ENVI CASES 1
The latter refused to surrender it,
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-12691 February 27, 1959
SIMEON T. DAGDAG, plaintiff-appellee,
vs.
VICENTE NEPOMUCENO, ET AL., defendants-appellants.
Jesus Paredes for appellee.
Mariano Sta. Romana for appellants.
BENGZON, J.:
Forwarded by the Court of Appeals, this lawsuit coming from Nueva Ecija, concern a
small parcel of land. Submitted for decision below upon a stipulation of facts, it raises
legal questions only.
A portion of Lot No. 3786, Cabanatuan Cadaster (admittedly alienable or disposable
public land way back in 1916) is covered by Sales Patent No. 251 issued to Margarita
Juanson, and also by lease No. 49 executed by the Bureau of Lands in favor of
Andres de Vera. The overlapping was recently discovered, and their successors in
interest now litigate for possession and/or ownership.
The Sales Patent was inscribed in the office of the Register of Deeds on July 11,
1927, and Original Certificate of Title No. 68 was accordingly issued in the same of
Margarita Juanson, who later sold the land of Remegio Juanson Bautista (1928), who
in turn sold it to Balarian Incorporated (1929). In May 1950, Simeon T. Dagdag
bought it from Balarin, Inc. After every sale, the corresponding Transfer Certificate of
Title was given out.
On the other hand, the lease to De Vera signed in June 1916 covered adjoining land
of a bigger area. It was transferred by him to Regino Nepomuceno. Originally for a
25-years period expiring on June 30, 1941, it was extended for another like period in
1949. Dagdag's title, and those of his predecessors contained no annotation of such
lease, of which neither he nor they any knowledge.
After purchasing the land, Simeon T. Dagdag had it relocated and the portion in
question turned out to be in possession of the heirs of Regino Nepomuceno,
appellants herein allegedly by virtue of the lease.
even in the face of Dagdag's patent and title, and despite the Director of Lands'
administrative determination in February 1953, practically holding that their contract
of lease did not, could not and should not extend to the area granted to Dagdag's
predecessors.
Hence, this judicial proceeding instituted by Dagdag in the Nueva Ecija court of first
instance, wherein he was declared to be the owner of the whole Lot 3786 and
entitled to the products thereof. The Honorable Jose N. Leutrio, Judge, explained that
"the sales patent issued in the name of Margarita Juanson having been registered
with the office of the Register of Deeds, and title having been issued by the Register
of Deeds in the name of Margarita Juanson, Lot 3786 was thereafter brought under
the operation of the Land Registration Act. The title issued in the name of Margarita
Juanson, Original Certificate of Title No. 68 was free from all liens and incumbrances.
This land was transferred successively, until it was acquired by the plaintiff herein,
and the certificate of title was issued in his name free from any lien or encumbrances,
and free from the claim of Regino Nepomuceno as losses. The plaintiffs herein
cannot, therefore, be bound by the fact that Lot 3786 is within the lease of Andres de
Vera which had been transferred to Regino Nepomuceno, the father and predecessor
of the defendants herein. The said lease not having been annotated on the certificate
of title, and it not having been neither proved or alleged that the plaintiff had
purchased the land knowing that Lot 3786 is a portion of the land leased to Andres
de Vera which had been acquired by the defendant's predecessors-in-interest, it
cannot prejudice the plaintiff who is presumed to be an innocent purchaser for value.
The fact that the lease in favor of Andres de Vera had been registered, cannot bind
and prejudice the plaintiff for Lot 3786 being a registered land, he need not go
farther than the title."
The above observations deserve our approval. They conform with our decisions on
indefeasibility of public land patents when registered in the corresponding Register of
Deeds Office.1 We regard these to be veritable Torrens Title subject to no
encumbrances except those stated therein, plus those specified by the status (lease is
not one of them).
In addition to the above reason given by his Honor, it should be remembered
that when the lease was renewed in 1949, the portion in question was no longer
public land subject to the disposition of the Director of Lands because it had already
been granted to Margarita Juanson and had become private property; therefore, it
could not have beenincluded in the renewal of such lease of public land.
Defendant's position may be summed up, in their own words, as follows:
When the contract of lease of the predecessor of the defendants was duly
issued and registered in the office of the register of deeds of Nueva Ecija,
and when the patent for the certificate of sale in favor of the predecessor of
the plaintiff was issued and registered in the said register of deeds of Nueva
 Ecija, both documents have the force and effect of registered properties
under the land Registration Act as provided for in . . . (section 122 of the
Land Registration Law). . . .
As the titles of the parties have come under the operation of the Land
Registration Act, and in case of overlapping titles, the older title should
prevail. The title of the defendants was issued and registered on June 14,
1916. The title of the plaintiff was registered on August 5, 1927. The title of
the defendants should, therefore prevail, and they should have been
declared the owners of the land in question. (pp. 8-9 Appellants Brief)
[Emphasis Ours].
The flaw in their argument lies in the assumption that their lease contract constituted
a "title", or deed or conveyance within the meaning of section 122, which for
convenience is quoted below:
Whenever public lands in the Philippine Islands belonging to the Government
of the United States or 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. It shall be the duty of the officials
issuing the instrument of alienation, grant, or conveyance in behalf of the
Government to cause such instrument, before its delivery to the grantee, to
be filed with the register of deeds for the province where the land lies and to
be there registered like other deeds and conveyance, whereupon a
certificate shall be entered as in other cases of registered land, and an
owner's duplicate issue to the grantee. The deed, grant, or instrument of
conveyance from the Government to the grantee shall not take effect as a
conveyance or bind the land, . . . After due registration and issue of the
certificate and owner's duplicate such shall be registered land for all
purposes under this Act.
Upon carefully reading the above, we think it clear that the documents mentioned,
wherein lands are "alienated, granted, or conveyed", are documents transferring
ownership not documents of lease, transferring mere possession. Observe
especially that the statue directs the issuance to the grantee of "an owner's duplicate
certificate". Appellants may not, therefore, assert a title just as good-so they claim-as
appellee's and older besides. So, the Torrens Title of appellee must prevail.
Judgment affirmed, with costs against appellants.
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 Paraaque 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,
Paraaque 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 Taada 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 Taada, 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 Taada
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 Taada 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 Taada, 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.1wphi1.nt
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 proposed contract, 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.1wphi1.nt
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, Considering that the Amended JVA is null and void ab initio, there is no necessity to
now covered by certificates of title in the name of PEA, are alienable lands rule on this last issue. Besides, the Court is not a trier of facts, and this last issue
of the public domain. PEA may lease these lands to private corporations involves a determination of factual matters.
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 WHEREFORE, the petition is GRANTED. The Public Estates Authority and Amari
limitations in the 1987 Constitution and existing laws. Coastal Bay Development Corporation are PERMANENTLY ENJOINED from
implementing the Amended Joint Venture Agreement which is hereby
2. The 592.15 hectares of submerged areas of Manila Bay remain inalienable declared NULL and VOID ab initio.
natural resources of the public domain until classified as alienable or
disposable lands open to disposition and declared no longer needed for SO ORDERED.
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 SECOND DIVISION
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. REPUBLIC OF THE PHILIPPINES, G.R. No. 134209

4. Since the Amended JVA also seeks to transfer to AMARI ownership of Petitioner,
290.156 hectares111 of still submerged areas of Manila Bay, such transfer is
void for being contrary to Section 2, Article XII of the 1987 Constitution Present:
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 PUNO, J., Chairperson,
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 SANDOVAL-GUTIERREZ,
land of the public domain.
CORONA,
Clearly, the Amended JVA violates glaringly Sections 2 and 3, Article XII of the 1987
Constitution. Under Article 1409112 of the Civil Code, contracts whose "object or AZCUNA, and
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 - versus - GARCIA, JJ.
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.

Promulgated:
 The decision under review recites the factual backdrop, as follows:

This is an application for registration of title to four (4)

CELESTINA NAGUIAT, January 24, 2006 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
Respondent. 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
x-----------------------------------------------------------------------------------x 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 applicants claim of
DECISION 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.
GARCIA, J.:

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.
Before the Court is this petition for review under Rule 45 of the Rules of
Court seeking the reversal of the Decision [1] dated May 29, 1998 of the Court of
Appeals (CA) in CA-G.R. CV No. 37001 which affirmed an earlier decision [2] of the
Regional Trial Court at Iba, Zambales, Branch 69 in Land Registration Case No. N-25-
1. 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 decision[4] 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 Republics present recourse on its basic submission that the CAs
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 respondents 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 Act [7] and the Constitution[8] 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 courts disposition, finding a registerable title for
respondent, is her and her predecessor-in-interests 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, respondents 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.
 EN BANC
[G.R. No. 127882. January 27, 2004]
LA BUGAL-BLAAN TRIBAL ASSOCIATION, INC., represented by its Chairman
FLONG MIGUEL M. LUMAYONG, WIGBERTO E. TAADA, PONCIANO
BENNAGEN, JAIME TADEO, RENATO R. CONSTANTINO, JR., FLONG
AGUSTIN M. DABIE, ROBERTO P. AMLOY, RAQIM L. DABIE, SIMEON
H. DOLOJO, IMELDA M. GANDON, LENY B. GUSANAN, MARCELO L.
GUSANAN, QUINTOL A. LABUAYAN, LOMINGGES D. LAWAY, BENITA
P. TACUAYAN, minors JOLY L. BUGOY, represented by his father
UNDERO D. BUGOY, ROGER M. DADING, represented by his father
ANTONIO L. DADING, ROMY M. LAGARO, represented by his father
TOTING A. LAGARO, MIKENY JONG B. LUMAYONG, represented by
his father MIGUEL M. LUMAYONG, RENE T. MIGUEL, represented by
his mother EDITHA T. MIGUEL, ALDEMAR L. SAL, represented by his
father DANNY M. SAL, DAISY RECARSE, represented by her mother
LYDIA S. SANTOS, EDWARD M. EMUY, ALAN P. MAMPARAIR,
MARIO L. MANGCAL, ALDEN S. TUSAN, AMPARO S. YAP, VIRGILIO
CULAR, MARVIC M.V.F. LEONEN, JULIA REGINA CULAR, GIAN
CARLO CULAR, VIRGILIO CULAR, JR., represented by their father
VIRGILIO CULAR, PAUL ANTONIO P. VILLAMOR, represented by his
parents JOSE VILLAMOR and ELIZABETH PUA-VILLAMOR, ANA
GININA R. TALJA, represented by her father MARIO JOSE B. TALJA,
SHARMAINE R. CUNANAN, represented by her father ALFREDO M.
CUNANAN, ANTONIO JOSE A. VITUG III, represented by his mother
ANNALIZA A. VITUG, LEAN D. NARVADEZ, represented by his father
MANUEL E. NARVADEZ, JR., ROSERIO MARALAG LINGATING,
represented by her father RIO OLIMPIO A. LINGATING, MARIO
JOSE B. TALJA, DAVID E. DE VERA, MARIA MILAGROS L. SAN JOSE,
SR., SUSAN O. BOLANIO, OND, LOLITA G. DEMONTEVERDE, BENJIE
L. NEQUINTO,[1] ROSE LILIA S. ROMANO, ROBERTO S. VERZOLA,
EDUARDO AURELIO C. REYES, LEAN LOUEL A. PERIA, represented
by his father ELPIDIO V. PERIA, [2] GREEN FORUM PHILIPPINES,
GREEN FORUM WESTERN VISAYAS, (GF-WV), ENVIRONMETAL
LEGAL ASSISTANCE CENTER (ELAC), PHILIPPINE KAISAHAN
TUNGO SA KAUNLARAN NG KANAYUNAN AT REPORMANG
PANSAKAHAN (KAISAHAN),[3] KAISAHAN TUNGO SA KAUNLARAN
NG KANAYUNAN AT REPORMANG PANSAKAHAN (KAISAHAN),
PARTNERSHIP FOR AGRARIAN REFORM and RURAL DEVELOPMENT
SERVICES, INC. (PARRDS), PHILIPPINE PART`NERSHIP FOR THE
DEVELOPMENT OF HUMAN RESOURCES IN THE RURAL AREAS, INC.
(PHILDHRRA), WOMENS LEGAL BUREAU (WLB), CENTER FOR
ALTERNATIVE DEVELOPMENT INITIATIVES, INC. (CADI), UPLAND
DEVELOPMENT INSTITUTE (UDI), KINAIYAHAN FOUNDATION,
INC., SENTRO NG ALTERNATIBONG LINGAP PANLIGAL (SALIGAN),
LEGAL RIGHTS AND NATURAL RESOURCES CENTER, INC.
(LRC), petitioners, vs. VICTOR O. RAMOS, SECRETARY,
DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES
(DENR), HORACIO RAMOS, DIRECTOR, MINES AND GEOSCIENCES
BUREAU (MGB-DENR), RUBEN TORRES, EXECUTIVE SECRETARY,
and WMC (PHILIPPINES), INC. [4] respondents.
DECISION
CARPIO-MORALES, J.:
The present petition for mandamus and prohibition assails the constitutionality
of Republic Act No. 7942,[5] otherwise known as the PHILIPPINE MINING ACT OF
1995, along with the Implementing Rules and Regulations issued pursuant thereto,
Department of Environment and Natural Resources (DENR) Administrative Order 96-
40, and of the Financial and Technical Assistance Agreement (FTAA) entered into on
March 30, 1995 by the Republic of the Philippines and WMC (Philippines), Inc.
(WMCP), a corporation organized under Philippine laws.
On July 25, 1987, then President Corazon C. Aquino issued Executive Order
(E.O.) No. 279[6] authorizing the DENR Secretary to
accept, consider and evaluate proposals from foreign-owned corporations or foreign
investors for contracts or agreements involving either technical or financial assistance
for large-scale exploration, development, and utilization of minerals, which, upon
appropriate recommendation of the Secretary, the President may execute with the
foreign proponent. In entering into such proposals, the President shall consider the
real contributions to the economic growth and general welfare of the country that will
be realized, as well as the development and use of local scientific and technical
resources that will be promoted by the proposed contract or agreement. Until
Congress shall determine otherwise, large-scale mining, for purpose of this Section,
shall mean those proposals for contracts or agreements for mineral resources
exploration, development, and utilization involving a committed capital investment in
a single mining unit project of at least Fifty Million Dollars in United States Currency
(US $50,000,000.00).[7]
On March 3, 1995, then President Fidel V. Ramos approved R.A. No. 7942 to
govern the exploration, development, utilization and processing of all mineral
resources.[8] R.A. No. 7942 defines the modes of mineral agreements for mining
operations,[9] outlines the procedure for their filing and approval,
[10]
assignment/transfer[11] and withdrawal,[12] and fixes their terms. [13]Similar
provisions govern financial or technical assistance agreements.[14]
The law prescribes the qualifications of contractors [15] and grants them certain
rights, including timber,[16] water[17] and easement[18] rights, and the right to possess
explosives.[19] Surface owners, occupants, or concessionaires are forbidden from
preventing holders of mining rights from entering private lands and concession areas.
[20]
A procedure for the settlement of conflicts is likewise provided for. [21]
 The Act restricts the conditions for exploration, [22] quarry[23] and
other[24] permits. It regulates the transport, sale and processing of minerals, [25] and
promotes the development of mining communities, science and mining technology,
[26]
and safety and environmental protection.[27]
The governments share in the agreements is spelled out and allocated, [28] taxes
and fees are imposed,[29] incentives granted.[30] Aside from penalizing certain acts,
[31]
the law likewise specifies grounds for the cancellation, revocation and termination
of agreements and permits.[32]
On April 9, 1995, 30 days following its publication on March 10, 1995
in Malaya and Manila Times, two newspapers of general circulation, R.A. No. 7942
took effect.[33]
Shortly before the effectivity of R.A. No. 7942, however, or on March 30,
1995, the President entered into an FTAA with WMCP covering 99,387 hectares of
land in South Cotabato, Sultan Kudarat, Davao del Sur and North Cotabato. [34]
On August 15, 1995, then DENR Secretary Victor O. Ramos issued DENR
Administrative Order (DAO) No. 95-23, s. 1995, otherwise known as the
Implementing Rules and Regulations of R.A. No. 7942. This was later repealed by
DAO No. 96-40, s. 1996 which was adopted on December 20, 1996.
On January 10, 1997, counsels for petitioners sent a letter to the DENR
Secretary demanding that the DENR stop the implementation of R.A. No. 7942 and
DAO No. 96-40,[35] giving the DENR fifteen days from receipt [36] to act thereon. The
DENR, however, has yet to respond or act on petitioners letter.[37]
Petitioners thus filed the present petition for prohibition and mandamus, with a
prayer for a temporary restraining order. They allege that at the time of the filing of
the petition, 100 FTAA applications had already been filed, covering an area of 8.4
million hectares,[38] 64 of which applications are by fully foreign-owned corporations
covering a total of 5.8 million hectares, and at least one by a fully foreign-owned
mining company over offshore areas.[39]
Petitioners claim that the DENR Secretary acted without or in excess of
jurisdiction:
I
x x x in signing and promulgating DENR Administrative Order No. 96-40 implementing
Republic Act No. 7942, the latter being unconstitutional in that it allows fully foreign
owned corporations to explore, develop, utilize and exploit mineral resources in a
manner contrary to Section 2, paragraph 4, Article XII of the Constitution;
II
x x x in signing and promulgating DENR Administrative Order No. 96-40 implementing
Republic Act No. 7942, the latter being unconstitutional in that it allows the taking of
private property without the determination of public use and for just compensation;
III
x x x in signing and promulgating DENR Administrative Order No. 96-40 implementing
Republic Act No. 7942, the latter being unconstitutional in that it violates Sec. 1, Art.
III of the Constitution;
IV
x x x in signing and promulgating DENR Administrative Order No. 96-40 implementing
Republic Act No. 7942, the latter being unconstitutional in that it allows enjoyment by
foreign citizens as well as fully foreign owned corporations of the nations marine
wealth contrary to Section 2, paragraph 2 of Article XII of the Constitution;
V
x x x in signing and promulgating DENR Administrative Order No. 96-40 implementing
Republic Act No. 7942, the latter being unconstitutional in that it allows priority to
foreign and fully foreign owned corporations in the exploration, development and
utilization of mineral resources contrary to Article XII of the Constitution;
VI
x x x in signing and promulgating DENR Administrative Order No. 96-40 implementing
Republic Act No. 7942, the latter being unconstitutional in that it allows the
inequitable sharing of wealth contrary to Sections [sic] 1, paragraph 1, and Section 2,
paragraph 4[,] [Article XII] of the Constitution;
VII
x x x in recommending approval of and implementing the Financial and Technical
Assistance Agreement between the President of the Republic of the Philippines and
Western Mining Corporation Philippines Inc. because the same is illegal and
unconstitutional.[40]
They pray that the Court issue an order:
(a) Permanently enjoining respondents from acting on any application for Financial or
Technical Assistance Agreements;
(b) Declaring the Philippine Mining Act of 1995 or Republic Act No. 7942 as
unconstitutional and null and void;
(c) Declaring the Implementing Rules and Regulations of the Philippine Mining Act
contained in DENR Administrative Order No. 96-40 and all other similar administrative
issuances as unconstitutional and null and void; and
(d) Cancelling the Financial and Technical Assistance Agreement issued to Western
Mining Philippines, Inc. as unconstitutional, illegal and null and void.[41]
Impleaded as public respondents are Ruben Torres, the then Executive
Secretary, Victor O. Ramos, the then DENR Secretary, and Horacio Ramos, Director of
the Mines and Geosciences Bureau of the DENR. Also impleaded is private respondent
WMCP, which entered into the assailed FTAA with the Philippine Government. WMCP
is owned by WMC Resources International Pty., Ltd. (WMC), a wholly owned
subsidiary of Western Mining Corporation Holdings Limited, a publicly listed
major Australian mining and exploration company.[42] By WMCPs information, it
is a 100% owned subsidiary of WMC LIMITED.[43]
Respondents, aside from meeting petitioners contentions, argue that the
requisites for judicial inquiry have not been met and that the petition does not comply
with the criteria for prohibition and mandamus. Additionally, respondent WMCP
argues that there has been a violation of the rule on hierarchy of courts.
After petitioners filed their reply, this Court granted due course to the
petition. The parties have since filed their respective memoranda.
WMCP subsequently filed a Manifestation dated September 25, 2002 alleging
that on January 23, 2001, WMC sold all its shares in WMCP to Sagittarius Mines, Inc.
(Sagittarius), a corporation organized under Philippine laws. [44] WMCP was
subsequently renamed Tampakan Mineral Resources Corporation. [45] WMCP claims
that at least 60% of the equity of Sagittarius is owned by Filipinos and/or Filipino-
owned corporations while about 40% is owned by Indophil Resources NL, an
Australian company.[46] It further claims that by such sale and transfer of shares,
WMCP has ceased to be connected in any way with WMC.[47]
By virtue of such sale and transfer, the DENR Secretary, by Order of December
18, 2001,[48] approved the transfer and registration of the subject FTAA from WMCP
to Sagittarius. Said Order, however, was appealed by Lepanto Consolidated Mining
Co. (Lepanto) to the Office of the President which upheld it by Decision of July 23,
2002.[49] Its motion for reconsideration having been denied by the Office of the
President by Resolution of November 12, 2002, [50] Lepanto filed a petition for
review[51] before the Court of Appeals. Incidentally, two other petitions for review
related to the approval of the transfer and registration of the FTAA to Sagittarius
were recently resolved by this Court.[52]
It bears stressing that this case has not been rendered moot either by the
transfer and registration of the FTAA to a Filipino-owned corporation or by the non-
issuance of a temporary restraining order or a preliminary injunction to stay the
above-said July 23, 2002 decision of the Office of the President. [53] The validity of the
transfer remains in dispute and awaits final judicial determination. This assumes, of
course, that such transfer cures the FTAAs alleged unconstitutionality, on which
question judgment is reserved.
WMCP also points out that the original claimowners of the major mineralized
areas included in the WMCP FTAA, namely, Sagittarius, Tampakan Mining
Corporation, and Southcot Mining Corporation, are all Filipino-owned corporations,
[54]
each of which was a holder of an approved Mineral Production Sharing Agreement
awarded in 1994, albeit their respective mineral claims were subsumed in the WMCP
FTAA;[55] and that these three companies are the same companies that consolidated
their interests in Sagittarius to whom WMC sold its 100% equity in WMCP. [56] WMCP
concludes that in the event that the FTAA is invalidated, the MPSAs of the three
corporations would be revived and the mineral claims would revert to their original
claimants.[57]
These circumstances, while informative, are hardly significant in the resolution
of this case, it involving the validity of the FTAA, not the possible consequences of its
invalidation.
Of the above-enumerated seven grounds cited by petitioners, as will be shown
later, only the first and the last need be delved into; in the latter, the discussion shall
dwell only insofar as it questions the effectivity of E. O. No. 279 by virtue of which
order the questioned FTAA was forged.
I
Before going into the substantive issues, the procedural questions posed by
respondents shall first be tackled.
REQUISITES FOR JUDICIAL REVIEW
When an issue of constitutionality is raised, this Court can exercise its power of
judicial review only if the following requisites are present:
(1) The existence of an actual and appropriate case;
(2) A personal and substantial interest of the party raising the constitutional
question;
(3) The exercise of judicial review is pleaded at the earliest opportunity; and
(4) The constitutional question is the lis mota of the case. [58]
Respondents claim that the first three requisites are not present.
 Section 1, Article VIII of the Constitution states that (j)udicial power includes
the duty of the courts of justice to settle actual controversies involving rights which
are legally demandable and enforceable. The power of judicial review, therefore, is
limited to the determination of actual cases and controversies. [59]
An actual case or controversy means an existing case or controversy that is
appropriate or ripe for determination, not conjectural or anticipatory, [60] lest the
decision of the court would amount to an advisory opinion. [61] The power does not
extend to hypothetical questions[62] since any attempt at abstraction could only lead
to dialectics and barren legal questions and to sterile conclusions unrelated to
actualities.[63]
Legal standing or locus standi has been defined as a personal and substantial
interest in the case such that the party has sustained or will sustain direct injury as a
result of the governmental act that is being challenged, [64] alleging more than a
generalized grievance.[65] The gist of the question of standing is whether a party
alleges such personal stake in the outcome of the controversy as to assure that
concrete adverseness which sharpens the presentation of issues upon which the court
depends for illumination of difficult constitutional questions. [66] Unless a person is
injuriously affected in any of his constitutional rights by the operation of statute or
ordinance, he has no standing.[67]
Petitioners traverse a wide range of sectors. Among them are La Bugal Blaan
Tribal Association, Inc., a farmers and indigenous peoples cooperative organized
under Philippine laws representing a community actually affected by the mining
activities of WMCP, members of said cooperative, [68] as well as other residents of
areas also affected by the mining activities of WMCP.[69] These petitioners have
standing to raise the constitutionality of the questioned FTAA as they allege a
personal and substantial injury. They claim that they would suffer irremediable
displacement[70] as a result of the implementation of the FTAA allowing WMCP to
conduct mining activities in their area of residence. They thus meet the appropriate
case requirement as they assert an interest adverse to that of respondents who, on
the other hand, insist on the FTAAs validity.
In view of the alleged impending injury, petitioners also have standing to assail
the validity of E.O. No. 279, by authority of which the FTAA was executed.
Public respondents maintain that petitioners, being strangers to the FTAA,
cannot sue either or both contracting parties to annul it. [71] In other words, they
contend that petitioners are not real parties in interest in an action for the annulment
of contract.
Public respondents contention fails. The present action is not merely one for
annulment of contract but for prohibition and mandamus. Petitioners allege that
public respondents acted without or in excess of jurisdiction in implementing the
FTAA, which they submit is unconstitutional. As the case involves constitutional
questions, this Court is not concerned with whether petitioners are real parties in
interest, but with whether they have legal standing. As held in Kilosbayan v. Morato:
[72]
x x x. It is important to note . . . that standing because of its constitutional and public
policy underpinnings, is very different from questions relating to whether a particular
plaintiff is the real party in interest or has capacity to sue. Although all three
requirements are directed towards ensuring that only certain parties can maintain an
action, standing restrictions require a partial consideration of the merits, as well as
broader policy concerns relating to the proper role of the judiciary in certain areas.
[] (FRIEDENTHAL, KANE AND MILLER, CIVIL PROCEDURE 328 [1985])
Standing is a special concern in constitutional law because in some cases suits are
brought not by parties who have been personally injured by the operation of a law or
by official action taken, but by concerned citizens, taxpayers or voters who actually
sue in the public interest. Hence, the question in standing is whether such parties
have alleged such a personal stake in the outcome of the controversy as to assure
that concrete adverseness which sharpens the presentation of issues upon which the
court so largely depends for illumination of difficult constitutional questions. (Baker v.
Carr, 369 U.S. 186, 7 L.Ed.2d 633 [1962].)
As earlier stated, petitioners meet this requirement.
The challenge against the constitutionality of R.A. No. 7942 and DAO No. 96-
40 likewise fulfills the requisites of justiciability. Although these laws were not in force
when the subject FTAA was entered into, the question as to their validity is ripe for
adjudication.
The WMCP FTAA provides:
14.3 Future Legislation
Any term and condition more favourable to Financial &Technical
Assistance Agreement contractors resulting from repeal or
amendment of any existing law or regulation or from the
enactment of a law, regulation or administrative order shall be
considered a part of this Agreement.
It is undisputed that R.A. No. 7942 and DAO No. 96-40 contain provisions that are
more favorable to WMCP, hence, these laws, to the extent that they are favorable to
WMCP, govern the FTAA.
In addition, R.A. No. 7942 explicitly makes certain provisions apply to pre-
existing agreements.
SEC. 112. Non-impairment of Existing Mining/Quarrying Rights. x x x That the
provisions of Chapter XIV on government share in mineral production-sharing
agreement and of Chapter XVI on incentives of this Act shall immediately govern and
apply to a mining lessee or contractor unless the mining lessee or contractor indicates
his intention to the secretary, in writing, not to avail of said provisions x x
xProvided, finally, That such leases, production-sharing agreements, financial or
technical assistance agreements shall comply with the applicable provisions of this Act
and its implementing rules and regulations.
As there is no suggestion that WMCP has indicated its intention not to avail of the
provisions of Chapter XVI of R.A. No. 7942, it can safely be presumed that they apply
to the WMCP FTAA.
Misconstruing the application of the third requisite for judicial review that the
exercise of the review is pleaded at the earliest opportunity WMCP points out that the
petition was filed only almost two years after the execution of the FTAA, hence, not
raised at the earliest opportunity.
The third requisite should not be taken to mean that the question of
constitutionality must be raised immediately after the execution of the state action
complained of. That the question of constitutionality has not been raised before is not
a valid reason for refusing to allow it to be raised later. [73] A contrary rule would mean
that a law, otherwise unconstitutional, would lapse into constitutionality by the mere
failure of the proper party to promptly file a case to challenge the same.
PROPRIETY OF PROHIBITION
AND MANDAMUS
Before the effectivity in July 1997 of the Revised Rules of Civil Procedure,
Section 2 of Rule 65 read:
SEC. 2. Petition for prohibition. When the proceedings of any tribunal, corporation,
board, or person, whether exercising functions judicial or ministerial, are without or in
excess of its or his jurisdiction, or with grave abuse of discretion, and there is no
appeal or any other plain, speedy, and adequate remedy in the ordinary course of
law, a person aggrieved thereby may file a verified petition in the proper court
alleging the facts with certainty and praying that judgment be rendered commanding
the defendant to desist from further proceeding in the action or matter specified
therein.
Prohibition is a preventive remedy. It seeks a judgment ordering the
[74]
defendant to desist from continuing with the commission of an act perceived to be
illegal.[75]
The petition for prohibition at bar is thus an appropriate remedy. While the
execution of the contract itself may be fait accompli, its implementation is not. Public
respondents, in behalf of the Government, have obligations to fulfill under said
contract. Petitioners seek to prevent them from fulfilling such obligations on the
theory that the contract is unconstitutional and, therefore, void.
The propriety of a petition for prohibition being upheld, discussion of the
propriety of the mandamus aspect of the petition is rendered unnecessary.
HIERARCHY OF COURTS
The contention that the filing of this petition violated the rule on hierarchy of
courts does not likewise lie. The rule has been explained thus:
Between two courts of concurrent original jurisdiction, it is the lower court that should
initially pass upon the issues of a case. That way, as a particular case goes through
the hierarchy of courts, it is shorn of all but the important legal issues or those of first
impression, which are the proper subject of attention of the appellate court. This is a
procedural rule borne of experience and adopted to improve the administration of
justice.
This Court has consistently enjoined litigants to respect the hierarchy of
courts. Although this Court has concurrent jurisdiction with the Regional Trial Courts
and the Court of Appeals to issue writs of certiorari, prohibition, mandamus, quo
warranto, habeas corpus and injunction, such concurrence does not give a party
unrestricted freedom of choice of court forum. The resort to this Courts primary
jurisdiction to issue said writs shall be allowed only where the redress desired cannot
be obtained in the appropriate courts or where exceptional and compelling
circumstances justify such invocation. We held in People v. Cuaresma that:
A becoming regard for judicial hierarchy most certainly indicates that petitions for the
issuance of extraordinary writs against first level (inferior) courts should be filed with
the Regional Trial Court, and those against the latter, with the Court of Appeals. A
direct invocation of the Supreme Courts original jurisdiction to issue these
writs should be allowed only where there are special and important
reasons therefor, clearly and specifically set out in the petition. This is established
policy. It is a policy necessary to prevent inordinate demands upon the Courts time
and attention which are better devoted to those matters within its exclusive
jurisdiction, and to prevent further over-crowding of the Courts docket x x x.
[76]
[Emphasis supplied.]
The repercussions of the issues in this case on the Philippine mining industry, if
not the national economy, as well as the novelty thereof, constitute exceptional and
compelling circumstances to justify resort to this Court in the first instance.
In all events, this Court has the discretion to take cognizance of a suit which
does not satisfy the requirements of an actual case or legal standing when paramount
public interest is involved.[77] When the issues raised are of paramount importance to
the public, this Court may brush aside technicalities of procedure.[78]
 II
Petitioners contend that E.O. No. 279 did not take effect because its supposed
date of effectivity came after President Aquino had already lost her legislative powers
under the Provisional Constitution.
And they likewise claim that the WMC FTAA, which was entered into pursuant to
E.O. No. 279, violates Section 2, Article XII of the Constitution because, among other
reasons:
(1) It allows foreign-owned companies to extend more than mere financial or
technical assistance to the State in the exploitation, development, and utilization of
minerals, petroleum, and other mineral oils, and even permits foreign owned
companies to operate and manage mining activities.
(2) It allows foreign-owned companies to extend both technical and financial
assistance, instead of either technical or financial assistance.
To appreciate the import of these issues, a visit to the history of the pertinent
constitutional provision, the concepts contained therein, and the laws enacted
pursuant thereto, is in order.
Section 2, Article XII reads in full:
Sec. 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. The State may directly undertake such activities or it may
enter into co-production, joint venture, or production-sharing agreements with
Filipino citizens, or corporations or associations at least sixty per centum of whose
capital is owned by such citizens. Such agreements may be for a period not
exceeding twenty-five years, renewable for not more than twenty-five years, and
under such terms and conditions as may be provided by law. In cases of water rights
for irrigation, water supply, fisheries, or industrial uses other than the development of
water power, beneficial use may be the measure and limit of the grant.
The State shall protect the nations marine wealth in its archipelagic waters, territorial
sea, and exclusive economic zone, and reserve its use and enjoyment exclusively to
Filipino citizens.
The Congress may, by law, allow small-scale utilization of natural resources by
Filipino citizens, as well as cooperative fish farming, with priority to subsistence
fishermen and fish-workers in rivers, lakes, bays, and lagoons.
The President may enter into agreements with foreign-owned corporations involving
either technical or financial assistance for large-scale exploration, development, and
utilization of minerals, petroleum, and other mineral oils according to the general
terms and conditions provided by law, based on real contributions to the economic
growth and general welfare of the country. In such agreements, the State shall
promote the development and use of local scientific and technical resources.
The President shall notify the Congress of every contract entered into in accordance
with this provision, within thirty days from its execution.
THE SPANISH REGIME
AND THE REGALIAN DOCTRINE
The first sentence of Section 2 embodies the Regalian doctrine or jura
regalia. Introduced by Spain into these Islands, this feudal concept is based on the
States power of dominium, which is the capacity of the State to own or acquire
property.[79]
In its broad sense, the term jura regalia refers to royal rights, or those rights which
the King has by virtue of his prerogatives. In Spanish law, it refers to a right which
the sovereign has over anything in which a subject has a right of property
or propriedad. These were rights enjoyed during feudal times by the king as the
sovereign.
The theory of the feudal system was that title to all lands was originally held by the
King, and while the use of lands was granted out to others who were permitted to
hold them under certain conditions, the King theoretically retained the title. By fiction
of law, the King was regarded as the original proprietor of all lands, and the true and
only source of title, and from him all lands were held. The theory of jura regalia was
therefore nothing more than a natural fruit of conquest. [80]
The Philippines having passed to Spain by virtue of discovery and conquest,
[81]
earlier Spanish decrees declared that all lands were held from the Crown. [82]
The Regalian doctrine extends not only to land but also to all natural wealth that
may be found in the bowels of the earth. [83] Spain, in particular, recognized the
unique value of natural resources, viewing them, especially minerals, as an abundant
source of revenue to finance its wars against other nations. [84] Mining laws during the
Spanish regime reflected this perspective.[85]
THE AMERICAN OCCUPATION AND
THE CONCESSION REGIME
 By the Treaty of Paris of December 10, 1898, Spain ceded the archipelago
known as the Philippine Islands to the United States. The Philippines was hence
governed by means of organic acts that were in the nature of charters serving as a
Constitution of the occupied territory from 1900 to 1935. [86] Among the principal
organic acts of the Philippines was the Act of Congress of July 1, 1902, more
commonly known as the Philippine Bill of 1902, through which the United States
Congress assumed the administration of the Philippine Islands. [87] Section 20 of said
Bill reserved the disposition of mineral lands of the public domain from sale. Section
21 thereof allowed the free and open exploration, occupation and purchase of mineral
deposits not only to citizens of the Philippine Islands but to those of the United States
as well:
Sec. 21. That all valuable mineral deposits in public lands in the Philippine Islands,
both surveyed and unsurveyed, are hereby declared to be free and open to
exploration, occupation and purchase, and the land in which they are found, to
occupation and purchase, by citizens of the United States or of said
Islands: Provided, That when on any lands in said Islands entered and occupied as
agricultural lands under the provisions of this Act, but not patented, mineral deposits
have been found, the working of such mineral deposits is forbidden until the person,
association, or corporation who or which has entered and is occupying such lands
shall have paid to the Government of said Islands such additional sum or sums as will
make the total amount paid for the mineral claim or claims in which said deposits are
located equal to the amount charged by the Government for the same as mineral
claims.
Unlike Spain, the United States considered natural resources as a source of
wealth for its nationals and saw fit to allow both Filipino and American citizens to
explore and exploit minerals in public lands, and to grant patents to private mineral
lands.[88] A person who acquired ownership over a parcel of private mineral land
pursuant to the laws then prevailing could exclude other persons, even the State,
from exploiting minerals within his property. [89] Thus, earlier jurisprudence[90] held
that:
A valid and subsisting location of mineral land, made and kept up in accordance with
the provisions of the statutes of the United States, has the effect of a grant by the
United States of the present and exclusive possession of the lands located, and this
exclusive right of possession and enjoyment continues during the entire life of the
location. x x x.
x x x.
The discovery of minerals in the ground by one who has a valid mineral location
perfects his claim and his location not only against third persons, but also against the
Government. x x x. [Italics in the original.]
The Regalian doctrine and the American system, therefore, differ in one
essential respect. Under the Regalian theory, mineral rights are not included in a
grant of land by the state; under the American doctrine, mineral rights are included in
a grant of land by the government.[91]
Section 21 also made possible the concession (frequently styled permit, license
or lease)[92] system.[93] This was the traditional regime imposed by the colonial
administrators for the exploitation of natural resources in the extractive sector
(petroleum, hard minerals, timber, etc.).[94]
Under the concession system, the concessionaire makes a direct equity
investment for the purpose of exploiting a particular natural resource within a given
area.[95] Thus, the concession amounts to complete control by the concessionaire over
the countrys natural resource, for it is given exclusive and plenary rights to exploit a
particular resource at the point of extraction.[96] In consideration for the right to
exploit a natural resource, the concessionaire either pays rent or royalty, which is a
fixed percentage of the gross proceeds.[97]
Later statutory enactments by the legislative bodies set up in the Philippines
adopted the contractual framework of the concession. [98] For instance, Act No. 2932,
[99]
approved on August 31, 1920, which provided for the exploration, location, and
lease of lands containing petroleum and other mineral oils and gas in the Philippines,
and Act No. 2719,[100] approved on May 14, 1917, which provided for the leasing and
development of coal lands in the Philippines, both utilized the concession system. [101]
THE 1935 CONSTITUTION AND THE
NATIONALIZATION OF NATURAL RESOURCES
By the Act of United States Congress of March 24, 1934, popularly known as
the Tydings-McDuffie Law, the People of the Philippine Islands were authorized to
adopt a constitution.[102] On July 30, 1934, the Constitutional Convention met for the
purpose of drafting a constitution, and the Constitution subsequently drafted was
approved by the Convention on February 8, 1935. [103] The Constitution was submitted
to the President of the United States on March 18, 1935. [104] On March 23, 1935, the
President of the United States certified that the Constitution conformed substantially
with the provisions of the Act of Congress approved on March 24, 1934. [105] On May
14, 1935, the Constitution was ratified by the Filipino people. [106]
The 1935 Constitution adopted the Regalian doctrine, declaring all natural
resources of the Philippines, including mineral lands and minerals, to be property
belonging to the State.[107]As adopted in a republican system, the medieval concept
of jura regalia is stripped of royal overtones and ownership of the land is vested in
the State.[108]
Section 1, Article XIII, on Conservation and Utilization of Natural Resources, of
the 1935 Constitution provided:
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, 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.
The nationalization and conservation of the natural resources of the country was
one of the fixed and dominating objectives of the 1935 Constitutional Convention.
[109]
One delegate relates:
There was an overwhelming sentiment in the Convention in favor of the principle of
state ownership of natural resources and the adoption of the Regalian doctrine. State
ownership of natural resources was seen as a necessary starting point to secure
recognition of the states power to control their disposition, exploitation, development,
or utilization. The delegates of the Constitutional Convention very well knew that the
concept of State ownership of land and natural resources was introduced by the
Spaniards, however, they were not certain whether it was continued and applied by
the Americans. To remove all doubts, the Convention approved the provision in the
Constitution affirming the Regalian doctrine.
The adoption of the principle of state ownership of the natural resources and of the
Regalian doctrine was considered to be a necessary starting point for the plan of
nationalizing and conserving the natural resources of the country. For with the
establishment of the principle of state ownership of the natural resources, it would
not be hard to secure the recognition of the power of the State to control their
disposition, exploitation, development or utilization. [110]
The nationalization of the natural resources was intended (1) to insure their
conservation for Filipino posterity; (2) to serve as an instrument of national defense,
helping prevent the extension to the country of foreign control through peaceful
economic penetration; and (3) to avoid making the Philippines a source of
international conflicts with the consequent danger to its internal security and
independence.[111]
The same Section 1, Article XIII also adopted the concession system, expressly
permitting the State to grant licenses, concessions, or leases for the exploitation,
development, or utilization of any of the natural resources. Grants, however, were
limited to Filipinos or entities at least 60% of the capital of which is owned by
Filipinos.
The swell of nationalism that suffused the 1935 Constitution was radically
diluted when on November 1946, the Parity Amendment, which came in the form of
an Ordinance Appended to the Constitution, was ratified in a plebiscite. [112] The
Amendment extended, from July 4, 1946 to July 3, 1974, the right to utilize and
exploit our natural resources to citizens of the United States and business enterprises
owned or controlled, directly or indirectly, by citizens of the United States: [113]
Notwithstanding the provision of section one, Article Thirteen, and section eight,
Article Fourteen, of the foregoing Constitution, during the effectivity of the Executive
Agreement entered into by the President of the Philippines with the President of the
United States on the fourth of July, nineteen hundred and forty-six, pursuant to the
provisions of Commonwealth Act Numbered Seven hundred and thirty-three, but in
no case to extend beyond the third of July, nineteen hundred and seventy-four, the
disposition, exploitation, development, and utilization of all agricultural, timber, and
mineral lands of the public domain, waters, minerals, coals, petroleum, and other
mineral oils, all forces and sources of potential energy, and other natural resources of
the Philippines, and the operation of public utilities, shall, if open to any person, be
open to citizens of the United States and to all forms of business enterprise owned or
controlled, directly or indirectly, by citizens of the United States in the same manner
as to, and under the same conditions imposed upon, citizens of the Philippines or
corporations or associations owned or controlled by citizens of the Philippines.
The Parity Amendment was subsequently modified by the 1954 Revised Trade
Agreement, also known as the Laurel-Langley Agreement, embodied in Republic Act
No. 1355.[114]
THE PETROLEUM ACT OF 1949
AND THE CONCESSION SYSTEM
In the meantime, Republic Act No. 387, [115] also known as the Petroleum Act of
1949, was approved on June 18, 1949.
The Petroleum Act of 1949 employed the concession system for the exploitation
of the nations petroleum resources. Among the kinds of concessions it sanctioned
were exploration and exploitation concessions, which respectively granted to the
concessionaire the exclusive right to explore for [116] or develop[117] petroleum within
specified areas.
Concessions may be granted only to duly qualified persons [118] who have
sufficient finances, organization, resources, technical competence, and skills
necessary to conduct the operations to be undertaken.[119]
Nevertheless, the Government reserved the right to undertake such work itself.
[120]
This proceeded from the theory that all natural deposits or occurrences of
petroleum or natural gas in public and/or private lands in the Philippines belong to
the State.[121] Exploration and exploitation concessions did not confer upon the
concessionaire ownership over the petroleum lands and petroleum deposits.
[122]
However, they did grant concessionaires the right to explore, develop, exploit,
and utilize them for the period and under the conditions determined by the law. [123]
Concessions were granted at the complete risk of the concessionaire; the
Government did not guarantee the existence of petroleum or undertake, in any case,
title warranty.[124]
Concessionaires were required to submit information as maybe required by the
Secretary of Agriculture and Natural Resources, including reports of geological and
geophysical examinations, as well as production reports. [125] Exploration[126] and
exploitation[127] concessionaires were also required to submit work programs.
Exploitation concessionaires, in particular, were obliged to pay an annual
exploitation tax,[128] the object of which is to induce the concessionaire to actually
produce petroleum, and not simply to sit on the concession without developing or
exploiting it.[129] These concessionaires were also bound to pay the Government
royalty, which was not less than 12% of the petroleum produced and saved, less that
consumed in the operations of the concessionaire. [130] Under Article 66, R.A. No. 387,
the exploitation tax may be credited against the royalties so that if the concessionaire
shall be actually producing enough oil, it would not actually be paying the exploitation
tax.[131]
Failure to pay the annual exploitation tax for two consecutive years, [132] or the
royalty due to the Government within one year from the date it becomes due,
[133]
constituted grounds for the cancellation of the concession. In case of delay in the
payment of the taxes or royalty imposed by the law or by the concession, a surcharge
of 1% per month is exacted until the same are paid. [134]
As a rule, title rights to all equipment and structures that the concessionaire
placed on the land belong to the exploration or exploitation concessionaire. [135] Upon
termination of such concession, the concessionaire had a right to remove the same.
[136]
The Secretary of Agriculture and Natural Resources was tasked with carrying
out the provisions of the law, through the Director of Mines, who acted under the
Secretarys immediate supervision and control.[137] The Act granted the Secretary the
authority to inspect any operation of the concessionaire and to examine all the books
and accounts pertaining to operations or conditions related to payment of taxes and
royalties.[138]
The same law authorized the Secretary to create an Administration Unit and a
Technical Board.[139] The Administration Unit was charged, inter alia, with the
enforcement of the provisions of the law. [140] The Technical Board had, among other
functions, the duty to check on the performance of concessionaires and to determine
whether the obligations imposed by the Act and its implementing regulations were
being complied with.[141]
Victorio Mario A. Dimagiba, Chief Legal Officer of the Bureau of Energy
Development, analyzed the benefits and drawbacks of the concession system insofar
as it applied to the petroleum industry:
Advantages of Concession. Whether it emphasizes income tax or royalty, the most
positive aspect of the concession system is that the States financial involvement is
virtually risk free and administration is simple and comparatively low in
cost. Furthermore, if there is a competitive allocation of the resource leading to
substantial bonuses and/or greater royalty coupled with a relatively high level of
taxation, revenue accruing to the State under the concession system may compare
favorably with other financial arrangements.
Disadvantages of Concession. There are, however, major negative aspects to this
system. Because the Governments role in the traditional concession is passive, it is at
a distinct disadvantage in managing and developing policy for the nations petroleum
resource. This is true for several reasons. First, even though most concession
agreements contain covenants requiring diligence in operations and production, this
establishes only an indirect and passive control of the host country in resource
development. Second, and more importantly, the fact that the host country does not
directly participate in resource management decisions inhibits its ability to train and
employ its nationals in petroleum development. This factor could delay or prevent the
country from effectively engaging in the development of its resources. Lastly, a direct
role in management is usually necessary in order to obtain a knowledge of the
international petroleum industry which is important to an appreciation of the host
countrys resources in relation to those of other countries.[142]
Other liabilities of the system have also been noted:
x x x there are functional implications which give the concessionaire great economic
power arising from its exclusive equity holding. This includes, first, appropriation of
the returns of the undertaking, subject to a modest royalty; second, exclusive
management of the project; third, control of production of the natural resource, such
as volume of production, expansion, research and development; and fourth, exclusive
responsibility for downstream operations, like processing, marketing, and
distribution. In short, even if nominally, the state is the sovereign and owner of the
natural resource being exploited, it has been shorn of all elements of control over
such natural resource because of the exclusive nature of the contractual regime of
the concession. The concession system, investing as it does ownership of natural
resources, constitutes a consistent inconsistency with the principle embodied in our
Constitution that natural resources belong to the state and shall not be alienated, not
to mention the fact that the concession was the bedrock of the colonial system in the
exploitation of natural resources.[143]
Eventually, the concession system failed for reasons explained by Dimagiba:
Notwithstanding the good intentions of the Petroleum Act of 1949, the concession
system could not have properly spurred sustained oil exploration activities in the
country, since it assumed that such a capital-intensive, high risk venture could be
successfully undertaken by a single individual or a small company. In effect,
concessionaires funds were easily exhausted. Moreover, since the concession system
practically closed its doors to interested foreign investors, local capital was stretched
to the limits. The old system also failed to consider the highly sophisticated
technology and expertise required, which would be available only to multinational
companies.[144]
A shift to a new regime for the development of natural resources thus seemed
imminent.
PRESIDENTIAL DECREE NO. 87, THE 1973
CONSTITUTION AND THE SERVICE CONTRACT SYSTEM
The promulgation on December 31, 1972 of Presidential Decree No. 87,
[145]
otherwise known as THE OIL EXPLORATION AND DEVELOPMENT ACT OF
1972 signaled such a transformation. P.D. No. 87 permitted the government to
explore for and produce indigenous petroleum through service contracts.[146]
Service contracts is a term that assumes varying meanings to different people,
and it has carried many names in different countries, like work contracts in Indonesia,
concession agreements in Africa, production-sharing agreements in the Middle East,
and participation agreements in Latin America. [147] A functional definition of service
contracts in the Philippines is provided as follows:
A service contract is a contractual arrangement for engaging in the exploitation and
development of petroleum, mineral, energy, land and other natural resources by
which a government or its agency, or a private person granted a right or privilege by
the government authorizes the other party (service contractor) to engage or
participate in the exercise of such right or the enjoyment of the privilege, in that the
latter provides financial or technical resources, undertakes the exploitation or
production of a given resource, or directly manages the productive enterprise,
operations of the exploration and exploitation of the resources or the disposition of
marketing or resources.[148]
In a service contract under P.D. No. 87, service and technology are furnished by
the service contractor for which it shall be entitled to the stipulated service fee.
[149]
The contractor must be technically competent and financially capable to
undertake the operations required in the contract.[150]
Financing is supposed to be provided by the Government to which all petroleum
produced belongs.[151] In case the Government is unable to finance petroleum
exploration operations, the contractor may furnish services, technology and financing,
and the proceeds of sale of the petroleum produced under the contract shall be the
source of funds for payment of the service fee and the operating expenses due the
contractor.[152] The contractor shall undertake, manage and execute petroleum
operations, subject to the government overseeing the management of the operations.
[153]
The contractor provides all necessary services and technology and the requisite
financing, performs the exploration work obligations, and assumes all exploration
risks such that if no petroleum is produced, it will not be entitled to reimbursement.
[154]
Once petroleum in commercial quantity is discovered, the contractor shall operate
the field on behalf of the government.[155]
P.D. No. 87 prescribed minimum terms and conditions for every service
contract.[156] It also granted the contractor certain privileges, including exemption
from taxes and payment of tariff duties, [157] and permitted the repatriation of capital
and retention of profits abroad.[158]
Ostensibly, the service contract system had certain advantages over the
concession regime.[159] It has been opined, though, that, in the Philippines, our
concept of a service contract, at least in the petroleum industry, was basically a
concession regime with a production-sharing element.[160]
On January 17, 1973, then President Ferdinand E. Marcos proclaimed the
ratification of a new Constitution.[161] Article XIV on the National Economy and
Patrimony contained provisions similar to the 1935 Constitution with regard to Filipino
participation in the nations natural resources. Section 8, Article XIV thereof provides:
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.
While Section 9 of the same Article maintained the Filipino-only policy in the
enjoyment of natural resources, it also allowed Filipinos, upon authority of the
Batasang Pambansa, to enter into service contracts with any person or entity for the
exploration or utilization of natural resources.
SEC. 9. The disposition, exploration, development, exploitation, or utilization of any of
the natural resources of the Philippines shall be limited to citizens, or to corporations
or associations at least sixty per centum of which is owned by such citizens. The
Batasang Pambansa, in the national interest, may allow such citizens,
corporations or associations to enter into service contracts for financial,
technical, management, or other forms of assistance with any person or
entity for the exploration, or utilization of any of the natural
resources. Existing valid and binding service contracts for financial, technical,
management, or other forms of assistance are hereby recognized as such. [Emphasis
supplied.]
The concept of service contracts, according to one delegate, was borrowed from
the methods followed by India, Pakistan and especially Indonesia in the exploration
of petroleum and mineral oils.[162] The provision allowing such contracts, according to
another, was intended to enhance the proper development of our natural resources
since Filipino citizens lack the needed capital and technical know-how which are
essential in the proper exploration, development and exploitation of the natural
resources of the country.[163]
The original idea was to authorize the government, not private entities, to enter
into service contracts with foreign entities. [164] As finally approved, however, a citizen
or private entity could be allowed by the National Assembly to enter into such service
contract.[165] The prior approval of the National Assembly was deemed sufficient to
protect the national interest.[166]Notably, none of the laws allowing service contracts
were passed by the Batasang Pambansa. Indeed, all of them were enacted by
presidential decree.
On March 13, 1973, shortly after the ratification of the new Constitution, the
President promulgated Presidential Decree No. 151.[167] The law allowed Filipino
citizens or entities which have acquired lands of the public domain or which own, hold
or control such lands to enter into service contracts for financial, technical,
management or other forms of assistance with any foreign persons or entity for the
exploration, development, exploitation or utilization of said lands. [168]
Presidential Decree No. 463,[169] also known as THE MINERAL RESOURCES
DEVELOPMENT DECREE OF 1974, was enacted on May 17, 1974. Section 44 of the
decree, as amended, provided that a lessee of a mining claim may enter into a
service contract with a qualified domestic or foreign contractor for the exploration,
development and exploitation of his claims and the processing and marketing of the
product thereof.
Presidential Decree No. 704[170] (THE FISHERIES DECREE OF 1975), approved
on May 16, 1975, allowed Filipinos engaged in commercial fishing to enter into
contracts for financial, technical or other forms of assistance with any foreign person,
corporation or entity for the production, storage, marketing and processing of fish
and fishery/aquatic products.[171]
Presidential Decree No. 705[172] (THE REVISED FORESTRY CODE OF THE
PHILIPPINES), approved on May 19, 1975, allowed forest products licensees, lessees,
or permitees to enter into service contracts for financial, technical, management, or
other forms of assistance . . . with any foreign person or entity for the exploration,
development, exploitation or utilization of the forest resources. [173]
Yet another law allowing service contracts, this time for geothermal resources,
was Presidential Decree No. 1442,[174] which was signed into law on June 11,
1978. Section 1 thereof authorized the Government to enter into service contracts for
the exploration, exploitation and development of geothermal resources with a foreign
contractor who must be technically and financially capable of undertaking the
operations required in the service contract.
Thus, virtually the entire range of the countrys natural resources from
petroleum and minerals to geothermal energy, from public lands and forest resources
to fishery products was well covered by apparent legal authority to engage in the
direct participation or involvement of foreign persons or corporations (otherwise
disqualified) in the exploration and utilization of natural resources through service
contracts.[175]
THE 1987 CONSTITUTION AND TECHNICAL
OR FINANCIAL ASSISTANCE AGREEMENTS
After the February 1986 Edsa Revolution, Corazon C. Aquino took the reins of
power under a revolutionary government. On March 25, 1986, President Aquino
issued Proclamation No. 3,[176] promulgating the Provisional Constitution, more
popularly referred to as the Freedom Constitution. By authority of the same
Proclamation, the President created a Constitutional Commission (CONCOM) to draft
a new constitution, which took effect on the date of its ratification on February 2,
1987.[177]
The 1987 Constitution retained the Regalian doctrine. The first sentence of
Section 2, Article XII states: 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.
Like the 1935 and 1973 Constitutions before it, the 1987 Constitution, in the
second sentence of the same provision, prohibits the alienation of natural resources,
except agricultural lands.
The third sentence of the same paragraph is new: The exploration, development
and utilization of natural resources shall be under the full control and supervision
of the State. The constitutional policy of the States full control and supervision over
natural resources proceeds from the concept of jura regalia, as well as the
recognition of the importance of the countrys natural resources, not only for national
economic development, but also for its security and national defense. [178] Under this
provision, the State assumes a more dynamic role in the exploration, development
and utilization of natural resources.[179]
Conspicuously absent in Section 2 is the provision in the 1935 and 1973
Constitutions authorizing the State to grant licenses, concessions, or leases for the
exploration, exploitation, development, or utilization of natural resources. By such
omission, the utilization of inalienable lands of public domain through license,
concession or lease is no longer allowed under the 1987 Constitution. [180]
 Having omitted the provision on the concession system, Section 2 proceeded to
introduce unfamiliar language:[181]
The State may directly undertake such activities or it may enter into co-production,
joint venture, or production-sharing agreements with Filipino citizens, or corporations
or associations at least sixty per centum of whose capital is owned by such citizens.
Consonant with the States full supervision and control over natural resources,
Section 2 offers the State two options. [182] One, the State may directly undertake
these activities itself; or two, it may enter into co-production, joint venture, or
production-sharing agreements with Filipino citizens, or entities at least 60% of
whose capital is owned by such citizens.
A third option is found in the third paragraph of the same section:
The Congress may, by law, allow small-scale utilization of natural resources by
Filipino citizens, as well as cooperative fish farming, with priority to subsistence
fishermen and fish-workers in rivers, lakes, bays, and lagoons.
While the second and third options are limited only to Filipino citizens or, in the
case of the former, to corporations or associations at least 60% of the capital of
which is owned by Filipinos, a fourth allows the participation of foreign-owned
corporations. The fourth and fifth paragraphs of Section 2 provide:
The President may enter into agreements with foreign-owned corporations involving
either technical or financial assistance for large-scale exploration, development, and
utilization of minerals, petroleum, and other mineral oils according to the general
terms and conditions provided by law, based on real contributions to the economic
growth and general welfare of the country. In such agreements, the State shall
promote the development and use of local scientific and technical resources.
The President shall notify the Congress of every contract entered into in accordance
with this provision, within thirty days from its execution.
Although Section 2 sanctions the participation of foreign-owned corporations in
the exploration, development, and utilization of natural resources, it imposes certain
limitations or conditions to agreements with such corporations.
First, the parties to FTAAs. Only the President, in behalf of the State, may
enter into these agreements, and only with corporations. By contrast, under the 1973
Constitution, a Filipino citizen, corporation or association may enter into a service
contract with a foreign person or entity.
Second, the size of the activities: only large-scale exploration, development,
and utilization is allowed. The term large-scale usually refers to very capital-intensive
activities.[183]
Third, the natural resources subject of the activities is restricted
to minerals, petroleum and other mineral oils, the intent being to limit service
contracts to those areas where Filipino capital may not be sufficient. [184]
Fourth, consistency with the provisions of statute. The agreements must
be in accordance with the terms and conditions provided by law.
Fifth, Section 2 prescribes certain standards for entering into such
agreements. The agreements must be based on real contributions to economic
growth and general welfare of the country.
Sixth, the agreements must contain rudimentary stipulations for
the promotion of the development and use of local scientific and technical resources.
Seventh, the notification requirement. The President shall notify Congress of
every financial or technical assistance agreement entered into within thirty days from
its execution.
Finally, the scope of the agreements. While the 1973 Constitution referred to
service contracts for financial, technical, management, or other forms of assistance
the 1987 Constitution provides for agreements. . . involving either financial or
technical assistance. It bears noting that the phrases service contracts and
management or other forms of assistance in the earlier constitution have been
omitted.
By virtue of her legislative powers under the Provisional Constitution,
President Aquino, on July 10, 1987, signed into law E.O. No. 211 prescribing the
[185]
interim procedures in the processing and approval of applications for the exploration,
development and utilization of minerals. The omission in the 1987 Constitution of the
term service contracts notwithstanding, the said E.O. still referred to them in Section
2 thereof:
SEC. 2. Applications for the exploration, development and utilization of mineral
resources, including renewal applications and applications for approval of operating
agreements and mining service contracts, shall be accepted and processed and
may be approved x x x. [Emphasis supplied.]
The same law provided in its Section 3 that the processing, evaluation and
approval of all mining applications . . . operating agreements and service
contracts . . . shall be governed by Presidential Decree No. 463, as amended, other
existing mining laws, and their implementing rules and regulations. . . .
As earlier stated, on the 25 th also of July 1987, the President issued E.O. No.
279 by authority of which the subject WMCP FTAA was executed on March 30, 1995.
 On March 3, 1995, President Ramos signed into law R.A. No. 7942. Section 15
thereof declares that the Act shall govern the exploration, development, utilization,
and processing of all mineral resources. Such declaration notwithstanding, R.A. No.
7942 does not actually cover all the modes through which the State may undertake
the exploration, development, and utilization of natural resources.
The State, being the owner of the natural resources, is accorded the primary
power and responsibility in the exploration, development and utilization thereof. As
such, it may undertake these activities through four modes:
The State may directly undertake such activities.
(2) The State may enter into co-production, joint venture or production-sharing
agreements with Filipino citizens or qualified corporations.
(3) Congress may, by law, allow small-scale utilization of natural resources by
Filipino citizens.
(4) For the large-scale exploration, development and utilization of minerals,
petroleum and other mineral oils, the President may enter into agreements with
foreign-owned corporations involving technical or financial assistance. [186]
Except to charge the Mines and Geosciences Bureau of the DENR with
performing researches and surveys,[187] and a passing mention of government-owned
or controlled corporations,[188] R.A. No. 7942 does not specify how the State should go
about the first mode. The third mode, on the other hand, is governed by Republic Act
No. 7076[189] (the Peoples Small-Scale Mining Act of 1991) and other pertinent laws.
[190]
R.A. No. 7942 primarily concerns itself with the second and fourth modes.
Mineral production sharing, co-production and joint venture agreements are
collectively classified by R.A. No. 7942 as mineral agreements. [191] The Government
participates the least in a mineral production sharing agreement (MPSA). In an MPSA,
the Government grants the contractor [192] the exclusive right to conduct mining
operations within a contract area [193] and shares in the gross output. [194] The MPSA
contractor provides the financing, technology, management and personnel necessary
for the agreements implementation.[195] The total government share in an MPSA is the
excise tax on mineral products under Republic Act No. 7729, [196] amending Section
151(a) of the National Internal Revenue Code, as amended. [197]
In a co-production agreement (CA), [198] the Government provides inputs to the
mining operations other than the mineral resource, [199] while in a joint venture
agreement (JVA), where the Government enjoys the greatest participation, the
Government and the JVA contractor organize a company with both parties having
equity shares.[200] Aside from earnings in equity, the Government in a JVA is also
entitled to a share in the gross output. [201] The Government may enter into a CA [202] or
JVA[203] with one or more contractors. The Governments share in a CA or JVA is set
out in Section 81 of the law:
The share of the Government in co-production and joint venture agreements shall be
negotiated by the Government and the contractor taking into consideration the: (a)
capital investment of the project, (b) the risks involved, (c) contribution of the project
to the economy, and (d) other factors that will provide for a fair and equitable
sharing between the Government and the contractor. The Government shall also be
entitled to compensations for its other contributions which shall be agreed upon by
the parties, and shall consist, among other things, the contractors income tax, excise
tax, special allowance, withholding tax due from the contractors foreign stockholders
arising from dividend or interest payments to the said foreign stockholders, in case of
a foreign national and all such other taxes, duties and fees as provided for under
existing laws.
All mineral agreements grant the respective contractors the exclusive right to
conduct mining operations and to extract all mineral resources found in the contract
area.[204] A qualified person may enter into any of the mineral agreements with the
Government.[205] A qualified person is
any citizen of the Philippines with capacity to contract, or a corporation, partnership,
association, or cooperative organized or authorized for the purpose of engaging in
mining, with technical and financial capability to undertake mineral resources
development and duly registered in accordance with law at least sixty per
centum (60%) of the capital of which is owned by citizens of the Philippines x x x. [206]
The fourth mode involves financial or technical assistance agreements. An FTAA
is defined as a contract involving financial or technical assistance for large-scale
exploration, development, and utilization of natural resources. [207] Any qualified
person with technical and financial capability to undertake large-scale exploration,
development, and utilization of natural resources in the Philippines may enter into
such agreement directly with the Government through the DENR. [208] For the purpose
of granting an FTAA, a legally organized foreign-owned corporation (any corporation,
partnership, association, or cooperative duly registered in accordance with law in
which less than 50% of the capital is owned by Filipino citizens) [209] is deemed a
qualified person.[210]
Other than the difference in contractors qualifications, the principal distinction
between mineral agreements and FTAAs is the maximum contract area to which a
qualified person may hold or be granted. [211] Large-scale under R.A. No. 7942 is
determined by the size of the contract area, as opposed to the amount invested (US
$50,000,000.00), which was the standard under E.O. 279.
Like a CA or a JVA, an FTAA is subject to negotiation. [212] The Governments
contributions, in the form of taxes, in an FTAA is identical to its contributions in the
two mineral agreements, save that in an FTAA:
The collection of Government share in financial or technical assistance agreement
shall commence after the financial or technical assistance agreement contractor has
fully recovered its pre-operating expenses, exploration, and development
expenditures, inclusive.[213]
III
Having examined the history of the constitutional provision and statutes enacted
pursuant thereto, a consideration of the substantive issues presented by the petition
is now in order.
THE EFFECTIVITY OF
EXECUTIVE ORDER NO. 279
Petitioners argue that E.O. No. 279, the law in force when the WMC FTAA was
executed, did not come into effect.
E.O. No. 279 was signed into law by then President Aquino on July 25, 1987,
two days before the opening of Congress on July 27, 1987. [214] Section 8 of the E.O.
states that the same shall take effect immediately. This provision, according to
petitioners, runs counter to Section 1 of E.O. No. 200, [215] which provides:
SECTION 1. Laws shall take effect after fifteen days following the completion
of their publication either in the Official Gazette or in a newspaper of general
circulation in the Philippines, unless it is otherwise provided. [216] [Emphasis supplied.]
On that premise, petitioners contend that E.O. No. 279 could have only taken
effect fifteen days after its publication at which time Congress had already convened
and the Presidents power to legislate had ceased.
Respondents, on the other hand, counter that the validity of E.O. No. 279 was
settled in Miners Association of the Philippines v. Factoran , supra. This is of course
incorrect for the issue in Miners Association was not the validity of E.O. No. 279 but
that of DAO Nos. 57 and 82 which were issued pursuant thereto.
Nevertheless, petitioners contentions have no merit.
It bears noting that there is nothing in E.O. No. 200 that prevents a law from
taking effect on a date other than even before the 15-day period after its
publication. Where a law provides for its own date of effectivity, such date prevails
over that prescribed by E.O. No. 200. Indeed, this is the very essence of the phrase
unless it is otherwise provided in Section 1 thereof.Section 1, E.O. No. 200, therefore,
applies only when a statute does not provide for its own date of effectivity.
What is mandatory under E.O. No. 200, and what due process requires, as this
Court held in Taada v. Tuvera,[217] is the publication of the law for
without such notice and publication, there would be no basis for the application of the
maxim ignorantia legis n[eminem] excusat. It would be the height of injustice to
punish or otherwise burden a citizen for the transgression of a law of which he had
no notice whatsoever, not even a constructive one.
While the effectivity clause of E.O. No. 279 does not require its publication, it is
not a ground for its invalidation since the Constitution, being the fundamental,
paramount and supreme law of the nation, is deemed written in the law. [218] Hence,
the due process clause,[219] which, so Taada held, mandates the publication of
statutes, is read into Section 8 of E.O. No. 279.Additionally, Section 1 of E.O. No. 200
which provides for publication either in the Official Gazette or in a newspaper of
general circulation in the Philippines, finds suppletory application. It is significant to
note that E.O. No. 279 was actually published in the Official Gazette [220] on August 3,
1987.
From a reading then of Section 8 of E.O. No. 279, Section 1 of E.O. No. 200,
and Taada v. Tuvera, this Court holds that E.O. No. 279 became
effective immediately upon its publication in the Official Gazette on August 3, 1987.
That such effectivity took place after the convening of the first Congress is
irrelevant. At the time President Aquino issued E.O. No. 279 on July 25, 1987, she
was still validly exercising legislative powers under the Provisional Constitution.
[221]
Article XVIII (Transitory Provisions) of the 1987 Constitution explicitly states:
SEC. 6. The incumbent President shall continue to exercise legislative powers until the
first Congress is convened.
The convening of the first Congress merely precluded the exercise of legislative
powers by President Aquino; it did not prevent the effectivity of laws she had
previously enacted.
There can be no question, therefore, that E.O. No. 279 is an effective,
and a validly enacted, statute.
THE CONSTITUTIONALITY
OF THE WMCP FTAA
Petitioners submit that, in accordance with the text of Section 2, Article XII of
the Constitution, FTAAs should be limited to technical or financial assistance
only. They observe, however, that, contrary to the language of the Constitution, the
WMCP FTAA allows WMCP, a fully foreign-owned mining corporation, to extend more
than mere financial or technical assistance to the State, for it permits WMCP to
manage and operate every aspect of the mining activity. [222]
 Petitioners submission is well-taken. It is a cardinal rule in the interpretation of
constitutions that the instrument must be so construed as to give effect to the
intention of the people who adopted it.[223] This intention is to be sought in the
constitution itself, and the apparent meaning of the words is to be taken as
expressing it, except in cases where that assumption would lead to absurdity,
ambiguity, or contradiction.[224] What the Constitution says according to the text of
the provision, therefore, compels acceptance and negates the power of the courts to
alter it, based on the postulate that the framers and the people mean what they say.
[225]
Accordingly, following the literal text of the Constitution, assistance accorded by
foreign-owned corporations in the large-scale exploration, development, and
utilization of petroleum, minerals and mineral oils should be limited to technical or
financial assistance only.
WMCP nevertheless submits that the word technical in the fourth paragraph of
Section 2 of E.O. No. 279 encompasses a broad number of possible services,
perhaps, scientific and/or technological in basis. [226] It thus posits that it may also well
include the area of management or operations . . . so long as such assistance
requires specialized knowledge or skills, and are related to the exploration,
development and utilization of mineral resources. [227]
This Court is not persuaded. As priorly pointed out, the phrase management or
other forms of assistance in the 1973 Constitution was deleted in the 1987
Constitution, which allows only technical or financial assistance. Casus omisus pro
omisso habendus est. A person, object or thing omitted from an enumeration must
be held to have been omitted intentionally. [228] As will be shown later, the
management or operation of mining activities by foreign contractors, which is the
primary feature of service contracts, was precisely the evil that the drafters of the
1987 Constitution sought to eradicate.
Respondents insist that agreements involving technical or financial assistance is
just another term for service contracts. They contend that the proceedings of the
CONCOM indicate that although the terminology service contract was avoided [by the
Constitution], the concept it represented was not. They add that [t]he concept is
embodied in the phrase agreements involving financial or technical assistance. [229] And
point out how members of the CONCOM referred to these agreements as service
contracts. For instance:
SR. TAN. Am I correct in thinking that the only difference between these future
service contracts and the past service contracts under Mr. Marcos is the
general law to be enacted by the legislature and the notification of Congress by the
President? That is the only difference, is it not?
MR. VILLEGAS. That is right.
SR. TAN. So those are the safeguards[?]
MR. VILLEGAS. Yes. There was no law at all governing service contracts before.
SR. TAN. Thank you, Madam President.[230] [Emphasis supplied.]
WMCP also cites the following statements of Commissioners Gascon, Garcia,
Nolledo and Tadeo who alluded to service contracts as they explained their respective
votes in the approval of the draft Article:
MR. GASCON. Mr. Presiding Officer, I vote no primarily because of two reasons: One,
the provision on service contracts. I felt that if we would constitutionalize any
provision on service contracts, this should always be with the concurrence of
Congress and not guided only by a general law to be promulgated by Congress. x x x.
[231]
[Emphasis supplied.]
x x x.
MR. GARCIA. Thank you.
I vote no. x x x.
Service contracts are given constitutional legitimization in Section 3, even
when they have been proven to be inimical to the interests of the nation,
providing as they do the legal loophole for the exploitation of our natural
resources for the benefit of foreign interests. They constitute a serious
negation of Filipino control on the use and disposition of the nations natural
resources, especially with regard to those which are nonrenewable. [232] [Emphasis
supplied.]
xxx
MR. NOLLEDO. While there are objectionable provisions in the Article on National
Economy and Patrimony, going over said provisions meticulously, setting aside
prejudice and personalities will reveal that the article contains a balanced set of
provisions. I hope the forthcoming Congress will implement such provisions taking
into account that Filipinos should have real control over our economy and patrimony,
and if foreign equity is permitted, the same must be subordinated to the imperative
demands of the national interest.
x x x.
It is also my understanding that service contracts involving foreign
corporations or entities are resorted to only when no Filipino enterprise or
Filipino-controlled enterprise could possibly undertake the exploration or
exploitation of our natural resources and that compensation under such
contracts cannot and should not equal what should pertain to ownership of
capital. In other words, the service contract should not be an instrument to
circumvent the basic provision, that the exploration and exploitation of
natural resources should be truly for the benefit of Filipinos.
Thank you, and I vote yes.[233] [Emphasis supplied.]
x x x.
MR. TADEO. Nais ko lamang ipaliwanag ang aking boto.
Matapos suriin ang kalagayan ng Pilipinas, ang saligang suliranin, pangunahin ang
salitang imperyalismo. Ang ibig sabihin nito ay ang sistema ng lipunang
pinaghaharian ng iilang monopolyong kapitalista at ang salitang imperyalismo ay
buhay na buhay sa National Economy and Patrimony na nating ginawa. Sa
pamamagitan ng salitang based on, naroroon na ang free trade sapagkat tayo ay
mananatiling tagapagluwas ng hilaw na sangkap at tagaangkat ng yaring
produkto. Pangalawa, naroroon pa rin ang parity rights, ang service contract,
ang 60-40 equity sa natural resources. Habang naghihirap ang sambayanang
Pilipino, ginagalugad naman ng mga dayuhan ang ating likas na
yaman. Kailan man ang Article on National Economy and Patrimony ay
hindi nagpaalis sa pagkaalipin ng ating ekonomiya sa kamay ng mga
dayuhan. Ang solusyon sa suliranin ng bansa ay dalawa lamang: ang pagpapatupad
ng tunay na reporma sa lupa at ang national industrialization. Ito ang tinatawag
naming pagsikat ng araw sa Silangan. Ngunit ang mga landlords and big
businessmen at ang mga komprador ay nagsasabi na ang free trade na ito, ang
kahulugan para sa amin, ay ipinipilit sa ating sambayanan na ang araw ay sisikat sa
Kanluran. Kailan man hindi puwedeng sumikat ang araw sa Kanluran. I vote no.
[234]
[Emphasis supplied.]
This Court is likewise not persuaded.
As earlier noted, the phrase service contracts has been deleted in the 1987
Constitutions Article on National Economy and Patrimony. If the CONCOM intended to
retain the concept of service contracts under the 1973 Constitution, it could have
simply adopted the old terminology (service contracts) instead of employing new and
unfamiliar terms (agreements . . . involving either technical or financial
assistance). Such a difference between the language of a provision in a revised
constitution and that of a similar provision in the preceding constitution is viewed as
indicative of a difference in purpose. [235] If, as respondents suggest, the concept of
technical or financial assistance agreements is identical to that of service contracts,
the CONCOM would not have bothered to fit the same dog with a new collar. To
uphold respondents theory would reduce the first to a mere euphemism for the
second and render the change in phraseology meaningless.
An examination of the reason behind the change confirms that technical or
financial assistance agreements are not synonymous to service contracts.
[T]he Court in construing a Constitution should bear in mind the object sought to be
accomplished by its adoption, and the evils, if any, sought to be prevented or
remedied. A doubtful provision will be examined in light of the history of the times,
and the condition and circumstances under which the Constitution was framed. The
object is to ascertain the reason which induced the framers of the Constitution to
enact the particular provision and the purpose sought to be accomplished thereby, in
order to construe the whole as to make the words consonant to that reason and
calculated to effect that purpose.[236]
As the following question of Commissioner Quesada and Commissioner Villegas
answer shows the drafters intended to do away with service contracts which were
used to circumvent the capitalization (60%-40%) requirement:
MS. QUESADA. The 1973 Constitution used the words service contracts. In this
particular Section 3, is there a safeguard against the possible control of foreign
interests if the Filipinos go into coproduction with them?
MR. VILLEGAS. Yes. In fact, the deletion of the phrase service contracts was
our first attempt to avoid some of the abuses in the past regime in the use
of service contracts to go around the 60-40 arrangement. The safeguard that
has been introduced and this, of course can be refined is found in Section 3, lines 25
to 30, where Congress will have to concur with the President on any agreement
entered into between a foreign-owned corporation and the government involving
technical or financial assistance for large-scale exploration, development and
utilization of natural resources.[237] [Emphasis supplied.]
In a subsequent discussion, Commissioner Villegas allayed the fears of
Commissioner Quesada regarding the participation of foreign interests in Philippine
natural resources, which was supposed to be restricted to Filipinos.
MS. QUESADA. Another point of clarification is the phrase and utilization of natural
resources shall be under the full control and supervision of the State. In the 1973
Constitution, this was limited to citizens of the Philippines; but it was removed and
substituted by shall be under the full control and supervision of the State. Was the
concept changed so that these particular resources would be limited to citizens of the
Philippines? Or would these resources only be under the full control and supervision
of the State; meaning, noncitizens would have access to these natural resources? Is
that the understanding?
MR. VILLEGAS. No, Mr. Vice-President, if the Commissioner reads the next sentence,
it states:
Such activities may be directly undertaken by the State, or it may enter into co-
production, joint venture, production-sharing agreements with Filipino citizens.
So we are still limiting it only to Filipino citizens.
x x x.
MS. QUESADA. Going back to Section 3, the section suggests that:
The exploration, development, and utilization of natural resources may be directly
undertaken by the State, or it may enter into co-production, joint venture or
production-sharing agreement with . . . corporations or associations at least sixty per
cent of whose voting stock or controlling interest is owned by such citizens.
Lines 25 to 30, on the other hand, suggest that in the large-scale exploration,
development and utilization of natural resources, the President with the concurrence
of Congress may enter into agreements with foreign-owned corporations even for
technical or financial assistance.
I wonder if this part of Section 3 contradicts the second part. I am raising this point
for fear that foreign investors will use their enormous capital resources to facilitate
the actual exploitation or exploration, development and effective disposition of our
natural resources to the detriment of Filipino investors. I am not saying that we
should not consider borrowing money from foreign sources. What I refer to is that
foreign interest should be allowed to participate only to the extent that they lend us
money and give us technical assistance with the appropriate government permit. In
this way, we can insure the enjoyment of our natural resources by our own people.
MR. VILLEGAS. Actually, the second provision about the President does not
permit foreign investors to participate. It is only technical or financial
assistance they do not own anything but on conditions that have to be
determined by law with the concurrence of Congress. So, it is very
restrictive.
If the Commissioner will remember, this removes the possibility for service
contracts which we said yesterday were avenues used in the previous
regime to go around the 60-40 requirement.[238][Emphasis supplied.]
The present Chief Justice, then a member of the CONCOM, also referred to this
limitation in scope in proposing an amendment to the 60-40 requirement:
MR. DAVIDE. May I be allowed to explain the proposal?
MR. MAAMBONG. Subject to the three-minute rule, Madam President.
MR. DAVIDE. It will not take three minutes.
The Commission had just approved the Preamble. In the Preamble we clearly
stated that the Filipino people are sovereign and that one of the objectives
for the creation or establishment of a government is to conserve and
develop the national patrimony. The implication is that the national
patrimony or our natural resources are exclusively reserved for the Filipino
people. No alien must be allowed to enjoy, exploit and develop our natural
resources. As a matter of fact, that principle proceeds from the fact that
our natural resources are gifts from God to the Filipino people and it would
be a breach of that special blessing from God if we will allow aliens to
exploit our natural resources.
I voted in favor of the Jamir proposal because it is not really exploitation that we
granted to the alien corporations but only for them to render financial or
technical assistance. It is not for them to enjoy our natural
resources. Madam President, our natural resources are depleting; our population is
increasing by leaps and bounds. Fifty years from now, if we will allow these aliens to
exploit our natural resources, there will be no more natural resources for the next
generations of Filipinos. It may last long if we will begin now. Since 1935 the aliens
have been allowed to enjoy to a certain extent the exploitation of our natural
resources, and we became victims of foreign dominance and control. The aliens are
interested in coming to the Philippines because they would like to enjoy the bounty of
nature exclusively intended for Filipinos by God.
And so I appeal to all, for the sake of the future generations, that if we have to pray
in the Preamble to preserve and develop the national patrimony for the sovereign
Filipino people and for the generations to come, we must at this time decide once
and for all that our natural resources must be reserved only to Filipino citizens.
Thank you.[239] [Emphasis supplied.]
The opinion of another member of the CONCOM is persuasive [240] and leaves no
doubt as to the intention of the framers to eliminate service contracts altogether. He
writes:
Paragraph 4 of Section 2 specifies large-scale, capital-intensive, highly technological
undertakings for which the President may enter into contracts with foreign-owned
corporations, and enunciates strict conditions that should govern such contracts. x x
x.
This provision balances the need for foreign capital and technology with the need to
maintain the national sovereignty. It recognizes the fact that as long as Filipinos can
formulate their own terms in their own territory, there is no danger of relinquishing
sovereignty to foreign interests.
Are service contracts allowed under the new Constitution? No. Under the
new Constitution, foreign investors (fully alien-owned) can NOT participate
in Filipino enterprises except to provide: (1) Technical Assistance for highly
technical enterprises; and (2) Financial Assistance for large-scale
enterprises.
The intent of this provision, as well as other provisions on foreign
investments, is to prevent the practice (prevalent in the Marcos
government) of skirting the 60/40 equation using the cover of service
contracts.[241] [Emphasis supplied.]
 Furthermore, it appears that Proposed Resolution No. 496, [242] which was the
draft Article on National Economy and Patrimony, adopted the concept of agreements renewable for not more renewable for not more years, renewable for not
. . . involving either technical or financial assistance contained in the Draft of the than twenty-five years and than twenty-five years, more than twenty-five
1986 U.P. Law Constitution Project (U.P. Law draft) which was taken into under such terms and and under such term and years, and under such
consideration during the deliberation of the CONCOM. [243] The former, as well as conditions as may be conditions as may be terms and conditions as
Article XII, as adopted, employed the same terminology, as the comparative table provided by law. In case provided by law. In cases may be provided by
below shows: as to water rights for of water rights for law. In case of water
irrigation, water supply, irrigation, water supply, rights for irrigation, water
PROPOSED RESOLUTION ARTICLE XII OF THE 1987 fisheries, or industrial uses fisheries or industrial uses supply, fisheries, or
NO. 496 OF THE CONSTITUTION other than the other than the industrial uses other than
CONSTITUTIONAL development of water development for water the development of water
COMMISSION power, beneficial use may power, beneficial use may power, beneficial use may
be the measure and limit be the measure and limit be the measure and limit
DRAFT OF THE UP LAW of the grant. of the grant. of the grant.
CONSTITUTION PROJECT

SEC. 1. All lands of the
public domain, waters,
minerals, coal, petroleum
and other mineral oils, all
forces of potential energy,
fisheries, flora and fauna
and other natural
resources of the
Philippines 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. Such activities may
be directly undertaken by
the state, or it may enter
into co-production, joint
venture, production
sharing agreements with
Filipino citizens or
corporations or
associations sixty per cent
of whose voting stock or
controlling interest is
owned by such citizens for
a period of not more than
twenty-five years,
SEC. 3. All lands of the
public domain, waters,
minerals, coal, petroleum
and other mineral oils, all
forces of potential energy,
fisheries, forests, 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. Such activities may
be directly undertaken by
the State, or it may enter
into co-production, joint
venture, production-
sharing agreements with
Filipino citizens or
corporations or
associations at least sixty
per cent of whose voting
stock or controlling
interest is owned by such
citizens. Such agreements
shall be for a period of
twenty-five years,
SEC. 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. The State may
directly undertake such
activities or it may enter
into co-production, joint
venture, or production-
sharing agreements with
Filipino citizens, or
corporations or
associations at least
sixty per centum of whose
capital is owned by such
citizens. Such agreements
may be for a period not
exceeding twenty-five
The National Assembly
may by law allow small
scale utilization of natural
resources by Filipino
citizens.
The National Assembly,
may, by two-thirds vote of
all its members by special
law provide the terms and
conditions under which a
foreign-owned corporation
The Congress may by law
allow small-scale utilization
of natural resources by
Filipino citizens, as well as
cooperative fish farming in
rivers, lakes, bays, and
lagoons.
The President with the
concurrence of Congress,
by special law, shall
provide the terms and
conditions under which a
foreign-owned corporation
The State shall protect the
nations marine wealth in
its archipelagic waters,
territorial sea, and
exclusive economic zone,
and reserve its use and
enjoyment exclusively to
Filipino citizens.
The Congress may, by
law, allow small-scale
utilization of natural
resources by Filipino
citizens, as well as
cooperative fish farming,
with priority to
subsistence fishermen and
fish-workers in rivers,
lakes, bays, and lagoons.
The President may enter
into agreements with
foreign-owned
corporations
involving either
technical or financial

may enter into
agreements with the
government
involving either
technical or financial
assistance for large-scale
exploration, development,
or utilization of natural
resources. [Emphasis
supplied.]
may enter into
agreements with the
government
involving either
technical or financial
assistance for large-scale
exploration, development,
and utilization of natural
resources. [Emphasis
supplied.]
2. Management of the enterprise vested on the contractor, including
assistance for large- operation of the field if petroleum is discovered; (Sec. 8, P.D. 87)
scale exploration,
development, and 3. Control of production and other matters such as expansion and
utilization of minerals, development; (Sec. 8)
petroleum, and other
mineral oils according to 4. Responsibility for downstream operations marketing, distribution, and
the general terms and processing may be with the contractor (Sec. 8);
conditions provided by
law, based on real
contributions to the 5. Ownership of equipment, machinery, fixed assets, and other properties remain
economic growth and with contractor (Sec. 12, P.D. 87);
general welfare of the
country. In such 6. Repatriation of capital and retention of profits abroad guaranteed to the contractor
agreements, the State (Sec. 13, P.D. 87); and
shall promote the
development and use of 7. While title to the petroleum discovered may nominally be in the name of
local scientific and the government, the contractor has almost unfettered control over its
technical resources. disposition and sale, and even the domestic requirements of the country is
[Emphasis supplied.] relegated to a pro rata basis (Sec. 8).

The President shall notify In short, our version of the service contract is just a rehash of the old concession
the Congress of every regime x x x. Some people have pulled an old rabbit out of a magicians hat, and
contract entered into in foisted it upon us as a new and different animal.
accordance with this
provision, within thirty
days from its execution. The service contract as we know it here is antithetical to the principle of
sovereignty over our natural resources restated in the same article of the
[1973] Constitution containing the provision for service contracts. If the
service contractor happens to be a foreign corporation, the contract would
also run counter to the constitutional provision on nationalization or
The insights of the proponents of the U.P. Law draft are, therefore, instructive Filipinization, of the exploitation of our natural resources. [245] [Emphasis
in interpreting the phrase technical or financial assistance. supplied. Underscoring in the original.]

In his position paper entitled Service Contracts: Old Wine in New Bottles? ,
Professor Pacifico A. Agabin, who was a member of the working group that prepared
the U.P. Law draft, criticized service contracts for they lodge exclusive management
and control of the enterprise to the service contractor, which is reminiscent of the old
concession regime. Thus, notwithstanding the provision of the Constitution that
natural resources belong to the State, and that these shall not be alienated, the
service contract system renders nugatory the constitutional provisions cited. [244] He
elaborates:
Looking at the Philippine model, we can discern the following vestiges of the
concession regime, thus:
1. Bidding of a selected area, or leasing the choice of the area to the interested party
and then negotiating the terms and conditions of the contract; (Sec. 5, P.D. 87)
Professor Merlin M. Magallona, also a member of the working group, was
harsher in his reproach of the system:
x x x the nationalistic phraseology of the 1935 [Constitution] was retained by the
[1973] Charter, but the essence of nationalism was reduced to hollow rhetoric. The
1973 Charter still provided that the exploitation or development of the countrys
natural resources be limited to Filipino citizens or corporations owned or controlled by
them. However, the martial-law Constitution allowed them, once these resources are
in their name, to enter into service contracts with foreign investors for financial,
technical, management, or other forms of assistance. Since foreign investors have the
capital resources, the actual exploitation and development, as well as the effective
disposition, of the countrys natural resources, would be under their direction, and
control, relegating the Filipino investors to the role of second-rate partners in joint
ventures.
Through the instrumentality of the service contract, the 1973 Constitution
had legitimized at the highest level of state policy that which was
prohibited under the 1973 Constitution, namely: the exploitation of the
countrys natural resources by foreign nationals. The drastic impact of [this]
constitutional change becomes more pronounced when it is considered
that the active party to any service contract may be a corporation wholly
owned by foreign interests. In such a case, the citizenship requirement is
completely set aside, permitting foreign corporations to obtain actual
possession, control, and [enjoyment] of the countrys natural resources.
[246]
[Emphasis supplied.]
Accordingly, Professor Agabin recommends that:
Recognizing the service contract for what it is, we have to expunge it from
the Constitution and reaffirm ownership over our natural resources. That is
the only way we can exercise effective control over our natural resources.
This should not mean complete isolation of the countrys natural resources from
foreign investment. Other contract forms which are less derogatory to our
sovereignty and control over natural resources like technical assistance
agreements, financial assistance [agreements], co-production agreements,
joint ventures, production-sharing could still be utilized and adopted
without violating constitutional provisions. In other words, we can adopt
contract forms which recognize and assert our sovereignty and ownership
over natural resources, and where the foreign entity is just a pure
contractor instead of the beneficial owner of our economic resources.
[247]
[Emphasis supplied.]
Still another member of the working group, Professor Eduardo Labitag,
proposed that:
2. Service contracts as practiced under the 1973 Constitution should be
discouraged, instead the government may be allowed, subject to
authorization by special law passed by an extraordinary majority to enter
into either technical or financial assistance. This is justified by the fact that as
presently worded in the 1973 Constitution, a service contract gives full control over
the contract area to the service contractor, for him to work, manage and dispose of
the proceeds or production. It was a subterfuge to get around the nationality
requirement of the constitution.[248] [Emphasis supplied.]
In the annotations on the proposed Article on National Economy and Patrimony,
the U.P. Law draft summarized the rationale therefor, thus:
5. The last paragraph is a modification of the service contract provision found in
Section 9, Article XIV of the 1973 Constitution as amended. This 1973 provision
shattered the framework of nationalism in our fundamental law (see Magallona,
Nationalism and its Subversion in the Constitution). Through the service contract, the
1973 Constitution had legitimized that which was prohibited under the 1935
constitutionthe exploitation of the countrys natural resources by foreign
nationals. Through the service contract, acts prohibited by the Anti-Dummy Law were
recognized as legitimate arrangements. Service contracts lodge exclusive
management and control of the enterprise to the service contractor, not
unlike the old concession regime where the concessionaire had complete
control over the countrys natural resources, having been given exclusive
and plenary rights to exploit a particular resource and, in effect, having
been assured of ownership of that resource at the point of extraction (see
Agabin, Service Contracts: Old Wine in New Bottles). Service contracts, hence, are
antithetical to the principle of sovereignty over our natural resources, as well as the
constitutional provision on nationalization or Filipinization of the exploitation of our
natural resources.
Under the proposed provision, only technical assistance or financial
assistance agreements may be entered into, and only for large-scale
activities. These are contract forms which recognize and assert our
sovereignty and ownership over natural resources since the foreign entity
is just a pure contractor and not a beneficial owner of our economic
resources. The proposal recognizes the need for capital and technology to
develop our natural resources without sacrificing our sovereignty and
control over such resources by the safeguard of a special law which
requires two-thirds vote of all the members of the Legislature. This will
ensure that such agreements will be debated upon exhaustively and thoroughly in the
National Assembly to avert prejudice to the nation. [249] [Emphasis supplied.]
The U.P. Law draft proponents viewed service contracts under the 1973
Constitution as grants of beneficial ownership of the countrys natural resources to
foreign owned corporations.While, in theory, the State owns these natural resources
and Filipino citizens, their beneficiaries service contracts actually vested foreigners
with the right to dispose, explore for, develop, exploit, and utilize the
same. Foreigners, not Filipinos, became the beneficiaries of Philippine natural
resources. This arrangement is clearly incompatible with the constitutional ideal of
nationalization of natural resources, with the Regalian doctrine, and on a broader
perspective, with Philippine sovereignty.
The proponents nevertheless acknowledged the need for capital and technical
know-how in the large-scale exploitation, development and utilization of natural
resources the second paragraph of the proposed draft itself being an admission of
such scarcity. Hence, they recommended a compromise to reconcile the nationalistic
provisions dating back to the 1935 Constitution, which reserved all natural resources
exclusively to Filipinos, and the more liberal 1973 Constitution, which allowed
foreigners to participate in these resources through service contracts. Such a
compromise called for the adoption of a new system in the exploration, development,
and utilization of natural resources in the form of technical agreements or financial
agreements which, necessarily, are distinct concepts from service contracts.
 The replacement of service contracts with agreements involving either technical
or financial assistance, as well as the deletion of the phrase management or other
forms of assistance, assumes greater significance when note is taken that the U.P.
Law draft proposed other equally crucial changes that were obviously heeded by the
CONCOM. These include the abrogation of the concession system and the adoption of
new options for the State in the exploration, development, and utilization of natural
resources. The proponents deemed these changes to be more consistent with the
States ownership of, and its full control and supervision (a phrase also employed by
the framers) over, such resources. The Project explained:
3. In line with the State ownership of natural resources, the State should take a more
active role in the exploration, development, and utilization of natural resources, than
the present practice of granting licenses, concessions, or leases hence the provision
that said activities shall be under the full control and supervision of the State. There
are three major schemes by which the State could undertake these activities: first,
directly by itself; second, by virtue of co-production, joint venture, production sharing
agreements with Filipino citizens or corporations or associations sixty per cent (60%)
of the voting stock or controlling interests of which are owned by such citizens; or
third, with a foreign-owned corporation, in cases of large-scale exploration,
development, or utilization of natural resources through agreements involving either
technical or financial assistance only. x x x.
At present, under the licensing concession or lease schemes, the government benefits
from such benefits only through fees, charges, ad valorem taxes and income taxes of
the exploiters of our natural resources. Such benefits are very minimal compared with
the enormous profits reaped by theses licensees, grantees,
concessionaires. Moreover, some of them disregard the conservation of natural
resources and do not protect the environment from degradation. The proposed role
of the State will enable it to a greater share in the profits it can also actively husband
its natural resources and engage in developmental programs that will be beneficial to
them.
4. Aside from the three major schemes for the exploration, development, and
utilization of our natural resources, the State may, by law, allow Filipino citizens to
explore, develop, utilize natural resources in small-scale. This is in recognition of the
plight of marginal fishermen, forest dwellers, gold panners, and others similarly
situated who exploit our natural resources for their daily sustenance and survival. [250]
Professor Agabin, in particular, after taking pains to illustrate the similarities
between the two systems, concluded that the service contract regime was but a
rehash of the concession system. Old wine in new bottles, as he put it. The
rejection of the service contract regime, therefore, is in consonance with
the abolition of the concession system.
In light of the deliberations of the CONCOM, the text of the Constitution, and
the adoption of other proposed changes, there is no doubt that the framers
considered and shared the intent of the U.P. Law proponents in employing the phrase
agreements . . . involving either technical or financial assistance.
While certain commissioners may have mentioned the term service contracts
during the CONCOM deliberations, they may not have been necessarily referring to
the concept of service contracts under the 1973 Constitution. As noted earlier, service
contracts is a term that assumes different meanings to different people. [251] The
commissioners may have been using the term loosely, and not in its technical and
legal sense, to refer, in general, to agreements concerning natural resources entered
into by the Government with foreign corporations. These loose statements do not
necessarily translate to the adoption of the 1973 Constitution provision allowing
service contracts.
It is true that, as shown in the earlier quoted portions of the proceedings in
CONCOM, in response to Sr. Tans question, Commissioner Villegas commented that,
other than congressional notification, the only difference between future and past
service contracts is the requirement of a general law as there were no laws previously
authorizing the same.[252]However, such remark is far outweighed by his more
categorical statement in his exchange with Commissioner Quesada that the draft
article does not permit foreign investors to participate in the nations natural resources
which was exactly what service contracts did except to provide technical or financial
assistance.[253]
In the case of the other commissioners, Commissioner Nolledo himself clarified
in his work that the present charter prohibits service contracts. [254] Commissioner
Gascon was not totally averse to foreign participation, but favored stricter restrictions
in the form of majority congressional concurrence. [255] On the other hand,
Commissioners Garcia and Tadeo may have veered to the extreme side of the
spectrum and their objections may be interpreted as votes against any foreign
participation in our natural resources whatsoever.
WMCP cites Opinion No. 75, s. 1987, [256] and Opinion No. 175, s. 1990 [257] of the
Secretary of Justice, expressing the view that a financial or technical assistance
agreement is no different in concept from the service contract allowed under the
1973 Constitution. This Court is not, however, bound by this interpretation. When an
administrative or executive agency renders an opinion or issues a statement of policy,
it merely interprets a pre-existing law; and the administrative interpretation of the
law is at best advisory, for it is the courts that finally determine what the law means.
[258]
In any case, the constitutional provision allowing the President to enter into
FTAAs with foreign-owned corporations is an exception to the rule that participation
in the nations natural resources is reserved exclusively to Filipinos. Accordingly, such
provision must be construed strictly against their enjoyment by non-Filipinos. As
Commissioner Villegas emphasized, the provision is very restrictive. [259] Commissioner
Nolledo also remarked that entering into service contracts is an exception to the rule
on protection of natural resources for the interest of the nation and, therefore, being
an exception, it should be subject, whenever possible, to stringent rules. [260] Indeed,
exceptions should be strictly but reasonably construed; they extend only so far as
their language fairly warrants and all doubts should be resolved in favor of the
general provision rather than the exception.[261]
 With the foregoing discussion in mind, this Court finds that R.A. No. 7942 is
invalid insofar as said Act authorizes service contracts. Although the statute employs
the phrase financial and technical agreements in accordance with the 1987
Constitution, it actually treats these agreements as service contracts that grant
beneficial ownership to foreign contractors contrary to the fundamental law.
Section 33, which is found under Chapter VI (Financial or Technical Assistance
Agreement) of R.A. No. 7942 states:
SEC. 33. Eligibility.Any qualified person with technical and financial capability to
undertake large-scale exploration, development, and utilization of mineral
resources in the Philippines may enter into a financial or technical assistance
agreement directly with the Government through the Department. [Emphasis
supplied.]
Exploration, as defined by R.A. No. 7942,
means the searching or prospecting for mineral resources by geological, geochemical
or geophysical surveys, remote sensing, test pitting, trending, drilling, shaft sinking,
tunneling or any other means for the purpose of determining the existence, extent,
quantity and quality thereof and the feasibility of mining them for profit. [262]
A legally organized foreign-owned corporation may be granted an exploration permit,
[263]
which vests it with the right to conduct exploration for all minerals in specified
areas,[264] i.e., to enter, occupy and explore the same. [265] Eventually, the foreign-
owned corporation, as such permittee, may apply for a financial and technical
assistance agreement.[266]
Development is
the work undertaken to explore and prepare an ore body or a mineral deposit for
mining, including the construction of necessary infrastructure and related facilities. [267]
Utilization means the extraction or disposition of minerals. [268] A stipulation
that the proponent shall dispose of the minerals and byproducts produced at the
highest price and more advantageous terms and conditions as provided for under the
implementing rules and regulations is required to be incorporated in every FTAA. [269]
A foreign-owned/-controlled corporation may likewise be granted a mineral
processing permit.[270] Mineral processing is the milling, beneficiation or upgrading of
ores or minerals and rocks or by similar means to convert the same into marketable
products.[271]
An FTAA contractor makes a warranty that the mining operations shall be
conducted in accordance with the provisions of R.A. No. 7942 and its implementing
rules[272] and for work programs and minimum expenditures and commitments.
And it obliges itself to furnish the Government records of geologic, accounting,
[273]
and other relevant data for its mining operation. [274]
Mining operation, as the law defines it, means mining
activities involving exploration, feasibility, development, utilization,
and processing.[275]
The underlying assumption in all these provisions is that the foreign contractor
manages the mineral resources, just like the foreign contractor in a service contract.
Furthermore, Chapter XII of the Act grants foreign contractors in FTAAs the
same auxiliary mining rights that it grants contractors in mineral agreements (MPSA,
CA and JV).[276]Parenthetically, Sections 72 to 75 use the term contractor, without
distinguishing between FTAA and mineral agreement contractors. And so does
holders of mining rights in Section 76. A foreign contractor may even convert its FTAA
into a mineral agreement if the economic viability of the contract area is found to be
inadequate to justify large-scale mining operations, [277]provided that it reduces its
equity in the corporation, partnership, association or cooperative to forty percent
(40%).[278]
Finally, under the Act, an FTAA contractor warrants that it has or has access to
all the financing, managerial, and technical expertise. . . . [279] This suggests that an
FTAA contractor is bound to provide some management assistance a form of
assistance that has been eliminated and, therefore, proscribed by the present
Charter.
By allowing foreign contractors to manage or operate all the aspects of the
mining operation, the above-cited provisions of R.A. No. 7942 have in effect
conveyed beneficial ownership over the nations mineral resources to these
contractors, leaving the State with nothing but bare title thereto.
Moreover, the same provisions, whether by design or inadvertence, permit a
circumvention of the constitutionally ordained 60%-40% capitalization requirement
for corporations or associations engaged in the exploitation, development and
utilization of Philippine natural resources.
In sum, the Court finds the following provisions of R.A. No. 7942 to be violative
of Section 2, Article XII of the Constitution:
(1) The proviso in Section 3 (aq), which defines qualified person, to wit:
Provided, That a legally organized foreign-owned corporation shall be deemed a
qualified person for purposes of granting an exploration permit, financial or technical
assistance agreement or mineral processing permit.
 (2) Section 23,[280] which specifies the rights and obligations of an exploration
permittee, insofar as said section applies to a financial or technical assistance
agreement,
(3) Section 33, which prescribes the eligibility of a contractor in a financial or
technical assistance agreement;
(4) Section 35,[281] which enumerates the terms and conditions for every
financial or technical assistance agreement;
(5) Section 39, [282]
which allows the contractor in a financial and technical
assistance agreement to convert the same into a mineral production-sharing
agreement;
(6) Section 56,[283] which authorizes the issuance of a mineral processing permit
to a contractor in a financial and technical assistance agreement;
The following provisions of the same Act are likewise void as they are
dependent on the foregoing provisions and cannot stand on their own:
(1) Section 3 (g),[284] which defines the term contractor, insofar as it applies to a
financial or technical assistance agreement.
Section 34,[285] which prescribes the maximum contract area in a financial or
technical assistance agreements;
Section 36,[286] which allows negotiations for financial or technical assistance
agreements;
Section 37,[287] which prescribes the procedure for filing and evaluation of
financial or technical assistance agreement proposals;
Section 38,[288] which limits the term of financial or technical assistance
agreements;
Section 40,[289] which allows the assignment or transfer of financial or technical
assistance agreements;
Section 41,[290] which allows the withdrawal of the contractor in an FTAA;
The second and third paragraphs of Section 81, [291] which provide for the
Governments share in a financial and technical assistance agreement; and
Section 90,[292] which provides for incentives to contractors in FTAAs insofar as it
applies to said contractors;
When the parts of the statute are so mutually dependent and connected as
conditions, considerations, inducements, or compensations for each other, as to
warrant a belief that the legislature intended them as a whole, and that if all could
not be carried into effect, the legislature would not pass the residue independently,
then, if some parts are unconstitutional, all the provisions which are thus dependent,
conditional, or connected, must fall with them.[293]
There can be little doubt that the WMCP FTAA itself is a service contract.
Section 1.3 of the WMCP FTAA grants WMCP the exclusive right to explore,
exploit, utilise[,] process and dispose of all Minerals products and by-products thereof
that may be produced from the Contract Area. [294] The FTAA also imbues WMCP with
the following rights:
(b) to extract and carry away any Mineral samples from the Contract area for the
purpose of conducting tests and studies in respect thereof;
(c) to determine the mining and treatment processes to be utilised during the
Development/Operating Period and the project facilities to be constructed during the
Development and Construction Period;
(d) have the right of possession of the Contract Area, with full right of ingress and
egress and the right to occupy the same, subject to the provisions of Presidential
Decree No. 512 (if applicable) and not be prevented from entry into private ands by
surface owners and/or occupants thereof when prospecting, exploring and exploiting
for minerals therein;
xxx
(f) to construct roadways, mining, drainage, power generation and transmission
facilities and all other types of works on the Contract Area;
(g) to erect, install or place any type of improvements, supplies, machinery and other
equipment relating to the Mining Operations and to use, sell or otherwise dispose of,
modify, remove or diminish any and all parts thereof;
(h) enjoy, subject to pertinent laws, rules and regulations and the rights of third
Parties, easement rights and the use of timber, sand, clay, stone, water and other
natural resources in the Contract Area without cost for the purposes of the Mining
Operations;
xxx
(l) have the right to mortgage, charge or encumber all or part of its interest and
obligations under this Agreement, the plant, equipment and infrastructure and the
Minerals produced from the Mining Operations;
x x x. [295]
All materials, equipment, plant and other installations erected or placed on the
Contract Area remain the property of WMCP, which has the right to deal with and
remove such items within twelve months from the termination of the FTAA. [296]
Pursuant to Section 1.2 of the FTAA, WMCP shall provide [all] financing,
technology, management and personnel necessary for the Mining Operations. The
mining company binds itself to perform all Mining Operations . . . providing all
necessary services, technology and financing in connection therewith, [297] and to
furnish all materials, labour, equipment and other installations that may be required
for carrying on all Mining Operations. [298] WMCP may make expansions, improvements
and replacements of the mining facilities and may add such new facilities as it
considers necessary for the mining operations.[299]
These contractual stipulations, taken together, grant WMCP beneficial ownership
over natural resources that properly belong to the State and are intended for the
benefit of its citizens.These stipulations are abhorrent to the 1987 Constitution. They
are precisely the vices that the fundamental law seeks to avoid, the evils that it aims
to suppress. Consequently, the contract from which they spring must be struck down.
In arguing against the annulment of the FTAA, WMCP invokes the Agreement
on the Promotion and Protection of Investments between the Philippine and
Australian Governments, which was signed in Manila on January 25, 1995 and which
entered into force on December 8, 1995.
x x x. Article 2 (1) of said treaty states that it applies to investments whenever made
and thus the fact that [WMCPs] FTAA was entered into prior to the entry into force of
the treaty does not preclude the Philippine Government from protecting [WMCPs]
investment in [that] FTAA. Likewise, Article 3 (1) of the treaty provides that Each
Party shall encourage and promote investments in its area by investors of
the other Party and shall [admit] such investments in accordance with its
Constitution, Laws, regulations and investment policies and in Article 3 (2),
it states that Each Party shall ensure that investments are accorded fair
and equitable treatment. The latter stipulation indicates that it was intended to
impose an obligation upon a Party to afford fair and equitable treatment to the
investments of the other Party and that a failure to provide such treatment by or
under the laws of the Party may constitute a breach of the treaty. Simply stated, the
Philippines could not, under said treaty, rely upon the inadequacies of its own laws to
deprive an Australian investor (like [WMCP]) of fair and equitable treatment by
invalidating [WMCPs] FTAA without likewise nullifying the service contracts entered
into before the enactment of RA 7942 such as those mentioned in PD 87 or EO 279.
This becomes more significant in the light of the fact that [WMCPs] FTAA was
executed not by a mere Filipino citizen, but by the Philippine Government itself,
through its President no less, which, in entering into said treaty is assumed to be
aware of the existing Philippine laws on service contracts over the exploration,
development and utilization of natural resources. The execution of the FTAA by the
Philippine Government assures the Australian Government that the FTAA is in
accordance with existing Philippine laws.[300] [Emphasis and italics by private
respondents.]
The invalidation of the subject FTAA, it is argued, would constitute a breach of
said treaty which, in turn, would amount to a violation of Section 3, Article II of the
Constitution adopting the generally accepted principles of international law as part of
the law of the land. One of these generally accepted principles is pacta sunt
servanda, which requires the performance in good faith of treaty obligations.
Even assuming arguendo that WMCP is correct in its interpretation of the treaty
and its assertion that the Philippines could not . . . deprive an Australian investor (like
[WMCP]) of fair and equitable treatment by invalidating [WMCPs] FTAA without
likewise nullifying the service contracts entered into before the enactment of RA 7942
. . ., the annulment of the FTAA would not constitute a breach of the treaty
invoked. For this decision herein invalidating the subject FTAA forms part of the legal
system of the Philippines.[301] The equal protection clause[302]guarantees that such
decision shall apply to all contracts belonging to the same class, hence, upholding
rather than violating, the fair and equitable treatment stipulation in said treaty.
One other matter requires clarification. Petitioners contend that, consistent with
the provisions of Section 2, Article XII of the Constitution, the President may enter
into agreements involving either technical or financial assistance only. The
agreement in question, however, is a technical and financial assistance agreement.
Petitioners contention does not lie. To adhere to the literal language of the
Constitution would lead to absurd consequences.[303] As WMCP correctly put it:
x x x such a theory of petitioners would compel the government (through the
President) to enter into contract with two (2) foreign-owned corporations, one for
financial assistance agreement and with the other, for technical assistance over one
and the same mining area or land; or to execute two (2) contracts with
only one foreign-owned corporation which has the capability to provide both financial
and technical assistance, one for financial assistance and another for technical
assistance, over the same mining area. Such an absurd result is definitely not
sanctioned under the canons of constitutional construction.[304] [Underscoring in the
original.]
Surely, the framers of the 1987 Charter did not contemplate such an absurd
result from their use of either/or. A constitution is not to be interpreted as demanding
the impossible or the impracticable; and unreasonable or absurd consequences, if
possible, should be avoided.[305] Courts are not to give words a meaning that would
lead to absurd or unreasonable consequences and a literal interpretation is to be
rejected if it would be unjust or lead to absurd results. [306] That is a strong argument
against its adoption.[307] Accordingly, petitioners interpretation must be rejected.
 The foregoing discussion has rendered unnecessary the resolution of the other G.R. No. L-44081 April 15, 1988
issues raised by the petition.
BENGUET CONSOLIDATED, INC., petitioner,
WHEREFORE, the petition is GRANTED. The Court hereby declares vs.
unconstitutional and void: HON. COURT OF APPEALS, JOSE Y. DE LA ROSA, VICTORIA, BENJAMIN and
EDUARDO, all surnamed DE LA ROSA, represented by their father JOSE Y.
(1) The following provisions of Republic Act No. 7942: DE LA ROSA, respondents.

(a) The proviso in Section 3 (aq), G.R. No. L-44092 April 15, 1988

(b) Section 23, ATOK-BIG WEDGE MINING COMPANY, petitioner,

vs.
HON. COURT OF APPEALS, JOSE Y. DE LA ROSA, VICTORlA, BENJAMIN and
(c) Section 33 to 41, EDUARDO, all surnamed DE LA ROSA, represented by their father, JOSE Y.
DE LA ROSA, respondents.
(d) Section 56,

(e) The second and third paragraphs of Section 81, and

CRUZ, J.:
(f) Section 90.
The Regalian doctrine reserves to the State all natural wealth that may be found in
(2) All provisions of Department of Environment and Natural Resources the bowels of the earth even if the land where the discovery is made be private. 1 In
Administrative Order 96-40, s. 1996 which are not in conformity with this Decision, the cases at bar, which have been consolidated because they pose a common issue,
and this doctrine was not correctly applied.

(3) The Financial and Technical Assistance Agreement between the Government
of the Republic of the Philippines and WMC Philippines, Inc.
SO ORDERED.
These cases arose from the application for registration of a parcel of land filed on
February 11, 1965, by Jose de la Rosa on his own behalf and on behalf of his three
children, Victoria, Benjamin and Eduardo. The land, situated in Tuding, Itogon,
Benguet Province, was divided into 9 lots and covered by plan Psu-225009. According
to the application, Lots 1-5 were sold to Jose de la Rosa and Lots 6-9 to his children
by Mamaya Balbalio and Jaime Alberto, respectively, in 1964. 2

The application was separately opposed by Benguet Consolidated, Inc. as to Lots 1-5,
Republic of the Philippines Atok Big Wedge Corporation, as to Portions of Lots 1-5 and all of Lots 6-9, and by the
SUPREME COURT Republic of the Philippines, through the Bureau of Forestry Development, as to lots 1-
Manila 9. 3

FIRST DIVISION In support of the application, both Balbalio and Alberto testified that they had
acquired the subject land by virtue of prescription Balbalio claimed to have received
G.R. No. L-43938 April 15, 1988 Lots 1-5 from her father shortly after the Liberation. She testified she was born in the
land, which was possessed by her parents under claim of ownership. 4 Alberto said he
REPUBLIC OF THE PHILIPPINES (DIRECTOR OF FOREST received Lots 6-9 in 1961 from his mother, Bella Alberto, who declared that the land
DEVELOPMENT), petitioner, was planted by Jaime and his predecessors-in-interest to bananas, avocado, nangka
vs. and camote, and was enclosed with a barbed-wire fence. She was corroborated by
HON. COURT OF APPEALS (THIRD DIVISION) and JOSE Y. DE LA Felix Marcos, 67 years old at the time, who recalled the earlier possession of the land
ROSA, respondents. by Alberto's father. 5 Balbalio presented her tax declaration in 1956 and the realty tax
receipts from that year to 1964, 6 Alberto his tax declaration in 1961 and the realty
tax receipts from that year to 1964. 7
Benguet opposed on the ground that the June Bug mineral claim covering Lots 1-5
was sold to it on September 22, 1934, by the successors-in-interest of James Kelly,
who located the claim in September 1909 and recorded it on October 14, 1909. From
the date of its purchase, Benguet had been in actual, continuous and exclusive
possession of the land in concept of owner, as evidenced by its construction of adits,
its affidavits of annual assessment, its geological mappings, geological samplings and
trench side cuts, and its payment of taxes on the land. 8
For its part, Atok alleged that a portion of Lots 1-5 and all of Lots 6-9 were covered
by the Emma and Fredia mineral claims located by Harrison and Reynolds on
December 25, 1930, and recorded on January 2, 1931, in the office of the mining
recorder of Baguio. These claims were purchased from these locators on November 2,
1931, by Atok, which has since then been in open, continuous and exclusive
possession of the said lots as evidenced by its annual assessment work on the claims,
such as the boring of tunnels, and its payment of annual taxes thereon. 9
The location of the mineral claims was made in accordance with Section 21 of the
Philippine Bill of 1902 which provided that:
SEC. 21. All valuable mineral deposits in public lands in the
philippine Islands both surveyed and unsurveyed are hereby
declared to be free and open to exploration, occupation and
purchase and the land in which they are found to occupation and
purchase by the citizens of the United States, or of said islands.
The Bureau of Forestry Development also interposed its objection, arguing that the
land sought to be registered was covered by the Central Cordillera Forest Reserve
under Proclamation No. 217 dated February 16, 1929. Moreover, by reason of its
nature, it was not subject to alienation under the Constitutions of 1935 and 1973. 10
The trial court * denied the application, holding that the applicants had failed to
prove their claim of possession and ownership of the land sought to be
registered. 11 The applicants appealed to the respondent court, * which reversed the
trial court and recognized the claims of the applicant, but subject to the rights of
Benguet and Atok respecting their mining claims. 12 In other words, the Court of
Appeals affirmed the surface rights of the de la Rosas over the land while at the same
time reserving the sub-surface rights of Benguet and Atok by virtue of their mining
claims.
Both Benguet and Atok have appealed to this Court, invoking their superior right of
ownership. The Republic has filed its own petition for review and reiterates its
argument that neither the private respondents nor the two mining companies have
any valid claim to the land because it is not alienable and registerable.
It is true that the subject property was considered forest land and included in the
Central Cordillera Forest Reserve, but this did not impair the rights already vested in
Benguet and Atok at that time. The Court of Appeals correctly declared that:
There is no question that the 9 lots applied for are within the June
Bug mineral claims of Benguet and the "Fredia and Emma" mineral
claims of Atok. The June Bug mineral claim of plaintiff Benguet was
one of the 16 mining claims of James E. Kelly, American and mining
locator. He filed his declaration of the location of the June Bug
mineral and the same was recorded in the Mining Recorder's Office
on October 14, 1909. All of the Kelly claims ha subsequently been
acquired by Benguet Consolidated, Inc. Benguet's evidence is that
it had made improvements on the June Bug mineral claim
consisting of mine tunnels prior to 1935. It had submitted the
required affidavit of annual assessment. After World War II,
Benguet introduced improvements on mineral claim June Bug, and
also conducted geological mappings, geological sampling and
trench side cuts. In 1948, Benguet redeclared the "June Bug" for
taxation and had religiously paid the taxes.
The Emma and Fredia claims were two of the several claims of
Harrison registered in 1931, and which Atok representatives
acquired. Portions of Lots 1 to 5 and all of Lots 6 to 9 are within
the Emma and Fredia mineral claims of Atok Big Wedge Mining
Company.
The June Bug mineral claim of Benguet and the Fredia and Emma
mineral claims of Atok having been perfected prior to the approval
of the Constitution of the Philippines of 1935, they were removed
from the public domain and had become private properties of
Benguet and Atok.
It is not disputed that the location of the mining
claim under consideration was perfected prior to
November 15, 1935, when the Government of
the Commonwealth was inaugurated; and
according to the laws existing at that time, as
construed and applied by this court in McDaniel
v. Apacible and Cuisia (42 Phil. 749), a valid
location of a mining claim segregated the area
from the public domain. Said the court in that
case: The moment the locator discovered a
valuable mineral deposit on the lands located,
and perfected his location in accordance with
law, the power of the United States Government
to deprive him of the exclusive right to the
possession and enjoyment of the located claim
was gone, the lands had become mineral lands
 and they were exempted from lands that could
be granted to any other person. The reservations
of public lands cannot be made so as to include
prior mineral perfected locations; and, of course,
if a valid mining location is made upon public
lands afterwards included in a reservation, such
inclusion or reservation does not affect the
validity of the former location. By such location
and perfection, the land located is segregated
from the public domain even as against the
Government. (Union Oil Co. v. Smith, 249 U.S.
337; Van Mess v. Roonet, 160 Cal. 131; 27 Cyc.
546).
"The legal effect of a valid location of a mining
claim is not only to segregate the area from the
public domain, but to grant to the locator the
beneficial ownership of the claim and the right to
a patent therefor upon compliance with the terms
and conditions prescribed by law. Where there is
a valid location of a mining claim, the area
becomes segregated from the public domain and
the property of the locator." (St. Louis Mining &
Milling Co. v. Montana Mining Co., 171 U.S. 650;
655; 43 Law ed., 320, 322.) "When a location of
a mining claim is perfected it has the effect of a
grant by the United States of the right of present
and exclusive possession, with the right to the
exclusive enjoyment of all the surface ground as
well as of all the minerals within the lines of the
claim, except as limited by the extralateral right
of adjoining locators; and this is the locator's
right before as well as after the issuance of the
patent. While a lode locator acquires a vested
property right by virtue of his location made in
compliance with the mining laws, the fee remains
in the government until patent issues."(18 R.C.L.
1152) (Gold Creek Mining Corporation v. Hon.
Eulogio Rodriguez, Sec. of Agriculture and
Commerce, and Quirico Abadilla, Director of the
Bureau of Mines, 66 Phil. 259, 265-266)
It is of no importance whether Benguet and Atok had secured a
patent for as held in the Gold Creek Mining Corp. Case, for all
physical purposes of ownership, the owner is not required to secure
a patent as long as he complies with the provisions of the mining
laws; his possessory right, for all practical purposes of ownership, is
as good as though secured by patent.
We agree likewise with the oppositors that having complied with all
the requirements of the mining laws, the claims were removed
from the public domain, and not even the government of the
Philippines can take away this right from them. The reason is
obvious. Having become the private properties of the oppositors,
they cannot be deprived thereof without due process of law. 13
Such rights were not affected either by the stricture in the Commonwealth
Constitution against the alienation of all lands of the public domain except those
agricultural in nature for this was made subject to existing rights. Thus, in its Article
XIII, Section 1, it was categorically provided that:
SEC. 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
Philipppines 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 60% 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 lands, 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 25 years, except
as to water rights for irrigation, water supply, fisheries, or industrial
uses other than the development of water power, in which case
beneficial use may be the measure and the limit of the grant.
Implementing this provision, Act No. 4268, approved on November 8, 1935, declared:
Any provision of existing laws, executive order, proclamation to the
contrary notwithstanding, all locations of mining claim made prior
to February 8, 1935 within lands set apart as forest reserve under
Sec. 1826 of the Revised Administrative Code which would be valid
and subsisting location except to the existence of said reserve are
hereby declared to be valid and subsisting locations as of the date
of their respective locations.
The perfection of the mining claim converted the property to mineral land and under
the laws then in force removed it from the public domain. 14 By such act, the locators
acquired exclusive rights over the land, against even the government, without need
of any further act such as the purchase of the land or the obtention of a patent over
it. 15As the land had become the private property of the locators, they had the right to
transfer the same, as they did, to Benguet and Atok.
It is true, as the Court of Appeals observed, that such private property was subject to
the "vicissitudes of ownership," or even to forfeiture by non-user or abandonment or,
as the private respondents aver, by acquisitive prescription. However, the method
invoked by the de la Rosas is not available in the case at bar, for two reasons.
First, the trial court found that the evidence of open, continuous, adverse and
exclusive possession submitted by the applicants was insufficient to support their
claim of ownership. They themselves had acquired the land only in 1964 and applied
for its registration in 1965, relying on the earlier alleged possession of their
predecessors-in-interest. 16The trial judge, who had the opportunity to consider the
evidence first-hand and observe the demeanor of the witnesses and test their
credibility was not convinced. We defer to his judgment in the absence of a showing
that it was reached with grave abuse of discretion or without sufficient basis. 17
Second, even if it be assumed that the predecessors-in-interest of the de la Rosas
had really been in possession of the subject property, their possession was not in the
concept of owner of the mining claim but of the property as agricultural land, which it
was not. The property was mineral land, and they were claiming it as agricultural
land. They were not disputing the lights of the mining locators nor were they seeking
to oust them as such and to replace them in the mining of the land. In fact, Balbalio
testified that she was aware of the diggings being undertaken "down below" 18 but
she did not mind, much less protest, the same although she claimed to be the owner
of the said land.
The Court of Appeals justified this by saying there is "no conflict of interest" between
the owners of the surface rights and the owners of the sub-surface rights. This is
rather doctrine, for it is a well-known principle that the owner of piece of land has
rights not only to its surface but also to everything underneath and the airspace
above it up to a reasonable height. 19 Under the aforesaid ruling, the land is classified
as mineral underneath and agricultural on the surface, subject to separate claims of
title. This is also difficult to understand, especially in its practical application.
Under the theory of the respondent court, the surface owner will be planting on the
land while the mining locator will be boring tunnels underneath. The farmer cannot
dig a well because he may interfere with the operations below and the miner cannot
blast a tunnel lest he destroy the crops above. How deep can the farmer, and how
high can the miner, go without encroaching on each other's rights? Where is the
dividing line between the surface and the sub-surface rights?
The Court feels that the rights over the land are indivisible and that the land itself
cannot be half agricultural and half mineral. The classification must be categorical;
the land must be either completely mineral or completely agricultural. In the instant
case, as already observed, the land which was originally classified as forest land
ceased to be so and became mineral and completely mineral once the mining
claims were perfected. 20 As long as mining operations were being undertaken
thereon, or underneath, it did not cease to be so and become agricultural, even if
only partly so, because it was enclosed with a fence and was cultivated by those who
were unlawfully occupying the surface.
What must have misled the respondent court is Commonwealth Act No. 137,
providing as follows:
Sec. 3. All mineral lands of the public domain and minerals 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 60% 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 government
established under the Constitution.
SEC. 4. The ownership of, and the right to the use of land for
agricultural, industrial, commercial, residential, or for any purpose
other than mining does not include the ownership of, nor the right
to extract or utilize, the minerals which may be found on or under
the surface.
SEC. 5. The ownership of, and the right to extract and utilize, the
minerals included within all areas for which public agricultural land
patents are granted are excluded and excepted from all such
patents.
SEC. 6. The ownership of, and the right to extract and utilize, the
minerals included within all areas for which Torrens titles are
granted are excluded and excepted from all such titles.
This is an application of the Regalian doctrine which, as its name implies, is intended
for the benefit of the State, not of private persons. The rule simply reserves to the
State all minerals that may be found in public and even private land devoted to
"agricultural, industrial, commercial, residential or (for) any purpose other than
mining." Thus, if a person is the owner of agricultural land in which minerals are
discovered, his ownership of such land does not give him the right to extract or utilize
the said minerals without the permission of the State to which such minerals belong.
The flaw in the reasoning of the respondent court is in supposing that the rights over
the land could be used for both mining and non-mining purposes simultaneously. The
correct interpretation is that once minerals are discovered in the land, whatever the
use to which it is being devoted at the time, such use may be discontinued by the
State to enable it to extract the minerals therein in the exercise of its sovereign
prerogative. The land is thus converted to mineral land and may not be used by any
private party, including the registered owner thereof, for any other purpose that will
impede the mining operations to be undertaken therein, For the loss sustained by
such owner, he is of course entitled to just compensation under the Mining Laws or in
appropriate expropriation proceedings. 21
Our holding is that Benguet and Atok have exclusive rights to the property in question
by virtue of their respective mining claims which they validly acquired before the
Constitution of 1935 prohibited the alienation of all lands of the public domain except
agricultural lands, subject to vested rights existing at the time of its adoption. The
land was not and could not have been transferred to the private respondents by
virtue of acquisitive prescription, nor could its use be shared simultaneously by them
and the mining companies for agricultural and mineral purposes.
WHEREFORE, the decision of the respondent court dated April 30, 1976, is SET
ASIDE and that of the trial court dated March 11, 1969, is REINSTATED, without any
pronouncement as to costs.
SO ORDERED.
The Regalian doctrine reserves to the State all natural wealth that may be found in
the bowels of the earth even if the land where the discovery is made be private. 1 In
the cases at bar, which have been consolidated because they pose a common issue,
this doctrine was not correctly applied.
These cases arose from the application for registration of a parcel of land filed on
February 11, 1965, by Jose de la Rosa on his own behalf and on behalf of his three
children, Victoria, Benjamin and Eduardo. The land, situated in Tuding, Itogon,
Benguet Province, was divided into 9 lots and covered by plan Psu-225009. According
to the application, Lots 1-5 were sold to Jose de la Rosa and Lots 6-9 to his children
by Mamaya Balbalio and Jaime Alberto, respectively, in 1964. 2

Republic of the Philippines The application was separately opposed by Benguet Consolidated, Inc. as to Lots 1-5,
SUPREME COURT Atok Big Wedge Corporation, as to Portions of Lots 1-5 and all of Lots 6-9, and by the
Manila Republic of the Philippines, through the Bureau of Forestry Development, as to lots 1-
9. 3
FIRST DIVISION
In support of the application, both Balbalio and Alberto testified that they had
acquired the subject land by virtue of prescription Balbalio claimed to have received
G.R. No. L-43938 April 15, 1988 Lots 1-5 from her father shortly after the Liberation. She testified she was born in the
land, which was possessed by her parents under claim of ownership. 4 Alberto said he
REPUBLIC OF THE PHILIPPINES (DIRECTOR OF FOREST received Lots 6-9 in 1961 from his mother, Bella Alberto, who declared that the land
DEVELOPMENT), petitioner, was planted by Jaime and his predecessors-in-interest to bananas, avocado, nangka
vs. and camote, and was enclosed with a barbed-wire fence. She was corroborated by
HON. COURT OF APPEALS (THIRD DIVISION) and JOSE Y. DE LA Felix Marcos, 67 years old at the time, who recalled the earlier possession of the land
ROSA, respondents. by Alberto's father. 5 Balbalio presented her tax declaration in 1956 and the realty tax
receipts from that year to 1964, 6 Alberto his tax declaration in 1961 and the realty
G.R. No. L-44081 April 15, 1988 tax receipts from that year to 1964. 7

BENGUET CONSOLIDATED, INC., petitioner, Benguet opposed on the ground that the June Bug mineral claim covering Lots 1-5
vs. was sold to it on September 22, 1934, by the successors-in-interest of James Kelly,
HON. COURT OF APPEALS, JOSE Y. DE LA ROSA, VICTORIA, BENJAMIN and who located the claim in September 1909 and recorded it on October 14, 1909. From
EDUARDO, all surnamed DE LA ROSA, represented by their father JOSE Y. the date of its purchase, Benguet had been in actual, continuous and exclusive
DE LA ROSA, respondents. possession of the land in concept of owner, as evidenced by its construction of adits,
its affidavits of annual assessment, its geological mappings, geological samplings and
trench side cuts, and its payment of taxes on the land. 8
G.R. No. L-44092 April 15, 1988

For its part, Atok alleged that a portion of Lots 1-5 and all of Lots 6-9 were covered
ATOK-BIG WEDGE MINING COMPANY, petitioner, by the Emma and Fredia mineral claims located by Harrison and Reynolds on
vs. December 25, 1930, and recorded on January 2, 1931, in the office of the mining
HON. COURT OF APPEALS, JOSE Y. DE LA ROSA, VICTORlA, BENJAMIN and recorder of Baguio. These claims were purchased from these locators on November 2,
EDUARDO, all surnamed DE LA ROSA, represented by their father, JOSE Y. 1931, by Atok, which has since then been in open, continuous and exclusive
DE LA ROSA, respondents. possession of the said lots as evidenced by its annual assessment work on the claims,
such as the boring of tunnels, and its payment of annual taxes thereon. 9

The location of the mineral claims was made in accordance with Section 21 of the
CRUZ, J.: Philippine Bill of 1902 which provided that:
 SEC. 21. All valuable mineral deposits in public lands in the
philippine Islands both surveyed and unsurveyed are hereby
declared to be free and open to exploration, occupation and
purchase and the land in which they are found to occupation and
purchase by the citizens of the United States, or of said islands.
The Bureau of Forestry Development also interposed its objection, arguing that the
land sought to be registered was covered by the Central Cordillera Forest Reserve
under Proclamation No. 217 dated February 16, 1929. Moreover, by reason of its
nature, it was not subject to alienation under the Constitutions of 1935 and 1973. 10
The trial court * denied the application, holding that the applicants had failed to
prove their claim of possession and ownership of the land sought to be
registered. 11 The applicants appealed to the respondent court, * which reversed the
trial court and recognized the claims of the applicant, but subject to the rights of
Benguet and Atok respecting their mining claims. 12 In other words, the Court of
Appeals affirmed the surface rights of the de la Rosas over the land while at the same
time reserving the sub-surface rights of Benguet and Atok by virtue of their mining
claims.
Both Benguet and Atok have appealed to this Court, invoking their superior right of
ownership. The Republic has filed its own petition for review and reiterates its
argument that neither the private respondents nor the two mining companies have
any valid claim to the land because it is not alienable and registerable.
It is true that the subject property was considered forest land and included in the
Central Cordillera Forest Reserve, but this did not impair the rights already vested in
Benguet and Atok at that time. The Court of Appeals correctly declared that:
There is no question that the 9 lots applied for are within the June
Bug mineral claims of Benguet and the "Fredia and Emma" mineral
claims of Atok. The June Bug mineral claim of plaintiff Benguet was
one of the 16 mining claims of James E. Kelly, American and mining
locator. He filed his declaration of the location of the June Bug
mineral and the same was recorded in the Mining Recorder's Office
on October 14, 1909. All of the Kelly claims ha subsequently been
acquired by Benguet Consolidated, Inc. Benguet's evidence is that
it had made improvements on the June Bug mineral claim
consisting of mine tunnels prior to 1935. It had submitted the
required affidavit of annual assessment. After World War II,
Benguet introduced improvements on mineral claim June Bug, and
also conducted geological mappings, geological sampling and
trench side cuts. In 1948, Benguet redeclared the "June Bug" for
taxation and had religiously paid the taxes.
The Emma and Fredia claims were two of the several claims of
Harrison registered in 1931, and which Atok representatives
acquired. Portions of Lots 1 to 5 and all of Lots 6 to 9 are within
the Emma and Fredia mineral claims of Atok Big Wedge Mining
Company.
The June Bug mineral claim of Benguet and the Fredia and Emma
mineral claims of Atok having been perfected prior to the approval
of the Constitution of the Philippines of 1935, they were removed
from the public domain and had become private properties of
Benguet and Atok.
It is not disputed that the location of the mining
claim under consideration was perfected prior to
November 15, 1935, when the Government of
the Commonwealth was inaugurated; and
according to the laws existing at that time, as
construed and applied by this court in McDaniel
v. Apacible and Cuisia (42 Phil. 749), a valid
location of a mining claim segregated the area
from the public domain. Said the court in that
case: The moment the locator discovered a
valuable mineral deposit on the lands located,
and perfected his location in accordance with
law, the power of the United States Government
to deprive him of the exclusive right to the
possession and enjoyment of the located claim
was gone, the lands had become mineral lands
and they were exempted from lands that could
be granted to any other person. The reservations
of public lands cannot be made so as to include
prior mineral perfected locations; and, of course,
if a valid mining location is made upon public
lands afterwards included in a reservation, such
inclusion or reservation does not affect the
validity of the former location. By such location
and perfection, the land located is segregated
from the public domain even as against the
Government. (Union Oil Co. v. Smith, 249 U.S.
337; Van Mess v. Roonet, 160 Cal. 131; 27 Cyc.
546).
"The legal effect of a valid location of a mining
claim is not only to segregate the area from the
public domain, but to grant to the locator the
beneficial ownership of the claim and the right to
a patent therefor upon compliance with the terms
and conditions prescribed by law. Where there is
a valid location of a mining claim, the area
becomes segregated from the public domain and
 the property of the locator." (St. Louis Mining &
Milling Co. v. Montana Mining Co., 171 U.S. 650;
655; 43 Law ed., 320, 322.) "When a location of
a mining claim is perfected it has the effect of a
grant by the United States of the right of present
and exclusive possession, with the right to the
exclusive enjoyment of all the surface ground as
well as of all the minerals within the lines of the
claim, except as limited by the extralateral right
of adjoining locators; and this is the locator's
right before as well as after the issuance of the
patent. While a lode locator acquires a vested
property right by virtue of his location made in
compliance with the mining laws, the fee remains
in the government until patent issues."(18 R.C.L.
1152) (Gold Creek Mining Corporation v. Hon.
Eulogio Rodriguez, Sec. of Agriculture and
Commerce, and Quirico Abadilla, Director of the
Bureau of Mines, 66 Phil. 259, 265-266)
It is of no importance whether Benguet and Atok had secured a
patent for as held in the Gold Creek Mining Corp. Case, for all
physical purposes of ownership, the owner is not required to secure
a patent as long as he complies with the provisions of the mining
laws; his possessory right, for all practical purposes of ownership, is
as good as though secured by patent.
We agree likewise with the oppositors that having complied with all
the requirements of the mining laws, the claims were removed
from the public domain, and not even the government of the
Philippines can take away this right from them. The reason is
obvious. Having become the private properties of the oppositors,
they cannot be deprived thereof without due process of law. 13
Such rights were not affected either by the stricture in the Commonwealth
Constitution against the alienation of all lands of the public domain except those
agricultural in nature for this was made subject to existing rights. Thus, in its Article
XIII, Section 1, it was categorically provided that:
SEC. 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
Philipppines 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 60% 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 lands, 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 25 years, except
as to water rights for irrigation, water supply, fisheries, or industrial
uses other than the development of water power, in which case
beneficial use may be the measure and the limit of the grant.
Implementing this provision, Act No. 4268, approved on November 8, 1935, declared:
Any provision of existing laws, executive order, proclamation to the
contrary notwithstanding, all locations of mining claim made prior
to February 8, 1935 within lands set apart as forest reserve under
Sec. 1826 of the Revised Administrative Code which would be valid
and subsisting location except to the existence of said reserve are
hereby declared to be valid and subsisting locations as of the date
of their respective locations.
The perfection of the mining claim converted the property to mineral land and under
the laws then in force removed it from the public domain. 14 By such act, the locators
acquired exclusive rights over the land, against even the government, without need
of any further act such as the purchase of the land or the obtention of a patent over
it. 15As the land had become the private property of the locators, they had the right to
transfer the same, as they did, to Benguet and Atok.
It is true, as the Court of Appeals observed, that such private property was subject to
the "vicissitudes of ownership," or even to forfeiture by non-user or abandonment or,
as the private respondents aver, by acquisitive prescription. However, the method
invoked by the de la Rosas is not available in the case at bar, for two reasons.
First, the trial court found that the evidence of open, continuous, adverse and
exclusive possession submitted by the applicants was insufficient to support their
claim of ownership. They themselves had acquired the land only in 1964 and applied
for its registration in 1965, relying on the earlier alleged possession of their
predecessors-in-interest. 16The trial judge, who had the opportunity to consider the
evidence first-hand and observe the demeanor of the witnesses and test their
credibility was not convinced. We defer to his judgment in the absence of a showing
that it was reached with grave abuse of discretion or without sufficient basis. 17
Second, even if it be assumed that the predecessors-in-interest of the de la Rosas
had really been in possession of the subject property, their possession was not in the
concept of owner of the mining claim but of the property as agricultural land, which it
was not. The property was mineral land, and they were claiming it as agricultural
land. They were not disputing the lights of the mining locators nor were they seeking
to oust them as such and to replace them in the mining of the land. In fact, Balbalio
testified that she was aware of the diggings being undertaken "down below" 18 but
she did not mind, much less protest, the same although she claimed to be the owner
of the said land.
The Court of Appeals justified this by saying there is "no conflict of interest" between
the owners of the surface rights and the owners of the sub-surface rights. This is
rather doctrine, for it is a well-known principle that the owner of piece of land has
rights not only to its surface but also to everything underneath and the airspace
above it up to a reasonable height. 19 Under the aforesaid ruling, the land is classified
as mineral underneath and agricultural on the surface, subject to separate claims of
title. This is also difficult to understand, especially in its practical application.
Under the theory of the respondent court, the surface owner will be planting on the
land while the mining locator will be boring tunnels underneath. The farmer cannot
dig a well because he may interfere with the operations below and the miner cannot
blast a tunnel lest he destroy the crops above. How deep can the farmer, and how
high can the miner, go without encroaching on each other's rights? Where is the
dividing line between the surface and the sub-surface rights?
The Court feels that the rights over the land are indivisible and that the land itself
cannot be half agricultural and half mineral. The classification must be categorical;
the land must be either completely mineral or completely agricultural. In the instant
case, as already observed, the land which was originally classified as forest land
ceased to be so and became mineral and completely mineral once the mining
claims were perfected. 20 As long as mining operations were being undertaken
thereon, or underneath, it did not cease to be so and become agricultural, even if
only partly so, because it was enclosed with a fence and was cultivated by those who
were unlawfully occupying the surface.
What must have misled the respondent court is Commonwealth Act No. 137,
providing as follows:
Sec. 3. All mineral lands of the public domain and minerals 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 60% 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 government
established under the Constitution.
SEC. 4. The ownership of, and the right to the use of land for
agricultural, industrial, commercial, residential, or for any purpose
other than mining does not include the ownership of, nor the right
to extract or utilize, the minerals which may be found on or under
the surface.
SEC. 5. The ownership of, and the right to extract and utilize, the
minerals included within all areas for which public agricultural land
patents are granted are excluded and excepted from all such
patents.
SEC. 6. The ownership of, and the right to extract and utilize, the
minerals included within all areas for which Torrens titles are
granted are excluded and excepted from all such titles.
This is an application of the Regalian doctrine which, as its name implies, is intended
for the benefit of the State, not of private persons. The rule simply reserves to the
State all minerals that may be found in public and even private land devoted to
"agricultural, industrial, commercial, residential or (for) any purpose other than
mining." Thus, if a person is the owner of agricultural land in which minerals are
discovered, his ownership of such land does not give him the right to extract or utilize
the said minerals without the permission of the State to which such minerals belong.
The flaw in the reasoning of the respondent court is in supposing that the rights over
the land could be used for both mining and non-mining purposes simultaneously. The
correct interpretation is that once minerals are discovered in the land, whatever the
use to which it is being devoted at the time, such use may be discontinued by the
State to enable it to extract the minerals therein in the exercise of its sovereign
prerogative. The land is thus converted to mineral land and may not be used by any
private party, including the registered owner thereof, for any other purpose that will
impede the mining operations to be undertaken therein, For the loss sustained by
such owner, he is of course entitled to just compensation under the Mining Laws or in
appropriate expropriation proceedings. 21
Our holding is that Benguet and Atok have exclusive rights to the property in question
by virtue of their respective mining claims which they validly acquired before the
Constitution of 1935 prohibited the alienation of all lands of the public domain except
agricultural lands, subject to vested rights existing at the time of its adoption. The
land was not and could not have been transferred to the private respondents by
virtue of acquisitive prescription, nor could its use be shared simultaneously by them
and the mining companies for agricultural and mineral purposes.
WHEREFORE, the decision of the respondent court dated April 30, 1976, is SET
ASIDE and that of the trial court dated March 11, 1969, is REINSTATED, without any
pronouncement as to costs.
SO ORDERED.
EN BANC
[G.R. No. 37435. November 28, 1934.]
NUMERIANO PADILLA, applicant-appellee, v. PABLO REYES and THE
 DIRECTOR OF LANDS, Oppositors-Appellants.
Attorney-General Jaranilla and Jose Nava for Appellants.
Sison & Siguion for Appellee.
SYLLABUS
1. TORRENS REGISTRATION; REGISTRABLE TITLE. In order that land may be
registered under the Torrens system, the applicant must show, even though there is
no opposition to his application, that he is the absolute owner, in fee simple, of such
land. In other words, the burden is upon him to show that he is the real and absolute
owner, in fee simple, of such land. (Roman Catholic Bishop of Lipa v. Municipality of
Taal, 38 Phil., 367, 375, 376.)
2. ID.; ID. It is well-settled that no public land can be acquired by private persons
without any grant, express or implied, from the government. A grant is conclusively
presumed by law when the claimant, by himself or through his predecessors in
interest, has occupied the land openly, continuously, exclusively, and under a claim of
title since July 26, 1894, or prior thereto. (Ongsiaco v. Magsilang, 50 Phil., 380.)
DECISION
ABAD SANTOS, J.:
Appellee applied for the registration in his name of a parcel of land containing a little
over 161 hectares located in Bogabong, Nueva Ecija. The application was opposed
by the Director of Lands and by nine homesteaders, on the ground that the property
sought to be registered was public land. One Pablo Reyes, who claimed to be the
exclusive owner of the land, also filed an opposition. After due hearing, the court
below dismissed all the oppositions and decreed the registration of the land in the
name of the appellee. From this judgment all the parties who opposed the application
appealed, although Pablo Reyes appeal was dismissed for failure to file his brief on
time.
In support of this appeal the following errors have been assigned: (1) That the lower
court erred in holding that the appellee has established his title to the property
sought to be registered, and (2) that the lower court erred in decreeing the
registration of the property in the name of the appellee.
Appellee presented no valid and sufficient title deed showing his ownership of the
land in question. He, however, tried to prove that he inherited the same from his
ancestors, who had been in possession of the land for many years dating back to the
Spanish regime; that he as well as his predecessors in interest had partly cultivated
the land and partly used it as a pasture; that various improvements had been made
on the land ever since the Spanish regime; and that upon the death of their father,
Pablo Padilla, he and his sister Alejandra took possession of the land. On the other
hand, the appellants introduced evidence tending to show that the land in question
was never occupied by Pablo Padilla during the Spanish regime; that when the
several homesteaders settled upon the land during 1912 to 1918, the same was
unoccupied, unclaimed, and without any sign of previous cultivation or occupation;
that the homesteaders were not molested in their possession of portions of the land
in question until 1927, after they had cleared their holdings and put the same in
cultivation.
In Roman Catholic Bishop of Lipa v. Municipality of Taal (38 Phil., 367, 375, 376), this
court said:jgc:chanrobles.com.ph
". . . In order, however, that the petitioner for registration of his land under the
Torrens system shall be permitted to have the same registered and to have the
benefit resulting from the certificate of title finally issued, the burden is upon him to
show that he is the real and absolute owner, in fee simple, of the lands which he is
attempting to have registered. The petitioner is not entitled to have his lands
registered under the Torrens system simply because no one appears to oppose his
title and to oppose the registration of his lands. In order that land may be registered
under the Torrens system, the petitioner must show, even though there is no
opposition, that he is the absolute owner, in fee simple, of the same. . . ."cralaw
virtua1aw library
On the other hand, it is well-settled that no public land can be acquired by private
persons without any grant, express or implied, from the government. A grant is
conclusively presumed by law when the claimant, by himself or through his
predecessors in interest, has occupied the land openly, continuously, exclusively, and
under a claim of title since July 26, 1894, or prior thereto. (Ongsiaco v. Magsilang, 50
Phil., 380.) In the case before us, appellee has failed to prove any express grant from
the government; neither has he succeeded in proving possession from which a
constructive grant can be predicated.
It results that the judgment appealed from must be reversed, and it is hereby
decreed and adjudged that the property sought to be registered in this case is public
land. Without any special pronouncement as to costs in this instance. So ordered.
Street, Butte, Goddard and Diaz, JJ., concur.
REPUBLIC OF THE PHILIPPINES, petitioner, vs. JEREMIAS AND DAVID
HERBIETO, respondents.
DECISION
CHICO-NAZARIO, J.:
Before this Court is a Petition for Review on Certiorari, under Rule 45 of the
1997 Rules of Civil Procedure, seeking the reversal of the Decision of the Court of
Appeals in CA-G.R. CV No. 67625, dated 22 November 2002, [1] which affirmed the
Judgment of the Municipal Trial Court (MTC) of Consolacion, Cebu, dated 21
December 1999,[2] granting the application for land registration of the respondents.
Respondents in the present Petition are the Herbieto brothers, Jeremias and
David, who filed with the MTC, on 23 September 1998, a single application for
registration of two parcels of land, Lots No. 8422 and 8423, located in Cabangahan,
Consolacion, Cebu (Subject Lots). They claimed to be owners in fee simple of the
Subject Lots, which they purchased from their parents, spouses Gregorio Herbieto
and Isabel Owatan, on 25 June 1976. [3] Together with their application for
registration, respondents submitted the following set of documents:
(a) Advance Survey Plan of Lot No. 8422, in the name of respondent
Jeremias; and Advance Survey Plan of Lot No. 8423, in the name of
respondent David;[4]
(b) The technical descriptions of the Subject Lots;[5]
(c) Certifications by the Department of Environment and Natural Resources
(DENR) dispensing with the need for Surveyors Certificates for the
Subject Lots;[6]
(d) Certifications by the Register of Deeds of Cebu City on the absence of
certificates of title covering the Subject Lots;[7]
(e) Certifications by the Community Environment and Natural Resources
Office (CENRO) of the DENR on its finding that the Subject Lots are
alienable and disposable, by virtue of Forestry Administrative Order
No. 4-1063, dated 25 June 1963;[8]
(f) Certified True Copies of Assessment of Real Property (ARP) No.
941800301831, in the name of Jeremias, covering Lot No. 8422,
issued in 1994; and ARP No. 941800301833, in the name of David,
covering Lot No. 8423, also issued in 1994;[9] and
(g) Deed of Definite Sale executed on 25 June 1976 by spouses Gregorio
Herbieto and Isabel Owatan selling the Subject Lots and the
improvements thereon to their sons and respondents herein,
Jeremias and David, for P1,000. Lot No. 8422 was sold to Jeremias,
while Lot No. 8423 was sold to David.[10]
On 11 December 1998, the petitioner Republic of the Philippines (Republic) filed
an Opposition to the respondents application for registration of the Subject Lots
arguing that: (1) Respondents failed to comply with the period of adverse possession
of the Subject Lots required by law; (2) Respondents muniments of title were not
genuine and did not constitute competent and sufficient evidence of bona
fide acquisition of the Subject Lots; and (3) The Subject Lots were part of the public
domain belonging to the Republic and were not subject to private appropriation. [11]
The MTC set the initial hearing on 03 September 1999 at 8:30 a.m. [12] All
owners of the land adjoining the Subject Lots were sent copies of the Notice of Initial
Hearing.[13] A copy of the Notice was also posted on 27 July 1999 in a conspicuous
place on the Subject Lots, as well as on the bulletin board of the municipal building of
Consolacion, Cebu, where the Subject Lots were located.[14] Finally, the Notice was
also published in the Official Gazette on 02 August 1999 [15] and The Freeman Banat
News on 19 December 1999.[16]
During the initial hearing on 03 September 1999, the MTC issued an Order of
Special Default,[17] with only petitioner Republic opposing the application for
registration of the Subject Lots. The respondents, through their counsel, proceeded
to offer and mark documentary evidence to prove jurisdictional facts. The MTC
commissioned the Clerk of Court to receive further evidence from the respondents
and to submit a Report to the MTC after 30 days.
On 21 December 1999, the MTC promulgated its Judgment ordering the
registration and confirmation of the title of respondent Jeremias over Lot No. 8422
and of respondent David over Lot No. 8423. It subsequently issued an Order on 02
February 2000 declaring its Judgment, dated 21 December 1999, final and executory,
and directing the Administrator of the Land Registration Authority (LRA) to issue a
decree of registration for the Subject Lots.[18]
Petitioner Republic appealed the MTC Judgment, dated 21 December 1999, to
the Court of Appeals.[19] The Court of Appeals, in its Decision, dated 22 November
2002, affirmed the appealed MTC Judgment reasoning thus:
In the case at bar, there can be no question that the land sought to be registered has
been classified as within the alienable and disposable zone since June 25, 1963.
Article 1113 in relation to Article 1137 of the Civil Code, respectively provides that All
things which are within the commerce of men are susceptible of prescription, unless
otherwise provided. Property of the State or any of its subdivisions of patrimonial
character shall not be the object of prescription and that Ownership and other real
rights over immovables also prescribe through uninterrupted adverse possession
thereof for thirty years, without need of title or of good faith.
As testified to by the appellees in the case at bench, their parents already acquired
the subject parcels of lands, subject matter of this application, since 1950 and that
they cultivated the same and planted it with jackfruits, bamboos, coconuts, and other
trees (Judgment dated December 21, 1999, p. 6). In short, it is undisputed that
herein appellees or their predecessors-in-interest had occupied and possessed the
subject land openly, continuously, exclusively, and adversely since 1950.
Consequently, even assuming arguendo that appellees possession can be reckoned
only from June 25, 1963 or from the time the subject lots had been classified as
within the alienable and disposable zone, still the argument of the appellant does not
hold water.
As earlier stressed, the subject property, being alienable since 1963 as shown by
CENRO Report dated June 23, 1963, may now be the object of prescription, thus
susceptible of private ownership. By express provision of Article 1137, appellees are,
with much greater right, entitled to apply for its registration, as provided by Section
14(4) of P.D. 1529 which allows individuals to own land in any manner provided by
law. Again, even considering that possession of appelless should only be reckoned
from 1963, the year when CENRO declared the subject lands alienable, herein
appellees have been possessing the subject parcels of land in open, continuous, and
in the concept of an owner, for 35 years already when they filed the instant
application for registration of title to the land in 1998. As such, this court finds no
reason to disturb the finding of the court a quo.[20]
The Republic filed the present Petition for the review and reversal of the
Decision of the Court of Appeals, dated 22 November 2002, on the basis of the
following arguments:
First, respondents failed to establish that they and their predecessors-in-interest
had been in open, continuous, and adverse possession of the Subject Lots in the
concept of owners since 12 June 1945 or earlier. According to the petitioner Republic,
possession of the Subject Lots prior to 25 June 1963 cannot be considered in
determining compliance with the periods of possession required by law. The Subject
Lots were classified as alienable and disposable only on 25 June 1963, per CENROs
certification. It also alleges that the Court of Appeals, in applying the 30-year
acquisitive prescription period, had overlooked the ruling in Republic v. Doldol,
[21]
where this Court declared that Commonwealth Act No. 141, otherwise known as
the Public Land Act, as amended and as it is presently phrased, requires that
possession of land of the public domain must be from 12 June 1945 or earlier, for the
same to be acquired through judicial confirmation of imperfect title.
Second, the application for registration suffers from fatal infirmity as the subject
of the application consisted of two parcels of land individually and separately owned
by two applicants. Petitioner Republic contends that it is implicit in the provisions of
Presidential Decree No. 1529, otherwise known as the Property Registration Decree,
as amended, that the application for registration of title to land shall be filed by a
single applicant; multiple applicants may file a single application only in case they are
co-owners. While an application may cover two parcels of land, it is allowed only
when the subject parcels of land belong to the same applicant or applicants (in case
the subject parcels of land are co-owned) and are situated within the same province.
Where the authority of the courts to proceed is conferred by a statute and when the
manner of obtaining jurisdiction is mandatory, it must be strictly complied with or the
proceedings will be utterly void. Since the respondents failed to comply with the
procedure for land registration under the Property Registration Decree, the
proceedings held before the MTC is void, as the latter did not acquire jurisdiction over
it.
I
Jurisdiction
Addressing first the issue of jurisdiction, this Court finds that the MTC had no
jurisdiction to proceed with and hear the application for registration filed by the
respondents but for reasons different from those presented by petitioner Republic.
A. The misjoinder of causes of action and parties does not affect the jurisdiction of
the MTC to hear and proceed with respondents application for registration.
Respondents filed a single application for registration of the Subject Lots even
though they were not co-owners. Respondents Jeremias and David were actually
seeking the individual and separate registration of Lots No. 8422 and 8423,
respectively.
Petitioner Republic believes that the procedural irregularity committed by the
respondents was fatal to their case, depriving the MTC of jurisdiction to proceed with
and hear their application for registration of the Subject Lots, based on this Courts
pronouncement in Director of Lands v. Court of Appeals,[22] to wit:
. . . In view of these multiple omissions which constitute non-compliance with the
above-cited sections of the Act, We rule that said defects have not invested the Court
with the authority or jurisdiction to proceed with the case because the manner or
mode of obtaining jurisdiction as prescribed by the statute which is mandatory has
not been strictly followed, thereby rendering all proceedings utterly null and void.
This Court, however, disagrees with petitioner Republic in this regard. This
procedural lapse committed by the respondents should not affect the jurisdiction of
the MTC to proceed with and hear their application for registration of the Subject
Lots.
The Property Registration Decree[23] recognizes and expressly allows the
following situations: (1) the filing of a single application by several applicants for as
long as they are co-owners of the parcel of land sought to be registered; [24] and (2)
the filing of a single application for registration of several parcels of land provided
that the same are located within the same province. [25] The Property Registration
Decree is silent, however, as to the present situation wherein two applicants filed a
single application for two parcels of land, but are seeking the separate and individual
registration of the parcels of land in their respective names.
Since the Property Registration Decree failed to provide for such a situation,
then this Court refers to the Rules of Court to determine the proper course of action.
Section 34 of the Property Registration Decree itself provides that, [t]he Rules of
Court shall, insofar as not inconsistent with the provisions of this Decree, be
applicable to land registration and cadastral cases by analogy or in a suppletory
character and whenever practicable and convenient.
Considering every application for land registration filed in strict accordance with
the Property Registration Decree as a single cause of action, then the defect in the
joint application for registration filed by the respondents with the MTC constitutes a
misjoinder of causes of action and parties. Instead of a single or joint application for
registration, respondents Jeremias and David, more appropriately, should have filed
separate applications for registration of Lots No. 8422 and 8423, respectively.
Misjoinder of causes of action and parties do not involve a question of
jurisdiction of the court to hear and proceed with the case. [26] They are not even
accepted grounds for dismissal thereof. [27] Instead, under the Rules of Court, the
misjoinder of causes of action and parties involve an implied admission of the courts
jurisdiction. It acknowledges the power of the court, acting upon the motion of a
party to the case or on its own initiative, to order the severance of the misjoined
cause of action, to be proceeded with separately (in case of misjoinder of causes of
action); and/or the dropping of a party and the severance of any claim against said
misjoined party, also to be proceeded with separately (in case of misjoinder of
parties).
The misjoinder of causes of action and parties in the present Petition may have
been corrected by the MTC motu propio or on motion of the petitioner Republic. It is
regrettable, however, that the MTC failed to detect the misjoinder when the
application for registration was still pending before it; and more regrettable that the
petitioner Republic did not call the attention of the MTC to the fact by filing a motion
for severance of the causes of action and parties, raising the issue of misjoinder only
before this Court.
B. Respondents, however, failed to comply with the publication requirements
mandated by the Property Registration Decree, thus, the MTC was not
invested with jurisdiction as a land registration court.
Although the misjoinder of causes of action and parties in the present Petition
did not affect the jurisdiction of the MTC over the land registration proceeding, this
Court, nonetheless, has discovered a defect in the publication of the Notice of Initial
Hearing, which bars the MTC from assuming jurisdiction to hear and proceed with
respondents application for registration.
A land registration case is a proceeding in rem,[28] and jurisdiction in rem cannot
be acquired unless there be constructive seizure of the land through publication and
service of notice.[29]
Section 23 of the Property Registration Decree requires that the public be given
Notice of the Initial Hearing of the application for land registration by means of (1)
publication; (2) mailing; and (3) posting. Publication of the Notice of Initial Hearing
shall be made in the following manner:
1. By publication.
Upon receipt of the order of the court setting the time for initial hearing, the
Commissioner of Land Registration shall cause a notice of initial hearing to be
published once in the Official Gazette and once in a newspaper of general circulation
in the Philippines: Provided, however, that the publication in the Official Gazette shall
be sufficient to confer jurisdiction upon the court. Said notice shall be addressed to all
persons appearing to have an interest in the land involved including the adjoining
owners so far as known, and to all whom it may concern. Said notice shall also
require all persons concerned to appear in court at a certain date and time to show
cause why the prayer of said application shall not be granted.
Even as this Court concedes that the aforequoted Section 23(1) of the Property
Registration Decree expressly provides that publication in the Official Gazette shall be
sufficient to confer jurisdiction upon the land registration court, it still affirms its
declaration in Director of Lands v. Court of Appeals [30] that publication in a newspaper
of general circulation is mandatory for the land registration court to validly confirm
and register the title of the applicant or applicants. That Section 23 of the Property
Registration Decree enumerated and described in detail the requirements of
publication, mailing, and posting of the Notice of Initial Hearing, then all such
requirements, including publication of the Notice in a newspaper of general
circulation, is essential and imperative, and must be strictly complied with. In the
same case, this Court expounded on the reason behind the compulsory publication of
the Notice of Initial Hearing in a newspaper of general circulation, thus
It may be asked why publication in a newspaper of general circulation should be
deemed mandatory when the law already requires notice by publication in the Official
Gazette as well as by mailing and posting, all of which have already been complied
with in the case at hand. The reason is due process and the reality that the Official
Gazette is not as widely read and circulated as newspaper and is oftentimes delayed
in its circulation, such that the notices published therein may not reach the interested
parties on time, if at all. Additionally, such parties may not be owners of neighboring
properties, and may in fact not own any other real estate. In sum, the all
encompassing in rem nature of land registration cases, the consequences of default
orders issued against the whole world and the objective of disseminating the notice in
as wide a manner as possible demand a mandatory construction of the requirements
for publication, mailing and posting.[31]
 In the instant Petition, the initial hearing was set by the MTC, and was in fact
held, on 03 September 1999 at 8:30 a.m. While the Notice thereof was printed in the
issue of the Official Gazette, dated 02 August 1999, and officially released on 10
August 1999, it was published in The Freeman Banat News, a daily newspaper
printed in Cebu City and circulated in the province and cities of Cebu and in the rest
of Visayas and Mindanao, only on 19 December 1999, more than three months after
the initial hearing.
Indubitably, such publication of the Notice, way after the date of the initial
hearing, would already be worthless and ineffective. Whoever read the Notice as it
was published in The Freeman Banat News and had a claim to the Subject Lots was
deprived of due process for it was already too late for him to appear before the MTC
on the day of the initial hearing to oppose respondents application for registration,
and to present his claim and evidence in support of such claim. Worse, as the Notice
itself states, should the claimant-oppositor fail to appear before the MTC on the date
of initial hearing, he would be in default and would forever be barred from contesting
respondents application for registration and even the registration decree that may be
issued pursuant thereto. In fact, the MTC did issue an Order of Special Default on 03
September 1999.
The late publication of the Notice of Initial Hearing in the newspaper of general
circulation is tantamount to no publication at all, having the same ultimate result.
Owing to such defect in the publication of the Notice, the MTC failed to constructively
seize the Subject Lots and to acquire jurisdiction over respondents application for
registration thereof. Therefore, the MTC Judgment, dated 21 December 1999,
ordering the registration and confirmation of the title of respondents Jeremias and
David over Lots No. 8422 and 8423, respectively; as well as the MTC Order, dated 02
February 2000, declaring its Judgment of 21 December 1999 final and executory, and
directing the LRA Administrator to issue a decree of registration for the Subject Lots,
are both null and void for having been issued by the MTC without jurisdiction.
II
Period of Possession
Respondents failed to comply with the required period of possession of the Subject
Lots for the judicial confirmation or legalization of imperfect or incomplete title.
While this Court has already found that the MTC did not have jurisdiction to
hear and proceed with respondents application for registration, this Court
nevertheless deems it necessary to resolve the legal issue on the required period of
possession for acquiring title to public land.
Respondents application filed with the MTC did not state the statutory basis for
their title to the Subject Lots. They only alleged therein that they obtained title to the
Subject Lots by purchase from their parents, spouses Gregorio Herbieto and Isabel
Owatan, on 25 June 1976. Respondent Jeremias, in his testimony, claimed that his
parents had been in possession of the Subject Lots in the concept of an owner since
1950.[32]
Yet, according to the DENR-CENRO Certification, submitted by respondents
themselves, the Subject Lots are within Alienable and Disposable, Block I, Project No.
28 per LC Map No. 2545 of Consolacion, Cebu certified under Forestry Administrative
Order No. 4-1063, dated June 25, 1963. Likewise, it is outside Kotkot-Lusaran
Mananga Watershed Forest Reservation per Presidential Proclamation No. 932 dated
June 29, 1992.[33] The Subject Lots are thus clearly part of the public domain,
classified as alienable and disposable as of 25 June 1963.
As already well-settled in jurisprudence, no public land can be acquired by
private persons without any grant, express or implied, from the government; [34] and it
is indispensable that the person claiming title to public land should show that his title
was acquired from the State or any other mode of acquisition recognized by law. [35]
The Public Land Act, as amended, governs lands of the public domain, except
timber and mineral lands, friar lands, and privately-owned lands which reverted to the
State.[36] It explicitly enumerates the means by which public lands may be disposed,
as follows:
(1) For homestead settlement;
(2) By sale;
(3) By lease;
(4) By confirmation of imperfect or incomplete titles;
(a) By judicial legalization; or
(b) By administrative legalization (free patent). [37]
Each mode of disposition is appropriately covered by separate chapters of the Public
Land Act because there are specific requirements and application procedure for every
mode.[38] Since respondents herein filed their application before the MTC, [39] then it
can be reasonably inferred that they are seeking the judicial confirmation or
legalization of their imperfect or incomplete title over the Subject Lots.
Judicial confirmation or legalization of imperfect or incomplete title to land, not
exceeding 144 hectares,[40] may be availed of by persons identified under Section 48
of the Public Land Act, as amended by Presidential Decree No. 1073, which reads
Section 48. The following-described citizens of the Philippines, occupying lands of the
public domain or claiming to own any such lands or an interest therein, but whose
titles have not been perfected or completed, may apply to the Court of First Instance
of the province where the land is located for confirmation of their claims and the
issuance of a certificate of title thereafter, under the Land Registration Act, to wit:
(a) [Repealed by Presidential Decree No. 1073].
(b) Those who by themselves or through their predecessors-in-interest
have been in open, continuous, exclusive, and notorious possession
and occupation of agricultural lands of the public domain, under
a bona fide claim of acquisition of ownership, since June 12, 1945, or
earlier, immediately preceding the filing of the applications for
confirmation of title, except when prevented by war or force majeure.
These shall be conclusively presumed to have performed all the
conditions essential to a Government grant and shall be entitled to a
certificate of title under the provisions of this chapter.
(c) Members of the national cultural minorities who by themselves or
through their predecessors-in-interest have been in open, continuous,
exclusive and notorious possession and occupation of lands of the
public domain suitable to agriculture whether disposable or not, under
a bona fide claim of ownership since June 12, 1945 shall be entitled
to the rights granted in subsection (b) hereof.
Not being members of any national cultural minorities, respondents may only be
entitled to judicial confirmation or legalization of their imperfect or incomplete title
under Section 48(b) of the Public Land Act, as amended. Section 48(b), as amended,
now requires adverse possession of the land since 12 June 1945 or earlier. In the
present Petition, the Subject Lots became alienable and disposable only on 25 June
1963. Any period of possession prior to the date when the Subject Lots were
classified as alienable and disposable is inconsequential and should be excluded from
the computation of the period of possession; such possession can never ripen into
ownership and unless the land had been classified as alienable and disposable, the
rules on confirmation of imperfect title shall not apply thereto. [41] It is very apparent
then that respondents could not have complied with the period of possession required
by Section 48(b) of the Public Land Act, as amended, to acquire imperfect or
incomplete title to the Subject Lots that may be judicially confirmed or legalized.
The confirmation of respondents title by the Court of Appeals was based on the
erroneous supposition that respondents were claiming title to the Subject Lots under
the Property Registration Decree. According to the Decision of the Court of Appeals,
dated 22 November 2002, Section 14(4) of the Property Registration Decree allows
individuals to own land in any other manner provided by law. It then ruled that the
respondents, having possessed the Subject Lots, by themselves and through their
predecessors-in-interest, since 25 June 1963 to 23 September 1998, when they filed
their application, have acquired title to the Subject Lots by extraordinary prescription
under Article 1113, in relation to Article 1137, both of the Civil Code. [42]
The Court of Appeals overlooked the difference between the Property
Registration Decree and the Public Land Act. Under the Property Registration Decree,
there already exists a title which is confirmed by the court; while under the Public
Land Act, the presumption always is that the land applied for pertains to the State,
and that the occupants and possessors only claim an interest in the same by virtue of
their imperfect title or continuous, open, and notorious possession. [43] As established
by this Court in the preceding paragraphs, the Subject Lots respondents wish to
register are undoubtedly alienable and disposable lands of the public domain and
respondents may have acquired title thereto only under the provisions of the Public
Land Act.
However, it must be clarified herein that even though respondents may acquire
imperfect or incomplete title to the Subject Lots under the Public Land Act, their
application for judicial confirmation or legalization thereof must be in accordance with
the Property Registration Decree, for Section 50 of the Public Land Act reads
SEC. 50. Any person or persons, or their legal representatives or successors in right,
claiming any lands or interest in lands under the provisions of this chapter, must in
every case present an application to the proper Court of First Instance, praying that
the validity of the alleged title or claim be inquired into and that a certificate of title
be issued to them under the provisions of the Land Registration Act.[44]
Hence, respondents application for registration of the Subject Lots must have
complied with the substantial requirements under Section 48(b) of the Public Land
Act and the procedural requirements under the Property Registration Decree.
Moreover, provisions of the Civil Code on prescription of ownership and other
real rights apply in general to all types of land, while the Public Land Act specifically
governs lands of the public domain. Relative to one another, the Public Land Act may
be considered a special law [45] that must take precedence over the Civil Code, a
general law. It is an established rule of statutory construction that between a general
law and a special law, the special law prevails Generalia specialibus non derogant.[46]
WHEREFORE, based on the foregoing, the instant Petition is GRANTED. The
Decision of the Court of Appeals in CA-G.R. CV No. 67625, dated 22 November 2002,
is REVERSED. The Judgment of the MTC of Consolacion, Cebu in LRC Case No. N-75,
dated 21 December 1999, and its Order, dated 02 February 2000 are declared NULL
AND VOID. Respondents application for registration is DISMISSED.
SO ORDERED.
EN BANC
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 States 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 Presidents 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 States 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.
Davide, Jr., C.J., Bellosillo, Melo, Quisumbing, Pardo, Buena, Gonzaga-Reyes, Ynares-
Santiago, and De Leon, Jr., JJ., concur.
EN BANC
G.R. No. 81564 April 26, 1990
ACTING REGISTRARS OF LAND TITLES AND DEEDS OF PASAY CITY, PASIG
AND MAKATI, METRO MANILA, petitioners,
vs.
THE REGIONAL TRIAL COURT, BRANCH 57, IN MAKATI, METRO MANILA
PRESIDED OVER BY THE HONORABLE JUDGE FRANCISCO X. VELEZ, AND
THE INTESTATE ESTATE OF THE LATE DELFIN CASAL, represented by
DOMINGO C. PALOMARES, ADMINISTRATOR, respondents.
G.R. No. 90176 April 26, 1990
THE INTESTATE ESTATE OF THE LATE DELFIN CASAL, represented by
DOMINGO C. PALOMARES, ADMINISTRATOR, petitioner,
vs.
HONORABLE CONRADO VASQUEZ, JR., Presiding Judge, BRANCH 118, RTC,
RICARDO P. SANTIAGO, ET AL., respondents.
Taada, Vivo & Tan for the Intestate Estate of the Late Delfin Casal.
Antonio J. Dalangpan for himself and the heirs of Delfin Casal.
Pedro S. Ravelo for Gerardo Casal.
Filomeno Peralta, Jr. for Domingo C. Palomares.
SARMIENTO, J.:
The petitioners ** charge His Honor, Judge Francisco Velez, of the Regional Trial
Court, Branch 57, Makati, Metro Manila, with grave abuse of discretion in issuing an
order authorizing the private respondent, through Domingo Palomares, to perform
acts of ownership over a 2,574-hectare parcel of land known as Hacienda de
Maricabanspread out in various parts of Makati, Pasig, Taguig, Pasay City, and
Paraaque. There is no controversy as to the facts.
On November 5, 1985, the private respondent, Domingo Palomares, as administrator
of the heirs of Delfin Casal, commenced suit with the Regional Trial Court, Branch
132, Makati, Metro Manila for declaratory relief, quieting of title, cancellation of
Transfer Certificate of Title No. 192, and cancellation of entries upon Original
Certificate of Title No. 291.
Palomares had earlier come to this Court (February 27, 1985) on a similar petition,
and in addition, to direct the Register of Deeds to issue a duplicate owner's copy of
Original Certificate of Title No. 291, embracing allegedly Hacienda de Maricaban, in
lieu of the (alleged) lost one. On September 9, 1985, the Court denied the petition for
lack of merit. (G.R. No. 69834).
On December 19, 1985, the petitioners filed their answer.
On June 2, 1986, the private respondent filed a motion to admit amended complaint
impleading the Republic of the Philippines and the Registers of Deeds of Pasig,
Makati, and Pasay City as parties-respondents, and alleging, among other things,
that: (1) on October 1, 1906, the Court of Land Registration (James Ostrand,
Presiding Judge) confirmed the title of Dolores Pascual Casal y Ochoa, a native of
Madrid, Spain, over the 2,574-hectare parcel above-mentioned; (2) on October 17,
1906, the Register of Deeds of Rizal issued OCT No. 291 in her name; (3) upon her
death, and successive deaths of her heirs, the property devolved on Gerardo,
Reynaldo, Lolita, and Erlinda, all surnamed Casal, great grandchildren of Dolores; (4)
no conveyances or dispositions of any kind have been allegedly made upon the
parcel; (5) TCT No. 192, which covers the same landholding, is allegedly spurious and
inexistent; (6) the State itself, by placing 27,213,255 square meters thereof under a
military reservation (Fort McKinley now Fort Bonifacio), by Proclamation No. 423, and
fifty hectares thereof pursuant to Proclamation No. 192, had been guilty of
landgrabbing; (7) any and all holders of any and all TCTs emanating therefrom or
from TCT No. 192, are null, void, and of no force and effect; and (8) as a
consequence thereof, the heirs of Dolores Casal suffered various damages and
attorney's fees.
On June 26, 1986, the petitioners filed an answer, stating, among other things, that:
(1) the estate of Dolores Casal (or Delfin Casal, her grandchild) is not a juridical
person authorized by law to bring suit; (2) the Registers of Deeds of Makati, Pasig,
and Pasay City are not the real parties in interest, but rather, the registered owners
over which the court had not acquired jurisdiction; (3) the non-joinder of the real
parties in interest is fatal; (4) OCT No. 291 has long been cancelled; (5) Judge
Gregorio Pineda of the then Court of First Instance of Rizal, Branch XXI, Pasig, had
earlier denied prayers for the issuance of duplicate owner's copy of OCT No. 291
because the land embraced therein had been validly delivered to the Government; (6)
the Supreme Court itself had denied the Casals' appeal; ***(7) as a consequence, res
judicata is a bar; (8) prescription has also set in; and (9) the Casal's claims can not
validly override the titles of innocent purchasers for value.
On August 29, 1986, the respondent judge issued a temporary restraining order,
directing the petitioners to cease and desist from performing the acts complained of.
In a subsequent memorandum, the petitioners alleged that Dolores Casal had
conveyed the property to the Government of the United States in 1906 and the
Manila Railroad Company on which Judge Ostrand, the Presiding Judge of the Court
of Land Registration, later Justice of this Court, had stamped his imprimatur.
On October 12, 1987, the respondent court issued an order in the tenor, as follows:
No other opposition having been registered, this Court hereby resolves to
grant the plaintiffs' prayer in the OMNIBUS MOTION in order to safeguard
the integrity of the land embraced in OCT 291, hereby authorizing for this
purpose the plaintiff Domingo C. Palomares:
1. To order such subdivision and/or individual survey or surveys
within Parcel II, Parcel III and Parcel IV under Survey Plan Psu-
2031 by a licensed geodetic engineer or engineers at plaintiffs'
expense in order to facilitate and simplify the efficient
administration of the property described in OCT 291; and
2. To sell, exchange, lease or otherwise dispose (of) any area or
areas or portion or portions thereof, subject to the approval of the
Intestate Estate Court, to cover expenses for the payment of taxes
to which the property is subject, as well as expenses of
administration and for the protection of the integrity of the said
lands.
SO ORDERED. 1
Eleven days later, or on October 23, 1987 to be precise, it issued another order, as
follows:
Acting on the plaintiffs MOTION dated October 15, 1987 praying for the
issuance of a Writ of Execution implementing the Order of this Court dated
October 12, 1987 before the expiration of the time to appeal, and after
inquiring from the plaintiff's counsel for their reason in seeking the same,
the Court hereby issues this clarificatory order affirming the power of the
plaintiff Domingo C. Palomares to execute and perform the acts authorized
in the said Order of October 12, 1987 without the need of a Writ of
Execution, where no relief has been sought therefrom by any party, said
Order being implementable at the instance of the said plaintiff Domingo C.
Palomares, anytime when the said Order becomes final 15 days after the
said plaintiff received copy of the same (see Section 39, Chapter IV, B.P.
Blg. 129). Plaintiff Domingo C. Palomares may therefore take whatever steps
he considers appropriate for the implementation of the said Order without
need of further Orders or additional authority from this Court.
SO ORDERED. 2
The petitioners filed a notice of appeal; the respondent court, however, denied it" 3 "it
being directed against . . . an interlocutory order. . . 4
Hence, this recourse.
The petitioners interpose the following questions:
A. Whether or not respondent Court can validly decide before trial in favor of
private respondent the ownership and possession of the 25,743,514 square
meters (of) land known as "Hacienda de Maricaban", which is the main issue
in this case;
B. Whether or not respondent Court can validly allow private respondent to
exercise and perform all acts of ownership and possession over the said land
before trial
C. Whether or not respondent Court has acquired jurisdiction to hear and
decide this action;
D. Whether of not respondent Court committed grave abuse of discretion
amounting to lack of jurisdiction in not dismissing this action or allowing
petitioners to appeal from the orders in question. 5
In their comment, the private respondent averred, among other things, that: (1) the
respondent court, contrary to the petitioners' claim, did not decide the case "before
trial"; (2) OCT No. 291 had not been validly cancelled and that the rubber stamp
impression thereon, "CANCELLED" is a forgery; (3) the act of Judge Pineda, in
denying issuance of OCT No. 291, duplicate owner's copy, can not be considered res
judicata because that case involved purportedly a mere petition for issuance of
duplicate owner's copy; (4) non-joinder of proper parties is not a jurisdictional defect;
(5) the TCTs issued thereafter are a nullity because OCT No. 291 had not been
shown to have been duly cancelled; (6) OCT No. 291 has become imprescriptible;
and (7) the private respondent has a valid right of dominion over the property.
In the meantime, the private respondent came to this Court on certiorari (G.R. No.
90176) alleging that on December 15, 1987, in connection with Sp. Proc. No. P-2993
of the Regional Trial Court, Branch 118, Pasay City, entitled "In the matter of the
Intestate Estate of the Late Fortunato Santiago and Mariano Pantanilla Crisanta P.
Santiago, et al., Petitioners," Judge Conrado Vasquez, Jr. issued an order disposing of
certain parcels which the private respondent claims as forming part and parcel
of Hacienda de Maricaban.
On June 20, 1988, the respondent judge in G.R. No. 81564 filed his own comment,
asserting, among other things, that: (1) what he had sought to bar, by virtue of
injunction, was incursions and forcible entries of trespassers and squatters; (2) the
petitioners can not rightly claim that he had prematurely adjudicated the case,
because there was allegedly no decision to begin with; (3) that he issued the writ of
preliminary injunction in order only to maintain the status quo ante bellum that is, to
re-place the private respondent, which had been allegedly in prior possession, in
possession; (4) he did not allegedly authorize unbridled "acts of ownership" to be
exercised on the property; (5) all rights of dominion given thereon were subject to
the approval of the intestate estate court; (6) he denied the notice of appeal because
the order dated October 12, 1987, was interlocutory in nature from which no appeal
lies; (7) as to jurisdiction, the various motions filed by petitioners, allegedly accepting
the court's jurisdiction, have clothed the court with jurisdiction, and that besides, the
jurisdictional question was never raised except now.
On July 7, 1988, the petitioners filed a reply traversing the respondent judge's
allegations.
On August 26, 1988, the respondent judge filed a supplemental comment. He
reiterated that the writ of injunction was directed only on such spaces not occupied
by the Government (Fort Bonifacio, Libingan ng mga Bayani, Ninoy Aquino
International Airport, Nayong Pilipino, Population Commission, National Science and
Development Board, and National Housing Authority).
Meanwhile, Atty. Antonio J. Dalangpan for and on behalf purportedly of the "Heirs of
Delfin Casal" and the private respondent, Domingo Palomares, file a
Comment/Opposition in Intervention", dated December 23, 1988 asking for the
outright dismissal of the petition.
On December 14, 1989, the private respondent filed a manifestation, stating, among
other things, that assuming OCT No. 291 had been cancelled, there was still basis for
the respondent judge to prevent landgrabbers from entering into vacant portions of
the state embraced thereby.
The Court finds the issues, quintessentially, to be:
(1) Is OCT No. 291 still valid and subsisting?
(2) Did the respondent judge, in issuing the orders, dated October 12 and
October 23, 1987, commit a grave abuse of discretion equivalent to lack or
excess of jurisdiction?
I.
Is OCT No. 291 still valid and subsisting?
The Court takes judicial notice of the fact that the hectarage embraced by
TCT No. 192 (OCT No. 291) consists of Government property. Three things
persuade the Court: (1) the decrees of Proclamations Nos. 192 and 435; (2)
the incontrovertible fact that OCT No. 291 has been duly cancelled; and (3)
the division of the Court of Appeals in AC-G.R. CV No. 00293, affirming the
decision of Hon. Gregorio Pineda, Judge of the then Court of First Instance
of Rizal, Branch XXI, in LRC (GLRO) Rec. No. 2484, Case No. R-1467
thereof, entitled "In Re: Issuance of Owner's Duplicate of Certificate of Title
No. 291," as well as our own Resolution, in G.R. No. 69834, entitled
"Domingo Palomares, et al., v. Intermediate Appellate Court".
 (a)
Proclamation No. 192 ("RESERVING FOR THE VETERANS CENTER SITE
PURPOSES CERTAIN PARCEL OF LAND OF THE PUBLIC DOMAIN SITUATED
IN THE PROVINCE OF RIZAL, ISLAND OF LUZON") and Proclamation No.
423 ("RESERVING FOR MILITARY PURPOSES CERTAIN PARCELS OF THE
PUBLIC DOMAIN SITUATED IN THE MUNICIPALITY OF PASIG, TAGUIG,
AND PARAAQUE PROVINCE OF RIZAL, AND PASAY CITY") have the
character of official assertions of ownership, and the presumption is that
they have been issued by right of sovereignty and in the exercise of the
State's dominical authority. We take not only judicial notice thereof 6 but
accept the same as a valid asseveration of regalian light over property.
With respect to the premises occupied by the Libingan ng mga Bayani, Ninoy
Aquino International Airport, Nayong Pilipino, the Population Commission,
National Science and Development Board, and the National Housing
Authority, we do not have the slightest doubt that they stand on
Government property by sheer presumption that, unless otherwise shown,
what the Government occupies is what the Government owns.
While there is no presumption that property is Government property until
otherwise shown, because the law recognizes private ownership, thus:
Art. 425. Property of private ownership, besides the patrimonial
property of the State, provinces, cities, and municipalities, consists
of all property belonging to private persons, either individually or
collectively. 7
we find hard evidence on record that: (1) the property covered by OCT No.
291 had been conveyed to the United States of America; (2) it had been
later ceded to the Republic of the Philippines, and (3) as a consequence,
OCT No. 291 was cancelled upon final order of Judge Ostrand.
Be that as it may, the private respondent in G.R. No. 81564 is pressed hard to
establish the fact that portions of the property, especially the open spaces referred to
in the lower court's writ of injunction and the private respondent's manifestation of
December 14, 1989, and which open spaces it claims to be outside Maricaban,
are indeed outside Maricaban (or OCT 291). With respect, however, to parts thereof
on which Fort Bonifacio, Libingan ng mga Bayani, Ninoy Aquino International Airport,
Nayong Pilipino, Population Commission National Science and Development Board,
and National Housing Authority sit, the hands of the private respondent are tied.
Claims that Judge Ostrand's decree was a counterfeit is not only self-serving, it finds
no support from the records. The presumptions is "that official duty has been
regularly performed," 8 and the burden is on the private respondent to prove irregular
performance. The barren insistence that Judge Ostrands order was a forgery is not
sufficient to overthrow the presumption. To begin with, the act of forgery has been
seasonably disputed by the petitioners. Secondly, the Acting Registrar of Deeds of
Pasig, who supposedly certified to the fake character of Judge Ostrand's order, has
himself joined the other petitioners in opposing the reconveyance sought.
(b)
The decision in AC-G.R. No. 00293, dismissing the private respondent's petition for
the issuance of a new owner's copy of OCT No. 291, a dismissal affirmed by this
Court in G.R. No. 69834, also militates against the return of the property to the heirs
of Delfin Casal. The Appellate Court's judgment, a judgment sustained by this Court,
operates as, at the very least, the law of the case between the parties, that OCT No.
291 has been cancelled and the land covered has been conveyed and ceded to the
National Government. The fact that AC-G.R. CV No. 00293 dealt with a petition for
issuance of lost owner's duplicate copy is no argument because be that as it may, the
private respondent can not rightfully say that the heirs of Delfin Casal still have title
to the land. If it can not secure a new owner's copy, it can mean that they have lost
title thereto.
(c)
The principle of res judicata is also a bar to the instant proceedings. It should be
noted that in G.R. No. 69834, Mr. Domingo Palomares prayed:
WHEREFORE, premises considered it is most respectfully prayed to the most
Honorable Supreme Court, that in the name of law, justice and fair play, to
prevent and frustrate "land-grabbing" by the government, decision be
rendered:
FIRST, That a thorough review of the aforementioned resolution of
the Intermediate Appellate Court be made;
SECOND, That after due consideration, the resolution subject of
review be set aside based on the aforestated assignment of error;
THIRD, That the Order of the Lower Court dated Jan. 19, 1977 be
affirmed as the lawful and valid order;
FOURTH, To erase all doubts by declaring OCT No. 291 as
continuously and existing validly against the whole world;
FIFTH, Clearing OCT No. 291 of all adverse claims, since the herein
petitioners are the true and legally declared heirs; and
SIXTH, Ordering the Register of Deeds of Pasig, Rizal to issue the
Owner's Duplicate Copy of OCT No. 291.
Petitioner-Appellant further prays for other just and equitable reliefs. ****
When we therefore denied that petition, we, in effect, held that reconstitution (of lost
duplicate owner's copy) was not possible because the mother title (OCT No. 291) had
been duly cancelled. And when we therefore declared OCT No. 291 to have been
cancelled, we perished all doubts as to the invalidity of Mr. Palomares' pretenses of
title to Maricaban. Our judgment was conclusive not only as to Mr. Palomares, but
also as to the existing status of the property. As we have held:
The lower Court correctly ruled that the present action is barred by the final
judgment rendered in the previous case of Tuason & Co. vs. Aguila, Civil
Case No. Q-4275, of the Court of First Instance of Rizal. The reason is plain:
if the herein appellants really had a preferential right to a conveyance of the
land from J.M. Tuason & Co., or if the certificate of (Torrens) title held by
Tuason & Co. were truly void and ineffective, then these facts should have
been pleaded by these appellants in the previous case (Q-4275), since such
facts, if true, constituted a defense to the claim of Tuason & Co. for recovery
of possession. If appellants failed to plead such defenses in that previous
case, they are barred from litigating the same in any subsequent
proceeding, for it is a well established rule that as between the same parties
and on the same subject and cause of action, a final judgment is conclusive
not only on matters directly adjudicated, but also as to any other matter that
could have been raised in relation thereto. 9
II
Did the respondent judge, in issuing the order, dated October 12, 1987, commit a
grave abuse of discretion equivalent to lack of excess of jurisdiction?
(a)
The Court has no doubt that Judge Velez is here guilty of grave abuse of discretion
tantamount to lack or excess of jurisdiction to warrant certiorari. As above-stated,
what he gave away, by virtue of reconveyance, was property that inalienably belongs
to the Government or its successors. Worse, he gave away property without notice to
the actual possessors, that is, the present registered owner. It is beyond debate, as
we have indicated, that the land had been, since the cancellation of OCT No. 291,
parcelled out to a succession of buyers and owners. In the absence of notice, it
acquired no jurisdiction to decree redelivery or reconveyance. It is well-established
that owners of property over which reconveyance is asserted are indispensable
parties, without whom no relief is available and without whom the court can render
no valid judgment. 10
Furthermore, the present holders of the land in question are innocent purchasers for
value, or presumed to be so in the absence of contrary evidence, against whom
reconveyance does not lie. 11
(b)
The respondent judge can not conceal his faults behind arguments that he did not
intend to convey the premises, but rather, to secure, allegedly, vacant portions
thereof from interlopers. First, this is not stated in his order. Second, that order is
clear and unequivocal that Domingo Palomares has the right "[t]o sell, exchange,
lease or otherwise dispose of any area or areas or portion or portions thereof . . .
" 12 Third and last, the security of the property is the lookout of the claimants, and
not the court's. In case the premises the respondent judge's injunctive writ have
been directed belong to others, let them air their plaints.
(c)
The Court is also agreed that the challenged order was issued with no benefit of trial
or hearing. The private respondent can not validly rely on AC-G.R. No. 00293 as the
"trial or hearing" to justify the issuance of its said order, in the first place, because it
is a different proceeding. But above all, the private respondent itself says that AC-
G.R. CV No. 00293 can not be made a basis for denying reconveyance because
"the . . . petition was merely for the issuance of a new owner's duplicate
copy . . . 13 Accordingly, it can not invoke that case and yet, repudiate its effects. It is
the height of contradiction.
(d)
It was also grave error for the lower court to deny the Solicitor General's notice of
appeal. The Government had all the right to appeal because: (1) the order of October
12, 1987 was in the nature of a final judgment, as "final judgment" is known in law
(however it is captioned), that is to say, one that "finally disposes of the pending
action so that nothing more can be done with it in the trial court; 14 (2) it did not
merely maintain the status quo, but allowed Mr. Domingo Palomares to transact on
the property by near right of dominion over it.
Judge Velez had therefore no reason, indeed, excuse, to deny the Government's
notice of appeal. What is plain is the fact that Judge Velez was hell-bent, so to speak,
in blocking the Government's efforts to defend what rightfully belongs to it.
What has obviously been lost on the parties, Judge Velez in particular, is the
established principle that injunction does not lie "to take property out of the
possession or control of one party and place it into that of another." 15 In this wise it
has also been held:
xxx xxx xxx
It is a well established doctrine in this jurisdiction that an injunction is not
the proper remedy for the recovery of possession of real estate and the
improvements thereon, as well as for the ejectments therefrom of the actual
 occupants who claim to have title to or material interest therein. The use of
said remedy in such cases has invariably been considered unjustified, in
open violation of the legal presumption that the bona fidepossessor of a
certain piece of land and improvements thereon, holds the same under claim
of ownership and with a just title, and as an advanced concession of the
remedy to which the claimant might be entitled. (Citations omitted) 16
xxx xxx xxx
Injunction, moreover, is an extraordinary remedy. It lies only in certain cases, to wit:
Sec. 3. Grounds for issuance of preliminary injunction. - A preliminary injunction may
be granted at any time after the commencement of the action and before judgment
when it is established:
(a) That the plaintiff is entitled to the relief demanded, and the whole or
part of such relief consists in restraining the commission or continuance of
the acts complained of, or in the performance of an act or acts, either for a
limited period or perpetually;
(b) That the commission or continuance of some act complained of during
the litigation or the non-performance thereof would probably work injustice
to the plaintiff; or
(c) That the defendant is doing, threatens, or is about to do, or is procuring
or suffering to be done, some act probably in violation of the plaintiffs rights
respecting the subject of the action, and tending to render the judgment
ineffectual. 17
xxx xxx xxx
The conspicuous and unusual zeal with which Judge Francisco Velez now defends his
acts 18 has not escaped us. His Honor should have borne in mind that in proceedings
under Rule 65 of the Rules, such as the present cases, the judge is included only as a
nominal party. Unless otherwise ordained by this Court, he is not called upon to
answer or comment on the petition, but rather, the private respondent. It is indeed
distressing to note that it is the very judge who has taken the cudgels for the latter,
in defending its interests, when he, the judge, should have remained a neutral
magistrate. Res ipsa loquitor. 19 He must get his just deserts.
III
The Court thus closes the long-drawn tale of Hacienda de Maricaban. In this
connection, let trial judges be cautioned on the indiscriminate disposition of our
dwindling natural resources to private persons. Accordingly, we grant G.R. No. 81564
and dismiss G.R. No. 90176, and so also, end what has come down as nearly a
century of uncertainty, doubt, and conflict Maricaban has left in its trail. The Court
has finally spoken. Let the matter rest.
WHEREFORE:
1. The petition in G.R. No. 81564 is GRANTED:
(a) The Writ of Preliminary Injunction issued by our Resolution, dated April
13, 1988, enjoining the respondent judge from enforcing his: (i) order of
October 12, 1987 and (ii) the follow-up order of October 23, 1987, is made
permanent and
(b) Original Certificate of Title No. 291 is declared duly CANCELLED;
2. The petition in G.R. No. 90176 is DISMISSED; and
3. Judge Francisco Velez is ordered to SHOW CAUSE why he should not be
administratively dealt with for giving away, by virtue of reconveyance,
property that inalienably belongs to the Government, without notice to the
registered owner, and without benefit of trial or hearing; for blocking
Government efforts to defend what rightfully belongs to it; and for filing his
comment of June 17, 1988 and supplemental comment of August 26, 1988
without express leave of court.
Costs against the private respondent.
SO ORDERED.
EN BANC
G.R. No. L-39919 January 30, 1934
FORTUNATO ORTUA, petitioner-appellant,
vs.
VICENTE SINGSON ENCARNACION, Secretary of Agriculture and
Commerce, ET AL., respondents-appellees.
Villafuerte, Tible and Valer for appellant.
Office of the Solicitor-General Hilado for appellees.
MALCOLM, J.:
in this case the petitioner and appellant seeks the issuance of a writ
of mandamus directed against the Secretary of Agriculture and Commerce and the
Director of Lands, for the purpose of compelling them to give due course to his sale's
application for a tract of public land. The demurrers interposed to the complaint by
the respondents and appellees were sustained in the trial court, and on the failure of
the petitioner further to amend his complaint, the action was dismissed, without
costs.
The principal facts admitted by the pleadings may be stated as follows: In January,
1920, the petitioner Fortunato Ortua filed an application with the Bureau of Lands for
the purchase of a tract of public land situated in the municipality of San Jose,
Province of Camarines Sur. Following an investigation conducted by the Bureau of
Lands, Ortua's application was rejected, allowing him, however, to file a sale or lease
application for the portion of the land classified to be suitable for commercial
purposes, within a period of sixty days from the date of the decision and upon
payment of P3,000 for accrued rents. Two motions for reconsideration of the decision
were filed and denied. On appeal to the then Secretary of Agriculture and Natural
Resources (Agriculture and Commerce), the decision was affirmed, except that the
sum of P3,000 was reduced to P400.
It should be explained that one condition for the purchase of a tract of public
agricultural land, provided by the Public Land Law, Act No. 2874, in its sections 23
and 88, is that the purchaser shall be a citizen of lawful age of the Philippine Islands
or of the United States. Fortunato Ortua in his application stated that he was a
Filipino citizen, but the Director of Lands held that on the contrary, Ortua was a
Chinese citizen. On this question, the Director of Lands found established the
following facts: Fortunato Ortua was born in 1885 in Lagonoy, Camarines Sur,
Philippine Islands, being the natural son of Irene Demesa, a Filipina, and Joaquin
Ortua, a Chinese. In 1896 Fortunato was sent to China to study. While he was in
China his father and mother were legally married. Fortunato returned to the
Philippines in 1906, that is, when he was twenty-one years of age.
It was conceded by the Director of Lands that presumptively Fortunato Ortua was a
Philippine citizen, but certain acts of Ortua were pointed to as demonstrating that he
had forfeited his Philippine citizenship. Thus it was stated that Ortua voluntarily
applied for a landing certificate of residence which was issued by the Insular Collector
of Customs and which is only given to Chinese persons. Also, when Ortua applied for
the registration of a boat, and it was denied by the Insular Collector of Customs on
the ground that the appellant was a Chinese citizen, Ortua submitted to the ruling.
The Director of Lands performs his functions pursuant to the provisions of the Public
Land Law. In accordance with this law, the Secretary of Agriculture and Commerce is
made the executive officer charged with carrying out the provisions of the Public Land
Law, and he performs this duty through the Director of Lands (sec. 3). Subject to the
control of the executive head, the Director of Lands is by law vested with direct
executive control over land matters, "and his decisions as to questions of fact shall be
conclusive when approved by the Secretary of Agriculture and Commerce." (Sec. 4).
The foregoing analysis of the pertinent provisions of the Public Land Law will show
why in the opening paragraphs of this decision, we accepted the decision of the
Director of Lands on questions of facts as conclusive. We would even go farther and
would hold that the Director of Lands has been made by law a quasi-judicial officer.
As such officer he makes findings of fact, even passes upon questions of mixed fact
and law, and considers and decides the qualifications of applicants for the purchase
of public lands. A discretion is lodged by law in the Director of Lands which should
not be interfered with. The decisions of the Director of Lands on the construction of
the Public Land Law are entitled to great respect by the courts.
Accordingly, to paraphrase the authorities and decisions coming principally from the
United States Supreme Court, we deduce the rule on the subject to be, that a
decision rendered by the Director of Lands and approved by the Secretary of
Agriculture and Commerce, upon a question of fact is conclusive and not subject to
be reviewed by the courts, in the absence of a showing that such decision was
rendered in consequence of fraud, imposition, or mistake, other than error of
judgment in estimating the value or effect of evidence, regardless of whether or not it
is consistent with the preponderance of the evidence, so long as there is some
evidence upon which the finding in question could be made. (Vargas and Maalac,
The Philippine Land Registration Law, pp. 738-740; Julian vs. Apostol [1928], 52 Phil.,
422; 50 C. J., 1089 et seq.; Johnson vs. Riddle [1916], 240 U.S., 467.)
There is, however, another side to the case. It certainly was not intended by the
legislative body to remove from the jurisdiction of courts all right to review decisions
of the Bureau of Lands, for to do so would be to attempt something which could not
be done legally. Giving force to all possible intendments regarding the facts as found
by the Director of Lands, yet so much of the decision of the Director of Lands as
relates to a question of law is in no sense conclusive upon the courts, but is subject
to review. In other words, any action of the Director of Lands which is based upon a
misconstruction of the law can be corrected by the courts. (Shepley vs. Cowan
[1876], 91 U.S., 330; Moore vs. Robbins [1878], 96 U.S., 530; Marquez vs. Frisbie
[1879], 101 U.S., 473; Black vs. Jackson [1900], 177 U.S., 349; Johnson vs.
Riddle, supra.)
Having adjusted this fundamental matter, it is now for the court to determine if the
question of law arising from the undisputed evidence was correctly decided by the
Director of Lands. This question is, if the petitioner Fortunato Ortua should be
considered to be a Philippine citizen or a Chinese citizen. Presumptively it is admitted
that he is a Philippine citizen. More correctly stated, Fortunato Ortua had a sort of a
dual citizenship, and had it within his power either to elect to become a Philippine
citizen or a Chinese citizen. Predicated on these assumptions, we doubt very much if
it could be found that Ortua has by his own acts repudiated his Philippine citizenship
and chosen Chinese citizenship. The Director of Lands gave too much prominence,
we think, to two minor facts, susceptible of explanation. When Ortua returned from
China at the age of twenty-one, it was the most natural thing in the world for him to
land as a Chinese, for this would facilitate entry and obviate complications. Again,
when Ortua applied for the registration of a boat, there may have been any number
of reasons why he did not care to appeal from the decision of the Insular Collector of
Customs. On the other hand, some consideration should be given to the intention of
the petitioner, and he vigorously insists that it is his desire to be considered a
Philippine citizen. He has taken a Filipino name. He has gone into business and has
improved the property here in question to a great extent. There has been no implied
renunciation of citizenship, because the petitioner has been domiciled in these Islands
except for a short period during his infancy when he temporarily sojourned in China
for study. On the contrary, he states that he has always considered himself to be a
Filipino, and that he has elected to remain as a Philippine citizen. Therefore, on the
facts found by the Director of Lands, we hold that clear error of law resulted in not
considering petitioner a Philippine citizen and so qualified under the Public Land Law
to purchase public agricultural lands.
Sustaining the assigned errors, the order of the trial court will be set aside, and the
record will be remanded to the court of origin for further proceedings in accordance
with law. No pronouncement as to costs in this instance.
Villa-Real, Hull, Imperial, and Goddard, JJ., concur.
[G.R. No. 95694. October 9, 1997]
VICENTE VILLLAFLOR, substituted by his heirs, petitioner, vs. COURT OF
APPEALS and NASIPIT LUMBER CO., INC., respondents.
DECISION
PANGANIBAN ,J.:
In this rather factually complicated case, the Court reiterates the binding force
and effect of findings of specialized administrative agencies as well as those of trial
courts when affirmed by the Court of Appeals; rejects petitioners theory of simulation
of contracts; and passes upon the qualifications of private respondent corporation to
acquire disposable public agricultural lands prior to the effectivity of the 1973
Constitution.
The Case
Before us is a petition for review on certiorari seeking the reversal of the
Decision[1] of the Court of Appeals, dated September 27, 1990, in C.A. G.R. CV No.
09062, affirming the dismissal by the trial court of Petitioner Vicente Villaflors
complaint against Private Respondent Nasipit Lumber Co., Inc. The disposition of
both the trial and the appellate courts are quoted in the statement of facts below.
The Facts
The facts of this case, as narrated in detail by Respondent Court of Appeals, are
as follows:[2]
The evidence, testimonial and documentary, presented during the trial show that on
January 16, 1940, Cirilo Piencenaves, in a Deed of Absolute Sale (exh. A), sold to
[petitioner], a parcel of agricultural land containing an area of 50 hectares, [3] more or
less, and particularly described and bounded as follows:
A certain parcel of agricultural land planted to abaca with visible concrete monuments
marking the boundaries and bounded on the NORTH by Public Land now Private
Deeds on the East by Serafin Villaflor, on the SOUTH by Public Land; and on the West
by land claimed by H. Patete, containing an area of 60 hectares more or less, now
under Tax Dec. 29451 in the (sic) of said Vicente Villaflor, the whole parcel of which
this particular parcel is only a part, is assessed at P22,550.00 under the above said
Tax Dec. Number.
This deed states:
That the above described land was sold to the said VICENTE VILLAFLOR, xxx on June
22, 1937, but no formal document was then executed, and since then until the
present time, the said Vicente Villaflor has been in possession and occupation of (the
same); (and)
That the above described property was before the sale, of my exclusive property
having inherited from my long dead parents and my ownership to it and that of my
[sic] lasted for more than fifty (50) years, possessing and occupying same peacefully,
publicly and continuously without interruption for that length of time.
Also on January 16, 1940, Claudio Otero, in a Deed of Absolute Sale (exh. C) sold to
Villaflor a parcel of agricultural land, containing an area of 24 hectares, more or less,
and particularly described and bounded as follows:
A certain land planted to corn with visible concrete measurements marking the
boundaries and bounded on the North by Public Land and Tungao Creek; on the East
by Agusan River; on the South by Serafin Villaflor and Cirilo Piencenaves; and on the
West by land of Fermin Bacobo containing an area of 24 hectares more or less, under
Tax Declaration No. 29451 in the name already of Vicente Villaflor, the whole parcel
of which this particular land is only a part, is assessed at P22,550.00 under the above
said Tax Declaration No. 29451.
This deed states:
That the above described land was sold to the said VICENTE VILLAFLOR, xxx on June
22, 1937, but no sound document was then executed, however since then and until
the present time, the said Vicente Villaflor has been in open and continuous
possession and occupation of said land; (and)
That the above described land was before the sale, my own exclusive property, being
inherited from my deceased parents, and my ownership to it and that of my
predecessors lasted more than fifty (50) years, possessing and occupying the same,
peacefully, openly and continuously without interruption for that length of time.
Likewise on January 16, 1940, Hermogenes Patete, in a Deed of Absolute Sale (exh.
D), sold to Villaflor, a parcel of agricultural land, containing an area of 20 hectares,
more or less, and particularly described and bounded as follows:
A certain parcel of agricultural land planted to abaca and corn with visible concrete
monuments marking the boundaries and bounded on the North by Public Land area-
private Road; on the East by land claimed by Cirilo Piencenaves; on the South by
Public Land containing an area of 20 hectares more or less, now under Tax
Declaration No. 29451 in the name of Vicente Villaflor the whole parcel of which this
particular parcel, is assessed at P22,550.00 for purposes of taxation under the above
said Tax Declaration No. 29451.
This deed states:
xxx (O)n June 22, 1937 but the formal document was then executed, and since then
until the present time, the said VICENTE VILLAFLOR has been in continuous and open
possession and occupation of the same; (and)
That the above described property was before the sale, my own and exclusive
property, being inherited from my deceased parents and my ownership to it and that
of my predecessors lasted more than fifty (50) years, possessing and occupying
same, peacefully, openly and continuously without interruption for that length of
time.
On February 15, 1940, Fermin Bocobo, in a Deed of Absolute Sale (exh. B), sold to
Villaflor, a parcel of agricultural land, containing an area of 18 hectares, more or less,
and particularly described and bounded as follows:
A certain parcel of agricultural land planted with abaca with visible part marking the
corners and bounded on the North by the corners and bounded on the North by
Public Land; on the East by Cirilo Piencenaves; on the South by Hermogenes Patete
and West by Public Land, containing an area of 18 hectares more or less now under
Tax Declaration No. 29451 in the name of Vicente Villaflor. The whole parcel of which
this particular parcel is only a part is assessed as P22,550.00 for purposes of taxation
under the above said Tax Declaration Number (Deed of Absolute Sale executed by
Fermin Bocobo date Feb. 15, 1940). This document was annotated in Registry of
Deeds on February 16, 1940).
This deed states:
That the above described property was before the sale of my own exclusive property,
being inherited from my deceased parents, and my ownership to it and that of my
predecessors lasted more than fifty (50) years, possessing and occupying the same
peacefully, openly and continuously without interruption for that length of time.
On November 8, 1946, Villaflor, in a Lease Agreement (exh. Q), [4] leased to Nasipit
Lumber Co., Inc. a parcel of land, containing an area of two (2) hectares, together
with all the improvements existing thereon, for a period of five (5) years from June 1,
1946 at a rental of P200.00 per annum to cover the annual rental of house and
building sites for thirty three (33) houses or buildings. This agreement also provides:
[5]
3. During the term of this lease, the Lessee is authorized and empowered to build
and construct additional houses in addition to the 33 houses or buildings mentioned
in the next preceding paragraph, provided however, that for every additional house
or building constructed the Lessee shall pay unto the Lessor an amount of fifty
centavos (50) per month for every house or building. The Lessee is empowered and
authorized by the Lessor to sublot (sic) the premises hereby leased or assign the
same or any portion of the land hereby leased to any person, firm and corporation;
(and)
4. The Lessee is hereby authorized to make any construction and/or improvement on
the premises hereby leased as he may deem necessary and proper thereon, provided
however, that any and all such improvements shall become the property of the Lessor
upon the termination of this lease without obligation on the part of the latter to
reimburse the Lessee for expenses incurred in the construction of the same.
Villaflor claimed having discovered that after the execution of the lease agreement,
that Nasipit Lumber in bad faith x x x surreptitiously grabbed and occupied a big
portion of plaintiffs property x x x; that after a confrontation with the corporates (sic)
field manager, the latter, in a letter dated December 3, 1973 (exh. R),[6] stated
recalling having made some sort of agreement for the occupancy (of the property at
Acacia, San Mateo), but I no longer recall the details and I had forgotten whether or
not we did occupy your land. But if, as you say, we did occupy it, then (he is ) sure
that the company is obligated to pay the rental.
On July 7, 1948, in an Agreement to Sell (exh. 2), Villaflor conveyed to Nasipit
Lumber, two (2) parcels of land xxx described as follows: [7]
PARCEL ONE
Bounded on the North by Public Land and Tungao Creek; on the East by Agusan
River and Serafin Villaflor; on the South by Public Land, on the West by Public
Land. Improvements thereon consist of abaca, fruit trees, coconuts and thirty houses
of mixed materials belonging to the Nasipit Lumber Company. Divided into Lot Nos.
5412, 5413, 5488, 5490, 5491, 5492, 5850, 5849, 5860, 5855, 5851, 5854, 5855,
5859, 5858, 5857, 5853, and 5852. Boundaries of this parcel of land are marked by
concrete monuments of the Bureau of Lands. Containing an area of 112,000
hectares. Assessed at P17,160.00 according to Tax Declaration No. V-315 dated April
14, 1946.
PARCEL TWO
Bounded on the North by Pagudasan Creek; on the East by Agusan River; on the
South by Tungao Creek; on the West by Public Land. Containing an area of 48,000
hectares more or less. Divided into Lot Nos. 5411, 5410, 5409, and
5399. Improvements 100 coconut trees, productive, and 300 cacao trees. Boundaries
of said land are marked by concrete monuments of the Bureau pf (sic)
Lands. Assessed value -- P6,290.00 according to Tax No. 317, April 14, 1946.
This Agreement to Sell provides:
3. That beginning today, the Party of the Second Part shall continue to occupy the
property not anymore in concept of lessee but as prospective owners, it being the
sense of the parties hereto that the Party of the Second Part shall not in any manner
be under any obligation to make any compensation to the Party of the First Part, for
the use, and occupation of the property herein before described in such concept of
prospective owner, and it likewise being the sense of the parties hereto to terminate
as they do hereby terminate, effective on the date of this present instrument, the
Contract of Lease, otherwise known as Doc. No. 420, Page No. 36, Book No. II,
Series of 1946 of Notary Public Gabriel R. Banaag, of the Province of Agusan.
4. That the Party of the Second Part has bound as it does hereby bind itself, its
executors and administrators, to pay unto the party of the First Part the sum of Five
Thousand Pesos (P5,000.00), Philippine Currency, upon presentation by the latter to
the former of satisfactory evidence that:
(a) The Bureau of Lands will not have any objection to the obtainment by the Party of
the First Part of a Certificate of Torrens Title in his favor, either thru ordinary land
registration proceedings or thru administrative means procedure.
(b) That there is no other private claimant to the properties hereinbefore described.
5. That the Party of the First Part has bound as he does hereby bind to undertake
immediately after the execution of these presents to secure and obtain, or cause to
be secured and obtained, a Certificate of Torrens Title in his favor over the properties
described on Page (One) hereof, and after obtainment of such Certificate of Torrens
Title, the said Party of the First Part shall execute a (D)eed of Absolute Sale unto and
in favor of the Party of the Second Part, its executors, administrators and assigns, it
being the sense of the parties that the Party of the Second Part upon delivery to it of
such deed of absolute sale, shall pay unto the Party of the First Part in cash, the sum
of Twelve Thousand (P12,000.00) Pesos in Philippine Currency, provided, however,
that the Party of the First Part, shall be reimbursed by the Party of the Second Part
with one half of the expenses incurred by the Party of the First Part for survey and
attorneys fees; and other incidental expenses not exceeding P300.00.
On December 2, 1948, Villaflor filed Sales Application No. V-807 [8] (exh. 1) with the
Bureau of Lands, Manila, to purchase under the provisions of Chapter V, XI or IX of
Commonwealth Act. No. 141 (The Public Lands Act), as amended, the tract of public
lands x x x and described as follows: North by Public Land; East by Agusan River and
Serafin Villaflor; South by Public Land and West by public land (Lot Nos. 5379, 5489,
5412, 5490, 5491, 5492, 5849, 5850, 5851, 5413, 5488, 5489, 5852, 5853, 5854,
5855, 5856, 5857, 5858, 5859 and 5860 x x x containing an area of 140 hectares
xxx. Paragraph 6 of the Application, states: I understand that this application conveys
no right to occupy the land prior to its approval, and I recognized (sic) that the land
covered by the same is of public domain and any and all rights I may have with
respect thereto by virtue of continuous occupation and cultivation are hereby
relinquished to the Government.[9] (exh. 1-D)
On December 7, 1948, Villaflor and Nasipit Lumber executed an Agreement (exh 3).
[10]
This contract provides:
1. That the First Party is the possessor since 1930 of two (2) parcels of land situated
in sitio Tungao, Barrio of San Mateo, Municipality of Butuan, Province of Agusan;
2. That the first parcel of land abovementioned and described in Plan PLS-97 filed in
the office of the Bureau of Lands is made up of Lots Nos. 5412, 5413, 5488, 5490,
5491, 5492, 5849, 5850, 5851, 5852, 5853, 5854, 5855, 5856, 5857, 5858, 5859 and
5860 and the second parcel of land is made of Lots Nos. 5399, 5409, 5410 and 5411;
3. That on July 7, 1948, a contract of Agreement to Sell was executed between the
contracting parties herein, covering the said two parcels of land, copy of said
Agreement to Sell is hereto attached marked as Annex A and made an integral part of
this document. The parties hereto agree that the said Agreement to Sell be
maintained in full force and effect with all its terms and conditions of this present
agreement and in no way be considered as modified.
4. That paragraph 4 of the Contract of Agreement to Sell, marked as annex, A
stipulates as follows:
Par. 4. That the Party of the Second Part has bound as it does hereby bind itself, its
executors and administrators, to pay unto the Party of the First Part of the sum of
FIVE THOUSAND PESOS (P5,000.00)Philippine Currency, upon presentation by the
latter to the former of satisfactory evidence that:
a) The Bureau of Lands will have any objection to the obtainment by Party of the
First Part of a favor, either thru ordinary land registration proceedings or thru
administrative means and procedure.
b) That there is no other private claimant to the properties hereinabove described.
That the First Party has on December 2, 1948, submitted to the Bureau of Lands, a
Sales Application for the twenty-two (22) lots comprising the two abovementioned
parcels of land, the said Sales Application was registered in the said Bureau under
No. V-807;
6. That in reply to the request made by the First Party to the Bureau of Lands, in
connection with the Sales Application No. V-807, the latter informed the former that
action on his request will be expedited, as per letter of the Chief, Public Land
Division, dated December 2, 1948, copy of which is hereto attached marked as annex
B and made an integral part of this agreement:
7. That for and in consideration of the premises above stated and the amount of
TWENTY FOUR THOUSAND (P24,000.00) PESOS that the Second Party shall pay to
the First Party, by these presents, the First Party hereby sells, transfers and conveys
unto the Second Party, its successors and assigns, his right, interest and participation
under an(d) by virtue of the Sales Application No. V-807, which he has or may have
in the lots mentioned in said Sales Application No. V-807;
8. That the amount of TWENTY FOUR THOUSAND (P24,000.00) PESOS, shall be paid
by the Second Party to the First Party, as follows:
a) The amount of SEVEN THOUSAND (P7,000.00) PESOS, has already been paid by
the Second Party to the First Party upon the execution of the Agreement to Sell, on
July 7, 1948;
b) The amount of FIVE THOUSAND (P5,000.00) PESOS shall be paid upon the signing
of this present agreement; and
c) The balance of TWELVE THOUSAND (P12,000.00) PESOS, shall be paid upon the
execution by the First Party of the Absolute Deed of Sale of the two parcels of land in
question in favor of the Second Party, and upon delivery to the Second Party of the
Certificate of Ownership of the said two parcels of land.
9. It is specially understood that the mortgage constituted by the First Party in favor
of the Second Party, as stated in the said contract of Agreement to Sell dated July 7,
1948, shall cover not only the amount of SEVEN THOUSAND (P7,000.00) PESOS as
specified in said document, but shall also cover the amount of FIVE THOUSAND
(P5,000.00) PESOS to be paid as stipulated in paragraph 8, sub-paragraph (b) of this
present agreement, if the First Party should fail to comply with the obligations as
provided for in paragraphs 2, 4, and 5 of the Agreement to Sell;
10. It is further agreed that the First Party obligates himself to sign, execute and
deliver to and in favor of the Second Party, its successors and assigns, at anytime
upon demand by the Second Party such other instruments as may be necessary in
order to give full effect to this present agreement;
In the Report dated December 31, 1949 by the public land inspector, District Land
Office, Bureau of Lands, in Butuan, the report contains an Indorsement of the
aforesaid District Land Officer recommending rejection of the Sales Application of
Villaflor for having leased the property to another even before he had acquired
transmissible rights thereto.
In a letter of Villaflor dated January 23, 1950, addressed to the Bureau of Lands, he
informed the Bureau Director that he was already occupying the property when the
Bureaus Agusan River Valley Subdivision Project was inaugurated, that the property
was formerly claimed as private properties (sic), and that therefore, the property was
segregated or excluded from disposition because of the claim of private ownership. In
a letter of Nasipit Lumber dated February 22, 1950 (exh. X) [11] addressed to the
Director of Lands, the corporation informed the Bureau that it recognized Villaflor as
the real owner, claimant and occupant of the land; that since June 1946, Villaflor
leased two (2) hectares inside the land to the company; that it has no other interest
on the land; and that the Sales Application of Villaflor should be given favorable
consideration.
xxx xxx xxx
On July 24, 1950, the scheduled date of auction of the property covered by the Sales
Application, Nasipit Lumber offered the highest bid of P41.00 per hectare, but since
an applicant under CA 141, is allowed to equal the bid of the highest bidder, Villaflor
tendered an equal bid, deposited the equivalent of 10% of the bid price and then
paid the assessment in full.
xxx xxx xxx
On August 16, 1950, Villaflor executed a document, denominated as a Deed of
Relinquishment of Rights (exh. N),[12] pertinent portion of which reads:
5. That in view of my present business in Manila, and my change in residence from
Butuan, Agusan to the City of Manila, I cannot, therefore, develope (sic) or cultivate
the land applied for as projected before;
6. That the Nasipit Lumber Company, Inc., a corporation duly organized xxx is very
much interested in acquiring the land covered by the aforecited application xxx;
7. That I believe the said company is qualified to acquire public land, and has the
means to develop (sic) the above-mentioned land;
xxx xxx xxx
WHEREFORE, and in consideration of the amount of FIVE THOUSAND PESOS
(P5,000.00) to be reimbursed to me by the aforementioned Nasipit Lumber Company,
Inc., after its receipt of the order of award, the said amount representing part of the
purchase price of the land aforesaid, the value of the improvements I introduced
thereon, and the expenses incurred in the publication of the Notice of Sale, I, the
applicant, Vicente J. Villaflor, hereby voluntarily renounce and relinquish whatever
rights to, and interests I have in the land covered by my above-mentioned application
in favor of the Nasipit Lumber Company, Inc.
Also on August 16, 1950, Nasipit Lumber filed a Sales Application over the two (2)
parcels of land, covering an area of 140 hectares, more or less. This application was
also numbered V-807 (exh. Y).
On August 17, 1950 the Director of Lands issued an Order of Award[13] in favor of
Nasipit Lumber Company, Inc., pertinent portion of which reads:
4. That at the auction sale of the land held on July 24, 1950 the highest bid received
was that of Nasipit Lumber Company, Inc. which offered P41.00 per hectare
or P5,740.00 for the whole tract, which bid was equaled by applicant Vicente J.
Villaflor, who deposited the amount of P574.00 under Official Receipt No. B-1373826
dated July 24, 1950 which is equivalent to 10% of the bid. Subsequently, the said xxx
Villaflor paid the amount of P5,160.00 in full payment of the purchase price of the
above-mentioned land and for some reasons stated in an instrument of
relinquishment dated August 16, 1950, he (Vicente J. Villaflor) relinquished his rights
to and interest in the said land in favor of the Nasipit Lumber Company, Inc. who
filed the corresponding application therefore.
In view of the foregoing, and it appearing that the proceedings had xxx were in
accordance with law and in [sic] existing regulations, the land covered thereby is
hereby awarded to Nasipit Lumber Company, Inc. at P41.00 per hectare or P5,740.00
for the whole tract.
This application should be entered in the record of this Office as Sales Entry No. V-
407.
It is Villaflors claim that he only learned of the Order of Award on January 16, 1974,
or after his arrival to the Philippines, coming from Indonesia, where he stayed for
more than ten (10) years; that he went to Butuan City in the latter part of 1973 upon
the call of his brother Serafin Villaflor, who was then sick and learned that Nasipit
Lumber (had) failed and refused to pay the agreed rentals, although his brother was
able to collect during the early years; and that Serafin died three days after his
(Vicentes) arrival, and so no accounting of the rentals could be made; that on
November 27, 1973, Villaflor wrote a letter to Mr. G.E.C. Mears of Nasipit Lumber,
reminding him of their verbal agreement in 1955 xxx that Mr. Mears in a Reply dated
December 3, 1973, appears to have referred the matter to Mr. Noriega, the corporate
general manager, but the new set of corporate officers refused to recognize
(Villaflors) claim, for Mr. Florencio Tamesis, the general manager of Nasipit Lumber,
in a letter dated February 19, 1974, denied Villaflors itemized claim dated January 5,
1974 (exh. V) to be without valid and legal basis. In that 5th January, 1974 letter,
Villaflor claimed the total amount of P427,000.00 x x x.
In a formal protest dated January 31, 1974[14] which Villaflor filed with the Bureau of
Lands, he protested the Sales Application of Nasipit Lumber, claiming that the
company has not paid him P5,000.00 as provided in the Deed of Relinquishment of
Rights dated August 16, 1950.
xxx xxx xxx
x x x (T)hat in a Decision dated August 8, 1977 (exh. 8), the Director of Lands found
that the payment of the amount of P5,000.00 in the Deed xxx and the consideration
in the Agreement to Sell were duly proven, and ordered the dismissal of Villaflors
protest and gave due course to the Sales Application of Nasipit Lumber. Pertinent
portion of the Decision penned by Director of Lands, Ramon Casanova, in the Matter
of SP No. V-807 (C-V-407) xxx reads:
xxx xxx xxx
During the proceedings, Villaflor presented another claim entirely different from his
previous claim -- this time, for recovery of rentals in arrears arising from a supposed
contract of lease by Villaflor as lessor in favor of Nasipit as lessee, and indemnity for
damages supposedly caused improvements on his other property xxx in the
staggering amount of Seventeen Million (P17,000,000.00) Pesos. Earlier, he had also
demanded from NASIPIT xxx (P427,000.00) xxx also as indemnity for damages to
improvements supposedly caused by NASIPIT on his other real property as well as for
reimbursement of realty taxes allegedly paid by him thereon.
xxx xxx xxx
It would seem that xxx Villaflor has sought to inject so many collaterals, if not
extraneous claims, into this case. It is the considered opinion of this Office that any
claim not within the sphere or scope of its adjudicatory authority as an administrative
as well as quasi-judicial body or any issue which seeks to delve into the merits of
incidents clearly outside of the administrative competence of this Office to decide may
not be entertained.
There is no merit in the contention of Villaflor that owing to Nasipits failure to pay the
amount of xxx (P5,000.00) xxx (assuming that Nasipit had failed) the deed of
relinquishment became null and void for lack of consideration. xxxx.
xxx xxx xxx
x x x The records clearly show, however, that since the execution of the deed of
relinquishment xxx Villaflor has always considered and recognized NASIPIT as having
the juridical personality to acquire public lands for agricultural purposes. xxxx.
xxx xxx xxx
Even this Office had not failed to recognize the juridical personality of NASIPIT to
apply for the purchase of public lands xxx when it awarded to it the land so
relinquished by Villaflor (Order of Award dated August 17, 1950) and accepted its
application therefor. At any rate, the question whether an applicant is qualified to
apply for the acquisition of public lands is a matter between the applicant and this
Office to decide and which a third party like Villaflor has no personality to question
beyond merely calling the attention of this Office thereto.
xxx xxx xxx
Villaflor offered no evidence to support his claim of non-payment beyond his own
self-serving assertions and expressions that he had not been paid said amount. As
protestant in this case, he has the affirmative of the issue. He is obliged to prove his
allegations, otherwise his action will fail. For, it is a well settled principle () that if
plaintiff upon whom rests the burden of proving his cause of action fails to show in a
satisfactory manner the facts upon which he bases his claim, the defendant is under
no obligation to prove his exceptions or special defenses (Belen vs. Belen, 13 Phil.
202; Mendoza vs. Fulgencio, 8 Phil. 243).
xxx xxx xxx
Consequently, Villaflors claim that he had not been paid must perforce fail.
On the other hand, there are strong and compelling reasons to presume that Villaflor
had already been paid the amount of Five Thousand (P5,000.00) Pesos.
First, xxx What is surprising, however, is not so much his claims consisting of gigantic
amounts as his having forgotten to adduce evidence to prove his claim of non-
payment of the Five Thousand (P5,000.00) Pesos during the investigation
proceedings when he had all the time and opportunity to do so. xxx The fact that he
did not adduce or even attempt to adduce evidence in support thereof shows either
that he had no evidence to offer xxx that NASIPIT had already paid him in fact. What
is worse is that Villaflor did not even bother to command payment, orally or in
writing, of the Five Thousand (P5,000.00) Pesos which was supposed to be due him
since August 17, 1950, the date when the order of award was issued to Nasipit, and
when his cause of action to recover payment had accrued. The fact that he only
made a command (sic) for payment on January 31, 1974, when he filed his protest or
twenty-four (24) years later is immediately nugatory of his claim for non-payment.
But Villaflor maintains that he had no knowledge or notice that the order of award
had already been issued to NASIPIT as he had gone to Indonesia and he had been
absent from the Philippines during all those twenty-four (24) years. This of course
taxes credulity. xxx.
Second, it should be understood that the condition that NASIPIT should reimburse
Villaflor the amount of Five Thousand (P5,000.00) Pesos upon its receipt of the order
of award was fulfilled as said award was issued to NASIPIT on August 17, 1950. The
said deed of relinquishment was prepared and notarized in Manila with Villaflor and
NASIPIT signing the instrument also in Manila on August 16, 1950 (p.77, (sic)). The
following day or barely a day after that, or on August 17, 1950, the order of award
was issued by this Office to NASIPIT also in Manila. Now, considering that Villaflor is
presumed to be more assiduous in following up with the Bureau of Lands the
expeditious issuance of the order of award as the payment of the Five Thousand
(P5,000.00) Pesos (consideration) would depend on the issuance of said order to
award NASIPIT, would it not be reasonable to believe that Villaflor was at hand when
the award was issued to NASIPIT on August 17, 1950, or barely a day which (sic) he
executed the deed of relinquishment on August 16, 1950, in Manila? xxx.
Third, on the other hand, NASIPIT has in his possession a sort of order upon itself --
(the deed of relinquishment wherein he (sic) obligated itself to reimburse or pay
Villaflor the xxx consideration of the relinquishment upon its receipt of the order of
award) for the payment of the aforesaid amount the moment the order of award is
issued to it. It is reasonable to presume that NASIPIT has paid the Five Thousand
(P5,000.00) Pesos to Villaflor.
A person in possession of an order on himself for the payment of money, or the
delivery of anything, has paid the money or delivered the thing accordingly. (Section
5(k) B-131-Revised Rules of Court.
It should be noted that NASIPIT did not produce direct evidence as proof of its
payment of the Five Thousand (P5,000.00) Pesos to Villaflor. Nasipits explanation on
this point is found satisfactory.
x x x (I)t was virtually impossible for NASIPIT, after the lapse of the intervening 24
years, to be able to cope up with all the records necessary to show that the
consideration for the deed of relinquishment had been fully paid. To expect NASIPIT
to keep intact all records pertinent to the transaction for the whole quarter of a
century would be to require what even the law does not. Indeed, even the applicable
law itself (Sec. 337, National Internal Revenue Code) requires that all records of
corporations be preserved for only a maximum of five years.
NASIPIT may well have added that at any rate while there are transactions where the
proper evidence is impossible or extremely difficult to produce after the lapse of time
xxx the law creates presumptions of regularity in favor of such transactions (20 Am.
Jur. 232) so that when the basic fact is established in an action the existence of the
presumed fact must be assumed by force of law. (Rule 13, Uniform Rules of
Evidence; 9 Wigmore, Sec. 2491).
Anent Villaflors claim that the 140-hectare land relinquished and awarded to NASIPIT
is his private property, little (need) be said. xxxx The tracks of land referred to
therein are not identical to the lands awarded to NASIPIT. Even in the assumption
that the lands mentioned in the deeds of transfer are the same as the 140-hectare
area awarded to NASIPIT, their purchase by Villaflor (or) the latters occupation of the
same did not change the character of the land from that of public land to a private
property. The provision of the law is specific that public lands can only be acquired in
the manner provided for therein and not otherwise (Sec. 11, C.A. No. 141, as
amended). The records show that Villaflor had applied for the purchase of the lands
in question with this Office (Sales Application No. V-807) on December 2, 1948. xxxx
There is a condition in the sales application signed by Villaflor to the effect that he
recognizes that the land covered by the same is of public domain and any and all
rights he may have with respect thereto by virtue of continuous occupation and
cultivation are relinquished to the Government (paragraph 6, Sales Application No. V-
807 xxx) of which Villaflor is very much aware. It also appears that Villaflor had paid
for the publication fees appurtenant to the sale of the land. He participated in the
public auction where he was declared the successful bidder. He had fully paid the
purchase prive (sic) thereof (sic). It would be a (sic) height of absurdity for Villaflor to
be buying that which is owned by him if his claim of private ownership thereof is to
be believed. The most that can be said is that his possession was merely that of a
sales applicant to when it had not been awarded because he relinquished his interest
therein in favor of NASIPIT who (sic) filed a sales application therefor.
xxx xxx xxx
x x x During the investigation proceedings, Villaflor presented as his Exhibit (sic)
(which NASIPIT adopted as its own exhibit and had it marked in evidence as Exhibit
1) a duly notarized agreement to Sell dated July 7, 1948, by virtue of which Villaflor
undertook to sell to Nasipit the tracts of land mentioned therein, for a consideration
of Twenty-Four Thousand (P24,000.00) Pesos. Said tracts of land have been verified
to be identical to the parcels of land formerly applied for by Villaflor and which the
latter had relinquished in favor of NASIPIT under a deed of relinquishment executed
by him on August 16, 1950.In another document executed on December 7, 1948 xxx
Villaflor as FIRST PARTY and NASIPIT as SECOND PARTY confirmed the Agreement
to Sell of July 7, 1948, which was maintained in full force and effect with all its terms
and conditions x x x (Exh. 38-A); and that for and in consideration of xxx TWENTY
FOUR THOUSAND (P24,000.00) PESOS that the Second Party shall pay to the First
Party xxx the First Party hereby sells, transfers and conveys unto the Second Party
xxx his right interest and participation under and by virtue of the Sales Application
No. V-807 and, in its paragraph 8, it made stipulations as to when part of the said
consideration xxx was paid and when the balance was to be paid, to wit:
a) the amount of SEVEN THOUSAND xxx PESOS has already been paid by the Second
Party to the First Party upon the execution of the Agreement to Sell, on July 17,
1948;
b) the amount of FIVE THOUSAND xxx PESOS shall be paid upon the signing of this
present agreement; and
c) the amount of TWELVE THOUSAND xxx PESOS, shall be paid upon the execution
by the First Party of the Absolute Sale of the Two parcels of land in question in favor
of the Second Party of the Certificate of Ownership of the said two parcels of land.
(Exh. 38-B). (Emphasis ours)
It is thus clear from this subsequent document marked Exhibit 38 ANALCO that of the
consideration of the Agreement to Sell dated July7, 1948, involving the 140-hectare
area relinquished by Villaflor in favor of NASIPIT, in the amount of Twenty-Four
Thousand (P24,000.00) Pesos:
(1) the amount of Seven Thousand (P7,000.00) Pesos was already paid upon the
execution of the Agreement to Sell on July 7, 1948, receipt of which incidentally was
admitted by Villaflor in the document of December 7, 1948;
(2) the amount of Five Thousand (P5,000.00) Pesos was paid when said document
was signed by Vicente J. Villaflor as the First Party and Nasipit thru its President, as
the Second Party, on December 7, 1948; and
(3) the balance of Twelve Thousand (P12,000.00) Pesos to be paid upon the
execution by the First Party of the Absolute Deed of Sale of the two parcels of land in
favor of the Second Party, and upon delivery to the Second Party of the Certificate of
Ownership of the said two parcels of land.
Villaflor contends that NASIPIT could not have paid Villaflor the balance of Twelve
Thousand (P12,000.00) Pesos x x x consideration in the Agreement to Sell will only
be paid to applicant-assignor (referring to Villaflor) upon obtaining a Torrens Title in
his favor over the 140-hectare of land applied for and upon execution by him of a
Deed of Absolute Sale in favor of Nasipit Lumber Company, Inc. x x x. Inasmuch as
applicant-assignor was not able to obtain a Torrens Title over the land in question he
could not execute an absolute Deed of (sic) Nasipit Lumber Co., Inc. Hence, the
Agreement to Sell was not carried out and no Twelve Thousand (P12,000.00) Pesos
was overpaid either to the applicant-assignor, much less to Howard J. Nell
Company. (See MEMORANDUM FOR THE APPLICANT-ASSIGNOR, dated January 5,
1977). xxx.
xxx Villaflor did not adduce evidence in support of his claim that he had not been paid
the xxx (P12,000.00) xxx consideration of the Agreement to Sell dated July 7, 1948
(Exh. 38 NALCO) beyond his mere uncorroborated assertions. On the other hand,
there is strong evidence to show that said Twelve Thousand (P12,000.00) Pesos had
been paid by (private respondent) to Edward J. Nell Company by virtue of the Deed
of Assignment of Credit executed by Villaflor (Exh. 41 NALCO) for the credit of the
latter.
Atty. Gabriel Banaag, resident counsel of NASIPIT who is in a position to know the
facts, testified for NASIPIT. He described that it was he who notarized the Agreement
to Sell (Exh. F); that he knew about the execution of the document of December 7,
1948 (Exh. 38) confirming the said Agreement to Sell having been previously
consulted thereon by Jose Fernandez, who signed said document on behalf of
NASIPIT xxx that subsequently, in January 1949, Villaflor executed a Deed of
Assignment of credit in favor of Edward J. Nell Company (Exh. 41 NALCO) whereby
Villaflor ceded to the latter his receivable for NASIPIT corresponding to the remaining
balance in the amount of Twelve Thousand xxx Pesos of the total consideration xxx
stipulated in both the Agreement to Sell (Exh. F) and the document dated December
7, 1948 (Exh. 39); xxx. He further testified that the said assignment of credit was
communicated to (private respondent) under cover letter dated January 24, 1949
(Exh. 41-A) and not long thereafter, by virtue of the said assignment of credit,
(private respondent) paid the balance of Twelve Thousand xxx due to Villaflor to
Edward J. Nell Company xxx. Atty. Banaags aforesaid testimony stand unrebutted;
hence, must be given full weight and credit. xxx Villaflor and his counsel were present
when Atty. Banaags foregoing testimony was given. Yet, Villaflor did not demur, nor
did he rebut the same, despite having been accorded full opportunity to do so.
xxx xxx xxx
Having found that both the Five Thousand xxx consideration of the deed of
Relinquishment xxx and that the remaining balance of xxx (P12,000.00) to complete
the Twenty-Four Thousand (P24,000.00) Pesos consideration of both the Agreement
to Sell dated July 7, 1948, and the document, dated December 7, 1948, executed by
the former in favor of the latter, have been paid Villaflor the issue on prescription and
laches becomes academic and needs no further discussion.
But more than all the questions thus far raised and resolved is the question whether a
sales patent can be issued to NASIPIT for the 140-hectare area awarded to it in the
light of Section 11, Article XIV of the new Constitution which provides in its pertinent
portion to wit:
x x x No private corporation or association may hold alienable land of the public
domain except by lease not to exceed one thousand hectares in area xxx.
The Secretary of Justice had previous occasion to rule on this point in his opinion No.
140, s. 1974. Said the Honorable Justice Secretary:
On the second question, (referring to the questions when may a public land be
considered to have been acquired by purchase before the effectivity of the new
Constitution posed by the Director of Lands in his query on the effect on pending
applications for the issuance of sales patent in the light of Section 11, Art. XIV of the
New Constitution aforecited), you refer to this Offices Opinion No. 64 series of 1973
in which I stated:
On the other hand, with respect to sales applications ready for issuance of sales
patent, it is my opinion that where the applicant had, before the Constitution took
effect, fully complied with all this obligations under the Public Land Act in order to
entitle him to a Sales patent, there would be no legal or equitable justification for
refusing to issue or release the sales patent.
With respect to the point as to when the Sales applicant has complied with all the
terms and conditions which would entitle him to a sales patent, the herein above
Secretary of Justice went on:
That as to when the applicant has complied with all the terms and conditions which
would entitle him to a patent is a questioned (sic) fact which your office would be in
the best position to determine.However, relating this to the procedure for the
processing of applications mentioned above, I think that as the applicant has fulfilled
the construction/cultivation requirements and has fully paid the purchase price, he
should be deemed to have acquired by purchase the particular tract of land and (sic)
the area (sic) in the provision in question of the new constitution would not apply.
From the decision of the Director of Lands, Villaflor filed a Motion for Reconsideration
which was considered as an Appeal M.N.R. Case 4341, to the Ministry of Natural
Resources.
On June 6, 1979, the Minister of Natural Resources rendered a Decision (exh. 9),
[15]
dismissing the appeal and affirming the decision of the Director of Lands, pertinent
portions of which reads:
After a careful study of the records and the arguments of the parties, we believe that
the appeal is not well taken.
Firstly, the area in dispute is not the private property of appellant.
The evidence adduced by appellant to establish his claim of ownership over the
subject area consists of deeds of absolute sale executed in his favor on January 16,
and February 15, 1940, by four (4) different persons, namely, Cirilo Piencenaves,
Fermin Balobo, Claudio Otero and Hermogenes Patete.
However, an examination of the technical descriptions of the tracts of land subject of
the deeds of sale will disclose that said parcels are not identical to, and do not tally
with, the area in controversy.
It is a basic assumption of our policy that lands of whatever classification belong to
the state. Unless alienated in accordance with law, it retains its rights over the same
as dominus, (Santiago vs. de los Santos, L-20241, November 22, 1974, 61 SCRA
152).
For, it is well-settled that no public land can be acquired by private persons without
any grant, express or implied from the government. It is indispensable then that
there be showing of title from the state or any other mode of acquisition recognized
by law. (Lee Hong Hok, et al. vs. David, et al., L-30389, December 27, 1972, 48 SCRA
379.)
It is well-settled that all lands remain part of the public domain unless severed
therefrom by state grant or unless alienated in accordance with law.
We, therefore, believe that the aforesaid deeds of sale do not constitute clear and
convincing evidence to establish that the contested area is of private
ownership. Hence, the property must be held to be public domain.
There being no evidence whatever that the property in question was ever acquired by
the applicants or their ancestors either by composition title from the Spanish
Government or by possessory information title or by any other means for the
acquisition of public lands, the property must be held to be public domain. (Lee Hong
Hok, et al., vs. David , et al., L-30389 December 27, 1972, 48 SCRA 378-379 citing
Heirs of Datu Pendatun vs. Director of Lands; see also Director of Lands vs. Reyes, L-
27594, November 28, 1975, 68 SCRA 177).
Be that as it may, appellant, by filing a sales application over the controverted land,
acknowledged unequivocably [sic] that the same is not his private property.
As such sales applicant, appellant manifestly acknowledged that he does not own the
land and that the same is a public land under the administration of the Bureau of
Lands, to which the application was submitted, xxx All of its acts prior thereof,
including its real estate tax declarations, characterized its possessions of the land as
that of a sales applicant and consequently, as one who expects to buy it, but has not
as yet done so, and is not, therefore, its owner. (Palawan Agricultural and Industrial
Co., Inc. vs. Director of Lands, L-25914, March 21, 1972, 44 SCRA 20, 21).
Secondly, appellants alleged failure to pay the consideration stipulated in the deed of
relinquishment neither converts said deed into one without a cause or consideration
nor ipso facto rescinds the same.Appellant, though, has the right to demand payment
with legal interest for the delay or to demand rescission.
xxx xxx xxx
However, appellants cause of action, either for specific performance or rescission of
contract, with damages, lies within the jurisdiction of civil courts, not with
administrative bodies.
xxx xxx xxx
Lastly, appellee has acquired a vested right to the subject area and, therefore, is
deemed not affected by the new constitutional provision that no private corporation
may hold alienable land of the public domain except by lease.
xxx xxx xxx
Implementing the aforesaid Opinion No. 64 of the Secretary of Justice, the then
Secretary of Agriculture and Natural Resources issued a memorandum, dated
February 18, 1974, which pertinently reads as follows:
In the implementation of the foregoing opinion, sales application of private individuals
covering areas in excess of 24 hectares and those of corporations, associations, or
partnership which fall under any of the following categories shall be given due course
and issued patents, to wit:
1. Sales application for fishponds and for agricultural purposes (SFA, SA and IGPSA)
wherein prior to January 17, 1973;
a. the land covered thereby was awarded;
b. cultivation requirements of law were complied with as shown by investigation
reports submitted prior to January 17, 1973;
c. land was surveyed and survey returns already submitted to the Director of Lands
for verification and approval; and
d. purchase price was fully paid.
From the records, it is evident that the aforestated requisites have been complied
with by appellee long before January 17, 1973, the effectivity of the New
Constitution. To restate, the disputed area was awarded to appellee on August 17,
1950, the purchase price was fully paid on July 26, 1951, the cultivation requirements
were complied with as per investigation report dated December 31, 1949, and the
land was surveyed under Pls-97.
On July 6, 1978, petitioner filed a complaint [16] in the trial court for Declaration
of Nullity of Contract (Deed of Relinquishment of Rights), Recovery of Possession (of
two parcels of land subject of the contract), and Damages at about the same time
that he appealed the decision of the Minister of Natural Resources to the Office of the
President.
On January 28, 1983, petitioner died. The trial court ordered his widow, Lourdes
D. Villaflor, to be substituted as petitioner. After trial in due course, the then Court of
First Instance of Agusan del Norte and Butuan City, Branch III, [17] dismissed the
complaint on the grounds that: (1) petitioner admitted the due execution and
genuineness of the contract and was estopped from proving its nullity, (2) the verbal
lease agreements were unenforceable under Article 1403 (2)(e) of the Civil Code, and
(3) his causes of action were barred by extinctive prescription and/or laches. It ruled
that there was prescription and/or laches because the alleged verbal lease ended in
1966, but the action was filed only on January 6, 1978. The six-year period within
which to file an action on an oral contract per Article 1145 (1) of the Civil Code
expired in 1972. The decretal portion[18] of the trial courts decision reads:
WHEREFORE, the foregoing premises duly considered, judgment is hereby rendered
in favor of the defendant and against the plaintiff. Consequently, this case is hereby
ordered DISMISSED. The defendant is hereby declared the lawful actual physical
possessor-occupant and having a better right of possession over the two (2) parcels
of land in litigation described in par. 1.2 of the complaint as Parcel I and Parcel II,
containing a total area of One Hundred Sixty (160) hectares, and was then the
subject of the Sales Application No. V-807 of the plaintiff (Exhibits 1, 1-A, 1-B, pp.
421 to 421-A, Record), and now of the Sales Application No. 807, Entry No. V-407 of
the defendant Nasipit Lumber Company (Exhibit Y, pp. 357-358, Record). The
Agreements to Sell Real Rights, Exhibits 2 to 2-C, 3 to 3-B, and the Deed of
Relinquishment of Rights, Exhibits N to N-1, over the two parcels of land in litigation
are hereby declared binding between the plaintiff and the defendant, their successors
and assigns.
Double the costs against the plaintiff.
The heirs of petitioner appealed to Respondent Court of Appeals [19] which,
however, rendered judgment against petitioner via the assailed Decision dated
September 27, 1990 finding petitioners prayers -- (1) for the declaration of nullity of
the deed of relinquishment, (2) for the eviction of private respondent from the
property and (3) for the declaration of petitioners heirs as owners to be without
basis. The decretal portion[20] of the assailed 49-page, single-spaced Decision curtly
reads:
WHEREFORE, the Decision appealed from, is hereby AFFIRMED, with costs against
plaintiff-appellants.
Not satisfied, petitioners heirs filed the instant 57-page petition for review dated
December 7, 1990. In a Resolution dated June 23, 1991, the Court denied this
petition for being late. On reconsideration -- upon plea of counsel that petitioners
were poor and that a full decision on the merits should be rendered -- the Court
reinstated the petition and required comment from private respondent. Eventually,
the petition was granted due course and the parties thus filed their respective
memoranda.
The Issues
Petitioner, through his heirs, attributes the following errors to the Court of
Appeals:
I. Are the findings of the Court of Appeals conclusive and binding upon the Supreme
Court?
II. Are the findings of the Court of Appeals fortified by the similar findings made by
the Director of Lands and the Minister of Natural Resources (as well as by the Office
of the President)?
III. Was there forum shopping?
IV. Are the findings of facts of the Court of Appeals and the trial court supported by
the evidence and the law?
V. Are the findings of the Court of Appeals supported by the very terms of the
contracts which were under consideration by the said court?
VI. Did the Court of Appeals, in construing the subject contracts, consider the
contemporaneous and subsequent act of the parties pursuant to article 1371 of the
Civil Code?
VII. Did the Court of Appeals consider the fact and the unrefuted claim of Villaflor
that he never knew of the award in favor of Nasipit?
VIII. Did the Court of Appeals correctly apply the rules on evidence in its findings that
Villaflor was paid the P5,000.00 consideration because Villaflor did not adduce any
proof that he was not paid?
IX. Is the Court of Appeals conclusion that the contract is not simulated or fictitious
simply because it is genuine and duly executed by the parties, supported by logic or
the law?
X. May the prestations in a contract agreeing to transfer certain rights
constitute estoppel when this very contract is the subject of an action for annulment
on the ground that it is fictitious?
XI. Is the Court of Appeals conclusion that the lease agreement between Villaflor is
verbal and therefore, unenforceable supported by the evidence and the law?
After a review of the various submissions of the parties, particularly those of
petitioner, this Court believes and holds that the issues can be condensed into three
as follows:
(1) Did the Court of Appeals err in adopting or relying on the factual findings of the
Bureau of Lands, especially those affirmed by the Minister (now Secretary) of Natural
Resources and the trial court?
(2) Did the Court of Appeals err in upholding the validity of the contracts to sell and
the deed of relinquishment? Otherwise stated, did the Court of Appeals err in finding
the deed of relinquishment of rights and the contracts to sell valid, and not simulated
or fictitious?
(3) Is the private respondent qualified to acquire title over the disputed property?
The Courts Ruling
The petition is bereft of merit. It basically questions the sufficiency of the
evidence relied upon by the Court of Appeals, alleging that public respondents factual
findings were based on speculations, surmises and conjectures. Petitioner insists that
a review of those findings is in order because they were allegedly (1) rooted, not on
specific evidence, but on conclusions and inferences of the Director of Lands which
were, in turn, based on misapprehension of the applicable law on simulated
contracts; (2) arrived at whimsically -- totally ignoring the substantial and admitted
fact that petitioner was not notified of the award in favor of private respondent; and
(3) grounded on errors and misapprehensions, particularly those relating to the
identity of the disputed area.
First Issue: Primary Jurisdiction of the Director of Lands and Finality of
Factual Findings of the Court of Appeals
Underlying the rulings of the trial and appellate courts is the doctrine of primary
jurisdiction; i.e., courts cannot and will not resolve a controversy involving a question
which is within the jurisdiction of an administrative tribunal, especially where the
question demands the exercise of sound administrative discretion requiring the
special knowledge, experience and services of the administrative tribunal to
determine technical and intricate matters of fact.[21]
In recent years, it has been the jurisprudential trend to apply this doctrine to
cases involving matters that demand the special competence of administrative
agencies even if the question involved is also judicial in character. It applies where a
claim is originally cognizable in the courts, and comes into play whenever
enforcement of the claim requires the resolution of issues which, under a regulatory
scheme, have been placed within the special competence of an administrative body;
in such case, the judicial process is suspended pending referral of such issues to the
administrative body for its view.[22]
In cases where the doctrine of primary jurisdiction is clearly applicable, the
court cannot arrogate unto itself the authority to resolve a controversy, the
jurisdiction over which is initially lodged with an administrative body of special
competence.[23] In Machete vs. Court of Appeals, the Court upheld the primary
jurisdiction of the Department of Agrarian Reform Adjudicatory Board (DARAB) in an
agrarian dispute over the payment of back rentals under a leasehold contract.
[24]
In Concerned Officials of the Metropolitan Waterworks and Sewerage System vs.
Vasquez,[25] the Court recognized that the MWSS was in the best position to evaluate
and to decide which bid for a waterworks project was compatible with its
development plan.
The rationale underlying the doctrine of primary jurisdiction finds application in
this case, since the questions on the identity of the land in dispute and the factual
qualification of private respondent as an awardee of a sales application require a
technical determination by the Bureau of Lands as the administrative agency with the
expertise to determine such matters.Because these issues preclude prior judicial
determination, it behooves the courts to stand aside even when they apparently have
statutory power to proceed, in recognition of the primary jurisdiction of the
administrative agency.[26]
One thrust of the multiplication of administrative agencies is that the interpretation of
contracts and the determination of private rights thereunder is no longer a uniquely
judicial function, exercisable only by our regular courts [27]
Petitioner initiated his action with a protest before the Bureau of Lands and
followed it through in the Ministry of Natural Resources and thereafter in the Office of
the President.Consistent with the doctrine of primary jurisdiction, the trial and the
appellate courts had reason to rely on the findings of these specialized administrative
bodies.
The primary jurisdiction of the director of lands and the minister of natural
resources over the issues regarding the identity of the disputed land and the
qualification of an awardee of a sales patent is established by Sections 3 and 4 of
Commonwealth Act No. 141, also known as the Public Land Act:
Section 3. The Secretary of Agriculture and Commerce (now Secretary of Natural
Resources) shall be the executive officer charged with carrying out the provisions of
this Act through the Director of Lands, who shall act under his immediate control.
Section 4. Subject to said control, the Director of Lands shall have direct executive
control of the survey, classification, lease, sale or any other form of concession or
disposition and management of the lands of the public domain, and his decision as to
questions of fact shall be conclusive when approved by the Secretary of Agriculture
and Commerce.
Thus, the Director of Lands, in his decision, said:[28]
x x x It is merely whether or not Villaflor has been paid the Five Thousand
(P5,000.00) Pesos stipulated consideration of the deed of relinquishment made by
him without touching on the nature of the deed of relinquishment. The administration
and disposition of public lands is primarily vested in the Director of Lands and
ultimately with the Secretary of Agriculture and Natural Resources (now Secretary of
Natural Resources), and to this end--
Our Supreme Court has recognized that the Director of Lands is a quasi-judicial
officer who passes on issues of mixed facts and law (Ortua vs. Bingson Encarnacion,
59 Phil 440). Sections 3 and 4 of the Public Land Law thus mean that the Secretary of
Agriculture and Natural Resources shall be the final arbiter on questions of fact in
public land conflicts (Heirs of Varela vs. Aquino, 71 Phil 69; Julian vs. Apostol, 52 Phil
442).
The ruling of this Office in its order dated September 10, 1975, is worth reiterating,
thus:
x x x it is our opinion that in the exercise of his power of executive control,
administrative disposition and allegation of public land, the Director of Lands should
entertain the protest of Villaflor and conduct formal investigation xxx to determine
the following points: (a) whether or not the Nasipit Lumber Company, Inc. paid or
reimbursed to Villaflor the consideration of the rights in the amount of P5,000.00 and
what evidence the company has to prove payment, the relinquishment of rights being
part of the administrative process in the disposition of the land in question xxx.
xxxx Besides, the authority of the Director of Lands to pass upon and determine
questions considered inherent in or essential to the efficient exercise of his powers
like the incident at issue, i.e. , whether Villaflor had been paid or not, is conceded by
law.
Reliance by the trial and the appellate courts on the factual findings of the
Director of Lands and the Minister of Natural Resources is not misplaced. By reason
of the special knowledge and expertise of said administrative agencies over matters
falling under their jurisdiction, they are in a better position to pass judgment thereon;
thus, their findings of fact in that regard are generally accorded great respect, if not
finality,[29] by the courts.[30] The findings of fact of an administrative agency must be
respected as long as they are supported by substantial evidence, even if such
evidence might not be overwhelming or even preponderant. It is not the task of an
appellate court to weigh once more the evidence submitted before the administrative
body and to substitute its own judgment for that of the administrative agency in
respect of sufficiency of evidence.[31]
However, the rule that factual findings of an administrative agency are accorded
respect and even finality by courts admits of exceptions. This is true also in assessing
factual findings of lower courts.[32] It is incumbent on the petitioner to show that the
resolution of the factual issues by the administrative agency and/or by the trial court
falls under any of the exceptions.Otherwise, this Court will not disturb such findings.
[33]
We mention and quote extensively from the rulings of the Bureau of Lands and
the Minister of Natural Resources because the points, questions and issues raised by
petitioner before the trial court, the appellate court and now before this Court are
basically the same as those brought up before the aforesaid specialized administrative
agencies. As held by the Court of Appeals:[34]
We find that the contentious points raised by appellant in this action, are substantially
the same matters he raised in BL Claim No. 873 (N). In both actions, he claimed
private ownership over the land in question, assailed the validity and effectiveness of
the Deed of Relinquishment of Rights he executed in August 16, 1950, that he had
not been paid the P5,000.00 consideration, the value of the improvements he
introduced on the land and other expenses incurred by him.
In this instance, both the principle of primary jurisdiction of administrative
agencies and the doctrine of finality of factual findings of the trial courts, particularly
when affirmed by the Court of Appeals as in this case, militate against petitioners
cause. Indeed, petitioner has not given us sufficient reason to deviate from them.
Land in Dispute Is Public Land
Petitioner argues that even if the technical description in the deeds of sale and
those in the sales application were not identical, the area in dispute remains his
private property. He alleges that the deeds did not contain any technical description,
as they were executed prior to the survey conducted by the Bureau of Lands; thus,
the properties sold were merely described by reference to natural boundaries. His
private ownership thereof was also allegedly attested to by private respondents
former field manager in the latters February 22, 1950 letter, which contained an
admission that the land leased by private respondent was covered by the sales
application.
This contention is specious. The lack of technical description did not prove that
the finding of the Director of Lands lacked substantial evidence. Here, the issue is not
so much whether the subject land is identical with the property purchased by
petitioner. The issue, rather, is whether the land covered by the sales application is
private or public land. In his sales application, petitioner expressly admitted that said
property was public land. This is formidable evidence as it amounts to an admission
against interest.
In the exercise of his primary jurisdiction over the issue, Director of Lands
Casanova ruled that the land was public:[35]
x x x Even (o)n the assumption that the lands mentioned in the deeds of transfer are
the same as the 140-hectare area awarded to Nasipit, their purchase by Villaflor (or)
the latters occupation of the same did not change the character of the land from that
of public land to a private property. The provision of the law is specific that public
lands can only be acquired in the manner provided for therein and not otherwise
(Sec. 11, C.A. No. 141, as amended). The records show that Villaflor had applied for
the purchase of lands in question with this Office (Sales Application No. V-807) on
December 2, 1948. xxx There is a condition in the sales application xxx to the effect
that he recognizes that the land covered by the same is of public domain and any and
all rights he may have with respect thereto by virtue of continuous occupation and
cultivation are relinquished to the Government (paragraph 6, Sales Application No. V-
807 of Vicente J. Villaflor, p. 21, carpeta) of which Villaflor is very much aware. It also
appears that Villaflor had paid for the publication fees appurtenant to the sale of the
land. He participated in the public auction where he was declared the successful
bidder. He had fully paid the purchase prive (sic) thereor (sic). It would be a (sic)
height of absurdity for Villaflor to be buying that which is owned by him if his claim of
private ownership thereof is to be believed. xxx.
This finding was affirmed by the Minister of Natural Resources: [36]
Firstly, the area in dispute is not the private property of appellant (herein petitioner).
The evidence adduced by (petitioner) to establish his claim of ownership over the
subject area consists of deeds of absolute sale executed in his favor xxx.
However, an examination of the technical descriptions of the tracts of land subject of
the deeds of sale will disclose that said parcels are not identical to, and do not tally
with, the area in controversy.
It is a basic assumption of our policy that lands of whatever classification belong to
the state. Unless alienated in accordance with law, it retains its rights over the same
as dominus. (Santiago vs. de los Santos, L-20241, November 22, 1974, 61 SCRA
152).
For it is well-settled that no public land can be acquired by private persons without
any grant, express or implied from the government. It is indispensable then that
there be showing of title from the state or any other mode of acquisition recognized
by law. (Lee Hong Hok, et al. vs. David, et al., L-30389, December 27, 1972, 48 SCRA
379).
xxx xxx xxx xxx
We, therefore, believe that the aforesaid deeds of sale do not constitute clear and
convincing evidence to establish that the contested area is of private
ownership. Hence, the property must be held to be public domain.
There being no evidence whatever that the property in question was ever acquired by
the applicants or their ancestors either by composition title from the Spanish
Government or by possessory information title or by any other means for the
acquisition of public lands, the property must be held to be public domain.
Be that as it may, [petitioner], by filing a sales application over the controverted land,
acknowledged unequivocably [sic] that the same is not his private property.
As such sales applicant manifestly acknowledged that he does not own the land and
that the same is a public land under the administration of the Bureau of Lands, to
which the application was submitted, xxx All of its acts prior thereof, including its real
estate tax declarations, characterized its possessions of the land as that of a sales
applicant. And consequently, as one who expects to buy it, but has not as yet done
so, and is not, therefore, its owner.(Palawan Agricultural and Industrial Co., Inc. vs.
Director of Lands, L-25914, March 21, 1972, 44 SCRA 15).
Clearly, this issue falls under the primary jurisdiction of the Director of Lands
because its resolution requires survey, classification, xxx disposition and management
of the lands of the public domain. It follows that his rulings deserve great respect. As
petitioner failed to show that this factual finding of the Director of Lands was
unsupported by substantial evidence, it assumes finality. Thus, both the trial and the
appellate courts correctly relied on such finding.[37] We can do no less.
Second Issue: No Simulation of Contracts Proven
Petitioner insists that contrary to Article 1371 [38] of the Civil Code, Respondent
Court erroneously ignored the contemporaneous and subsequent acts of the parties;
hence, it failed toascertain their true intentions. However, the rule on the
interpretation of contracts that was alluded to by petitioner is used in affirming, not
negating, their validity. Thus, Article 1373, [39]which is a conjunct of Article 1371,
provides that, if the instrument is susceptible of two or more interpretations, the
interpretation which will make it valid and effectual should be adopted. In this light, it
is not difficult to understand that the legal basis urged by petitioner does not support
his allegation that the contracts to sell and the deed of relinquishment are simulated
and fictitious. Properly understood, such rules on interpretation even negate
petitioners thesis.
But let us indulge the petitioner awhile and determine whether the cited
contemporaneous and subsequent acts of the parties support his allegation of
simulation. Petitioner asserts that the relinquishment of rights and the agreements to
sell were simulated because, first, the language and terms of said contracts negated
private respondents acquisition of ownership of the land in issue; and second,
contemporaneous and subsequent communications between him and private
respondent allegedly showed that the latter admitted that petitioner owned and
occupied the two parcels; i.e., that private respondent was not applying for said
parcels but was interested only in the two hectares it had leased, and that private
respondent supported petitioners application for a patent.
Petitioner explains that the Agreement to Sell dated December 7, 1948 did not
and could not transfer ownership because paragraph 8 (c) thereof stipulates that the
balance of twelve thousand pesos (P12,000.00) shall be paid upon the execution by
the First Party [petitioner] of the Absolute Deed of Sale of the two parcels of land in
question in favor of the Second Party, and upon delivery to the Second Party [private
respondent] of the Certificate of Ownership of the said two parcels of land. The
mortgage provisions in paragraphs 6 and 7 of the agreement state that the P7,000.00
and P5,000.00 were earnest money or a loan with antichresis by the free occupancy
and use given to Nasipit of the 140 hectares of land not anymore as a lessee.If the
agreement to sell transferred ownership to Nasipit, then why was it necessary to
require petitioner, in a second agreement, to mortgage his property in the event of
nonfulfillment of the prestations in the first agreement?
 True, the agreement to sell did not absolutely transfer ownership of the land to
private respondent. This fact, however, does not show that the agreement was
simulated. Petitioners delivery of the Certificate of Ownership and execution of the
deed of absolute sale were suspensive conditions, which gave rise to a corresponding
obligation on the part of the private respondent, i.e., the payment of the last
installment of the consideration mentioned in the December 7, 1948 Agreement. Such
conditions did not affect the perfection of the contract or prove simulation. Neither
did the mortgage.
Simulation occurs when an apparent contract is a declaration of a fictitious will,
deliberately made by agreement of the parties, in order to produce, for the purpose
of deception, the appearance of a juridical act which does not exist or is different
from that which was really executed. [40] Such an intention is not apparent in the
agreements. The intent to sell, on the other hand, is as clear as daylight.
Petitioner alleges further that the deed of relinquishment of right did not give
full effect to the two agreements to sell, because the preliminary clauses of the deed
allegedly served only to give private respondent an interest in the property as a
future owner thereof and to enable respondent to follow up petitioners sales
application.
We disagree. Such an intention is not indicated in the deed. On the contrary, a
real and factual sale is evident in paragraph 6 thereof, which states: That the Nasipit
Lumber Co., Inc., xxx is very much interested in acquiring the land covered by the
aforecited application to be used for purposes of mechanized farming and the
penultimate paragraph stating: xxx VICENTE J. VILLAFLOR, hereby voluntarily
renounce and relinquish whatever rights to, and interests I have in the land covered
by my above-mentioned application in favor of the Nasipit Lumber Co., Inc.
We also hold that no simulation is shown either in the letter, dated December 3,
1973, of the former field manager of private respondent, George Mear. A pertinent
portion of the letter reads:
(a)s regards your property at Acacia, San Mateo, I recall that we made some sort of
agreement for the occupancy, but I no longer recall the details and I had forgotten
whether or not we actually did occupy your land. But if, as you say, we did occupy it,
then I am sure that the Company is obligated to pay a rental.
The letter did not contain any express admission that private respondent was
still leasing the land from petitioner as of that date. According to Mear, he could no
longer recall the details of his agreement with petitioner. This cannot be read as
evidence of the simulation of either the deed of relinquishment or the agreements to
sell. It is evidence merely of an honest lack of recollection.
Petitioner also alleges that he continued to pay realty taxes on the land even
after the execution of said contracts. This is immaterial because payment of realty
taxes does not necessarily prove ownership, much less simulation of said contracts. [41]
Nonpayment of the Consideration
Did Not Prove Simulation
Petitioner insists that nonpayment of the consideration in the contracts proves
their simulation. We disagree. Nonpayment, at most, gives him only the right to sue
for collection.Generally, in a contract of sale, payment of the price is a resolutory
condition and the remedy of the seller is to exact fulfillment or, in case of a
substantial breach, to rescind the contract under Article 1191 of the Civil Code.
[42]
However, failure to pay is not even a breach, but merely an event which prevents
the vendors obligation to convey title from acquiring binding force. [43]
Petitioner also argues that Respondent Court violated evidentiary rules in
upholding the ruling of the Director of Lands that petitioner did not present evidence
to show private respondents failure to pay him. We disagree. Prior to the amendment
of the rules on evidence on March 14, 1989, Section 1, Rule 131, states that each
party must prove his or her own affirmative allegations. [44] Thus, the burden of proof
in any cause rested upon the party who, as determined by the pleadings or the
nature of the case, asserts the affirmative of an issue and remains there until the
termination of the action.[45] Although nonpayment is a negative fact which need not
be proved, the party seeking payment is still required to prove the existence of the
debt and the fact that it is already due.[46]
Petitioner showed the existence of the obligation with the presentation of the
contracts, but did not present any evidence that he demanded payment from private
respondent. The demand letters dated January 2 and 5, 1974 (Exhs. J and U),
adduced in evidence by petitioner, were for the payment of back rentals, damages to
improvements and reimbursement of acquisition costs and realty taxes, not payment
arising from the contract to sell.
Thus, we cannot fault Respondent Court for adopting the finding of the Director
of Lands that petitioner offered no evidence to support his claim of nonpayment
beyond his own self-serving assertions, as he did not even demand payment, orally
or in writing, of the five thousand (P5,000.00) pesos which was supposed to be due
him since August 17, 1950, the date when the order of award was issued to Nasipit,
and when his cause of action to recover payment had accrued. Nonpayment of the
consideration in the contracts to sell or the deed of relinquishment was raised for the
first time in the protest filed with the Bureau of Lands on January 31, 1974. But this
protest letter was not the demand letter required by law.
Petitioner alleges that the assignment of credit and the letter of the former field
manager of private respondent are contemporaneous and subsequent acts revealing
the nonpayment of the consideration. He maintains that the P12,000.00 credit
assigned pertains to the P5,000.00 and P7,000.00 initial payments in the December
7, 1948 Agreement, because the balance of P12,000.00 was not yet due and
accruing. This is consistent, he argues, with the representation that private
respondent was not interested in filing a sales application over the land in issue and
that Nasipit was instead supporting petitioners application thereto in Mears letter to
the Director of Lands dated February 22, 1950 (Exh. X).[47]
This argument is too strained to be acceptable. The assignment of credit did not
establish the nondelivery of these initial payments of the total consideration. First, the
assignment of credit happened on January 19, 1949, or a month after the signing of
the December 7, 1948 Agreement and almost six months after the July 7, 1948
Agreement to Sell. Second, it does not overcome the recitation in the Agreement of
December 7, 1948: xxx a) The amount of SEVEN THOUSAND (P7,000.00) PESOS has
already been paid by the Second Party to the First Party upon the execution of the
Agreement to Sell, on July 7, 1948; b) The amount of FIVE THOUSAND (P5,000.00)
PESOS shall be paid upon the signing of this present agreement; xxx.
Aside from these facts, the Director of Lands found evidence of greater weight
showing that payment was actually made:[48]
x x x (T)here is strong evidence to show that said xxx (P12,000.00) had been paid by
NASIPIT to Edward J. Nell Company by virtue of the Deed of Assignment of Credit
executed by Villaflor (Exh. 41 NALCO) for the credit of the latter.
Atty. Gabriel Banaag, resident counsel of NASIPIT xxx declared that it was he who
notarized the Agreement to Sell (Exh. F); xxxx that subsequently, in January 1949,
Villaflor executed a Deed of Assignment of credit in favor of Edward J. Nell Company
(Exh. 41 NALCO) whereby Villaflor ceded to the latter his receivable for NASIPIT
corresponding to the remaining balance in the amount of xxx (P12,000.00) xxx of the
total consideration xxxx; He further testified that the said assignment xxx was
communicated to NASIPIT under cover letter dated January 24, 1949 (Exh. 41-A) and
not long thereafter, by virtue of the said assignment of credit, NASIPIT paid the
balance xxx to Edward J. Nell Company (p. 58, bid). Atty. Banaags aforesaid
testimony stand unrebutted; hence, must be given full weight and credit.
xxx xxx xxx.
The Director of Lands also found that there had been payment of the
consideration in the relinquishment of rights: [49]
On the other hand, there are strong and compelling reasons to presume that Villaflor
had already been paid the amount of Five Thousand (P5,000.00) Pesos.
First, x x x What is surprising, however, is not so much his claims consisting of
gigantic amounts as his having forgotten to adduce evidence to prove his claim of
non-payment of the Five Thousand (P5,000.00) Pesos during the investigation
proceedings when he had all the time and opportunity to do so. xxxx The fact that he
did not adduce or even attempt to adduce evidence in support thereof shows either
that he had no evidence to offer of that NASIPIT had already paid him in fact. What
is worse is that Villaflor did not even bother to command payment, orally or in
writing, of the Five Thousand (P5,000.00) Pesos which was supposed to be due him
since August 17, 1950, the date when the order of award was issued to Nasipit, and
when his cause of action to recover payment had accrued. The fact that he only
made a command for payment on January 31, 1974, when he filed his protest or
twenty-four (24) years later is immediately nugatory of his claim for non-payment.
But Villaflor maintains that he had no knowledge or notice that the order of award
had already been issued to NASIPIT as he had gone to Indonesia and he had been
absent from the Philippines during all those twenty-four (24) years. This of course
taxes credulity.xxxx
x x x It is more in keeping with the ordinary course of things that he should have
acquired information as to what was transpiring in his affairs in Manila x x x.
Second, it should be understood that the condition that NASIPIT should reimburse
Villaflor the amount of Five Thousand (P5,000.00) Pesos upon its receipt of the order
of award was fulfilled as said award was issued to NASIPIT on August 17, 1950. The
said deed of relinquishment was prepared and notarized in Manila with Villaflor and
NASIPIT signing the instrument also in Manila. Now, considering that Villaflor is
presumed to be more assiduous in following up with the Bureau of Lands the
expeditious issuance of the order of award as the (consideration) would depend on
the issuance of said order to award NASIPIT, would it not be reasonable to believe
that Villaflor was at hand when the award was issued to NASIPIT on August 17,
1950, or barely a day which he executed the deed of relinquishment on August 16,
1950, in Manila? xxxx.
Third, on the other hand, NASIPIT has in his possession a sort of order upon itself --
(the deed of relinquishment wherein he(sic) obligated itself to reimburse or pay
Villaflor the xxx consideration of the relinquishment upon its receipt of the order of
award) for the payment of the aforesaid amount the moment the order of award is
issued to it. It is reasonable to presume that NASIPIT has paid the (consideration) to
Villaflor.
xxx xxx xxx
x x x (I)t was virtually impossible for NASIPIT, after the lapse of the intervening 24
years, to be able to cope up with all the records necessary to show that the
consideration for the deed of relinquishment had been fully paid. To expect NASIPIT
to keep intact all records pertinent to the transaction for the whole quarter of a
century would be to require what even the law does not. Indeed, even the applicable
law itself (Sec. 337, National Internal Revenue Code) requires that all records of
corporations be preserved for only a maximum of five years.
NASIPIT may well have added that at any rate while there are transactions where the
proper evidence is impossible or extremely difficult to produce after the lapse of time
xxx the law creates presumptions of regularity in favor of such transactions (20 Am.
Jur. 232) so that when the basic fact is established in an action the existence of the
presumed fact must be assumed by force of law. (Rule 13, Uniform Rules of
Evidence; 9 Wigmore, Sec. 2491).
The Court also notes that Mears letter of February 22, 1950 was sent six
months prior to the execution of the deed of relinquishment of right. At the time of its
writing, private respondent had not perfected its ownership of the land to be able to
qualify as a sales applicant. Besides, although he was a party to the July 7, 1948
Agreement to Sell, Mear was not a signatory to the Deed of Relinquishment or to the
December 7, 1948 Agreement to Sell. Thus, he cannot be expected to know the
existence of and the amendments to the later contracts. These circumstances explain
the mistaken representations, not misrepresentations, in said letter.
Lack of Notice of the Award
Petitioner insists that private respondent suppressed evidence, pointing to his
not having been notified of the Order of Award dated August 17, 1950. [50] At the
bottom of page 2 of the order, petitioner was not listed as one of the parties who
were to be furnished a copy by Director of Lands Jose P. Dans. Petitioner also posits
that Public Land Inspector Sulpicio A. Taeza irregularly received the copies for both
private respondent and the city treasurer of Butuan City. The lack of notice for
petitioner can be easily explained. Plainly, petitioner was not entitled to said notice of
award from the Director of Lands, because by then, he had already relinquished his
rights to the disputed land in favor of private respondent. In the heading of the order,
he was referred to as sales applicant-assignor. In paragraph number 4, the order
stated that, on August 16, 1950, he relinquished his rights to the land subject of the
award to private respondent. From such date, the sales application was considered to
be a matter between the Bureau of Lands and private respondent only. Considering
these facts, the failure to give petitioner a copy of the notice of the award cannot be
considered as suppression of evidence. [51] Furthermore, this order was in fact
available to petitioner and had been referred to by him since January 31, 1974 when
he filed his protest with the Bureau of Lands.[52]
Third Issue: Private Respondent Qualified
for an Award of Public Land
Petitioner asserts that private respondent was legally disqualified from acquiring
the parcels of land in question because it was not authorized by its charter to acquire
disposable public agricultural lands under Sections 121, 122 and 123 of the Public
Land Act, prior to its amendment by P.D. No. 763. We disagree. The requirements for
a sales application under the Public Land Act are: (1) the possession of the
qualifications required by said Act (under Section 29) and (2) the lack of the
disqualifications mentioned therein (under Sections 121, 122, and 123).However, the
transfer of ownership via the two agreements dated July 7 and December 7, 1948
and the relinquishment of rights, being private contracts, were binding only between
petitioner and private respondent. The Public Land Act finds no relevance because
the disputed land was covered by said Act only after the issuance of the order of
award in favor of private respondent. Thus, the possession of any disqualification by
private respondent under said Act is immaterial to the private contracts between the
parties thereto. (We are not, however, suggesting a departure from the rule that laws
are deemed written in contracts.) Consideration of said provisions of the Act will
further show their inapplicability to these contracts. Section 121 of the Act pertains to
acquisitions of public land by a corporation from a grantee, but petitioner never
became a grantee of the disputed land. On the other hand, private respondent itself
was the direct grantee. Sections 122 and 123 disqualify corporations, which are not
authorized by their charter, from acquiring public land; the records do not show that
private respondent was not so authorized under its charter.
Also, the determination by the Director of Lands and the Minister of Natural
Resources of the qualification of private respondent to become an awardee or
grantee under the Act is persuasive on Respondent Court. In Espinosa vs. Makalintal,
[53]
the Court ruled that, by law, the powers of the Secretary of Agriculture and
Natural Resources regarding the disposition of public lands -- including the approval,
rejection, and reinstatement of applications are of executive and administrative
nature. (Such powers, however, do not include the judicial power to decide
controversies arising from disagreements in civil or contractual relations between the
litigants.) Consequently, the determination of whether private respondent is qualified
to become an awardee of public land under C.A. 141 by sales application is included
therein.
All told, the only disqualification that can be imputed to private respondent is
the prohibition in the 1973 Constitution against the holding of alienable lands of the
public domain by corporations.[54] However, this Court earlier settled the matter,
ruling that said constitutional prohibition had no retroactive effect and could not
prevail over a vested right to the land. In Ayog vs. Cusi, Jr.,[55] this Court declared:
We hold that the said constitutional prohibition has no retroactive application to the
sales application of Bian Development Co., Inc. because it had already acquired a
vested right to the land applied for at the time the 1973 Constitution took effect.
That vested right has to be respected. It could not be abrogated by the new
Constitution. Section 2, Article XIII of the 1935 Constitution allows private
corporations to purchase public agricultural lands not exceeding one thousand and
twenty-four hectares. Petitioners prohibition action is barred by the doctrine of vested
rights in constitutional law.
A right is vested when the right to enjoyment has become the property of some
particular person or persons as a present interest. (16 C.J.S. 1173). It is the privilege
to enjoy property legally vested, to enforce contracts, and enjoy the rights of
property conferred by existing law (12 C.J. 955, Note 46, No. 6) or some right or
interest in property which has become fixed and established and is no longer open to
doubt or controversy (Downs vs. Blount, 170 Fed. 15, 20, cited in Balboa vs. Farrales,
51 Phil. 498, 502).
The due process clause prohibits the annihilation of vested rights. A state may not
impair vested rights by legislative enactment, by the enactment or by the subsequent
repeal of a municipal ordinance, or by a change in the constitution of the State,
except in a legitimate exercise of the police power (16 C.J.S. 1177-78).
It has been observed that, generally, the term vested right expresses the concept of
present fixed interest, which in right reason and natural justice should be protected
against arbitrary State action, or an innately just an imperative right which an
enlightened free society, sensitive to inherent and irrefragable individual rights,
cannot deny (16 C.J.S. 1174, Note 71, No. 5, citing Pennsylvania Greyhound Lines,
Inc. vs. Rosenthal, 192 Atl. 2nd 587).
Secretary of Justice Abad Santos in his 1973 opinion ruled that where the applicant,
before the Constitution took effect, had fully complied with all his obligations under
the Public Land Act in order to entitle him to a sales patent, there would seem to be
no legal or equitable justification for refusing to issue or release the sales patent (p.
254, Rollo).
In Opinion No. 140, series of 1974, he held that as soon as the applicant had fulfilled
the construction or cultivation requirements and has fully paid the purchase price, he
should be deemed to have acquired by purchase the particular tract of land and to
him the area limitation in the new Constitution would not apply.
In Opinion No. 185, series of 1976, Secretary Abad Santos held that where the
cultivation requirements were fulfilled before the new Constitution took effect but the
full payment of the price was completed after January 17, 1973, the applicant was,
nevertheless, entitled to a sales patent (p. 256, Rollo).
Such a contemporaneous construction of the constitutional prohibition by a high
executive official carries great weight and should be accorded much respect. It is a
correct interpretation of section 11 of Article XIV.
In the instant case, it is incontestable that prior to the effectivity of the 1973
Constitution the right of the corporation to purchase the land in question had become
fixed and established and was no longer open to doubt or controversy.
Its compliance with the requirements of the Public Land Law for the issuance of a
patent had the effect of segregating the said land from the public domain. The
corporations right to obtain a patent for that land is protected by law. It cannot be
deprived of that right without due process (Director of Lands vs. CA, 123 Phil. 919).
The Minister of Natural Resources ruled, and we agree, that private respondent
was similarly qualified to become an awardee of the disputed land because its rights
to it vested prior to the effectivity of the 1973 Constitution: [56]
Lastly, appellee has acquired a vested right to the subject area and, therefore, is
deemed not affected by the new constitutional provision that no private corporation
may hold alienable land of the public domain except by lease.
It may be recalled that the Secretary of Justice in his Opinion No. 64, series of 1973,
had declared, to wit:
On the other hand, with respect to sales application ready for issuance of sales
patent, it is my opinion that where the applicant had, before, the constitution took
effect, fully complied with all his obligations under the Public Land act in order to
entitle him to sales patent, there would seem to be not legal or equitable justification
for refusing to issue or release the sales patent.
Implementing the aforesaid Opinion No. 64 xxx, the then Secretary of Agriculture and
Natural Resources issued a memorandum, dated February 18, 1974, which
pertinently reads as follows:
In the implementation of the foregoing opinion, sales application of private individuals
covering areas in excess of 24 hectares and those of corporations, associations, or
partnership which fall under any of the following categories shall be given due course
and issued patents, to wit:
Sales application for fishponds and for agricultural purposes (SFA, SA and IGPSA)
wherein prior to January 17, 1973,
a. the land covered thereby was awarded;
b. cultivation requirements of law were complied with as shown by investigation
reports submitted prior to January 17, 1973;
c. land was surveyed and survey returns already submitted to the Director of Lands
for verification and approval; and
d. purchase price was fully paid.
From the records, it is evident that the aforestated requisites have been complied
with by appellee long before January 17, 1973, the effectivity of the New
Constitution. To restate, the disputed area was awarded to appellee on August 17,
1950, the purchase price was fully paid on July 26, 1951, the cultivation requirements
were complied with as per investigation report dated December 31, 1949, and the
land was surveyed under Pls-97.
The same finding was earlier made by the Director of Lands:[57]
It is further contended by Villaflor that Nasipit has no juridical personality to apply for
the purchase of public lands for agricultural purposes. The records clearly show,
however, that since the execution of the deed of relinquishment of August 16, 1950,
in favor of Nasipit, Villaflor has always considered and recognized Nasipit as having
the juridical personality to acquire public lands for agricultural purposes. In the deed
of relinquishment xxx, it is stated:
6. That the Nasipit Lumber Co., Inc., a corporation duly organized in accordance with
the laws of the Philippines, x x x.
Even this Office had not failed to recognize the juridical personality of Nasipit to apply
for the purchase of public lands xxx when it awarded to it the land so relinquished by
Villaflor (Order of Award dated August 17, 1950) and accepted its application
therefor. At any rate, the question whether an applicant is qualified to apply for the
acquisition of public lands is a matter between the applicant and this Office to decide
and which a third party like Villaflor has no personality to question beyond merely
calling the attention of this Office thereto.
Needless to say, we also agree that the November 8, 1946 Lease Agreement
between petitioner and private respondent had been terminated by the agreements
to sell and the relinquishment of rights. By the time the verbal leases were allegedly
made in 1951 and 1955,[58] the disputed land had already been acquired and awarded
to private respondent. In any event, petitioners cause of action on these alleged lease
agreements prescribed long before he filed Civil Case No. 2072-III, as correctly found
by the trial and appellate courts.[59] Thus, it is no longer important, in this case, to
pass upon the issue of whether or not amendments to a lease contract can be proven
by parol evidence. The same holds true as regards the issue of forum-shopping.
All in all, petitioner has not provided us sufficient reason to disturb the cogent
findings of the Director of Lands, the Minister of Natural Resources, the trial court
and the Court of Appeals.
WHEREFORE, the petition is hereby DISMISSED.
SO ORDERED.
LEONARDO A. PAAT, in his capacity as Officer-in-Charge (OIC), Regional
Executive Director (RED), Region 2 and JOVITO LAYUGAN, JR., in
his capacity as Community Environment and Natural Resources
Officer (CENRO), both of the Department of Environment and
Natural Resources (DENR), petitioners, vs. COURT OF APPEALS,
HON. RICARDO A. BACULI in his capacity as Presiding Judge of
Branch 2, Regional Trial Court at Tuguegarao, Cagayan, and
SPOUSES BIENVENIDO and VICTORIA DE GUZMAN, respondents.
DECISION
TORRES, JR., J.:
Without violating the principle of exhaustion of administrative remedies, may an
action for replevin prosper to recover a movable property which is the subject matter
of an administrative forfeiture proceeding in the Department of Environment and
Natural Resources pursuant to Section 68-A of P. D. 705, as amended, entitled The
Revised Forestry Code of the Philippines?
Are the Secretary of DENR and his representatives empowered to confiscate and
forfeit conveyances used in transporting illegal forest products in favor of the
government?
These are two fundamental questions presented before us for our resolution.
The controversy on hand had its incipiency on May 19, 1989 when the truck of
private respondent Victoria de Guzman while on its way to Bulacan from San Jose,
Baggao, Cagayan, was seized by the Department of Environment and Natural
Resources (DENR, for brevity) personnel in Aritao, Nueva Vizcaya because the driver
could not produce the required documents for the forest products found concealed in
the truck. Petitioner Jovito Layugan, the Community Environment and Natural
Resources Officer (CENRO) in Aritao, Cagayan, issued on May 23, 1989 an order of
confiscation of the truck and gave the owner thereof fifteen (15) days within which to
submit an explanation why the truck should not be forfeited. Private respondents,
however, failed to submit the required explanation. On June 22, 1989,[1] Regional
Executive Director Rogelio Baggayan of DENR sustained petitioner Layugans action of
confiscation andordered the forfeiture of the truck invoking Section 68-A of
Presidential Decree No. 705 as amended by Executive Order No. 277. Private
respondents filed a letter of reconsideration dated June 28, 1989 of the June 22,
1989 order of Executive Director Baggayan, which was, however, denied in a
subsequent order of July 12, 1989. [2] Subsequently, the case was brought by the
petitioners to the Secretary of DENR pursuant to private respondents statement in
their letter dated June 28, 1989 that in case their letter for reconsideration would be
denied then this letter should be considered as an appeal to the Secretary. [3] Pending
resolution however of the appeal, a suit for replevin, docketed as Civil Case 4031,
was filed by the private respondents against petitioner Layugan and Executive
Director Baggayan[4] with the Regional Trial Court, Branch 2 of Cagayan, [5] which
issued a writ ordering the return of the truck to private respondents. [6] Petitioner
Layugan and Executive Director Baggayan filed a motion to dismiss with the trial
court contending, inter alia, that private respondents had no cause of action for their
failure to exhaust administrative remedies. The trial court denied the motion to
dismiss in an order dated December 28, 1989. [7] Their motion for reconsideration
having been likewise denied, a petition for certiorari was filed by the petitioners with
the respondent Court of Appeals which sustained the trial courts order ruling that the
question involved is purely a legal question. [8] Hence, this present petition,[9] with
prayer for temporary restraining order and/or preliminary injunction, seeking to
reverse the decision of the respondent Court of Appeals was filed by the petitioners
on September 9, 1993. By virtue of the Resolution dated September 27, 1993, [10] the
prayer for the issuance of temporary restraining order of petitioners was granted by
this Court.
Invoking the doctrine of exhaustion of administrative remedies, petitioners aver
that the trial court could not legally entertain the suit for replevin because the truck
was under administrative seizure proceedings pursuant to Section 68-A of P.D. 705,
as amended by E.O. 277. Private respondents, on the other hand, would seek to
avoid the operation of this principle asserting that the instant case falls within the
exception of the doctrine upon the justification that (1) due process was violated
because they were not given the chance to be heard, and (2) the seizure and
forfeiture was unlawful on the grounds: (a) that the Secretary of DENR and his
representatives have no authority to confiscate and forfeit conveyances utilized in
transporting illegal forest products, and (b) that the truck as admitted by petitioners
was not used in the commission of the crime.
Upon a thorough and delicate scrutiny of the records and relevant jurisprudence
on the matter, we are of the opinion that the plea of petitioners for reversal is in
order.
This Court in a long line of cases has consistently held that before a party is
allowed to seek the intervention of the court, it is a pre-condition that he should have
availed of all the means of administrative processes afforded him. Hence, if a remedy
within the administrative machinery can still be resorted to by giving the
administrative officer concerned every opportunity to decide on a matter that comes
within his jurisdiction then such remedy should be exhausted first before courts
judicial power can be sought. The premature invocation of courts intervention is fatal
to ones cause of action.[11] Accordingly, absent any finding of waiver or estoppel the
case is susceptible of dismissal for lack of cause of action. [12] This doctrine of
exhaustion of administrative remedies was not without its practical and legal reasons,
for one thing, availment of administrative remedy entails lesser expenses and
provides for a speedier disposition of controversies. It is no less true to state that the
courts of justice for reasons of comity and convenience will shy away from a dispute
until the system of administrative redress has been completed and complied with so
as to give the administrative agency concerned every opportunity to correct its error
and to dispose of the case. However, we are not amiss to reiterate that the principle
of exhaustion of administrative remedies as tested by a battery of cases is not an
ironclad rule. This doctrine is a relative one and its flexibility is called upon by
the peculiarity and uniqueness of the factual and circumstantial settings of a
case. Hence, it is disregarded (1) when there is a violation of due process, [13] (2)
when the issue involved is purely a legal question, [14] (3) when the administrative
action is patently illegal amounting to lack or excess of jurisdiction, [15] (4) when there
is estoppel on the part of the administrative agency concerned, [16] (5) when there is
irreparable injury,[17] (6) when the respondent is a department secretary whose acts
as an alter ego of the President bears the implied and assumed approval of the latter,
[18]
(7) when to require exhaustion of administrative remedies would be unreasonable,
[19]
(8) when it would amount to a nullification of a claim, [20] (9) when the subject
matter is a private land in land case proceedings, [21] (10) when the rule does not
provide a plain, speedy and adequate remedy, and (11) when there are
circumstances indicating the urgency of judicial intervention.[22]
In the case at bar, there is no question that the controversy was pending before
the Secretary of DENR when it was forwarded to him following the denial by the
petitioners of the motion for reconsideration of private respondents through the order
of July 12, 1989. In their letter of reconsideration dated June 28, 1989, [23] private
respondents clearly recognize the presence of an administrative forum to which they
seek to avail, as they did avail, in the resolution of their case. The letter, reads, thus:
xxx
If this motion for reconsideration does not merit your favorable action, then this letter
should be considered as an appeal to the Secretary.[24]
It was easy to perceive then that the private respondents looked up to the
Secretary for the review and disposition of their case. By appealing to him, they
acknowledged the existence of an adequate and plain remedy still available and open
to them in the ordinary course of the law. Thus, they cannot now, without violating
the principle of exhaustion of administrative remedies, seek courts intervention by
filing an action for replevin for the grant of their relief during the pendency of an
administrative proceedings.
Moreover, it is important to point out that the enforcement of forestry laws,
rules and regulations and the protection, development and management of forest
lands fall within the primary and special responsibilities of the Department of
Environment and Natural Resources. By the very nature of its function, the DENR
should be given a free hand unperturbed by judicial intrusion to determine a
controversy which is well within its jurisdiction. The assumption by the trial court,
therefore, of the replevin suit filed by private respondents constitutes an unjustified
encroachment into the domain of the administrative agencys prerogative. The
doctrine of primary jurisdiction does not warrant a court to arrogate unto itself the
authority to resolve a controversy the jurisdiction over which is initially lodged with an
administrative body of special competence. [25] In Felipe Ismael, Jr. and Co. vs. Deputy
Executive Secretary,[26] which was reiterated in the recent case of Concerned Officials
of MWSS vs. Vasquez,[27] this Court held:
Thus, while the administration grapples with the complex and multifarious problems
caused by unbriddled exploitation of these resources, the judiciary will stand clear. A
long line of cases establish the basic rule that the courts will not interfere in matters
which are addressed to the sound discretion of government agencies entrusted with
the regulation of activities coming under the special technical knowledge and training
of such agencies.
To sustain the claim of private respondents would in effect bring the instant
controversy beyond the pale of the principle of exhaustion of administrative remedies
and fall within the ambit of excepted cases heretofore stated. However, considering
the circumstances prevailing in this case, we can not but rule out these assertions of
private respondents to be without merit. First, they argued that there was violation of
due process because they did not receive the May 23, 1989 order of confiscation of
petitioner Layugan. This contention has no leg to stand on. Due process does not
necessarily mean or require a hearing, but simply an opportunity or right to be heard.
[28]
One may be heard , not solely by verbal presentation but also, and perhaps many
times more creditably and practicable than oral argument, through pleadings. [29] In
administrative proceedings moreover, technical rules of procedure and evidence are
not strictly applied; administrative process cannot be fully equated with due process
in its strict judicial sense.[30] Indeed, deprivation of due process cannot be successfully
invoked where a party was given the chance to be heard on his motion for
reconsideration,[31] as in the instant case, when private respondents were
undisputedly given the opportunity to present their side when they filed a letter of
reconsideration dated June 28, 1989 which was, however, denied in an order of July
12, 1989 of Executive Director Baggayan. In Navarro III vs. Damasco, [32] we ruled
that :
The essence of due process is simply an opportunity to be heard, or as applied to
administrative proceedings, an opportunity to explain ones side or an opportunity to
seek a reconsideration of the action or ruling complained of. A formal or trial type
hearing is not at all times and in all instances essential. The requirements are
satisfied when the parties are afforded fair and reasonable opportunity to explain
their side of the controversy at hand. What is frowned upon is the absolute lack of
notice or hearing.
Second, private respondents imputed the patent illegality of seizure and
forfeiture of the truck because the administrative officers of the DENR allegedly have
no power to perform these acts under the law. They insisted that only the court is
authorized to confiscate and forfeit conveyances used in transporting illegal forest
products as can be gleaned from the second paragraph of Section 68 of P.D. 705, as
amended by E.O. 277. The pertinent provision reads as follows:
SECTION 68. xxx
xxx
The court shall further order the confiscation in favor of the government of the timber
or any forest products cut, gathered, collected, removed, or possessed, as well as
the machinery, equipments, implements and tools illegaly [sic] used in the area
where the timber or forest products are found. (Underline ours)
A reading, however, of the law persuades us not to go along with private
respondents thinking not only because the aforequoted provision apparently does not
mention nor include conveyances that can be the subject of confiscation by the
courts, but to a large extent, due to the fact that private respondents interpretation
of the subject provision unduly restricts the clear intention of the law and inevitably
reduces the other provision of Section 68-A , which is quoted herein below:
SECTION 68-A. Administrative Authority of the Department or His Duly Authorized
Representative To Order Confiscation. In all cases of violation of this Code or other
forest laws, rules and regulations, theDepartment Head or his duly authorized
representative, may order the confiscation of any forest products illegally cut,
gathered, removed, or possessed or abandoned, and all conveyances used either by
land, water or air in the commission of the offense and to dispose of the same in
accordance with pertinent laws, regulations and policies on the matter. (Underline
ours)
It is, thus, clear from the foregoing provision that the Secretary and his duly
authorized representatives are given the authority to confiscate and forfeit
any conveyances utilized in violating the Code or other forest laws, rules and
regulations. The phrase to dispose of the same is broad enough to cover the act of
forfeiting conveyances in favor of the government. The only limitation is that it should
be made in accordance with pertinent laws, regulations or policies on the matter. In
the construction of statutes, it must be read in such a way as to give effect to the
purpose projected in the statute.[33] Statutes should be construed in the light of the
object to be achieved and the evil or mischief to be suppressed, and they should be
given such construction as will advance the object, suppress the mischief, and secure
the benefits intended.[34] In this wise, the observation of the Solicitor General is
significant, thus:
But precisely because of the need to make forestry laws more responsive to present
situations and realities and in view of the urgency to conserve the remaining
resources of the country, that the government opted to add Section 68-A. This
amendatory provision is an administrative remedy totally separate and distinct from
criminal proceedings. More than anything else, it is intended to supplant the
inadequacies that characterize enforcement of forestry laws through criminal actions.
The preamble of EO 277-the law that added Section 68-A to PD 705-is most
revealing:
WHEREAS, there is an urgency to conserve the remaining forest resources of the
country for the benefit and welfare of the present and future generations of Filipinos;
WHEREAS, our forest resources may be effectively conserved and protected through
the vigilant enforcement and implementation of our forestry laws, rules and
regulations;
WHEREAS, the implementation of our forestry laws suffers from technical difficulties,
due to certain inadequacies in the penal provisions of the Revised Forestry Code of
the Philippines; and
WHEREAS, to overcome this difficulties, there is a need to penalize certain acts more
responsive to present situations and realities;
It is interesting to note that Section 68-A is a new provision authorizing the DENR to
confiscate, not only conveyances, but forest products as well. On the other
hand, confiscation of forest products by the court in a criminal action has long been
provided for in Section 68. If as private respondents insist, the power on confiscation
cannot be exercised except only through the court under Section 68, then Section 68-
A would have no purpose at all. Simply put, Section 68-A would not have provided
any solution to the problem perceived in EO 277, supra.[35]
Private respondents, likewise, contend that the seizure was illegal because the
petitioners themselves admitted in the Order dated July 12, 1989 of Executive
Director Baggayan that the truck of private respondents was not used in the
commission of the crime. This order, a copy of which was given to and received by
the counsel of private respondents, reads in part , viz. :
xxx while it is true that the truck of your client was not used by her in the commission
of the crime, we uphold your claim that the truck owner is not liable for the crime and
in no case could a criminal case be filed against her as provided under Article 309 and
310 of the Revised Penal Code. xxx[36]
We observed that private respondents misread the content of the aforestated
order and obviously misinterpreted the intention of petitioners. What is contemplated
by the petitioners when they stated that the truck "was not used in the commission of
the crime" is that it was not used in the commission of the crime of theft, hence, in
no case can a criminal action be filed against the owner thereof for violation of Article
309 and 310 of the Revised Penal Code. Petitioners did not eliminate the possibility
that the truck was being used in the commission of another crime, that is, the breach
of Section 68 of P.D.705 as amended by E.O. 277. In the same order of July 12,
1989, petitioners pointed out:
xxx However, under Section 68 of P.D.705 as amended and further amended by
Executive Order No.277 specifically provides for the confiscation of the conveyance
used in the transport of forest products not covered by the required legal documents.
She may not have been involved in the cutting and gathering of the product in
question but the fact that she accepted the goods for a fee or fare the same is
therefor liable. xxx[37]
Private respondents, however, contended that there is no crime defined and
punishable under Section 68 other than qualified theft, so that, when petitioners
admitted in the July 12, 1989 order that private respondents could not be charged for
theft as provided for under Articles 309 and 310 of the Revised Penal Code, then
necessarily private respondents could not have committed an act constituting a crime
under Section 68. We disagree. For clarity, the provision of Section 68 of P.D. 705
before its amendment by E.O. 277 and the provision of Section 1 of E.O. No.277
amending the aforementioned Section 68 are reproduced herein, thus:
SECTION 68. Cutting, gathering and/or collecting timber or other products without
license. - Any person who shall cut , gather , collect , or remove timber or other
forest products from any forest land, or timber from alienable and disposable public
lands, or from private lands, without any authority under a license agreement, lease,
license or permit, shall be guilty of qualified theft as defined and punished under
Articles 309 and 310 of the Revised Penal Code xxx. (Underscoring ours; Section 68,
P.D.705 before its amendment by E.O.277 )
SECTION 1. Section 68 of Presidential Decree No.705, as amended, is hereby
amended to read as follows:
Section 68. Cutting, gathering and/or collecting timber or other forest products
without license. -Any person who shall cut, gather, collect, remove timber or other
forest products from any forest land, or timber from alienable or disposable public
land, or from private land, without any authority, or possess timber or other forest
products without the legal documents as required under existing forest laws and
regulations, shall be punished with the penalties imposed under Articles 309 and 310
of the Revised Penal Code xxx." (Underscoring ours; Section 1, E.O No. 277
amending Section 68, P.D. 705 as amended)
With the introduction of Executive Order No. 277 amending Section 68 of P.D.
705, the act of cutting, gathering, collecting, removing, or possessing forest products
without authority constitutes a distinct offense independent now from the crime of
theft under Articles 309 and 310 of the Revised Penal Code, but the penalty to be
imposed is that provided for under Article 309 and 310 of the Revised Penal Code.
This is clear from the language of Executive Order No. 277 when it eliminated the
phrase shall be guilty of qualified theft as defined and punished under Articles 309
and 310 of the Revised Penal Code and inserted the words shall be punished with the
penalties imposed under Article 309 and 310 of the Revised Penal Code . When the
statute is clear and explicit, there is hardly room for any extended court ratiocination
or rationalization of the law.[38]
From the foregoing disquisition, it is clear that a suit for replevin can not be
sustained against the petitioners for the subject truck taken and retained by them for
administrative forfeiture proceedings in pursuant to Section 68-A of the P. D. 705, as
amended. Dismissal of the replevin suit for lack of cause of action in view of the
private respondents failure to exhaust administrative remedies should have been the
proper course of action by the lower court instead of assuming jurisdiction over the
case and consequently issuing the writ ordering the return of the truck. Exhaustion of
the remedies in the administrative forum, being a condition precedent prior to ones
recourse to the courts and more importantly, being an element of private
respondents right of action, is too significant to be waylaid by the lower court.
It is worth stressing at this point, that a suit for replevin is founded solely on the
claim that the defendant wrongfully withholds the property sought to be recovered. It
lies to recover possession of personal chattels that are unlawfully detained. [39] To
detain is defined as to mean to hold or keep in custody, [40] and it has been held that
there is tortuous taking whenever there is an unlawful meddling with the property, or
an exercise or claim of dominion over it, without any pretense of authority or right;
this, without manual seizing of the property is sufficient. [41] Under the Rules of Court,
it is indispensable in replevin proceedings, that the plaintiff must show by his own
affidavit that he is entitled to the possession of property, that the property is
wrongfully detained by the defendant, alleging the cause of detention, that the same
has not been taken for tax assessment, or seized under execution, or attachment, or
if so seized, that it is exempt from such seizure, and the actual value of the property.
[42]
Private respondents miserably failed to convince this Court that a wrongful
detention of the subject truck obtains in the instant case. It should be noted that the
truck was seized by the petitioners because it was transporting forest products with
out the required permit of the DENR in manifest contravention of Section 68 of P.D.
705 as amended by E.O 277. Section 68-A of P.D. 705, as amended, unquestionably
warrants the confiscation as well as the disposition by the Secretary of DENR or his
duly authorized representatives of the conveyances used in violating the provision of
forestry laws. Evidently, the continued possession or detention of the truck by the
petitioners for administrative forfeiture proceeding is legally permissible, hence , no
wrongful detention exists in the case at bar.
Moreover, the suit for replevin is never intended as a procedural tool to question
the orders of confiscation and forfeiture issued by the DENR in pursuance to the
authority given under P.D.705, as amended. Section 8 of the said law is explicit that
actions taken by the Director of the Bureau of Forest Development concerning the
enforcement of the provisions of the said law are subject to review by the Secretary
of DENR and that courts may not review the decisions of the Secretary except
through a special civil action for certiorari or prohibition. It reads :
SECTION 8 . REVIEW - All actions and decisions of the Director are subject to review,
motu propio or upon appeal of any person aggrieved thereby, by the Department
Head whose decision shall be final and executory after the lapse of thirty (30) days
from the receipt of the aggrieved party of said decision, unless appealed to the
President in accordance with Executive Order No. 19, Series of 1966. The Decision of
the Department Head may not be reviewed by the courts except through a special
civil action for certiorari or prohibition.
WHEREFORE, the Petition is GRANTED; the Decision of the respondent Court
of Appeals dated October 16, 1991 and its Resolution dated July 14, 1992 are hereby
SET ASIDE AND REVERSED; the Restraining Order promulgated on September 27,
1993 is hereby made permanent; and the Secretary of DENR is directed to resolve
the controversy with utmost dispatch.
SO ORDERED.
[G.R. No. 120066. September 9, 1999]
OCTABELA ALBA Vda. De RAZ, Spouses MANUEL and SUSANA BRAULIO,
RODOLFO, LOURDES and BEATRIZ all surnamed ALBA, petitioners,
vs. COURT OF APPEALS and JOSE LACHICA, respondents.
DECISION
YNARES-SANTIAGO, J.:
Before us is an appeal by certiorari from a decision rendered by the Court of
Appeals dated August 18, 1992 affirming in toto the decision of the Regional Trial
Court of Kalibo, Aklan, Branch I, in Land Registration Case No. K-101, LRC Record No.
K. 15104, the dispositive portion of which reads as follows:
WHEREFORE, judgment is hereby rendered as follows:
1. The parcel of land described in Plan Psu-161277 and the improvements
thereon situated in the Poblacion of the Municipality of Banga, Province of
Aklan, Philippines, with an area of 4,845 square meters is brought under the
operation of the property registration decree (PD No. 1529) and the title thereto
is registered and confirmed in the name of applicant Jose Lachica, married to
Adela Raz of Kalibo, Aklan, Philippines;
2. A ten (10) meter road width along the national road mentioned in the
application be segregated for future road widening program upon payment of
just compensation to be annotated at the back of the title;
3. For lack of merit, the opposition filed by the spouses Manuel and
Susana Braulio, Octabela Alba Vda. De Raz, Rodolfo Alba, Lourdes Alba and
Beatriz Alba are hereby DISMISSED.
SO ORDERED.[1]
The factual antecedents of the case as summed by the trial court and adopted
by the Court of Appeals are as follows:
Applicant Jose Lachica filed this application for title to land on April 28, 1958 with the
claim that the land applied for was purchased by him and his wife, Adela Raz from,
from one Eulalio Raz. The documents attached to the application are: technical
description, surveyors certificate, certification by the chief deputy assessor of Aklan
and the blue print of Psu-161277.
The initial hearing was scheduled for October 31, 1958 and the certificate of
publication in the Official Gazette was issued on September 23, 1958. The
certification of posting of the notice of initial hearing was issued on October 13, 1958.
The land applied for is residential, situated in the Poblacion of Banga, Aklan, with an
area of 4,845 square meters, bounded on the northeast by the property of the
Municipality of Banga (Sketch, Exh. F).
The initial hearing was held on October 31, 1958. An order of general default was
issued but those who presented their opposition, namely, Octabela Alba Vda. De Raz,
Manuel and Susana Braulio, Jose Rago, representing Apolonia Rebeco, the Director of
Lands and the Municipality of Banga represented by the Provincial Fiscal, were given
thirty (30) days to file their written opposition.
Manuel C. Braulio and Susana P. Braulio filed their opposition on October 31,
1958. They opposed the registration of the southeastern portion of the 240 square
meters of the land applied for alleging that they are the owners in fee simple and
possessors of said portion and all the improvements thereon for not less than 70
years together with their predecessor-in-interest deriving their title by purchase from
the original owners. They prayed for the Court to declare them the true and absolute
owners of the disputed portion of the same in their names.
On October 31, 1958, Octabela Vda. de Raz filed her opposition.
Jose Rago filed his opposition on November 29, 1958 as the duly constituted
attorney-in-fact of Apolonia Rebeco although no special power of attorney was
attached. He opposed the registration of the northeastern portion of the land applied
for, with an area of 43.83 square meters. He alleged that his principal is the owner by
right of succession and is in the possession of said portion with all its improvements
for more than 80 years together with his predecessor-in-interest, continuously,
peacefully and openly under claim of ownership. He prayed that his principal be
declared the true and absolute owner of the disputed portion of 43.83 square meters.
On March 22, 1966, the Court issued an Order allowing the applicant to hire another
surveyor to segregate the non-controversial portion of the land applied for and to
notify the oppositors and their counsels.
On January 12, 1970, a motion to lift the order of general default and to admit the
attached opposition of Rodolfo Alba, Lourdes Alba and Beatriz Alba, as well as a
motion to admit the attached amended petition of Octabela Vda. de Raz were
filed. The Court in its order dated March 21, 1970 admitted said opposition and set
aside the order of default.
In their opposition, Rodolfo Alba, Lourdes Alba, represented by their attorney-in-fact,
Octabela Alba Vda. de Raz, alleged that they are the co-owners of a portion of the
land applied for with an area of 2,262 square meters bounded on the north by
Januario Masigon, Nicolas Realtor, Agustina Rebeldia and Apolonia Rebeco, on the
south by Eulalio Raz and on the west by the public market of Banga. They claimed to
have inherited the above-mentioned portion from their late father, Eufrosino M. Alba,
who purchased the same from Dionisia Regado in 1918. Hence, they have been in
possession continuously, openly and peacefully under claim of ownership of the
above-mentioned portion for not less 70 years. They prayed that the disputed portion
of 2,262 square meters be registered as their pro-indiviso property.
In her amended opposition, Octabela Alba Vda. de Raz opposed the registration of
the southeastern portion of the land applied for with an area of 331.44 square
meters. She claimed to have been in peaceful, continuous and open possession
together with her deceased husband, Eulalio Raz, under claim of ownership of the
above-mentioned portion for not less than 70 years, by purchase from its
owners. She likewise opposed the registration of the western portion of the land
applied for, with an area of 676 square meters, having purchased the same from its
original owners on (sic) her predecessor-in-interest has been open, peaceful and
continuous under claim of ownership for a period of not less than 70 years. She
prayed that the portion of 331.44 square meters be registered in her name and that
of the heirs of Eulalio Raz, pro indiviso., and the other portion of 676 square meters
be registered solely in her name.
On February 25, 1970, the applicant Dr. Jose Lachica filed his consolidated opposition
and reply to the motion to lift order of default stating that there is no reason to do so
under the Rules of Court, and that the opposition of Rodolfo Alba, Lourdes Alba and
Beatriz Alba, as well as the amended opposition of Octabela Alba Vda. de Raz are
without merit in law and in fact.
On March 21, 1970, the motion to lift the order of general default was granted and
the opposition of Rodolfo Alba, Lourdes Alba and Beatriz Alba, as well as the
opposition of Octabela Alba Vda. de Raz were all admitted.
In the hearing of March 3, 1972, applicant offered for admission exhibits A to I and
the testimonies of Pedro Ruiz (April 20, 1971), Jose Rago (Oct. 23, 1970) and Dr.
Jose Lachica (July 16, 1971; Feb. 10, 1972). The Court admitted the same.
On March 13, 1974, the Court issued an order appointing Engr. Angeles Relor to act
as Commissioner and delimit the portions claimed by the three sets of oppositors and
submit an amended approved plan together with the technical description for each
portion.
The Commissioners report and sketch was submitted on December 4, 1974. The
applicant filed his opposition to the Commissioners report on December 12,
1974. The Court in its order of December 13, 1974 required the Commissioner to
submit an amended report and amended sketch.
The Commissioners corrected report and sketch was submitted on February 24, 1975
which the Court approved on February 25, 1975 there being no objection from the
parties.
On March 15, 1977, the Court issued an order whereby the testimony of oppositor
Octabela Alba Vda. de Raz was stricken off the record for her failure to appear in the
scheduled hearing on March 15, 1977.
Again, in its order dated May 27, 1977 the testimony of Octabela Alba Vda. de Raz
was stricken off record because the latter was bedridden and can not possibly appear
for cross-examination.
Oppositor Octabela Alba Vda. de Raz substituted by her heirs filed a formal offer of
exhibits on August 24, 1988. Applicant filed his comments thereto on August 29,
1988. The Court admitted said exhibits and the testimony of their witness on March
1, 1989.
In this applicaton for title to land filed by applicant Jose Lachica, four oppositions
were filed by the following:
1. Jose Rago, in representation of Apolonia Rebeco;
2. Manuel C. Braulio and Susana Braulio;
3. Rodolfo, Lourdes and Beatriz, all surnamed Alba, represented by
Octabela Alba Vda. de Raz; and
4. Octabela Alba Vda. de Raz.
In the hearing of October 23, 1970, counsel for oppositor Jose Rago manifested that
he would file a motion for withdrawal of opposition and Jose Rago himself declared
his conformity (Tsn, Oct. 23, 1970, p. 5). Although no formal motion to withdraw was
actually filed, oppositor Rago has not presented evidence on his behalf; hence, his
opposition must be disregarded.
As regards oppositor Manuel C. Braulio ans Susana Braulio, a deed of sale supposedly
executed by Susana Braulio and Octabela Alba Vda. de Raz in 1956 was identified by
Felimon Raz, a witness for the oppositors (Tsn, Sept. 29, 1977, pp. 3 to 4). However,
said deed cannot be found in the records. Even so, the Braulios have not presented
evidence to show that by the time this application was filed, they and their
predecessors-in-interest have been in actual, open, public, peaceful and continuous
possession of the land claimed, in concept of owner, for at least 10 years sufficient to
acquire title thereto (Arts. 1117, 1118, 1134, Civil Code of the Philippines). As such,
the opposition of Manuel C. Braulio and Susana Braulio must be dismissed. [2]
On the basis of the testimonial and documentary evidence presented by the
applicant and the oppositor Raz, the court a quo rendered judgment in favor of the
applicant as stated at the outset. In dismissing the claim of the remaining oppositors
Rodolfo, Lourdes and Beatriz, all surnamed Alba, represented by Octabela Alba Vda.
de Raz and Octabela Alba Vda. de Raz herself, the trial court in sum noted that said
oppositors have never offered any explanation as to the non-payment of realty taxes
for the disputed portions of the subject property from 1941 to 1958 while the
respondent/applicant continuously paid taxes under Tax Declaration No. 14181
covering said property from 1945-1958 when the case was filed per certification
issued by the Municipal Treasurers Office of Banga. [3] In rendering judgment in favor
of respondent/applicant, the trial court stressed that while it is true that tax receipts
and declarations of ownership for tax purposes are not incontrovertible evidence of
ownership, they become strong evidence of ownership acquired by prescription when
accompanied by proof of actual possession.
Dissatisfied, petitioners interposed an appeal to the Court of Appeals which
affirmed the decision of the trial court.
Unfazed, petitioners now come to this Court arguing that
1. The Civil law provisions on prescription are inapplicable.
2. The applicable law is Section 48 [a] of the Public Land Law or Act 141, as
amended.
3. Private respondent has not acquired ownership in fee simple, much less has
he met the conditions for judicial confirmation of imperfect title under
Section 48 [a] of Act 141, as amended, except perhaps for a 620
square meter portion of the land applied for because:
3.1. There is absolutely no proof of the alleged sales made by Raz and
Alba.
3.2. There is absolutely no reliable proof of the alleged theft of the deeds
of sale.
3.3. The identity of the land has not been established.
3.4. The Court of Appeals misapplied the basic rules governing the
introduction of secondary evidence.
3.5. The applicant/respondents Tax Declaration No. 14181 is a doctored
tax declaration.
3.6. Applicant/respondents tax declarations have no probative value.
3.7. Applicant/respondent has not satisfied the required quantum of
evidence in land registration cases.
3.8. Petitioners-oppositors have proven their right over the subject
property.
In rendering judgment in favor of private respondent, the Court of Appeals
reasoned, inter alia, as follows:
On the basis of the testimonial and documentary evidence presented by the
applicant, the trial court did not err in confirming that the applicant is the absolute
owner in fee simple of the property subject of the application for registration entitling
him to register the same in his name under the operation of PD 1529.
It is of no moment that the applicant failed to produce the originals of those other
deeds/documents of conveyances, for he was able to present sufficient substantial
secondary evidence, in accordance with the requirements of Section 4, Rule 130 of
the Revised Rules of Court, now Section 5, same Rule of the Revised Rules on
Evidence, and the doctrines in point.
Thus, Government vs. Martinez, 44 Phil. 817, explained that when the original writing
is not available for one reason or another which is the best or primary evidence, to
prove its contents is the testimony of some one who has read or known about
it. Republic vs. Court of Appeals, 73 SCRA 148, laid out the foundation before
secondary evidence is introduced, that the due execution, delivery and reason for
non-production of the original writing must first be produced. Raylago vs Jarabe, 22
SCRA 1247, ruled that it is not necessary to prove the loss of the original document
beyond all possibility of mistake. A reasonable probability of its loss is sufficient and
this may be shown by a bonafide (sic) and diligent search, fruitlessly made, for it in
places where it is likely to be found. After proving the due execution and delivery of
the document, together with the fact that the same has been lost or destroyed, its
contents may be proved, among others, by the recollection of witnesses. And Beall
vs. Dearing, 7 ala. 126; and Bogardas vs. Trinity Church, 4 Sandf. Ch. (Nn.y.) 639,
are of the view that that where the lost documents are more than thirty (30) years
old and would thus prove themselves if produced, secondary evidence of their
contents is admissible without proof of their execution.
In the case at bar, petitioner acquired the property in 1940-1941. He presented the
Deed (Exh. G) executed by the vendor Faustino Martirez. While he failed to present
the other deeds of sale covering the other portions of the property, he has sufficiently
established that they were notarized documents and were taken by his mother-in-law
sometime in 1956. He reported the loss to the authorities and even filed a case of
theft. He further exerted efforts and made a diligent search of those documents from
the notary public but in vain. He presented the clerk of the Municipal Treasurers
Office of Banga, who testified having seen those deeds as they were presented to
him by the applicant and which were used as basis for the preparation and issuance
of Tax Declaration No. 14181 in the name of the tax declarant. Tax Declaration No.
14181 (Exh. H) was presented in Court, proving that the land was declared for tax
purposes in the name of the applicant and his wife. The applicant has been paying
the realty tax covering the property since 1945 and beyond 1958, when the
application for registration was filed in court, per certification of the Municipal
Treasurer of Banga (Exh. 1).
In resume, We find and so hold as did the trial court that Dr. Jose Lachica is the
abolute owner in fee simple of the land described in his application for its original
registration in his name. The land contains an area of 4,845 square meters, more or
less, situated in Banga, Aklan, and
Bounded on the NE., along line1-2, by property of Apolonia Rimate; on the SE., along
line 2-3, by National road; on the SW., along line 3-4, by property of the Mpl.
Government of Banga (Public Market); and on the NW., along line 4-1, by property of
the Municipal Government of Banga (Public Market). Beginning at a point marked 1
on plan, being N. 45 deg. 02 E., 423.38 m. from B.L.L.M. 1, Mp. of Banga, Aklan;
thence, S. 33 deg. 46 E., 87.66 m. to point 2
thence, S. 56 deg. 42 W., 63.81 m. to point 3
thence, N. 37 deg. 22 W., 59.26 m. to point 4
thence, N. 33 deg. 42 E., 73.08 m. to the point of
beginning, xxx All points referred to are indicated on the plan and are marked on the
ground by P.L.S. Cyl. Conc. Mons. Bearings true date of the survey, January 25,
1957, and that of the approval, October 3, 1957.
The applicant has been in public, open, continuous and adverse possession of the
property since 1940-41 up to the present to the exclusion of all, and thereby also
acquired the property by acquisitive prescription, in accordance with Sections 40 and
43 of Act 190, otherwise known as the Code of Civil Procedure, having been in actual
and adverse possession under claim of ownership for over ten (10) years, and thus in
whatever way his occupancy might have commenced or continued under a claim of
title exclusive of any other right and adverse to all other claimants, resulted in the
acquisition of title to the land by acquisitive prescription (Vda. de Delima vs. Tio, 32
SCRA 516).
Indeed, to borrow the apt words of the ponente in the Delima case, such proof of
ownership of, and the adverse, continuous possession of the applicant since 1940,
strongly xxx militate against any judicial cognizance of a matter that could have been
withheld in its ken, hence, whatever right oppositors may have had over the property
or any portion thereof was thereby also lost through extinctive prescription in favor of
the applicant who had been in actual, open, adverse and continuous possession of
the land applied for in the concept of owner for over 10 years when the application
for registration was filed in court.[4]
It is a fundamental and settled rule that findings of fact by the trial court and
the Court of Appeals are final, binding or conclusive on the parties and upon this
Court,[5] which will not be reviewed[6] or disturbed on appeal unless these findings are
not supported by evidence[7] or unless strong and cogent reasons dictate otherwise.[8]
More explicitly, the findings of fact of the Court of Appeals, which are as a
general rule deemed conclusive, may be reviewed by this Court in the following
instances:
1.] When the factual findings of the Court of Appeals and the trial court
are contradictory;[9]
 2.] When the conclusion is a finding grounded entirely on speculation,
surmises and conjectures;[10]
3.] When the inference made by the Court of Appeals from its findings of
fact is manifestly mistaken, absurd[11] or impossible;
4.] Where there is a grave abuse of discretion in the appreciation of facts;
[12]
5.] When the appellate court in making its findings went beyond the issues
of the case, and such findings are contrary to the submission of both
appellant and appellee;
6.] When the judgment of the Court of Appeals is premised on a
misapprehension of facts;[13]
7.] When the Court of Appeals manifestly overlooked certain relevant facts
not disputed by the parties which, if properly considered, would justify
a different conclusion;[14]
8.] When the findings of fact are themselves conflicting;
9.] When the findings of fact are conclusions without citation of specific
evidence on which they are based; and
10.] When the findings of fact of the Court of Appeals are premised on the
absence of evidence but such findings are contradicted by the evidence
on record.[15]
The primordial issue to be resolved is whether or not the private
respondent/applicant is entitled to the confirmation of his ownership in fee simple for
the 4, 845 square meter parcel of land he applied for.
In sum, both the trial court and the Court of Appeals adjudicated and confirmed
private respondent/applicants title to the land on the basis of the findings that: 1.]
the private respondent/applicant purchased the land from Faustino Martirez; 2.] the
subject land is covered by Tax Declaration No. 14181; 3.] the private
respondent/applicant has paid the realty taxes on the land from 1945 up to the filing
of his application in 1958; 4.] the private respondent/applicant has been in actual,
open and continuous possession of the subject land in the concept of owner since
1945, and 5.] the private respondent/applicant has acquired the land by prescription.
As stated earlier, a review of the findings of fact of the Court of Appeals is not a
function that this Court normally undertakes [16] unless the appellate courts findings
are palpably unsupported by the evidence on record or unless the judgment itself is
based on a misapprehension of facts. [17] A thorough review of the record convinces
this Court that the general rule with regard to the conclusiveness of the trial courts
and appellate tribunals factual findings should not be applied because there
are material circumstances which, when properly considered, would have altered the
result of the case.
First, a circumspect scrutiny of the evidence extant on record reveals that with
the exception of 620 square meters, there has been no satisfactory showing of how
private respondent/applicant acquired the remainder of the subject land.
As can be gathered from the discussion of the appellate court, as well as the
arguments proffered by private respondent, he acquired the land in question from
three (3) sources, namely: a.] A Deed of Sale dated August 13, 1941 allegedly
executed by Faustino Martirez covering 840 square meters; b.] 300 square meters
allegedly purchased from private respondents father-in-law Eulalio Raz, and c.] 3,725
square meters private respondent allegedly bought in 1940 from Eufrocino Alba.
The sale involving the first parcel of land covering 840 square meters, was not
questioned by petitioners as its technical description delineated in the Escritura De
Venta Absoluta dated August 13, 1941,[18] to wit:
Un terreno solar residencia antes palayero regado, actuado en el casco central del
municipio de Banga, Capiz. Sin ninguna mejora, de una extension superficial de
ochocientos cuarenta metros cuadrados (840 mts. cds.) 6 sean cuarenta metros de
frente por otros veinte y unmetrode fondo, cuyos linderos por el Norte con propiedad
de Eufrosino Alba y con Eulalio Raz; por Este con Eulalio Raz y con la carretera
provincial de Kalibo a Banga; por Sur con la misma carretera provincial y con terreno
del municipio para mercado; y por al Oeste con al terreno del mercado municipal de
Banga y con propiedad de Eufrosino Alba y al terreno tienes sus mojones de cemento
en todos sus cuatro cantos de linderia y sin otro limite visible de linderia mas que
dichos mojones y esta amillarado a mi nombre en una sola hoja declaratoria de
propiedad Tax No. 12374 en la Oficina del Tasador Provincial de Capiz, cuyo valor
amilarado actual es veinte pesos (P20.00) xxx
leaves no room for doubt as to its identity, total area of 840 square meters as well as
its dimensions of 40 meters in front and 21 meters at the base. How this parcel was
further reduced to 620 square meters is explained by the fact that the Municipal
Government of Banga appropriated 220 square meters thereof for the Banga Public
Market Road.
What, however, is seriously contested are the alleged purchases of the other
two parcels from Eulalio Raz measuring 300 square meters and from Eufrocino Alba
measuring 3,725 square meters owing to the questionable circumstances surrounding
their acquisition.
The records disclose that the subject land was originally owned by Dionisia
Regado under Tax Declaration No. 802. [19] The records further reveal that Dionisia
Regado sold: [1.] 1,850 square meters of the land to the Municipality of Banga
evidenced by a Spanish document denominated as a deed of sale dated April 29,
1914;[20] [2.] 1,320 square meters to Eulalio Raz evidenced by a document
entitled Escritura de Venta Absoluta dated September 6, 1918,[21] and [3.] 2,938
square meters to Eufrocino Alba evidenced by a deed of conveyance dated
September 6, 1918 written in Spanish.[22]
Faustino Martirez acquired a portion of 840 square meters from Eulalio Raz on
January 15, 1933.[23] Raz retained 480 square meters, however, he and his wife
Octabela Alba conveyed a 240 square meter portion thereof to Susana Braulio on
November 5, 1956.[24] Subsequently on May 29, 1969, the heirs of Eufrocino Alba sold
a 676 square meter portion of the parcel purchased by Eufrocino to Octabela Alba
Vda. de Raz.[25] The deed of conveyance was duly registered with the Registry of
Deeds of Aklan pursuant to Act No. 334 on June 17, 1969 [26] and is covered by Tax
Declaration No. 332 in the name of Eulalio Raz, her husband.[27]
Other than the foregoing transactions involving the subject land which are
borne out by the documentary evidence on record, private respondent/applicant did
not produce the alleged deeds of conveyances evidencing the purported transfers
made by Eulalio Raz and Eufrocino Alba in his favor. Instead he relied chiefly on
secondary evidence to prove the existence thereof which was sustained by both the
trial and the appellate courts. Such reliance on secondary evidence vis--vis the
peculiar facts prevailing in this case rests on infirm legal bases much more so in the
face of the overwhelming documentary evidence of petitioners arrayed against it
because
. . . [a] contract of sale of realty cannot be proven by means of witnesses, but must
necessarily be evidenced by a written instrument, duly subscribed by the party
charged, or by his agent, or by secondary evidence of their contents. No other
evidence, therefore, can be received except the documentary evidence referred to, in
so far as regards such contracts, and these are valueless as evidence unless they are
drawn up in writing in the manner aforesaid.[28]
An applicant for registration of land, if he relies on a document evidencing his title
thereto, must prove not only the genuineness of his title but the identity of the land
therein referred to. The document in such a case is either a basis of his claim for
registration or not at all. If , as in this case, he only claims a portion of what is
included in his title, he must clearly prove that the property sought to be registered is
included in that title.[29]
Second, there are glaring variances in the identities and technical descriptions of
the land applied for by private respondent/applicant and the land he purportedly
purchased from Eufrocino Alba.
Private respondent/applicant alleged that he purchased the remainder of the
subject land measuring 3,725 square meters from Eufrocino Alba sometime in 1940
averring that this parcel is listed as Item No. 5 of his Exhibit I which is denominated
as an Inventory And Appraisal Of The Properties Of The Spouses Adela Raz De
Lachica (Deceased) and Dr. Jose Lachica. Item No. 5[30] of the said inventory
described the parcel of land mentioned therein as follows:
5. Una parcela de terreno cocal secano, amillarado en nombre de Eufrocino Alba bajo
el Tax No. 12792 por valor de P390.00, situado en el municipio de Banga, Capiz, que
linda el Norte con Lorenzo Retiro, y Silverio Relis; al Este con la carretera provincial
Banga-Libacao; al sur con Bienvenido M. Alba y al Oeste con Cirilo rala y Adela Raz;
con una extension aproximada de una (1) hectarea (20) areas y (35) centiareas poco
mas o menos. (Note: Said property was purchased by the spouses Jose Lachica and
Adela Raz Lachica from Eufrocino M. Alba in the amount of P500.00 as evidenced by
a Escritura de Compraventa executed on November 25, 1940, at Himamaylan, Negros
Occidental and notarized by Atty. Conrado Gensiano, as Reg. Not. 122, Pag. 67, Libro
VIII, Serie 1940).
On the other hand, the land applied for is described technically per Psu 161277
as
A parcel of land (as shown on Plan Psu-161277), situated in Poblacion, Municipality of
Banga, Province of Aklan. Bounded on the NE., along line 1-2, by property of
Apolonia Rimate; on the SE., along line 2-3, by National Road; on the SW., along line
3-4, by property of the Mpl. Government of Banga (Public Market); and on the NW.,
along line 4-1, by property of the Municipal Government of Banga (Public
Market). Beginning at a point marked 1 on plan, being N. 45 deg. 02 E., 423.38 m.
from B.L.L.M. 1, Mp. of Banga, Aklan;
thence S. 33 deg. 46 E. 87.66 m. to point 2
thence S. 56 deg. 42 W., 63.81 m. to point 3
thence N. 37 deg. 22 W., 59.26 m. to point 4
thence N. 33 deg. 42 E., 73.08 m. to the point of
beginning, containing an area of FOUR THOUSAND EIGHT HUNDRED AND FORTY
FIVE (4,845) SQUARE METERS. All points referred to are indicated on the plan and
are marked on the ground by P.L.S. Cyl. Conc. Mons. Bearings true date of survey,
January 25, 1957, and that of the approval, October 3, 1957. [31]
It will be readily noted vis--vis the foregoing that: a.] the land applied for is
covered by Tax Declaration No. 14181 while the parcel allegedly purchased from
Eufrocino Alba is covered by Tax Declaration No. 15792; b.] the land applied for
is palayero whereas the land allegedly acquired from Eufrocino Alba is cocal
secano. Palay is unhusked rice,[32] thus, the term palayero refers to land devoted to
the planting of rice; cocal, on the other hand, means coconut tree
plantation[33] while secano denotes unwatered land or a dry sand bank; [34] c.] the land
applied for has an area of 4,845 square meters whereas the land supposedly sold by
Eufrocino Alba measures 12,035 square meters; d.] the land applied for is bounded
on the NE by the Banga Public Market, on the SE by Apolonia Rimate, on the SW by
the Banga-Kalibo National Road; and on the NW by the Banga Public Market whereas
the land allegedly obtained from Eufrocino Alba is bounded on the N by Ernesto
Retino and Silverio Relis, on the E by the Banga-Libacao Carretera Provincial, on the S
by Bienvenido Alba and on the W by Cirilo Rala and Adela Raz. It needs be stressed
in this regard that a person who claims that he has better right to real property must
prove not only his ownership of the same but also must satisfactorily prove the
identity thereof.[35]
Third, both trial and appellate courts placed undue reliance on Tax Declaration
No. 14181 considering that there is no satisfactory explanation of how the area of
land covered by Tax Declaration No. 14181 geometrically ballooned from a modest
620 square meter lot to a huge parcel measuring 4, 845 square meters.
As pointed out by petitioners, Tax Declaration No. 14181 was preceded by 1954
Tax Declaration No. 13578 in the name of private respondent/applicant and his
spouse which shows that the land declared therein for taxation purposes covers an
area of 620 square meters. Tax Declaration No. 13578 was preceded by 1953 Tax
Declaration No. 13040 in the name of Adela Raz, private respondents wife. The land
declared for taxation purposes therein also has an area of 620 square meters. Tax
Declaration No. 134040 was preceded by 1947 Tax Declaration No. 6528 in the name
of private respondents wife, Adela Raz.The land declared therein for taxation
purposes likewise measures 620 square meters.
It appears that the quantum leap from 620 square meters in 1947 to 4,845
square meters in 1956 came about on account of an affidavit dated November 17,
1956 wherein private respondent/applicant requested[36] the Municipal Assessor of
Banga to issue a revised tax declaration covering 4,845 square meters on the bare
claim that the area has been decreased to only 620 square meters. The timing of the
revision and its proximity to the date of filing of the application can not but engender
serious doubts on the application more so considering that prior thereto realty tax
payments covering the period 1945 to 1956 covered an area measuring 620 square
meters and private respondent/applicant is banking on said payments to claim
possession and ownership over the same period for an infinitely larger area of 4,845
square meters.
A tax declaration, by itself, is not conclusive evidence of ownership. [37] Tax
declarations for a certain number of years, although constituting proof of claim of title
to land,[38] is not incontrovertible evidence of ownership unless they are supported by
other effective proof.[39] It was, thus, held in one case [40] that where realty taxes
covering thirty-one (31) years were paid only a few months prior to the filing of an
application, such payment does not constitute sufficient proof that the applicant had
a bona fide claim of ownership prior to the filing of the application. Still in another
case,[41] the claim that the applicant had been in continuous and uninterrupted
possession of the disputed land was not given credence because it was negated by
the fact that he declared the land for taxation purposes in October 1959 when he
filed his application for registration although he could have done so in 1937 when he
allegedly purchased the land. A belated declaration is, furthermore, indicative that the
applicant had no real claim of ownership over the subject land prior to the
declaration[42] and where there are serious discrepancies in the tax declarations as in
this case, registration must be denied.[43] If at all, the foregoing facts only serves to
underscore private respondent/applicants crafty attempt to cloak with judicial color
his underhanded scheme to seize the adjoining parcels of land and to enrich himself
at the expense of its rightful owners.
Fourth, the lower courts reliance on prescription is not well-taken given the
peculiar facts prevailing in this case.
The law in force at the time an action accrues is what governs the proceeding
consistent with the fundamental dictum that laws shall have no retroactive effect,
unless the contrary is proved. [44] Basic is the rule that no statute, decree, ordinance,
rule, regulation or policy shall be given retrospective effect unless explicitly stated so.
[45]
Along the same vein, a courts jurisdiction depends on the law existing at the time
an action is filed[46]and a law continues to be in force with regard to all rights which
accrued prior to the amendment thereof.[47]
In this case, the controlling statute when the private respondent/applicant filed
his application for registration on April 28, 1958 is Section 48 of Commonwealth Act
141, as amended by RA Nos. 1942 and 6236,[48] which states that:
SEC. 48. The following-described citizens of the Philippines, occupying lands of the
public domain or claiming to own any such lands or an interest therein, but whose
titles have not been perfected or completed, may apply to the Court of First Instance
of the province where the land is located for confirmation of their claims and the
issuance of a certificate of title therefor, under the Land Registration Act, to wit:
(a) Those who prior to the transfer of sovereignty from Spain to the United States
have applied for the purchase, composition or other form of grant of lands of the
public domain under the laws and royal decrees then in force and have instituted and
prosecuted the proceedings in connection therewith, but have with or without default
upon their part, or for any other cause, not received title therefor, if such applicants
or grantees and their heirs have occupied and cultivated said lands continuously since
the filing of their applications.[49]
(b) Those who by themselves or through their predecessors in interest have been in
open, continuous, exclusive and notorious possession and occupation of agricultural
lands of the public domain under a bona fide claim of ownership, for at least thirty
years immediately preceding the filing of the application for confirmation of title
except when prevented by war or force majeure. These shall be conclusively
presumed to have performed all the conditions essential to a Government grant and
shall be entitled to a certificate of title under the provisions of this chapter. [50]
(c) Members of the national cultural minorities who by themselves or through their
predecessors-in-interest have been in open, continuous, exclusive and notorious
possession and occupation of lands of the public domain suitable to agriculture,
whether disposable or not, under a bona fide claim of ownership for at least 30 years
shall be entitled to the rights granted in subsection (b) hereof.[51]
A circumspect scrutiny of the assailed Decision readily shows that in affirming
the ruling of the trial court, the Court of Appeals relied on the provisions of Section
19 of Act 496[52] in relation to the Civil Codes provisions on prescription on the
assumption that the subject land is private land. Therein lies the flaw in the appellate
courts postulate. The application for registration of private respondent is for the
judicial confirmation of an imperfect title considering that the land is presumed under
the Regalian Doctrine to be part of the public domain.
Public lands are broadly classified into 1.] Alienable or disposable lands; and, 2.]
Inalienable or non-disposable public lands. Non-disposable public lands or those not
susceptible of private appropriation include a.] Timber lands; and, b.] Mineral lands.
[53]
For purposes of administration and disposition, the lands of the public domain
classified as disposable or alienable are further sub-classified into a.] Agricultural; b.]
Residential, commercial, industrial or for similar productive purposes; c.] Educational,
charitable or other similar purposes, and d.] Reservations for town sites and for
public and quasi-public purposes.[54]
From the foregoing classifications, public agricultural land may be defined as
those alienable portions of the public domain which are neither timber nor mineral
lands. Thus the term includes residential, commercial and industrial lands for the
reason that these lands are neither timber nor mineral lands. [55]
On the other hand, Section 19 of Act No. 496, as amended, permits the
registration of private lands claimed to be owned by the applicant in fee simple which
refer to:
1.] Lands acquired by various types of titles from the government during
the Spanish Regime by way of grants by the Spanish crown namely
the: a.] Titulo real or royal grant; b.] Concession especial or special grant; c.]
Composicion con el estado title or adjustment title; d.] Titulo de compra or title
by purchase and; e.] Informacion posesoria or possessory information title,
which could become a Titulo gratuito or a gratuitous title;[56]
2.] Lands that are claimed to be owned by accession, i.e. accretion,
avulsion, formation of islands, abandoned river beds, as provided for in Articles
457, 461 and 464 of the Civil Code; and
3.] Lands which have been acquired in any other manner provided by law.
Suffice it to state that the land sought to be registered by private respondent
hardly falls under any of the latter classifications of land referred to by Act No. 496,
as amended. Given the foregoing facts, prescription in the manner invoked by both
courts can not be pleaded to bolster private respondent/applicants claim because
. . . [N]o public land can be acquired by private persons without any grant, express or
implied from the government; it is indispensable that there be a showing of title from
the state . . . .[57]
xxxxxxxxx
Indeed, the possession of public agricultural land, however, long the period may have
extended, never confers title thereto upon the possessor. [58] The reason, to reiterate
our ruling, is because the statute of limitations with regard to public agricultural land
does not operate against the State, unless the occupant can prove possession and
occupation of the same under claim of ownership for the required number of years to
constitute a grant from the State.[59]
Fifth, even assuming ex gratia argumenti that prescription can be applied in the
manner invoked by the trial court and the appellate court, it must be pointed out that
. . . [W]hile Art. 1134 of the Civil Code provides that (o)wnership and other real rights
over immovable property are acquired by ordinary prescription through possession of
ten years, this provision of law must be read in conjunction with Art. 1117 of the
same Code. This article states that xxx (o)rdinary acquisitive prescription of things
requires possession in good faith and with just title for the time fixed by law. Hence,
a prescriptive title to real estate is not acquired by mere possession thereof under
claim of ownership for a period of ten years unless such possession was
acquired con justo titulo y buena fe(with color of title and good faith).[60] The good
faith of the possessor consists in the reasonable belief that the person from whom he
received the thing was the owner thereof, and could transmit his ownership.[61] For
purposes of prescription, there is just title when the adverse claimant came into
possession of the property through one of the recognized modes of acquisition of
ownership or other real rights but the grantor was not the owner or could not
transmit any right.[62]
It can not be said that private respondents possession was con justo titulo y
buena fe. On the contrary, private respondent/applicants act of appropriating for
himself the entire area of 4,845 square meters to the exclusion of petitioners who
have been occupying portions of the disputed land constituted acts of deprivation of
the latters rights which is tantamount to bad faith. Indeed this Court has ruled that
the
. . . [c]oncealment and misrepresentation in the application that no other persons had
any claim or interest in the said land, constitute specific allegations of extrinsic fraud
supported by competent proof.Failure and intentional omission of the applicants to
disclose the fact of actual physical possession by another person constitutes an
allegation of actual fraud.[63] Likewise, it is fraud to knowingly omit or conceal a fact,
upon which benefit is obtained to the prejudice of a third person.[64]
 Suffice it to state in this regard that to allow private respondent/applicant to
benefit from his own wrong would run counter to the maxim ex dolo malo non oritur
actio - no man can be allowed to found a claim upon his own wrongdoing. [65]
It need not be overemphasized that extraordinary acquisitive prescription can
not similarly vest ownership over the property upon private respondent/applicant
because Article 1137 of the Civil Code states in no uncertain terms that
ART. 1137. Ownership and other real rights over immovables also prescribe through
uninterrupted adverse possession thereof for thirty years, without need of good faith.
Needless to state, private respondent/applicants possession of thirteen (13)
years falls way below the thirty-year requirement mandated by Article 1137.
Sixth, petitioners/oppositors have, in stark contrast to the secondary proof of
private respondent, adduced overwhelming evidence to prove their ownership of the
portions they claim in the subject land.The evidence on record clearly points to the
fact that private respondent/applicants right, if at all, is confined to only 620 square
meters or what has been left of the 840 square meters he purchased from Faustino
Martirez after 220 square meters thereof were appropriated by the Municipality of
Banga for the Public Market Road.[66]
The records further bear out that the original owner of the whole area was one
Dionisia Regado who executed three (3) deeds of sale covering certain portions of the
disputed lands, namely: 1.] the Deed of Sale dated April 29, 1914 covering 1,850
square meters executed in favor of the Municipality of Banga; [67] 2.] the Deed of Sale
dated July 10, 1915 covering 1,320 square meters executed in favor of Eulalio Raz;
[68]
and, 3.] the Deed of Sale dated September 6, 1918 covering the balance with an
area of 2,938 square meters in favor of Eufrocino Alba.[69]
Faustino Martirez acquired only an 840 square meter portion of the land by
purchase from Eulalio Raz on January 15, 1933 as confirmed in paragraph 2 of
the Escritura De Venta Absoluta executed by him on August 13, 1941. [70] After selling
840 square meters to Faustino Martirez, Eulalio Raz retained 480 square meters but
on November 5, 1956 Eulalio Raz and his wife Octabela Alba conveyed 240 square
meters to Susana Braulio[71] leaving a balance of 240 square meters which remained
undisposed.
On May 29, 1969, Virginia Alba, Inocentes Alba and Estrella Alba, children of the
deceased Eufrocino Alba, sold a 676 square meter portion of the 2,938 square meter
lot purchased by their father from Dionisia Regado to petitioner/oppositor Octabela
alba Vda. De Raz.[72] This Deed was duly registered with the Registry of Deeds of
Aklan in accordance with Act No. 3344 on June 17, 1969. [73] The land is covered by
Tax Declaration No. 332 in the name of Octabela Alba Vda. De Razs husband. [74]
Petitioner/oppositor Octabela Alba Vda. De Razs ownership of the remaining 240
square meter portion which she and her husband Eulalio Raz bought from Dionisia
Regado[75] and the 676 square meter portion which they bought from the heirs of
Eufrocino Alba[76] is fully substantiated by documentary proof. [77] Rodolfo Alba,
Lourdes Alba and Beatriz Albas ownership of a portion measuring 1,335 square
meters[78] and another portion measuring 2,262 square meters [79] is likewise backed
by documentary evidence. Susana Braulios ownership of a 240 square meter
portion[80] which she acquired from Octabela Alba Vda. De Raz on November 11,
1956[81] is also documented, her predecessor-in-interest having acquired the same
from Dionisia Regado on September 6, 1918. [82]
The foregoing only serves to underscore the paucity of the proof of private
respondent/applicant to support his claim of ownership over the entire 4, 845 square
meter area. He has not adduced evidence to show how and when he was able to
acquire, with the exception of 840 square meters further reduced to 620 square
meters on account of 220 square meters appropriated for the market road, the bigger
area of 3,755 square meters from anybody let alone the ancestral owner, Dionisia
Regado.
His claim is anchored mainly on Revised Tax Declaration No. 14181 which he
was able to procure from the Municipal Assessor of Banga in 1956 on the basis of a
self-serving affidavit which proffered the lame excuse that there was error in the
statement of the area of the land which he claimed to be 4,845 square meters
instead of 620 square meters which was the area reflected in earlier tax declarations
namely, 1954 Tax Declaration No. 13578; 1953 Tax Declaration No. 13043; and 1947
Tax Declaration No. 6528.
Be that as it may, the Court has reservations on the propriety of adjudicating to
petitioners the contested portions of the subject land, in view of their failure to
present the technical descriptions of these areas. Furthermore, there is no sufficient
evidence showing that petitioners have been in open, adverse, exclusive, peaceful
and continuous possession thereof in the concept of owner, considering that the
testimony of Octabela Alba vda. De Raz was stricken off the record.
WHEREFORE, based on foregoing premises, the Decision of the Regional Trial
Court of Kalibo, Aklan, Branch 1 dated August 18, 1992 in Land Registration Case No.
K-101, LRC Record No. K-15104 is hereby MODIFIED as follows:
1.] The 620 square meter portion on which private respondent Jose N.
Lachicas house is situated, clearly delineating its metes and bounds, is hereby
ORDERED segregated from the parcel of land described in Psu-161277 situated
in the Poblacion of the Municipality of Banga, Province of Aklan, Philippines with
an area of 4,484 square meters, to be registered and confirmed in the name of
private respondent;
2.] A ten (10) meter road width along the National road mentioned in the
application be segregated for future road widening programs upon the payment
of just compensation to be annotated at the back of the title.
 3.] Insofar as the ownership of the remainder of the subject land is
concerned, the case is hereby REMANDED to the court of origin for the
reception of further evidence for the petitioners to establish the other requisites
for the confirmation of title and registration in their names of the areas they
respectively claim.
SO ORDERED.
THIRD DIVISION
G.R. No. 112567 February 7, 2000
THE DIRECTOR, LANDS MANAGEMENT BUREAU, petitioner,
vs.
COURT OF APPEALS and AQUILINO L. CARIO, respondents.
PURISIMA, J.:
At bar is a Petition for Review on Certiorari under Rule 45 of the Rules of Court,
seeking to set aside the Decision of the Court of Appeals, dated November 11, 1993,
in CA-G.R. No. 29218, which affirmed the Decision, dated February 5, 1990, of
Branch XXIV, Regional Trial Court of Laguna, in LRC No. B-467, ordering the
registration of Lot No. 6 in the name of the private respondent.
The facts that matter are as follows:
On May 15, 1975, the private respondent, Aquilino Cario, filed with the then Branch
I, Court of First Instance of Laguna, a petition1 for registration of Lot No. 6, a sugar
land with an area of forty-three thousand six hundred fourteen (43,614) square
meters, more or less, forming part of a bigger tract of land surveyed as Psu-108952
and situated in Barrio Sala, Cabuyao, Laguna.
Private respondent declared that subject land was originally owned by his mother,
Teresa Lauchangco, who died on February 15, 1911, 2 and later administered by him
in behalf of his five brothers and sisters, after the death of their father in 1934. 3
In 1949, private respondent and his brother, Severino Cario, became co-owners of
Lot No. 6 by virtue of an extra-judicial partition of the land embraced in Plan Psu-
108952, among the heirs of Teresa Lauchangco. On July 26, 1963, through another
deed of extrajudicial settlement, sole ownership of Lot No. 6 was adjudicated to the
private respondent.4
Pertinent report of the Land Investigator of the Bureau of Lands (now Bureau of
Lands Management), disclosed:
xxx xxx xxx
1. That the land subject for registration thru judicial confirmation of
imperfect title is situated in the barrio of Sala, municipality of Cabuyao,
province of Laguna as described on plan Psu-108952 and is identical to Lot
No. 3015, Cad. 455-0, Cabuyao Cadastre; and that the same is agricultural
in nature and the improvements found thereon are sugarcane, bamboo
clumps, chico and mango trees and one house of the tenant made of light
materials;
2. That the land subject for registration is outside any civil or military
reservation, riverbed, park and watershed reservation and that same land is
free from claim and conflict;
3. That said land is neither inside the relocation site earmarked for Metro
Manila squatters nor any pasture lease; it is not covered by any existing
public land application and no patent or title has been issued therefor;
4. That the herein petitioner has been in continuous, open and exclusive
possession of the land who acquired the same thru inheritance from his
deceased mother, Teresa Lauchangco as mentioned on the Extra-judicial
partition dated July 26, 1963 which applicant requested that said instrument
will be presented on the hearing of this case; and that said land is also
declared for taxation purposes under Tax Declaration No. 6359 in the name
of the petitioner;
xxx xxx x x x5
With the private respondent as lone witness for his petition, and the Director of Lands
as the only oppositor, the proceedings below ended. On February 5, 1990, on the
basis of the evidence on record, the trial court granted private respondent's petition,
disposing thus:
WHEREFORE, the Count hereby orders and declares the registration and
confirmation of title to one (1) parcel of land identified as Lot 6, plan Psu-
108952, identical to Cadastral Lot No. 3015, Cad. 455-D, Cabuyao Cadastre,
situated in the barrio of Sala, municipality of Cabuyao, province of Laguna,
containing an area of FORTY THREE THOUSAND SIX HUNDRED FOURTEEN
(43,614) Square Meters, more or less, in favor of applicant AQUILINO L.
CARINO, married to Francisca Alomia, of legal age, Filipino, with residence
and postal address at Bian, Laguna.
 After this decision shall have become final, let an order for the issuance of
decree of registration be issued.
SO ORDERED.6
From the aforesaid decision, petitioner (as oppositor) went to the Court of Appeals,
which, on November 11, 1993, affirmed the decision appealed from.
Undaunted, petitioner found his way to this Court via the present Petition; theorizing
that:
I Registration Act, to wit:
THE COURT OF APPEALS ERRED IN NOT FINDING THAT PRIVATE
RESPONDENT HAS NOT SUBMITTED PROOF OF HIS FEE SIMPLE TITLE OR
PROOF OF POSSESSION IN THE MANNER AND FOR THE LENGTH OF TIME
REQUIRED BY THE LAW TO JUSTIFY CONFIRMATION OF AN IMPERFECT
TITLE.
II
THE COURT OF APPEALS ERRED IN NOT DECLARING THAT PRIVATE
RESPONDENT HAS NOT OVERTHROWN THE PRESUMPTION THAT THE
LAND IS A PORTION OF THE PUBLIC DOMAIN BELONGING TO THE
REPUBLIC OF THE PHILIPPINES.7
The Petition is impressed with merit.
The petition for land registration8 at bar is under the Land Registration Act.9 Pursuant
to said Act, he who alleges in his petition or application, ownership in fee simple,
must present muniments of title since the Spanish times, such as a titulo real or royal
grant, a concession especial or special grant, a composicion con al estado or
adjustment title, or a titulo de compra or title through purchase; and "informacion
possessoria" or "possessory information title", which would become a "titulo gratuito"
or a gratuitous title.10
In the case under consideration, the private respondents (petitioner below) has not
produced a single muniment of title substantiate his claim of ownership. 11 The Court
has therefore no other recourse, but to dismiss private respondent's petition for the
registration of subject land under Act 496.
Anyway, even if considered as petition for confirmation of imperfect title under the
Public land Act (CA No. 141), as amended, private respondent's petition would meet
the same fate. For insufficiency of evidence, its denial is inevitable. The evidence
adduced by the private respondent is not enough to prove his possession of subject
lot in concept of owner, in the manner and for the number of years required by law
for the confirmation of imperfect title.
Sec. 48(b) of Commonwealth Act No. 141,12 as amended R.A. No. 1942 and R.A. No.
3872, the law prevailing at the time the Petition of private respondent was filed on
May 15, 1975, provides:
Sec. 48. The following described citizens of the Philippines, occupying lands
of the public domain or claiming to own any such lands or an interest
therein, but whose titles have not been perfected or completed, may apply
to the Court of First Instance of the province where the land is located for
confirmation of their claim and the issuance of title therefor, under the Land
xxx xxx xxx
(b) Those who by themselves or through their predecessors-in-interest have
been in open, continuous, exclusive, and notorious possession and
occupation of agricultural lands of the public domain, under a bona fide
claim of acquisition or ownership, for at least thirty years immediately
preceding the filing of the application for confirmation of title except when
prevented by war or force majeure. These shall be conclusively presumed to
have performed all the conditions essential to a Government grant and shall
be entitled to a certificate of title under the provisions of this chapter.
(Emphasis supplied)
Possession of public lands, however long, never confers title upon the possessor,
unless the occupant can prove possession or occupation of the same under claim of
ownership for the required period to constitute a grant from the State.13
Notwithstanding absence of opposition from the government, the petitioner in land
registration cases is not relieved of the burden of proving the imperfect right or title
sought to be confirmed. In Director of Lands vs. Agustin,14 this Court stressed that:
. . . The petitioner is not necessarily entitled to have the land registered
under the Torrens system simply because no one appears to oppose his title
and to oppose the registration of his land. He must show, even though there
is no opposition, to the satisfaction of the court, that he is the absolute
owner, in fee simple. Courts are not justified in registering property under
the Torrens system, simply because there is no opposition offered. Courts
may, even in the absence of any opposition, deny the registration of the
land under the Torrens system, upon the ground that the facts presented
did not show that petitioner is the owner, in fee simple, of the land which he
is attempting to have registered.15
There is thus an imperative necessity of the most rigorous scrutiny before imperfect
titles over public agricultural lands may be granted judicial
recognition.16
The underlying principle is that all lands that were not acquired from the government,
either by purchase or by grant, belong to the state as part of the public domain. As
enunciated in Republic vs. Lee:17
. . . Both under the 1935 and the present Constitutions, the conservation no
less than the utilization of the natural resources is ordained. 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. To be granted, they
must be grounded in well-nigh incontrovertible evidence. Where, as in this
case, no such proof would be forthcoming, there is no justification for
viewing such claim with favor. It is a basic assumption of our polity that
lands of whatever classification belong to the state. Unless alienated in
accordance with law, it retains its right over the same as dominus. . . .18
In order that a petition for registration of land may prosper and the petitioners may
savor the benefit resulting from the issuance of certificate of title for the land
petitioned for, the burden is upon him (petitioner) to show that he and/or his
predecessor-in-interest has been in open, continuous, exclusive, and adverse
possession and occupation of the land sought for registration, for at least (30) thirty
years immediately preceding the filing of the petition for confirmation of title. 19
In the case under consideration, private respondent can only trace his own
possession of subject parcel of land to the year 1949, when the same was
adjudicated to him by virtue of an extra-judicial settlement and partition. Assuming
that such a partition was truly effected, the private respondent has possessed the
property thus partitioned for only twenty-six (26) years as of 1975, when he filed his
petition for the registration thereof. To bridge the gap, he proceeded to tack his
possession to what he theorized upon as possession of the same land by his parents.
However, other than his unilateral assertion, private respondent has not introduced
sufficient evidence to substantiate his allegation that his late mother possessed the
land in question even prior to 1911.1wphi1.nt
Basic is the rule that the petitioner in a land registration case must prove the facts
and circumstances evidencing his alleged ownership of the land applied for. General
statements, which are mere conclusions of law and not factual proof of possession
are unavailing and cannot suffice.20
From the relevant documentary evidence, it can be gleaned that the earliest tax
declaration covering Lot No. 6 was Tax Declaration No. 3214 issued in 1949 under
the names of the private respondent and his brother, Severino Cario. The same was
followed by Tax Declaration No. 1921 issued in 1969 declaring an assessed value of
Five Thousand Two Hundred Thirty-three (P5,233.00) Pesos and Tax Declaration No.
6359 issued in 1974 in the name of private respondent, declaring an assessment of
Twenty-One Thousand Seven Hundred Seventy (P21,770.00) Pesos.21
It bears stressing that the Exhibit "E" referred to in the decision below as the tax
declaration for subject land under the names of the parents of herein private
respondent does not appear to have any sustainable basis. Said Exhibit "E" shows
that it is Tax Declaration 1921 for Lot No. 6 in the name of private respondent and
not in the name of his parents.22
The rule that findings of fact by the trial court and the Court of Appeals are binding
upon this Court is not without exceptions. Where, as in this case, pertinent records
belie the findings by the lower courts that subject land was declared for taxation
purposes in the name of private respondent's predecessor-in-interest, such findings
have to be disregarded by this Court. In Republic vs. Court of Appeals,23 the Court
ratiocinated thus:
This case represents an instance where the findings of the lower court
overlooked certain facts of substance and value that if considered would
affect the result of the case (People v. Royeras, 130 SCRA 259) and when it
appears that the appellate court based its judgment on a misapprehension
of facts (Carolina Industries, Inc. v. CMS Stock Brokerage, Inc., et al., 97
SCRA 734; Moran, Jr. v. Court of Appeals, 133 SCRA 88; Director of Lands v.
Funtillar, et al., G.R. No. 68533, May 3, 1986). This case therefore is an
exception to the general rule that the findings of facts of the Court of
Appeals are final and conclusive and cannot be reviewed on appeal to this
Court.'
and
. . . in the interest of substantial justice this Court is not prevented from
considering such a pivotal factual matter that had been overlooked by the
Courts below. The Supreme Court is clothed with ample authority to review
palpable errors not assigned as such if it finds that their consideration is
necessary in arriving at a just decision.24
Verily, the Court of Appeals just adopted entirely the findings of the trial court. Had it
examined the original records of the case, the said court could have verified that the
land involved was never declared for taxation purposes by the parents of the
respondent. Tax receipts and tax declarations are not incontrovertible evidence of
ownership. They are mere indicia of claim of ownership.25 In Director of Lands
vs. Santiago.26
. . . if it is true that the original owner and possessor, Generosa Santiago,
had been in possession since 1925, why were the subject lands declared for
taxation purposes for the first time only in 1968, and in the names of Garcia
and Obdin? For although tax receipts and declarations of ownership for
taxation purposes are not incontrovertible evidence of ownership, they
 constitute at least proof that the holder had a claim of title over the
property.27
As stressed by the Solicitor General, the contention of private respondent that his
mother had been in possession of subject land even prior to 1911 is self-serving,
hearsay, and inadmissible in evidence. The phrase "adverse, continuous, open,
public, and in concept of owner", by which characteristics private respondent
describes his possession and that of his parents, are mere conclusions of law
requiring evidentiary support and substantiation. The burden of proof is on the
private respondent, as applicant, to prove by clear, positive and convincing evidence
that the alleged possession of his parents was of the nature and duration required by
law. His bare allegations without more, do not amount to preponderant evidence that
would shift the burden of proof to the oppositor. 28
In a case,29 this Court set aside the decisions of the trial court and the Court of
Appeals for the registration of a parcel of land in the name of the applicant, pursuant
to Section 48 (b) of the Public Land Law; holding as follows:
Based on the foregoing, it is incumbent upon private respondent to prove
that the alleged twenty year or more possession of the spouses Urbano Diaz
and Bernarda Vinluan which supposedly formed part of the thirty (30) year
period prior to the filing of the application, was open, continuous, exclusive,
notorious and in concept of owners. This burden, private respondent failed
to discharge to the satisfaction of the Court. The bare assertion that the
spouses Urbano Diaz and Bernarda Vinluan had been in possession of the
property for more than twenty (20) years found in private respondent's
declaration is hardly the "well-nigh incontrovertible" evidence required in
cases of this nature. Private respondent should have presented specific facts
that would have shown the nature of such possession. . . .30
In Director of Lands vs. Datu,31 the application for confirmation of imperfect title was
likewise denied on the basis of the following disquisition, to wit:
We hold that applicants' nebulous evidence does not support their claim of
open, continuous, exclusive and notorious occupation of Lot No. 2027-B en
concepto de dueo. Although they claimed that they have possessed the
land since 1950, they declared it for tax purposes only in 1972. It is not
clear whether at the time they filed their application in 1973, the lot was still
cogon land or already cultivated land.
They did not present as witness their predecessor, Peaflor, to testify on his
alleged possession of the land. They alleged in their application that they
had tenants on the land. Not a single tenant was presented as witness to
prove that the applicants had possessed the land as owners.
xxx xxx xxx
On the basis of applicants' insubstantial evidence, it cannot justifiably be
concluded that they have an imperfect title that should be confirmed or that
they had performed all the conditions essential to a Government grant of a
portion of the public domain.32
Neither can private respondent seek refuge under P.D. No. 1073,33 amending Section
48(b) of Commonwealth Act No. 141 under which law a certificate of title may issue
to any occupant of a public land, who is a Filipino citizen, upon proof of open,
continuous exclusive, and notorious possession and occupation since June 12, 1945,
or earlier. Failing to prove that his predecessors-in-interest occupied subject land
under the conditions laid down by law, the private respondent could only establish his
possession since 1949, four years later than June 12, 1945, as set by law.
The Court cannot apply here the juris et de jure presumption that the lot being
claimed by the private respondent ceased to be a public land and has become private
property.34 To reiterate, under the Regalian doctrine all lands belong to the
State.35 Unless alienated in accordance with law, it retains its basic rights over the
same as dominus.36
Private respondent having failed to come forward with muniments of title to reinforce
his petition for registration under the Land Registration Act (Act 496), and to present
convincing and positive proof of his open, continuous, exclusive and notorious
occupation of Lot No. 6 en concepto de dueo for at least 30 years immediately
preceding the filing of his petition,37 the Court is of the opinion, and so finds, that
subject Lot No. 6 surveyed under Psu-108952, forms part of the public domain not
registrable in the name of private respondent.
WHEREFORE, the Petition is GRANTED; the Decision of the Court of Appeals, dated
November 11, 1993, in CA-G.R. No. 29218 affirming the Decision, dated February 5,
1990, of Branch XXIV, Regional Trial Court of Laguna in LRC No. 8-467, is SET
ASIDE; and Lot No. 6, covered by and more particularly described in Psu-108952, is
hereby declared a public land, under the administrative supervision and power of
disposition of the Bureau of Lands Management. No pronouncement as to
costs.1wphi1.nt
SO ORDERED.
EN BANC
G.R. No. L-28565 January 30, 1971
IN RE: APPLICATION FOR REGISTRATION OF TITLE. SPOUSES FRANCISCO
LAHORA and TORIBIA MORALIZON, petitioners-appellants,
vs.
EMILIO DAYANGHIRANG, JR., and THE DIRECTOR OF LANDS, oppositors-
appellees.
Occena and Ocampo Law Offices for petitioners-appellants.
Jose C. Magune for oppositor-appellee Emilio Dayanghirang, Jr.
REYES, J.B.L., J.:
The spouses Francisco Lahora and Toribia Moralizon brought the present appeal to
this Court from the order of the Court of First Instance of Davao (in Land Reg. Case
No. N-86), dismissing their petition with respect to Lot No. 2228 on the ground of
previous registration, said appellants claiming that the question of the validity of a
certificate of title based on a patent allegedly obtained by fraud can be raised by
them in a land registration proceeding, contrary to the ruling of the court a quo.
The records show that on 26 November 1965 herein appellants petitioned the Court
of First Instance of Davao for registration of nine (9) parcels of land located in barrio
Zaragosa, municipality of Manay, province of Davao, one-half of which having been
acquired by appellant Toribia Moralizon allegedly by inheritance, and the other half by
purchase and by continuous, open, public and adverse possession in the concept of
owner. One of the said parcels of land is identified as lot No. 2228, plan SWO-36856,
Manay Cadastre.
The petition was opposed by Emilio Dayanghirang, Jr., who alleged that lands
belonging to him and his wife were included in the application for registration,
mentioning specifically Lot No. 2228 which was said to be already covered by Original
Certificate of Title No. P-6055 in the name of oppositor's wife. The Director of Lands
also filed an opposition to the petition, contending that the applicants or their
predecessors-in-interest never had sufficient title over the parcels of land sought to
be registered, nor have they been in open, continuous, and notorious possession
thereof for at least 30 years.
On 14 June 1967, counsel for the private oppositor filed a motion for correction of the
number of the certificate of title covering Lot No. 2228, erroneously referred to as
OCT No. P-6055, when it should properly be OCT No. P-6053. It is likewise prayed in
the same motion that the petition be dismissed insofar as it includes Lot No. 2228, for
the reason that said lot was already registered and titled in the name of oppositor's
wife as of 21 June 1956. In its order of 18 June 1967, which was amended on 29
June 1967, the court granted the oppositor's motion and directed the dismissal of the
petition as regards Lot No. 2228, on the ground that it having been previously
registered and titled, said parcel of land can no longer be the subject of adjudication
in another proceeding. Hence, this appeal by the petitioners.
It may be recalled that the action filed by petitioners-appellants in the lower court on
26 November 1965 was for original registration of certain parcels of land, including
Lot No. 2228 of the Manay Cadastre. It is not here denied by appellants that said Lot
No. 2228 was the subject of a public land grant in favor of the oppositor's wife, and
by virtue of which grant or patent Original Certificate of Title No. P-6053 was issued
in her name on 21 June 1956. Appellants, however, try to make a case against the
dismissal-order of the lower court by contending that the patent issued to oppositor's
wife was procured by fraud, because appellants, the alleged actual occupants of the
land, were not notified of the application for patent therefor and of its adjudication.
Thus, according to appellants, since they were the actual occupants of the property,
the government could not have awarded it to oppositor's wife, and the patent issued
to the latter, as well as the original certificate of title subsequently obtained by her,
were null and void.
The rule in this jurisdiction, regarding public land patents and the character of the
certificate of title that may be issued by virtue thereof, is that where land is granted
by the government to a private individual, the corresponding patent therefor is
recorded, and the certificate of title is issued to the grantee; thereafter, the land is
automatically brought within the operation of the Land Registration Act 1, the title
issued to the grantee becoming entitled to all the safeguards provided in Section 38
of the said Act.2 In other words, upon expiration of one year from its issuance, the
certificate of title shall become irrevocable and indefeasible like a certificate issued in
a registration proceeding.3
In the present case, Lot No. 2228 was registered and titled in the name of oppositors'
wife as of 21 June 1956, nine (9) years earlier. Clearly, appellants' petition for
registration of the same parcel of land on 26 November 1965, on the ground that the
first certificate of title (OCT No. P-6053) covering the said property is a nullity, can no
longer prosper. Orderly administration of justice precludes that Lot 2228, of the
Manay Cadastre, should be the subject of two registration proceedings. Having
become registered land under Act 496, for all legal purposes, by the issuance of the
public land patent and the recording thereof, further registration of the same would
lead to the obviously undesirable result of two certificates of title being issued for the
same piece of land, even if both certificates should be in the name of the same
person. And if they were to be issued to different persons, the indefeasibility of the
first title, which is the most valued characteristic of Torrens titles, would be torn
away. For this reason, this Court has ruled in Pamintuan vs. San Agustin, 43 Phil.
558, that in a cadastral case the court has no jurisdiction to decree again the
registration of land already decreed in an earlier case; and that a second decree for
the same land would be null and void.4 Of course, if the patent had been issued
during the pendency of the registration proceedings, the situation would be
different.5
Even assuming arguendo, that there indeed exists a proper case for cancellation of
the patent for intrinsic fraud, the action for review of the decree should have been
filed before the one year period had elapsed.6 Thereafter, the proper party to bring
the action would only be the person prejudiced by the alleged fraudulent act the
owner and grantor,7 and not another applicant or claimant. Furthermore, the relief
provided by the law in such instance may be secured by the aggrieved party, not in
another registration, for land already registered in the name of a person can not be
the subject of another registration8, but in an appropriate action such as one for
reconveyance or reversion9, or for damages in case the property has passed into the
hands of an innocent purchaser for value. 10
As regards the complaint against the alleged correction of the number of the
certificate of title covering Lot No. 2228 which was erroneously stated in the
oppositor's motion as OCT No. P-6055, when it should properly be OCT No. P-6053, it
appearing that the motion was intended to rectify a clearly typographical mistake,
there is nothing irregular in the lower court's order granting the same.
WHEREFORE, finding no error in the order appealed from, the same is hereby
affirmed, with costs against the appellants.
REPUBLIC OF THE PHILIPPINES, petitioner, vs. THE HONORABLE COURT
OF APPEALS and CORAZON NAGUIT, respondents.
DECISION
TINGA, J.:
This is a Petition for Review on Certiorari under Rule 45 of the 1997 Rules of
Civil Procedure, seeking to review the Decision[1] of the Sixth Division of the Court of
Appeals dated July 12, 2000 in CA-G.R. SP No. 51921. The appellate court affirmed
the decisions of both the Regional Trial Court (RTC), [2] Branch 8, of Kalibo, Aklan
dated February 26, 1999, and the 7thMunicipal Circuit Trial Court (MCTC)[3] of Ibajay-
Nabas, Aklan dated February 18, 1998, which granted the application for registration
of a parcel of land of Corazon Naguit (Naguit), the respondent herein.
The facts are as follows:
On January 5, 1993, Naguit, a Filipino citizen, of legal age and married to
Manolito S. Naguit, filed with the MCTC of Ibajay-Nabas, Aklan, a petition for
registration of title of a parcel of land situated in Brgy. Union, Nabas, Aklan. The
parcel of land is designated as Lot No. 10049, Cad. 758-D, Nabas Cadastre, AP
060414-014779, and contains an area of 31,374 square meters. The application seeks
judicial confirmation of respondents imperfect title over the aforesaid land.
On February 20, 1995, the court held initial hearing on the application. The
public prosecutor, appearing for the government, and Jose Angeles, representing the
heirs of Rustico Angeles, opposed the petition. On a later date, however, the heirs of
Rustico Angeles filed a formal opposition to the petition. Also on February 20, 1995,
the court issued an order of general default against the whole world except as to the
heirs of Rustico Angeles and the government.
The evidence on record reveals that the subject parcel of land was originally
declared for taxation purposes in the name of Ramon Urbano (Urbano) in 1945 under
Tax Declaration No. 3888 until 1991.[4] On July 9, 1992, Urbano executed a Deed of
Quitclaim in favor of the heirs of Honorato Maming (Maming), wherein he renounced
all his rights to the subject property and confirmed the sale made by his father to
Maming sometime in 1955 or 1956. [5] Subsequently, the heirs of Maming executed a
deed of absolute sale in favor of respondent Naguit who thereupon started occupying
the same. She constituted Manuel Blanco, Jr. as her attorney-in-fact and
administrator. The administrator introduced improvements, planted trees, such as
mahogany, coconut and gemelina trees in addition to existing coconut trees which
were then 50 to 60 years old, and paid the corresponding taxes due on the subject
land. At present, there are parcels of land surrounding the subject land which have
been issued titles by virtue of judicial decrees. Naguit and her predecessors-in-
interest have occupied the land openly and in the concept of owner without any
objection from any private person or even the government until she filed her
application for registration.
After the presentation of evidence for Naguit, the public prosecutor manifested
that the government did not intend to present any evidence while oppositor Jose
Angeles, as representative of the heirs of Rustico Angeles, failed to appear during the
trial despite notice. On September 27, 1997, the MCTC rendered a decision ordering
that the subject parcel be brought under the operation of the Property Registration
Decree or Presidential Decree (P.D.) No. 1529 and that the title thereto registered
and confirmed in the name of Naguit.[6]
The Republic of the Philippines (Republic), thru the Office of the Solicitor
General (OSG), filed a motion for reconsideration. The OSG stressed that the land
applied for was declared alienable and disposable only on October 15, 1980, per the
certification from Regional Executive Director Raoul T. Geollegue of the Department
of Environment and Natural Resources, Region VI.[7] However, the court denied the
motion for reconsideration in an order dated February 18, 1998. [8]
Thereafter, the Republic appealed the decision and the order of the MCTC to the
RTC, Kalibo, Aklan, Branch 8. On February 26, 1999, the RTC rendered its decision,
dismissing the appeal.[9]
Undaunted, the Republic elevated the case to the Court of Appeals via Rule 42
of the 1997 Rules of Civil Procedure. On July 12, 2000, the appellate court rendered a
decision dismissing the petition filed by the Republic and affirmed in toto the assailed
decision of the RTC.
Hence, the present petition for review raising a pure question of law was filed
by the Republic on September 4, 2000.[10]
The OSG assails the decision of the Court of Appeals contending that the
appellate court gravely erred in holding that there is no need for the governments
prior release of the subject lot from the public domain before it can be considered
alienable or disposable within the meaning of P.D. No. 1529, and that Naguit had
been in possession of Lot No. 10049 in the concept of owner for the required period.
[11]
Hence, the central question for resolution is whether is necessary under Section
14(1) of the Property Registration Decree that the subject land be first classified as
alienable and disposable before the applicants possession under a bona fide claim of
ownership could even start.
The OSG invokes our holding in Director of Lands v. Intermediate Appellate
Court[12] in arguing that the property which is in open, continuous and exclusive
possession must first be alienable. Since the subject land was declared alienable only
on October 15, 1980, Naguit could not have maintained a bona fide claim of
ownership since June 12, 1945, as required by Section 14 of the Property Registration
Decree, since prior to 1980, the land was not alienable or disposable, the OSG
argues.
Section 14 of the Property Registration Decree, governing original registration
proceedings, bears close examination. It expressly provides:
SECTION 14. Who may apply. The following persons may file in the proper Court of
First Instance an application for registration of title to land, whether personally or
through their duly authorized representatives:
(1) those who by themselves or through their predecessors-in-interest
have been in open, continuous, exclusive and notorious
possession and occupation of alienable and disposable lands of
the public domain under a bona fide claim of ownership since
June 12, 1945, or earlier.
(2) Those who have acquired ownership over private lands by
prescription under the provisions of existing laws.
....
There are three obvious requisites for the filing of an application for registration
of title under Section 14(1) that the property in question is alienable and disposable
land of the public domain; that the applicants by themselves or through their
predecessors-in-interest have been in open, continuous, exclusive and notorious
possession and occupation, and; that such possession is under a bona fide claim of
ownership since June 12, 1945 or earlier.
Petitioner suggests an interpretation that the alienable and disposable character
of the land should have already been established since June 12, 1945 or earlier. This
is not borne out by the plain meaning of Section 14(1). Since June 12, 1945, as used
in the provision, qualifies its antecedent phrase under a bonafide claim of ownership.
Generally speaking, qualifying words restrict or modify only the words or phrases to
which they are immediately associated, and not those distantly or remotely located.
[13]
Ad proximum antecedents fiat relation nisi impediatur sentencia.
Besides, we are mindful of the absurdity that would result if we adopt
petitioners position. Absent a legislative amendment, the rule would be, adopting the
OSGs view, that all lands of the public domain which were not declared alienable or
disposable before June 12, 1945 would not be susceptible to original registration, no
matter the length of unchallenged possession by the occupant. Such interpretation
renders paragraph (1) of Section 14 virtually inoperative and even precludes the
government from giving it effect even as it decides to reclassify public agricultural
lands as alienable and disposable. The unreasonableness of the situation would even
be aggravated considering that before June 12, 1945, the Philippines was not yet
even considered an independent state.
Instead, the more reasonable interpretation of Section 14(1) is that it merely
requires the property sought to be registered as already alienable and disposable at
the time the application for registration of title is filed. If the State, at the time the
application is made, has not yet deemed it proper to release the property for
alienation or disposition, the presumption is that the government is still reserving the
right to utilize the property; hence, the need to preserve its ownership in the State
irrespective of the length of adverse possession even if in good faith. However, if the
property has already been classified as alienable and disposable, as it is in this case,
then there is already an intention on the part of the State to abdicate its exclusive
prerogative over the property.
This reading aligns conformably with our holding in Republic v. Court of
Appeals.[14] Therein, the Court noted that to prove that the land subject of an
application for registration is alienable, an 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. [15] In that case, the subject land had
been certified by the DENR as alienable and disposable in 1980, thus the Court
concluded that the alienable status of the land, compounded by the established fact
that therein respondents had occupied the land even before 1927, sufficed to allow
the application for registration of the said property. In the case at bar, even the
petitioner admits that the subject property was released and certified as within
alienable and disposable zone in 1980 by the DENR.[16]
This case is distinguishable from Bracewell v. Court of Appeals ,[17] wherein the
Court noted that while the claimant had been in possession since 1908, it was only in
1972 that the lands in question were classified as alienable and disposable. Thus, the
bid at registration therein did not succeed. In Bracewell, the claimant had filed his
application in 1963, or nine (9) years before the property was declared alienable and
disposable. Thus, in this case, where the application was made years after the
property had been certified as alienable and disposable, the Bracewell ruling does not
apply.
 A different rule obtains for forest lands, [18] such as those which form part of a
reservation for provincial park purposes [19] the possession of which cannot ripen into
ownership.[20] It is elementary in the law governing natural resources that forest land
cannot be owned by private persons. As held in Palomo v. Court of Appeals,[21] forest
land is not registrable and possession thereof, no matter how lengthy, cannot convert
it into private property, unless such lands are reclassified and considered disposable
and alienable.[22] In the case at bar, the property in question was undisputedly
classified as disposable and alienable; hence, the ruling in Palomo is inapplicable, as
correctly held by the Court of Appeals.[23]
It must be noted that the present case was decided by the lower courts on the
basis of Section 14(1) of the Property Registration Decree, which pertains to original
registration through ordinary registration proceedings. The right to file the application
for registration derives from a bona fide claim of ownership going back to June 12,
1945 or earlier, by reason of the claimants open, continuous, exclusive and notorious
possession of alienable and disposable lands of the public domain.
A similar right is given under Section 48(b) of the Public Land Act, which reads:
Sec. 48. The following described citizens of the Philippines, occupying lands of the
public domain or claiming to own any such land or an interest therein, but those titles
have not been perfected or completed, may apply to the Court of First Instance of
the province where the land is located for confirmation of their claims and the
issuance of a certificate of title therefor, under the Land Registration Act, to wit:
xxx xxx xxx
(b) Those who by themselves or through their predecessors in interest have been in
open, continuous, exclusive, and notorious possession and occupation of agricultural
lands of the public domain, under a bona fide claim of acquisition of ownership, for at
least thirty years immediately preceding the filing of the application for confirmation
of title except when prevented by war or force majeure. These shall be conclusively
presumed to have performed all the conditions essential to a Government grant and
shall be entitled to a certificate of title under the provisions of this chapter.
When the Public Land Act was first promulgated in 1936, the period of
possession deemed necessary to vest the right to register their title to agricultural
lands of the public domain commenced from July 26, 1894. However, this period was
amended by R.A. No. 1942, which provided that the bona fide claim of ownership
must have been for at least thirty (30) years. Then in 1977, Section 48(b) of the
Public Land Act was again amended, this time by P.D. No. 1073, which pegged the
reckoning date at June 12, 1945. This new starting point is concordant with Section
14(1) of the Property Registration Decree.
Indeed, there are no material differences between Section 14(1) of the Property
Registration Decree and Section 48(b) of the Public Land Act, as amended. True, the
Public Land Act does refer to agricultural lands of the public domain, while the
Property Registration Decree uses the term alienable and disposable lands of the
public domain. It must be noted though that the Constitution declares that alienable
lands of the public domain shall be limited to agricultural lands. [24] Clearly, the subject
lands under Section 48(b) of the Public Land Act and Section 14(1) of the Property
Registration Decree are of the same type.
Did the enactment of the Property Registration Decree and the amendatory P.D.
No. 1073 preclude the application for registration of alienable lands of the public
domain, possession over which commenced only after June 12, 1945? It did not,
considering Section 14(2) of the Property Registration Decree, which governs and
authorizes the application of those who have acquired ownership of private lands by
prescription under the provisions of existing laws.
Prescription is one of the modes of acquiring ownership under the Civil Code.
[25]
There is a consistent jurisprudential rule that properties classified as alienable
public land may be converted into private property by reason of open, continuous and
exclusive possession of at least thirty (30) years. [26] With such conversion, such
property may now fall within the contemplation of private lands under Section 14(2),
and thus susceptible to registration by those who have acquired ownership through
prescription. Thus, even if possession of the alienable public land commenced on a
date later than June 12, 1945, and such possession being been open, continuous and
exclusive, then the possessor may have the right to register the land by virtue of
Section 14(2) of the Property Registration Decree.
The land in question was found to be cocal in nature, it having been planted
with coconut trees now over fifty years old. [27] The inherent nature of the land but
confirms its certification in 1980 as alienable, hence agricultural. There is no
impediment to the application of Section 14(1) of the Property Registration Decree,
as correctly accomplished by the lower courts.
The OSG posits that the Court of Appeals erred in holding that Naguit had been
in possession in the concept of owner for the required period. The argument begs the
question. It is again hinged on the assertionshown earlier to be unfoundedthat there
could have been no bona fide claim of ownership prior to 1980, when the subject
land was declared alienable or disposable.
We find no reason to disturb the conclusion of both the RTC and the Court of
Appeals that Naguit had the right to apply for registration owing to the continuous
possession by her and her predecessors-in-interest of the land since 1945. The basis
of such conclusion is primarily factual, and the Court generally respects the factual
findings made by lower courts. Notably, possession since 1945 was established
through proof of the existence of 50 to 60-year old trees at the time Naguit
purchased the property as well as tax declarations executed by Urbano in 1945.
Although tax declarations and realty tax payment of property are not conclusive
evidence of ownership, nevertheless, they are good indicia of the possession in the
concept of owner for no one in his right mind would be paying taxes for a property
that is not in his actual or at least constructive possession. They constitute at least
proof that the holder has a claim of title over the property. The voluntary declaration
of a piece of property for taxation purposes manifests not only ones sincere and
honest desire to obtain title to the property and announces his adverse claim against
the State and all other interested parties, but also the intention to contribute needed
revenues to the Government. Such an act strengthens ones bona fide claim of
acquisition of ownership.[28]

Considering that the possession of the subject parcel of land by the respondent
can be traced back to that of her predecessors-in-interest which commenced since
1945 or for almost fifty (50) years, it is indeed beyond any cloud of doubt that she
has acquired title thereto which may be properly brought under the operation of the
Torrens system. That she has been in possession of the land in the concept of an
owner, open, continuous, peaceful and without any opposition from any private
person and the government itself makes her right thereto undoubtedly settled and
deserving of protection under the law.

WHEREFORE, foregoing premises considered, the assailed Decision of the

Court of Appeals dated July 12, 2000 is hereby AFFIRMED. No costs.

SO ORDERED.