classified."
Section 56 of Act No. 2874 stated that lands "disposable under this title48 shall be classified" as government reclaimed,
foreshore and marshy lands, as well as other lands. All these lands, however, must be suitable for residential,
commercial, industrial or other productive non-agricultural purposes. These provisions vested upon the Governor-
General the power to classify inalienable lands of the public domain into disposable lands of the public domain. These
provisions also empowered the Governor-General to classify further such disposable lands of the public domain into
government reclaimed, foreshore or marshy lands of the public domain, as well as other non-agricultural lands.
Section 58 of Act No. 2874 categorically mandated that disposable lands of the public domain classified as government
reclaimed, foreshore and marshy lands "shall be disposed of to private parties by lease only and not
otherwise." The Governor-General, before allowing the lease of these lands to private parties, must formally declare that
the lands were "not necessary for the public service." Act No. 2874 reiterated the State policy to lease and not to sell
government reclaimed, foreshore and marshy lands of the public domain, a policy first enunciated in 1907 in Act No.
1654. Government reclaimed, foreshore and marshy lands remained sui generis, as the only alienable or disposable
lands of the public domain that the government could not sell to private parties.
The rationale behind this State policy is obvious. Government reclaimed, foreshore and marshy public lands for non-
agricultural purposes retain their inherent potential as areas for public service. This is the reason the government
prohibited the sale, and only allowed the lease, of these lands to private parties. The State always reserved these lands
for some future public service.
Act No. 2874 did not authorize the reclassification of government reclaimed, foreshore and marshy lands into other non-
agricultural lands under Section 56 (d). Lands falling under Section 56 (d) were the only lands for non-agricultural
purposes the government could sell to private parties. Thus, under Act No. 2874, the government could not sell
government reclaimed, foreshore and marshy lands to private parties, unless the legislature passed a law allowing
their sale.49
Act No. 2874 did not prohibit private parties from reclaiming parts of the sea pursuant to Section 5 of the Spanish Law of
Waters of 1866. Lands reclaimed from the sea by private parties with government permission remained private lands.
Dispositions under the 1935 Constitution
On May 14, 1935, the 1935 Constitution took effect upon its ratification by the Filipino people. The 1935 Constitution, in
adopting the Regalian doctrine, declared in Section 1, Article XIII, that –
"Section 1. All agricultural, timber, and mineral lands of the public domain, waters, minerals, coal, petroleum, and
other mineral oils, all forces of potential energy and other natural resources of the Philippines belong to the State,
and their disposition, exploitation, development, or utilization shall be limited to citizens of the Philippines or to
corporations or associations at least sixty per centum of the capital of which is owned by such citizens, subject to
any existing right, grant, lease, or concession at the time of the inauguration of the Government established under
this Constitution. Natural resources, with the exception of public agricultural land, shall not be alienated,
and no license, concession, or lease for the exploitation, development, or utilization of any of the natural
resources shall be granted for a period exceeding twenty-five years, renewable for another twenty-five years,
except as to water rights for irrigation, water supply, fisheries, or industrial uses other than the development of
water power, in which cases beneficial use may be the measure and limit of the grant." (Emphasis supplied)
The 1935 Constitution barred the alienation of all natural resources except public agricultural lands, which were the only
natural resources the State could alienate. Thus, foreshore lands, considered part of the State's natural resources,
became inalienable by constitutional fiat, available only for lease for 25 years, renewable for another 25 years. The
government could alienate foreshore lands only after these lands were reclaimed and classified as alienable agricultural
lands of the public domain. Government reclaimed and marshy lands of the public domain, being neither timber nor
mineral lands, fell under the classification of public agricultural lands. 50 However, government reclaimed and marshy
lands, although subject to classification as disposable public agricultural lands, could only be leased and not sold to
private parties because of Act No. 2874.
The prohibition on private parties from acquiring ownership of government reclaimed and marshy lands of the public
domain was only a statutory prohibition and the legislature could therefore remove such prohibition. The 1935 Constitution
did not prohibit individuals and corporations from acquiring government reclaimed and marshy lands of the public domain
that were classified as agricultural lands under existing public land laws. Section 2, Article XIII of the 1935 Constitution
provided as follows:
"Section 2. No private corporation or association may acquire, lease, or hold public agricultural lands in
excess of one thousand and twenty four hectares, nor may any individual acquire such lands by
purchase in excess of one hundred and forty hectares, or by lease in excess of one thousand and twenty-
four hectares, or by homestead in excess of twenty-four hectares. Lands adapted to grazing, not exceeding two
thousand hectares, may be leased to an individual, private corporation, or association." (Emphasis supplied)
Still, after the effectivity of the 1935 Constitution, the legislature did not repeal Section 58 of Act No. 2874 to open for sale
to private parties government reclaimed and marshy lands of the public domain. On the contrary, the legislature continued
the long established State policy of retaining for the government title and ownership of government reclaimed and marshy
lands of the public domain.
Commonwealth Act No. 141 of the Philippine National Assembly
On November 7, 1936, the National Assembly approved Commonwealth Act No. 141, also known as the Public Land Act,
which compiled the then existing laws on lands of the public domain. CA No. 141, as amended, remains to this day
the existing general law governing the classification and disposition of lands of the public domain other than timber and
mineral lands.51
Section 6 of CA No. 141 empowers the President to classify lands of the public domain into "alienable or
disposable"52 lands of the public domain, which prior to such classification are inalienable and outside the commerce of
man. Section 7 of CA No. 141 authorizes the President to "declare what lands are open to disposition or concession."
Section 8 of CA No. 141 states that the government can declare open for disposition or concession only lands that are
"officially delimited and classified." Sections 6, 7 and 8 of CA No. 141 read as follows:
"Sec. 6. The President, upon the recommendation of the Secretary of Agriculture and Commerce, shall
from time to time classify the lands of the public domain into –
(a) Alienable or disposable,
(b) Timber, and
(c) Mineral lands,
and may at any time and in like manner transfer such lands from one class to another,53 for the purpose of their
administration and disposition.
Sec. 7. For the purposes of the administration and disposition of alienable or disposable public lands, the
President, upon recommendation by the Secretary of Agriculture and Commerce, shall from time to time
declare what lands are open to disposition or concession under this Act.
Sec. 8. Only those lands shall be declared open to disposition or concession which have been officially
delimited and classified and, when practicable, surveyed, and which have not been reserved for public or
quasi-public uses, nor appropriated by the Government, nor in any manner become private property, nor those
on which a private right authorized and recognized by this Act or any other valid law may be claimed, or which,
having been reserved or appropriated, have ceased to be so. x x x."
Thus, before the government could alienate or dispose of lands of the public domain, the President must first officially
classify these lands as alienable or disposable, and then declare them open to disposition or concession. There must be
no law reserving these lands for public or quasi-public uses.
The salient provisions of CA No. 141, on government reclaimed, foreshore and marshy lands of the public domain, are as
follows:
"Sec. 58. Any tract of land of the public domain which, being neither timber nor mineral land, is intended
to be used for residential purposes or for commercial, industrial, or other productive purposes other than
agricultural, and is open to disposition or concession, shall be disposed of under the provisions of this
chapter and not otherwise.
Sec. 59. The lands disposable under this title shall be classified as follows:
(a) Lands reclaimed by the Government by dredging, filling, or other means;
(b) Foreshore;
(c) Marshy lands or lands covered with water bordering upon the shores or banks of navigable lakes or
rivers;
(d) Lands not included in any of the foregoing classes.
Sec. 60. Any tract of land comprised under this title may be leased or sold, as the case may be, to any person,
corporation, or association authorized to purchase or lease public lands for agricultural purposes. x x x.
Sec. 61. The lands comprised in classes (a), (b), and (c) of section fifty-nine shall be disposed of to private
parties by lease only and not otherwise, as soon as the President, upon recommendation by the Secretary of
Agriculture, shall declare that the same are not necessary for the public service and are open to disposition
under this chapter. The lands included in class (d) may be disposed of by sale or lease under the
provisions of this Act." (Emphasis supplied)
Section 61 of CA No. 141 readopted, after the effectivity of the 1935 Constitution, Section 58 of Act No. 2874 prohibiting
the sale of government reclaimed, foreshore and marshy disposable lands of the public domain. All these lands are
intended for residential, commercial, industrial or other non-agricultural purposes. As before, Section 61 allowed only the
lease of such lands to private parties. The government could sell to private parties only lands falling under Section 59 (d)
of CA No. 141, or those lands for non-agricultural purposes not classified as government reclaimed, foreshore and marshy
disposable lands of the public domain. Foreshore lands, however, became inalienable under the 1935 Constitution which
only allowed the lease of these lands to qualified private parties.
Section 58 of CA No. 141 expressly states that disposable lands of the public domain intended for residential, commercial,
industrial or other productive purposes other than agricultural "shall be disposed of under the provisions of this
chapter and not otherwise." Under Section 10 of CA No. 141, the term "disposition" includes lease of the land. Any
disposition of government reclaimed, foreshore and marshy disposable lands for non-agricultural purposes must comply
with Chapter IX, Title III of CA No. 141,54 unless a subsequent law amended or repealed these provisions.
In his concurring opinion in the landmark case of Republic Real Estate Corporation v. Court of Appeals,55Justice
Reynato S. Puno summarized succinctly the law on this matter, as follows:
"Foreshore lands are lands of public dominion intended for public use. So too are lands reclaimed by the
government by dredging, filling, or other means. Act 1654 mandated that the control and disposition of the
foreshore and lands under water remained in the national government. Said law allowed only the 'leasing' of
reclaimed land. The Public Land Acts of 1919 and 1936 also declared that the foreshore and lands reclaimed by
the government were to be "disposed of to private parties by lease only and not otherwise." Before leasing,
however, the Governor-General, upon recommendation of the Secretary of Agriculture and Natural Resources,
had first to determine that the land reclaimed was not necessary for the public service. This requisite must have
been met before the land could be disposed of. But even then, the foreshore and lands under water were not
to be alienated and sold to private parties. The disposition of the reclaimed land was only by lease. The
land remained property of the State." (Emphasis supplied)
As observed by Justice Puno in his concurring opinion, "Commonwealth Act No. 141 has remained in effect at present."
The State policy prohibiting the sale to private parties of government reclaimed, foreshore and marshy alienable lands of
the public domain, first implemented in 1907 was thus reaffirmed in CA No. 141 after the 1935 Constitution took effect.
The prohibition on the sale of foreshore lands, however, became a constitutional edict under the 1935 Constitution.
Foreshore lands became inalienable as natural resources of the State, unless reclaimed by the government and classified
as agricultural lands of the public domain, in which case they would fall under the classification of government reclaimed
lands.
After the effectivity of the 1935 Constitution, government reclaimed and marshy disposable lands of the public domain
continued to be only leased and not sold to private parties.56 These lands remained sui generis, as the only alienable or
disposable lands of the public domain the government could not sell to private parties.
Since then and until now, the only way the government can sell to private parties government reclaimed and marshy
disposable lands of the public domain is for the legislature to pass a law authorizing such sale. CA No. 141 does not
authorize the President to reclassify government reclaimed and marshy lands into other non-agricultural lands under
Section 59 (d). Lands classified under Section 59 (d) are the only alienable or disposable lands for non-agricultural
purposes that the government could sell to private parties.
Moreover, Section 60 of CA No. 141 expressly requires congressional authority before lands under Section 59 that the
government previously transferred to government units or entities could be sold to private parties. Section 60 of CA No.
141 declares that –
"Sec. 60. x x x The area so leased or sold shall be such as shall, in the judgment of the Secretary of Agriculture
and Natural Resources, be reasonably necessary for the purposes for which such sale or lease is requested, and
shall not exceed one hundred and forty-four hectares: Provided, however, That this limitation shall not apply to
grants, donations, or transfers made to a province, municipality or branch or subdivision of the Government for
the purposes deemed by said entities conducive to the public interest; but the land so granted, donated, or
transferred to a province, municipality or branch or subdivision of the Government shall not be alienated,
encumbered, or otherwise disposed of in a manner affecting its title, except when authorized by
Congress: x x x." (Emphasis supplied)
The congressional authority required in Section 60 of CA No. 141 mirrors the legislative authority required in Section 56 of
Act No. 2874.
One reason for the congressional authority is that Section 60 of CA No. 141 exempted government units and entities from
the maximum area of public lands that could be acquired from the State. These government units and entities should not
just turn around and sell these lands to private parties in violation of constitutional or statutory limitations. Otherwise, the
transfer of lands for non-agricultural purposes to government units and entities could be used to circumvent constitutional
limitations on ownership of alienable or disposable lands of the public domain. In the same manner, such transfers could
also be used to evade the statutory prohibition in CA No. 141 on the sale of government reclaimed and marshy lands of
the public domain to private parties. Section 60 of CA No. 141 constitutes by operation of law a lien on these lands. 57
In case of sale or lease of disposable lands of the public domain falling under Section 59 of CA No. 141, Sections 63 and
67 require a public bidding. Sections 63 and 67 of CA No. 141 provide as follows:
"Sec. 63. Whenever it is decided that lands covered by this chapter are not needed for public purposes, the
Director of Lands shall ask the Secretary of Agriculture and Commerce (now the Secretary of Natural Resources)
for authority to dispose of the same. Upon receipt of such authority, the Director of Lands shall give notice by
public advertisement in the same manner as in the case of leases or sales of agricultural public land, x x x.
Sec. 67. The lease or sale shall be made by oral bidding; and adjudication shall be made to the highest
bidder. x x x." (Emphasis supplied)
Thus, CA No. 141 mandates the Government to put to public auction all leases or sales of alienable or disposable lands of
the public domain.58
Like Act No. 1654 and Act No. 2874 before it, CA No. 141 did not repeal Section 5 of the Spanish Law of Waters of 1866.
Private parties could still reclaim portions of the sea with government permission. However, the reclaimed land could
become private land only if classified as alienable agricultural land of the public domain open to disposition under
CA No. 141. The 1935 Constitution prohibited the alienation of all natural resources except public agricultural lands.
The Civil Code of 1950
The Civil Code of 1950 readopted substantially the definition of property of public dominion found in the Civil Code of
1889. Articles 420 and 422 of the Civil Code of 1950 state that –
"Art. 420. The following things are property of public dominion:
(1) Those intended for public use, such as roads, canals, rivers, torrents, ports and bridges constructed by the
State, banks, shores, roadsteads, and others of similar character;
(2) Those which belong to the State, without being for public use, and are intended for some public service or for
the development of the national wealth.
x x x.
Art. 422. Property of public dominion, when no longer intended for public use or for public service, shall form part
of the patrimonial property of the State."
Again, the government must formally declare that the property of public dominion is no longer needed for public use or
public service, before the same could be classified as patrimonial property of the State.59 In the case of government
reclaimed and marshy lands of the public domain, the declaration of their being disposable, as well as the manner of their
disposition, is governed by the applicable provisions of CA No. 141.
Like the Civil Code of 1889, the Civil Code of 1950 included as property of public dominion those properties of the State
which, without being for public use, are intended for public service or the "development of the national wealth." Thus,
government reclaimed and marshy lands of the State, even if not employed for public use or public service, if developed
to enhance the national wealth, are classified as property of public dominion.
Dispositions under the 1973 Constitution
The 1973 Constitution, which took effect on January 17, 1973, likewise adopted the Regalian doctrine. Section 8, Article
XIV of the 1973 Constitution stated that –
"Sec. 8. All lands of the public domain, waters, minerals, coal, petroleum and other mineral oils, all forces of
potential energy, fisheries, wildlife, and other natural resources of the Philippines belong to the State. With the
exception of agricultural, industrial or commercial, residential, and resettlement lands of the public
domain, natural resources shall not be alienated, and no license, concession, or lease for the exploration,
development, exploitation, or utilization of any of the natural resources shall be granted for a period exceeding
twenty-five years, renewable for not more than twenty-five years, except as to water rights for irrigation, water
 supply, fisheries, or industrial uses other than the development of water power, in which cases, beneficial use
may be the measure and the limit of the grant." (Emphasis supplied)
The 1973 Constitution prohibited the alienation of all natural resources with the exception of "agricultural, industrial or
commercial, residential, and resettlement lands of the public domain." In contrast, the 1935 Constitution barred the
alienation of all natural resources except "public agricultural lands." However, the term "public agricultural lands" in the
1935 Constitution encompassed industrial, commercial, residential and resettlement lands of the public domain. 60 If the
land of public domain were neither timber nor mineral land, it would fall under the classification of agricultural land of the
public domain. Both the 1935 and 1973 Constitutions, therefore, prohibited the alienation of all natural resources
except agricultural lands of the public domain.
The 1973 Constitution, however, limited the alienation of lands of the public domain to individuals who were citizens of the
Philippines. Private corporations, even if wholly owned by Philippine citizens, were no longer allowed to acquire alienable
lands of the public domain unlike in the 1935 Constitution. Section 11, Article XIV of the 1973 Constitution declared that –
"Sec. 11. The Batasang Pambansa, taking into account conservation, ecological, and development requirements
of the natural resources, shall determine by law the size of land of the public domain which may be developed,
held or acquired by, or leased to, any qualified individual, corporation, or association, and the conditions
therefor. No private corporation or association may hold alienable lands of the public domain except by
lease not to exceed one thousand hectares in area nor may any citizen hold such lands by lease in excess of five
hundred hectares or acquire by purchase, homestead or grant, in excess of twenty-four hectares. No private
corporation or association may hold by lease, concession, license or permit, timber or forest lands and other
timber or forest resources in excess of one hundred thousand hectares. However, such area may be increased by
the Batasang Pambansa upon recommendation of the National Economic and Development Authority."
(Emphasis supplied)
Thus, under the 1973 Constitution, private corporations could hold alienable lands of the public domain only through
lease. Only individuals could now acquire alienable lands of the public domain, and private corporations became
absolutely barred from acquiring any kind of alienable land of the public domain. The constitutional ban extended to
all kinds of alienable lands of the public domain, while the statutory ban under CA No. 141 applied only to government
reclaimed, foreshore and marshy alienable lands of the public domain.
PD No. 1084 Creating the Public Estates Authority
On February 4, 1977, then President Ferdinand Marcos issued Presidential Decree No. 1084 creating PEA, a wholly
government owned and controlled corporation with a special charter. Sections 4 and 8 of PD No. 1084, vests PEA with
the following purposes and powers:
"Sec. 4. Purpose. The Authority is hereby created for the following purposes:
(a) To reclaim land, including foreshore and submerged areas, by dredging, filling or other means, or to
acquire reclaimed land;
(b) To develop, improve, acquire, administer, deal in, subdivide, dispose, lease and sell any and all kinds of
lands, buildings, estates and other forms of real property, owned, managed, controlled and/or operated by the
government;
(c) To provide for, operate or administer such service as may be necessary for the efficient, economical and
beneficial utilization of the above properties.
Sec. 5. Powers and functions of the Authority. The Authority shall, in carrying out the purposes for which it is
created, have the following powers and functions:
(a)To prescribe its by-laws.
xxx
(i) To hold lands of the public domain in excess of the area permitted to private corporations by statute.
(j) To reclaim lands and to construct work across, or otherwise, any stream, watercourse, canal, ditch, flume x x
x.
xxx
(o) To perform such acts and exercise such functions as may be necessary for the attainment of the purposes
and objectives herein specified." (Emphasis supplied)
PD No. 1084 authorizes PEA to reclaim both foreshore and submerged areas of the public domain. Foreshore areas are
those covered and uncovered by the ebb and flow of the tide. 61 Submerged areas are those permanently under water
regardless of the ebb and flow of the tide.62 Foreshore and submerged areas indisputably belong to the public
domain63 and are inalienable unless reclaimed, classified as alienable lands open to disposition, and further declared no
longer needed for public service.
The ban in the 1973 Constitution on private corporations from acquiring alienable lands of the public domain did not apply
to PEA since it was then, and until today, a fully owned government corporation. The constitutional ban applied then, as it
still applies now, only to "private corporations and associations." PD No. 1084 expressly empowers PEA "to hold lands
of the public domain" even "in excess of the area permitted to private corporations by statute." Thus, PEA can hold
title to private lands, as well as title to lands of the public domain.
In order for PEA to sell its reclaimed foreshore and submerged alienable lands of the public domain, there must be
legislative authority empowering PEA to sell these lands. This legislative authority is necessary in view of Section 60 of
CA No.141, which states –
 "Sec. 60. x x x; but the land so granted, donated or transferred to a province, municipality, or branch or
subdivision of the Government shall not be alienated, encumbered or otherwise disposed of in a manner affecting
its title, except when authorized by Congress; x x x." (Emphasis supplied)
Without such legislative authority, PEA could not sell but only lease its reclaimed foreshore and submerged alienable
lands of the public domain. Nevertheless, any legislative authority granted to PEA to sell its reclaimed alienable lands of
the public domain would be subject to the constitutional ban on private corporations from acquiring alienable lands of the
public domain. Hence, such legislative authority could only benefit private individuals.
Dispositions under the 1987 Constitution
The 1987 Constitution, like the 1935 and 1973 Constitutions before it, has adopted the Regalian doctrine. The 1987
Constitution declares that all natural resources are "owned by the State," and except for alienable agricultural lands of
the public domain, natural resources cannot be alienated. Sections 2 and 3, Article XII of the 1987 Constitution state that
–
"Section 2. All lands of the public domain, waters, minerals, coal, petroleum and other mineral oils, all forces of
potential energy, fisheries, forests or timber, wildlife, flora and fauna, and other natural resources are owned by
the State. With the exception of agricultural lands, all other natural resources shall not be alienated. The
exploration, development, and utilization of natural resources shall be under the full control and supervision of the
State. x x x.
Section 3. Lands of the public domain are classified into agricultural, forest or timber, mineral lands, and national
parks. Agricultural lands of the public domain may be further classified by law according to the uses which they
may be devoted. Alienable lands of the public domain shall be limited to agricultural lands. Private
corporations or associations may not hold such alienable lands of the public domain except by lease, for
a period not exceeding twenty-five years, renewable for not more than twenty-five years, and not to
exceed one thousand hectares in area. Citizens of the Philippines may lease not more than five hundred
hectares, or acquire not more than twelve hectares thereof by purchase, homestead, or grant.
Taking into account the requirements of conservation, ecology, and development, and subject to the requirements
of agrarian reform, the Congress shall determine, by law, the size of lands of the public domain which may be
acquired, developed, held, or leased and the conditions therefor." (Emphasis supplied)
The 1987 Constitution continues the State policy in the 1973 Constitution banning private corporations from acquiring
any kind of alienable land of the public domain. Like the 1973 Constitution, the 1987 Constitution allows private
corporations to hold alienable lands of the public domain only through lease. As in the 1935 and 1973 Constitutions, the
general law governing the lease to private corporations of reclaimed, foreshore and marshy alienable lands of the public
domain is still CA No. 141.
The Rationale behind the Constitutional Ban
The rationale behind the constitutional ban on corporations from acquiring, except through lease, alienable lands of the
public domain is not well understood. During the deliberations of the 1986 Constitutional Commission, the commissioners
probed the rationale behind this ban, thus:
"FR. BERNAS: Mr. Vice-President, my questions have reference to page 3, line 5 which says:
`No private corporation or association may hold alienable lands of the public domain except by lease, not to
exceed one thousand hectares in area.'
If we recall, this provision did not exist under the 1935 Constitution, but this was introduced in the 1973
Constitution. In effect, it prohibits private corporations from acquiring alienable public lands. But it has not been
very clear in jurisprudence what the reason for this is. In some of the cases decided in 1982 and 1983, it was
indicated that the purpose of this is to prevent large landholdings. Is that the intent of this provision?
MR. VILLEGAS: I think that is the spirit of the provision.
FR. BERNAS: In existing decisions involving the Iglesia ni Cristo, there were instances where the Iglesia ni Cristo
was not allowed to acquire a mere 313-square meter land where a chapel stood because the Supreme Court said
it would be in violation of this." (Emphasis supplied)
In Ayog v. Cusi,64 the Court explained the rationale behind this constitutional ban in this way:
"Indeed, one purpose of the constitutional prohibition against purchases of public agricultural lands by private
corporations is to equitably diffuse land ownership or to encourage 'owner-cultivatorship and the economic family-
size farm' and to prevent a recurrence of cases like the instant case. Huge landholdings by corporations or private
persons had spawned social unrest."
However, if the constitutional intent is to prevent huge landholdings, the Constitution could have simply limited the size of
alienable lands of the public domain that corporations could acquire. The Constitution could have followed the limitations
on individuals, who could acquire not more than 24 hectares of alienable lands of the public domain under the 1973
Constitution, and not more than 12 hectares under the 1987 Constitution.
If the constitutional intent is to encourage economic family-size farms, placing the land in the name of a corporation would
be more effective in preventing the break-up of farmlands. If the farmland is registered in the name of a corporation, upon
the death of the owner, his heirs would inherit shares in the corporation instead of subdivided parcels of the farmland. This
would prevent the continuing break-up of farmlands into smaller and smaller plots from one generation to the next.
In actual practice, the constitutional ban strengthens the constitutional limitation on individuals from acquiring more than
the allowed area of alienable lands of the public domain. Without the constitutional ban, individuals who already acquired
the maximum area of alienable lands of the public domain could easily set up corporations to acquire more alienable
public lands. An individual could own as many corporations as his means would allow him. An individual could even hide
his ownership of a corporation by putting his nominees as stockholders of the corporation. The corporation is a convenient
vehicle to circumvent the constitutional limitation on acquisition by individuals of alienable lands of the public domain.
The constitutional intent, under the 1973 and 1987 Constitutions, is to transfer ownership of only a limited area of
alienable land of the public domain to a qualified individual. This constitutional intent is safeguarded by the provision
prohibiting corporations from acquiring alienable lands of the public domain, since the vehicle to circumvent the
constitutional intent is removed. The available alienable public lands are gradually decreasing in the face of an ever-
growing population. The most effective way to insure faithful adherence to this constitutional intent is to grant or sell
alienable lands of the public domain only to individuals. This, it would seem, is the practical benefit arising from the
constitutional ban.
The Amended Joint Venture Agreement
The subject matter of the Amended JVA, as stated in its second Whereas clause, consists of three properties, namely:
1. "[T]hree partially reclaimed and substantially eroded islands along Emilio Aguinaldo Boulevard in Paranaque
and Las Pinas, Metro Manila, with a combined titled area of 1,578,441 square meters;"
2. "[A]nother area of 2,421,559 square meters contiguous to the three islands;" and
3. "[A]t AMARI's option as approved by PEA, an additional 350 hectares more or less to regularize the
configuration of the reclaimed area."65
PEA confirms that the Amended JVA involves "the development of the Freedom Islands and further reclamation of about
250 hectares x x x," plus an option "granted to AMARI to subsequently reclaim another 350 hectares x x x." 66
In short, the Amended JVA covers a reclamation area of 750 hectares. Only 157.84 hectares of the 750-hectare
reclamation project have been reclaimed, and the rest of the 592.15 hectares are still submerged areas forming
part of Manila Bay.
Under the Amended JVA, AMARI will reimburse PEA the sum of P1,894,129,200.00 for PEA's "actual cost" in partially
reclaiming the Freedom Islands. AMARI will also complete, at its own expense, the reclamation of the Freedom Islands.
AMARI will further shoulder all the reclamation costs of all the other areas, totaling 592.15 hectares, still to be reclaimed.
AMARI and PEA will share, in the proportion of 70 percent and 30 percent, respectively, the total net usable area which is
defined in the Amended JVA as the total reclaimed area less 30 percent earmarked for common areas. Title to AMARI's
share in the net usable area, totaling 367.5 hectares, will be issued in the name of AMARI. Section 5.2 (c) of the Amended
JVA provides that –
"x x x, PEA shall have the duty to execute without delay the necessary deed of transfer or conveyance of the title
pertaining to AMARI's Land share based on the Land Allocation Plan. PEA, when requested in writing by
AMARI, shall then cause the issuance and delivery of the proper certificates of title covering AMARI's
Land Share in the name of AMARI, x x x; provided, that if more than seventy percent (70%) of the titled area at
any given time pertains to AMARI, PEA shall deliver to AMARI only seventy percent (70%) of the titles pertaining
to AMARI, until such time when a corresponding proportionate area of additional land pertaining to PEA has been
titled." (Emphasis supplied)
Indisputably, under the Amended JVA AMARI will acquire and own a maximum of 367.5 hectares of reclaimed
land which will be titled in its name.
To implement the Amended JVA, PEA delegated to the unincorporated PEA-AMARI joint venture PEA's statutory
authority, rights and privileges to reclaim foreshore and submerged areas in Manila Bay. Section 3.2.a of the Amended
JVA states that –
"PEA hereby contributes to the joint venture its rights and privileges to perform Rawland Reclamation and
Horizontal Development as well as own the Reclamation Area, thereby granting the Joint Venture the full and
exclusive right, authority and privilege to undertake the Project in accordance with the Master Development Plan."
The Amended JVA is the product of a renegotiation of the original JVA dated April 25, 1995 and its supplemental
agreement dated August 9, 1995.
The Threshold Issue
The threshold issue is whether AMARI, a private corporation, can acquire and own under the Amended JVA 367.5
hectares of reclaimed foreshore and submerged areas in Manila Bay in view of Sections 2 and 3, Article XII of the 1987
Constitution which state that:
"Section 2. All lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all forces of
potential energy, fisheries, forests or timber, wildlife, flora and fauna, and other natural resources are owned by
the State. With the exception of agricultural lands, all other natural resources shall not be alienated. x x x.
xxx
Section 3. x x x Alienable lands of the public domain shall be limited to agricultural lands. Private corporations
or associations may not hold such alienable lands of the public domain except by lease, x x x."(Emphasis
supplied)
Classification of Reclaimed Foreshore and Submerged Areas
PEA readily concedes that lands reclaimed from foreshore or submerged areas of Manila Bay are alienable or disposable
lands of the public domain. In its Memorandum,67 PEA admits that –
 "Under the Public Land Act (CA 141, as amended), reclaimed lands are classified as alienable and
disposable lands of the public domain:
'Sec. 59. The lands disposable under this title shall be classified as follows:
(a) Lands reclaimed by the government by dredging, filling, or other means;
x x x.'" (Emphasis supplied)
Likewise, the Legal Task Force68 constituted under Presidential Administrative Order No. 365 admitted in its Report and
Recommendation to then President Fidel V. Ramos, "[R]eclaimed lands are classified as alienable and disposable
lands of the public domain."69 The Legal Task Force concluded that –
"D. Conclusion
Reclaimed lands are lands of the public domain. However, by statutory authority, the rights of ownership and
disposition over reclaimed lands have been transferred to PEA, by virtue of which PEA, as owner, may validly
convey the same to any qualified person without violating the Constitution or any statute.
The constitutional provision prohibiting private corporations from holding public land, except by lease (Sec. 3, Art.
XVII,70 1987 Constitution), does not apply to reclaimed lands whose ownership has passed on to PEA by statutory
grant."
Under Section 2, Article XII of the 1987 Constitution, the foreshore and submerged areas of Manila Bay are part of the
"lands of the public domain, waters x x x and other natural resources" and consequently "owned by the State." As such,
foreshore and submerged areas "shall not be alienated," unless they are classified as "agricultural lands" of the public
domain. The mere reclamation of these areas by PEA does not convert these inalienable natural resources of the State
into alienable or disposable lands of the public domain. There must be a law or presidential proclamation officially
classifying these reclaimed lands as alienable or disposable and open to disposition or concession. Moreover, these
reclaimed lands cannot be classified as alienable or disposable if the law has reserved them for some public or quasi-
public use.71
Section 8 of CA No. 141 provides that "only those lands shall be declared open to disposition or concession which have
been officially delimited and classified."72 The President has the authority to classify inalienable lands of the public
domain into alienable or disposable lands of the public domain, pursuant to Section 6 of CA No. 141. In Laurel vs.
Garcia,73 the Executive Department attempted to sell the Roppongi property in Tokyo, Japan, which was acquired by the
Philippine Government for use as the Chancery of the Philippine Embassy. Although the Chancery had transferred to
another location thirteen years earlier, the Court still ruled that, under Article 42274 of the Civil Code, a property of public
dominion retains such character until formally declared otherwise. The Court ruled that –
"The fact that the Roppongi site has not been used for a long time for actual Embassy service does not
automatically convert it to patrimonial property. Any such conversion happens only if the property is withdrawn
from public use (Cebu Oxygen and Acetylene Co. v. Bercilles, 66 SCRA 481 [1975]. A property continues to be
part of the public domain, not available for private appropriation or ownership 'until there is a formal
declaration on the part of the government to withdraw it from being such' (Ignacio v. Director of Lands, 108
Phil. 335 [1960]." (Emphasis supplied)
PD No. 1085, issued on February 4, 1977, authorized the issuance of special land patents for lands reclaimed by PEA
from the foreshore or submerged areas of Manila Bay. On January 19, 1988 then President Corazon C. Aquino issued
Special Patent No. 3517 in the name of PEA for the 157.84 hectares comprising the partially reclaimed Freedom Islands.
Subsequently, on April 9, 1999 the Register of Deeds of the Municipality of Paranaque issued TCT Nos. 7309, 7311 and
7312 in the name of PEA pursuant to Section 103 of PD No. 1529 authorizing the issuance of certificates of title
corresponding to land patents. To this day, these certificates of title are still in the name of PEA.
PD No. 1085, coupled with President Aquino's actual issuance of a special patent covering the Freedom Islands, is
equivalent to an official proclamation classifying the Freedom Islands as alienable or disposable lands of the public
domain. PD No. 1085 and President Aquino's issuance of a land patent also constitute a declaration that the Freedom
Islands are no longer needed for public service. The Freedom Islands are thus alienable or disposable lands of the
public domain, open to disposition or concession to qualified parties.
At the time then President Aquino issued Special Patent No. 3517, PEA had already reclaimed the Freedom Islands
although subsequently there were partial erosions on some areas. The government had also completed the necessary
surveys on these islands. Thus, the Freedom Islands were no longer part of Manila Bay but part of the land mass. Section
3, Article XII of the 1987 Constitution classifies lands of the public domain into "agricultural, forest or timber, mineral lands,
and national parks." Being neither timber, mineral, nor national park lands, the reclaimed Freedom Islands necessarily fall
under the classification of agricultural lands of the public domain. Under the 1987 Constitution, agricultural lands of the
public domain are the only natural resources that the State may alienate to qualified private parties. All other natural
resources, such as the seas or bays, are "waters x x x owned by the State" forming part of the public domain, and are
inalienable pursuant to Section 2, Article XII of the 1987 Constitution.
AMARI claims that the Freedom Islands are private lands because CDCP, then a private corporation, reclaimed the
islands under a contract dated November 20, 1973 with the Commissioner of Public Highways. AMARI, citing Article 5 of
the Spanish Law of Waters of 1866, argues that "if the ownership of reclaimed lands may be given to the party
constructing the works, then it cannot be said that reclaimed lands are lands of the public domain which the State may not
alienate."75 Article 5 of the Spanish Law of Waters reads as follows:
 "Article 5. Lands reclaimed from the sea in consequence of works constructed by the State, or by the provinces,
pueblos or private persons, with proper permission, shall become the property of the party constructing such
works, unless otherwise provided by the terms of the grant of authority." (Emphasis supplied)
Under Article 5 of the Spanish Law of Waters of 1866, private parties could reclaim from the sea only with "proper
permission" from the State. Private parties could own the reclaimed land only if not "otherwise provided by the terms of
the grant of authority." This clearly meant that no one could reclaim from the sea without permission from the State
because the sea is property of public dominion. It also meant that the State could grant or withhold ownership of the
reclaimed land because any reclaimed land, like the sea from which it emerged, belonged to the State. Thus, a private
person reclaiming from the sea without permission from the State could not acquire ownership of the reclaimed land which
would remain property of public dominion like the sea it replaced. 76 Article 5 of the Spanish Law of Waters of 1866
adopted the time-honored principle of land ownership that "all lands that were not acquired from the government, either by
purchase or by grant, belong to the public domain."77
Article 5 of the Spanish Law of Waters must be read together with laws subsequently enacted on the disposition of public
lands. In particular, CA No. 141 requires that lands of the public domain must first be classified as alienable or disposable
before the government can alienate them. These lands must not be reserved for public or quasi-public
purposes.78 Moreover, the contract between CDCP and the government was executed after the effectivity of the 1973
Constitution which barred private corporations from acquiring any kind of alienable land of the public domain. This
contract could not have converted the Freedom Islands into private lands of a private corporation.
Presidential Decree No. 3-A, issued on January 11, 1973, revoked all laws authorizing the reclamation of areas under
water and revested solely in the National Government the power to reclaim lands. Section 1 of PD No. 3-A declared that –
"The provisions of any law to the contrary notwithstanding, the reclamation of areas under water, whether
foreshore or inland, shall be limited to the National Government or any person authorized by it under a
proper contract. (Emphasis supplied)
x x x."
PD No. 3-A repealed Section 5 of the Spanish Law of Waters of 1866 because reclamation of areas under water could
now be undertaken only by the National Government or by a person contracted by the National Government. Private
parties may reclaim from the sea only under a contract with the National Government, and no longer by grant or
permission as provided in Section 5 of the Spanish Law of Waters of 1866.
Executive Order No. 525, issued on February 14, 1979, designated PEA as the National Government's implementing arm
to undertake "all reclamation projects of the government," which "shall be undertaken by the PEA or through a proper
contract executed by it with any person or entity." Under such contract, a private party receives compensation for
reclamation services rendered to PEA. Payment to the contractor may be in cash, or in kind consisting of portions of the
reclaimed land, subject to the constitutional ban on private corporations from acquiring alienable lands of the public
domain. The reclaimed land can be used as payment in kind only if the reclaimed land is first classified as alienable or
disposable land open to disposition, and then declared no longer needed for public service.
The Amended JVA covers not only the Freedom Islands, but also an additional 592.15 hectares which are still submerged
and forming part of Manila Bay. There is no legislative or Presidential act classifying these submerged areas as
alienable or disposable lands of the public domain open to disposition. These submerged areas are not covered by
any patent or certificate of title. There can be no dispute that these submerged areas form part of the public domain, and
in their present state are inalienable and outside the commerce of man. Until reclaimed from the sea, these
submerged areas are, under the Constitution, "waters x x x owned by the State," forming part of the public domain and
consequently inalienable. Only when actually reclaimed from the sea can these submerged areas be classified as public
agricultural lands, which under the Constitution are the only natural resources that the State may alienate. Once reclaimed
and transformed into public agricultural lands, the government may then officially classify these lands as alienable or
disposable lands open to disposition. Thereafter, the government may declare these lands no longer needed for public
service. Only then can these reclaimed lands be considered alienable or disposable lands of the public domain and within
the commerce of man.
The classification of PEA's reclaimed foreshore and submerged lands into alienable or disposable lands open to
disposition is necessary because PEA is tasked under its charter to undertake public services that require the use of lands
of the public domain. Under Section 5 of PD No. 1084, the functions of PEA include the following: "[T]o own or operate
railroads, tramways and other kinds of land transportation, x x x; [T]o construct, maintain and operate such systems of
sanitary sewers as may be necessary; [T]o construct, maintain and operate such storm drains as may be necessary."
PEA is empowered to issue "rules and regulations as may be necessary for the proper use by private parties of any or all
of the highways, roads, utilities, buildings and/or any of its properties and to impose or collect fees or tolls for their
use." Thus, part of the reclaimed foreshore and submerged lands held by the PEA would actually be needed for public
use or service since many of the functions imposed on PEA by its charter constitute essential public services.
Moreover, Section 1 of Executive Order No. 525 provides that PEA "shall be primarily responsible for integrating,
directing, and coordinating all reclamation projects for and on behalf of the National Government." The same section also
states that "[A]ll reclamation projects shall be approved by the President upon recommendation of the PEA, and shall be
undertaken by the PEA or through a proper contract executed by it with any person or entity; x x x." Thus, under EO No.
525, in relation to PD No. 3-A and PD No.1084, PEA became the primary implementing agency of the National
Government to reclaim foreshore and submerged lands of the public domain. EO No. 525 recognized PEA as the
government entity "to undertake the reclamation of lands and ensure their maximum utilization in promoting public
welfare and interests."79 Since large portions of these reclaimed lands would obviously be needed for public service,
there must be a formal declaration segregating reclaimed lands no longer needed for public service from those still
needed for public service.1âwphi1.nêt
Section 3 of EO No. 525, by declaring that all lands reclaimed by PEA "shall belong to or be owned by the PEA," could not
automatically operate to classify inalienable lands into alienable or disposable lands of the public domain. Otherwise,
reclaimed foreshore and submerged lands of the public domain would automatically become alienable once reclaimed by
PEA, whether or not classified as alienable or disposable.
The Revised Administrative Code of 1987, a later law than either PD No. 1084 or EO No. 525, vests in the Department of
Environment and Natural Resources ("DENR" for brevity) the following powers and functions:
"Sec. 4. Powers and Functions. The Department shall:
(1) x x x
xxx
(4) Exercise supervision and control over forest lands, alienable and disposable public lands, mineral
resources and, in the process of exercising such control, impose appropriate taxes, fees, charges, rentals and
any such form of levy and collect such revenues for the exploration, development, utilization or gathering of such
resources;
xxx
(14) Promulgate rules, regulations and guidelines on the issuance of licenses, permits, concessions,
lease agreements and such other privileges concerning the development, exploration and utilization of
the country's marine, freshwater, and brackish water and over all aquatic resources of the country and
shall continue to oversee, supervise and police our natural resources; cancel or cause to cancel such
privileges upon failure, non-compliance or violations of any regulation, order, and for all other causes which are in
furtherance of the conservation of natural resources and supportive of the national interest;
(15) Exercise exclusive jurisdiction on the management and disposition of all lands of the public domain
and serve as the sole agency responsible for classification, sub-classification, surveying and titling of lands in
consultation with appropriate agencies."80 (Emphasis supplied)
As manager, conservator and overseer of the natural resources of the State, DENR exercises "supervision and control
over alienable and disposable public lands." DENR also exercises "exclusive jurisdiction on the management and
disposition of all lands of the public domain." Thus, DENR decides whether areas under water, like foreshore or
submerged areas of Manila Bay, should be reclaimed or not. This means that PEA needs authorization from DENR before
PEA can undertake reclamation projects in Manila Bay, or in any part of the country.
DENR also exercises exclusive jurisdiction over the disposition of all lands of the public domain. Hence, DENR decides
whether reclaimed lands of PEA should be classified as alienable under Sections 681 and 782 of CA No. 141. Once DENR
decides that the reclaimed lands should be so classified, it then recommends to the President the issuance of a
proclamation classifying the lands as alienable or disposable lands of the public domain open to disposition. We note that
then DENR Secretary Fulgencio S. Factoran, Jr. countersigned Special Patent No. 3517 in compliance with the Revised
Administrative Code and Sections 6 and 7 of CA No. 141.
In short, DENR is vested with the power to authorize the reclamation of areas under water, while PEA is vested with the
power to undertake the physical reclamation of areas under water, whether directly or through private contractors. DENR
is also empowered to classify lands of the public domain into alienable or disposable lands subject to the approval of the
President. On the other hand, PEA is tasked to develop, sell or lease the reclaimed alienable lands of the public domain.
Clearly, the mere physical act of reclamation by PEA of foreshore or submerged areas does not make the reclaimed lands
alienable or disposable lands of the public domain, much less patrimonial lands of PEA. Likewise, the mere transfer by the
National Government of lands of the public domain to PEA does not make the lands alienable or disposable lands of the
public domain, much less patrimonial lands of PEA.
Absent two official acts – a classification that these lands are alienable or disposable and open to disposition and a
declaration that these lands are not needed for public service, lands reclaimed by PEA remain inalienable lands of the
public domain. Only such an official classification and formal declaration can convert reclaimed lands into alienable or
disposable lands of the public domain, open to disposition under the Constitution, Title I and Title III83 of CA No. 141 and
other applicable laws.84
PEA's Authority to Sell Reclaimed Lands
PEA, like the Legal Task Force, argues that as alienable or disposable lands of the public domain, the reclaimed lands
shall be disposed of in accordance with CA No. 141, the Public Land Act. PEA, citing Section 60 of CA No. 141, admits
that reclaimed lands transferred to a branch or subdivision of the government "shall not be alienated, encumbered, or
otherwise disposed of in a manner affecting its title, except when authorized by Congress: x x x."85 (Emphasis by PEA)
In Laurel vs. Garcia,86 the Court cited Section 48 of the Revised Administrative Code of 1987, which states that –
"Sec. 48. Official Authorized to Convey Real Property. Whenever real property of the Government is authorized
by law to be conveyed, the deed of conveyance shall be executed in behalf of the government by the following:
x x x."
Thus, the Court concluded that a law is needed to convey any real property belonging to the Government. The Court
declared that -
 "It is not for the President to convey real property of the government on his or her own sole will. Any such
conveyance must be authorized and approved by a law enacted by the Congress. It requires executive and
legislative concurrence." (Emphasis supplied)
PEA contends that PD No. 1085 and EO No. 525 constitute the legislative authority allowing PEA to sell its reclaimed
lands. PD No. 1085, issued on February 4, 1977, provides that –
"The land reclaimed in the foreshore and offshore area of Manila Bay pursuant to the contract for the
reclamation and construction of the Manila-Cavite Coastal Road Project between the Republic of the Philippines
and the Construction and Development Corporation of the Philippines dated November 20, 1973 and/or any other
contract or reclamation covering the same area is hereby transferred, conveyed and assigned to the
ownership and administration of the Public Estates Authority established pursuant to PD No. 1084;
Provided, however, That the rights and interests of the Construction and Development Corporation of the
Philippines pursuant to the aforesaid contract shall be recognized and respected.
Henceforth, the Public Estates Authority shall exercise the rights and assume the obligations of the Republic of
the Philippines (Department of Public Highways) arising from, or incident to, the aforesaid contract between the
Republic of the Philippines and the Construction and Development Corporation of the Philippines.
In consideration of the foregoing transfer and assignment, the Public Estates Authority shall issue in favor of the
Republic of the Philippines the corresponding shares of stock in said entity with an issued value of said shares of
stock (which) shall be deemed fully paid and non-assessable.
The Secretary of Public Highways and the General Manager of the Public Estates Authority shall execute such
contracts or agreements, including appropriate agreements with the Construction and Development Corporation
of the Philippines, as may be necessary to implement the above.
Special land patent/patents shall be issued by the Secretary of Natural Resources in favor of the Public
Estates Authority without prejudice to the subsequent transfer to the contractor or his assignees of such
portion or portions of the land reclaimed or to be reclaimed as provided for in the above-mentioned
contract. On the basis of such patents, the Land Registration Commission shall issue the corresponding
certificate of title." (Emphasis supplied)
On the other hand, Section 3 of EO No. 525, issued on February 14, 1979, provides that -
"Sec. 3. All lands reclaimed by PEA shall belong to or be owned by the PEA which shall be responsible for its
administration, development, utilization or disposition in accordance with the provisions of Presidential Decree No.
1084. Any and all income that the PEA may derive from the sale, lease or use of reclaimed lands shall be used in
accordance with the provisions of Presidential Decree No. 1084."
There is no express authority under either PD No. 1085 or EO No. 525 for PEA to sell its reclaimed lands. PD No. 1085
merely transferred "ownership and administration" of lands reclaimed from Manila Bay to PEA, while EO No. 525 declared
that lands reclaimed by PEA "shall belong to or be owned by PEA." EO No. 525 expressly states that PEA should dispose
of its reclaimed lands "in accordance with the provisions of Presidential Decree No. 1084," the charter of PEA.
PEA's charter, however, expressly tasks PEA "to develop, improve, acquire, administer, deal in, subdivide, dispose, lease
and sell any and all kinds of lands x x x owned, managed, controlled and/or operated by the government."87(Emphasis
supplied) There is, therefore, legislative authority granted to PEA to sell its lands, whether patrimonial or alienable
lands of the public domain. PEA may sell to private parties its patrimonial propertiesin accordance with the PEA
charter free from constitutional limitations. The constitutional ban on private corporations from acquiring alienable lands of
the public domain does not apply to the sale of PEA's patrimonial lands.
PEA may also sell its alienable or disposable lands of the public domain to private individuals since, with the
legislative authority, there is no longer any statutory prohibition against such sales and the constitutional ban does not
apply to individuals. PEA, however, cannot sell any of its alienable or disposable lands of the public domain to private
corporations since Section 3, Article XII of the 1987 Constitution expressly prohibits such sales. The legislative authority
benefits only individuals. Private corporations remain barred from acquiring any kind of alienable land of the public
domain, including government reclaimed lands.
The provision in PD No. 1085 stating that portions of the reclaimed lands could be transferred by PEA to the "contractor or
his assignees" (Emphasis supplied) would not apply to private corporations but only to individuals because of the
constitutional ban. Otherwise, the provisions of PD No. 1085 would violate both the 1973 and 1987 Constitutions.
The requirement of public auction in the sale of reclaimed lands
Assuming the reclaimed lands of PEA are classified as alienable or disposable lands open to disposition, and further
declared no longer needed for public service, PEA would have to conduct a public bidding in selling or leasing these
lands. PEA must observe the provisions of Sections 63 and 67 of CA No. 141 requiring public auction, in the absence of a
law exempting PEA from holding a public auction.88 Special Patent No. 3517 expressly states that the patent is issued by
authority of the Constitution and PD No. 1084, "supplemented by Commonwealth Act No. 141, as amended." This is an
acknowledgment that the provisions of CA No. 141 apply to the disposition of reclaimed alienable lands of the public
domain unless otherwise provided by law. Executive Order No. 654, 89 which authorizes PEA "to determine the kind and
manner of payment for the transfer" of its assets and properties, does not exempt PEA from the requirement of public
auction. EO No. 654 merely authorizes PEA to decide the mode of payment, whether in kind and in installment, but does
not authorize PEA to dispense with public auction.
Moreover, under Section 79 of PD No. 1445, otherwise known as the Government Auditing Code, the government is
required to sell valuable government property through public bidding. Section 79 of PD No. 1445 mandates that –
"Section 79. When government property has become unserviceable for any cause, or is no longer needed, it
shall, upon application of the officer accountable therefor, be inspected by the head of the agency or his duly
authorized representative in the presence of the auditor concerned and, if found to be valueless or unsaleable, it
may be destroyed in their presence. If found to be valuable, it may be sold at public auction to the highest
bidder under the supervision of the proper committee on award or similar body in the presence of the auditor
concerned or other authorized representative of the Commission, after advertising by printed notice in the
Official Gazette, or for not less than three consecutive days in any newspaper of general circulation, or
where the value of the property does not warrant the expense of publication, by notices posted for a like period in
at least three public places in the locality where the property is to be sold. In the event that the public auction
fails, the property may be sold at a private sale at such price as may be fixed by the same committee or
body concerned and approved by the Commission."
It is only when the public auction fails that a negotiated sale is allowed, in which case the Commission on Audit must
approve the selling price.90 The Commission on Audit implements Section 79 of the Government Auditing Code through
Circular No. 89-29691 dated January 27, 1989. This circular emphasizes that government assets must be disposed of only
through public auction, and a negotiated sale can be resorted to only in case of "failure of public auction."
At the public auction sale, only Philippine citizens are qualified to bid for PEA's reclaimed foreshore and submerged
alienable lands of the public domain. Private corporations are barred from bidding at the auction sale of any kind of
alienable land of the public domain.
PEA originally scheduled a public bidding for the Freedom Islands on December 10, 1991. PEA imposed a condition that
the winning bidder should reclaim another 250 hectares of submerged areas to regularize the shape of the Freedom
Islands, under a 60-40 sharing of the additional reclaimed areas in favor of the winning bidder. 92 No one, however,
submitted a bid. On December 23, 1994, the Government Corporate Counsel advised PEA it could sell the Freedom
Islands through negotiation, without need of another public bidding, because of the failure of the public bidding on
December 10, 1991.93
However, the original JVA dated April 25, 1995 covered not only the Freedom Islands and the additional 250 hectares still
to be reclaimed, it also granted an option to AMARI to reclaim another 350 hectares. The original JVA, a negotiated
contract, enlarged the reclamation area to 750 hectares.94 The failure of public bidding on December 10, 1991, involving
only 407.84 hectares,95 is not a valid justification for a negotiated sale of 750 hectares, almost double the area publicly
auctioned. Besides, the failure of public bidding happened on December 10, 1991, more than three years before the
signing of the original JVA on April 25, 1995. The economic situation in the country had greatly improved during the
intervening period.
Reclamation under the BOT Law and the Local Government Code
The constitutional prohibition in Section 3, Article XII of the 1987 Constitution is absolute and clear: "Private corporations
or associations may not hold such alienable lands of the public domain except by lease, x x x." Even Republic Act No.
6957 ("BOT Law," for brevity), cited by PEA and AMARI as legislative authority to sell reclaimed lands to private parties,
recognizes the constitutional ban. Section 6 of RA No. 6957 states –
"Sec. 6. Repayment Scheme. - For the financing, construction, operation and maintenance of any infrastructure
projects undertaken through the build-operate-and-transfer arrangement or any of its variations pursuant to the
provisions of this Act, the project proponent x x x may likewise be repaid in the form of a share in the revenue of
the project or other non-monetary payments, such as, but not limited to, the grant of a portion or percentage of the
reclaimed land, subject to the constitutional requirements with respect to the ownership of the land: x x x."
(Emphasis supplied)
A private corporation, even one that undertakes the physical reclamation of a government BOT project, cannot acquire
reclaimed alienable lands of the public domain in view of the constitutional ban.
Section 302 of the Local Government Code, also mentioned by PEA and AMARI, authorizes local governments in land
reclamation projects to pay the contractor or developer in kind consisting of a percentage of the reclaimed land, to wit:
"Section 302. Financing, Construction, Maintenance, Operation, and Management of Infrastructure Projects by
the Private Sector. x x x
xxx
In case of land reclamation or construction of industrial estates, the repayment plan may consist of the grant of a
portion or percentage of the reclaimed land or the industrial estate constructed."
Although Section 302 of the Local Government Code does not contain a proviso similar to that of the BOT Law, the
constitutional restrictions on land ownership automatically apply even though not expressly mentioned in the Local
Government Code.
Thus, under either the BOT Law or the Local Government Code, the contractor or developer, if a corporate entity, can
only be paid with leaseholds on portions of the reclaimed land. If the contractor or developer is an individual, portions of
the reclaimed land, not exceeding 12 hectares96 of non-agricultural lands, may be conveyed to him in ownership in view of
the legislative authority allowing such conveyance. This is the only way these provisions of the BOT Law and the Local
Government Code can avoid a direct collision with Section 3, Article XII of the 1987 Constitution.
Registration of lands of the public domain
Finally, PEA theorizes that the "act of conveying the ownership of the reclaimed lands to public respondent PEA
transformed such lands of the public domain to private lands." This theory is echoed by AMARI which maintains that the
"issuance of the special patent leading to the eventual issuance of title takes the subject land away from the land of public
domain and converts the property into patrimonial or private property." In short, PEA and AMARI contend that with the
issuance of Special Patent No. 3517 and the corresponding certificates of titles, the 157.84 hectares comprising the
Freedom Islands have become private lands of PEA. In support of their theory, PEA and AMARI cite the following rulings
of the Court:
1. Sumail v. Judge of CFI of Cotabato,97 where the Court held –
"Once the patent was granted and the corresponding certificate of title was issued, the land ceased to be part of
the public domain and became private property over which the Director of Lands has neither control nor
jurisdiction."
2. Lee Hong Hok v. David,98 where the Court declared -
"After the registration and issuance of the certificate and duplicate certificate of title based on a public land patent,
the land covered thereby automatically comes under the operation of Republic Act 496 subject to all the
safeguards provided therein."3. Heirs of Gregorio Tengco v. Heirs of Jose Aliwalas,99 where the Court ruled -
"While the Director of Lands has the power to review homestead patents, he may do so only so long as the land
remains part of the public domain and continues to be under his exclusive control; but once the patent is
registered and a certificate of title is issued, the land ceases to be part of the public domain and becomes private
property over which the Director of Lands has neither control nor jurisdiction."
4. Manalo v. Intermediate Appellate Court,100 where the Court held –
"When the lots in dispute were certified as disposable on May 19, 1971, and free patents were issued covering
the same in favor of the private respondents, the said lots ceased to be part of the public domain and, therefore,
the Director of Lands lost jurisdiction over the same."
5.Republic v. Court of Appeals,101 where the Court stated –
"Proclamation No. 350, dated October 9, 1956, of President Magsaysay legally effected a land grant to the
Mindanao Medical Center, Bureau of Medical Services, Department of Health, of the whole lot, validly sufficient
for initial registration under the Land Registration Act. Such land grant is constitutive of a 'fee simple' title or
absolute title in favor of petitioner Mindanao Medical Center. Thus, Section 122 of the Act, which governs the
registration of grants or patents involving public lands, provides that 'Whenever public lands in the Philippine
Islands belonging to the Government of the United States or to the Government of the Philippines are alienated,
granted or conveyed to persons or to public or private corporations, the same shall be brought forthwith under the
operation of this Act (Land Registration Act, Act 496) and shall become registered lands.'"
The first four cases cited involve petitions to cancel the land patents and the corresponding certificates of titles issued to
private parties. These four cases uniformly hold that the Director of Lands has no jurisdiction over private lands or that
upon issuance of the certificate of title the land automatically comes under the Torrens System. The fifth case cited
involves the registration under the Torrens System of a 12.8-hectare public land granted by the National Government to
Mindanao Medical Center, a government unit under the Department of Health. The National Government transferred the
12.8-hectare public land to serve as the site for the hospital buildings and other facilities of Mindanao Medical Center,
which performed a public service. The Court affirmed the registration of the 12.8-hectare public land in the name of
Mindanao Medical Center under Section 122 of Act No. 496. This fifth case is an example of a public land being
registered under Act No. 496 without the land losing its character as a property of public dominion.
In the instant case, the only patent and certificates of title issued are those in the name of PEA, a wholly government
owned corporation performing public as well as proprietary functions. No patent or certificate of title has been issued to
any private party. No one is asking the Director of Lands to cancel PEA's patent or certificates of title. In fact, the thrust of
the instant petition is that PEA's certificates of title should remain with PEA, and the land covered by these certificates,
being alienable lands of the public domain, should not be sold to a private corporation.
Registration of land under Act No. 496 or PD No. 1529 does not vest in the registrant private or public ownership of the
land. Registration is not a mode of acquiring ownership but is merely evidence of ownership previously conferred by any
of the recognized modes of acquiring ownership. Registration does not give the registrant a better right than what the
registrant had prior to the registration.102 The registration of lands of the public domain under the Torrens system, by itself,
cannot convert public lands into private lands.103
Jurisprudence holding that upon the grant of the patent or issuance of the certificate of title the alienable land of the public
domain automatically becomes private land cannot apply to government units and entities like PEA. The transfer of the
Freedom Islands to PEA was made subject to the provisions of CA No. 141 as expressly stated in Special Patent No.
3517 issued by then President Aquino, to wit:
"NOW, THEREFORE, KNOW YE, that by authority of the Constitution of the Philippines and in conformity with the
provisions of Presidential Decree No. 1084, supplemented by Commonwealth Act No. 141, as amended, there
are hereby granted and conveyed unto the Public Estates Authority the aforesaid tracts of land containing a total
area of one million nine hundred fifteen thousand eight hundred ninety four (1,915,894) square meters; the
technical description of which are hereto attached and made an integral part hereof." (Emphasis supplied)
Thus, the provisions of CA No. 141 apply to the Freedom Islands on matters not covered by PD No. 1084. Section 60 of
CA No. 141 prohibits, "except when authorized by Congress," the sale of alienable lands of the public domain that are
transferred to government units or entities. Section 60 of CA No. 141 constitutes, under Section 44 of PD No. 1529, a
"statutory lien affecting title" of the registered land even if not annotated on the certificate of title.104Alienable lands of the
public domain held by government entities under Section 60 of CA No. 141 remain public lands because they cannot be
alienated or encumbered unless Congress passes a law authorizing their disposition. Congress, however, cannot
authorize the sale to private corporations of reclaimed alienable lands of the public domain because of the constitutional
ban. Only individuals can benefit from such law.
The grant of legislative authority to sell public lands in accordance with Section 60 of CA No. 141 does not automatically
convert alienable lands of the public domain into private or patrimonial lands. The alienable lands of the public domain
must be transferred to qualified private parties, or to government entities not tasked to dispose of public lands, before
these lands can become private or patrimonial lands. Otherwise, the constitutional ban will become illusory if Congress
can declare lands of the public domain as private or patrimonial lands in the hands of a government agency tasked to
dispose of public lands. This will allow private corporations to acquire directly from government agencies limitless areas of
lands which, prior to such law, are concededly public lands.
Under EO No. 525, PEA became the central implementing agency of the National Government to reclaim foreshore and
submerged areas of the public domain. Thus, EO No. 525 declares that –
"EXECUTIVE ORDER NO. 525
Designating the Public Estates Authority as the Agency Primarily Responsible for all Reclamation Projects
Whereas, there are several reclamation projects which are ongoing or being proposed to be undertaken in various
parts of the country which need to be evaluated for consistency with national programs;
Whereas, there is a need to give further institutional support to the Government's declared policy to provide for a
coordinated, economical and efficient reclamation of lands;
Whereas, Presidential Decree No. 3-A requires that all reclamation of areas shall be limited to the National
Government or any person authorized by it under proper contract;
Whereas, a central authority is needed to act on behalf of the National Government which shall ensure a
coordinated and integrated approach in the reclamation of lands;
Whereas, Presidential Decree No. 1084 creates the Public Estates Authority as a government corporation
to undertake reclamation of lands and ensure their maximum utilization in promoting public welfare and
interests; and
Whereas, Presidential Decree No. 1416 provides the President with continuing authority to reorganize the
national government including the transfer, abolition, or merger of functions and offices.
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the powers vested in
me by the Constitution and pursuant to Presidential Decree No. 1416, do hereby order and direct the following:
Section 1. The Public Estates Authority (PEA) shall be primarily responsible for integrating, directing, and
coordinating all reclamation projects for and on behalf of the National Government. All reclamation projects
shall be approved by the President upon recommendation of the PEA, and shall be undertaken by the PEA or
through a proper contract executed by it with any person or entity; Provided, that, reclamation projects of any
national government agency or entity authorized under its charter shall be undertaken in consultation with the
PEA upon approval of the President.
x x x ."
As the central implementing agency tasked to undertake reclamation projects nationwide, with authority to sell reclaimed
lands, PEA took the place of DENR as the government agency charged with leasing or selling reclaimed lands of the
public domain. The reclaimed lands being leased or sold by PEA are not private lands, in the same manner that DENR,
when it disposes of other alienable lands, does not dispose of private lands but alienable lands of the public domain. Only
when qualified private parties acquire these lands will the lands become private lands. In the hands of the government
agency tasked and authorized to dispose of alienable of disposable lands of the public domain, these lands are
still public, not private lands.
Furthermore, PEA's charter expressly states that PEA "shall hold lands of the public domain" as well as "any and all
kinds of lands." PEA can hold both lands of the public domain and private lands. Thus, the mere fact that alienable lands
of the public domain like the Freedom Islands are transferred to PEA and issued land patents or certificates of title in
PEA's name does not automatically make such lands private.
To allow vast areas of reclaimed lands of the public domain to be transferred to PEA as private lands will sanction a gross
violation of the constitutional ban on private corporations from acquiring any kind of alienable land of the public domain.
PEA will simply turn around, as PEA has now done under the Amended JVA, and transfer several hundreds of
hectares of these reclaimed and still to be reclaimed lands to a single private corporation in only one transaction. This
scheme will effectively nullify the constitutional ban in Section 3, Article XII of the 1987 Constitution which was intended to
diffuse equitably the ownership of alienable lands of the public domain among Filipinos, now numbering over 80 million
strong.
This scheme, if allowed, can even be applied to alienable agricultural lands of the public domain since PEA can "acquire x
x x any and all kinds of lands." This will open the floodgates to corporations and even individuals acquiring hundreds of
hectares of alienable lands of the public domain under the guise that in the hands of PEA these lands are private lands.
This will result in corporations amassing huge landholdings never before seen in this country - creating the very evil that
the constitutional ban was designed to prevent. This will completely reverse the clear direction of constitutional
development in this country. The 1935 Constitution allowed private corporations to acquire not more than 1,024 hectares
of public lands.105 The 1973 Constitution prohibited private corporations from acquiring any kind of public land, and the
1987 Constitution has unequivocally reiterated this prohibition.
The contention of PEA and AMARI that public lands, once registered under Act No. 496 or PD No. 1529, automatically
become private lands is contrary to existing laws. Several laws authorize lands of the public domain to be registered
under the Torrens System or Act No. 496, now PD No. 1529, without losing their character as public lands. Section 122 of
Act No. 496, and Section 103 of PD No. 1529, respectively, provide as follows:
Act No. 496
"Sec. 122. Whenever public lands in the Philippine Islands belonging to the x x x Government of the Philippine
Islands are alienated, granted, or conveyed to persons or the public or private corporations, the same shall be
brought forthwith under the operation of this Act and shall become registered lands."
PD No. 1529
"Sec. 103. Certificate of Title to Patents. Whenever public land is by the Government alienated, granted or
conveyed to any person, the same shall be brought forthwith under the operation of this Decree." (Emphasis
supplied)
Based on its legislative history, the phrase "conveyed to any person" in Section 103 of PD No. 1529 includes
conveyances of public lands to public corporations.
Alienable lands of the public domain "granted, donated, or transferred to a province, municipality, or branch or subdivision
of the Government," as provided in Section 60 of CA No. 141, may be registered under the Torrens System pursuant to
Section 103 of PD No. 1529. Such registration, however, is expressly subject to the condition in Section 60 of CA No. 141
that the land "shall not be alienated, encumbered or otherwise disposed of in a manner affecting its title, except when
authorized by Congress." This provision refers to government reclaimed, foreshore and marshy lands of the public
domain that have been titled but still cannot be alienated or encumbered unless expressly authorized by Congress. The
need for legislative authority prevents the registered land of the public domain from becoming private land that can be
disposed of to qualified private parties.
The Revised Administrative Code of 1987 also recognizes that lands of the public domain may be registered under the
Torrens System. Section 48, Chapter 12, Book I of the Code states –
"Sec. 48. Official Authorized to Convey Real Property. Whenever real property of the Government is authorized
by law to be conveyed, the deed of conveyance shall be executed in behalf of the government by the following:
(1) x x x
(2) For property belonging to the Republic of the Philippines, but titled in the name of any political
subdivision or of any corporate agency or instrumentality, by the executive head of the agency or
instrumentality." (Emphasis supplied)
Thus, private property purchased by the National Government for expansion of a public wharf may be titled in the name of
a government corporation regulating port operations in the country. Private property purchased by the National
Government for expansion of an airport may also be titled in the name of the government agency tasked to administer the
airport. Private property donated to a municipality for use as a town plaza or public school site may likewise be titled in the
name of the municipality.106 All these properties become properties of the public domain, and if already registered under
Act No. 496 or PD No. 1529, remain registered land. There is no requirement or provision in any existing law for the de-
registration of land from the Torrens System.
Private lands taken by the Government for public use under its power of eminent domain become unquestionably part of
the public domain. Nevertheless, Section 85 of PD No. 1529 authorizes the Register of Deeds to issue in the name of the
National Government new certificates of title covering such expropriated lands. Section 85 of PD No. 1529 states –
"Sec. 85. Land taken by eminent domain. Whenever any registered land, or interest therein, is expropriated or
taken by eminent domain, the National Government, province, city or municipality, or any other agency or
instrumentality exercising such right shall file for registration in the proper Registry a certified copy of the
judgment which shall state definitely by an adequate description, the particular property or interest expropriated,
the number of the certificate of title, and the nature of the public use. A memorandum of the right or interest taken
shall be made on each certificate of title by the Register of Deeds, and where the fee simple is taken, a new
certificate shall be issued in favor of the National Government, province, city, municipality, or any other
agency or instrumentality exercising such right for the land so taken. The legal expenses incident to the
memorandum of registration or issuance of a new certificate of title shall be for the account of the authority taking
the land or interest therein." (Emphasis supplied)
Consequently, lands registered under Act No. 496 or PD No. 1529 are not exclusively private or patrimonial lands. Lands
of the public domain may also be registered pursuant to existing laws.
AMARI makes a parting shot that the Amended JVA is not a sale to AMARI of the Freedom Islands or of the lands to be
reclaimed from submerged areas of Manila Bay. In the words of AMARI, the Amended JVA "is not a sale but a joint
venture with a stipulation for reimbursement of the original cost incurred by PEA for the earlier reclamation and
construction works performed by the CDCP under its 1973 contract with the Republic." Whether the Amended JVA is a
sale or a joint venture, the fact remains that the Amended JVA requires PEA to "cause the issuance and delivery of the
certificates of title conveying AMARI's Land Share in the name of AMARI."107
This stipulation still contravenes Section 3, Article XII of the 1987 Constitution which provides that private corporations
"shall not hold such alienable lands of the public domain except by lease." The transfer of title and ownership to AMARI
clearly means that AMARI will "hold" the reclaimed lands other than by lease. The transfer of title and ownership is a
"disposition" of the reclaimed lands, a transaction considered a sale or alienation under CA No. 141, 108 the Government
Auditing Code,109 and Section 3, Article XII of the 1987 Constitution.
The Regalian doctrine is deeply implanted in our legal system. Foreshore and submerged areas form part of the public
domain and are inalienable. Lands reclaimed from foreshore and submerged areas also form part of the public domain
and are also inalienable, unless converted pursuant to law into alienable or disposable lands of the public domain.
Historically, lands reclaimed by the government are sui generis, not available for sale to private parties unlike other
alienable public lands. Reclaimed lands retain their inherent potential as areas for public use or public service. Alienable
lands of the public domain, increasingly becoming scarce natural resources, are to be distributed equitably among our
ever-growing population. To insure such equitable distribution, the 1973 and 1987 Constitutions have barred private
corporations from acquiring any kind of alienable land of the public domain. Those who attempt to dispose of inalienable
natural resources of the State, or seek to circumvent the constitutional ban on alienation of lands of the public domain to
private corporations, do so at their own risk.
We can now summarize our conclusions as follows:
1. The 157.84 hectares of reclaimed lands comprising the Freedom Islands, now covered by certificates of title in
the name of PEA, are alienable lands of the public domain. PEA may lease these lands to private corporations
but may not sell or transfer ownership of these lands to private corporations. PEA may only sell these lands to
Philippine citizens, subject to the ownership limitations in the 1987 Constitution and existing laws.
2. The 592.15 hectares of submerged areas of Manila Bay remain inalienable natural resources of the public
domain until classified as alienable or disposable lands open to disposition and declared no longer needed for
public service. The government can make such classification and declaration only after PEA has reclaimed these
submerged areas. Only then can these lands qualify as agricultural lands of the public domain, which are the only
natural resources the government can alienate. In their present state, the 592.15 hectares of submerged
areas are inalienable and outside the commerce of man.
3. Since the Amended JVA seeks to transfer to AMARI, a private corporation, ownership of 77.34 hectares110of
the Freedom Islands, such transfer is void for being contrary to Section 3, Article XII of the 1987 Constitution
which prohibits private corporations from acquiring any kind of alienable land of the public domain.
4. Since the Amended JVA also seeks to transfer to AMARI ownership of 290.156 hectares 111 of still submerged
areas of Manila Bay, such transfer is void for being contrary to Section 2, Article XII of the 1987 Constitution
which prohibits the alienation of natural resources other than agricultural lands of the public domain. PEA may
reclaim these submerged areas. Thereafter, the government can classify the reclaimed lands as alienable or
disposable, and further declare them no longer needed for public service. Still, the transfer of such reclaimed
alienable lands of the public domain to AMARI will be void in view of Section 3, Article XII of the 1987 Constitution
which prohibits private corporations from acquiring any kind of alienable land of the public domain.
Clearly, the Amended JVA violates glaringly Sections 2 and 3, Article XII of the 1987 Constitution. Under Article 1409 112 of
the Civil Code, contracts whose "object or purpose is contrary to law," or whose "object is outside the commerce of men,"
are "inexistent and void from the beginning." The Court must perform its duty to defend and uphold the Constitution, and
therefore declares the Amended JVA null and void ab initio.
Seventh issue: whether the Court is the proper forum to raise the issue of whether the Amended JVA is grossly
disadvantageous to the government.
Considering that the Amended JVA is null and void ab initio, there is no necessity to rule on this last issue. Besides, the
Court is not a trier of facts, and this last issue involves a determination of factual matters.
WHEREFORE, the petition is GRANTED. The Public Estates Authority and Amari Coastal Bay Development Corporation
are PERMANENTLY ENJOINED from implementing the Amended Joint Venture Agreement which is hereby
declared NULL and VOID ab initio.
SO ORDERED.

THE SECRETARY OF THE G.R. No. 167707

DEPARTMENT OF ENVIRONMENT
AND NATURAL RESOURCES, THE
REGIONAL EXECUTIVE Present:
DIRECTOR, DENR-REGION VI,
REGIONAL TECHNICAL PUNO, C.J.,
DIRECTOR FOR LANDS, QUISUMBING,
LANDS MANAGEMENT BUREAU, YNARES-SANTIAGO,
REGION VI PROVINCIAL CARPIO,
ENVIRONMENT AND NATURAL AUSTRIA-MARTINEZ,
RESOURCES OFFICER OF KALIBO, CORONA,*
AKLAN, REGISTER OF DEEDS, CARPIO MORALES,
DIRECTOR OF LAND AZCUNA,
REGISTRATION AUTHORITY, TINGA,
DEPARTMENT OF TOURISM CHICO-NAZARIO,
SECRETARY, DIRECTOR OF VELASCO, JR.,
PHILIPPINE TOURISM NACHURA,**
AUTHORITY, REYES,
Petitioners, LEONARDO-DE CASTRO, and
BRION, JJ.
- versus -

MAYOR JOSE S. YAP, LIBERTAD

TALAPIAN, MILA Y. SUMNDAD, and
ANICETO YAP, in their behalf and Promulgated:
in behalf of all those similarly situated,
Respondents. October 8, 2008

x--------------------------------------------------x

DR. ORLANDO SACAY and G.R. No. 173775

WILFREDO GELITO, joined by
THE LANDOWNERS OF
BORACAY SIMILARLY
SITUATED NAMED IN A LIST,
ANNEX A OF THIS PETITION,
Petitioners,

- versus -

THE SECRETARY OF THE

DEPARTMENT OF ENVIRONMENT
AND NATURAL RESOURCES, THE
REGIONAL TECHNICAL
DIRECTOR FOR LANDS, LANDS
MANAGEMENT BUREAU,
REGION VI, PROVINCIAL
ENVIRONMENT AND NATURAL
RESOURCES OFFICER, KALIBO,
AKLAN,
Respondents.

x--------------------------------------------------x

DECISION

REYES, R.T., J.:

AT stake in these consolidated cases is the right of the present occupants of Boracay Island to secure titles over
their occupied lands.

There are two consolidated petitions. The first is G.R. No. 167707, a petition for review on certiorari of the
Decision[1] of the Court of Appeals (CA) affirming that [2] of the Regional Trial Court (RTC) in Kalibo, Aklan, which granted
the petition for declaratory relief filed by respondents-claimants Mayor Jose Yap, et al. and ordered the survey of Boracay
for titling purposes. The second is G.R. No. 173775, a petition for prohibition, mandamus, and nullification of Proclamation
No. 1064[3] issued by President Gloria Macapagal-Arroyo classifying Boracay into reserved forest and agricultural land.
 The Antecedents

G.R. No. 167707

Boracay Island in the Municipality of Malay, Aklan, with its powdery white sand beaches and warm crystalline
waters, is reputedly a premier Philippine tourist destination. The island is also home to 12,003 inhabitants[4] who live in the
bone-shaped islands three barangays.[5]

On April 14, 1976, the Department of Environment and Natural Resources (DENR) approved the National
Reservation Survey of Boracay
Island,[6] which identified several lots as being occupied or claimed by named persons. [7]

On November 10, 1978, then President Ferdinand Marcos issued Proclamation

No. 1801[8] declaring Boracay Island, among other islands, caves and peninsulas in the Philippines, as tourist zones and
marine reserves under the administration of the Philippine Tourism Authority (PTA). President Marcos later approved the
issuance of PTA Circular 3-82[9] dated September 3, 1982, to implement Proclamation No. 1801.

Claiming that Proclamation No. 1801 and PTA Circular No 3-82 precluded them from filing an application for judicial
confirmation of imperfect title or survey of land for titling purposes, respondents-claimants
Mayor Jose S. Yap, Jr., Libertad Talapian, Mila Y. Sumndad, and Aniceto Yap filed a petition for declaratory relief with
the RTC in Kalibo, Aklan.

In their petition, respondents-claimants alleged that Proclamation No. 1801 and PTA Circular No. 3-82 raised
doubts on their right to secure titles over their occupied lands. They declared that they themselves, or through their
predecessors-in-interest, had been in open, continuous, exclusive, and notorious possession and occupation in Boracay
since June 12, 1945, or earlier since time immemorial. They declared their lands for tax purposes and paid realty taxes on
them.[10]

Respondents-claimants posited that Proclamation No. 1801 and its implementing Circular did not place Boracay
beyond the commerce of man. Since the Islandwas classified as a tourist zone, it was susceptible of private
ownership. Under Section 48(b) of Commonwealth Act (CA) No. 141, otherwise known as the Public Land Act, they had the
right to have the lots registered in their names through judicial confirmation of imperfect titles.

The Republic, through the Office of the Solicitor General (OSG), opposed the petition for declaratory
relief. The OSG countered that Boracay Island was an unclassified land of the public domain. It formed part of the mass
of lands classified as public forest, which was not available for disposition pursuant to Section 3(a) of Presidential Decree
(PD) No. 705 or the Revised Forestry Code,[11] as amended.
 The OSG maintained that respondents-claimants reliance on PD No. 1801 and PTA Circular No. 3-82 was
misplaced. Their right to judicial confirmation of title was governed by CA No. 141 and PD No.
705. Since Boracay Island had not been classified as alienable and disposable, whatever possession they had cannot ripen
into ownership.

During pre-trial, respondents-claimants and the OSG stipulated on the following facts: (1) respondents-claimants
were presently in possession of parcels of land in Boracay Island; (2) these parcels of land were planted with coconut trees
and other natural growing trees; (3) the coconut trees had heights of more or less twenty (20) meters and were planted
more or less fifty (50) years ago; and (4) respondents-claimants declared the land they were occupying for tax purposes.[12]

The parties also agreed that the principal issue for resolution was purely legal: whether Proclamation No. 1801
posed any legal hindrance or impediment to the titling of the lands in Boracay. They decided to forego with the trial and to
submit the case for resolution upon submission of their respective memoranda. [13]

The RTC took judicial notice[14] that certain parcels of land in Boracay Island, more particularly Lots 1 and 30,
Plan PSU-5344, were covered by Original Certificate of Title No. 19502 (RO 2222) in the name of the Heirs of Ciriaco S.
Tirol. These lots were involved in Civil Case Nos. 5222 and 5262 filed before
the RTCof Kalibo, Aklan.[15] The titles were issued on
August 7, 1933.[16]

RTC and CA Dispositions

On July 14, 1999, the RTC rendered a decision in favor of respondents-claimants, with a fallo reading:

WHEREFORE, in view of the foregoing, the Court declares that Proclamation No. 1801
and PTA Circular No. 3-82 pose no legal obstacle to the petitioners and those similarly situated to acquire
title to their lands in Boracay, in accordance with the applicable laws and in the manner prescribed therein;
and to have their lands surveyed and approved by respondent Regional Technical Director of Lands as the
approved survey does not in itself constitute a title to the land.

SO ORDERED.[17]

The RTC upheld respondents-claimants right to have their occupied lands titled in their name. It ruled that neither
Proclamation No. 1801 nor PTA Circular No. 3-82 mentioned that lands in Boracay were inalienable or could not be the
subject of disposition.[18] The Circular itself recognized private ownership of lands.[19]The trial court cited Sections 87[20] and
53[21] of the Public Land Act as basis for acknowledging private ownership of lands in Boracay and that only those forested
areas in public lands were declared as part of the forest reserve.[22]

The OSG moved for reconsideration but its motion was denied.[23] The Republic then appealed to the CA.

On December 9, 2004, the appellate court affirmed in toto the RTC decision, disposing as follows:
 WHEREFORE, in view of the foregoing premises, judgment is hereby rendered by us DENYING
the appeal filed in this case and AFFIRMING the decision of the lower court. [24]

The CA held that respondents-claimants could not be prejudiced by a declaration that the lands they occupied since
time immemorial were part of a forest reserve.

Again, the OSG sought reconsideration but it was similarly denied.[25] Hence, the present petition under Rule 45.

G.R. No. 173775

On May 22, 2006, during the pendency of G.R. No. 167707, President Gloria Macapagal-Arroyo issued Proclamation No.
1064[26] classifying Boracay Island into four hundred (400) hectares of reserved forest land (protection purposes) and six
hundred twenty-eight and 96/100 (628.96) hectares of agricultural land (alienable and disposable). The Proclamation
likewise provided for a fifteen-meter buffer zone on each side of the centerline of roads and trails, reserved for right-of-way
and which shall form part of the area reserved for forest land protection purposes.

On August 10, 2006, petitioners-claimants Dr. Orlando Sacay,[27] Wilfredo Gelito,[28] and other landowners[29] in
Boracay filed with this Court an original petition for prohibition, mandamus, and nullification of Proclamation No.
1064.[30] They allege that the Proclamation infringed on their prior vested rights over portions of Boracay. They have been
in continued possession of their respective lots in Boracay since time immemorial. They have also invested billions of pesos
in developing their lands and building internationally renowned first class resorts on their lots.[31]

Petitioners-claimants contended that there is no need for a proclamation reclassifying Boracay into agricultural
land. Being classified as neither mineral nor timber land, the island is deemed agricultural pursuant to the Philippine Bill of
1902 and Act No. 926, known as the first Public Land Act.[32] Thus, their possession in the concept of owner for the required
period entitled them to judicial confirmation of imperfect title.

Opposing the petition, the OSG argued that petitioners-claimants do not have a vested right over their occupied
portions in the island. Boracay is an unclassified public forest land pursuant to Section 3(a) of PD No. 705. Being public
forest, the claimed portions of the island are inalienable and cannot be the subject of judicial confirmation of imperfect title. It
is only the executive department, not the courts, which has authority to reclassify lands of the public domain into alienable
and disposable lands. There is a need for a positive government act in order to release the lots for disposition.

On November 21, 2006, this Court ordered the consolidation of the two petitions as they principally involve the
same issues on the land classification of Boracay Island.[33]

Issues
 G.R. No. 167707

The OSG raises the lone issue of whether Proclamation No. 1801 and PTA Circular No. 3-82 pose any legal
obstacle for respondents, and all those similarly situated, to acquire title to their occupied lands in Boracay Island.[34]

G.R. No. 173775

Petitioners-claimants hoist five (5) issues, namely:

I.
AT THE TIME OF THE ESTABLISHED POSSESSION OF PETITIONERS IN CONCEPT OF OWNER
OVER THEIR RESPECTIVE AREAS IN BORACAY, SINCE TIME IMMEMORIAL OR AT THE LATEST
SINCE 30 YRS. PRIOR TO THE FILING OF THE PETITION FOR DECLARATORY RELIEF ON NOV. 19,
1997, WERE THE AREAS OCCUPIED BY THEM PUBLIC AGRICULTURAL LANDS AS DEFINED
BY LAWS THEN ON JUDICIAL CONFIRMATION OF IMPERFECT TITLES OR PUBLIC FOREST AS
DEFINED BY SEC. 3a, PD 705?

II.
HAVE PETITIONERS OCCUPANTS ACQUIRED PRIOR VESTED RIGHT OF PRIVATE
OWNERSHIP OVER THEIR OCCUPIED PORTIONS OF BORACAY LAND, DESPITE THE FACT THAT
THEY HAVE NOT APPLIED YET FOR JUDICIAL CONFIRMATION OF IMPERFECT TITLE?

III.
IS THE EXECUTIVE DECLARATION OF THEIR AREAS AS
ALIENABLE AND DISPOSABLE UNDER SEC 6, CA 141 [AN] INDISPENSABLE PRE-REQUISITE FOR
PETITIONERS TO OBTAIN TITLE UNDER THE TORRENS SYSTEM?

IV.
IS THE ISSUANCE OF PROCLAMATION 1064 ON MAY 22, 2006, VIOLATIVE OF THE PRIOR VESTED
RIGHTS TO PRIVATE OWNERSHIP OF PETITIONERS OVER THEIR LANDS IN BORACAY,
PROTECTED BY THE DUE PROCESS CLAUSE OF THE CONSTITUTION OR IS PROCLAMATION 1064
CONTRARY TO SEC. 8, CA 141, OR SEC. 4(a) OF RA 6657.

V.
CAN RESPONDENTS BE COMPELLED BY MANDAMUS TO ALLOW THE SURVEY AND TO APPROVE
THE SURVEY PLANS FOR PURPOSES OF THE APPLICATION FOR TITLING OF THE LANDS OF
PETITIONERS IN BORACAY?[35] (Underscoring supplied)

In capsule, the main issue is whether private claimants (respondents-claimants in G.R. No. 167707 and petitioners-
claimants in G.R. No. 173775) have a right to secure titles over their occupied portions in Boracay. The twin petitions pertain
to their right, if any, to judicial confirmation of imperfect title under CA No. 141, as amended. They do not involve their right
to secure title under other pertinent laws.

Our Ruling

Regalian Doctrine and power of the executive

to reclassify lands of the public domain
 Private claimants rely on three (3) laws and executive acts in their bid for judicial confirmation of imperfect title,
namely: (a) Philippine Bill of 1902[36] in relation to Act No. 926, later amended and/or superseded by Act No. 2874 and CA
No. 141;[37] (b) Proclamation No. 1801[38] issued by then President Marcos; and (c) Proclamation No. 1064 [39] issued by
President Gloria Macapagal-Arroyo. We shall proceed to determine their rights to apply for judicial confirmation of imperfect
title under these laws and executive acts.

But first, a peek at the Regalian principle and the power of the executive to reclassify lands of the public domain.

The 1935 Constitution classified lands of the public domain into agricultural, forest or timber. [40] Meanwhile, the
1973 Constitution provided the following divisions: agricultural, industrial or commercial, residential, resettlement, mineral,
timber or forest and grazing lands, and such other classes as may be provided by law, [41] giving the government great
leeway for classification.[42] Then the 1987 Constitution reverted to the 1935 Constitution classification with one addition:
national parks.[43] Of these, only agricultural lands may be alienated.[44] Prior to Proclamation No. 1064 of May 22,
2006, Boracay Island had never been expressly and administratively classified under any of these grand divisions. Boracay
was an unclassified land of the public domain.

The Regalian Doctrine dictates that all lands of the public domain belong to the State, that the State is the source
of any asserted right to ownership of land and charged with the conservation of such patrimony. [45] The doctrine has been
consistently adopted under the 1935, 1973, and 1987 Constitutions.[46]

All lands not otherwise appearing to be clearly within private ownership are presumed to belong to the State.[47] Thus,
all lands that have not been acquired from the government, either by purchase or by grant, belong to the State as part of
the inalienable public domain.[48] Necessarily, it is up to the State to determine if lands of the public domain will be
disposed of for private ownership. The government, as the agent of the state, is possessed of the plenary power as the
persona in law to determine who shall be the favored recipients of public lands, as well as under what terms they may be
granted such privilege, not excluding the placing of obstacles in the way of their exercise of what otherwise would be ordinary
acts of ownership.[49]

Our present land law traces its roots to the Regalian Doctrine. Upon the Spanish conquest of the Philippines,
ownership of all lands, territories and possessions in the Philippines passed to the Spanish Crown.[50] The Regalian doctrine
was first introduced in the Philippines through the Laws of the Indies and the Royal Cedulas, which laid the foundation that
all lands that were not acquired from the Government, either by purchase or by grant, belong to the public domain.[51]

The Laws of the Indies was followed by the Ley Hipotecaria or the Mortgage Law of 1893. The Spanish Mortgage
Law provided for the systematic registration of titles and deeds as well as possessory claims. [52]

The Royal Decree of 1894 or the Maura Law[53] partly amended the Spanish Mortgage Law and the Laws of the
Indies. It established possessory information as the method of legalizing possession of vacant Crown land, under certain
conditions which were set forth in said decree.[54] Under Section 393 of the Maura Law, an informacion posesoria or
possessory information title,[55] when duly inscribed in the Registry of Property, is converted into a title of ownership only
after the lapse of twenty (20) years of uninterrupted possession which must be actual, public, and adverse,[56] from the date
of its inscription.[57] However, possessory information title had to be perfected one year after the promulgation of the Maura
Law, or until April 17, 1895. Otherwise, the lands would revert to the State.[58]

In sum, private ownership of land under the Spanish regime could only be founded on royal concessions which took
various forms, namely: (1) titulo real or royal grant; (2) concesion especial or special grant; (3) composicion con el estado or
adjustment title; (4) titulo de compra or title by purchase; and (5) informacion posesoria or possessory information title.[59]

The first law governing the disposition of public lands in the Philippines under American rule was embodied in the
Philippine Bill of 1902.[60] By this law, lands of the public domain in the Philippine Islands were classified into three (3) grand
divisions, to wit: agricultural, mineral, and timber or forest lands. [61] The act provided for, among others, the disposal of
mineral lands by means of absolute grant (freehold system) and by lease (leasehold system). [62] It also provided the
definition by exclusion of agricultural public lands. [63] Interpreting the meaning of agricultural lands under the Philippine Bill
of 1902, the Court declared in Mapa v. Insular Government:[64]

x x x In other words, that the phrase agricultural land as used in Act No. 926 means those public
lands acquired from Spain which are not timber or mineral lands. x x x[65] (Emphasis Ours)

On February 1, 1903, the Philippine Legislature passed Act No. 496, otherwise known as the Land Registration
Act. The act established a system of registration by which recorded title becomes absolute, indefeasible, and
imprescriptible. This is known as the Torrens system.[66]

Concurrently, on October 7, 1903, the Philippine Commission passed Act No. 926, which was the first Public Land
Act. The Act introduced the homestead system and made provisions for judicial and administrative confirmation of imperfect
titles and for the sale or lease of public lands. It permitted corporations regardless of the nationality of persons owning the
controlling stock to lease or purchase lands of the public domain.[67] Under the Act, open, continuous, exclusive, and
notorious possession and occupation of agricultural lands for the next ten (10) years preceding July 26, 1904 was sufficient
for judicial confirmation of imperfect title.[68]

On November 29, 1919, Act No. 926 was superseded by Act No. 2874, otherwise known as the second Public
Land Act. This new, more comprehensive law limited the exploitation of agricultural lands to Filipinos and Americans and
citizens of other countries which gave Filipinos the same privileges. For judicial confirmation of title, possession and
occupation en concepto dueo since time immemorial, or since July 26, 1894, was required.[69]

After the passage of the 1935 Constitution, CA No. 141 amended Act No. 2874 on December 1, 1936. To this day,
CA No. 141, as amended, remains as the existing general law governing the classification and disposition of lands of the
public domain other than timber and mineral lands,[70] and privately owned lands which reverted to the State. [71]
 Section 48(b) of CA No. 141 retained the requirement under Act No. 2874 of possession and occupation of lands
of the public domain since time immemorial or since July 26, 1894. However, this provision was superseded by Republic
Act (RA) No. 1942,[72] which provided for a simple thirty-year prescriptive period for judicial confirmation of imperfect
title. The provision was last amended by PD No. 1073,[73] which now provides for possession and occupation of the land
applied for since June 12, 1945, or earlier.[74]

The issuance of PD No. 892[75] on February 16, 1976 discontinued the use of Spanish titles as evidence in land
registration proceedings.[76] Under the decree, all holders of Spanish titles or grants should apply for registration of their
lands under Act No. 496 within six (6) months from the effectivity of the decree on February 16, 1976. Thereafter, the
recording of all unregistered lands[77] shall be governed by Section 194 of the Revised Administrative Code, as amended
by Act No. 3344.

On June 11, 1978, Act No. 496 was amended and updated by PD No. 1529, known as the Property Registration
Decree. It was enacted to codify the various laws relative to registration of property. [78] It governs registration of lands under
the Torrens system as well as unregistered lands, including chattel mortgages.[79]

A positive act declaring land as alienable and disposable is required. In keeping with the presumption of State
ownership, the Court has time and again emphasized that there must be a positive act of the government, such as an
official proclamation,[80] declassifying inalienable public land into disposable land for agricultural or other purposes. [81] In fact,
Section 8 of CA No. 141 limits alienable or disposable lands only to those lands which have been officially delimited and
classified.[82]

The burden of proof in overcoming the presumption of State ownership of the lands of the public domain is on the
person applying for registration (or claiming ownership), who must prove that the land subject of the application is alienable
or disposable.[83] To overcome this presumption, incontrovertible evidence must be established that the land subject of the
application (or claim) is alienable or disposable.[84] There must still be a positive act declaring land of the public domain as
alienable and disposable. To prove that the land subject of an application for registration is alienable, the applicant must
establish the existence of a positive act of the government such as a presidential proclamation or an executive order; an
administrative action; investigation reports of Bureau of Lands investigators; and a legislative act or a statute. [85] The
applicant may also secure a certification from the government that the land claimed to have been possessed for the required
number of years is alienable and disposable.[86]

In the case at bar, no such proclamation, executive order, administrative action, report, statute, or certification was
presented to the Court. The records are bereft of evidence showing that, prior to 2006, the portions of Boracay occupied by
private claimants were subject of a government proclamation that the land is alienable and disposable. Absent such well-
nigh incontrovertible evidence, the Court cannot accept the submission that lands occupied by private claimants were
already open to disposition before 2006. Matters of land classification or reclassification cannot be assumed. They call for
proof.[87]
 Ankron and De Aldecoa did not make the whole of Boracay Island, or portions of it, agricultural lands.
Private claimants posit that Boracay was already an agricultural land pursuant to the old cases Ankron v. Government of
the Philippine Islands (1919)[88] and De Aldecoa v. The Insular Government (1909).[89] These cases were decided under the
provisions of the Philippine Bill of 1902 and Act No. 926. There is a statement in these old cases that in the absence of
evidence to the contrary, that in each case the lands are agricultural lands until the contrary is shown. [90]

Private claimants reliance on Ankron and De Aldecoa is misplaced. These cases did not have the effect of
converting the whole of Boracay Island or portions of it into agricultural lands. It should be stressed that the Philippine Bill
of 1902 and Act No. 926 merely provided the manner through which land registration courts would classify lands of the
public domain. Whether the land would be classified as timber, mineral, or agricultural depended on proof presented in each
case.

Ankron and De Aldecoa were decided at a time when the President of the Philippines had no power to classify lands
of the public domain into mineral, timber, and agricultural. At that time, the courts were free to make corresponding
classifications in justiciable cases, or were vested with implicit power to do so, depending upon the preponderance of the
evidence.[91] This was the Courts ruling in Heirs of the Late Spouses Pedro S. Palanca and Soterranea Rafols Vda. De
Palanca v. Republic,[92] in which it stated, through Justice Adolfo Azcuna, viz.:

x x x Petitioners furthermore insist that a particular land need not be formally released by an act of
the Executive before it can be deemed open to private ownership, citing the cases of Ramos v. Director of
Lands and Ankron v. Government of the Philippine Islands.

xxxx

Petitioners reliance upon Ramos v. Director of Lands and Ankron v. Government is misplaced.
These cases were decided under the Philippine Bill of 1902 and the first Public Land Act No. 926 enacted
by the Philippine Commission on October 7, 1926, under which there was no legal provision vesting in the
Chief Executive or President of the Philippines the power to classify lands of the public domain into mineral,
timber and agricultural so that the courts then were free to make corresponding classifications in justiciable
cases, or were vested with implicit power to do so, depending upon the preponderance of the evidence.[93]

To aid the courts in resolving land registration cases under Act No. 926, it was then necessary to devise a
presumption on land classification. Thus evolved the dictum in Ankron that the courts have a right to presume, in the
absence of evidence to the contrary, that in each case the lands are agricultural lands until the contrary is shown. [94]

But We cannot unduly expand the presumption in Ankron and De Aldecoa to an argument that all lands of the public
domain had been automatically reclassified as disposable and alienable agricultural lands. By no stretch of imagination did
the presumption convert all lands of the public domain into agricultural lands.

If We accept the position of private claimants, the Philippine Bill of 1902 and Act No. 926 would have automatically
made all lands in the Philippines, except those already classified as timber or mineral land, alienable and disposable
lands. That would take these lands out of State ownership and worse, would be utterly inconsistent with and totally
repugnant to the long-entrenched Regalian doctrine.

The presumption in Ankron and De Aldecoa attaches only to land registration cases brought under the provisions
of Act No. 926, or more specifically those cases dealing with judicial and administrative confirmation of imperfect titles. The
presumption applies to an applicant for judicial or administrative conformation of imperfect title under Act No. 926. It certainly
cannot apply to landowners, such as private claimants or their predecessors-in-interest, who failed to avail themselves of
the benefits of Act No. 926. As to them, their land remained unclassified and, by virtue of the Regalian doctrine, continued
to be owned by the State.

In any case, the assumption in Ankron and De Aldecoa was not absolute. Land classification was, in the end,
dependent on proof. If there was proof that the land was better suited for non-agricultural uses, the courts could adjudge it
as a mineral or timber land despite the presumption. In Ankron, this Court stated:

In the case of Jocson vs. Director of Forestry (supra), the Attorney-General admitted in effect that
whether the particular land in question belongs to one class or another is a question of fact. The mere fact
that a tract of land has trees upon it or has mineral within it is not of itself sufficient to declare that one is
forestry land and the other, mineral land. There must be some proof of the extent and present or future
value of the forestry and of the minerals. While, as we have just said, many definitions have been given for
agriculture, forestry, and mineral lands, and that in each case it is a question of fact, we think it is safe to
say that in order to be forestry or mineral land the proof must show that it is more valuable for the forestry
or the mineral which it contains than it is for agricultural purposes. (Sec. 7, Act No. 1148.) It is not sufficient
to show that there exists some trees upon the land or that it bears some mineral. Land may be classified
as forestry or mineral today, and, by reason of the exhaustion of the timber or mineral, be classified as
agricultural land tomorrow. And vice-versa, by reason of the rapid growth of timber or the discovery of
valuable minerals, lands classified as agricultural today may be differently classified tomorrow. Each case
must be decided upon the proof in that particular case, having regard for its present or future value
for one or the other purposes. We believe, however, considering the fact that it is a matter of public
knowledge that a majority of the lands in the Philippine Islands are agricultural lands that the courts have a
right to presume, in the absence of evidence to the contrary, that in each case the lands are agricultural
lands until the contrary is shown. Whatever the land involved in a particular land registration case is
forestry or mineral land must, therefore, be a matter of proof. Its superior value for one purpose or
the other is a question of fact to be settled by the proof in each particular case. The fact that the land
is a manglar [mangrove swamp] is not sufficient for the courts to decide whether it is agricultural, forestry,
or mineral land. It may perchance belong to one or the other of said classes of land. The Government, in
the first instance, under the provisions of Act No. 1148, may, by reservation, decide for itself what portions
of public land shall be considered forestry land, unless private interests have intervened before such
reservation is made. In the latter case, whether the land is agricultural, forestry, or mineral, is a question of
proof. Until private interests have intervened, the Government, by virtue of the terms of said Act (No. 1148),
may decide for itself what portions of the public domain shall be set aside and reserved as forestry or
mineral land. (Ramos vs. Director of Lands, 39 Phil. 175; Jocson vs. Director of
Forestry,supra)[95] (Emphasis ours)

Since 1919, courts were no longer free to determine the classification of lands from the facts of each case, except
those that have already became private lands.[96] Act No. 2874, promulgated in 1919 and reproduced in Section 6 of CA No.
141, gave the Executive Department, through the President, the exclusive prerogative to classify or reclassify public lands
into alienable or disposable, mineral or forest.96-a Since then, courts no longer had the authority, whether express or implied,
to determine the classification of lands of the public domain.[97]
 Here, private claimants, unlike the Heirs of Ciriaco Tirol who were issued their title in 1933, [98] did not present a
justiciable case for determination by the land registration court of the propertys land classification. Simply put, there was no
opportunity for the courts then to resolve if the land the Boracay occupants are now claiming were agricultural lands. When
Act No. 926 was supplanted by Act No. 2874 in 1919, without an application for judicial confirmation having been filed by
private claimants or their predecessors-in-interest, the courts were no longer authorized to determine the propertys land
classification. Hence, private claimants cannot bank on Act No. 926.

We note that the RTC decision[99] in G.R. No. 167707 mentioned Krivenko v. Register of Deeds of Manila,[100] which
was decided in 1947 when CA No. 141, vesting the Executive with the sole power to classify lands of the public domain was
already in effect. Krivenko cited the old cases Mapa v. Insular Government,[101]De Aldecoa v. The Insular
Government,[102] and Ankron v. Government of the Philippine Islands.[103]

Krivenko, however, is not controlling here because it involved a totally different issue. The pertinent issue
in Krivenko was whether residential lots were included in the general classification of agricultural lands; and if so, whether
an alien could acquire a residential lot. This Court ruled that as an alien, Krivenko was prohibited by the 1935
Constitution[104] from acquiring agricultural land, which included residential lots. Here, the issue is whether unclassified lands
of the public domain are automatically deemed agricultural.

Notably, the definition of agricultural public lands mentioned in Krivenko relied on the old cases decided prior to the
enactment of Act No. 2874, including Ankron and De Aldecoa.[105] As We have already stated, those cases cannot apply
here, since they were decided when the Executive did not have the authority to classify lands as agricultural, timber, or
mineral.

Private claimants continued possession under Act No. 926 does not create a presumption that the land is
alienable. Private claimants also contend that their continued possession of portions of Boracay Island for the requisite
period of ten (10) years under Act No. 926[106] ipso facto converted the island into private ownership. Hence, they may apply
for a title in their name.

A similar argument was squarely rejected by the Court in Collado v. Court of Appeals.[107] Collado, citing the
separate opinion of now Chief Justice Reynato S. Puno in Cruz v. Secretary of Environment and Natural Resources,107-
a ruled:

Act No. 926, the first Public Land Act, was passed in pursuance of the provisions
of the Philippine Bill of 1902. The law governed the disposition of lands of the public domain.
It prescribed rules and regulations for the homesteading, selling and leasing of portions of
the public domain of the Philippine Islands, and prescribed the terms and conditions to
enable persons to perfect their titles to public lands in the Islands. It also provided for the
issuance of patents to certain native settlers upon public lands, for the establishment of
town sites and sale of lots therein, for the completion of imperfect titles, and for the
cancellation or confirmation of Spanish concessions and grants in the Islands. In short, the
Public Land Act operated on the assumption that title to public lands in the Philippine
Islands remained in the government; and that the governments title to public land sprung
from the Treaty of Paris and other subsequent treaties between Spain and the United
States. The term public land referred to all lands of the public domain whose title still
 remained in the government and are thrown open to private appropriation and settlement,
and excluded the patrimonial property of the government and the friar lands.

Thus, it is plain error for petitioners to argue that under the Philippine Bill of 1902
and Public Land Act No. 926, mere possession by private individuals of lands creates the legal
presumption that the lands are alienable and disposable.[108] (Emphasis Ours)

Except for lands already covered by existing titles, Boracay was an unclassified land of the public domain
prior to Proclamation No. 1064. Such unclassified lands are considered public forest under PD No. 705. The
DENR[109] and the National Mapping and Resource Information Authority[110] certify that Boracay Island is an unclassified
land of the public domain.

PD No. 705 issued by President Marcos categorized all unclassified lands of the public domain as public
forest. Section 3(a) of PD No. 705 defines a public forest as a mass of lands of the public domain which has not been the
subject of the present system of classification for the determination of which lands are needed for forest purpose and which
are not. Applying PD No. 705, all unclassified lands, including those in Boracay Island, are ipso facto considered public
forests. PD No. 705, however, respects titles already existing prior to its effectivity.

The Court notes that the classification of Boracay as a forest land under PD No. 705 may seem to be out of touch
with the present realities in the island. Boracay, no doubt, has been partly stripped of its forest cover to pave the way for
commercial developments. As a premier tourist destination for local and foreign tourists, Boracay appears more of a
commercial island resort, rather than a forest land.

Nevertheless, that the occupants of Boracay have built multi-million peso beach resorts on the island;[111] that the
island has already been stripped of its forest cover; or that the implementation of Proclamation No. 1064 will destroy the
islands tourism industry, do not negate its character as public forest.

Forests, in the context of both the Public Land Act and the Constitution [112] classifying lands of the public domain
into agricultural, forest or timber, mineral lands, and national parks, do not necessarily refer to large tracts of wooded land
or expanses covered by dense growths of trees and underbrushes. [113] The discussion in Heirs of Amunategui v. Director of
Forestry[114] is particularly instructive:

A forested area classified as forest land of the public domain does not lose such classification
simply because loggers or settlers may have stripped it of its forest cover. Parcels of land classified as
forest land may actually be covered with grass or planted to crops by kaingin cultivators or other
farmers. Forest lands do not have to be on mountains or in out of the way places. Swampy areas covered
by mangrove trees, nipa palms, and other trees growing in brackish or sea water may also be classified as
forest land. The classification is descriptive of its legal nature or status and does not have to be
descriptive of what the land actually looks like. Unless and until the land classified as forest is released
in an official proclamation to that effect so that it may form part of the disposable agricultural lands of the
public domain, the rules on confirmation of imperfect title do not apply. [115] (Emphasis supplied)

There is a big difference between forest as defined in a dictionary and forest or timber land as a classification of lands of
the public domain as appearing in our statutes. One is descriptive of what appears on the land while the other is a legal
status, a classification for legal purposes.[116] At any rate, the Court is tasked to determine the legal status of Boracay Island,
and not look into its physical layout. Hence, even if its forest cover has been replaced by beach resorts, restaurants and
other commercial establishments, it has not been automatically converted from public forest to alienable agricultural land.

Private claimants cannot rely on Proclamation No. 1801 as basis for judicial confirmation of imperfect
title. The proclamation did not convert Boracay into an agricultural land. However, private claimants argue that
Proclamation No. 1801 issued by then President Marcos in 1978 entitles them to judicial confirmation of imperfect title. The
Proclamation classified Boracay, among other islands, as a tourist zone. Private claimants assert that, as a tourist spot, the
island is susceptible of private ownership.

Proclamation No. 1801 or PTA Circular No. 3-82 did not convert the whole of Boracay into an agricultural
land. There is nothing in the law or the Circular which made Boracay Island an agricultural land. The reference in Circular
No. 3-82 to private lands[117] and areas declared as alienable and disposable [118] does not by itself classify the entire island
as agricultural. Notably, Circular No. 3-82 makes reference not only to private lands and areas but also to public forested
lands. Rule VIII, Section 3 provides:

No trees in forested private lands may be cut without prior authority from the PTA. All forested
areas in public lands are declared forest reserves. (Emphasis supplied)

Clearly, the reference in the Circular to both private and public lands merely recognizes that the island can be
classified by the Executive department pursuant to its powers under CA No. 141. In fact, Section 5 of the Circular recognizes
the then Bureau of Forest Developments authority to declare areas in the island as alienable and disposable when it provides:

Subsistence farming, in areas declared as alienable and disposable by the Bureau of Forest
Development.

Therefore, Proclamation No. 1801 cannot be deemed the positive act needed to classify Boracay Island as
alienable and disposable land. If President Marcos intended to classify the island as alienable and disposable or forest, or
both, he would have identified the specific limits of each, as President Arroyo did in Proclamation No. 1064. This was not
done in Proclamation No. 1801.

The Whereas clauses of Proclamation No. 1801 also explain the rationale behind the declaration of Boracay Island,
together with other islands, caves and peninsulas in the Philippines, as a tourist zone and marine reserve to be administered
by the PTA to ensure the concentrated efforts of the public and private sectors in the development of the areas tourism
potential with due regard for ecological balance in the marine environment. Simply put, the proclamation is aimed at
administering the islands for tourism and ecological purposes. It does not address the areas alienability.[119]

More importantly, Proclamation No. 1801 covers not only Boracay Island, but sixty-four (64) other islands, coves,
and peninsulas in the Philippines, such as Fortune and Verde Islands in Batangas, Port Galera in Oriental Mindoro, Panglao
and Balicasag Islands in Bohol, Coron Island, Puerto Princesa and surrounding areas in Palawan, Camiguin Island in
Cagayan de Oro, and Misamis Oriental, to name a few. If the designation of Boracay Island as tourist zone makes it
alienable and disposable by virtue of Proclamation No. 1801, all the other areas mentioned would likewise be declared wide
open for private disposition. That could not have been, and is clearly beyond, the intent of the proclamation.

It was Proclamation No. 1064 of 2006 which positively declared part of Boracay as alienable and opened
the same to private ownership. Sections 6 and 7 of CA No. 141[120] provide that it is only the President, upon the
recommendation of the proper department head, who has the authority to classify the lands of the public domain into
alienable or disposable, timber and mineral lands.[121]

In issuing Proclamation No. 1064, President Gloria Macapagal-Arroyo merely exercised the authority granted to her
to classify lands of the public domain, presumably subject to existing vested rights. Classification of public lands is the
exclusive prerogative of the Executive Department, through the Office of the President. Courts have no authority to do
so.[122] Absent such classification, the land remains unclassified until released and rendered open to disposition. [123]

Proclamation No. 1064 classifies Boracay into 400 hectares of reserved forest land and 628.96 hectares of
agricultural land. The Proclamation likewise provides for a 15-meter buffer zone on each side of the center line of roads and
trails, which are reserved for right of way and which shall form part of the area reserved for forest land protection purposes.
Contrary to private claimants argument, there was nothing invalid or irregular, much less unconstitutional, about the
classification of Boracay Island made by the President through Proclamation No. 1064. It was within her authority to make
such classification, subject to existing vested rights.

Proclamation No. 1064 does not violate the Comprehensive Agrarian Reform Law. Private claimants further
assert that Proclamation No. 1064 violates the provision of the Comprehensive Agrarian Reform Law (CARL) or RA No.
6657 barring conversion of public forests into agricultural lands. They claim that since Boracay is a public forest under PD
No. 705, President Arroyo can no longer convert it into an agricultural land without running afoul of Section 4(a) of RA No.
6657, thus:

SEC. 4. Scope. The Comprehensive Agrarian Reform Law of 1988 shall cover, regardless of
tenurial arrangement and commodity produced, all public and private agricultural lands as provided in
Proclamation No. 131 and Executive Order No. 229, including other lands of the public domain suitable for
agriculture.

More specifically, the following lands are covered by the Comprehensive Agrarian Reform Program:

(a) All alienable and disposable lands of the public domain devoted to or suitable for
agriculture. No reclassification of forest or mineral lands to agricultural lands shall
be undertaken after the approval of this Act until Congress, taking into account
ecological, developmental and equity considerations, shall have determined by law,
the specific limits of the public domain.

That Boracay Island was classified as a public forest under PD No. 705 did not bar the Executive from later
converting it into agricultural land. Boracay Islandstill remained an unclassified land of the public domain despite PD No.
705.
 In Heirs of the Late Spouses Pedro S. Palanca and Soterranea Rafols v. Republic,[124] the Court stated that
unclassified lands are public forests.

While it is true that the land classification map does not categorically state that the islands
are public forests, the fact that they were unclassified lands leads to the same result. In the absence
of the classification as mineral or timber land, the land remains unclassified land until released and rendered
open to disposition.[125] (Emphasis supplied)

Moreover, the prohibition under the CARL applies only to a reclassification of land. If the land had never been
previously classified, as in the case of Boracay, there can be no prohibited reclassification under the agrarian law. We agree
with the opinion of the Department of Justice[126] on this point:

Indeed, the key word to the correct application of the prohibition in Section 4(a) is the word
reclassification. Where there has been no previous classification of public forest [referring, we repeat, to
the mass of the public domain which has not been the subject of the present system of classification for
purposes of determining which are needed for forest purposes and which are not] into permanent forest or
forest reserves or some other forest uses under the Revised Forestry Code, there can be no reclassification
of forest lands to speak of within the meaning of Section 4(a).

Thus, obviously, the prohibition in Section 4(a) of the CARL against the reclassification of forest
lands to agricultural lands without a prior law delimiting the limits of the public domain, does not, and cannot,
apply to those lands of the public domain, denominated as public forest under the Revised Forestry Code,
which have not been previously determined, or classified, as needed for forest purposes in accordance with
the provisions of the Revised Forestry Code.[127]

Private claimants are not entitled to apply for judicial confirmation of imperfect title under CA No.
141. Neither do they have vested rights over the occupied lands under the said law. There are two requisites for
judicial confirmation of imperfect or incomplete title under CA No. 141, namely: (1) open, continuous, exclusive, and
notorious possession and occupation of the subject land by himself or through his predecessors-in-interest under a bona
fide claim of ownership since time immemorial or from June 12, 1945; and (2) the classification of the land as alienable and
disposable land of the public domain.[128]

As discussed, the Philippine Bill of 1902, Act No. 926, and Proclamation No. 1801 did not convert portions
of Boracay Island into an agricultural land. The island remained an unclassified land of the public domain and, applying the
Regalian doctrine, is considered State property.

Private claimants bid for judicial confirmation of imperfect title, relying on the Philippine Bill of 1902, Act No. 926,
and Proclamation No. 1801, must fail because of the absence of the second element of alienable and disposable land. Their
entitlement to a government grant under our present Public Land Act presupposes that the land possessed and applied for
is already alienable and disposable. This is clear from the wording of the law itself. [129] Where the land is not alienable and
disposable, possession of the land, no matter how long, cannot confer ownership or possessory rights. [130]
 Neither may private claimants apply for judicial confirmation of imperfect title under Proclamation No. 1064, with
respect to those lands which were classified as agricultural lands. Private claimants failed to prove the first element of open,
continuous, exclusive, and notorious possession of their lands in Boracay since June 12, 1945.

We cannot sustain the CA and RTC conclusion in the petition for declaratory relief that private claimants complied
with the requisite period of possession.

The tax declarations in the name of private claimants are insufficient to prove the first element of possession. We
note that the earliest of the tax declarations in the name of private claimants were issued in 1993. Being of recent dates, the
tax declarations are not sufficient to convince this Court that the period of possession and occupation commenced on June
12, 1945.

Private claimants insist that they have a vested right in Boracay, having been in possession of the island for a long
time. They have invested millions of pesos in developing the island into a tourist spot. They say their continued possession
and investments give them a vested right which cannot be unilaterally rescinded by Proclamation No. 1064.

The continued possession and considerable investment of private claimants do not automatically give them a vested
right in Boracay. Nor do these give them a right to apply for a title to the land they are presently occupying. This Court is
constitutionally bound to decide cases based on the evidence presented and the laws applicable. As the law and
jurisprudence stand, private claimants are ineligible to apply for a judicial confirmation of title over their occupied portions in
Boracay even with their continued possession and considerable investment in the island.

One Last Note

The Court is aware that millions of pesos have been invested for the development of Boracay Island, making it a
by-word in the local and international tourism industry. The Court also notes that for a number of years, thousands of people
have called the island their home. While the Court commiserates with private claimants plight, We are bound to apply the
law strictly and judiciously. This is the law and it should prevail. Ito ang batas at ito ang dapat umiral.

All is not lost, however, for private claimants. While they may not be eligible to apply for judicial confirmation of
imperfect title under Section 48(b) of CA No. 141, as amended, this does not denote their automatic ouster from the
residential, commercial, and other areas they possess now classified as agricultural. Neither will this mean the loss of their
substantial investments on their occupied alienable lands. Lack of title does not necessarily mean lack of right to possess.

For one thing, those with lawful possession may claim good faith as builders of improvements. They can take steps
to preserve or protect their possession. For another, they may look into other modes of applying for original registration of
title, such as by homestead[131] or sales patent,[132] subject to the conditions imposed by law.
 More realistically, Congress may enact a law to entitle private claimants to acquire title to their occupied lots or to
exempt them from certain requirements under the present land laws. There is one such bill[133] now pending in the House of
Representatives. Whether that bill or a similar bill will become a law is for Congress to decide.

In issuing Proclamation No. 1064, the government has taken the step necessary to open up the island to private
ownership. This gesture may not be sufficient to appease some sectors which view the classification of the island partially
into a forest reserve as absurd. That the island is no longer overrun by trees, however, does not becloud the vision to protect
its remaining forest cover and to strike a healthy balance between progress and ecology. Ecological conservation is as
important as economic progress.

To be sure, forest lands are fundamental to our nations survival. Their promotion and protection are not just fancy
rhetoric for politicians and activists. These are needs that become more urgent as destruction of our environment gets
prevalent and difficult to control. As aptly observed by Justice Conrado Sanchez in 1968 in Director of Forestry v. Munoz:[134]

The view this Court takes of the cases at bar is but in adherence to public policy that should be
followed with respect to forest lands. Many have written much, and many more have spoken, and quite
often, about the pressing need for forest preservation, conservation, protection, development and
reforestation. Not without justification. For, forests constitute a vital segment of any country's natural
resources. It is of common knowledge by now that absence of the necessary green cover on our lands
produces a number of adverse or ill effects of serious proportions. Without the trees, watersheds dry up;
rivers and lakes which they supply are emptied of their contents. The fish disappear. Denuded areas
become dust bowls. As waterfalls cease to function, so will hydroelectric plants. With the rains, the fertile
topsoil is washed away; geological erosion results. With erosion come the dreaded floods that wreak havoc
and destruction to property crops, livestock, houses, and highways not to mention precious human
lives. Indeed, the foregoing observations should be written down in a lumbermans decalogue. [135]

WHEREFORE, judgment is rendered as follows:

1. The petition for certiorari in G.R. No. 167707 is GRANTED and the Court of Appeals Decision in CA-G.R. CV No.
71118 REVERSED AND SET ASIDE.

2. The petition for certiorari in G.R. No. 173775 is DISMISSED for lack of merit.

SO ORDERED.

FIL-ESTATE MANAGEMENT INC., MEGATOP G. R. No. 130871

REALTY DEVELOPMENT, INC., PEAKSUN
ENTERPRISES AND EXPORT CORP., Present:
ARTURO DY, AND ELENA DY JAO,
Petitioners, PUNO, J., Chairperson,
SANDOVAL-GUTIERREZ,
- versus - *CORONA,

AZCUNA, and
GEORGE H. TRONO, MA. TERESA TRONO, GARCIA, JJ.
MA. VIRGINIA TRONO, JESSE TRONO, MA.
CRISTINA TRONO, PATRICIA TRONO, MA.
DIVINA TRONO, INOCENCIO TRONO, JR.,
CARMEN TRONO, AND ZENAIDA TRONO,
Respondents.
 Promulgated:

February 17, 2006

x-----------------------------------------------------------------------------------------x

DECISION

SANDOVAL-GUTIERREZ, J.:

Before us is a petition for review on certiorari[1] assailing the Decision[2] dated May 20, 1997 and Resolution[3] dated
September 5, 1997 of the Court of Appeals in CA-G.R. SP No. 40263, Ayala Land, Inc., Fil-estate Management Inc.,
Megatop Realty Development, Inc., Peaksun Enterprises and Export Corp., Arturo E. Dy, and Elena Dy
Jao, petitioners, versus Hon. Florentino Alumbres, George H. Trono, Ma. Teresa Trono, Edgardo Trono, Ma. Virginia Trono,
Jesse Trono, Ma. Cristina Trono, Inocencio Trono, Jr., Carmen Trono, and Zenaida Trono, respondents.
The petition alleges that on November 9, 1994, George, Ma. Teresa, Edgardo, Ma. Virginia, Jesse, Ma. Cristina,
Inocencio, Jr., Carmen, and Zenaida, all surnamed Trono, herein respondents, filed with the Regional Trial Court, Branch
255, Las Pias City, an application for registration[4] of a parcel of land, docketed as LRC Case No. M-228. The land is located
at Bo. Almanza, Las Pias City, Metro Manila consisting of 245,536 square meters.
Mr. Salvador L. Oriel, Chief of the Docket Division, Land Registration Authority (LRA), issued a Notice of Initial
Hearing,[5] stating, among others, that:

NOTE: This lot is covered portion of Lot 2271 that which is overlapped by Lot 10, Psu-80886 Lot
2276, that which is overlapped by Lot 2, Psu-56007 which is also Lot 6, Psu-80886; Lot 2270, portion of
that which is overlapped by Lot 7, Psu-56007 and the whole Lot 8, Psu-56007.

On August 11, 1995, the above-named petitioners filed their opposition to LRC Case No. M-228 alleging that as per
Survey Plan Psu-31086, respondents property partly overlaps their lot. As early as April 28, 1989, this lot was registered in
their names under Transfer Certificate of Title (TCT) No. T-9182 of the Registry of Deeds of Las Pias City.
Earlier, or on July 25, 1995, Ayala Land, Inc. (Ayala Land) also filed an opposition to respondents application for
registration anchored on the ground that the land applied for overlaps the parcels of land covered by TCT Nos. T-5331, T-
41326, T-15644, T-41325, T-36979, T-36891, and T-36982 registered in its name in the Registry of Deeds, same city.
During the hearing, respondents presented the July 24, 1995 Report of the LRA and the Survey Report of the Land
Management Services, Department of Environment and Natural Resources, showing that the land they sought to register
under Plan Psu-31086 overlaps the property already registered in the names of petitioners.

Thereafter, petitioners and Ayala Land filed their respective motions to dismiss respondents application for
registration on the ground of lack of jurisdiction.They claimed that since the property was previously Torrens registered in
their names, the trial court has no jurisdiction over the subject matter of the proceedings.
On March 4, 1996, the trial court issued a Resolution denying the motions to dismiss, holding that the Regional Trial
Court has exclusive original jurisdiction over all applications for original registration of title to lands.
Petitioners then filed with the Court of Appeals a petition for certiorari.
On May 20, 1997, the Appellate Court rendered its Decision granting the petition for certiorari, holding that:
The incontrovertibility of a title prevents a land registration court from acquiring jurisdiction over a
land that is applied for registration if that land is already decreed and registered under the Torrens System.

The dispositive portion of the Decision reads:

WHEREFORE, the petition is GRANTED and the assailed Order dated March 4, 1996 (Annex A,
Petition) is ANNULLED and SET ASIDE. Instead, the respondent Judge is directed to DISMISS without
prejudice LRC M-228.

SO ORDERED.

Petitioners then filed their motion for partial reconsideration praying that LRC Case No. M-228 be dismissed with
prejudice and to declare that the right of respondents to file any action for reconveyance of the property has prescribed.
Meanwhile, on July 9, 1997, Ayala Land and respondents executed a Compromise Agreement.[6] On July 10, 1997,
they filed with the Court of Appeals a Motion for Judgment Based on Compromise Agreement.
On July 25, 1997, the Court of Appeals rendered an Amendatory Decision, holding that in view of the Compromise
Agreement, the case as between Ayala Landand respondents has become moot and academic.

In a Resolution dated September 5, 1997, the Appellate Court denied petitioners motion for partial reconsideration.
Petitioners then filed the instant petition for review on certiorari ascribing to the Court of Appeals the following errors:

IN REFUSING TO DECLARE THE DISMISSAL OF LRC M-228 TO BE WITH PREJUDICE AND THAT
ANY ACTION FOR RECONVEYANCE TO HAVE LONG AGO PRESCRIBED, THE COURT OF APPEALS
DECIDED THE ISSUE NOT IN ACCORD WITH LAW AND PERTINENT JURISPRUDENCE, IN THAT

I.

HAVING ALREADY FOUND THAT THE LAND WAS TITLED, THE COURT OF APPEALS REFUSAL TO
DISMISS THE LAND REGISTRATION CASE WITH PREJUDICE CONTRAVENES THE DOCTRINES
THAT A) DECREES OF REGISTRATION ARE IN REM, B) TITLED LANDS CANNOT BE DECREED
AGAIN AND C) THERE CAN BE NO COLLATERAL ATTACK ON TITLES.

II.

HAVING FOUND THAT THE DECREES FROM WHICH PETITIONERS TITLE IS DERIVED, WERE
ISSUED IN 1966, THE COURT OF APPEALS REFUSAL TO DECLARE AS ALREADY PRESCRIBED,
ANY DIRECT ATTACK OR ACTION FOR RECONVEYANCE CONTRAVENES SECTION 32 OF PD 1529
AND THE DOCTRINES IN CARO VS. COURT OF APPEALS AND SALVATIERRA VS. COURT OF
APPEALS.

Petitioners contend that the dismissal of a subsequent application for original registration of title already covered by
a Torrens title should be with prejudice;that an action for annulment of title or reconveyance of the property involved has
prescribed; and that respondents application for registration (LRC Case No. M-228) is a collateral attack against petitioners
land titles.
In their comment, respondents claim that they were misled by their lawyers and that what they should have filed
was a complaint for nullification of titles instead of an application for registration of land.
The petition is impressed with merit.
 The fundamental issue for our resolution is whether the trial court has jurisdiction over respondents application for
registration of a parcel of land.

Section 2 of Presidential Decree (PD) 1529 [7] partly provides:

Sec. 2. Nature of registration proceedings; jurisdiction of courts. Judicial proceedings for the
registration of lands throughout the Philippines shall be in rem, and shall be based on the generally
accepted principles underlying the Torrens System.

Courts of First Instance shall have exclusive jurisdiction over all applications for original registration
of title to lands, including improvements and interests therein, and over all petitions filed after original
registration of title, with power to hear and determine all questions arising upon such applications or
petitions. x x x

Pursuant to the above provisions, the Regional Trial Court (formerly Court of First Instance) has the authority to act,
not only on applications for original registration of title to land, but also on all petitions filed after the original registration of
title. Thus, it has the authority and power to hear and determine all questions arising from such applications or petitions. [8]
The Court of Appeals, therefore, erred in ruling that the Regional Trial Court, Branch 255, Las Pias City has no
jurisdiction over LRC Case No. M-228 on the ground that the land subject of respondents application for registration was
already registered in the Registry of Deeds of Las Pias City.
Significantly, even respondents themselves admit in their comment on the instant petition that what they should
have filed was a complaint for nullity of petitioners titles.
Likewise, Section 48 of PD 1529 provides:

Sec. 48. Certificate not subject to collateral attack. A certificate of title shall not be subject to
collateral attack. It cannot be altered, modified, or cancelled except in a direct proceeding in accordance
with law. (Underscoring ours)

Respondents application for registration of a parcel of land already covered by a Torrens title is actually a collateral
attack against petitioners title not permitted under the principle of indefeasibility of a Torrens title. It is well settled that
a Torrens title cannot be collaterally attacked; the issue on the validity of title, i.e., whether or not it was fraudulently issued,
can only be raised in an action expressly instituted for the purpose.[9] Hence, whether or not respondents have the right to
claim title over the property in question is beyond the province of the instant proceeding. That should be threshed out in a
proper action. It has been invariably stated that the real purpose of the Torrens System is to quiet title to land and to stop
forever any question as to its legality. Once a title is registered, the owner may rest secure, without the necessity of waiting
in the portals of the court, or sitting on the mirador su casa to avoid the possibility of losing his land.[10]
In Ramos v. Rodriguez,[11] we held:

It must be noted that petitioners failed to rebut the LRA report and only alleged that the title of the
Payatas Estate was spurious, without offering any proof to substantiate this claim. TCT No. 8816, however,
having been issued under the Torrens System, enjoys the conclusive presumption of validity. As we
declared in an earlier case (Reyes and Nadres vs. Borbon and Director of Lands, 50 Phil. 791), (t)he very
purpose of the Torrens system would be destroyed if the same land may be subsequently brought under a
second action for registration. The application for registration of the petitioners in this case
would, under the circumstances, appear to be a collateral attack of TCT No. 8816 which is not
allowed under Section 48 of P.D. 1529. (underscoring ours)
 Corollarily, Section 32 of the same law states:

Sec. 32. Review of decree of registration; Innocent purchaser for value. The decree of registration
shall not be reopened or revised by reason of absence, minority, or other disability of any person adversely
affected thereby, nor by any proceeding in any court for reversing judgment, subject, however, to the right
of any person, including the government and the branches thereof, deprived of land or of any estate or
interest therein by such adjudication or confirmation of title obtained by actual fraud, to file in the proper
Court of First Instance a petition for reopening and review of the decree of registration not later
than one year from and after the date of the entry of such decree of registration, but in no case shall
such petition be entertained by the court where an innocent purchaser for value has acquired the land or
an interest therein whose rights may be prejudiced. Whenever the phrase innocent purchaser for value or
an equivalent phrase occurs in this Decree, it shall be deemed to include an innocent lessee, mortgagee,
or other encumbrancer for value.

Upon the expiration of said period of one year, the decree of registration and the certificate
of title issued shall become incontrovertible. Any person aggrieved by such decree of registration in
any case may pursue his remedy by action for damages against the applicant or any other person
responsible for the fraud. (underscoring ours)

A decree of registration that has become final shall be deemed conclusive not only on the questions actually
contested and determined, but also upon all matters that might be litigated or decided in the land registration proceedings.[12]
As per records of the Registry of Deeds of Las Pias City, TCT No. T-9182[13] was registered in petitioners name as
early as April 28, 1989, or five (5) years before the filing of respondents application for registration. Thus, it is too
late for them (respondents) to question petitioners titles considering that the Certificates of Title issued to the latter have
become incontrovertible after the lapse of one year from the decree of registration.
WHEREFORE, the petition is GRANTED. The assailed Decision and Resolution of the Court of Appeals in CA-G.R.
SP No. 40263 are REVERSED and SET ASIDE. Respondents application for registration of land in LRC Case No. M-
228 pending before the Regional Trial Court, Branch 255, Las Pias City is ordered DISMISSED with prejudice.

SO ORDERED.

G.R. No. 135385 December 6, 2000

ISAGANI CRUZ and CESAR EUROPA, petitioners,
vs.
SECRETARY OF ENVIRONMENT AND NATURAL RESOURCES, SECRETARY OF BUDGET AND MANAGEMENT
and CHAIRMAN and COMMISSIONERS OF THE NATIONAL COMMISSION ON INDIGENOUS
PEOPLES, respondents.
HON. JUAN M .FLAVIER, HON. PONCIANO BENNAGEN, BAYANI ASCARRAGA, EDTAMI MANSAYANGAN,
BASILIO WANDAG, EVELYN DUNUAN, YAOM TUGAS, ALFREMO CARPIANO, LIBERATO A. GABIN,
MATERNIDAD M. COLAS, NARCISA M. DALUPINES, BAI KIRAM-CONNIE SATURNO, BAE MLOMO-BEATRIZ T.
ABASALA, DATU BALITUNGTUNG-ANTONIO D. LUMANDONG, DATU MANTUMUKAW TEOFISTO SABASALES,
DATU EDUAARDO BANDA, DATU JOEL UNAD, DATU RAMON BAYAAN, TIMUAY JOSE ANOY, TIMUAY MACARIO
D. SALACAO, TIMUAY EDWIN B. ENDING, DATU SAHAMPONG MALANAW VI, DATU BEN PENDAO CABIGON,
BAI NANAPNAY-LIZA SAWAY, BAY INAY DAYA-MELINDA S. REYMUNDO, BAI TINANGHAGA HELINITA T.
PANGAN, DATU MAKAPUKAW ADOLINO L. SAWAY, DATU MAUDAYAW-CRISPEN SAWAY, VICKY MAKAY,
LOURDES D. AMOS, GILBERT P. HOGGANG, TERESA GASPAR, MANUEL S. ONALAN, MIA GRACE L. GIRON,
ROSEMARIE G. PE, BENITO CARINO, JOSEPH JUDE CARANTES, LYNETTE CARANTES-VIVAL, LANGLEY
SEGUNDO, SATUR S. BUGNAY, CARLING DOMULOT, ANDRES MENDIOGRIN, LEOPOLDO ABUGAN, VIRGILIO
CAYETANO, CONCHITA G. DESCAGA, LEVY ESTEVES, ODETTE G. ESTEVEZ, RODOLFO C. AGUILAR, MAURO
VALONES, PEPE H. ATONG, OFELIA T. DAVI, PERFECTO B. GUINOSAO, WALTER N. TIMOL, MANUEL T. SELEN,
OSCAR DALUNHAY, RICO O. SULATAN, RAFFY MALINDA, ALFREDO ABILLANOS, JESSIE ANDILAB, MIRLANDO
H. MANGKULINTAS, SAMIE SATURNO, ROMEO A. LINDAHAY, ROEL S. MANSANG-CAGAN, PAQUITO S. LIESES,
FILIPE G. SAWAY, HERMINIA S. SAWAY, JULIUS S. SAWAY, LEONARDA SAWAY, JIMMY UGYUB, SALVADOR
TIONGSON, VENANCIO APANG, MADION MALID, SUKIM MALID, NENENG MALID, MANGKATADONG AUGUSTO
DIANO, JOSEPHINE M. ALBESO, MORENO MALID, MARIO MANGCAL, FELAY DIAMILING, SALOME P. SARZA,
FELIPE P. BAGON, SAMMY SALNUNGAN, ANTONIO D. EMBA, NORMA MAPANSAGONOS, ROMEO SALIGA, SR.,
JERSON P. GERADA, RENATO T. BAGON, JR., SARING MASALONG, SOLEDAD M. GERARDA, ELIZABETH L.
MENDI, MORANTE S. TIWAN, DANILO M. MALUDAO, MINORS MARICEL MALID, represented by her father
CORNELIO MALID, MARCELINO M. LADRA, represented by her father MONICO D. LADRA, JENNYLYN MALID,
represented by her father TONY MALID, ARIEL M. EVANGELISTA, represented by her mother LINAY BALBUENA,
EDWARD M. EMUY, SR., SUSAN BOLANIO, OND, PULA BATO B'LAAN TRIBAL FARMER'S ASSOCIATION, INTER-
PEOPLE'S EXCHANGE, INC. and GREEN FORUM-WESTERN VISAYAS, intervenors.
COMMISSION ON HUMAN RIGHTS, intervenor.
IKALAHAN INDIGENOUS PEOPLE and HARIBON FOUNDATION FOR THE CONSERVATION OF NATURAL
RESOURCES, INC., intervenor.
RESOLUTION
PER CURIAM:
Petitioners Isagani Cruz and Cesar Europa brought this suit for prohibition and mandamus as citizens and taxpayers,
assailing the constitutionality of certain provisions of Republic Act No. 8371 (R.A. 8371), otherwise known as the
Indigenous Peoples Rights Act of 1997 (IPRA), and its Implementing Rules and Regulations (Implementing Rules).
In its resolution of September 29, 1998, the Court required respondents to comment. 1 In compliance, respondents
Chairperson and Commissioners of the National Commission on Indigenous Peoples (NCIP), the government agency
created under the IPRA to implement its provisions, filed on October 13, 1998 their Comment to the Petition, in which they
defend the constitutionality of the IPRA and pray that the petition be dismissed for lack of merit.
On October 19, 1998, respondents Secretary of the Department of Environment and Natural Resources (DENR) and
Secretary of the Department of Budget and Management (DBM) filed through the Solicitor General a consolidated
Comment. The Solicitor General is of the view that the IPRA is partly unconstitutional on the ground that it grants
ownership over natural resources to indigenous peoples and prays that the petition be granted in part.
On November 10, 1998, a group of intervenors, composed of Sen. Juan Flavier, one of the authors of the IPRA, Mr.
Ponciano Bennagen, a member of the 1986 Constitutional Commission, and the leaders and members of 112 groups of
indigenous peoples (Flavier, et. al), filed their Motion for Leave to Intervene. They join the NCIP in defending the
constitutionality of IPRA and praying for the dismissal of the petition.
On March 22, 1999, the Commission on Human Rights (CHR) likewise filed a Motion to Intervene and/or to Appear as
Amicus Curiae. The CHR asserts that IPRA is an expression of the principle of parens patriae and that the State has the
responsibility to protect and guarantee the rights of those who are at a serious disadvantage like indigenous peoples. For
this reason it prays that the petition be dismissed.
On March 23, 1999, another group, composed of the Ikalahan Indigenous People and the Haribon Foundation for the
Conservation of Natural Resources, Inc. (Haribon, et al.), filed a motion to Intervene with attached Comment-in-
Intervention. They agree with the NCIP and Flavier, et al. that IPRA is consistent with the Constitution and pray that the
petition for prohibition and mandamus be dismissed.
The motions for intervention of the aforesaid groups and organizations were granted.
Oral arguments were heard on April 13, 1999. Thereafter, the parties and intervenors filed their respective memoranda in
which they reiterate the arguments adduced in their earlier pleadings and during the hearing.
Petitioners assail the constitutionality of the following provisions of the IPRA and its Implementing Rules on the ground
that they amount to an unlawful deprivation of the State’s ownership over lands of the public domain as well as minerals
and other natural resources therein, in violation of the regalian doctrine embodied in Section 2, Article XII of the
Constitution:
"(1) Section 3(a) which defines the extent and coverage of ancestral domains, and Section 3(b) which, in turn, defines
ancestral lands;
"(2) Section 5, in relation to section 3(a), which provides that ancestral domains including inalienable public lands, bodies
of water, mineral and other resources found within ancestral domains are private but community property of the
indigenous peoples;
"(3) Section 6 in relation to section 3(a) and 3(b) which defines the composition of ancestral domains and ancestral lands;
"(4) Section 7 which recognizes and enumerates the rights of the indigenous peoples over the ancestral domains;
(5) Section 8 which recognizes and enumerates the rights of the indigenous peoples over the ancestral lands;
"(6) Section 57 which provides for priority rights of the indigenous peoples in the harvesting, extraction, development or
exploration of minerals and other natural resources within the areas claimed to be their ancestral domains, and the right to
enter into agreements with nonindigenous peoples for the development and utilization of natural resources therein for a
period not exceeding 25 years, renewable for not more than 25 years; and
"(7) Section 58 which gives the indigenous peoples the responsibility to maintain, develop, protect and conserve the
ancestral domains and portions thereof which are found to be necessary for critical watersheds, mangroves, wildlife
sanctuaries, wilderness, protected areas, forest cover or reforestation."2
Petitioners also content that, by providing for an all-encompassing definition of "ancestral domains" and "ancestral lands"
which might even include private lands found within said areas, Sections 3(a) and 3(b) violate the rights of private
landowners.3
In addition, petitioners question the provisions of the IPRA defining the powers and jurisdiction of the NCIP and making
customary law applicable to the settlement of disputes involving ancestral domains and ancestral lands on the ground that
these provisions violate the due process clause of the Constitution.4
These provisions are:
"(1) sections 51 to 53 and 59 which detail the process of delineation and recognition of ancestral domains and
which vest on the NCIP the sole authority to delineate ancestral domains and ancestral lands;
"(2) Section 52[i] which provides that upon certification by the NCIP that a particular area is an ancestral domain
and upon notification to the following officials, namely, the Secretary of Environment and Natural Resources,
Secretary of Interior and Local Governments, Secretary of Justice and Commissioner of the National
Development Corporation, the jurisdiction of said officials over said area terminates;
"(3) Section 63 which provides the customary law, traditions and practices of indigenous peoples shall be applied
first with respect to property rights, claims of ownership, hereditary succession and settlement of land disputes,
and that any doubt or ambiguity in the interpretation thereof shall be resolved in favor of the indigenous peoples;
"(4) Section 65 which states that customary laws and practices shall be used to resolve disputes involving
indigenous peoples; and
"(5) Section 66 which vests on the NCIP the jurisdiction over all claims and disputes involving rights of the
indigenous peoples."5
Finally, petitioners assail the validity of Rule VII, Part II, Section 1 of the NCIP Administrative Order No. 1, series of 1998,
which provides that "the administrative relationship of the NCIP to the Office of the President is characterized as a lateral
but autonomous relationship for purposes of policy and program coordination." They contend that said Rule infringes upon
the President’s power of control over executive departments under Section 17, Article VII of the Constitution. 6
Petitioners pray for the following:
"(1) A declaration that Sections 3, 5, 6, 7, 8, 52[I], 57, 58, 59, 63, 65 and 66 and other related provisions of R.A.
8371 are unconstitutional and invalid;
"(2) The issuance of a writ of prohibition directing the Chairperson and Commissioners of the NCIP to cease and
desist from implementing the assailed provisions of R.A. 8371 and its Implementing Rules;
"(3) The issuance of a writ of prohibition directing the Secretary of the Department of Environment and Natural
Resources to cease and desist from implementing Department of Environment and Natural Resources Circular
No. 2, series of 1998;
"(4) The issuance of a writ of prohibition directing the Secretary of Budget and Management to cease and desist
from disbursing public funds for the implementation of the assailed provisions of R.A. 8371; and
"(5) The issuance of a writ of mandamus commanding the Secretary of Environment and Natural Resources to
comply with his duty of carrying out the State’s constitutional mandate to control and supervise the exploration,
development, utilization and conservation of Philippine natural resources."7
After due deliberation on the petition, the members of the Court voted as follows:
Seven (7) voted to dismiss the petition. Justice Kapunan filed an opinion, which the Chief Justice and Justices Bellosillo,
Quisumbing, and Santiago join, sustaining the validity of the challenged provisions of R.A. 8371. Justice Puno also filed a
separate opinion sustaining all challenged provisions of the law with the exception of Section 1, Part II, Rule III of NCIP
Administrative Order No. 1, series of 1998, the Rules and Regulations Implementing the IPRA, and Section 57 of the
IPRA which he contends should be interpreted as dealing with the large-scale exploitation of natural resources and should
be read in conjunction with Section 2, Article XII of the 1987 Constitution. On the other hand, Justice Mendoza voted to
dismiss the petition solely on the ground that it does not raise a justiciable controversy and petitioners do not have
standing to question the constitutionality of R.A. 8371.
Seven (7) other members of the Court voted to grant the petition. Justice Panganiban filed a separate opinion expressing
the view that Sections 3 (a)(b), 5, 6, 7 (a)(b), 8, and related provisions of R.A. 8371 are unconstitutional. He reserves
judgment on the constitutionality of Sections 58, 59, 65, and 66 of the law, which he believes must await the filing of
specific cases by those whose rights may have been violated by the IPRA. Justice Vitug also filed a separate opinion
expressing the view that Sections 3(a), 7, and 57 of R.A. 8371 are unconstitutional. Justices Melo, Pardo, Buena,
Gonzaga-Reyes, and De Leon join in the separate opinions of Justices Panganiban and Vitug.
As the votes were equally divided (7 to 7) and the necessary majority was not obtained, the case was redeliberated upon.
However, after redeliberation, the voting remained the same. Accordingly, pursuant to Rule 56, Section 7 of the Rules of
Civil Procedure, the petition is DISMISSED.
Attached hereto and made integral parts thereof are the separate opinions of Justices Puno, Vitug, Kapunan, Mendoza,
and Panganiban.
SO ORDERED.

CAMILO F. BORROMEO, G.R. No. 159310

Petitioner,
Present:
PUNO, C.J., Chairperson,
- versus - CARPIO,
CORONA,
LEONARDO-DE CASTRO, and
BRION, JJ.
ANTONIETTA O. DESCALLAR, Promulgated:
Respondent. February 24, 2009

x--------------------------------------------------x

DECISION

PUNO, C.J.:
What are the rights of an alien (and his successor-in-interest) who acquired real properties in the country as against his
former Filipina girlfriend in whose sole name the properties were registered under the Torrens system?

The facts are as follows:

Wilhelm Jambrich, an Austrian, arrived in the Philippines in 1983 after he was assigned by his employer,

Simmering-Graz Panker A.G., an Austrian company, to work at a project in Mindoro. In 1984, he transferred to Cebu and

worked at the Naga II Project of the National Power Corporation. There, he met respondent Antonietta Opalla-Descallar, a

separated mother of two boys who was working as a waitress at St. Moritz Hotel. Jambrich befriended respondent and

asked her to tutor him in English. In dire need of additional income to support her children, respondent agreed. The tutorials

were held in Antoniettas residence at a squatters area in Gorordo Avenue.

Jambrich and respondent fell in love and decided to live together in a rented house in Hernan

Cortes, Mandaue City. Later, they transferred to their own house and lots at Agro-Macro Subdivision,

Cabancalan, Mandaue City. In the Contracts to Sell dated November 18, 1985 [1] and March 10, 1986[2] covering the

properties,Jambrich and respondent were referred to as the buyers. A Deed of Absolute Sale dated November 16,

1987[3] was likewise issued in their favor. However, when the Deed of Absolute Sale was presented for registration before

the Register of Deeds, registration was refused on the ground that Jambrich was an alien and could not acquire alienable

lands of the public domain. Consequently, Jambrichs name was erased from the document. But it could be noted that his

signature remained on the left hand margin of page 1, beside respondents signature as buyer on page 3, and at the bottom

of page 4 which is the last page. Transfer Certificate of Title (TCT) Nos. 24790, 24791 and 24792 over the properties were

issued in respondents name alone.

Jambrich also formally adopted respondents two sons in Sp. Proc. No. 39-MAN,[4] and per Decision of

the Regional Trial Court of Mandaue City dated May 5, 1988.[5]

However, the idyll lasted only until April 1991. By then, respondent found a new boyfriend while Jambrich began to

live with another woman in Danao City.Jambrich supported respondents sons for only two months after the break up.

Jambrich met petitioner Camilo F. Borromeo sometime in 1986. Petitioner was engaged in the real estate

business. He also built and repaired speedboats as a hobby. In 1989, Jambrich purchased an engine and some accessories

for his boat from petitioner, for which he became indebted to the latter for about P150,000.00. To pay for his debt, he sold

his rights and interests in the Agro-Macro properties to petitioner for P250,000, as evidenced by a Deed of Absolute
Sale/Assignment.[6] On July 26, 1991, when petitioner sought to register the deed of assignment, he discovered that titles

to the three lots have been transferred in the name of respondent, and that the subject property has already been mortgaged.

On August 2, 1991, petitioner filed a complaint against respondent for recovery of real property before

the Regional Trial Court of Mandaue City. Petitioner alleged that the Contracts to Sell dated November 18, 1985 and March

10, 1986 and the Deed of Absolute Sale dated November 16, 1987 over the properties which identified both Jambrich and

respondent as buyers do not reflect the true agreement of the parties since respondent did not pay a single centavo of the

purchase price and was not in fact a buyer; that it was Jambrich alone who paid for the properties using his exclusive funds;

that Jambrich was the real and absolute owner of the properties; and, that petitioner acquired absolute ownership by virtue

of the Deed of Absolute Sale/Assignment dated July 11, 1991 which Jambrich executed in his favor.

In her Answer, respondent belied the allegation that she did not pay a single centavo of the purchase price. On the

contrary, she claimed that she solely and exclusively used her own personal funds to defray and pay for the purchase price

of the subject lots in question, and that Jambrich, being an alien, was prohibited to acquire or own real property in

the Philippines.

At the trial, respondent presented evidence showing her alleged financial capacity to buy the disputed property with

money from a supposed copra business.Petitioner, in turn, presented Jambrich as his witness and documentary evidence

showing the substantial salaries which Jambrich received while still employed by the Austrian company, Simmering-Graz

Panker A.G.

In its decision, the court a quo found

Evidence on hand clearly show that at the time of the purchase and acquisition of [the] properties
under litigation that Wilhelm Jambrich was still working and earning much. This fact of Jambrich earning
much is not only supported by documentary evidence but also by the admission made by the defendant
Antoniet[t]a Opalla. So that, Jambrichs financial capacity to acquire and purchase the
properties . . . is not disputed.[7]

xxx

On the other hand, evidence . . . clearly show that before defendant met Jambrich sometime in the
latter part of 1984, she was only working as a waitress at the St. Moritz Hotel with an income of P1,000.00
a month and was . . . renting and living only in . . . [a] room at . . . [a] squatter area at Gorordo Ave., Cebu
City; that Jambrich took pity of her and the situation of her children that he offered her a better life which
she readily accepted. In fact, this miserable financial situation of hers and her two children . . . are all stated
and reflected in the Child Study Report dated April 20, 1983 (Exhs. G and G-1) which facts she supplied to
the Social Worker who prepared the same when she was personally interviewed by her in connection with
the adoption of her two children by Wilhelm Jambrich. So that, if such facts were not true because these
are now denied by her . . . and if it was also true that during this time she was already earning as much
as P8,000.00 to P9,000.00 as profit per month from her copra business, it would be highly unbelievable
and impossible for her to be living only in such a miserable condition since it is the observation of this Court
that she is not only an extravagant but also an expensive person and not thrifty as she wanted to impress
this Court in order to have a big saving as clearly shown by her actuation when she was already cohabiting
and living with Jambrich that according to her . . . the allowance given . . . by him in the amount of $500.00
a month is not enough to maintain the education and maintenance of her children.[8]

This being the case, it is highly improbable and impossible that she could acquire the
properties under litigation or could contribute any amount for their acquisition which according to
her is worth more than P700,000.00 when while she was working as [a] waitress at St. Moritz Hotel
earning P1,000.00 a month as salary and tips of more or less P2,000.00 she could not even provide
[for] the daily needs of her family so much so that it is safe to conclude that she was really in
 financial distress when she met and accepted the offer of Jambrich to come and live with him
because that was a big financial opportunity for her and her children who were already abandoned
by her husband.[9]

xxx
The only probable and possible reason why her name appeared and was included in [the contracts
to sell dated November 18, 1985 and March 10, 1986 and finally, the deed of absolute sale dated November
16, 1987] as buyer is because as observed by the Court, she being a scheming and exploitive woman, she
has taken advantage of the goodness of Jambrich who at that time was still bewitched by her beauty,
sweetness, and good attitude shown by her to him since he could still very well provide for everything she
needs, he being earning (sic) much yet at that time. In fact, as observed by this Court, the acquisition of
these properties under litigation was at the time when their relationship was still going smoothly and
harmoniously.[10] [Emphasis supplied.]

The dispositive portion of the Decision states:

WHEREFORE, . . . Decision is hereby rendered in favor of the plaintiff and against the defendant
Antoniet[t]a Opalla by:

1) Declaring plaintiff as the owner in fee simple over the residential house of strong materials and
three parcels of land designated as Lot Nos. 1, 3 and 5 which are covered by TCT Nos. 24790, 24791 and
24792 issued by the Register of Deeds of Mandaue City;

2) Declaring as null and void TCT Nos. 24790, 24791 and 24792 issued in the name of defendant
Antoniet[t]a Descallar by the Register of Deeds of Mandaue City;

3) Ordering the Register of Deeds of Mandaue City to cancel TCT Nos. 24790, 24791 and 24792
in the name of defendant Antoniet[t]a Descallar and to issue new ones in the name of plaintiff Camilo F.
Borromeo;

4) Declaring the contracts now marked as Exhibits I, K and L as avoided insofar as they appear to
convey rights and interests over the properties in question to the defendant Antoniet[t]a Descallar;

5) Ordering the defendant to pay plaintiff attorneys fees in the amount of P25,000.00 and litigation
expenses in the amount of P10,000.00; and,

6) To pay the costs.[11]

Respondent appealed to the Court of Appeals. In a Decision dated April 10, 2002, [12] the appellate court reversed

the decision of the trial court. In ruling for the respondent, the Court of Appeals held:
We disagree with the lower courts conclusion. The circumstances involved in the case cited by the
lower court and similar cases decided on by the Supreme Court which upheld the validity of the title of the
subsequent Filipino purchasers are absent in the case at bar. It should be noted that in said cases, the title
to the subject property has been issued in the name of the alien transferee (Godinez et al., vs. Fong Pak
Luen et al., 120 SCRA 223 citing Krivenko vs. Register of Deeds of Manila, 79 Phils. 461; United Church
Board for World Ministries vs. Sebastian, 159 SCRA 446, citing the case of Sarsosa Vda. De Barsobia vs.
Cuenco, 113 SCRA 547; Tejido vs. Zamacoma, 138 SCRA 78). In the case at bar, the title of the subject
property is not in the name of Jambrich but in the name of defendant-appellant. Thus, Jambrich could not
have transferred a property he has no title thereto.[13]

Petitioners motion for reconsideration was denied.

Hence, this petition for review.

Petitioner assigns the following errors:

I. THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN DISREGARDING
RESPONDENTS JUDICIAL ADMISSION AND OTHER OVERWHELMING EVIDENCE
ESTABLISHING JAMBRICHS PARTICIPATION, INTEREST AND OWNERSHIP OF THE
PROPERTIES IN QUESTION AS FOUND BY THE HONORABLE TRIAL COURT.
 II. THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN HOLDING THAT
JAMBRICH HAS NO TITLE TO THE PROPERTIES IN QUESTION AND MAY NOT THEREFORE
TRANSFER AND ASSIGN ANY RIGHTS AND INTERESTS IN FAVOR OF PETITIONER.

III. THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN REVERSING THE WELL-
REASONED DECISION OF THE TRIAL COURT AND IN IMPOSING DOUBLE COSTS AGAINST
HEREIN PETITIONER (THEN, PLAINTIFF-APPELLEE).[14]

First, who purchased the subject properties?

The evidence clearly shows, as pointed out by the trial court, who between respondent and Jambrich possesses

the financial capacity to acquire the properties in dispute. At the time of the acquisition of the properties in 1985 to 1986,

Jambrich was gainfully employed at Simmering-Graz Panker A.G., an Austrian company. He was earning an estimated

monthly salary of P50,000.00. Then, Jambrich was assigned to Syria for almost one year where his monthly salary was

approximately P90,000.00.

On the other hand, respondent was employed as a waitress from 1984 to 1985 with a monthly salary of not more

than P1,000.00. In 1986, when the parcels of land were acquired, she was unemployed, as admitted by her during the pre-

trial conference. Her allegations of income from a copra business were unsubstantiated.The supposed copra business was

actually the business of her mother and their family, with ten siblings. She has no license to sell copra, and had not filed

any income tax return. All the motorized bancas of her mother were lost to fire, and the last one left standing was already

scrap. Further, the Child Study Report[15] submitted by the Department of Social Welfare and Development (DSWD) in the

adoption proceedings of respondents two sons by Jambrich disclosed that:

Antonietta tried all types of job to support the children until she was accepted as a waitress at St.
Moritz Restaurant in 1984. At first she had no problem with money because most of the customers of St.
Moritz are (sic) foreigners and they gave good tips but towards the end of 1984 there were no more
foreigners coming because of the situation in the Philippines at that time. Her financial problem started then.
She was even renting a small room in a squatters area in Gorordo Ave., Cebu City. It was during her time
of great financial distress that she met Wilhelm Jambrich who later offered her a decent place for herself
and her children.[16]

The DSWD Home Study Report[17] further disclosed that:

[Jambrich] was then at the Restaurant of St. Moritz when he saw Antonietta Descallar, one of the
waitresses of the said Restaurants. He made friends with the girl and asked her to tutor him in [the] English
language. Antonietta accepted the offer because she was in need of additional income to support [her] 2
young children who were abandoned by their father. Their session was agreed to be scheduled every
afternoon at the residence of Antonietta in the squatters area in Gorordo Avenue, Cebu City. The Austrian
was observing the situation of the family particularly the children who were malnourished. After a few
months sessions, Mr. Jambrich offered to transfer the family into a decent place. He told Antonietta that the
place is not good for the children. Antonietta who was miserable and financially distressed at that time
accepted the offer for the sake of the children.[18]

Further, the following additional pieces of evidence point to Jambrich as the source of fund used to purchase the

three parcels of land, and to construct the house thereon:

(1) Respondent Descallar herself affirmed under oath, during her re-direct examination and during the proceedings

for the adoption of her minor children, that Jambrich was the owner of the properties in question, but that his name was
deleted in the Deed of Absolute Sale because of legal constraints. Nonetheless, his signature remained in the deed of sale,

where he signed as buyer.

(2) The money used to pay the subject parcels of land in installments was in postdated checks issued by

Jambrich. Respondent has never opened any account with any bank. Receipts of the installment payments were also in the

name of Jambrich and respondent.

(3) In 1986-1987, respondent lived in Syria with Jambrich and her two children for ten months, where she was

completely under the support of Jambrich.

(4) Jambrich executed a Last Will and Testament, where he, as owner, bequeathed the subject properties to

respondent.

Thus, Jambrich has all authority to transfer all his rights, interests and participation over the subject properties to

petitioner by virtue of the Deed of Assignment he executed on July 11, 1991.

Well-settled is the rule that this Court is not a trier of facts. The findings of fact of the trial court are accorded great

weight and respect, if not finality by this Court, subject to a number of exceptions. In the instant case, we find no reason to

disturb the factual findings of the trial court. Even the appellate court did not controvert the factual findings of the trial

court. They differed only in their conclusions of law.

Further, the fact that the disputed properties were acquired during the couples cohabitation also does not help

respondent. The rule that co-ownership applies to a man and a woman living exclusively with each other as husband and

wife without the benefit of marriage, but are otherwise capacitated to marry each other, does not apply. [19] In the instant

case, respondent was still legally married to another when she and Jambrich lived together. In such an adulterous

relationship, no co-ownership exists between the parties. It is necessary for each of the partners to prove his or her actual

contribution to the acquisition of property in order to be able to lay claim to any portion of it. Presumptions of co-ownership

and equal contribution do not apply.[20]

Second, we dispose of the issue of registration of the properties in the name of respondent alone. Having found

that the true buyer of the disputed house and lots was the Austrian Wilhelm Jambrich, what now is the effect of registration

of the properties in the name of respondent?

It is settled that registration is not a mode of acquiring ownership.[21] It is only a means of confirming the fact of its

existence with notice to the world at large. [22] Certificates of title are not a source of right. The mere possession of a title

does not make one the true owner of the property. Thus, the mere fact that respondent has the titles of the disputed

properties in her name does not necessarily, conclusively and absolutely make her the owner. The rule on indefeasibility of

title likewise does not apply to respondent. A certificate of title implies that the title is quiet,[23] and that it is perfect, absolute

and indefeasible.[24] However, there are well-defined exceptions to this rule, as when the transferee is not a holder in good

faith and did not acquire the subject properties for a valuable consideration. [25] This is the situation in the instant

case. Respondent did not contribute a single centavo in the acquisition of the properties. She had no income of her own at

that time, nor did she have any savings. She and her two sons were then fully supported by Jambrich.
 Respondent argued that aliens are prohibited from acquiring private land. This is embodied in Section 7, Article XII

of the 1987 Constitution,[26] which is basically a reproduction of Section 5, Article XIII of the 1935 Constitution,[27] and Section

14, Article XIV of the 1973 Constitution.[28] The capacity to acquire private land is dependent on the capacity to acquire or

hold lands of the public domain. Private land may be transferred only to individuals or entities qualified to acquire or hold

lands of the public domain. Only Filipino citizens or corporations at least 60% of the capital of which is owned by Filipinos

are qualified to acquire or hold lands of the public domain. Thus, as the rule now stands, the fundamental law explicitly

prohibits non-Filipinos from acquiring or holding title to private lands, except only by way of legal succession or if the

acquisition was made by a former natural-born citizen.[29]

Therefore, in the instant case, the transfer of land from Agro-Macro Development Corporation to Jambrich, who is

an Austrian, would have been declared invalid if challenged, had not Jambrich conveyed the properties to petitioner who is

a Filipino citizen. In United Church Board for World Ministries v. Sebastian,[30] the Court reiterated the consistent ruling

in a number of cases[31] that if land is invalidly transferred to an alien who subsequently becomes a Filipino citizen or

transfers it to a Filipino, the flaw in the original transaction is considered cured and the title of the transferee is rendered

valid. Applying United Church Board for World Ministries, the trial court ruled in favor of petitioner, viz.:
[W]hile the acquisition and the purchase of (sic) Wilhelm Jambrich of the properties under litigation
[were] void ab initio since [they were] contrary to the Constitution of the Philippines, he being a foreigner,
yet, the acquisition of these properties by plaintiff who is a Filipino citizen from him, has cured the flaw in
the original transaction and the title of the transferee is valid.

The trial court upheld the sale by Jambrich in favor of petitioner and ordered the cancellation of the TCTs in the name of

respondent. It declared petitioner as owner in fee simple of the residential house of strong materials and three parcels of

land designated as Lot Nos. 1, 3 and 5, and ordered the Register of Deeds of Mandaue City to issue new certificates of title

in his name. The trial court likewise ordered respondent to pay petitioner P25,000 as attorneys fees and P10,000 as litigation

expenses, as well as the costs of suit.

We affirm the Regional Trial Court.

The rationale behind the Courts ruling in United Church Board for World Ministries, as reiterated in subsequent

cases,[32] is this since the ban on aliens is intended to preserve the nations land for future generations of Filipinos, that aim

is achieved by making lawful the acquisition of real estate by aliens who became Filipino citizens by naturalization or those

transfers made by aliens to Filipino citizens. As the property in dispute is already in the hands of a qualified person, a Filipino

citizen, there would be no more public policy to be protected. The objective of the constitutional provision to keep our lands

in Filipino hands has been achieved.

IN VIEW WHEREOF, the petition is GRANTED. The Decision of the Court of Appeals in C.A. G.R. CV No. 42929

dated April 10, 2002 and its Resolution dated July 8, 2003 are REVERSED and SET ASIDE. The Decision of

the Regional Trial Court of Mandaue City in Civil Case No. MAN-1148 is REINSTATED.

SO ORDERED.
G.R. No. 74833 January 21, 1991
THOMAS C. CHEESMAN, petitioner,
vs.
INTERMEDIATE APPELLATE COURT and ESTELITA PADILLA, respondents.
Estanislao L. Cesa, Jr. for petitioner.
Benjamin I. Fernandez for private respondent.

NARVASA, J.:
This appeal concerns the attempt by an American citizen (petitioner Thomas Cheesman) to annul — for lack of consent
on his part — the sale by his Filipino wife (Criselda) of a residential lot and building to Estelita Padilla, also a Filipino.
Thomas Cheesman and Criselda P. Cheesman were married on December 4, 1970 but have been separated since
February 15,1981.1
On June 4, 1974, a "Deed of Sale and Transfer of Possessory Rights" was executed by Armando Altares conveying a
parcel of unregistered land and the house thereon (at No. 7 Neptune Street, Gordon Heights, Olongapo City) in favor of
"Criselda P. Cheesman, of legal age, Filipino citizen, married to Thomas Cheesman, and residing at Lot No. 1, Blk. 8,
Filtration Road, Sta. Rita, Olongapo City . . ."2 Thomas Cheesman, although aware of the deed, did not object to the
transfer being made only to his wife.3
Thereafter—and again with the knowledge of Thomas Cheesman and also without any protest by him—tax declarations
for the property purchased were issued in the name only of Criselda Cheesman and Criselda assumed exclusive
management and administration of said property, leasing it to tenants. 4
On July 1, 1981, Criselda Cheesman sold the property to Estelita M. Padilla, without the knowledge or consent of Thomas
Cheesman.5 The deed described Criselda as being" . . . of legal age, married to an American citizen,. . ." 6
Thirty days later, or on July 31, 1981, Thomas Cheesman brought suit in the Court of First Instance at Olongapo City
against his wife, Criselda, and Estelita Padilla, praying for the annulment of the sale on the ground that the transaction
had been executed without his knowledge and consent.7 An answer was filed in the names of both defendants, alleging
that (1) the property sold was paraphernal, having been purchased by Criselda with funds exclusively belonging to her
("her own separate money"); (2) Thomas Cheesman, being an American, was disqualified to have any interest or right of
ownership in the land; and (3) Estelita Padilla was a buyer in good faith. 8
During the pre-trial conference, the parties agreed upon certain facts which were subsequently set out in a pre-trial Order
dated October 22, 1981,9 as follows:
1. Both parties recognize the existence of the Deed of Sale over the residential house located at No. 7 Granada
St., Gordon Heights, Olongapo City, which was acquired from Armando Altares on June 4, 1974 and sold by
defendant Criselda Cheesman to Estelita Padilla on July 12, 1981; and
2. That the transaction regarding the transfer of their property took place during the existence of their marriage as
the couple were married on December 4, 1970 and the questioned property was acquired sometime on June
4,1974.
The action resulted in a judgment dated June 24, 1982,10 declaring void ab initio the sale executed by Criselda Cheesman
in favor of Estelita M. Padilla, and ordering the delivery of the property to Thomas Cheesman as administrator of the
conjugal partnership property, and the payment to him of P5,000.00 as attorney's fees and expenses of litigation. 11
The judgment was however set aside as regards Estelita Padilla on a petition for relief filed by the latter, grounded on
"fraud, mistake and/or excusable negligence" which had seriously impaired her right to present her case
adequately.12 "After the petition for relief from judgment was given due course," according to petitioner, "a new judge
presided over the case."13
Estelita Padilla filed a supplemental pleading on December 20, 1982 as her own answer to the complaint, and a motion
for summary judgment on May 17, 1983. Although there was initial opposition by Thomas Cheesman to the motion, the
parties ultimately agreed on the rendition by the court of a summary judgment after entering into a stipulation of facts, at
the hearing of the motion on June 21, 1983, the stipulation being of the following tenor: 14
(1) that the property in question was bought during the existence of the marriage between the plaintiff and the
defendant Criselda P. Cheesman;
(2) that the property bought during the marriage was registered in the name of Criselda Cheesman and that the
Deed of Sale and Transfer of Possessory Rights executed by the former owner-vendor Armando Altares in favor
of Criselda Cheesman made no mention of the plaintiff;
(3) that the property, subject of the proceedings, was sold by defendant Criselda Cheesman in favor of the other
defendant Estelita M. Padilla, without the written consent of the plaintiff.
Obviously upon the theory that no genuine issue existed any longer and there was hence no need of a trial, the parties
having in fact submitted, as also stipulated, their respective memoranda each praying for a favorable verdict, the Trial
Court15 rendered a "Summary Judgment" dated August 3, 1982 declaring "the sale executed by . . . Criselda Cheesman in
favor of . . . Estelita Padilla to be valid," dismissing Thomas Cheesman's complaint and ordering him "to immediately turn
over the possession of the house and lot subject of . . . (the) case to . . . Estelita Padilla . . ."16
The Trial Court found that —
 1) the evidence on record satisfactorily overcame the disputable presumption in Article 160 of the Civil Code—
that all property of the marriage belongs to the conjugal partnership "unless it be proved that it pertains
exclusively to the husband or to the wife"—and that the immovable in question was in truth Criselda's paraphernal
property;
2) that moreover, said legal presumption in Article 160 could not apply "inasmuch as the husband-plaintiff is an
American citizen and therefore disqualified under the Constitution to acquire and own real properties; and
3) that the exercise by Criselda of exclusive acts of dominion with the knowledge of her husband "had led . . .
Estelita Padilla to believe that the properties were the exclusive properties of Criselda Cheesman and on the faith
of such a belief she bought the properties from her and for value," and therefore, Thomas Cheesman was, under
Article 1473 of the Civil Code, estopped to impugn the transfer to Estelita Padilla.
Thomas Cheesman appealed to the Intermediate Appellate Court. There he assailed the Trial Court acts (1) of granting
Estelita Padilla's petition for relief, and its resolution of matters not subject of said petition; (2) of declaring valid the sale to
Estelita Padilla despite the lack of consent thereto by him, and the presumption of the conjugal character of the property in
question pursuant to Article 160 of the Civil Code; (3) of disregarding the judgment of June 24, 1982 which, not having
been set aside as against Criselda Cheesman, continued to be binding on her; and (4) of making findings of fact not
supported by evidence. All of these contentions were found to be without merit by the Appellate Tribunal which, on
January 7, 1986, promulgated a decision (erroneously denominated, "Report") 17affirming the "Summary Judgment
complained of," "having found no reversible error" therein.
Once more, Thomas Cheesman availed of the remedy of appeal, this time to this Court. Here, he argues that it was
reversible error for the Intermediate Appellate Court —
1) to find that the presumption that the property in question is conjugal in accordance with Article 160 had been
satisfactorily overcome by Estelita Padilla;18
2) to rule that Estelita Padilla was a purchaser of said property in good faith, it appearing:
a) that the deed by which the property was conveyed to Criselda Cheesman described her as "married to
Thomas C. Cheesman," as well as the deed by which the property was later conveyed to Estelita Padilla
by Criselda Cheesman also described her as "married to an American citizen," and both said descriptions
had thus "placed Estelita on knowledge of the conjugal nature of the property;" and
b) that furthermore, Estelita had admitted to stating in the deed by which she acquired the property a
price much lower than that actually paid "in order to avoid payment of more obligation to the
government;"19
3) to decline to declare that the evidence did not warrant the grant of Estelita Padilla's petition for relief on the ground of
"fraud, mistake and/or excusable negligence;"20
4) to hold that Thomas Cheesman had waived his objection to Estelita's petition for relief by failing to appeal from the
order granting the same;
5) to accord to Estelita Padilla a relief other than that she had specifically prayed for in her petition for relief, ie., "the
restoration of the purchase price which Estelita allegedly paid to Criselda;" 21 and
6) to fail to declare that Thomas Cheesman's citizenship is not a bar to his action to recover the lot and house for the
conjugal partnership.22
Such conclusions as that (1) fraud, mistake or excusable negligence existed in the premises justifying relief to Estelita
Padilla under Rule 38 of the Rules of Court, or (2) that Criselda Cheesman had used money she had brought into her
marriage to Thomas Cheesman to purchase the lot and house in question, or (3) that Estelita Padilla believed in good
faith that Criselda Cheesman was the exclusive owner of the property that she (Estelita) intended to and did in fact buy—
derived from the evidence adduced by the parties, the facts set out in the pleadings or otherwise appearing on record—
are conclusions or findings of fact. As distinguished from a question of law—which exists "when the doubt or difference
arises as to what the law is on a certain state of facts" — "there is a question of fact when the doubt or difference arises
as to the truth or the falsehood of alleged facts;"23 or when the "query necessarily invites calibration of the whole evidence
considering mainly the credibility of witnesses, existence and relevancy of specific surrounding circumstances, their
relation; to each other and to the whole and the probabilities of the situation." 24
Now, it is axiomatic that only questions of law, distinctly set forth, may be raised in a petition for the review oncertiorari of
a decision of the Court of Appeals presented to this Court.25 As everyone knows or ought to know, the appellate
jurisdiction of this Court is limited to reviewing errors of law, accepting as conclusive the factual findings of the lower court
upon its own assessment of the evidence.26 The creation of the Court of Appeals was precisely intended to take away
from the Supreme Court the work of examining the evidence, and confine its task to the determination of questions which
do not call for the reading and study of transcripts containing the testimony of witnesses. 27 The rule of conclusiveness of
the factual findings or conclusions of the Court of Appeals is, to be sure, subject to certain exceptions, 28 none of which
however obtains in the case at bar.
It is noteworthy that both the Trial Court and the Intermediate Appellate Court reached the same conclusions on the three
(3) factual matters above set forth, after assessment of the evidence and determination of the probative value thereof.
Both Courts found that the facts on record adequately proved fraud, mistake or excusable negligence by which Estelita
Padilla's rights had been substantially impaired; that the funds used by Criselda Cheesman was money she had earned
and saved prior to her marriage to Thomas Cheesman, and that Estelita Padilla did believe in good faith that Criselda
Cheesman was the sole owner of the property in question. Consequently, these determinations of fact will not be here
disturbed, this Court having been cited to no reason for doing so.
These considerations dispose of the first three (3) points that petitioner Cheesman seeks to make in his
appeal.1âwphi1They also make unnecessary an extended discussion of the other issues raised by him. As to them, it
should suffice to restate certain fundamental propositions.
An order of a Court of First Instance (now Regional Trial Court) granting a petition for relief under Rule 38 is interlocutory
and is not appealable. Hence, the failure of the party who opposed the petition to appeal from said order, or his
participation in the proceedings subsequently had, cannot be construed as a waiver of his objection to the petition for
relief so as to preclude his raising the same question on appeal from the judgment on the merits of the main case. Such a
party need not repeat his objections to the petition for relief, or perform any act thereafter (e.g., take formal exception) in
order to preserve his right to question the same eventually, on appeal, it being sufficient for this purpose that he has made
of record "the action which he desires the court to take or his objection to the action of the court and his grounds
therefor."29
Again, the prayer in a petition for relief from judgment under Rule 38 is not necessarily the same prayer in the petitioner's
complaint, answer or other basic pleading. This should be obvious. Equally obvious is that once a petition for relief is
granted and the judgment subject thereof set aside, and further proceedings are thereafter had, the Court in its judgment
on the merits may properly grant the relief sought in the petitioner's basic pleadings, although different from that stated in
his petition for relief.
Finally, the fundamental law prohibits the sale to aliens of residential land. Section 14, Article XIV of the 1973 Constitution
ordains that, "Save in cases of hereditary succession, no private land shall be transferred or conveyed except to
individuals, corporations, or associations qualified to acquire or hold lands of the public domain."30Petitioner Thomas
Cheesman was, of course, charged with knowledge of this prohibition. Thus, assuming that it was his intention that the lot
in question be purchased by him and his wife, he acquired no right whatever over the property by virtue of that purchase;
and in attempting to acquire a right or interest in land, vicariously and clandestinely, he knowingly violated the
Constitution; the sale as to him was null and void.31 In any event, he had and has no capacity or personality to question
the subsequent sale of the same property by his wife on the theory that in so doing he is merely exercising the prerogative
of a husband in respect of conjugal property. To sustain such a theory would permit indirect controversion of the
constitutional prohibition. If the property were to be declared conjugal, this would accord to the alien husband a not
insubstantial interest and right over land, as he would then have a decisive vote as to its transfer or disposition. This is a
right that the Constitution does not permit him to have.
As already observed, the finding that his wife had used her own money to purchase the property cannot, and will not, at
this stage of the proceedings be reviewed and overturned. But even if it were a fact that said wife had used conjugal funds
to make the acquisition, the considerations just set out militate, on high constitutional grounds, against his recovering and
holding the property so acquired or any part thereof. And whether in such an event, he may recover from his wife any
share of the money used for the purchase or charge her with unauthorized disposition or expenditure of conjugal funds is
not now inquired into; that would be, in the premises, a purely academic exercise. An equally decisive consideration is
that Estelita Padilla is a purchaser in good faith, both the Trial Court and the Appellate Court having found that
Cheesman's own conduct had led her to believe the property to be exclusive property of the latter's wife, freely disposable
by her without his consent or intervention. An innocent buyer for value, she is entitled to the protection of the law in her
purchase, particularly as against Cheesman, who would assert rights to the property denied him by both letter and spirit of
the Constitution itself.
WHEREFORE, the appealed decision is AFFIRMED, with costs against petitioner.
SO ORDERED.

G.R. No. L-27952 February 15, 1982

TESTATE ESTATE OF JOSE EUGENIO RAMIREZ, MARIA LUISA PALACIOS, Administratrix, petitioner-appellee,
vs.
MARCELLE D. VDA. DE RAMIREZ, ET AL., oppositors, JORGE and ROBERTO RAMIREZ, legatees, oppositors-
appellants.

ABAD SANTOS, J.:

The main issue in this appeal is the manner of partitioning the testate estate of Jose Eugenio Ramirez among the principal
beneficiaries, namely: his widow Marcelle Demoron de Ramirez; his two grandnephews Roberto and Jorge Ramirez; and
his companion Wanda de Wrobleski.
The task is not trouble-free because the widow Marcelle is a French who lives in Paris, while the companion Wanda is an
Austrian who lives in Spain. Moreover, the testator provided for substitutions.
Jose Eugenio Ramirez, a Filipino national, died in Spain on December 11, 1964, with only his widow as compulsory heir.
His will was admitted to probate by the Court of First Instance of Manila, Branch X, on July 27, 1965. Maria Luisa Palacios
was appointed administratrix of the estate. In due time she submitted an inventory of the estate as follows:
INVENTARIO
Una sexta parte (1/6) proindiviso de un te
rreno, con sus mejoras y edificaciones, situadoen
 la Escolta, Manila............................................................. P500,000.00
Una sexta parte (1/6) proindiviso de dos
parcelas de terreno situadas en Antipolo, Rizal................... 658.34
Cuatrocientos noventa y uno (491) acciones
de la 'Central Azucarera de la Carlota a P17.00
por accion ................................................................................8,347.00
Diez mil ochocientos seize (10,806) acciones
de la 'Central Luzon Milling Co.', disuelta y en
liquidacion a P0.15 por accion ..............................................1,620.90
Cuenta de Ahorros en el Philippine Trust
Co.............................................................................................. 2,350.73
TOTAL.............................................................. P512,976.97
MENOS:
Deuda al Banco de las Islas Filipinas, garan-
tizada con prenda de las acciones de La Carlota ......... P 5,000,00
VALOR LIQUIDO........................................... P507,976.97
The testamentary dispositions are as follows:
A.—En nuda propiedad, a D. Roberto y D. Jorge Ramirez, ambas menores de edad, residentes en
Manila, I.F., calle 'Alright, No. 1818, Malate, hijos de su sobrino D. Jose Ma. Ramirez, con sustitucion
vulgar a favor de sus respectivos descendientes, y, en su defecto, con sustitucion vulgar reciprocal entre
ambos.
El precedente legado en nuda propiedad de la participacion indivisa de la finca Santa Cruz Building, lo
ordena el testador a favor de los legatarios nombrados, en atencion a que dicha propiedad fue creacion
del querido padre del otorgante y por ser aquellos continuadores del apellido Ramirez,
B.—Y en usufructo a saber: —
a. En cuanto a una tercera parte, a favor de la esposa del testador, Da. Marcelle Ramirez, domiciliada en
IE PECO, calle del General Gallieni No. 33, Seine Francia, con sustitucion vulgar u fideicomisaria a favor
de Da. Wanda de Wrobleski, de Palma de Mallorca, Son Rapina Avenida de los Reyes 13,
b.—Y en cuanto a las dos terceras partes restantes, a favor de la nombrada Da. Wanda de Nrobleski con
sustitucion vulgar v fideicomisaria a saber:—
En cuanto a la mitad de dichas dos terceras partes, a favor de D. Juan Pablo Jankowski, de Son Rapina
Palma de Mallorca; y encuanto a la mitad restante, a favor de su sobrino, D. Horace V. Ramirez, San
Luis Building, Florida St. Ermita, Manila, I.F.
A pesar de las sustituciones fideiconiisarias precedentemente ordinadas, las usufiructuarias nombradas
conjuntamente con los nudo propietarios, podran en cualquier memento vender a tercero los bienes
objeto delegado, sin intervencion alguna de los titulares fideicomisaarios.
On June 23, 1966, the administratrix submitted a project of partition as follows: the property of the deceased is to be
divided into two parts. One part shall go to the widow 'en pleno dominio" in satisfaction of her legitime; the other part or
"free portion" shall go to Jorge and Roberto Ramirez "en nuda propriedad." Furthermore, one third (1/3) of the free portion
is charged with the widow's usufruct and the remaining two-thirds (2/3) with a usufruct in favor of Wanda.
Jorge and Roberto opposed the project of partition on the grounds: (a) that the provisions for vulgar substitution in favor of
Wanda de Wrobleski with respect to the widow's usufruct and in favor of Juan Pablo Jankowski and Horacio V. Ramirez,
with respect to Wanda's usufruct are invalid because the first heirs Marcelle and Wanda) survived the testator; (b) that the
provisions for fideicommissary substitutions are also invalid because the first heirs are not related to the second heirs or
substitutes within the first degree, as provided in Article 863 of the Civil Code; (c) that the grant of a usufruct over real
property in the Philippines in favor of Wanda Wrobleski, who is an alien, violates Section 5, Article III of the Philippine
Constitution; and that (d) the proposed partition of the testator's interest in the Santa Cruz (Escolta) Building between the
widow Marcelle and the appellants, violates the testator's express win to give this property to them Nonetheless, the lower
court approved the project of partition in its order dated May 3, 1967. It is this order which Jorge and Roberto have
appealed to this Court.
1. The widow's legitime.
The appellant's do not question the legality of giving Marcelle one-half of the estate in full ownership. They admit that the
testator's dispositions impaired his widow's legitime. Indeed, under Art. 900 of the Civil Code "If the only survivor is the
widow or widower, she or he shall be entitled to one-half of the hereditary estate." And since Marcelle alone survived the
deceased, she is entitled to one-half of his estate over which he could impose no burden, encumbrance, condition or
substitution of any kind whatsoever. (Art. 904, par. 2, Civil Code.)
It is the one-third usufruct over the free portion which the appellants question and justifiably so. It appears that the court a
quo approved the usufruct in favor of Marcelle because the testament provides for a usufruct in her favor of one-third of
the estate. The court a quo erred for Marcelle who is entitled to one-half of the estate "en pleno dominio" as her legitime
and which is more than what she is given under the will is not entitled to have any additional share in the estate. To give
Marcelle more than her legitime will run counter to the testator's intention for as stated above his dispositions even
impaired her legitime and tended to favor Wanda.
2. The substitutions.
It may be useful to recall that "Substitution is the appoint- judgment of another heir so that he may enter into the
inheritance in default of the heir originally instituted." (Art. 857, Civil Code. And that there are several kinds of
substitutions, namely: simple or common, brief or compendious, reciprocal, and fideicommissary (Art. 858, Civil Code.)
According to Tolentino, "Although the Code enumerates four classes, there are really only two principal classes of
substitutions: the simple and the fideicommissary. The others are merely variations of these two." (111 Civil Code, p. 185
[1973].)
The simple or vulgar is that provided in Art. 859 of the Civil Code which reads:
ART. 859. The testator may designate one or more persons to substitute the heir or heirs instituted in
case such heir or heirs should die before him, or should not wish, or should be incapacitated to accept the
inheritance.
A simple substitution, without a statement of the cases to which it refers, shall comprise the three
mentioned in the preceding paragraph, unless the testator has otherwise provided.
The fideicommissary substitution is described in the Civil Code as follows:
ART. 863. A fideicommissary substitution by virtue of which the fiduciary or first heir instituted is entrusted
with the obligation to preserve and to transmit to a second heir the whole or part of inheritance, shall be
valid and shall take effect, provided such substitution does not go beyond one degree from the heir
originally instituted, and provided further that the fiduciary or first heir and the second heir are living at
time of the death of the testator.
It will be noted that the testator provided for a vulgar substitution in respect of the legacies of Roberto and Jorge Ramirez,
the appellants, thus: con sustitucion vulgar a favor de sus respectivos descendientes, y, en su defecto, con substitution
vulgar reciprocal entre ambos.
The appellants do not question the legality of the substitution so provided. The appellants question the sustitucion vulgar y
fideicomisaria a favor de Da. Wanda de Wrobleski" in connection with the one-third usufruct over the estate given to the
widow Marcelle However, this question has become moot because as We have ruled above, the widow is not entitled to
any usufruct.
The appellants also question the sustitucion vulgar y fideicomisaria in connection with Wanda's usufruct over two thirds of
the estate in favor of Juan Pablo Jankowski and Horace v. Ramirez.
They allege that the substitution in its vulgar aspect as void because Wanda survived the testator or stated differently
because she did not predecease the testator. But dying before the testator is not the only case for vulgar substitution for it
also includes refusal or incapacity to accept the inheritance as provided in Art. 859 of the Civil Code, supra. Hence, the
vulgar substitution is valid.
As regards the substitution in its fideicommissary aspect, the appellants are correct in their claim that it is void for the
following reasons:
(a) The substitutes (Juan Pablo Jankowski and Horace V. Ramirez) are not related to Wanda, the heir originally instituted.
Art. 863 of the Civil Code validates a fideicommissary substitution "provided such substitution does not go beyond one
degree from the heir originally instituted."
What is meant by "one degree" from the first heir is explained by Tolentino as follows:
Scaevola Maura, and Traviesas construe "degree" as designation, substitution, or transmission. The
Supreme Court of Spain has decidedly adopted this construction. From this point of view, there can be
only one tranmission or substitution, and the substitute need not be related to the first heir. Manresa,
Morell and Sanchez Roman, however, construe the word "degree" as generation, and the present Code
has obviously followed this interpretation. by providing that the substitution shall not go beyond one
degree "from the heir originally instituted." The Code thus clearly indicates that the second heir must be
related to and be one generation from the first heir.
From this, it follows that the fideicommissary can only be either a child or a parent of the first heir. These
are the only relatives who are one generation or degree from the fiduciary (Op. cit., pp. 193-194.)
(b) There is no absolute duty imposed on Wanda to transmit the usufruct to the substitutes as required by Arts. 865 and
867 of the Civil Code. In fact, the appellee admits "that the testator contradicts the establishment of a fideicommissary
substitution when he permits the properties subject of the usufruct to be sold upon mutual agreement of the usufructuaries
and the naked owners." (Brief, p. 26.)
3. The usufruct of Wanda.
The appellants claim that the usufruct over real properties of the estate in favor of Wanda is void because it violates the
constitutional prohibition against the acquisition of lands by aliens.
The 1935 Constitution which is controlling provides as follows:
SEC. 5. Save in cases of hereditary succession, no private agricultural land shall be transferred or
assigned except to individuals, corporations, or associations qualified to acquire or hold lands of the
public domain in the Philippines. (Art. XIII.)
The court a quo upheld the validity of the usufruct given to Wanda on the ground that the Constitution covers not only
succession by operation of law but also testamentary succession. We are of the opinion that the Constitutional provision
which enables aliens to acquire private lands does not extend to testamentary succession for otherwise the prohibition will
be for naught and meaningless. Any alien would be able to circumvent the prohibition by paying money to a Philippine
landowner in exchange for a devise of a piece of land.
This opinion notwithstanding, We uphold the usufruct in favor of Wanda because a usufruct, albeit a real right, does not
vest title to the land in the usufructuary and it is the vesting of title to land in favor of aliens which is proscribed by the
Constitution.
IN VIEW OF THE FOREGOING, the estate of Jose Eugenio Ramirez is hereby ordered distributed as follows:
One-half (1/2) thereof to his widow as her legitime;
One-half (1/2) thereof which is the free portion to Roberto and Jorge Ramirez in naked ownership and the usufruct to
Wanda de Wrobleski with a simple substitution in favor of Juan Pablo Jankowski and Horace V. Ramirez.
The distribution herein ordered supersedes that of the court a quo. No special pronouncement as to costs.
SO ORDERED.

G.R. No. 142913. August 9, 2005

ESTATE OF SALVADOR SERRA SERRA (SPEC. PROC. NO. 242) AND ESTATE OF GREGORIO SERRA SERRA
(SPEC. PROC. NO. 240), BOTH REPRESENTED BY THE JUDICIAL CO-ADMINISTRATOR LUIS ISASI, MARGARITA
SERRA SERRA, FRANCISCA TERESA SERRA SERRA and FRANCISCO JOSE SERRA SERRA,Petitioners,
vs.
HEIRS OF PRIMITIVO HERNAEZ, REPRESENTED BY PRESENTACION HERNAEZ BELBAR, HEIRS OF LUISA
HERNAEZ, REPRESENTED BY WILFREDO GAYARES, LOLITA GAYARES, JULIETA FORTALEZA AND ROSAURO
FORTALEZA, HEIRS OF ROGACIANA HERNAEZ, REPRESENTED BY LOURDES MONCERA,Respondent.
DECISION
YNARES-SANTIAGO, J.:
This petition for review on certiorari under Rule 45 of the 1997 Revised Rules of Civil Procedure assails the March 3, 2000
decision of the Court of Appeals in CA-G.R. SP No. 52817, and its April 17, 2000 resolution denying reconsideration
thereof.
The factual antecedents are as follows:
On December 27, 1967, a petition for reconstitution of alleged lost original certificates of title (OCT) and owner’s duplicate
copies in the name of Eleuterio Hernaez covering Lot No. 1316 of Kabankalan Cadastre and Lot Nos. 2685 and 717 of
Ilog Cadastre, in the Province of Negros Occidental, was filed by his successors-in-interest Primitivo, Rogaciana and
Luisa, all surnamed Hernaez (Hernaez) with then Court of First Instance (CFI) of Bacolod City.
On April 6, 1968, the CFI granted the petition and ordered the reconstitution of the subject OCTs and its duplicate
copies.1 Accordingly, the Register of Deeds of Negros Occidental issued reconstituted OCT Nos. RO-10173, RO-10174,
and RO-10175, for Lot Nos. 1316, 2685, and 717, respectively. These reconstituted OCTs were cancelled on May 29,
1969 upon presentation by Hernaez of a "declaration of heirship" and in lieu thereof, Transfer Certificate of Title (TCT)
Nos. T-51546, T-51547, and T-51548 were issued in their names.
Upon learning of the existence of the above TCTs, Salvador Serra Serra, for and in behalf of his co-heirs, registered their
adverse claim and moved for the cancellation of the reconstituted titles. They averred that they are holders of valid and
existing certificates of title over the subject properties and have been in continuous and actual possession thereof.
The trial court denied petitioners’ motion to cancel the reconstituted titles and granted instead Hernaez’ prayer that they
be placed in possession of the subject properties, which petitioners challenged before the Court of Appeals in a petition
for certiorari docketed as CA-G.R. No. SP-00139.2
On June 7, 1971, the appellate court issued a writ of preliminary injunction 3 which was ordered lifted in a resolution dated
August 3, 1971. Petitioners’ motion for reconsideration was denied, hence they filed before this Court a petition
for certiorari, prohibition and mandamus, docketed as G.R. No. L-34080 and consolidated with G.R. No. L-
34693,4 seeking to annul the resolution lifting the writ of preliminary injunction.
On March 22, 1991, this Court rendered judgment the decretal portion of which reads:
ACCORDINGLY, the petitions are GRANTED. The questioned order of the respondent Court of Appeals lifting the writ of
preliminary injunction is SET ASIDE. The writ of possession issued in Cadastral Case No. 17, GLRO Records No. 163 is
declared NULL and VOID. The records of this case and of CA-G.R. No. 00139 are remanded to the trial court for hearing
of the motion for cancellation of the reconstituted titles. Private respondents are ordered to return to petitioners the
possession of the properties in question. The temporary restraining order issued by this Court on February 15, 1972,
enjoining private respondents from interfering in any manner, with petitioners’ right of possession of the properties in
question, shall remain effective until the issue of ownership and/or possession of the properties is finally settled by a
competent court.
SO ORDERED.5
Pursuant thereto, the trial court heard petitioners’ motion for cancellation of certificates of title and on November 25, 1998,
rendered judgment the dispositive portion of which reads:
WHEREFORE, based on the foregoing premises and considerations, the court hereby renders judgment in favor of the
oppositors and hereby orders the following:
1) The petition filed by movants Serra Serra dated November 4, 1968 is hereby DISMISSED for lack of merit;
2) Declaring the Transfer Certificate of Title No. T-27644 covering Lot No. 1316, Kabankalan Cadastre and Lot No. 2685,
Ilog Cadastre, Transfer Certificate of Title No. T-22344 covering Lot No. 717-A, and Transfer Certificate of Title No. T-
22351, Ilog Cadastre, all issued in the name of movants Serra Serra NULL and VOID for being issued to foreigners;
3) Declaring the oppositors Hernaez as owners of Lot No. 1316, Kabankalan Cadastre, covered by Transfer Certificate of
Title No. 51546; Lot No. 2685, Ilog Cadastre, covered by Transfer Certificate of Title No. T-51547; and Lot No. 717, Ilog
Cadastre, covered by Transfer Certiticate of Title No. T-51548; and
4) Ordering the movants Serra Serra to return possession of said lots to the oppositors Hernaez.
SO ORDERED.6
Without filing a motion for reconsideration, petitioners assailed the lower court’s decision before the Court of Appeals via a
petition for certiorari. On March 3, 2000, the appellate court rendered the herein assailed judgment which dismissed the
petition for lack of merit, pertinent portion of which reads:
In the case at bench, We find no cogent reason to disturb the assailed decision denying petitioners’ motion for
cancellation of the reconstituted titles, especially after the court a quo found that the evidence presented is sufficient and
proper to uphold the reconstituted certificates of title in question. A perusal of the assailed order shows that the trial court
correctly applied the established legal principle that in cases of annulment and/or reconveyance of title, a party seeking it
should establish not merely by a preponderance of evidence but by clear and convincing evidence that the land sought to
be reconveyed is his.
Petitioners (Serra Serra), however, as noted by the court a quo in its Order dated November 25, 1998, failed to present in
court as evidence the original certificates of title of the aforementioned lots, Lot No. 1316, Lot No. 2685 and Lot No. 717.
Petitioners were also found to be of Spanish citizenship and, hence, as aliens, disqualified to acquire lands in the
Philippines under the 1935 Constitution.7
Petitioners’ motion for reconsideration was subsequently denied, hence the instant petition based on the following
assigned errors:
I
THE COURT OF APPEALS HAS ... DEPARTED FROM THE ACCEPTED AND USUAL COURSE OF JUDICIAL
PROCEEDINGS AS TO CALL FOR THE EXERCISE OF THE POWER OF SUPERVISION BY THIS HONORABLE
COURT, IN THAT:
THE RULE THAT THE PETITIONER SHOULD HAVE PREVIOUSLY FILED A MOTION FOR RECONSIDERATION
WITH THE LOWER COURT BEFORE HE MAY AVAIL HIMSELF OF THE WRIT OF CERTIORARI UNDER RULE 65 OF
THE RULES OF COURT IS SUBJECT TO WELL-SETTLED EXCEPTIONS ...
...
II
THE COURT OF APPEALS ... HAS DECIDED A QUESTION OF SUBSTANCE IN A WAY PROBABLY NOT IN ACCORD
WITH LAW, REPUBLIC ACT NO. 26, OR WITH THE APPLICABLE DECISION OF THIS HONORABLE COURT IN
SERRA VS. COURT OF APPEALS, G.R. NO. L-34080, MARCH 22, 1991.8
Petitioners assail the dismissal of their petition on the ground that they failed to file a motion for reconsideration with the
lower court before filing a petition for certiorari before the Court of Appeals. While admitting procedural lapse on their part,
they argue that the rule is subject to well-settled exceptions, such as, when the questions raised before the Supreme
Court are the same as those which have been squarely raised and passed upon by the trial court, or when the petitioner
has been deprived of due process of law, or when the writ is urgent under the circumstances. 9
The petition is denied. Other than citing general exceptions to the rule requiring a motion for reconsideration as a pre-
condition to instituting a petition for certiorari, the petitioners did not offer valid reason why their particular case fall under
any of the specified exceptions.
The settled rule is that a motion for reconsideration is a sine qua non condition for the filing of a petition for certiorari. The
purpose is to grant an opportunity to public respondent to correct any actual or perceived error attributed to it by the re-
examination of the legal and factual circumstances of the case.10 Petitioners’ failure to file a motion for reconsideration
deprived the trial court of the opportunity to rectify an error unwittingly committed or to vindicate itself of an act unfairly
imputed. Besides, a motion for reconsideration under the present circumstances is the plain, speedy and adequate
remedy to the adverse judgment of the trial court.
Granting arguendo that certiorari is the proper remedy, the Court of Appeals nevertheless did not err in dismissing the
petition.
Both the trial court and the Court of Appeals found that petitioners are Spanish citizens and as such, disqualified from
acquiring lands in the Philippines. As a rule, only a Filipino citizen can acquire private lands in the Philippines and the only
instances when a foreigner can own private lands are by hereditary succession and if he was formerly a natural-born
Filipino citizen who lost his Philippine citizenship. The records are bereft of any showing that petitioners derived their title
by any mode which would qualify them to acquire private lands in the country. Petitioners’ bare allegation that they
acquired the subject lots from Salvador Serra Serra has no probative value lacking sufficient proof that the latter is not
disqualified to own or hold private property and was able to legally transmit to petitioners title thereto.
Petitioners’ alleged possession of TCTs and actual possession of the subject lands, although strong proof of ownership,
are not necessarily conclusive where the assertion of proprietary rights is founded on dubious claim of ownership. They
claimed that their title over the subject properties emanated from Salvador Serra Serra; yet they failed to present in
evidence the OCT in the name of the latter. Since petitioners impugn the proprietary claim of Hernaez over the properties,
the burden rests on them to establish their superior right over the latter. To recall, the trial court found that the evidence
they presented have not established superior proprietary rights over the respondents’ on the subject lots. It held that the
non-presentation of the OCTs cast doubt on the veracity of their claim. He who asserts must prove.
It is also undisputed that petitioners are all Spanish citizens. Under Philippine law, foreigners can acquire private lands
only by hereditary succession or when they were formerly natural-born Filipinos who lost their Philippine citizenship. In
this case, petitioners did not present proof that they acquired the properties by inheritance. Neither did they claim to be
former natural-born Filipinos. On the contrary, they declare in this petition that they are all Spanish citizens residing in
Mallorca, Spain.
It is axiomatic that factual findings of trial courts, when adopted and confirmed by the Court of Appeals, are binding and
conclusive and will not be disturbed on appeal. This Court is not a trier of facts. It is not its function to examine and
determine the weight of the evidence supporting the assailed decision. Moreover, well entrenched is the prevailing
jurisprudence that only errors of law and not of facts are reviewable by this Court in a petition for review
on certiorari under Rule 45 of the Revised Rules of Court, which applies with greater force to the petition under
consideration because the factual findings of the Court of Appeals are in full agreement with what the trial court found. 11
WHEREFORE, the petition is DENIED. The March 3, 2000 decision and the April 17, 2000 resolution of the Court of
Appeals in CA-G.R. SP No. 52817 are AFFIRMED.
SO ORDERED.

G.R. No. 91189 November 27, 1992

THE DIRECTOR OF LANDS, petitioner,
vs.
SAMUEL BUYCO and EDGAR BUYCO, represented by their attorney-in-fact, RIEVEN H. BUYCO and THE COURT
OF APPEALS, respondents.

DAVIDE, JR., J.:

In its Decision of 5 February 1985, 1 Branch 82 of the Regional Trial Court (RTC) at Odiongan, Romblon granted the
application of the private respondents, who are American citizens, to bring within the operation of the Land Registration
Act a parcel of land with an area of 3,194,788 square meters (319.4788 hectares) which spreads across the barangays of
Canduyong, Anahao and Ferrol in the municipality of Odiongan, Province of Romblon, and to confirm their title thereto.
Petitioner appealed the decision to the Court of Appeals; he alleged therein that the trial court erred (a) in not declaring
the private respondents barred by the Constitution from applying for registration because they are American citizens and
are thus disqualified from acquiring lands in the Philippines, (b) in holding that private respondents had established
proprietary rights over the land even before acquiring American citizenship through naturalization, and (c) independently
of the issue of alienage, in not dismissing the application for registration on the basis of the private respondents failure to
overthrow, by conclusive or well-nigh incontrovertible proof, the presumption that the land applied for is public land
belonging to the State. 2
In its Decision of 21 November 1989 in CA-G.R. CV No. 05824, 3 public respondent dismissed the appeal "for lack of
merit."4
Petitioner consequently filed this petition on 11 January 1990 under Rule 45 of the Rules of Court. Reiterating the issues
he raised before the respondent Court, he seeks a review and reversal of the latter's decision. 5
In the Resolution of 11 July 1990, this Court gave due course to the petition after the filing by the private respondents of
their Comment to the same and by the petitioner of his reply thereto.6 On 17 April 1991, the parties were required to file
their respective Memoranda. 7
The records disclose the following material operative facts and procedural antecedents:
A certain Charles Hankins, an American who was married to Laura Crescini and who resided in Canduyong, Odiongan,
Romblon, died on 31 May 1937 leaving a will (Exhibit "N"). He was survived by his widow; his son Alexander and William;
and his grandchildren Ismael Samuel and Edgar, all surnamed Buyco, who are the legitimate issues of his deceased
daughter Lilia and her husband Marcelino Buyco. The will was submitted for probate before the then Court of First
Instance (now Regional Trial Court) of Romblon. Charles Hankins' son Alexander was appointed administrator of the
estate in Special Proceedings No. 796.
Laura Crescini died on 22 December 1941.
It appears that in a Project of Partition dated 25 June 1947 (Exhibit "O") and submitted to the probate court in the
aforesaid Special Proceedings No. 796, one of the properties of Charles Hankins described as "a parcel of pastureland,
riceland and coconut land containing an area of about 250 hectares, 21 ares and 63 untares . . . assessed at for
P6,950.00 as per Tax Declaration No. 15853," was partitioned among his heirs as follows:
xxx xxx xxx
TO LAURA C. HANKINS, . . .
(a) 157 acres . . . comprised in what is known as Carabao Pastureland and Milk-Cow
Pasture. (This land is a portion of the land described in tax declaration N0. 15853 . . .)
xxx xxx xxx
TO ALEXANDER HANKINS, . . .
 (a) 80 acres of land (pasture) which is a portion of the land described in Tax declaration
No. 15853 . . . .
xxx xxx xxx
TO LILIA HANKINS, . . .
(a) 100 acres of pastureland situated in the barrio of Canduyong and which is a portion of
the entire parcel described in tax declaration No. 15853 . . . .
(b) 25 acres of pasture land situated in the barrio of Canduyong and which is a portion of
the entire parcel described in tax declaration No. 15853.
xxx xxx xxx
TO WILLIAM B. HANKINS, . . .
(a) 100 acres of pastureland situated in the barrio of Canduyong and which is a portion of
the entire parcel described in tax declaration No. 15853 . . . .
(b) 25 acres of pasture land situated in barrio Anajao and which is a portion of the entire
parcel described in tax declaration No. 15853 . . . . 8
The total area so adjudicated is 487 acres, or 197.086 hectares (1 hectare = 2.471 acres)
On 30 July 1948, Laura's share in the estate of her husband Charles was partitioned among her children. Alexander and
William, and her grandchildren, Ismael, Samuel and Edgar who were represented by their father Marcelino Buyco (Exhibit
"P"). Thereafter, on the same date, William sold his hereditary shares in the estate of his parents to Marcelino Buyco
(Exhibit "R").
On 20 August 1962, Marcelino Buyco donated to his children the property acquired from William together with other
properties (Exhibit "S").
On 8 September 1970, the Buyco brothers partitioned among themselves the properties acquired by inheritance from their
grandparents and by donation from their father (Exhibit "T"). However, Ismael waived his right to his share therein in favor
of Samuel, one of the private respondents in this case.
Edgar and Samuel Buyco became naturalized American citizens on 29 January 1972 and 12 September 1975,
respectively.
On 14 October 1967, Edgar and Samuel, through their attorney-in-fact, Rieven H. Buyco, filed before the then Court of
First Instance of Romblon an application for the registration of a parcel of land, described as follows:
A parcel of land (Lot I, under surveyed for the heirs of Lilia Hankins situated in the barrios of Canduyong,
Anahao and Ferrol, Municipality of Odiongan, province of Romblon, Tablas Island under PSU 127238)
LRC Record No. ________: Bounded on the North by properties of the heirs of Rita Fiedacan and
Alexander Hankins; on the Northeast, by Canduyong River and property of Alexander Hankins; on the
East, by properties of Andres Cuasay, Escolastica Feruelo, Candido Mendoza, Raymundo Goray, Pedro
Goray, Manuel Yap, Feliza Fedri and Silverio Mierculecio; on the Southeast, by properties of Candido
Mendoza, the Heirs of Benita Formilleza Silverio Mierculecio, Zosimo Llorca, Lot 2, and properties of
Beatrice Hankins and Zosimo Llorca; on the West, by properties of Maria Llorca and Miguel Llorca; and
on the Northwest, by property of Catalino Fabio. Point "I" is S. 33 deg. 24"., 4075.50 m. from B.L.L.M. 1,
Odiongan, Romblon. Area THREE MILLION ONE HUNDRED NINETY FOUR THOUSAND SEVEN
HUNDRED EIGHTY EIGHT (3,194,788) SQUARE METERS, more or less as Exhibit "C". 9
which they claim to own in fee simple as they acquired the same by inheritance and donation inter vivos. However, they
allege in paragraph 9 of the application that should the Land Registration Act be inapplicable, the benefits provided for
under C.A. No. 141, as amended, be made to extend to them since both they and their predecessors-in-interest have
been in possession thereof since time immemorial. The application was docketed as Land Registration Case No. N-48
LRC Record No. N-51706.
The above description is based on a survey plan prepared by private land surveyor Santiago Español in 1950 (Exhibit "C")
and subsequently approved by the Director of Lands. While in their application, private respondents invoked the
provisions of the Land Registration Act,10 they eventually sought for a confirmation of imperfect title pursuant to paragraph
(b), Section 48 of the Public Land Act 11, as further amended by P.D. No. 1073.
While only the herein petitioner filed an opposition thereto, the Development Bank of the Philippines (DBP) manifested
that the portion of the property pertaining to Samuel Buyco is covered by a mortgage in its favor. After the jurisdictional
facts had been established during the initial hearing and a general order of default entered against all other parties, the
lower court designated the Judge of the Municipal Trial Court of Odiongan as commissioner to receive the evidence for
the parties. Samuel Buyco, William Hankins, Manuel Firmalo and Jacinta Gomez Gabay (who was 83 years old when she
took the witness stand in October 1979) testified for the applicants. The first two (2) recounted the history of the tract of
land up to the time of the abovementioned partitions and the alleged possession of the entire area by the applicants
(private respondents herein).
On 5 February 1985, the land registration court handed down a Decision 12 the dispositive portion of which reads:
PREMISES CONSIDERED, this Court hereby orders the registration of title to the parcel of land
designated as Lot No. 1 Psu-127238 and its technical description together with all the improvements
thereon, in the name of the herein applicants, recognizing the interest of the Development Bank of the
Philippines to be annotated on the certificate of title to be issued as mortgagee for the amount of
P200,000.00 with respect to the share of applicants (sic) Samuel H. Buyco.
 Upon the decision become (sic) final let the corresponding decree and certificate of title be issued
accordingly.
The favorable decision is based on the court's conclusion that:
The oral and documentary evidence indubitably show applicants and their predecessors-in-interest —
their grandparents Charles Hankins and Laura Crescini, to their uncle Alexander Hankins, to them thru
their administrators Gregorio Gabay and later Manuel Firmalo — have possessed the property herein
sought to be registered in the concept of owners thereof, and such possession has been continuous,
uninterrupted, adverse, open and public for a period of more than eighty years. And their right over the
property is duly recognized by the adjoining owners in their individual affidavits marked as Exhibits "V",
"V-1" to "V-21", inclusive. Moreover, none of the adjoining owners filed any opposition to the herein land
registration case, thereby indubitably showing their recognition of the correctness of the boundary (sic)
between their individual lots and that of applicants land subject of this registration.
The late Charles Hankins declared said land for taxation purposes under Tax Declaration No. 15853
(please see description of lot in Exh. "N") and thereafter in the name of applicants and/or their father
Marcelino Buyco since 1949 up to the present time (Exhs. "W", "W-1" to "W-19").
Applicants have also paid the real estate taxes thereon since 1948 up to the present time (Exhs. "X", "X-
1" to "X-194").
In 1950, the land of applicants was surveyed by Private Surveyor Santiago Español and its exact metes
and bounds were determined with accuracy in his survey plan PSU-127238 (Exh. "C"). This survey
corrected the impreciseness of the land area as mentioned in the several instruments –– the will, project
of partition, deed of partition, deed of sale (Exhs. "N", "O", "P", and "R") — under which applicants
acquired the land in question. The correctness of this survey is further shown by the fact that none of the
other heirs, like Alexander Hankins nor (sic) the adjoining owners ever made a claim over any portion of
the lot shown in said Psu-127238.
The land in question has been primarily devoted to cattle grazing (sic) and to the cultivation of rice and
coconut and it was (sic) the applicants and their predecessors-in-interest have (sic) been reaping the
fruits thereof.
The evidence further show (sic) that applicants can rightfully and did validly acquire title and ownership
over the land in question because they were then Filipino citizens, their father Marcelino Buyco being a
Filipino citizen himself (please see personal circumstances of Marcelino Buyco in Exhs. "P" and "R") and
their modes of acquisition — by inheritance, intestate succession, and donation inter-vivos — are all
legally recognized modes to transfer ownership to them from their predecessors-in-interest.
Since time immemorial, applicants and their predecessors-in-interest have exercised all the attributes of
dominion and absolute ownership over the land in question, and have therefore established their vested
proprietary rights and registrable (sic) title over the land in question, rights which they have acquired long
before they became citizens of the United States (Edgar Buyco became a U.S. citizen only on January
29, 1972; while Samuel H. Buyco, only on September 12, 1975. As a matter of fact, applicant Samuel H.
Buyco mortgaged in favor of the Development Bank of the Philippines (Exhs. "U", "U-1" and "U-2") the
portion belonging to him in Lot 1, Psu-127238.
From the foregoing evidence it has been satisfactorily established that the applicants have acquired an
imperfect and incomplete title over the parcel of land subject of this registration proceedings in their own
right as citizens of the Philippines so as to entitle them to a confirmation and registration of said lot in their
names. Consequently Section II, Article XVII of the 1973 Constitution does not apply to this case, neither
(sic) does this case fall under the provisions of Presidential Decree No. 713. 13
More specifically, the conclusion regarding possession is based on the testimonies of Manuel Firmalo, William Hankins
and Jacinta Gomez Gabay which, as summarized by the court, are as follows:
xxx xxx xxx
Witness Manuel Firmalo testified that from 1970 to 1978 he was the administrator, of the property of
applicants; that the said property is located in the Barrios of Anahao, Canduyong, and Tubigon (now
forming part of the municipality of Ferrol) and the same is shown in the survey may marked as Exh. "C"
(Psu-127238); that said lot is separated from the adjacent properties by concrete monuments, big tress
and some barb (sic) wire fence (sic); that previous to his administration thereof, the same property was
administered by his father-in-law, Gregorio Gabay; . . . that during his administration, a large part of the
land was devoted to cattle grazing and a little portion, to coconut (sic) which are now fruit bearing; that
when he took over the administration of the ranch, there was a total of 120 heads of cattle and at the time
of termination of his administration there were 300 heads; that from time to time, some cattle in the ranch
were sold by him and he rendered an accounting to the applicants, the owners of the ranch; that he
employed cowhands to help him ran (sic) the ranch of applicants and the salaries of said cowhands were
paid out of the funds of applicant Samuel Buyco from the sale of the cattle; that the proceeds of the
coconuts harvested, the money was (sic) deposited with the bank and a portion was used for the payment
of the real estate taxes on the land; that during his administration no third person ever claimed ownership
over applicants land; that he was the one who procured the execution of the affidavits of adjoining owners
 (Exhs. "V", "V-1" to "V-21") which were used to support the real estate mortgage with the DBP over said
land; that from the proceeds of the sale of the copra harvested from the land of applicants,. he paid the
real estate taxes thereon specifically the taxes covered by Exhs. "X-83" to "X-144"; . . . that his
administration over said land was adverse, open continuous and public.
William Hankins, then 72 years old and resident (sic) of Odiongan, Romblon, testified . . .; that ever since
he was still a small kid, he know (sic) that the big tract of land subject of their partition was already owned
by his father (Charles Hankins); that the possession of his father was in the concept of owner, continuous,
adverse, public, and open, up to his (Charles Hankins) death; that after receiving his hereditary share
from the estates of his father and mother, he sold his said shares to Marcelino Buyco, father of applicants
by executing a Deed of Sale (Exh. "R") dated July 30, 1948; that during the lifetime of Charles Hankins;
the big tract of land was devoted primarily to cattle grazing and to coconut and rice; that after he sold his
hereditary share of (sic) Marcelino Buyco, the latter took possession of his said portion; that after
Marcelino Buyco died, the property of Marcelino Buyco (including his share (sic) hereditary share sold
under Ex. (sic) "R") was transmitted to his children, namely: Edgar H. Buyco, Ismael Buyco and Samuel
H. Buyco (Samuel and Edgar Buyco, the (sic) applicants herein); that he known that at present the
owners in possession of the property subject of this registration proceedings are applicants Samuel
Buyco and Edgar Buyco; that the said land is devoted to cattle grazing and planted with coconuts and
rice.
xxx xxx xxx
Jacinta Gomez Gabay, 83 years (as of October, 1979) . . . testified that she knew the spouses Charles
Hankins and Laura Crescini because since the time she can remember, she stayed with said spouses up
to the (sic) their death (sic); that having stayed with the Hankins couple, she knew of their properties
because she lived with them in Canduyong where the property was situated; that the property is a big
tract of land; . . . that when she was living with the Hankins spouses, said spouses already owned and
were in possession of this big tract of land, and this land was fenced off with barbed wires, and that said
big tract of land has been used for grazing purposes since she reached the age of reason up to the
present time; that during all the time that she has been with said Hankins spouses, nobody ever claimed
any portion thereof; that this property extended from barrio Canduyong up to barrio Anahao; that after
Charles Hankins died, his property was divided among his children Alexander Hankins, William Hankins
and Lilia Hankins and the latter's share was received by her children named Ismael, Samuel and Edgar
all surnamed Buyco; that before Charles Hankins' estate was partitioned it was placed under the
administration of Alexander Hankins (one of the heirs); that after the partition, the portion (sic) that went to
the Buyco children (as heirs of Lilia Hankins) were administered by her husband Gregorio Gabay; that her
husband's administration over said property started 3 or 4 years after the war which (sic) lasted 25 years
or until Gregorio Gabay died; that his son-in-law Manuel Firmalo took over the administration of
applicants' property; that the land she was referring to is utilized as a pasture land and it has been a
pasture since the time it was it was owned by spouses Charles Hankins and Laura Crescini up to the
present time; that Edgar, Samuel and Ismael, all surnamed Buyco have been receiving the fruits of the
portion that went to Lilia Hankins; that Charles Hankins' possession of that big tract of land was in the
concept of owner, continuous, adverse, open and public; that a portion of this big tract of land went to
Edgar H. Buyco, Samuel H. Buyco and Ismael H. Buyco as the heirs of Lilia Hankins; that the possession
of the said heirs of the late Lilia Hankins over the portion that went to them was in the concept of owner,
continuous, adverse, open and public up to the present time; that as far as she can remember the
Hankins family possessed said property for more than eighty (80) years. 14
The land registration court also summarized the testimony of private respondent Samuel H. Buyco as to possession in this
wise:
Applicant Samuel H. Buyco testified that he was 51 years of age, . . .; that prior to the death of his
grandfather Charles Hankins, that big parcel of pastureland was about 500 to 550 hectares, the
boundaries of which were marked off by concrete monuments, some big trees, some big stones until it
was partitioned in 1948, and to fix the actual boundaries, the land was surveyed by private surveyor
Español (Exh. "D"); that during the lifetime of their grandfather Charles Hankins this big land was primarily
used as a ranch and it was fenced off by barb (sic) wires to prevent the cattle from getting out; that after
the death of his grandfather Charles Hankins, the property was administered by his uncle Alexander
Hankins, and such administration was terminated when there was a partition in 1948 in accordance with
the will of his grandfather; that during the administration of the property by Alexander Hankins, this
property was used as a cattle ranch, even during the Japanese time; that after receiving their share form
the partition of the estate, they initially planted rice and coconut and later on they reverted to cattle ranch
operation (sic); that after he and his brother Edgar became the possessor (sic) of said land, they were the
one (sic) who have been harvesting the fruits of the land; that they did not personally managed (sic) the
land but hired in 1949 the services of Mr. Gregorio Gabay to administer the estate for them until 1970
when the latter died, and Manuel Firmalo was hired to take over the administration until 1977 when
applicant took over active management of the property because he obtained a loan of P200,000.00 from
 the Development Bank of the Philippines; . . . that the land was declared in their name (sic) for taxation
purposes by their administrator Gregorio Gabay in 1949 (Exhs. "W", "W-1" to "W-19", inclusive) and that
the taxes thereon were paid out of their own money since 1948 up to the present (Exhs. "X", "X-1" to "X-
194", inclusive); that applicants' possession in the concept of owner over the property sought to be
registered has been open, continuous, uninterrupted, adverse and
public. 15
As earlier adverted to petitioner's appeal from the said decision was dismissed by the public respondent for lack of merit.
As to the private respondents' title to the land subject of the application, public respondent makes the following findings:
Undisputably, applicant-appellees anchored their title to the land in question by means of hereditary
succession as well as donation from their own father, Marcelino Buyco, who purchased the entire
hereditary share of William Hankins (Exhs. "R"). Subsequently, applicants-appellees and their brother,
Ismael, partitioned their hereditary share from their grandparents, the spouses Hankins, including the
property donated by their father, Marcelino Buyco, in an instrument dated September 8, 1970 (Exh. "T").
In this partition, the share of Ismael H. Buyco went to applicant-appellee Samuel H. Buyco (Exh. "T-1").
From the records extant in this case, it is Our considered view that from almost (sic) time immemorial or a
period of eighty (80) years, applicant-appellees through their predecessors-in-interest have been in
actual, continuous, and peaceful possession of the property in question so that the inescapable
conclusion is that all along it is private land and had been segregated from the dominion (sic) of the State.
Thus, We sustain the conclusion reached by the court a quo that the latter (applicants-appellees) thru
their predecessors-in-interest have acquired title by acquisitive prescription over the same. . . . 16
As to the issue of the private respondents citizenship, public respondent held that:
. . . it is beyond per adventure (sic) of doubt that applicants-appellees were still Filipinos when they
acquired their title thereto. From the death of their grandfather Charles Hankins on May 31, 1937,
applicants-appellees right of succession was already vested. Moreover, as early as the year 1962, their
father Marcelino Buyco transferred his title thereto by donation inter-vivos so that on September 8, 1970,
when the Buyco brothers partitioned the property in question, among themselves, they could validly
register the same as they already possess the necessary qualifications to have their title perfected under
the Torrens system of registration. 17
The petition is meritorious.
As could be gleaned from the evidence adduce, the private respondents do not rely on fee simple ownership base on a
Spanish grant or possessory information title under Section 19 of the Land Registration Act; the private respondents did
not present any proof that they or their predecessors-in-interest derived title from an old Spanish grant such as (a)
the "titulo real" or royal; (b) the "concession especial" or special grant; (c) the "composicion con el estado" title or
adjustment title; (d) the "titulo de compra" or title of purchase; and (e) the "informacion posesoria" or possessory
information title, which could become a "titulo gratuito" or gratuitous title.18 The primary basis of their claim is possession,
by themselves and their predecessors-in-interest, since time immemorial. The land registration court and the public
respondent are of the opinion, and so held, that the private respondents had this in their favor. Thus, both courts declared
that the land applied for had been segregated from the public domain and had become private land.
If indeed private respondents and their predecessors have been in possession since time immemorial, the rulings of both
courts could be upheld for, as this Court stated in Oh Cho vs. Director of Lands; 19
. . . All lands that were not acquired from the Government, either by purchase or by grant, belong to the
public domain. An exception to the rule would be any land that should have been in the possession of an
occupant and of his predecessors in interest since time immemorial, for such possession would justify the
presumption that the land had never been part of the public domain even before the Spanish conquest.
(Cariño vs. Insular Government, 212 U.S., 449; 53 Law. ed., 594.)20 The applicant does not come under
the exception, for the earliest possession of the lot by his first predecessor in interest began in 1880.
This exception was reiterated in Susi vs. Razon, 21 where the first possessor was in possession was in possession for an
undetermined period of time prior to 1880. We stated therein:
. . . In favor of Valentin Susi, there is, moreover, the presumption juris et de jure established, in paragraph
(b) of section 45 of Act No. 2874, 22 amending Act No. 926, that all the necessary requirements for a grant
by the Government were complied with, for he has been in actual and physical possession, personally
and through his predecessors, of an agricultural land of the public domain openly, continuously,
exclusively and publicly since July 26, 1894, with a right to a certificate of title to said land under the
provisions of Chapter VIII of said Act. . . . If by a legal fiction, Valentin Susi had acquired the land in
question by a grant of the State, it had already ceased to be of the public domain and had become private
property, at least by presumption, of Valentin Susi, beyond the control of the Director of Lands.
Although this additional pronouncement was rippled by the ruling Manila Electric Co. vs. Castro-Bartolome 23, to the effect
that land would cease to be public only upon the issuance of a certificate of title to any Filipino citizen claiming it under
Section 48 (b) of the Public Land Act, 24 and that a piece of land over which an imperfect title is sought to be confirmed
remains public, this Court, speaking through then Associate Justice, now Chief Justice Andres R. Narvasa, in Director of
Lands vs. Intermediate Appellate Court, 25 reiterated the Cariño and Susi doctrine, thus:
 The Court, in the light of the foregoing, is of the view, and so holds, that the majority ruling
in Meralcomust be reconsidered and no longer deemed to be binding precedent. The correct rule, as
enunciated in the line of cases already referred to, 26 is that alienable public land held by a possessor,
personally or through his predecessor-in-interest, openly, continuously and exclusively for the prescribed
statutory period (30 years under The Public Land Act, as amended) is covered to private property by the
mere lapse or completion of said period, ipso jure.
It is obvious from the foregoing rule that the applicant must prove that (a) the land is alienable public land and (b) his
possession, in the concept abovestated, must be either since time immemorial, as ruled in both Cariño and Susi, or for the
period prescribe in the Public Land Act. As to the latter, this Court, in Gutierrez Hermanos vs. Court of
Appeals, 27 adopted the rule enunciated by the Court of Appeals, per then Associate Justice Hugo E. Gutierrez, Jr., now a
distinguished member of this Court, that an applicant for registration under Section 48 of the Public Land Act must secure
a certification from the Government that the lands which he claims to have possessed as owner for more than thirty (30)
years are alienable and disposable. It is the burden of the applicant to prove its positive averments.
In the instant case, private respondents offered no evidence at all to prove that the property subject of the application is
an alienable and disposable parcel of land of the public domain. On the contrary, based on their own evidence, the entire
property which is alleged to have originally belonged to Charles Hankins was pasture land. According to witness Jacinta
Gomez Gabay, this land has been pasture land, utilized for grazing purposes, since the time it was "owned" by the
spouses Charles Hankins and Laura Crescini up to the present time (i.e., up to the date she testified). In Director of Lands
vs. Rivas, 28 this Court ruled:
Grazing lands and timber lands are not alienable under section 1, Article XIII of the 1935 Constitution and
sections 8, 10 and 11 of Article XIV of the 1973 Constitution. Section 10 distinguishes strictly agricultural
lands (disposable) from grazing lands (inalienable).
The instant application was filed, heard and decided under the regime of the 1973 Constitution.
As to the second matter to be proved, the applicant must present evidence of an imperfect title such as those derived from
the old Spanish grants. He may also show that he has been in continuous, open and notorious possession and
occupation of agricultural lands of the public domain under a bona fide claim of acquisition of ownership and for the period
prescribed under Section 48(b) of the Public Land Act. 29 Simply put, a person who seeks the registration of title to a piece
of land on the basis of possession by himself and his predecessors-in-interest must prove his claim by clear and
convincing evidence; he should not rely on the weakness of the evidence of the
oppositors. 30 This rule is certainly not new. In the 1913 case of Maloles vs. Director of Lands, 31 this Court already held
that in order that a petitioner may be entitled to have a parcel of land registered under the Torrens system, he has to show
that he is the real and absolute owner, in fee simple, of the said land; moreover, it is the duty of the court, even in the
absence of any oppositor, to require the petitioner to show, by a preponderance of the evidence and by positive and
absolute proof, so far as it is possible, that he is the owner in fee simple of the land in question.
In Santiago vs. de los Santos, 32 this rule was to find anchorage in policy considerations based no less on one of the
fundamental objectives of the Constitution, namely the conservation and utilization of our natural resources. We held in
the said case that there would be a failure to abide by its command if the judiciary does not scrutinize with care
applications to private ownership of real estate. This Court then set the quantum of evidence needed to be established by
the applicant, to wit: well-nigh incontrovertible evidence.
In the instant case, private respondents evidence miserably failed to establish their imperfect title to the property in
question. Their allegation of possession since time immemorial, which was conceded by the land registration court and
the public respondent, is patently baseless. There is an evident failure to comprehend the meaning and import of the
term immemorial. As defined, immemorial simply means beyond the reach of memory, 33 beyond human memory, or time
out of mind. 34 When referring to possession, specifically "immemorial possession," it means possession of which no man
living has seen the beginning, and the existence of which he has learned form his elders. 35 Such possession was never
present in the case of the private respondents. The trial court and the public respondent based the finding of the more
than eighty (80) years of possession by the private respondents and their predecessors-in-interest on the sole testimony
of Mrs. Gabay who was eighty-three (83) years old when she testified in October of 1979. Thus, she must have been born
in 1896. If the asserted possession lasted for a period of more than eighty (80) years at the time she testified the same
must have commenced sometime in 1899, or at the time that she was barely three (3) years old. It is quite impossible that
she could fully grasp, before coming to the age of reason, the concept of possession of such a big tract of land and testify
on the same some eight (8) decades later. In short, therefore, she cannot be relied upon to prove the possession by
Charles Hankins of the said property from 1899.
Charles Hankins was an American citizen. There is no evidence to show the date of his birth, his arrival in the Philippines
— particularly in Odiongan, Romblon — or his acquisition of the big tract of land; neither is there any evidence to prove
the manner of his acquisition thereof. Thus, there does not even exist a reasonable basis for the finding that the private
respondents and their predecessors-in-interest possessed the land for more than eighty (80) years, much less since time
immemorial. In Oh Cho vs. Director of Lands, 36 possession which began in 1880 was not considered as possession
"since time immemorial."
There is as well, no evidence on record to show that Charles Hankins cultivated, had control over or used the whole or
even a greater portion of the big tract of land for grazing purposes. None of the witnesses testified as to the number of
heads of cattle which were bought by Charles into the land. There is likewise no competent proof that he declared the
land in his name for taxation purposes or that he had paid the taxes thereon. Although his will (Exhibit "N") made mention
of Tax Declaration No. 15853, neither the said declaration nor any tax receipt was presented in evidence. Because of
such non-production, it cannot be determined when Charles initially declared his alleged land for taxation purpose and
what exactly were its natural boundaries, if any. It is clear that the non-production of this tax declaration accounted for the
obvious inability of the witnesses to testify with certainty as to the extent of the area of the property. As correctly observed
by the petitioner, none of the private respondents' witnesses could give the court a definite idea thereon. Thus, Samuel
Buyco declared:
I really don't know the exact area, but it is between 500 to 550 hectares. 37
while William Hankins admitted:
I cannot exactly tell because that is a very big estate. 38
On the other hand, witness Jacinta Gomez Gabay averred:
I could not exactly tell but I have heard that it was a big tract of land because we were staying there. 39
In any event, even if Charles had indeed declared the property for taxation purposes and actually paid taxes, such facts
are still insufficient to justify possession thereof, much less a claim of ownership thereon. This Court has repeatedly held
that the declaration of ownership for purposes of assessment on the payment of the tax is not sufficient to prove
ownership. 40
To this Court's mind, private respondents failed to prove that Charles Hankins had possessed the property — allegedly
covered by Tax Declaration No. 15853 and made the subject of both his last will and testament and the project of partition
of his estate among his heirs — in such a manner as to remove the same from the public domain under the Cariño and
Susi doctrines. Thus, when he died on 31 May 1937, he transmitted no right whatsoever, with respect to the said property,
to his heirs. This being the case, his possession cannot be tacked to that of the private respondents for the latter's benefit
pursuant to Section 48(b) of the Public Land Act, the alternative ground relied upon in their application. It would have been
entirely different if the possession of Charles was open, continuous, exclusive, notorious and under a bona fide claim of
ownership as provided under Section 48 of the Public Land Act. Even if he were an American citizen at that time, he
would have had the same civil rights as Filipino citizens pursuant to the original ordinance appended to the 1935
Constitution. the pertinent portion of said ordinance reads:
(17) Citizens and corporations of the United States shall enjoy in the Commonwealth of the Philippines all
the civil rights of the citizens and corporations, respectively, thereof.
The import of said paragraph (17) was confirmed and reinforced the originally by Section 44 of Act No. 2874 and Section
127 of C.A. No. 141 (The Public Land Act of 1936); the latter provided that:
Sec. 127. During the existence and continuance of the Commonwealth and before the Republic of the
Philippines is established, citizens and corporations of the United States shall enjoy the same rights
granted to citizens and corporations of the Philippines under this Act.
This right, however, vanished with the advent of the Philippine Republic on 4 July 1946. 41
Verily, private respondents had to rely exclusively on their own possession. under the applicable law at the time, it was
incumbent upon them to prove that they had been in open, continuous, exclusive and notorious possession and
occupation of agricultural land of the public domain, under a bona fide claim of acquisition of ownership for at least thirty
(30) years immediately preceding the filing of the applications for confirmation of title, except when prevented by war
or force majeure. 42
By their own evidence, private respondents admitted that they were never in actual possession of the property prior to the
filing of their application. During the pendency of Special Proceedings No. 796, the estate of Charles Hankins appeared to
have been administered by his son Alexander. This administration was terminated in 1948 upon the execution of the
Project of Partition. Private respondents and their brother Ismael did not take possession of the share which pertained to
their mother, Lilia; instead; they allegedly hired Gregorio Gabay to administer the same. There is, however, no competent
evidence to show the extent of such administration. Moreover, notwithstanding the fact that Gregorio had the property
declared for taxation purposes, the correct area and boundaries of the same have not been proven. As evidenced by the
Project of Partition, the share of Lilia was only 125 acres or 50.59 hectares, which is clearly not the portion applied for.
The area applied for consists of 319.4788 hectares of land based on a survey plan prepared by private land surveyor
Español on the basis of a survey conducted in 1950. Obviously, therefore, the plan was not prepared to determine Lilia's
share alone for, as admitted by the private respondents themselves, this plan includes William Hankins' share which was
sold to Marcelino Buyco, private respondents father, and the other properties which the latter donated to the private
respondents and Ismael Buyco on 20 August 1962 (Exhibit "S"). However, there is no competent evidence as to the
respective boundaries and areas of the properties constituting the said share of William Hankins; neither are there reliable
descriptions of the other alleged properties belonging to Marcelino Buyco. Be that as it may, when the survey was
conducted by Español, private respondents and their brother Ismael did not immediately acquire the portion originating
from William Hankins and the other alleged properties of Marcelino Buyco; hence, there was no valid basis for the
inclusion of said properties in the survey. And even if both William's share and Marcelino Buyco's properties were
included there would still be nothing to support the application for the entire 319,4788 hectares considering that as per the
Project of Partition, the share pertaining to William consisted only of 50.59 hectares. There was, moreover, no evidence to
show the extent of the alleged "other properties" of Marcelino Buyco. Given such circumstances, it would be reasonable to
presume that what was surveyed in 1950 was the entire pasture land alleged to form part of the estate of Charles
Hankins, covered by Tax Declaration No. 15853, and which necessarily included the share of Alexander Hankins.
Significantly, per Exhibit "O" the latter's share is specified as part of the property covered by Tax Declaration No. 15853.
The inclusion then of Alexander's share in the survey and the plan may provide the clue to this unusual increase in the
area covered by the survey plan.
Nevertheless, even if We are to assume for argument's sake that there was nothing irregular in the inclusion in the survey
plan of the share of William Hankins and the other properties of Marcelino Buyco, the fact remains that the "ownership"
thereof could have been acquired by the private respondents and Ismael Buyco only on 20 August 1962 upon the
execution of the deed of donation in their favor. To be thus benefited by the possession of William or Marcelino for
purposes of Section 48 (b) of the Public Land Act, there should be proof that said predecessors had been in open,
continuous, exclusive and notorious possession and occupation thereof. Unfortunately, no such proof was offered.
It is palpably obvious then that at the time Land Registration Case No. N-48 was filed in the Regional Trial Court of
Romblon on 14 October 1976, private respondents did not have in their favor an imperfect title over that which they
claimed to have inherited, by representation, from the estate of Charles Hankins. With greater force does this conclusion
likewise apply with respect to the properties donated to them in 1962 by their father Marcelino Buyco. This is because
they were not able to prove open, continuous, exclusive and notorious possession and occupation thereof under a bona
fide claim of acquisition of ownership for at least thirty (30) years immediately preceding the filing of the application, 43 or
from 12 June 1945. 44
Considering that the private respondents became American citizens before such filing, it goes without saying that they had
acquired no vested right, consisting of an imperfect title over to property before they lost their Philippine citizenship.
WHEREFORE, the Petition is GRANTED. The challenged Decision of the public respondent of 21 November 1989 in CA-
G.R. CV No. 05824 is hereby SET ASIDE and the Decision of 5 February 1985 of Branch 82 of the Regional Trial Court of
Romblon in Land Registration Case No. N-48, LRC Record No. N-51706 is REVERSED.
Costs against the private respondents.
SO ORDERED.

[G.R. No. 124293. September 24, 2003]

JG SUMMIT HOLDINGS, INC., petitioner, vs. COURT OF APPEALS, COMMITTEE ON PRIVATIZATION, its
Chairman and Members; ASSET PRIVATIZATION TRUST and PHILYARDS HOLDINGS, INC., respondents.
RESOLUTION
PUNO, J.:
The core issue posed by the Motions for Reconsideration is whether a shipyard is a public utility whose capitalization
must be sixty percent (60%) owned by Filipinos. Our resolution of this issue will determine the fate of the shipbuilding and
ship repair industry. It can either spell the industrys demise or breathe new life to the struggling but potentially healthy
partner in the countrys bid for economic growth. It can either kill an initiative yet in its infancy, or harness creativity in the
productive disposition of government assets.
The facts are undisputed and can be summarized briefly as follows:
On January 27, 1977, the National Investment and Development Corporation (NIDC), a government corporation,
entered into a Joint Venture Agreement (JVA) with Kawasaki Heavy Industries, Ltd. of Kobe, Japan (KAWASAKI) for the
construction, operation and management of the Subic National Shipyard, Inc. (SNS) which subsequently became the
Philippine Shipyard and Engineering Corporation (PHILSECO). Under the JVA, the NIDC and KAWASAKI will
contribute P330 million for the capitalization of PHILSECO in the proportion of 60%-40% respectively.[1] One of its salient
features is the grant to the parties of the right of first refusal should either of them decide to sell, assign or transfer its
interest in the joint venture, viz:
1.4 Neither party shall sell, transfer or assign all or any part of its interest in SNS [PHILSECO] to any third party without
giving the other under the same terms the right of first refusal. This provision shall not apply if the transferee is a
corporation owned or controlled by the GOVERNMENT or by a KAWASAKI affiliate.[2]
On November 25, 1986, NIDC transferred all its rights, title and interest in PHILSECO to the Philippine National Bank
(PNB). Such interests were subsequently transferred to the National Government pursuant to Administrative Order No. 14.
On December 8, 1986, President Corazon C. Aquino issued Proclamation No. 50 establishing the Committee on
Privatization (COP) and the Asset Privatization Trust (APT) to take title to, and possession of, conserve, manage and
dispose of non-performing assets of the National Government. Thereafter, on February 27, 1987, a trust agreement was
entered into between the National Government and the APT wherein the latter was named the trustee of the National
Governments share in PHILSECO. In 1989, as a result of a quasi-reorganization of PHILSECO to settle its huge obligations
to PNB, the National Governments shareholdings in PHILSECO increased to 97.41% thereby reducing KAWASAKIs
shareholdings to 2.59%.[3]
In the interest of the national economy and the government, the COP and the APT deemed it best to sell the National
Governments share in PHILSECO to private entities. After a series of negotiations between the APT and KAWASAKI, they
agreed that the latters right of first refusal under the JVA be exchanged for the right to top by five percent (5%) the highest
bid for the said shares. They further agreed that KAWASAKI would be entitled to name a company in which it was a
stockholder, which could exercise the right to top. On September 7, 1990, KAWASAKI informed APT that Philyards Holdings,
Inc. (PHI) would exercise its right to top.[4]
At the pre-bidding conference held on September 18, 1993, interested bidders were given copies of the JVA between
NIDC and KAWASAKI, and of the Asset Specific Bidding Rules (ASBR) drafted for the National Governments 87.6% equity
share in PHILSECO.[5] The provisions of the ASBR were explained to the interested bidders who were notified that the
bidding would be held on December 2, 1993. A portion of the ASBR reads:
1.0 The subject of this Asset Privatization Trust (APT) sale through public bidding is the National Governments equity in
PHILSECO consisting of 896,869,942 shares of stock (representing 87.67% of PHILSECOs outstanding capital stock),
which will be sold as a whole block in accordance with the rules herein enumerated.
...
2.0 The highest bid, as well as the buyer, shall be subject to the final approval of both the APT Board of Trustees and the
Committee on Privatization (COP).
2.1 APT reserves the right in its sole discretion, to reject any or all bids.
3.0 This public bidding shall be on an Indicative Price Bidding basis. The Indicative price set for the National Governments
87.67% equity in PHILSECO is PESOS: ONE BILLION THREE HUNDRED MILLION (P1,300,000,000.00).
...
6.0 The highest qualified bid will be submitted to the APT Board of Trustees at its regular meeting following the bidding,
for the purpose of determining whether or not it should be endorsed by the APT Board of Trustees to the COP, and the
latter approves the same. The APT shall advise Kawasaki Heavy Industries, Inc. and/or its nominee, Philyards Holdings,
Inc., that the highest bid is acceptable to the National Government. Kawasaki Heavy Industries, Inc. and/or Philyards
Holdings, Inc. shall then have a period of thirty (30) calendar days from the date of receipt of such advice from APT within
which to exercise their Option to Top the Highest Bid by offering a bid equivalent to the highest bid plus five (5%) percent
thereof.
6.1 Should Kawasaki Heavy Industries, Inc. and/or Philyards Holdings, Inc. exercise their Option to Top the Highest Bid,
they shall so notify the APT about such exercise of their option and deposit with APT the amount equivalent to ten percent
(10%) of the highest bid plus five percent (5%) thereof within the thirty (30)-day period mentioned in paragraph 6.0 above.
APT will then serve notice upon Kawasaki Heavy Industries, Inc. and/or Philyards Holdings, Inc. declaring them as the
preferred bidder and they shall have a period of ninety (90) days from the receipt of the APTs notice within which to pay
the balance of their bid price.
6.2 Should Kawasaki Heavy Industries, Inc. and/or Philyards Holdings, Inc. fail to exercise their Option to Top the Highest
Bid within the thirty (30)-day period, APT will declare the highest bidder as the winning bidder.
...
12.0 The bidder shall be solely responsible for examining with appropriate care these rules, the official bid forms, including
any addenda or amendments thereto issued during the bidding period. The bidder shall likewise be responsible for
informing itself with respect to any and all conditions concerning the PHILSECO Shares which may, in any manner, affect
the bidders proposal. Failure on the part of the bidder to so examine and inform itself shall be its sole risk and no relief for
error or omission will be given by APT or COP. . ..[6]
At the public bidding on the said date, petitioner J.G. Summit Holdings, Inc. submitted a bid of Two Billion and Thirty
Million Pesos (P2,030,000,000.00) with an acknowledgement of KAWASAKI/Philyards right to top, viz:
4. I/We understand that the Committee on Privatization (COP) has up to thirty (30) days to act on APTs recommendation
based on the result of this bidding. Should the COP approve the highest bid, APT shall advise Kawasaki Heavy Industries,
Inc. and/or its nominee, Philyards Holdings, Inc. that the highest bid is acceptable to the National Government. Kawasaki
Heavy Industries, Inc. and/or Philyards Holdings, Inc. shall then have a period of thirty (30) calendar days from the date of
receipt of such advice from APT within which to exercise their Option to Top the Highest Bid by offering a bid equivalent to
the highest bid plus five (5%) percent thereof.[7]
As petitioner was declared the highest bidder, the COP approved the sale on December 3, 1993 subject to the right of
Kawasaki Heavy Industries, Inc./Philyards Holdings, Inc. to top JGSMIs bid by 5% as specified in the bidding rules. [8]
On December 29, 1993, petitioner informed APT that it was protesting the offer of PHI to top its bid on the grounds
that: (a) the KAWASAKI/PHI consortium composed of Kawasaki, Philyards, Mitsui, Keppel, SM Group, ICTSI and Insular
Life violated the ASBR because the last four (4) companies were the losing bidders thereby circumventing the law and
prejudicing the weak winning bidder; (b) only KAWASAKI could exercise the right to top; (c) giving the same option to top
to PHI constituted unwarranted benefit to a third party; (d) no right of first refusal can be exercised in a public bidding or
auction sale; and (e) the JG Summit consortium was not estopped from questioning the proceedings.[9]
On February 2, 1994, petitioner was notified that PHI had fully paid the balance of the purchase price of the subject
bidding. On February 7, 1994, the APT notified petitioner that PHI had exercised its option to top the highest bid and that
the COP had approved the same on January 6, 1994. On February 24, 1994, the APT and PHI executed a Stock Purchase
Agreement.[10] Consequently, petitioner filed with this Court a Petition for Mandamus under G.R. No. 114057. On May 11,
1994, said petition was referred to the Court of Appeals. On July 18, 1995, the Court of Appeals denied the same for lack
of merit. It ruled that the petition for mandamus was not the proper remedy to question the constitutionality or legality of the
right of first refusal and the right to top that was exercised by KAWASAKI/PHI, and that the matter must be brought by the
proper party in the proper forum at the proper time and threshed out in a full blown trial. The Court of Appeals further ruled
that the right of first refusal and the right to top are prima facie legal and that the petitioner, by participating in the public
bidding, with full knowledge of the right to top granted to KASAWASAKI/Philyards is . . .estopped from questioning the
validity of the award given to Philyards after the latter exercised the right to top and had paid in full the purchase price of
the subject shares, pursuant to the ASBR. Petitioner filed a Motion for Reconsideration of said Decision which was denied
on March 15, 1996. Petitioner thus filed a Petition for Certiorari with this Court alleging grave abuse of discretion on the part
of the appellate court.[11]
On November 20, 2000, this Court rendered the now assailed Decision ruling among others that the Court of Appeals
erred when it dismissed the petition on the sole ground of the impropriety of the special civil action of mandamus because
the petition was also one of certiorari.[12] It further ruled that a shipyard like PHILSECO is a public utility whose capitalization
must be sixty percent (60%) Filipino-owned.[13] Consequently, the right to top granted to KAWASAKI under the Asset
Specific Bidding Rules (ASBR) drafted for the sale of the 87.67% equity of the National Government in PHILSECO is illegal-
--not only because it violates the rules on competitive bidding--- but more so, because it allows foreign corporations to own
more than 40% equity in the shipyard.[14] It also held that although the petitioner had the opportunity to examine the ASBR
before it participated in the bidding, it cannot be estopped from questioning the unconstitutional, illegal and inequitable
provisions thereof.[15] Thus, this Court voided the transfer of the national governments 87.67% share in PHILSECO to
Philyard Holdings, Inc., and upheld the right of JG Summit, as the highest bidder, to take title to the said shares, viz:
WHEREFORE, the instant petition for review on certiorari is GRANTED. The assailed Decision and Resolution of the
Court of Appeals are REVERSED and SET ASIDE. Petitioner is ordered to pay to APT its bid price of Two Billion Thirty
Million Pesos (P2,030,000,000.00 ), less its bid deposit plus interests upon the finality of this Decision. In turn, APT is
ordered to:
(a) accept the said amount of P2,030,000,000.00 less bid deposit and interests from petitioner;
(b) execute a Stock Purchase Agreement with petitioner;
(c) cause the issuance in favor of petitioner of the certificates of stocks representing 87.6% of PHILSECOs
total capitalization;
(d) return to private respondent PHGI the amount of Two Billion One Hundred Thirty-One Million Five
Hundred Thousand Pesos (P2,131,500,000.00); and
(e) cause the cancellation of the stock certificates issued to PHI.
SO ORDERED.[16]
In separate Motions for Reconsideration,[17] respondents submit three basic issues for our resolution: (1) Whether
PHILSECO is a public utility; (2) Whether under the 1977 JVA, KAWASAKI can exercise its right of first refusal only up to
40% of the total capitalization of PHILSECO; and (3) Whether the right to top granted to KAWASAKI violates the principles
of competitive bidding.
I.
Whether PHILSECO is a Public Utility.
After carefully reviewing the applicable laws and jurisprudence, we hold that PHILSECO is not a public utility for the
following reasons:
First. By nature, a shipyard is not a public utility.
A public utility is a business or service engaged in regularly supplying the public with some commodity or service of
public consequence such as electricity, gas, water, transportation, telephone or telegraph service. [18] To constitute a public
utility, the facility must be necessary for the maintenance of life and occupation of the residents. However, the fact that a
business offers services or goods that promote public good and serve the interest of the public does not automatically make
it a public utility. Public use is not synonymous with public interest. As its name indicates, the term public utility implies public
use and service to the public. The principal determinative characteristic of a public utility is that of service to, or
readiness to serve, an indefinite public or portion of the public as such which has a legal right to demand and receive its
services or commodities. Stated otherwise, the owner or person in control of a public utility must have devoted it to such
use that the public generally or that part of the public which has been served and has accepted the service, has the right to
demand that use or service so long as it is continued, with reasonable efficiency and under proper charges. [19] Unlike a
private enterprise which independently determines whom it will serve, a public utility holds out generally and may not refuse
legitimate demand for service.[20] Thus, in Iloilo Ice and Cold Storage Co. vs. Public Utility Board, [21] this Court defined
public use, viz:
Public use means the same as use by the public. The essential feature of the public use is that it is not confined to
privileged individuals, but is open to the indefinite public. It is this indefinite or unrestricted quality that gives it its public
character. In determining whether a use is public, we must look not only to the character of the business to be done, but
also to the proposed mode of doing it. If the use is merely optional with the owners, or the public benefit is merely
incidental, it is not a public use, authorizing the exercise of jurisdiction of the public utility commission. There must be, in
general, a right which the law compels the owner to give to the general public. It is not enough that the general prosperity
of the public is promoted. Public use is not synonymous with public interest. The true criterion by which to judge the
character of the use is whether the public may enjoy it by right or only by permission. [22] (emphasis supplied)
Applying the criterion laid down in Iloilo to the case at bar, it is crystal clear that a shipyard cannot be considered a
public utility.
A shipyard is a place or enclosure where ships are built or repaired. [23] Its nature dictates that it serves but a limited
clientele whom it may choose to serve at its discretion. While it offers its facilities to whoever may wish to avail of its
services, a shipyard is not legally obliged to render its services indiscriminately to the public. It has no legal
obligation to render the services sought by each and every client. The fact that it publicly offers its services does not give
the public a legal right to demand that such services be rendered.
 There can be no disagreement that the shipbuilding and ship repair industry is imbued with public interest as it involves
the maintenance of the seaworthiness of vessels dedicated to the transportation of either persons or goods. Nevertheless,
the fact that a business is affected with public interest does not imply that it is under a duty to serve the public. While t he
business may be regulated for public good, the regulation cannot justify the classification of a purely private enterprise as a
public utility. The legislature cannot, by its mere declaration, make something a public utility which is not in fact such; and a
private business operated under private contracts with selected customers and not devoted to public use cannot,
by legislative fiat or by order of a public service commission, be declared a public utility, since that would be taking
private property for public use without just compensation, which cannot be done consistently with the due process clause. [24]
It is worthy to note that automobile and aircraft manufacturers, which are of similar nature to shipyards, are not
considered public utilities despite the fact that their operations greatly impact on land and air transportation. The reason is
simple. Unlike commodities or services traditionally regarded as public utilities such as electricity, gas, water, transportation,
telephone or telegraph service, automobile and aircraft manufacturing---and for that matter ship building and ship repair---
serve the public only incidentally.
Second. There is no law declaring a shipyard as a public utility.
History provides us hindsight and hindsight ought to give us a better view of the intent of any law. The succession of
laws affecting the status of shipyards ought not to obliterate, but rather, give us full picture of the intent of the legislature.
The totality of the circumstances, including the contemporaneous interpretation accorded by the administrative bodies
tasked with the enforcement of the law all lead to a singular conclusion: that shipyards are not public utilities.
Since the enactment of Act No. 2307 which created the Public Utility Commission (PUC) until its repeal by
Commonwealth Act No. 146, establishing the Public Service Commission (PSC), a shipyard, by legislative declaration, has
been considered a public utility. [25] A Certificate of Public Convenience (CPC) from the PSC to the effect that the operation
of the said service and the authorization to do business will promote the public interests in a proper and suitable manner is
required before any person or corporation may operate a shipyard.[26] In addition, such persons or corporations should abide
by the citizenship requirement provided in Article XIII, section 8 of the 1935 Constitution,[27]viz:
Sec. 8. No franchise, certificate, or any other form or authorization for the operation of a public utility shall be granted
except to citizens of the Philippines or to corporations or other entities organized under the laws of the
Philippines, sixty per centum of the capital of which is owned by citizens of the Philippines, nor shall such
franchise, certificate or authorization be exclusive in character or for a longer period than fifty years. No franchise or right
shall be granted to any individual, firm or corporation, except under the condition that it shall be subject to amendment,
alteration, or repeal by the National Assembly when the public interest so requires. (emphasis supplied)
To accelerate the development of shipbuilding and ship repair industry, former President Ferdinand E. Marcos issued
P.D. No. 666 granting the following incentives:
SECTION 1. Shipbuilding and ship repair yards duly registered with the Maritime Industry Authority shall be entitled to the
following incentive benefits:
(a) Exemption from import duties and taxes.- The importation of machinery, equipment and materials for shipbuilding, ship
repair and/or alteration, including indirect import, as well as replacement and spare parts for the repair and overhaul of
vessels such as steel plates, electrical machinery and electronic parts, shall be exempt from the payment of customs duty
and compensating tax: Provided, however, That the Maritime Industry Authority certifies that the item or items imported
are not produced locally in sufficient quantity and acceptable quality at reasonable prices, and that the importation is
directly and actually needed and will be used exclusively for the construction, repair, alteration, or overhaul of merchant
vessels, and other watercrafts; Provided, further, That if the above machinery, equipment, materials and spare parts are
sold to non-tax exempt persons or entities, the corresponding duties and taxes shall be paid by the original
importer; Provided, finally, That local dealers and/or agents who sell machinery, equipment, materials and accessories to
shipyards for shipbuilding and ship repair are entitled to tax credits, subject to approval by the total tariff duties and
compensating tax paid for said machinery, equipment, materials and accessories.
(b) Accelerated depreciation.- Industrial plant and equipment may, at the option of the shipbuilder and ship repairer, be
depreciated for any number of years between five years and expected economic life.
(c) Exemption from contractors percentage tax.- The gross receipts derived by shipbuilders and ship repairers from
shipbuilding and ship repairing activities shall be exempt from the Contractors Tax provided in Section 91 of the National
Internal Revenue Code during the first ten years from registration with the Maritime Industry Authority, provided that such
registration is effected not later than the year 1990; Provided, That any and all amounts which would otherwise have been
paid as contractors tax shall be set aside as a separate fund, to be known as Shipyard Development Fund, by the
contractor for the purpose of expansion, modernization and/or improvement of the contractors own shipbuilding or ship
repairing facilities; Provided, That, for this purpose, the contractor shall submit an annual statement of its receipts to the
Maritime Industry Authority; and Provided, further, That any disbursement from such fund for any of the purposes
hereinabove stated shall be subject to approval by the Maritime Industry Authority.
In addition, P.D. No. 666 removed the shipbuilding and ship repair industry from the list of public utilities, thereby freeing
the industry from the 60% citizenship requirement under the Constitution and from the need to obtain Certificate of Public
Convenience pursuant to section 15 of C.A No. 146. Section 1 (d) of P.D. 666 reads:
(d) Registration required but not as a Public Utility.- The business of constructing and repairing vessels or parts
thereof shall not be considered a public utility and no Certificate of Public Convenience shall be required
therefor. However, no shipyard, graving dock, marine railway or marine repair shop and no person or enterprise shall
engage in construction and/or repair of any vessel, or any phase or part thereof, without a valid Certificate of Registration
and license for this purpose from the Maritime Industry Authority, except those owned or operated by the Armed Forces of
the Philippines or by foreign governments pursuant to a treaty or agreement. (emphasis supplied)
Any law, decree, executive order, or rules and regulations inconsistent with P.D. No. 666 were repealed or modified
accordingly.[28] Consequently, sections 13 (b) and 15 of C.A. No. 146 were repealed in so far as the former law included
shipyards in the list of public utilities and required the certificate of public convenience for their operation. Simply stated, the
repeal was due to irreconcilable inconsistency, and by definition, this kind of repeal falls under the category of an implied
repeal.[29]
On April 28, 1983, Batas Pambansa Blg. 391, also known as the Investment Incentive Policy Act of 1983, was enacted.
It laid down the general policy of the government to encourage private domestic and foreign investments in the various
sectors of the economy, to wit:
Sec. 2. Declaration of Investment Policy.- It is the policy of the State to encourage private domestic and foreign
investments in industry, agriculture, mining and other sectors of the economy which shall: provide significant employment
opportunities relative to the amount of the capital being invested; increase productivity of the land, minerals, forestry,
aquatic and other resources of the country, and improve utilization of the products thereof; improve technical skills of the
people employed in the enterprise; provide a foundation for the future development of the economy; accelerate
development of less developed regions of the country; and result in increased volume and value of exports for the
economy.
It is the policy of the State to extend to projects which will significantly contribute to the attainment of these
objectives, fiscal incentives without which said projects may not be established in the locales, number and/or pace
required for optimum national economic development. Fiscal incentive systems shall be devised to compensate for
market imperfections, reward performance of making contributions to economic development, cost-efficient and
be simple to administer.
The fiscal incentives shall be extended to stimulate establishment and assist initial operations of the enterprise, and shall
terminate after a period of not more than 10 years from registration or start-up of operation unless a special period is
otherwise stated.
The foregoing declaration shall apply to all investment incentive schemes and in particular will supersede article 2 of
Presidential Decree No. 1789. (emphases supplied)
With the new investment incentive regime, Batas Pambansa Blg. 391 repealed the following laws, viz:
Sec. 20. The following provisions are hereby repealed:
1) Section 53, P.D. 463 (Mineral Resources Development Decree);
2.) Section 1, P.D. 666 (Shipbuilding and Ship Repair Industry);
3) Section 6, P.D. 1101 (Radioactive Minerals);
4) LOI 508 extending P.D. 791 and P.D. 924 (Sugar); and
5) The following articles of Presidential Decree 1789: 2, 18, 19, 22, 28, 30, 39, 49 (d), 62, and 77. Articles 45, 46
and 48 are hereby amended only with respect to domestic and export producers.
All other laws, decrees, executive orders, administrative orders, rules and regulations or parts thereof which are
inconsistent with the provisions of this Act are hereby repealed, amended or modified accordingly.
All other incentive systems which are not in any way affected by the provisions of this Act may be restructured by the
President so as to render them cost-efficient and to make them conform with the other policy guidelines in the declaration
of policy provided in Section 2 of this Act. (emphasis supplied)
From the language of the afore-quoted provision, the whole of P.D. No. 666, section 1 was expressly and categorically
repealed. As a consequence, the provisions of C.A. No. 146, which were impliedly repealed by P.D. No. 666, section 1 were
revived.[30] In other words, with the enactment of Batas Pambansa Blg. 391, a shipyard reverted back to its status as a
public utility and as such, requires a CPC for its operation.
The crux of the present controversy is the effect of the express repeal of Batas Pambansa Blg. 391 by Executive Order
No. 226 issued by former President Corazon C. Aquino under her emergency powers.
We rule that the express repeal of Batas Pambansa Blg. 391 by E.O. No. 226 did not revive Section 1 of P.D. No. 666.
But more importantly, it also put a period to the existence of sections 13 (b) and 15 of C.A. No. 146. It bears emphasis that
sections 13 (b) and 15 of C.A. No. 146, as originally written, owed their continued existence to Batas Pambansa Blg. 391.
Had the latter not repealed P.D. No. 666, the former should have been modified accordingly and shipyards effectively
removed from the list of public utilities. Ergo, with the express repeal of Batas Pambansa Blg. 391 by E.O. No. 226, the
revival of sections 13 (b) and 15 of C.A. No. 146 had no more leg to stand on. A law that has been expressly repealed
ceases to exist and becomes inoperative from the moment the repealing law becomes effective. [31] Hence, there is simply
no basis in the conclusion that shipyards remain to be a public utility. A repealed statute cannot be the basis for classifying
shipyards as public utilities.
In view of the foregoing, there can be no other conclusion than to hold that a shipyard is not a pubic utility. A shipyard
has been considered a public utility merely by legislative declaration. Absent this declaration, there is no more reason why
it should continuously be regarded as such. The fact that the legislature did not clearly and unambiguously express its
intention to include shipyards in the list of public utilities indicates that that it did not intend to do so. Thus, a shipyard reverts
back to its status as non-public utility prior to the enactment of the Public Service Law.
 This interpretation is in accord with the uniform interpretation placed upon it by the Board of Investments (BOI), which
was entrusted by the legislature with the preparation of annual Investment Priorities Plan (IPPs). The BOI has consistently
classified shipyards as part of the manufacturing sector and not of the public utilities sector. The enactment of Batas
Pambansa Blg. 391 did not alter the treatment of the BOI on shipyards. It has been, as at present, classified as part of the
manufacturing and not of the public utilities sector.[32]
Furthermore, of the 441 Ship Building and Ship Repair (SBSR) entities registered with the MARINA,[33] none appears
to have an existing franchise. If we continue to hold that a shipyard is a pubic utility, it is a necessary consequence that all
these entities should have obtained a franchise as was the rule prior to the enactment of P.D. No. 666. But MARINA remains
without authority, pursuant to P.D. No. 474[34] to issue franchises for the operation of shipyards. Surely,
the legislature did not intend to create a vacuum by continuously treating a shipyard as a public utility without giving
MARINA the power to issue a Certificate of Public Convenience (CPC) or a Certificate of Public Convenience and Necessity
(CPCN) as required by section 15 of C.A. No. 146.
II.
Whether under the 1977 Joint Venture Agreement,
KAWASAKI can purchase only a maximum of 40%
of PHILSECOs total capitalization.
A careful reading of the 1977 Joint Venture Agreement reveals that there is nothing that prevents KAWASAKI from
acquiring more than 40% of PHILSECOs total capitalization. Section 1 of the 1977 JVA states:
1.3 The authorized capital stock of Philseco shall be P330 million. The parties shall thereafter increase their subscription
in Philseco as may be necessary and as called by the Board of Directors, maintaining a proportion of 60%-40% for NIDC
and KAWASAKI respectively, up to a total subscribed and paid-up capital stock of P312 million.
1.4 Neither party shall sell, transfer or assign all or any part of its interest in SNS [renamed PHILSECO] to any third party
without giving the other under the same terms the right of first refusal. This provision shall not apply if the transferee is a
corporation owned and controlled by the GOVERMENT [of the Philippines] or by a Kawasaki affiliate.
1.5 The By-Laws of SNS [PHILSECO] shall grant the parties preemptive rights to unissued shares of SNS [PHILSECO]. [35]
Under section 1.3, the parties agreed to the amount of P330 million as the total capitalization of their joint venture.
There was no mention of the amount of their initial subscription. What is clear is that they are to infuse the needed capital
from time to time until the total subscribed and paid-up capital reaches P312 million. The phrase maintaining a proportion
of 60%-40% refers to their respective share of the burden each time the Board of Directors decides to increase the
subscription to reach the target paid-up capital of P312 million. It does not bind the parties to maintain the sharing scheme
all throughout the existence of their partnership.
The parties likewise agreed to arm themselves with protective mechanisms to preserve their respective interests in the
partnership in the event that (a) one party decides to sell its shares to third parties; and (b) new Philseco shares are
issued. Anent the first situation, the non-selling party is given the right of first refusal under section 1.4 to have a
preferential right to buy or to refuse the selling partys shares. The right of first refusal is meant to protect the original or
remaining joint venturer(s) or shareholder(s) from the entry of third persons who are not acceptable to it as co-venturer(s)
or co-shareholder(s). The joint venture between the Philippine Government and KAWASAKI is in the nature of a
partnership[36] which, unlike an ordinary corporation, is based on delectus personae.[37] No one can become a member of
the partnership association without the consent of all the other associates. The right of first refusal thus ensures that the
parties are given control over who may become a new partner in substitution of or in addition to the original partners. Should
the selling partner decide to dispose all its shares, the non-selling partner may acquire all these shares and terminate the
partnership. No person or corporation can be compelled to remain or to continue the partnership. Of course, this
presupposes that there are no other restrictions in the maximum allowable share that the non-selling partner may acquire
such as the constitutional restriction on foreign ownership in public utility. The theory that KAWASAKI can acquire, as a
maximum, only 40% of PHILSECOs shares is correct only if a shipyard is a public utility. In such instance, the non-selling
partner who is an alien can acquire only a maximum of 40% of the total capitalization of a public utility despite the grant of
first refusal. The partners cannot, by mere agreement, avoid the constitutional proscription. But as afore-discussed,
PHILSECO is not a public utility and no other restriction is present that would limit the right of KAWASAKI to purchase the
Governments share to 40% of Philsecos total capitalization.
Furthermore, the phrase under the same terms in section 1.4 cannot be given an interpretation that would limit the right
of KAWASAKI to purchase PHILSECO shares only to the extent of its original proportionate contribution of 40% to the total
capitalization of the PHILSECO. Taken together with the whole of section 1.4, the phrase under the same terms means
that a partner to the joint venture that decides to sell its shares to a third party shall make a similar offer to the
non-selling partner. The selling partner cannot make a different or a more onerous offer to the non-selling partner.
The exercise of first refusal presupposes that the non-selling partner is aware of the terms of the conditions attendant
to the sale for it to have a guided choice. While the right of first refusal protects the non-selling partner from the entry of third
persons, it cannot also deprive the other partner the right to sell its shares to third persons if, under the same offer, it does
not buy the shares.
Apart from the right of first refusal, the parties also have preemptive rights under section 1.5 in the unissued shares
of Philseco. Unlike the former, this situation does not contemplate transfer of a partners shares to third parties but the
issuance of new Philseco shares. The grant of preemptive rights preserves the proportionate shares of the original partners
so as not to dilute their respective interests with the issuance of the new shares. Unlike the right of first refusal, a preemptive
right gives a partner a preferential right over the newly issued shares only to the extent that it retains its original proportionate
share in the joint venture.
The case at bar does not concern the issuance of new shares but the transfer of a partners share in the joint venture.
Verily, the operative protective mechanism is the right of first refusal which does not impose any limitation in the maximum
shares that the non-selling partner may acquire.
III.
Whether the right to top granted to KAWASAKI
in exchange for its right of first refusal violates
the principles of competitive bidding.
We also hold that the right to top granted to KAWASAKI and exercised by private respondent did not violate the rules
of competitive bidding.
The word bidding in its comprehensive sense means making an offer or an invitation to prospective contractors
whereby the government manifests its intention to make proposals for the purpose of supplies, materials and equipment for
official business or public use, or for public works or repair.[38] The three principles of public bidding are: (1) the offer to the
public; (2) an opportunity for competition; and (3) a basis for comparison of bids.[39] As long as these three principles are
complied with, the public bidding can be considered valid and legal. It is not necessary that the highest bid be automatically
accepted. The bidding rules may specify other conditions or the bidding process be subjected to certain reservation or
qualification such as when the owner reserves to himself openly at the time of the sale the right to bid upon the property, or
openly announces a price below which the property will not be sold. Hence, where the seller reserves the right to refuse to
accept any bid made, a binding sale is not consummated between the seller and the bidder until the seller accepts the bid.
Furthermore, where a right is reserved in the seller to reject any and all bids received, the owner may exercise the right
even after the auctioneer has accepted a bid, and this applies to the auction of public as well as private property. [40] Thus:
It is a settled rule that where the invitation to bid contains a reservation for the Government to reject any or all bids, the
lowest or the highest bidder, as the case may be, is not entitled to an award as a matter of right for it does not become a
ministerial duty of the Government to make such an award. Thus, it has been held that where the right to reject is so
reserved, the lowest bid or any bid for that matter may be rejected on a mere technicality, that all bids may be rejected,
even if arbitrarily and unwisely, or under a mistake, and that in the exercise of a sound discretion, the award may be made
to another than the lowest bidder. And so, where the Government as advertiser, availing itself of that right, makes its
choice in rejecting any or all bids, the losing bidder has no cause to complain nor right to dispute that choice, unless an
unfairness or injustice is shown. Accordingly, he has no ground of action to compel the Government to award the contract
in his favor, nor compel it to accept his bid.[41]
In the instant case, the sale of the Government shares in PHILSECO was publicly known. All interested bidders were
welcomed. The basis for comparing the bids were laid down. All bids were accepted sealed and were opened and read in
the presence of the COAs official representative and before all interested bidders. The only question that remains is whether
or not the existence of KAWASAKIs right to top destroys the essence of competitive bidding so as to say that the bidders
did not have an opportunity for competition. We hold that it does not.
The essence of competition in public bidding is that the bidders are placed on equal footing. This means that all qualified
bidders have an equal chance of winning the auction through their bids. In the case at bar, all of the bidders were exposed
to the same risk and were subjected to the same condition, i.e., the existence of KAWASAKIs right to top. Under the ASBR,
the Government expressly reserved the right to reject any or all bids, and manifested its intention not to accept the highest
bid should KAWASAKI decide to exercise its right to top under the ABSR. This reservation or qualification was made known
to the bidders in a pre-bidding conference held on September 28, 1993. They all expressly accepted this condition in writing
without any qualification. Furthermore, when the Committee on Privatization notified petitioner of the approval of the sale of
the National Government shares of stock in PHILSECO, it specifically stated that such approval was subject to the right of
KAWASAKI Heavy Industries, Inc./Philyards Holdings, Inc. to top JGSMIs bid by 5% as specified in the bidding rules. Clearly,
the approval of the sale was a conditional one. Since Philyards eventually exercised its right to top petitioners bid by 5%,
the sale was not consummated. Parenthetically, it cannot be argued that the existence of the right to top set for naught the
entire public bidding. Had Philyards Holdings, Inc. failed or refused to exercise its right to top, the sale between the petitioner
and the National Government would have been consummated. In like manner, the existence of the right to top cannot be
likened to a second bidding, which is countenanced, except when there is failure to bid as when there is only one bidder or
none at all. A prohibited second bidding presupposes that based on the terms and conditions of the sale, there is already a
highest bidder with the right to demand that the seller accept its bid. In the instant case, the highest bidder was well aware
that the acceptance of its bid was conditioned upon the non-exercise of the right to top.
To be sure, respondents did not circumvent the requirements for bidding by granting KAWASAKI, a non-bidder, the
right to top the highest bidder. The fact that KAWASAKIs nominee to exercise the right to top has among its stockholders
some losing bidders cannot also be deemed unfair.
It must be emphasized that none of the parties questions the existence of KAWASAKIs right of first refusal, which is
concededly the basis for the grant of the right to top. Under KAWASAKIs right of first refusal, the National Government is
under the obligation to give preferential right to KAWASAKI in the event it decides to sell its shares in PHILSECO. It has to
offer to KAWASAKI the shares and give it the option to buy or refuse under the same terms for which it is willing to sell
the said shares to third parties.KAWASAKI is not a mere non-bidder. It is a partner in the joint venture; the incidents of which
are governed by the law on contracts and on partnership.
 It is true that properties of the National Government, as a rule, may be sold only after a public bidding is held. Public
bidding is the accepted method in arriving at a fair and reasonable price and ensures that overpricing, favoritism and other
anomalous practices are eliminated or minimized.[42] But the requirement for public bidding does not negate the exercise of
the right of first refusal. In fact, public bidding is an essential first step in the exercise of the right of first refusal because it
is only after the public bidding that the terms upon which the Government may be said to be willing to sell its shares to third
parties may be known. It is only after the public bidding that the Government will have a basis with which to offer KAWASAKI
the option to buy or forego the shares.
Assuming that the parties did not swap KAWASAKIs right of first refusal with the right to top, KAWASAKI would have
been able to buy the National Governments shares in PHILSECO under the same terms as offered by the highest bidder.
Stated otherwise, by exercising its right of first refusal, KAWASAKI could have bought the shares for only P2.03 billion and
not the higher amount of P2.1315 billion. There is, thus, no basis in the submission that the right to top unfairly favored
KAWASAKI. In fact, with the right to top, KAWASAKI stands to pay higher than it should had it settled with its right of first
refusal. The obvious beneficiary of the scheme is the National Government.
If at all, the obvious consideration for the exchange of the right of first refusal with the right to top is that KAWASAKI
can name a nominee, which it is a shareholder, to exercise the right to top. This is a valid contractual stipulation; the right
to top is an assignable right and both parties are aware of the full legal consequences of its exercise. As aforesaid, all
bidders were aware of the existence of the right to top, and its possible effects on the result of the public bidding was fully
disclosed to them. The petitioner, thus, cannot feign ignorance nor can it be allowed to repudiate its acts and question the
proceedings it had fully adhered to.[43]
The fact that the losing bidder, Keppel Consortium (composed of Keppel, SM Group, Insular Life Assurance, Mitsui
and ICTSI), has joined Philyards in the latters effort to raise P2.131 billion necessary in exercising the right to top is not
contrary to law, public policy or public morals. There is nothing in the ASBR that bars the losing bidders from joining either
the winning bidder (should the right to top is not exercised) or KAWASAKI/PHI (should it exercise its right to top as it did),
to raise the purchase price. The petitioner did not allege, nor was it shown by competent evidence, that the participation of
the losing bidders in the public bidding was done with fraudulent intent. Absent any proof of fraud, the formation by Philyards
of a consortium is legitimate in a free enterprise system. The appellate court is thus correct in holding the petitioner estopped
from questioning the validity of the transfer of the National Governments shares in PHILSECO to respondent.
Finally, no factual basis exists to support the view that the drafting of the ASBR was illegal because no prior approval
was given by the COA for it, specifically the provision on the right to top the highest bidder and that the public auction on
December 2, 1993 was not witnessed by a COA representative. No evidence was proffered to prove these allegations and
the Court cannot make legal conclusions out of mere allegations. Regularity in the performance of official duties is
presumed[44] and in the absence of competent evidence to rebut this presumption, this Court is duty bound to uphold this
presumption.
IN VIEW OF THE FOREGOING, the Motion for Reconsideration is hereby GRANTED. The impugned Decision and
Resolution of the Court of Appeals are AFFIRMED.
SO ORDERED.