Republic of the Philippines
2056 is unconstitutional because it unduly delegates judicial power to the
SUPREME COURT
Manila
EN BANC
G.R. No. L-21024 July 28, 1969
CENON MATEO, petitioner-appellant,
vs.
HON. FLORENCIO MORENO, in his capacity as SECRETARY OF PUBLIC WORKS AND
COMMUNICATIONS,defendant-appellee.
Antonio M. Albano and C.S. de Guzman for petitioner-appellant.
Office of the Solicitor General for defendant-appellee.
MAKALINTAL, J.:
This case, elevated to the Court of Appeals by the petitioner for review of the decision of the Court
of First Instance of Manila dismissing his petition for injunction, was subsequently Certified to us
under Section 31 of Republic Act No. 296.
Sometime in 1959 a number of residents of Guiguinto, Bulacan, sent a letter-complaint to the
Highway District Engineer of that province asking that the Sapang Cabay, a public navigable stream,
which had been blocked by means of dikes and dams and converted into fishponds, be ordered
reopened and restored to its original condition. The letter was referred to the Secretary of Public
Works and Communications, who caused an investigation to be conducted pursuant to Republic Act
No. 2056. Acting on the report which the investigator submitted to him, the Secretary rendered his
decision on August 10, 1959, finding that the Sapang Cabay was a public navigable stream and
ordering Cenon Mateo, the herein petitioner-appellant, who had in the meantime acquired the
property inside which the said creek is situated, to remove the dikes and dams therein constructed
within thirty days from notice; otherwise they would be removed at his expense. Mateo moved to
reconsider but was turned down, whereupon he filed the basic petition to restrain the respondent
Secretary from enforcing his decision. The petition, as already stated, was dismissed by the Court a
quo. The certification of the appeal to us was upon motion of both parties in view of the
constitutional question involved.
Five errors are ascribed to the decision of dismissal, to wit: (1) in not holding that the respondent
Secretary had no jurisdiction to conduct the investigation (of the original complaint) and order the
removal of the dikes and dams constructed in the fishponds of the appellant; (2) in not holding that
Republic Act No.
Secretary and unlawfully deprives the appellant and others similarly situated of their property
without due process of law; (3) granting that Republic Act No. 2056 is constitutional, in not holding
that it is inapplicable to the instant case; (4) in finding that the Sapang Cabay is a public navigable
waterway belonging to the public domain; (5) in disregarding and failing to give legal effect to the
Torrens Certificate of title of the appellant covering the property in question; and (6) in not issuing
the writ of injunction prayed for.
The first two errors assigned are interrelated. They pose the argument that when the question at
issue is whether or not a certain body of water is private property or constitutes a navigable stream
or river of the public domain, the same is essentially judicial and therefore beyond the jurisdiction of
the Secretary of Public Works and Communications to inquire into and decide; and that insofar as
Republic Act No. 2056 purports to confer that power upon him it does so in violation of the
Constitution.
The constitutionality of the aforesaid statute has been upheld by this Court in Lovina vs. Moreno,
G.R. No. L-17821, November 29, 1963, shortly before the present appeal was submitted for decision.
That case held, furthermore, that the absence of any mention of a navigable stream within a
property covered by a certificate of title does not preclude a subsequent investigation and
determination of its existence nor make it private property of the title holder; that the findings of
fact made by the Secretary of Public Works and Communications should be respected in the
absence of illegality, error of law, fraud or imposition, as long as such findings are supported by
substantial evidence; and that the ownership of a navigable stream or of the bed thereof is not
subject to acquisitive prescription.
In the memorandum filed by the petitioner-appellant after Lovina vs. Moreno was decided, he
submits that all but one of the issues he raised have been settled by that decision, and that the only
issue which remains is the applicability of Republic Act No. 2056 in the instant case. He concedes the
authority of the Secretary to decide, after hearing, whether or not a river or creek is navigable and
therefore belongs to the public domain; whether or not the dikes and dams complained against
encroach upon or obstruct such navigable river or creek, or communal fishing grounds; and whether
or not the dikes and dams constitute public nuisance or prohibited constructions. The plea, however,
is that in the light of the facts established at the investigation ordered by the respondent Secretary
his conclusion that Sapang Cabay is a public navigable creek constitutes a grave abuse of discretion.
We see nothing in the argument which would justify a departure in the present case from the
"substantial-evidence" rule as a limitation upon the scope of judicial review in administrative cases.
Substantial evidence, it has been held, "is more than a scintilla. It means such relevant evidence as a
reasonable mind might accept as adequate to support a conclusion." 1
Under this rule the courts are not supposed to reassess the evidence, determine its preponderance the surrounding areas are easily flooded whenever there is heavy rain (Ibid., 143); that
on either side, and substitute its own findings for those of the administrative agency. All that the the people of Guiguinto once complained to the authorities about said closure (Ibid.,
court does is to inquire from the record if the findings are based on substantial evidence. If so, the 144); that before its closure, he and his brother-in-law used to go fishing there, riding on
findings are deemed conclusive. a banca (Ibid., 159-160); that Pedro Dionisio, 64 years in 1959, declared that before its
closure, they used to fish, gather firewood and nipa palms on said creek; that its closure
has caused the flooding of surrounding areas, thereby resulting in poor rice harvests
In the present case the evidence in support of the respondent Secretary's decision is more than
(Ibid., 152-154); that ocular inspection further showed that there is a man-made canal
merely substantial. The testimony of several witnesses is correctly summarized in the brief
about 5 feet deep and between 4 to 8 wide which diverts the water from the main path
submitted by the Solicitor General, as follows:
of Cabay Creek as said canal is within the fishpond; that the canal ends at Guiguinto River
(Ibid., 185-186); that portions of Cabay Creek is within respondent-appellant's fishpond
Ocular inspection of the entire length of the creek up to Guiguinto, shows that portions and the water therein is deep enough for bancas to sail over it (Ibid., 190-191).
of the creek are closed by dikes (pp. 85, 92, 93 Exh. 1, Def.), that traces of the path of the
Cabay Creek within petitioner-appellant's fishpond are still visible by the nature of the
The documentary evidence shows that as long ago as 1941 there were already complaints against
mud; that a man-made canal detours the creek from its original path (Ibid., 89); that the
the closure of the Sapang Cabay by the petitioner-appellant's predecessor-in-interest, Modesto
widest portion of the creek is from 70 to 75 meters wide (Ibid., 97); that Juan Bernardo,
Pascual; that the municipal council of Guiguinto passed a resolution on November 22 of the same
79 years old in 1959, and resident of Guiguinto from birth, testified (that) as a result of
year, requesting the Secretary of Public Works and Communications to order the removal of the
the closing of said creek for fishpond purposes, it deprived the public the use of the same
obstruction; that the administrative proceedings for that purpose were interrupted by the war, but
for fishing, gathering fruits and fuel, and that surrounding areas are overflooded during
reopened in 1948, and again in 1952, pursuant to similar resolutions of the same municipal council;
heavy rain as water from creek could not be drained to the river (Ibid., 95-96, 98); that in
and that in 1954 the Secretary of Public Works and Communications rendered a decision ordering
1917, he complained to the Chief of Police, Demetrio Bernardo, against the construction
Encarnacion Jacobo, who was then the owner from whom the petitioner-appellant subsequently
of dikes across said Cabay Creek (Ibid., 98); that he used to go fishing on said creek
bought the property, to remove the dikes she had constructed. It is true that Encarnacion Jacobo
before its closure (Ibid., 98); that they usually rode on boats in entering the creek (Ibid.,
was able to get her free patent application approved in 1953 and to secure the corresponding
98-99); that Jose Mojica, 70 years old in 1959, and a resident of Guiguinto, testified that
certificate of title, but said title did not change the public character of the Sapang Cabay, the same
Petra Gatmaitan was the second claimant to said creek, the first being Venancio
being covered by one of the exceptions mentioned in Section 39 of Act No. 496. 2
Gatmaitan; that the same was sold to Modesto Pascual, then to Encarnacion Jacobo and
lastly to present petitioner-appellant (Ibid., 107); that petitioner-appellant used a
bulldozer to elevate the dikes crossing the creek which encloses the fishpond (Ibid, 108); WHEREFORE, the decision appealed from is affirmed, with costs.1äwphï1.ñët
that they used to fish on said creek before its closure, gather nipa palms and fuel, and
catch shrimps (Ibid., 109); that they used bancas along the creek before its closure,
Concepcion, C.J., Reyes, J.B.L., Dizon, Zaldivar, Sanchez, Castro, Fernando, Capistrano, Teehankee
particularly when carrying rice seedlings to distant ricefields for planting purposes (Ibid.,
and Barredo, JJ., concur.
111); that during the flood season the creek is waistdeep and even more, and
surrounding ricelands are overflooded (Ibid., 111); that Isidra de la Cruz, 65 years old in
1959, and a resident of Guiguinto, testified that she drafted a resolution complaining Footnotes
against the issuance of title covering said creek (Ibid., 117-118); that Agripino de la Cruz
testified that the creek is public property across which a tall dike was constructed (Ibid., 1ChiefJustice Hughes, in Consolidated Edison Co. vs. N.L.R.B., 305 U.S. 197; 83 Ed. 126
118-120); that the surrounding ricelands are flooded during heavy rains because the (1938); Ang Tibay vs. CIR, 69 Phil. 635.
man-made canal is not sufficient to contain the volume of water coming from the creek
(Ibid., 121); that he knew that Guiguinto folks made use of fishtraps for catching fish
2Mercado vs. Macabebe, 59 Phil. 592.
therefrom (Ibid., 122); that in his children days, he used to see bancas going thru the
creek; that although before its closure overflooding did not usually occur even after
continuous heavy rains, things have changed now and overflooding occurs frequently
(Ibid., 123-124); that Julian Manicad, 70 years old in 1959, declared that before its
closure, people fished there, gathered fuel and nipa palms, but it is different now, and
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-28379 March 27, 1929
THE GOVERNMENT OF THE PHILIPPINE ISLANDS, applicant-appellant,
vs.
CONSORCIA CABANGIS, ET AL., claimants-appellees.
Attorney-General Jaranilla for appellant.
Abad Santos, Camus & Delgado for appellees.
VILLA-REAL, J.:
The Government of the Philippine Islands appeals to this court from the judgment of the Court of
First Instance of Manila in cadastral proceeding No. 373 of the Court of First Instance of Manila, G. L.
R. O. Cadastral Record No. 373, adjudicating the title and decreeing the registration of lots Nos. 36,
39 and 40, block 3055 of the cadastral survey of the City of Manila in favor of Consuelo, Consorcia,
Elvira and Tomas, surnamed Cabangis, in equal parts, and dismissing the claims presented by the
Government of the Philippine Islands and the City of Manila.
In support of its appeal, the appellant assigns the following alleged errors as committed by the trial
court in its judgment, to wit:
1. The lower court erred in not holding that the lots in question are of the public domain,
the same having been gained from the sea (Manila Bay) by accession, by fillings made by
the Bureau of Public Works and by the construction of the break-water (built by the
Bureau of Navigation) near the mouth of Vitas Estero.
2. The lower court erred in holding that the lots in question formed part of the big parcel
of land belonging to the spouses Maximo Cabangis and Tita Andres, and in holding that
these spouses and their successors in interest have been in continuous, public, peaceful
and uninterrupted possession of said lots up to the time this case came up.
3. The lower court erred in holding that said lots existed before, but that due to the
current of the Pasig River and to the action of the big waves in Manila Bay during the
south-west monsoons, the same disappeared.
4. The lower court erred in adjudicating the registration of the lands in question in the
name of the appellees, and in denying the appellant's motion for a new trial.
A preponderance of the evidence in the record which may properly be taken into consideration in
deciding the case, proves the following facts:
Lots 36, 39 and 40, block 3035 of cadastral proceeding No. 71 of the City of Manila, G. L. R. O.
Record No. 373, were formerly a part of a large parcel of land belonging to the predecessor of the
herein claimants and appellees. From the year 1896 said land began to wear away, due to the action
of the waves of Manila Bay, until the year 1901 when the said lots became completely submerged in
water in ordinary tides, and remained in such a state until 1912 when the Government undertook
the dredging of Vitas Estuary in order to facilitate navigation, depositing all the sand and silt taken
from the bed of the estuary on the low lands which were completely covered with water,
surrounding that belonging to the Philippine Manufacturing Company, thereby slowly and gradually
forming the lots, the subject matter of this proceeding.
Up to the month of February, 1927 nobody had declared lot 39 for the purposes of taxation, and it
was only in the year 1926 that Dr. Pedro Gil, in behalf of the claimants and appellees, declared lot
No. 40 for such purpose.
In view of the facts just stated, as proved by a preponderance of the evidence, the question arises:
Who owns lots 36, 39 and 40 in question?
The claimants-appellees contend that inasmuch as the said lots once formed a part of a large parcel
of land belonging to their predecessors, whom they succeeded, and their immediate predecessor in
interest, Tomas Cabangis, having taken possession thereof as soon as they were reclaimed, giving
his permission to some fishermen to dry their fishing nets and deposit their bancas thereon, said
lots belong to them.
Article 339, subsection 1, of the Civil Code, reads:
Article 339. Property of public ownership is —
1. That devoted to public use, such as roads, canals, rivers, torrents, ports and bridges
constructed by the State, riverbanks, shorts, roadsteads, and that of a similar character.
 xxx xxx xxx
Article 1, case 3, of the Law of Waters of August 3, 1866, provides as follows:
ARTICLE 1. The following are part of the national domain open to public use:
xxx xxx xxx
3. The Shores. By the shore is understood that space covered and uncovered by the
movement of the tide. Its interior or terrestrial limit is the line reached by the highest
equinoctial tides. Where the tides are not appreciable, the shore begins on the land side
at the line reached by the sea during ordinary storms or tempests.
In the case of Aragon vs. Insular Government (19 Phil., 223), with reference to article 339 of the Civil
Code just quoted, this court said:
We should not be understood, by this decision, to hold that in a case of gradual encroachment or
erosion by the ebb and flow of the tide, private property may not become 'property of public
ownership,' as defined in article 339 of the code, where it appears that the owner has to all intents
and purposes abandoned it and permitted it to be totally destroyed, so as to become a part of the
'playa' (shore of the seas), 'rada' (roadstead), or the like. . . .
In the Enciclopedia Juridica Espanola, volume XII, page 558, we read the following:
With relative frequency the opposite phenomenon occurs; that is, the sea advances and
private properties are permanently invaded by the waves, and in this case they become
part of the shore or beach. They then pass to the public domain, but the owner thus
dispossessed does not retain any right to the natural products resulting from their new
nature; it is a de facto case of eminent domain, and not subject to indemnity.
Now then , when said land was reclaimed, did the claimants-appellees or their predecessors recover
it as their original property?
As we have seen, the land belonging to the predecessors of the herein claimants-appellees began to
wear way in 1896, owing to the gradual erosion caused by the ebb and flow of the tide, until the
year 1901, when the waters of Manila Bay completely submerged a portion of it, included within
lots 36, 39 and 40 here in question, remaining thus under water until reclaimed as a result of certain
work done by the Government in 1912. According to the above-cited authorities said portion of land,
that is, lots 36, 39 and 40, which was private property, became a part of the public domain. The
predecessors of the herein claimants-appellees could have protected their land by building a
retaining wall, with the consent of competent authority, in 1896 when the waters of the sea began
to wear it away, in accordance with the provisions of Article 29 of the aforecited Law of Waters of
August 3, 1866, and their failure to do so until 1901, when a portion of the same became completely
covered by said waters, remaining thus submerged until 1912, constitutes abandonment.
Now then: The lots under discussion having been reclaimed from the seas as a result of certain work
done by the Government, to whom do they belong?
The answer to this question is found in article 5 of the aforementioned Law of Waters, which is as
follows
ART. 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.
The fact that from 1912 some fishermen had been drying their fishing nets and depositing
their bancas on lots 36, 39 and 40, by permission of Tomas Cabangis, does not confer on the latter
or his successors the ownership of said lots, because, as they were converted into public land, no
private person could acquire title thereto except in the form and manner established by the law.
In the case of Buzon vs. Insular Government and City of Manila (13 Phil., 324), cited by the
claimants-appellees, this court, admitting the findings and holdings of the lower court, said the
following:
If we heed the parol evidence, we find that the seashore was formerly about one
hundred brazas distant from the land in question; that, in the course of time, and by the
removal of a considerable quantity of sand from the shore at the back of the land for the
use of the street car company in filling in Calle Cervantes, the sea water in ordinary tides
now covers part of the land described in the petition.
The fact that certain land, not the bed of a river or of the sea, is covered by sea water
during the period of ordinary high tide, is not a reason established by any law to cause
the loss thereof, especially when, as in the present case, it becomes covered by water
owing to circumstances entirely independent of the will of the owner.
In the case of Director of Lands vs. Aguilar (G.R. No. 22034),1 also cited by the claimants-appellees,
wherein the Government adduced no evidence in support of its contention, the lower court said in
part:
 The contention of the claimants Cabangis is to the effect that said lots are a part of the In the instant case the evidence shows that from 1896, the waves of Manila Bay had been gradually
adjoining land adjudicated to their deceased father, Don Tomas Cabangis, which, for over and constantly washing away the sand that formed the lots here in question, until 1901, when the
fifty years had belonged to their deceased grandmother, Tita Andres, and that, due to sea water completely covered them, and thus they remained until the year 1912. In the latter year
certain improvements made in Manila Bay, the waters of the sea covered a large part of they were reclaimed from the sea by filling in with sand and silt extracted from the bed of Vitas
the lots herein claimed. Estuary when the Government dredged said estuary in order to facilitate navigation. Neither the
herein claimants-appellees nor their predecessors did anything to prevent their destruction.
The Government of the Philippine Islands also claims the ownership of said lots, because,
at ordinary high tide, they are covered by the sea. In conclusion, then, we hold that the lots in question having disappeared on account of the gradual
erosion due to the ebb and flow of the tide, and having remained in such a state until they were
reclaimed from the sea by the filling in done by the Government, they are public land. (Aragon vs.
Upon petition of the parties, the lower court made an ocular inspection of said lots on
Insular Government, 19 Phil., 223; Francisco vs. Government of the Philippine Islands, 28 Phil., 505).
September 12, 1923, and on said inspection found some light material houses built
thereon, and that on that occasion the waters of the sea did not reach the aforesaid lots.
By virtue whereof, the judgment appealed from is reversed and lots Nos. 36, 39 and 40 of cadastral
proceeding No. 373 of the City of Manila are held to be public land belonging to the Government of
From the evidence adduced at the trial of this cause, it may be inferred that Tita Andres,
the United States under the administration and control of the Government of the Philippine Islands.
during her lifetime was the owner of a rather large parcel of land which was adjudicated
So ordered.
by a decree to her son Tomas Cabangis; the lots now in question are contiguous to that
land and are covered by the waters of the sea at extraordinary high tide; some 50 years
before the sea did not reach said strip of land, and on it were constructed, for the most Johnson, Street, Malcolm, Ostrand, Johns and Romualdez, JJ., concur.
part, light material houses, occupied by the tenants of Tita Andres, to whom they paid
rent. Upon her death, her son Tomas Cabangis succeeded to the possession, and his
children succeeded him, they being the present claimants, Consuelo, Jesus, Tomas, and
Consorcia Cabangis.

The Government of the Philippine Islands did not adduce any evidence in support of its
contention, with the exception of registry record No. 8147, to show that the lots here in
question were not excluded from the application presented in said proceeding.

It will be seen that in the case of Buzon vs. Insular Government and City of Manila, cited above, the
rise of the waters of the sea that covered the lands there in dispute, was due not to the action of
the tide but to the fact that a large quantity of sand was taken from the sea at the side of said land
in order to fill in Cervantes Street, and this court properly held that because of this act, entirely
independent of the will of the owner of said land, the latter could not lose the ownership thereof,
and the mere fact that the waters of the sea covered it as a result of said act, is not sufficient to
convert it into public land, especially, as the land was high and appropriate for building purposes.

In the case of the Director of Lands vs. Aguilar also cited by the claimants-appellees, the Insular
Government did not present any evidence in support of its contention, thus leaving uncontradicted
the evidence adduced by the claimants Aguilar et al., as to the ownership, possession and
occupation of said lots.
THIRD DIVISION
[G.R. No. 100709. November 14, 1997]
REPUBLIC OF THE PHILIPPINES, represented by the DIRECTOR OF LANDS, petitioner, vs. COURT OF
APPEALS, JOSEFINA L. MORATO, SPOUSES NENITA CO and ANTONIO QUILATAN AND
THE REGISTER OF DEEDS OF QUEZON PROVINCE, respondents.
DECISION
PANGANIBAN, J.:
Will the lease and/or mortgage of a portion of a realty acquired through free patent
constitute sufficient ground for the nullification of such land grant? Should such property revert to
the State once it is invaded by the sea and thus becomes foreshore land?
The Case
These are the two questions raised in the petition before us assailing the Court of
Appeals[1] Decision in CA-G.R. CV No. 02667 promulgated on June 13, 1991 which answered the said
questions in the negative.[2] Respondent Courts Decision dismissed[3] petitioners appeal and
affirmed in toto the decision of the Regional Trial Court[4] of Calauag, Quezon, dated December 28,
1983 in Civil Case No. C-608. In turn, the Regional Trial Courts decision dismissed petitioners
complaint for cancellation of the Torrens Certificate of Title of Respondent Morato and for reversion
of the parcel of land subject thereof to the public domain.
The Facts
The petition of the solicitor general, representing the Republic of the Philippines, recites the
following facts:[5]
Sometime in December, 1972, respondent Morato filed a Free Patent Application No. III-3-8186-B
on a parcel of land with an area of 1,265 square meters situated at Pinagtalleran, Calauag,
Quezon. On January 16, 1974, the patent was approved and the Register of Deeds of Quezon at
Lucena City issued on February 4, 1974 Original Certificate of Title No. P-17789. Both the free patent
and the title specifically mandate that the land shall not be alienated nor encumbered within five (5)
years from the date of the issuance of the patent (Sections 118 and 124 of CA No. 141, as amended).
Subsequently, the District Land Officer in Lucena City, acting upon reports that respondent Morato
had encumbered the land in violation of the condition of the patent, conducted an
investigation. Thereafter, it was established that the subject land is a portion of the Calauag Bay,
five (5) to six (6) feet deep under water during high tide and two (2) feet deep at low tide, and not
suitable to vegetation. Moreover, on October 24, 1974, a portion of the land was mortgaged by
respondent Morato to respondents Nenita Co and Antonio Quilatan for P10,000.00 (pp. 2, 25,
Folder of Exhibits). The spouses Quilatan constructed a house on the land. Another portion of the
land was leased to Perfecto Advincula on February 2, 1976 at P100.00 a month, where a warehouse
was constructed.
On November 5, 1978, petitioner filed an amended complaint against respondents Morato, spouses
Nenita Co and Antonio Quilatan, and the Register of Deeds of Quezon for the cancellation of title
and reversion of a parcel of land to the public domain, subject of a free patent in favor of
respondent Morato, on the grounds that the land is a foreshore land and was mortgaged and leased
within the five-year prohibitory period (p. 46, Records).
After trial, the lower court, on December 28, 1983, rendered a decision dismissing petitioners
complaint. In finding for private respondents, the lower court ruled that there was no violation of
the 5-year period ban against alienating or encumbering the land, because the land was merely
leased and not alienated. It also found that the mortgage to Nenita Co and Antonio Quilatan
covered only the improvement and not the land itself.
On appeal, the Court of Appeals affirmed the decision of the trial court. Thereafter, the
Republic of the Philippines filed the present petition.[6]
The Issues
Petitioner alleges that the following errors were committed by Respondent Court:[7]
I
Respondent Court erred in holding that the patent granted and certificate of title issued to
Respondent Morato cannot be cancelled and annulled since the certificate of title becomes
indefeasible after one year from the issuance of the title.
II
Respondent Court erred in holding that the questioned land is part of a disposable public land and
not a foreshore land.
The Courts Ruling
The petition is meritorious.
First Issue: Indefeasibility of a Free Patent Title
In resolving the first issue against petitioner, Respondent Court held:[8]
x x x. As ruled in Heirs of Gregorio Tengco vs. Heirs of Jose Alivalas, 168 SCRA 198. x x. The rule is
well-settled that an original certificate of title issued on the strength of a homestead patent
partakes of the nature of a certificate of title issued in a judicial proceeding, as long as the land
disposed of is really part of the disposable land of the public domain, and becomes indefeasible and
incontrovertible upon the expiration of one year from the date of promulgation of the order of the
Director of Lands for the issuance of the patent. (Republic v. Heirs of Carle, 105 Phil. 1227 (1959);
Ingaran v. Ramelo, 107 Phil. 498 (1960); Lopez v. Padilla, (G.R. No. L-27559, May 18, 1972, 45 SCRA
44). A homestead patent, one registered under the Land Registration Act, becomes as indefeasible
as a Torrens Title. (Pamintuan v.San Agustin, 43 Phil. 558 (1982); El Hogar Filipino v. Olviga, 60 Phil.
17 (1934); Duran v. Oliva, 113 Phil. 144 (1961); Pajomayo v. Manipon, G.R. No. L-33676, June 30,
1971, 39 SCRA 676). (p. 203).
Again, in Lopez vs. Court of Appeals, 169 SCRA 271, citing Iglesia ni Cristo v. Hon. Judge, CFI of Nueva
Ecija, Branch I, (123 SCRA 516 (1983) and Pajomayo, et al. v. Manipon, et al. (39 SCRA 676 (1971)
held that once a homestead patent granted in accordance with the Public Land Act is registered
pursuant to Section 122 of Act 496, the certificate of title issued in virtue of said patent has the
force and effect of a Torrens Title issued under the Land Registration Act.
Indefeasibility of the title, however, may not bar the State, thru the Solicitor General, from filing an
action for reversion, as ruled in Heirs of Gregorio Tengo v. Heirs of Jose Aliwalas, (supra), as follows:
But, as correctly pointed out by the respondent Court of Appeals, Dr. Aliwalas title to the property
having become incontrovertible, such may no longer be collaterally attacked. If indeed there had
been any fraud or misrepresentation in obtaining the title, an action for reversion instituted by the
Solicitor General would be the proper remedy (Sec. 101, C.A. No. 141; Director of Lands v. Jugado,
G.R. No. L-14702, May 21, 1961, 2 SCRA 32; Lopez v. Padilla, supra). (p. 204).
Petitioner contends that the grant of Free Patent (IV-3) 275 and the subsequent issuance of
Original Certificate of Title No. P-17789 to Respondent Josefina L. Morato were subject to the
conditions provided for in Commonwealth Act (CA) No. 141. It alleges that on October 24, 1974, or
nine (9) months and eight (8) days after the grant of the patent, Respondent Morato, in violation of
the terms of the patent, mortgaged a portion of the land to Respondent Nenita Co, who thereafter
constructed a house thereon. Likewise, on February 2, 1976 and within the five-year prohibitory
period, Respondent Morato leased a portion of the land to Perfecto Advincula at a monthly rent
of P100.00 who, shortly thereafter, constructed a house of concrete materials on the subject
land.[9] Further, petitioner argues that the defense of indefeasibility of title is inaccurate. The original
certificate of title issued to Respondent Morato contains the seeds of its own cancellation: such
certificate specifically states on its face that it is subject to the provisions of Sections 118, 119, 121,
122, 124 of CA No. 141, as amended.[10]
Respondent Morato counters by stating that although a portion of the land was previously
leased, it resulted from the fact that Perfecto Advincula built a warehouse in the subject land
without [her] prior consent. The mortgage executed over the improvement cannot be considered a
violation of the said grant since it can never affect the ownership.[11] She states further:
x x x. the appeal of the petitioner was dismissed not because of the principle of indefeasibility of
title but mainly due to failure of the latter to support and prove the alleged violations of respondent
Morato.The records of this case will readily show that although petitioner was able to establish that
Morato committed some acts during the prohibitory period of 5 years, a perusal thereof will also
show that what petitioner was able to prove never constituted a violation of the grant.[12]
Respondent-Spouses Quilatan, on the other hand, state that the mortgage contract they
entered into with Respondent Morato can never be considered as [an] alienation inasmuch as the
ownership over the property remains with the owner.[13] Besides, it is the director of lands and not
the Republic of the Philippines who is the real party in interest in this case, contrary to the provision
of the Public Land Act which states that actions for reversion should be instituted by the solicitor
general in the name of Republic of the Philippines.[14]
We find for petitioner.
 Quoted below are relevant sections of Commonwealth Act No. 141, otherwise known as the
Public Land Act:
Sec. 118. Except in favor of the Government or any of its branches, units or institutions, or legally
constituted banking corporations, lands acquired under free patent or homestead provisions shall
not be subject to encumbrance or alienation from the date of the approval of the application and
for a term of five years from and after the date of issuance of the patent or grant nor shall they
become liable to the satisfaction of any debt contracted prior to the expiration of said period; but
the improvements or crops on the land may be mortgaged or pledged to qualified persons,
associations, or corporations.
No alienation, transfer, or conveyance of any homestead after five years and before twenty-five
years after issuance of title shall be valid without the approval of the Secretary of Agriculture and
Natural Resources, which approval shall not be denied except on constitutional and legal
grounds. (As amended by Com. Act No. 456, approved June 8, 1939.)
xxxxxxxxx
Sec. 121. Except with the consent of the grantee and the approval of the Secretary of Agriculture
and Natural Resources, and solely for educational, religious, or charitable purposes or for a right of
way, no corporation, association, or partnership may acquire or have any right, title, interest, or
property right whatsoever to any land granted under the free patent, homestead, or individual sale
provisions of this Act or to any permanent improvement on such land. (As amended by Com. Act No.
615, approved May 5, 1941)
Sec. 122. No land originally acquired in any manner under the provisions of this Act, nor any
permanent improvement on such land, shall be encumbered, alienated or transferred, except to
persons, corporations, association, or partnerships who may acquire lands of the public domain
under this Act or to corporations organized in the Philippines authorized therefore by their charters.
Except in cases of hereditary successions, no land or any portion thereof originally acquired under
the free patent, homestead, or individual sale provisions of this Act, or any permanent improvement
on such land, shall be transferred or assigned to any individual, nor shall such land or any
permanent improvement thereon be leased to such individual, when the area of said land, added to
that of his own, shall exceed one hundred and forty-four hectares. Any transfer, assignment, or
lease made in violation hereto shall be null and void. (As amended by Com. Act No. 615, Id.)
xxxxxxxxx
Sec. 124. Any acquisition, conveyance, alienation, transfer, or other contract made or executed in
violation of any of the provisions of sections one hundred and eighteen, one hundred and twenty,
one hundred and twenty-one, one hundred and twenty-two, and one hundred and twenty-three of
this Act shall be unlawful and null and void from its execution and shall produce the effect of
annulling and cancelling the grant, title, patent, or permit originally issued, recognized or confirmed,
actually or presumptively, and cause the reversion of the property and its improvements to the
State. (Underscoring supplied.)
The foregoing legal provisions clearly proscribe the encumbrance of a parcel of land acquired
under a free patent or homestead within five years from the grant of such patent. Furthermore,
such encumbrance results in the cancellation of the grant and the reversion of the land to the public
domain. Encumbrance has been defined as [a]nything that impairs the use or transfer of property;
anything which constitutes a burden on the title; a burden or charge upon property; a claim or lien
upon property. It may be a legal claim on an estate for the discharge of which the estate is liable; an
embarrassment of the estate or property so that it cannot be disposed of without being subject to it;
an estate, interest, or right in lands, diminishing their value to the general owner; a liability resting
upon an estate.[15] Do the contracts of lease and mortgage executed within five (5) years from the
issuance of the patent constitute an encumbrance and violate the terms and conditions of such
patent? Respondent Court answered in the negative:[16]
From the evidence adduced by both parties, it has been proved that the area of the portion of the
land, subject matter of the lease contract (Exh. B) executed by and between Perfecto Advincula and
Josefina L. Morato is only 10 x 12 square meters, whereas the total area of the land granted to
Morato is 1,265 square meters. It is clear from this that the portion of the land leased by Advincula
does not significantly affect Moratos ownership and possession. Above all, the circumstances under
which the lease was executed do not reflect a voluntary and blatant intent to violate the conditions
provided for in the patent issued in her favor. On the contrary, Morato was compelled to enter into
that contract of lease out of sympathy and the goodness of her heart to accommodate a fellow
man. x x x
It is indisputable, however, that Respondent Morato cannot fully use or enjoy the land during
the duration of the lease contract. This restriction on the enjoyment of her property sufficiently
meets the definition of an encumbrance under Section 118 of the Public Land Act, because such
contract impairs the use of the property by the grantee. In a contract of lease which is consensual,
bilateral, onerous and commutative, the owner temporarily grants the use of his or her property to
another who undertakes to pay rent therefor.[17] During the term of the lease, the grantee of the
patent cannot enjoy the beneficial use of the land leased. As already observed, the Public Land Act
does not permit a grantee of a free patent from encumbering any portion of such land. Such
encumbrance is a ground for the nullification of the award.
Moratos resort to equity, i.e. that the lease was executed allegedly out of the goodness of her
heart without any intention of violating the law, cannot help her. Equity, which has been aptly
described as justice outside legality, is applied only in the absence of, and never against, statutory
law or judicial rules of procedure. Positive rules prevail over all abstract arguments based on
equity contra legem.[18]
Respondents failed to justify their position that the mortgage should not be considered an
encumbrance. Indeed, we do not find any support for such contention. The questioned mortgage
falls squarely within the term encumbrance proscribed by Section 118 of the Public Land
Act.[19] Verily, a mortgage constitutes a legal limitation on the estate, and the foreclosure of such
mortgage would necessarily result in the auction of the property.[20]
Even if only part of the property has been sold or alienated within the prohibited period of
five years from the issuance of the patent, such alienation is a sufficient cause for the reversion of
the whole estate to the State. As a condition for the grant of a free patent to an applicant, the law
requires that the land should not be encumbered, sold or alienated within five years from the
issuance of the patent. The sale or the alienation of part of the homestead violates that condition.[21]
The prohibition against the encumbrance -- lease and mortgage included -- of a homestead
which, by analogy applies to a free patent, is mandated by the rationale for the grant, viz.:[22]
equitable owner thereof.[24] However, for Respondent Moratos title of ownership over the patented
land to be perfected, she should have complied with the requirements of the law, one of which was
to keep the property for herself and her family within the prescribed period of five (5) years. Prior to
the fulfillment of all requirements of the law, Respondent Moratos title over the property was
incomplete. Accordingly, if the requirements are not complied with, the State as the grantor could
petition for the annulment of the patent and the cancellation of the title.
Respondent Morato cannot use the doctrine of the indefeasibility of her Torrens title to bar
the state from questioning its transfer or encumbrance. The certificate of title issued to her clearly
stipulated that its award was subject to the conditions provided for in Sections 118, 119, 121, 122
and 124 of Commonwealth Act (CA) No. 141. Because she violated Section 118, the reversion of the
property to the public domain necessarily follows, pursuant to Section 124.
Second Issue: Foreshore Land Reverts to the Public Domain

There is yet another reason for granting this petition.

It is well-known that the homestead laws were designed to distribute disposable agricultural lots of
the State to land-destitute citizens for their home and cultivation. Pursuant to such benevolent Although Respondent Court found that the subject land was foreshore land, it nevertheless
intention the State prohibits the sale or encumbrance of the homestead (Section 116) within five sustained the award thereof to Respondent Morato:[25]
years after the grant of the patent. After that five-year period the law impliedly permits alienation
of the homestead; but in line with the primordial purpose to favor the homesteader and his family
First of all, the issue here is whether the land in question, is really part of the foreshore lands. The
the statute provides that such alienation or conveyance (Section 117) shall be subject to the right of
Supreme Court defines foreshore land in the case of Republic vs. Alagad, 169 SCRA 455, 464, as
repurchase by the homesteader, his widow or heirs within five years. This section 117 is
follows:
undoubtedly a complement of section 116. It aims to preserve and keep in the family of the
homesteader that portion of public land which the State had gratuitously given to him. It would,
therefore, be in keeping with this fundamental idea to hold, as we hold, that the right to repurchase Otherwise, where the rise in water level is due to, the extraordinary action of nature, rainful, for
exists not only when the original homesteader makes the conveyance, but also when it is made by instance, the portions inundated thereby are not considered part of the bed or basin of the body of
his widow or heirs. This construction is clearly deducible from the terms of the statute. water in question. It cannot therefore be said to be foreshore land but land outside of the public
dominion, and land capable of registration as private property.
By express provision of Section 118 of Commonwealth Act 141 and in conformity with the
policy of the law, any transfer or alienation of a free patent or homestead within five years from the A foreshore land, on the other hand has been defined as follows:
issuance of the patent is proscribed. Such transfer nullifies said alienation and constitutes a cause
for the reversion of the property to the State. ... that part of (the land) which is between high and low water and left dry by the flux and reflux of
the tides x x x x (Republic vs. C.A., Nos. L-43105, L-43190, August 31, 1984, 131 SCRA 532;
The prohibition against any alienation or encumbrance of the land grant is a proviso attached
Government vs. Colegio de San Jose, 53 Phil 423)
to the approval of every application.[23] Prior to the fulfillment of the requirements of law,
Respondent Morato had only an inchoate right to the property; such property remained part of the
public domain and, therefore, not susceptible to alienation or encumbrance. Conversely, when a The strip of land that lies between the high and low water marks and that is alternatively wet and
homesteader has complied with all the terms and conditions which entitled him to a patent for [a] dry according to the flow of the tide. (Rep. vs. CA, supra, 539).
particular tract of public land, he acquires a vested interest therein and has to be regarded an
 The factual findings of the lower court regarding the nature of the parcel of land in question
reads:
Evidence disclose that the marginal area of the land radically changed sometime in 1937 up to 1955
due to a strong earthquake followed by frequent storms eventually eroding the land. From 1955 to
1968, however, gradual reclamation was undertaken by the lumber company owned by the
Moratos. Having thus restored the land thru mostly human hands employed by the lumber company,
the area continued to be utilized by the owner of the sawmill up to the time of his death in 1965. On
or about March 17, 1973, there again was a strong earthquake unfortunately causing destruction to
hundreds of residential houses fronting the Calauag Bay including the Santiago Building, a cinema
house constructed of concrete materials. The catastrophe totally caused the sinking of a concrete
bridge at Sumulong river also in the municipality of Calauag, Quezon.
On November 13, 1977 a typhoon code named Unding wrought havoc as it lashed the main land of
Calauag, Quezon causing again great erosion this time than that which the area suffered in
1937. The Court noted with the significance of the newspaper clipping entitled Baryo ng
Mangingisda Kinain ng Dagat (Exh. 11).
xxxxxxxxx
Evidently this was the condition of the land when on or about December 5, 1972 defendant Josefina
L. Morato filed with the Bureau of Lands her free patent application. The defendant Josefina Morato
having taken possession of the land after the demise of Don Tomas Morato, she introduced
improvement and continued developing the area, planted it to coconut trees. Having applied for a
free patent, defendant had the land area surveyed and an approved plan (Exh. 9) based on the
cadastral survey as early as 1927 (Exh. 10) was secured. The area was declared for taxation purposes
in the name of defendant Josefina Morato denominated as Tax Declaration No. 4115 (Exh. 8) and
the corresponding realty taxes religiously paid as shown by Exh. 8-A). (pp. 12-14, DECISION).
Being supported by substantial evidence and for failure of the appellant to show cause which would
warrant disturbance, the afore-cited findings of the lower court, must be respected.
Petitioner correctly contends, however, that Private Respondent Morato cannot own
foreshore land:
Through the encroachment or erosion by the ebb and flow of the tide, a portion of the subject land
was invaded by the waves and sea advances. During high tide, at least half of the land (632.5 square
meters) is 6 feet deep under water and three (3) feet deep during low tide. The Calauag Bay shore
has extended up to a portion of the questioned land.
While at the time of the grant of free patent to respondent Morato, the land was not reached by the
water, however, due to gradual sinking of the land caused by natural calamities, the sea advances
had permanently invaded a portion of subject land. As disclosed at the trial, through the testimony
of the court-appointed commissioner, Engr. Abraham B. Pili, the land was under water during high
tide in the month of August 1978. The water margin covers half of the property, but during low tide,
the water is about a kilometer (TSN, July 19, 1979, p. 12). Also, in 1974, after the grant of the patent,
the land was covered with vegetation, but it disappeared in 1978 when the land was reached by the
tides (Exhs. E-1; E-14). In fact, in its decision dated December 28, 1983, the lower court observed
that the erosion of the land was caused by natural calamities that struck the place in 1977 (Cf.
Decision, pp. 17-18).[26]
Respondent-Spouses Quilatan argue, however, that it is unfair and unjust if Josefina Morato
will be deprived of the whole property just because a portion thereof was immersed in water for
reasons not her own doing.[27]
As a general rule, findings of facts of the Court of Appeals are binding and conclusive upon
this Court, unless such factual findings are palpably unsupported by the evidence on record or
unless the judgment itself is based on a misapprehension of facts.[28] The application for a free
patent was made in 1972. From the undisputed factual findings of the Court of Appeals, however,
the land has since become foreshore. Accordingly, it can no longer be subject of a free patent under
the Public Land Act. Government of the Philippine Islands vs. Cabagis[29]explained the rationale for
this proscription:
Article 339, subsection 1, of the Civil Code, reads:
Art. 339. Property of public ownership 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.
********
Article 1, case 3, of the Law of Waters of August 3, 1866, provides as follows:
ARTICLE 1. The following are part of the national domain open to public use:
********
3. The Shores. By the shore is understood that space covered and uncovered by the movement of
the tide. Its interior or terrestrial limit is the line reached by the highest equinoctal tides. Where the
tides are not appreciable, the shore begins on the land side at the line reached by the sea during issued to Respondent Morato and the subsequent Original Certificate of Title No. P-17789. The
ordinary storms or tempests. subject land therefore REVERTS to the State. No costs.

SO ORDERED.
In the case of Aragon vs. Insular Government (19 Phil. 223), with reference to article 339 of the Civil
Code just quoted, this Court said: Romero, Melo, and Francisco, JJ., concur.
Narvasa, C.J., (Chairman), on leave.
We should not be understood, by this decision, to hold that in a case of gradual encroachment or
erosion by the ebb and flow of the tide, private property may not become property of public
ownership. as defined in article 339 of the code, where it appear that the owner has to all intents
and purposes abandoned it and permitted it to be totally destroyed, so as to become a part of the
playa (shore of the sea), rada (roadstead), or the like. * * *

In the Enciclopedia Jurdica Espaola, volume XII, page 558, we read the following:

With relative frequency the opposite phenomenon occurs; that is, the sea advances and private
properties are permanently invaded by the waves, and in this case they become part of the shore or
beach. They then pass to the public domain, but the owner thus dispossessed does not retain any
right to the natural products resulting from their new nature; it is a de facto case of eminent domain,
and not subject to indemnity.

In comparison, Article 420 of the Civil Code provides:

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.

When the sea moved towards the estate and the tide invaded it, the invaded property
became foreshore land and passed to the realm of the public domain. In fact, the Court
in Government vs. Cabangis[30] annulled the registration of land subject of cadastral proceedings
when the parcel subsequently became foreshore land.[31] In another case, the Court voided the
registration decree of a trial court and held that said court had no jurisdiction to award foreshore
land to any private person or entity.[32] The subject land in this case, being foreshore land, should
therefore be returned to the public domain.

WHEREFORE, the petition is GRANTED. This Court hereby REVERSES and SETS ASIDE the
assailed Decision of Respondent Court and ORDERS the CANCELLATION of Free Patent No. (IV-3) 275
Republic of the Philippines case, said area was not yet available for fishpond purposes and the same was
SUPREME COURT only released for said purpose on January 14, 1954. The conflicting claims of
Manila the aforesaid parties were brought to the attention of the Director of the
Bureau of Fisheries who issued an order on April 10, 1954 awarding the whole
area in favor of the petitioner-appellant and rejecting the claims of the
FIRST DIVISION
respondents-appellees (pp. 1-3, Rec. on Appeal). Appellants Anita V. de
Gonzales and Jose M. Lopez appealed the order of the Director of Fisheries to
G.R. No. L-36847 July 20, 1983 the Department of Agriculture and Natural Resources where their appeals
were docketed as D.A.N.R. Cases Nos. 901 and 901-A (p. 3, Rec. on Appeal).
SERAFIN B. YNGSON, plaintiff-appellant,
vs. In an order dated April 5, 1955, the Honorable Secretary of the Department of
THE HON. SECRETARY OF AGRICULTURE and NATURAL RESOURCES, ANITA V. DE GONZALES and Agriculture and Natural Resources set aside the order of the Director of the
JOSE M. LOPEZ, defendants-appellees. Bureau of Fisheries and caused the division of the area in question into three
portions giving each party an area of one-third (1/3) of the whole area
GUTIERREZ, JR., J.: covered by their respective applications (pp. 4-5, Rec. on Appeal). Appellant
filed a petition for review dated July 6, 1955 from the aforesaid order of the
Department of Agriculture and Natural Resources but the same was dismissed
This is an appeal from the decision of the Court of First Instance of Negros Occidental which upheld by the Office of the President of the Philippines on December 20, 1955 (pp. 5-
the orders of the Secretary of Agriculture and Natural Resources and the Office of the President 8, Rec. on Appeal). A motion for reconsideration filed by the appellant on
regarding the disposition of swamplands for conversion into fishponds. Originally taken to the Court February 15, 1956 was likewise denied on August 3, 1956. A second and third
of Appeals, the case was elevated to this Court on a finding that only a pure question of law was motion for reconsiderations filed by the appellant was also denied on August
involved in the appeal. 5, 1958 and October 26, 1960, respectively (p. 18, Rec. on Appeal).

There is no dispute over the facts. The Court of Appeals adopted the statement of facts in the Not satisfied with one-third of the 66 hectares, Mr. Yngson filed a petition for certiorari with the
Solicitor-General's brief. We do the same: Court of First Instance against the Executive Secretary, Office of the President, the Secretary of
Agriculture and Natural Resources, Anita V. Gonzales, and Jose M. Lopez.
The subject matter of the case at bar are the same mangrove swamps with an
area of about 66 hectares, more or less, situated in sitio Urbaso, barrio Mabini, The petitioner-appellant asked that the orders of the public respondents be declared null and void
municipality of Escalante, province of the Negros Occidental. In view of the and that the order of the Director of Fisheries awarding the entire area to him be reinstated.
potentialities and possibilities of said area for fishpond purposes, several
persons filed their applications with the Bureau of Fisheries, to utilize the
same for said purposes. The first applicant was Teofila Longno de Ligasan who The Court of First Instance of Negros Occidental dismissed the petition on the ground that plaintiff
filed her application on January 14, 1946, followed by Custodio Doromal who had not established such "capricious and whimsical exercise of judgment" on the part of the
filed his on October 28, 1947. Both applications were rejected, however, Department of Agriculture and Natural Resources and the Office of the President of the Philippines
because said area were then still considered as communal forest and as to constitute grave abuse of discretion justifying review by the courts in a special civil action.
therefore not yet available for fishpond purposes.
The plaintiff-appellant made the following assignments of errors:
On March 19, 1952, petitioner-appellant Serafin B. Yngson filed a similar
application for fishpond permit with the Bureau of Fisheries followed by those I
of the respondents-appellees, Anita de Gonzales and Jose M. Lopez, who filed
their respective applications with the same bureau on March 19 and April 24,
1953. When the applications were filed by the aforesaid parties in the instant
THE LOWER COURT ERRED IN HOLDING THAT THE PLAINTIFF HAS NOT ESTABLISHED SUCH
'CAPRICIOUS AND WHIMSICAL EXERCISE OF JUDGMENT ON THE PART OF THE DEFENDANTS-
APPELLEES DEPARTMENT OF AGRICULTURE AND NATURAL RESOURCES AND THE OFFICE OF THE
PRESIDENT OF THE PHILIPPINES AS TO CONSTITUTE GRAVE ABUSE OF DISCRETION, JUSTIFYING
REVIEW THEREOF IN A SPECIAL CIVIL ACTION BY THE COURT.
II
THE LOWER COURT ERRED IN SUSTAINING THE RULE OF THE DEFENDANTS-APPELLEES
ADMINISTRATIVE OFFICES IN EFFECT ITSELF HOLDING THAT THE 'PRIORITY RULE' ESTABLISHED IN
PARAGRAPHS (a) AND (d), SECTION 14, FISHERY ADMINISTRATIVE ORDER NO. 14 IS NOT APPLICABLE
TO FISHPOND APPLICATIONS FILED PRIOR TO THE CERTIFICATION OF THE BUREAU OF FORESTRY
THAT THE AREA APPLIED FOR IS AVAILABLE FOR FISHPOND PURPOSES; IN TREATING THE
APPLICATIONS OF THE APPELLANT AND THAT OF THE APPELLEES LOPEZ AND GONZALES ON EQUAL
FOOTING ONLY AND IN ORDERING THE DIVISION OF THE AREA INVOLVED IN THESE APPLICATIONS
INTO THREE EQUAL PARTS AWARDING ONE-THIRD SHARE EACH TO THESE APPLICANTS.
III
THE LOWER COURT ERRED IN DISMISSING THE COMPLAINT.
Did the administrative agencies having jurisdiction over leases of public lands for development into
fishponds gravely abuse their discretion in interpreting and applying their own rules? This is the only
issue in this case.
The pertinent provisions of Fisheries Administrative Order No. 14 read:
SEC. 14. Priority Right of Application-In determining the priority of application
or right to a permit or lease the following rules shall be observed:
(a) When two or more applications are filed for the same area, which is
unoccupied and unimproved, the first applicant shall have the right of
preference thereto.
xxx xxx xxx
(d) A holder of fishpond application which has been rejected or cancelled by
the Director of Fisheries by reason of the fact that the area covered thereby
has been certified by the Director of Forestry as not available for fishpond
purposes, SHALL NOT LOSE his right as a PRIOR APPLICANT therefore, if LATER
ON, the area applied for is certified by the Director of Forestry as available for
fishpond purposes, provided that not more than one (1) year has expired
since the rejection or cancellation of his application, in which case, his
fishpond application which was rejected or cancelled before, shall be
reinstated and given due course, and all other fishpond applications filed for
the same area shall be rejected.
The five applicants for the 66 hectares of swampland filed their applications on the following dates:
1. Teofila L. de Ligasan — January 14, 1946.
2. Custodio Doromal — October 28, 1947
3. Serafin B. Yngson — March 19, 1952
4. Anita V. Gonzales — March 19, 1953
5. Jose M. Lopez — April 24, 1953
The mangrove swampland was released and made available for fishpond purposes only on January
14, 1954. It is clear, therefore, that all five applications were filed prematurely. There was no land
available for lease permits and c•nversion into fishponds at the time all five applicants filed their
applications.
After the area was opened for development, the Director of Fisheries inexplicably gave due course
to Yngzon's application and rejected those of Anita V. Gonzales and Jose M. Lopez. The reason given
was Yngzon's priority of application.
We see no error in the decision of the lower court. The administrative authorities committed no
grave abuse of discretion.
It is elementary in the law governing the disposition of lands of the public domain that until timber
or forest lands are released as disposable and alienable neither the Bureau of Lands nor the Bureau
of Fisheries has authority to lease, grant, sell, or otherwise dispose of these lands for homesteads,
sales patents, leases for grazing or other purposes, fishpond leases, and other modes of utilization.
(Mapa v. Insular Government, 10 Phil. 175; Ankron v. Government of the Philippine Islands, 40 Phil.
10; Vda. de Alfafara v. Mapa, 95 Phil. 125; Director of Forestry v. Muñoz, 23 SCRA 1184).
The Bureau of Fisheries has no jurisdiction to administer and dispose of swamplands or mangrove
lands forming part of the public domain while such lands are still classified as forest land or
timberland and not released for fishery or other purposes.
All the applications being premature, not one of the applicants can claim to have a preferential right
over another. The priority given in paragraph "d" of Section 14 is only for those applications filed so
close in time to the actual opening of the swampland for disposition and utilization, within a period
of one year, as to be given some kind of administrative preferential treatment. Whether or not the
administrative agencies could validly issue such an administrative order is not challenged in this case.
The validity of paragraph "d" is not in issue because petitioner-appellant Yngson is clearly not
covered by the provision. His application was filed almost two years before the release of the area
for fishpond purposes. The private respondents, who filed their applications within the one-year
period, do not object to sharing the area with the petitioner-appellant, in spite of the fact that the
latter has apparently the least right to the fishpond leases. As a matter of fact, the respondent
Secretary's order states that all three applications must be considered as having been filed at the
same time on the day the area was released to the Bureau of Fisheries and to share the lease of the
66 hectares among the three of them equally. The private respondents accept this order. They pray
that the decision of the lower court be affirmed in toto.
The Office of the President holds the view that the only purpose of the provision in question is to
redeem a rejected premature application and to consider it filed as of the date the area was
released and not to grant a premature application a better right over another of the same category.
We find such an interpretation as an exercise of sound discretion which should not be disturbed. In
the case of Salaria v. Buenviaje (81 SCRA 722) we reiterated the rule that the construction of the
officer charged with implementing and enforcing the provision of a statute should be given
controlling weight. Similarly, in Pastor v. Echavez (79 SCRA 220) we held that in the absence of a
clear showing of abuse, the discretion of the appropriate department head must be respected. The
records show that the above rulings should also apply to the present case.
markers and signs were subsequently destroyed and later on Mr. Yngson started development by
building dikes in the area applied for, which he has no authority to do so due to the present conflict.
The resolution further prohibited Yngson from constructing any improvements in any area outside
his 22 hectares and also prohibited Bayoborda and Amamio from entering and making constructions
in the applied for areas pending the issuance of their permits.
The petitioner has failed to show that the acts committed by the respondents were a direct
disturbance in the proper administration of justice and processes of the law which constitutes
contempt of court. If there were any violations of petitioner's rights, he should resort to PACLAP
which issued the resolution between him and respondents or file, as he alleged he did, a criminal
complaint or other action before the courts. The motion also raises factual considerations including
boundaries and geographical locations more proper for a trial court.
We have held that contempt of court presupposes contumacious and arrogant defiance of the court.
(De Midgely v. Ferandos, 64 SCRA 23; Matutina v. Judge Buslon, 109 Phil. 140,142)
The petitioner has failed to show a contempt of court which we can take cognizance of and punish.
If any of his property or other rights over his one-third's share of the disputed property are violated,
he can pursue the correct action before the proper lower court.
WHEREFORE, the judgment appealed from is hereby AFFIRMED. The motion for contempt is also
DENIED for lack of merit. Costs against petitioner-appellant.
SO ORDERED.
Teehankee (Chairman), Plana, Escolin and Relova, JJ., concur.

During the pendency of this petition, petitioner Yngson filed a motion to have Patricio Bayoborda, Melencio-Herrera and Vasquez, JJ., is on leave.
Rene Amamio, and nine other respondents, declared in contempt of court. Petitioner charged that
Bayoborda and Amamio entered the property in controversy and without petitioner's consent, laid
stakes on the ground alleging that the same were boundaries of the areas they were claiming; that
the other respondents likewise entered the property on different dates and destroyed petitioner's
hut and the uppermost part of his fishpond and started to build houses and to occupy the same. In
their comment, the respondents in the contempt motion denied petitioner's charges. Bayoborda
and Amamio stated that they were bona-fide applicants for fishpond purposes of areas outside the
22 hectares alloted for the petitioner and that they were authorized to place placards in the areas
they applied for. As evidence the respondents attached a copy of the resolution of the Presidential
Action Committee on Land Problems (PACLAP) showing that their applications have been duly
received and acknowledged by the latter and in compliance with government regulations, they
placed markers and signs in their respective boundaries. The resolution likewise stated that these
Republic of the Philippines
SUPREME COURT considering the evidence, the trial court rendered its April 26, 1974 Decision. The dispositive portion
Manila
reads:
SECOND DIVISION
____________________________
ESTATE OF THE LATE G.R. No. 168661 * As per September 3, 2007 raffle.
JESUS S. YUJUICO, represented WHEREFORE, the Court hereby declares the applicant, Fermina Castro, of legal
by ADMINISTRATORS age, single, Filipino and a resident of 1515 F. Agoncillo St., Corner J. Escoda St.,
BENEDICTO V. YUJUICO and Present: Ermita, Manila, the true and absolute owner of the land applied for situated in
EDILBERTO V. YUJUICO; and the Municipality of Paraaque, Province of Rizal, with an area of 17,343 square
AUGUSTO Y. CARPIO, QUISUMBING, J., Chairperson, meters and covered by plan (LRC) Psu-964 and orders the registration of said
Petitioners, CARPIO MORALES, parcel of land in her name with her aforementioned personal circumstances.
TINGA,
VELASCO, JR., and Once this decision becomes final and executory, let the corresponding order
- versus - NACHURA,* JJ. for the issuance of the decree be issued.

REPUBLIC OF THE PHILIPPINES Promulgated: SO ORDERED.[1]

and the COURT OF APPEALS,
The Director of Lands and Mercedes Dizon did not appeal from the adverse decision of the Pasig-
Respondents. October 26, 2007
x-----------------------------------------------------------------------------------------x Rizal CFI. Thus, the order for the issuance of a decree of registration became final, and Decree No.
DECISION N-150912 was issued by the Land Registration Commission (LRC).[2] Original Certificate of Title (OCT)
VELASCO, JR., J.:
No. 10215 was issued in the name of Fermina Castro by the Register of Deeds for the Province of

Rizal on May 29, 1974.[3]

In 1973, Fermina Castro filed an application for the registration and confirmation of her title over a

parcel of land with an area of 17,343 square meters covered by plan (LRC) Psu-964 located in the
The land was then sold to Jesus S. Yujuico, and OCT No. 10215 was cancelled. On May 31,
Municipality of Paraaque, Province of Rizal (now Paraaque City), in the Pasig-Rizal Court of First
1974,[4] Transfer Certificate of Title (TCT) No. 445863 was issued in Yujuicos name, who subdivided
Instance (CFI), Branch 22. The application was docketed LRC Case No. N-8239. The application was
the land into two lots. TCT No. 446386[5] over Lot 1 was issued in his name, while TCT No. S-
opposed by the Office of the Solicitor General (OSG) on behalf of the Director of Lands, and by
29361[6] over Lot 2 was issued in the name of petitioner Augusto Y. Carpio.
Mercedes Dizon, a private party. Both oppositions were stricken from the records since the
Annotations at the back of TCT No. 446386 show that Yujuico had, at one time or another,
opposition of Dizon was filed after the expiration of the period given by the court, and the
mortgaged the lot to the Philippine Investments System Organization (PISO) and Citibank,
opposition of the Director of Lands was filed after the entry of the order of general default. After
N.A. Annotations in the title of petitioner Carpio reveal the lot was mortgaged in favor of Private

Development Corporation (PDC), Rizal Commercial Banking Corporation (RCBC) and then Philippine
Commercial and Industrial Bank (PCIB) and the Development Bank of the Philippines (DBP) to secure where the PEA property with an area of 1.4007 hectares would be conveyed to Jesus Yujuico and

various loans. petitioner Carpio in exchange for their property with a combined area of 1.7343 hectares.

Sometime in 1977, Presidential Decree No. (PD) 1085 entitled Conveying the Land Reclaimed in the

Foreshore and Offshore of the Manila Bay (The Manila-Cavite Coastal Road Project) as Property of On July 31, 1998, the incumbent PEA General Manager, Carlos P. Doble, informed the OSG that the

the Public Estates Authority as well as Rights and Interests with Assumptions of Obligations in the new PEA board and management had reviewed the compromise agreement and had decided to

Reclamation Contract Covering Areas of the Manila Bay between the Republic of the Philippines and defer its implementation and hold it in abeyance following the view of the former PEA General

the Construction and Development Corporation of the Philippines (1977) was issued. Land reclaimed Manager, Atty. Arsenio Yulo, Jr., that the compromise agreement did not reflect a condition of the

in the foreshore and offshore areas of Manila Bay became the properties of the Public Estates previous PEA Board, requiring the approval of the Office of the President. The new PEA

Authority (PEA), a government corporation that undertook the reclamation of lands or the management then filed a petition for relief from the resolution approving the compromise

acquisition of reclaimed lands. On January 13, 1989, OCT No. SP 02 was issued in favor of PEA. The agreement on the ground of mistake and excusable negligence.

PEA also acquired ownership of other parcels of land along the Manila Baycoast, some of which

were subsequently sold to the Manila Bay Development Corporation (MBDC), which in turn leased The petition was dismissed by the trial court on the ground that it was filed out of time
and that the allegation of mistake and excusable negligence lacked basis.
portions to Uniwide Holdings, Inc.[7]

The PEA fared no better in the Court of Appeals (CA), as the petition was dismissed for
The PEA undertook the construction of the Manila Coastal Road. As this was being planned, Yujuico failure to pay the required docket fees and for lack of merit.
and Carpio discovered that a verification survey they commissioned showed that the road directly

overlapped their property, and that they owned a portion of the land sold by the PEA to the MBDC. The matter was raised to the Supreme Court in Public Estates Authority v. Yujuico[8] but
PEAs petition was denied, upholding the trial courts dismissal of the petition for relief for having
been filed out of time. The allegation of fraud in the titling of the subject property in the name of
On July 24, 1996, Yujuico and Carpio filed before the Paraaque City Regional Trial Court
Fermina Castro was not taken up by the Court.
(RTC), a complaint for the Removal of Cloud and Annulment of Title with Damages docketed as Civil

Case No. 96-0317 against the PEA. On May 15, 1998 the parties entered into a compromise
On June 8, 2001, in a Complaint for Annulment and Cancellation of Decree No. N-150912 and its
agreement approved by the trial court in a Resolution dated May 18, 1998. On June 17, 1998, the
Derivative Titles, entitled Republic of the Philippines v. Fermina Castro, Jesus S. Yujuico, August Y.
parties executed a Deed of Exchange of Real Property, pursuant to the compromise agreement,
Carpio and the Registry of Deeds of Paraaque City docketed as Civil Case No. 01-0222, filed with the
Paraaque City RTC, respondent Republic of the Philippines, through the OSG, alleged that when the precedent for the filing of the complaint was not complied with; and (4) the complaint was not

land registered to Castro was surveyed by Engr. H. Obreto on August 3, 1972 and subsequently verified and the certification against forum shopping was not duly executed by the plaintiff or

approved by the LRC on April 23, 1973, the land was still a portion of Manila Bay as evidenced by principal party.

Namria Hydrographic Map No. 4243, Surveys to 1980; 1st Ed/. January 9/61: Revised 80-11-2; that

Roman Mataverde, the then OIC of the Surveys Division, Bureau of Lands, informed the OIC of the On November 27, 2001, respondent Republic filed an Opposition[11] to the motion to

Legal Division that [w]hen projected on Cadastral Maps CM 14 deg. 13 N-120 deg, 59E, Sec.2-A of dismiss to which defendants filed a Reply[12] on January 14, 2002, reiterating the grounds for the

Paraaque Cadastre (Cad. 299), (LRC) Psu-964 falls inside Manila Bay, outside Cad. 299; that then motion to dismiss.

Acting Regional Lands Director Narciso V. Villapando issued a Report dated November 15,

1973 stating that plan (LRC) Psu-964 is a portion of Manila Bay; that then Officer-in-Charge, In the August 7, 2002 Order of the RTC,[13] Civil Case No. 01-0222 was dismissed. The trial

Assistant Director of Lands, Ernesto C. Mendiola, submitted his Comment and Recommendation re: court stated that the matter had already been decided in LRC Case No. N-8239, and that after 28

Application for Registration of Title of FERMINA CASTRO, LRC Case No. N-8239, dated Dec. 1, 1977, years without being contested, the case had already become final and executory. The trial court also

praying that the instant registration case be dismissed; and that Fermina Castro had no registrable found that the OSG had participated in the LRC case, and could have questioned the validity of the

rights over the property. decision but did not. Civil Case No. 01-0222 was thus found barred by prior judgment.

More significantly, respondent Republic argued that, first, since the subject land was still On appeal to the CA, in CA-G.R. CV No. 76212, respondent Republic alleged that the trial

underwater, it could not be registered in the name of Fermina Castro. Second, the land registration court erred in disregarding that appellant had evidence to prove that the subject parcel of land used

court did not have jurisdiction to adjudicate inalienable lands, thus the decision adjudicating the to be foreshore land of the Manila Bay and that the trial court erred in dismissing Civil Case No. 01-

subject parcel of land to Fermina Castro was void. And third, the titles of Yujuico and Carpio, being 0222 on the ground of res judicata.[14]

derived from a void title, were likewise void.[9]

The CA observed that shores are properties of the public domain intended for public use and,

On September 13, 2001, Yujuico and Carpio filed a Motion to Dismiss (With Cancellation therefore, not registrable and their inclusion in a certificate of title does not convert the same into

of Notice of Lis Pendens),[10] on the grounds that: (1) the cause of action was barred by prior properties of private ownership or confer title upon the registrant.

judgment; (2) the claim had been waived, abandoned, or otherwise extinguished; (3) a condition

Further, according to the appellate court res judicata does not apply to lands of public
domain, nor does possession of the land automatically divest the land of its public character.
The appellate court explained that rulings of the Supreme Court have made exceptions in
cases where the findings of the Director of Lands and the Department of Environment and Natural
Resources (DENR) were conflicting as to the true nature of the land in as much as reversion efforts
pertaining foreshore lands are embued with public interest.
The dispositive portion of the CA decision reads,
WHEREFORE, premises considered, the present appeal is hereby
GRANTED. The appealed Order dated August 7, 2002 of the trial court in Civil
Case No. 01-0222 is hereby REVERSED and SET ASIDE. The case is hereby
REMANDED to said court for further proceedings and a full-blown trial on the
merits with utmost dispatch.[15]
Hence, this petition.
The Issues
Petitioners now raise the following issues before this Cour
THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR AND DECIDED A
QUESTION OF SUBSTANCE IN A WAY NOT IN ACCORDANCE WITH LAW AND
THE APPLICABLE DECISIONS OF THE HONORABLE COURT AND HAS DEPARTED
FROM THE ACCEPTED AND USUAL COURSE OF JUDICIAL PROCEEDINGS
NECESSITATING THE HONORABLE COURTS EXERCISE OF ITS POWER OF
SUPERVISION CONSIDERING THAT:
I. THE REVERSAL BY THE COURT OF APPEALS OF THE TRIAL COURTS
APPLICATION OF THE PRINCIPLE OF RES JUDICATA IN THE INSTANT CASE IS
BASED ON ITS ERRONEOUS ASSUMPTION THAT THE SUBJECT LAND IS OF
PUBLIC DOMAIN, ALLEGEDLY PART OF MANILA BAY.
A. IN THE FIRESTONE CASE, THE HONORABLE COURT APPLIED
THE PRINCIPLE OF RES JUDICATA NOTWITHSTANDING
ALLEGATIONS OF LACK OF JURISDICTION OF A LAND
REGISTRATION COURT, FORECLOSING ANY FURTHER
ATTEMPT BY RESPONDENT THEREIN, AS IN THE INSTANT
CASE, TO RESURRECT A LONG-SETTLED JUDICIAL
DETERMINATION OF REGISTRABILITY OF A PARCEL OF LAND
BASED ON THE SHEER ALLEGATION THAT THE SAME IS PART
OF THE PUBLIC DOMAIN.
B. THE LAND REGISTRATION COURT HAD JURISDICTION TO
DETERMINE WHETHER THE SUBJECT LAND WAS PART OF THE
PUBLIC DOMAIN.
C. RESPONDENTS REVERSION CASE SEEKS TO RETRY THE VERY
SAME FACTUAL ISSUES THAT HAVE ALREADY BEEN
JUDICIALLY DETERMINED OVER THIRTY (30) YEARS AGO.
D. THE JURISPRUDENTIAL BASES APPLIED BY THE COURT OF
APPEALS IN ITS QUESTIONED DECISION ARE MISPLACED,
CONSIDERING THAT THEY ARE ALL PREDICATED ON THE
ERRONEOUS PREMISE THAT IT IS UNDISPUTED THAT
THE SUBJECT LAND IS PART OF THE PUBLIC DOMAIN.
II. RESPONDENT IS BARRED BY JURISDICTIONAL ESTOPPEL AND
LACHES FROM QUESTIONING THE JURISDICTION OF THE LAND
REGISTRATION COURT.
III. RELIANCE BY THE COURT OF APPEALS ON THE ISOLATED
PRONOUNCEMENT OF THE HONORABLE COURT IN THE PEA CASE IS
UNWARRANTED AND MISLEADING CONSIDERING THAT THE MATTER
OF WHETHER RES JUDICATA APPLIES WITH RESPECT TO THE LAND
REGISTRATION COURTS DECISION IN 1974 WAS NOT IN ISSUE IN SAID
CASE.
A. THE INSTANT REVERSION CASE IS NOT THE PROPER RECOURSE.
B.THE VALIDITY OF THE COURT-APPROVED COMPROMISE
AGREEMENT 15 MAY 1998 HAS ALREADY BEEN AFFIRMED BY
THE HONORABLE COURT IN THE PEA CASE.
IV. EQUITABLE CONSIDERATIONS MANDATE THE APPLICATION OF THE
RULE ON ORDINARY ESTOPPEL AND LACHES IN THE INSTANT CASE
AGAINST RESPONDENT.
V. RESPONDENT CANNOT BE GIVEN SPECIAL CONSIDERATION AND
EXCUSED FOR TRANSGRESSING RULES OF PROCEDURE.[16]
Essentially, the issues boil down to three: (1) Is a reversion suit proper in this case? (2) Is
the present petition estopped by laches? (3) Did the CA erroneously apply the principle of res
judicata?
 An action for reversion seeks to restore public land fraudulently awarded and disposed of While CA No. 141 did not specify whether judicial confirmation of titles by a land

to private individuals or corporations to the mass of public domain.[17] This remedy is provided registration court can be subject of a reversion suit, the government availed of such remedy by filing

under Commonwealth Act (CA) No. 141 (Public Land Act) which became effective on December 1, actions with the RTC to cancel titles and decrees granted in land registration applications.

1936. Said law recognized the power of the state to recover lands of public domain. Section 124 of The situation changed on August 14, 1981 upon effectivity of Batas Pambansa (BP) Blg.

CA No. 141 reads: 129 which gave the Intermediate Appellate Court the exclusive original jurisdiction over actions for

annulment of judgments of RTCs

SEC. 124. Any acquisition, conveyance, alienation, transfer, or
other contract made or executed in violation of any of the provisions of When the 1997 Rules of Civil Procedure became effective on July 1, 1997, it incorporated
Sections one hundred and eighteen, one hundred and twenty, one hundred
and twenty one, one hundred and twenty-two, and one hundred twenty- Rule 47 on annulment of judgments or final orders and resolutions of the RTCs.The two grounds for
three of this Act shall be unlawful and null and void from its execution and
annulment under Sec. 2, Rule 47 are extrinsic fraud and lack of jurisdiction. If based on extrinsic
shall produce the effect of annulling and cancelling the grant, title, patent, or
permit originally issued, recognized or confirmed, actually or fraud, the action must be filed within four (4) years from its discovery, and if based on lack of
presumptively, and cause the reversion of the property and its
improvements to the State. (Emphasis supplied.) jurisdiction, before it is barred by laches or estoppel as provided by Section 3, Rule 47. Thus,
Pursuant to Section 124 of the Public Land Act, reversion suits are proper in the following effective July 1, 1997, any action for reversion of public land instituted by the Government was
instances, to wit: already covered by Rule 47.

The instant Civil Case No. 01-0222 for annulment and cancellation of Decree No. N-
1. Alienations of land acquired under free patent or homestead provisions in violation of
Section 118, CA No. 141; 150912 and its derivative titles was filed on June 8, 2001 with the Paraaque City RTC.It is clear

2. Conveyances made by non-Christians in violation of Section 120, CA No. 141; and therefore that the reversion suit was erroneously instituted in the Paraaque RTC and should have

3. Alienations of lands acquired under CA No. 141 in favor of persons not qualified under been dismissed for lack of jurisdiction. The proper court is the CA which is the body mandated by BP
Sections 121, 122, and 123 of CA No. 141.
Blg. 129 and prescribed by Rule 47 to handle annulment of judgments of RTCs.
From the foregoing, an action for reversion to cancel titles derived from homestead
In Collado v. Court of Appeals,[18] the government, represented by the Solicitor General
patents or free patents based on transfers and conveyances in violation of CA No. 141 is filed by the
pursuant to Section 9(2) of BP Blg. 129, filed a petition for annulment of judgment with the
OSG pursuant to its authority under the Administrative Code with the RTC. It is clear therefore that
CA. Similarly in the case of Republic v. Court of Appeals,[19] the Solicitor General correctly filed the
reversion suits were originally utilized to annul titles or patents administratively issued by the
annulment of judgment with the said appellate court.
Director of the Land Management Bureau or the Secretary of the DENR.
 This was not done in this case. The Republic misfiled the reversion suit with the Paraaque
RTC. It should have been filed with the CA as required by Rule 47. Evidently, the Paraaque RTC had
no jurisdiction over the instant reversion case.
Assuming that the Paraaque RTC has jurisdiction over the reversion case, still the lapse of
almost three decades in filing the instant case, the inexplicable lack of action of the Republic and the
injury this would cause constrain us to rule for petitioners. While it may be true that estoppel does
not operate against the state or its agents,[20] deviations have been allowed. In Manila Lodge No.
761 v. Court of Appeals, we said:
Estoppels against the public are little favored. They should not be
invoked except in rare and unusual circumstances, and may not be invoked
where they would operate to defeat the effective operation of a policy
adopted to protect the public. They must be applied with circumspection and
should be applied only in those special cases where the interests of justice
clearly require it. Nevertheless, the government must not be allowed to deal
dishonorably or capriciously with its citizens, and must not play an ignoble
part or do a shabby thing; and subject to limitations x x x, the doctrine of
equitable estoppel may be invoked against public authorities as well as
against private individuals.[21] (Emphasis supplied.)
Equitable estoppel may be invoked against public authorities when as in this case, the lot
was already alienated to innocent buyers for value and the government did not undertake any act to
contest the title for an unreasonable length of time.
In Republic v. Court of Appeals, where the title of an innocent purchaser for value who
relied on the clean certificates of the title was sought to be cancelled and the excess land to be
reversion case, we held that even if the original grantee of a patent and title has obtained the same
reverted to the Government, we ruled that [i]t is only fair and reasonable to apply the equitable
through fraud, reversion will no longer prosper as the land had become private land and the
principle of estoppel by laches against the government to avoid an injustice to innocent
fraudulent acquisition cannot affect the titles of innocent purchasers for value.
purchasers for value (emphasis supplied).[22] We explained:
Likewise time-settled is the doctrine that where innocent third
persons, relying on the correctness of the certificate of title, acquire rights
over the property, courts cannot disregard such rights and order the
cancellation of the certificate. Such cancellation would impair public
confidence in the certificate of title, for everyone dealing with property
registered under the Torrens system would have to inquire in every instance
whether the title has been regularly issued or not. This would be contrary to
the very purpose of the law, which is to stabilize land titles. Verily, all persons
dealing with registered land may safely rely on the correctness of the
certificate of title issued therefore, and the law or the courts do not oblige
them to go behind the certificate in order to investigate again the true
condition of the property. They are only charged with notice of the liens and
encumbrances on the property that are noted on the certificate.[23]
xxxx
But in the interest of justice and equity, neither may the titleholder
be made to bear the unfavorable effect of the mistake or negligence of the
States agents, in the absence of proof of his complicity in a fraud or of
manifest damage to third persons. First, the real purpose of
the Torrens system is to quiet title to land to put a stop forever to any
question as to the legality of the title, except claims that were noted in the
certificate at the time of the registration or that may arise subsequent
thereto. Second, as we discussed earlier, estoppel by laches now bars
petitioner from questioning private respondents titles to the subdivision
lots. Third, it was never proven that Private Respondent St. Jude was a party
to the fraud that led to the increase in the area of the property after its
subdivision. Finally, because petitioner even failed to give sufficient proof of
any error that might have been committed by its agents who had surveyed
the property, the presumption of regularity in the performance of their
functions must be respected. Otherwise, the integrity of the Torrens system,
which petitioner purportedly aims to protect by filing this case, shall forever
be sullied by the ineptitude and inefficiency of land registration officials, who
are ordinarily presumed to have regularly performed their duties.[24]
Republic v. Court of Appeals is reinforced by our ruling in Republic v. Umali,[25] where, in a
 Considering that innocent purchaser for value Yujuico bought the lot in 1974, and more encumbrances which may be subsisting.[26] The same legal shield redounds to his successors-in-

than 27 years had elapsed before the action for reversion was filed, then said action is now barred interest, the Yujuicos and Carpio, more particularly the latter since Carpio bought the lot from Jesus

by laches. Y. Yujuico for value and in good faith.

While the general rule is that an action to recover lands of public domain is Likewise protected are the rights of innocent mortgagees for value, the PISO, Citibank,

imprescriptible, said right can be barred by laches or estoppel. Section 32 of PD 1592 recognized the N.A., PDC, RCBC, PCIB, and DBP. Even if the mortgagors title was proved fraudulent and the title

rights of an innocent purchaser for value over and above the interests of the government. Section declared null and void, such declaration cannot nullify the mortgage rights of a mortgagee in good

32 provides: faith.[27]
SEC. 32. Review of decree of registration; Innocent purchaser for
value.The decree of registration shall not be reopened or revised by reason of All told, a reversion suit will no longer be allowed at this stage.
absence, minority, or other disability of any person adversely affected thereby,
nor by any proceeding in any court for reversing judgments, subject, however, More on the issue of laches. Laches is the failure or neglect, for an unreasonable and
to the right of any person, including the government and the branches
unexplained length of time, to do that which by exercising due diligence could or should have been
thereof, deprived of land or of any estate or interest therein by such
adjudication or confirmation of title obtained by actual fraud, to file in the done earlier. It is negligence or omission to assert a right within a reasonable time, warranting a
proper Court of First Instance a petition for reopening and review of the
decree of registration not later than one year from and after the date of the presumption that the party entitled thereto has either abandoned or declined to assert it.[28]
entry of such decree of registration, but in no case shall such petition be
entertained by the court where an innocent purchaser for value has When respondent government filed the reversion case in 2001, 27 years had already
acquired the land or an interest therein, whose rights may be
prejudiced. Whenever the phrase innocent purchaser for value or an elapsed from the time the late Jesus Yujuico purchased the land from the original owner Castro.
equivalent phrase occurs in this Decree, it shall be deemed to include an
innocent lessee, mortgagee, or other encumbrances for value. (Emphasis After the issuance of OCT No. 10215 to Castro, no further action was taken by the government to
supplied.)
question the issuance of the title to Castro until the case of Public Estates Authority, brought up in
In this petition, the LRC (now LRA), on May 30, 1974, issued Decree No. N-150912 in
the oral argument before this Court on September 6, 2000.[29] We then held that allegation of fraud
favor of Fermina Castro and OCT No. 10215 was issued by the Rizal Registrar of Deeds on May 29,
in the issuance of the title was not proper for consideration and determination at that stage of the
1974. OCT No. 10215 does not show any annotation, lien, or encumbrance on its face. Relying on
case.
the clean title, Yujuico bought the same in good faith and for value from her. He was issued TCT No.
From the undisputed facts of the case, it is easily revealed that respondent Republic took
445863 on May 31, 1974. There is no allegation that Yujuico was a buyer in bad faith, nor did he
its sweet time to nullify Castros title, notwithstanding the easy access to ample remedies which
acquire the land fraudulently. He thus had the protection of the Torrens System that every
were readily available after OCT No. 10215 was registered in the name of Castro. First, it could have
subsequent purchaser of registered land taking a certificate of title for value and in good faith shall
appealed to the CA when the Pasig-Rizal CFI rendered a decision ordering the registration of title in
hold the same free from all encumbrances except those noted on the certificate and any of the x x x
the name of applicant Castro on April 26, 1974. Had it done so, it could have elevated the matter to Even granting arguendo that respondent Republic is not precluded by laches from

this Court if the appellate court affirms the decision of the land registration court. Second, when the challenging the title of petitioners in the case at bar, still we find that the instant action for reversion

entry of Decree No. N-150912 was made on May 29, 1974 by the Rizal Register of Deeds, the is already barred by res judicata.

Republic had one (1) year from said date or up to May 28, 1975 to file a petition for the reopening Petitioners relying on Firestone Ceramics, Inc. v. Court of Appeals[31] as a precedent to the

and review of Decree No. N-150912 with the Rizal CFI (now RTC) on the ground of actual fraud case at bar contend that the instant reversion suit is now barred by res judicata.

under section 32 of PD 1592. Again, respondent Republic did not avail of such remedy. Third, when We agree with petitioners.

Jesus Yujuico filed a complaint for Removal of Cloud and Annulment of Title with Damages against The doctrine on precedents is expressed in the latin maximStare decisis et non quieta

PEA before the Paraaque RTC in Civil Case No. 96-0317, respondent could have persevered to movere. Follow past precedents and do not disturb what has been settled.[32] In order however that

question and nullify Castros title. Instead, PEA undertook a compromise agreement on which the a case can be considered as a precedent to another case which is pending consideration, the facts of

May 18, 1998 Resolution[30] was issued. PEA in effect admitted that the disputed land was owned by the first case should be similar or analogous to the second case.

the predecessors-in-interest of petitioners and their title legal and valid; and impliedly waived its A perusal of the facts of the Firestone case and those of the case at bar reveals that the

right to contest the validity of said title; respondent Republic even filed the petition for relief from facts in the two (2) cases are parallel. First, in Firestone and in this case, the claimants filed land

judgment beyond the time frames allowed by the rules, a fact even acknowledged by this Court registration applications with the CFI; both claimants obtained decrees for registration of lots

in Public Estates Authority. Lastly, respondent only filed the reversion suit on June 8, 2001 after the applied for and were issued OCTs. Second, in Firestone, the Republic filed a reversion case alleging

passage of 27 years from the date the decree of registration was issued to Fermina Castro. that the land covered by the OCT was still inalienable forest land at the time of the application and

Such a Rip Van Winkle, coupled with the signing of the settlement with PEA, hence the Land Registration Court did not acquire jurisdiction to adjudicate the property to the

understandably misled petitioners to believe that the government no longer had any right or claimant. In the instant case, respondent Republic contend that the land applied for by Yujuico was

interest in the disputed lot to the extent that the two lots were even mortgaged to several banks within Manila Bay at the time of application and therefore the CFI had no jurisdiction over the

including a government financing institution. Any nullification of title at this stage would unsettle subject matter of the complaint. Third, in Firestone, the validity of the title of the claimant was

and prejudice the rights and obligations of innocent parties. All told, we are constrained to conclude favorably ruled upon by this Court in G.R. No. 109490 entitled Patrocinio E. Margolles v. CA. In the

that laches had set in case at bar, the validity of the compromise agreement involving the disputed lot was in effect

upheld when this Court in Public Estates Authority v. Yujuico dismissed the petition of PEA seeking

to reinstate the petition for relief from the May 18, 1998 Resolution approving said compromise
agreement. With the dismissal of the petition, the May 18, 1998 Resolution became final and
executory and herein respondent Republic through PEA was deemed to have recognized Castros
title over the disputed land as legal and valid. In Romero v. Tan,[33] we ruled that a judicial
compromise has the effect of res judicata. We also made clear that a judgment based on a
compromise agreement is a judgment on the merits, wherein the parties have validly entered into
stipulations and the evidence was duly considered by the trial court that approved the
agreement. In the instant case, the May 18, 1998 Resolution approving the compromise agreement
confirmed the favorable decision directing the registration of the lot to Castros name in LRC Case No.
N-8239. Similarly, in Firestone, the Margolles case confirmed the decision rendered in favor of Gana
in Land Registration Case No. 672 ordering the issuance of the decree to said applicant. Fourth,
in Firestone, the Supreme Court relied on the letter of then Solicitor General Francisco Chavez that
the evidence of the Bureau of Lands and the LRC was not sufficient to support an action for
cancellation of OCT No. 4216. In the instant case, both the Solicitor General and the Government
Corporate Counsel opined that the Yujuico land was not under water and that there appears to be
no sufficient basis for the Government to institute the action for annulment. Fifth, in Firestone, we
ruled that the Margolles case had long become final, thus the validity of OCT No. 4216 should no
longer be disturbed and should be applied in the instant case (reversion suit) based on the principle
of res judicata or, otherwise, the rule on conclusiveness of judgment.[34]
Clearly from the above, Firestone is a precedent case. The Public Estates Authority had
become final and thus the validity of OCT No. 10215 issued to Castro could no longer be questioned.
While we said in Public Estates Authority that the court does not foreclose the right of
the Republic from pursuing the proper recourse in a separate proceedings as it may deem
warranted, the statement was obiter dictum since the inquiry on whether or not the disputed land
was still under water at the time of its registration was a non-issue in the said case.
Even granting for the sake of argument that Firestone is not squarely applicable, still we
find the reversion suit already barred by res judicata.
For res judicata to serve as an absolute bar to a subsequent action, the following
requisites must concur: (1) there must be a final judgment or order; (2) the court rendering it must
have jurisdiction over the subject matter and the parties; (3) it must be a judgment or order on the
merits; and (4) there must be between the two cases, identity of parties, subject matter and causes
of action.[35]
There is no question as to the first, third and last requisites. The threshold question
pertains to the second requisite, whether or not the then Pasig-Rizal CFI, Branch 22 had jurisdiction
over the subject matter in LRC Case No. N-8239. In Civil Case No. 01-0222, the Paraaque City RTC,
Branch 257 held that the CFI had jurisdiction. The CA reversed the decision of the Paraaque City RTC
based on the assertion of respondent Republic that the Pasig-Rizal CFI had no jurisdiction over the
subject matter, and that there was a need to determine the character of the land in question.
The Paraaque City RTC Order dismissing the case for res judicata must be upheld.
The CA, in rejecting the dismissal of the reversion case by the Paraaque RTC, relied on
two cases, namely: Municipality of Antipolo v. Zapanta[36] and Republic v. Vda. De Castillo.[37]
In Municipality of Antipolo, we held that the land registration court had no jurisdiction to
entertain any land registration application if the land was public property, thus:
Since the Land Registration Court had no jurisdiction to entertain the
application for registration of public property of ANTIPOLO, its Decision
adjudicating the DISPUTED PROPERTY as of private ownership is null and
void. It never attained finality, and can be attacked at any time. It was not a
bar to the action brought by ANTIPOLO for its annulment by reason of res
judicata.
 [x x x] the want of jurisdiction by a court over the subject matter
renders the judgment void and a mere nullity, and considering that
a void judgment is in legal effect no judgment, by which no rights
are divested, from which no rights can be obtained, which neither
binds nor bars any one, and under which all acts performed and all
claims flowing out of are void, and considering, further, that the
decision, for want of jurisdiction of the court, is not a decision in
contemplation of law, and hence, can never become executory, it
follows that such a void judgment cannot constitute a bar to
another case by reason of res judicata.
xxxx
It follows that if a person obtains a title under the Public Land Act
which includes, by oversight, lands which cannot be registered
under the Torrens System, or when the Director of Lands did not
have jurisdiction over the same because it is a public forest, the
grantee does not, by virtue of the said certificate of title alone,
become the owner of the land illegally included (Republic vs.
Animas, 56 SCRA 499, 503; Ledesma vs. Municipality of Iloilo, 49
Phil. 769).
Section 14 of PD 1592 provides:
SEC. 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. (Emphasis supplied.)
Conformably, the Pasig-Rizal CFI, Branch XXII has jurisdiction over the subject matter of the land
registration case filed by Fermina Castro, petitioners predecessor-in-interest, since jurisdiction over
the subject matter is determined by the allegations of the initiatory pleadingthe
application.[41] Settled is the rule that the authority to decide a case and not the decision rendered
therein is what makes up jurisdiction. When there is jurisdiction, the decision of all questions arising

[x x x x] in the case is but an exercise of jurisdiction.[42]

Under these circumstances, the certificate of title may be ordered

cancelled (Republic vs. Animas, et al., supra), and the cancellation
In our view, it was imprecise to state in Municipality of Antipolo that the Land
maybe pursued through an ordinary action therefore. This action
cannot be barred by the prior judgment of the land registration
Registration Court [has] no jurisdiction to entertain the application for registration of public
court, since the said court had no jurisdiction over the subject
matter. And if there was no such jurisdiction, then the principle property x x x for such court precisely has the jurisdiction to entertain land registration applications
of res judicata does not apply. [x x x] Certainly, one of the essential
requisites, i.e., jurisdiction over the subject matter, is absent in this since that is conferred by PD 1529. The applicant in a land registration case usually claims the land
case. (Italics supplied).[38]
subject matter of the application as his/her private property, as in the case of the application of
The plain import of Municipality of Antipolo is that a land registration court, the RTC at present, has
Castro. Thus, the conclusion of the CA that the Pasig-Rizal CFI has no jurisdiction over the subject
no jurisdiction over the subject matter of the application which respondent Republic claims is public
matter of the application of Castro has no legal mooring. The land registration court initially has
land. This ruling needs elucidation.
jurisdiction over the land applied for at the time of the filing of the application. After trial, the court,
Firmly entrenched is the principle that jurisdiction over the subject matter is conferred
in the exercise of its jurisdiction, can determine whether the title to the land applied for is
by law.[39] Consequently, the proper CFI (now the RTC) under Section 14 of PD 1529[40] (Property
registrable and can be confirmed. In the event that the subject matter of the application turns out
Registration Decree) has jurisdiction over applications for registration of title to land.

to be inalienable public land, then it has no jurisdiction to order the registration of the land and
perforce must dismiss the application.
Based on our ruling in Antipolo, the threshold question is whether the land covered by
the titles of petitioners is under water and forms part of Manila Bay at the time of the land
registration application in 1974. If the land was within Manila Bay, then res judicata does not
apply. Otherwise, the decision of the land registration court is a bar to the instant reversion suit.
After a scrutiny of the case records and pleadings of the parties in LRC Case No. N-8239
and in the instant petition, we rule that the land of Fermina Castro is registrable and not part of
Manila Bay at the time of the filing of the land registration application.
The trial courts Decision in 1974 easily reveals the basis for its conclusion that the subject
matter was a dry land, thus:
On February 1, 1974, the applicant presented her evidence before
the Deputy Clerk of this Court and among the evidence presented by her were
certain documents which were marked as Exhibits D to J, inclusive. The
applicant testified in her behalf and substantially declared that: she was 62
years old, single, housekeeper and residing at 1550 J. Escoda, Ermita, Manila;
that she was born on June 3, 1911; that she first came to know of the land
applied for which is situated in the Municipality of Paraaque, province of Rizal,
with an area of 17,343 square meters and covered by plan (LRC) Psu-964
while she was still ten (10) years old or sometime in 1921; that when she first
came to know of the land applied for, the person who was in possession and
owner of said land was her father, Catalino Castro; that during that time her
father used to plant on said land various crops like pechay, mustard, eggplant,
etc.; that during that time, her father built a house on said land which was
used by her father and the other members of the family, including the
applicant, as their residential house; that the land applied for was inherited by
her father from her grandfather Sergio Castro; that Catalino Castro
continuously possessed and owned the land in question from 1921 up to the
time of his death in 1952; and that during that period of time nobody ever
disturbed the possession and ownership of her father over the said parcel of
land; that after the death of her father in 1952 she left the place and
transferred her place of residence but she had also occasions to visit said land
twice or thrice a week and sometimes once a week; that after she left the
land in question in 1952, she still continued possessing said land, through her
caretaker Eliseo Salonga; that her possession over the land in question from
the time she inherited it up to the time of the filing of the application has
been continuous, public, adverse against the whole world and in the concept
of an owner; that it was never encumbered, mortgaged, or disposed of by her
father during his lifetime and neither did she ever encumber or sell the same;
that it was declared for taxation purposes by her father when he was still alive
and her father also paid the real estate taxes due to the government although
the receipt evidencing the payment of said real estate taxes for the property
applied for have been lost and could no longer be found inspite of diligent
effort exerted to locate the same.
The other witness presented by the applicant was Emiliano de
Leon, who declared that he was 70 years old, married, farmer and residing at
San Jose, Baliwag, Bulacan; that he knew Catalino Castro, the father of the
applicant because said Catalino Castro was his neighbor in Tambo, Paraaque,
Rizal, he had a house erected on the land of Catalino Castro; that he was born
in 1903 and he first came to know of the land in question when in 1918 when
he was about 18 years old; that the area of the land owned and possessed by
Catalino Castro where he constructed a residential house has an area of more
than one and one-half (1 ) hectares; that the possession of Catalino Castro
over the land in question was peaceful, continuous, notorious, adverse
against the whole world and in the concept of an owner; that during the time
that Catalino Castro was in possession of the land applied for he planted on
said parcel of land mango, coconut and banana, etc.; that Catalino Castro
continuously possessed and owned said parcel of land up to the year 1952
when he died; that during the time that Catalino Castro was in possession of
said land, nobody ever laid claim over the said property; that said land is not
within any military or naval reservation; that upon the death of Catalino
Castro, the applicant took possession of the land applied for and that up to
the present the applicant is in possession of said land; that he resided in the
land in question from 1918 up to the time he transferred his place of
residence in Baliwag, Bulacan in the year 1958.
On February 11, 1974, the Court, pursuant to the provision of
Presidential Decree No. 230 issued by his Excellency, Ferdinand E. Marcos
dated July 9, 1973 held in abeyance the rendition of a decision in this case and
directed the applicant to submit a white print copy of plan (LRC) Psu-964 to
 the Director of lands who was directed by the Court to submit his comment
and recommendation thereon. The same conclusion was adopted in a November 15, 1973 letter of Narciso Villapando,

The property in question is declared for taxation purposes under Acting Regional Lands Director to the Chief, Legal Division, Bureau of Lands and in the Comment and
Tax Declaration No. 51842 (Exhibit G) and real estate taxes due thereon have
Recommendation of Ernesto C. Mendiola, Assistant Director, also of the Bureau of Lands.
been paid up to the year 1973 (Exhibit H).

In compliance with the Order of this Court February 11, 1974, the Director
of Lands, thru Special Attorney Saturnino A. Pacubas, submitted a report to Respondent likewise cites Namria Hydrographic Map No. 4243 Revised 80-11-2 to
this Court dated April 25, 1974, stating among other things, that upon ocular
inspection conducted by Land Inspector Adelino G. Gorospe and the support its position that Castros lot is a portion of Manila Bay.
subsequent joint ocular inspection conducted by Geodetic Engineer Manuel
A. Cervantes and Administrative Assistant Lazaro G. Berania, it was
established that the parcel of land covered by plan (LRC) Psu-964 no longer
forms part of the Manila Bay but is definitely solid and dry land. The burden of proving these averments falls to the shoulders of respondent

In this connection, it should be noted that Administrative Assistant Republic. The difficulty is locating the witnesses of the government. Roman Mataverde, then OIC of
Lazaro G. Berania and Geodetic Engineer Manuel A. Cervantes, in their report
the Surveys Division retired from the government service in 1982. He should by this time be in his
dated March 22, 1974 have also stated that the land applied for cannot be
reached by water even in the highest tide and that the said land is occupied 90s. Moreover, Asst. Regional Director Narciso Villapando and Asst. Director Ernesto C. Mendiola
by squatter families who have erected makeshift shanties and a basketball
court which only prove that the same is dry and solid land away from the are no longer connected with the Bureau of Lands since 1986.
shores of Manila Bay
Assuming that OIC Roman Mataverde, Asst. Regional Director Narciso Villapando and
Furthermore, Land Inspector Adelino G. Gorospe in his letter-report dated
November 28, 1973 has also stated that there is a house of pre-war vintage Assistant Director Ernesto C. Mendiola are still available as witnesses, the projections made on the
owned by the applicant on the land in question which in effect corroborates
the testimony of the applicant and her witness that they have lived on the cadastral maps of the then Bureau of Lands cannot prevail over the results of the two ocular
land in question even prior to the outbreak of the second world war and that
inspections by several Bureau of Lands officials that the disputed lot is definitely dry and solid land
the applicant has been in possession of the land in question long time ago.[43]
and not part of Manila Bay. Special Attorney Saturnino A. Pacubas, Land Inspector Adelino G.
To counter the evidence of applicant Castro, and bolster its claim that she has no valid Gorospe, Geodetic Engineer Manuel A. Cervantes and Administrative Asst. Lazaro A. Berana, all
[44]
title, respondent Republic relies on the July 18, 1973 Office Memorandum of Roman Mataverde, officials of the Bureau of Lands, were positive that the disputed land is solid and dry land and no
OIC, Surveys Division, to the OIC, Legal Division, of the Bureau of Lands, stating that when projected longer forms part of Manila Bay. Evidence gathered from the ocular inspection is considered direct
on cadastral maps CM 14 13N - 120 59 E., Sec. 3-D and CM 14 30N - 120 59E., Sec. 2-A of Paranaque and firsthand information entitled to great weight and credit while the Mataverde and Villapando
[45]
[sic] Cadastre (Cad-299), (LRC) Psu-964 falls inside Manila Bay, outside Cad-299. reports are evidence weak in probative value, being merely based on theoretical projections in the

cadastral map or table surveys.[46] Said projections must be confirmed by the actual inspection and

verification survey by the land inspectors and geodetic engineers of the Bureau of
Lands. Unfortunately for respondent Republic, the bureau land inspectors attested and affirmed
that the disputed land is already dry land and not within Manila Bay.
On the other hand, the Namria Hydrographic Map No. 4243 does not reveal what portion
of Manila Bay was Castros lot located in 1974. Moreover, a hydrographic map is not the best
evidence to show the nature and location of the lot subject of a land registration application. It is
derived from a hydrographic survey which is mainly used for navigation purposes, thus:
Surveys whose principal purpose is the determination of data
relating to bodies of water. A hydrographic survey may consist of the
determination of one or several of the following classes of data: depth water;
configuration and nature of the bottom; directions and force of currents;
heights and times of tides and water stages; and location of fixed objects for
survey and navigation purposes.[47]
Juxtaposed with finding of the ocular inspection by Bureau of Lands Special Attorney
Pacubas and others that Castros lot is dry land in 1974, Namria Hydrographic Map No. 4243 is
therefore inferior evidence and lacking in probative force.
Moreover, the reliability and veracity of the July 18, 1973 report of Roman Mataverde
based on the alleged projection on cadastral maps and the Villapando report dated November 15,
1973 are put to serious doubt in the face of the opinion dated October 13, 1997 of the Government
Corporate Counsel, the lawyer of the PEA, which upheld the validity of the titles of petitioners, thus:
We maintain to agree with the findings of the court that the
property of Fermina Castro was registrable land, as based on the two (2)
ocular inspections conducted on March 22, 1974 by Lands Administrative
Assistant Lazaro G. Berania and Lands Geodetic Engr. Manuel Cervantes,
finding the same no longer forms part of Manila Bay but is definitely solid land
which cannot be reached by water even in the highest of tides. This Berania-
Cervantes report based on ocular inspections literally overturned the
findings and recommendations of Land Director Narciso V. Villapando dated
November 15, 1973, and that of Director Ernesto C. Mendiola dated
December 1, 1977, and the fact that the Villapando-Mendiola reports were
merely based on projections in the cadastral map or table surveys.
xxxx
A. The Legal prognosis of the case is not promising in favor of PEA.
4.1 LRC Case No. N-8239 has already become final and executory
and OCT No. 10215 was already issued in favor of Fermina Castro. Any and all
attempts to question its validity can only be entertained in a quo warranto
proceedings (sic), assuming that there are legal grounds (not factual grounds)
to support its nullification. Subjecting it to a collateral attack is not allowed
under the Torrens Title System. In Calalang vs. Register of Deeds of Quezon
City, 208 SCRA 215, the Supreme Court held that the present petition is not
the proper remedy in challenging the validity of certificates of titles since the
judicial action required is a direct and not a collateral attack (refer also to:
Toyota Motor Philippine Corporation vs. CA, 216 SCRA 236).
4.2 OCT No. 10215 in favor of Fermina Castro was issued pursuant
to a cadastral proceeding, hence is a rem proceedings which is translated as a
constructive notice to the whole world, as held in Adez Realty Incorporated vs.
CA, 212 SCRA 623.
4.3 From the cursory and intent reading of the decision of Judge
Sison in LRC Case No. N-8239, we cannot find any iota of fraud having been
committed by the court and the parties. In fact, due process was observed
when the Office of the Solicitor General represented ably the Bureau of Lands.
In Balangcad vs. Justices of the Court of Appeals, 206 SCRA 169, the Supreme
Court held that title to registered property becomes indefeasible after one-
year from date of registration except where there is actual fraud in which case
it may be challenged in a direct proceeding within that period. This is also the
ruling in Bishop vs. CA, 208 SCRA 636, that to sustain an action for annulment
of a torrens certificate for being void ab initio, it must be shown that the
registration court had not acquired jurisdiction over the case and there was
actual fraud in securing the title.
4.4 As to priority of torrens title, PEA has no defense, assuming
that both PEA and Yujuico titles are valid, as held in Metropolitan Waterworks
and Sewerage System vs. CA, 215 SCRA 783, where two (2) certificates
purport to include the same land, the earlier in date prevails.
4.5 The documents so far submitted by the parties to the court
indicate that the mother title of the Yujuico land when registered in 1974
 was not underwater. This was shown in the two (2) ocular inspections
conducted by the officials of the Land Bureau.
4.6 The provision of P.D. 239 that no decree of registration may be
issued by the court unless upon approval and recommendation of the Bureau
of Lands was substantially complied with in the Report of Lands Special
Attorney Saturnino Pacubas, submitted to the court.[48]
cancellation/annulment of Decree No. N-150912 and OCT No. 10215 and all
its derivative titles will not prosper unless there is convincing evidence to
negate the report of the then Land Management Bureau through Special
Attorney Pacubas. Should the Government pursue the filing of such an
action, the possibility of winning the case is remote.[49]
More so, respondent Government, through its counsel, admits that the land applied by

Fermina Castro in 1973 was solid and dry land, negating the nebulous allegation that said land is
Even the counsel of respondent Republic, the OSG, arrived at the conclusion that there is
underwater. The only conclusion that can be derived from the admissions of the Solicitor General
no sufficient legal basis for said respondent to institute action to annul the titles of petitioners, thus:
and Government Corporate Counsel is that the land subject of the titles of petitioners is alienable
It may be stated at the outset that a petition for annulment of
land beyond the reach of the reversion suit of the state.
certificate of title or reconveyance of land may be based on fraud which
attended the issuance of the decree of registration and the corresponding Notably, the land in question has been the subject of a compromise agreement upheld
certificate of title.
by this Court in Public Estates Authority.[50] In that compromise agreement, among other provisions,
Based on the decision in the LRC Case No. N-8239 involving the
petition for registration and confirmation of title filed by Fermina Castro, it was held that the property covered by TCT Nos. 446386 and S-29361, the land subject of the
there is no showing that fraud attended the issuance of OCT No. 10215. it
appears that the evidence presented by Fermina Castro was sufficient for the instant case, would be exchanged for PEA property. The fact that PEA signed the May 15, 1998
trial court to grant her petition.
Compromise Agreement is already a clear admission that it recognized petitioners as true and legal
The testimony of Fermina Castro, which was corroborated by
Emiliano de Leon, that she and her predecessors-in-interest had been in owners of the land subject of this controversy.
possession of the land for more than thirty (30) years sufficiently established
Moreover, PEA has waived its right to contest the legality and validity of Castros
her vested right over the property initially covered by OCT No. 10215. The
report dated April 25, 1974 which was submitted to the trial court by the title. Such waiver is clearly within the powers of PEA since it was created by PD 1084 as a body
Director of Lands through Special Attorney Saturnino Pacubas showed that
the parcel of land was solid and dry land when Fermina Castros application for corporate which shall have the attribute of perpetual succession and possessed of the powers of the
registration of title was filed. It was based on the ocular inspection conducted
by Land Inspector Adelino Gorospe and the joint circular inspection conducted corporations, to be exercised in conformity with the provisions of this Charter [PD 1084].[51] It has
by Geodetic Engineer Manuel A. Cervantes and Administrative Assistant
Lazaro Berania on November 28, 1973 and March 22, 1974 respectively. the power to enter into, make, perform and carry out contracts of every class and description,

The aforesaid report must be requested unless there is a concrete
proof that there was an irregularity in the issuance thereof. In the absence of
evidence to the contrary, the ocular inspection of the parcel of land, which
was made the basis of said report, is presumed to be in order.
including loan agreements, mortgages and other types of security arrangements, necessary or
incidental to the realization of its purposes with any person, firm or corporation, private or public,
and with any foreign government or entity.[52] It also has the power to sue and be sued in its

Based on the available records, there appears to be no sufficient corporate name.[53] Thus, the Compromise Agreement and the Deed of Exchange of Real Property
basis for the Government to institute an action for the annulment of OCT No.
10215 and its derivative titles. It is opined that a petition for signed by PEA with the petitioners are legal, valid and binding on PEA. In the Compromise
Agreement, it is provided that it settles in full all the claims/counterclaims of the parties against upheld because it is already barred by laches. Even if laches is disregarded, still the suit is already

each other.[54] The waiver by PEA of its right to question petitioners title is fortified by the precluded by res judicata in view of the peculiar facts and circumstances obtaining therein.

manifestation by PEA in the Joint Motion for Judgment based on Compromise Agreement that

4. The parties herein hereto waive and abandon any and all other
claims and counterclaims which they may have against each other arising
from this case or related thereto.[55]
WHEREFORE, premises considered, the petition is GRANTED. The Decision of the Court
of Appeals in CA-G.R. CV No. 76212 is REVERSED and SET ASIDE, and the August 7, 2002 Order of
the Paraaque City RTC, Branch 257 in Civil Case No. 01-0222 entitled Republic of the Philippines v.

Thus, there was a valid waiver of the right of respondent Republic through PEA to Fermina Castro, et al. dismissing the complaint is AFFIRMED.

challenge petitioners titles.

No costs.

The recognition of petitioners legal ownership of the land is further bolstered by the

categorical and unequivocal acknowledgment made by PEA in its September 30, 2003 letter where it SO ORDERED.

stated that: Your ownership thereof was acknowledged by PEA when it did not object to your

membership in the CBP-IA Association, in which an owner of a piece of land in CBP-IA automatically

becomes a member thereof.[56] Section 26, Rule 130 provides that the act, declaration or omission of

a party as to a relevant fact may be given in evidence against him. The admissions of PEA which is

the real party-in-interest in this case on the nature of the land of Fermina Castro are valid and

binding on respondent Republic. Respondents claim that the disputed land is underwater falls flat in

the face of the admissions of PEA against its interests. Hence, res judicata now effectively precludes

the relitigation of the issue of registrability of petitioners lot.

In sum, the Court finds that the reversion case should be dismissed for lack of jurisdiction

on the part of the Paraaque RTC. Even if we treat said case as a petition for annulment of judgment

under Rule 47 of the 1997 Rules of Civil Procedure, the dismissal of the case nevertheless has to be
Republic of the Philippines 23, 2001, in CA-G.R. CV No. 64121 entitled Republic of the Philippines, represented by the Director of
Supreme Court
Lands v. Angelito Bugayong, et al.; and (2) Resolution[5] of the same Court, dated November 12,
Manila
2001, denying LBPs motion for reconsideration.
THIRD DIVISION

LAND BANK OF THE G.R. No. 150824 The CA affirmed the Decision[6] of the Regional Trial Court (RTC), dated July 9, 1996,
PHILIPPINES,
Petitioner, Present: declaring null and void Original Certificate of Title (OCT) No. P-2823, as well as other titles
YNARES-SANTIAGO, J.,
Chairperso originating from it, on the ground that at the time it was issued, the land covered was still within the
n,
forest zone.[7]
- versus - AUSTRIA-MARTINEZ,
*
CORONA, The Facts
NACHURA, and
REYES, JJ. OCT No. P-2823 was issued on September 26, 1969 in favor of one Angelito C.
REPUBLIC OF THE
PHILIPPINES, represented Promulgated: Bugayong. Said mother title emanated from Sales Patent No. 4576 issued in Bugayongs name
by the Director of Lands,
Respondent. February 4, 2008 on September 22, 1969.[8] It covered a parcel of land located in Bocana, Kabacan, Davao City, with

x--------------------------------------------------x an area of 41,276 square meters. It was originally identified and surveyed as Lot No. 4159 under
DECISION
REYES, R.T., J.: Plan SI-(VIII-1), 328-D. Marshy and under water during high tide, it used to be a portion of a dry river

FOREST lands are outside the commerce of man and unsusceptible of private bed near the mouth of Davao River.[9]

appropriation in any form.[1] The land was initially subdivided into four lots, viz.: Lot Nos. 4159-A, 4159-B, 4159-C and

It is well settled that a certificate of title is void when it covers property of public domain 4159-D under Subdivision Plan (LRC) Psd-139511 approved by the Commissioner of Land

classified as forest, timber or mineral lands. Any title issued covering non-disposable lots even in the Registration on April 23, 1971.[10] Consequently, OCT No. P-2823 was cancelled and new Transfer

hands of an alleged innocent purchaser for value shall be cancelled.[2] The rule must stand no matter Certificates of Title (TCTs) replaced it, all in the name of Bugayong.

how harsh it may seem. Dura lex sed lex.[3] Ang batas ay maaaring mahigpit subalit ito ang Bugayong sold all of the four lots to different persons. Lot No. 4159-A, which was then

mananaig. under TCT No. T-32769, was sold to spouses Lourdes and Candido Du.Accordingly, said TCT was

Before Us is a petition for review on certiorari under Rule 45 filed by petitioner Land cancelled and replaced by TCT No. T-42166 in the name of spouses Du.[11]

Bank of the Philippines (LBP) appealing the: (1) Decision[4] of the Court of Appeals (CA), dated August
 Afterwards, the spouses Du further caused the subdivision of the land covered by Upon recommendation of the Bureau of Lands, the Republic of the Philippines

their TCT No. T-42166 into two (2) lots. They sold one of said lots to spouses Felix and Guadalupe represented by the Director of Lands, through the Office of the Solicitor General (OSG), instituted a

Dayola, who were issued TCT No. T-45586. The other remaining lot, registered under TCT No. T- complaint[19] before the RTC in Davao, Branch 15, for the cancellation of title/patent and reversion

45587, was retained by and registered in the names of spouses Du.[12] of the land covered by OCT No. P-2823 into the mass of public domain. The complaint, as

amended,[20] was filed against Bugayong and other present owners and mortgagees of the land, such

Subsequently, Du spouses TCT No. T-45587 was cancelled and was replaced by TCT No. T- as Lourdes Farms, Inc. and the latters mortgagee, petitioner LBP.

57348 registered in the name of Lourdes Farms, Inc. subject of this case.[13]Lourdes Farms, Inc.

mortgaged this property to petitioner LBP on April 14, 1980.[14] In its answer with cross-claim,[21] LBP claimed that it is a mortgagee in good faith and for

value. It prayed that should TCT No. T-57348 of Lourdes Farms, Inc. be annulled by the court,

The validity of OCT No. P-2823, as well as its derivative TCTs, remained undisturbed until Lourdes Farms, Inc. should be ordered to pay its outstanding obligations to LBP or to provide a new

some residents of the land it covered, particularly those along Bolton Diversion Road, filed a formal collateral security.[22]

petition before the Bureau of Lands on July 15, 1981.[15]

RTC Judgment
Investigation and ocular inspection were conducted by the Bureau of Lands to check the
Eventually, the RTC rendered its judgment[23] on July 9, 1996 determining that:
legitimacy of OCT No. P-2823. They found out that: (1) at the time Sales Patent No. 4576 was issued x x x The mistakes and the flaws in the granting of the title were
made by the Bureau of Lands personnel more particularly the Director of
to Bugayong, the land it covered was still within the forest zone, classified under Project No. 1, LC- Lands who is the Officer charged with the following the provisions of the
Public Land Law. x x x.
47 dated August 6, 1923; it was released as alienable and disposable land only on March 25, 1981,

pursuant to BFD Administrative Order No. 4-1585 and to the provisions of Section 13, Presidential It is clear that the mother Title, OCTP-2823 in the name of
defendant Bugayong was issued at a time when the area was not yet released
Decree (P.D.) No. 705;[16] (2) the land was marshy and covered by sea water during high tide; and (3) by the Bureau of Forestry to the Bureau of Lands.

Bugayong was never in actual possession of the land.[17] The area covered by OCT No. P. 2823 was not yet declared by the
Bureau of Lands alienable and disposable when the said OCT was issued. The
subdivision of the lot covered by OCT P-2823 into 4 lots covered by TCT Nos.
T-32768, 32769, 32756 and 32771 did not cure the defect. x x x.[24]
In view of the foregoing findings, the Bureau of Lands resolved that the sales patent in

favor of Bugayong was improperly and illegally issued and that the Director of Lands had no
The RTC explained that titles issued to private parties by the Bureau of Lands are void ab
jurisdiction to dispose of the subject land.[18]
initio if the land covered by it is a forest land.[25] It went further by stating that if the mother title is
void, all titles arising from the mother title are also void.[26] It thus ruled in favor of the Republic with The CA confirmed that the evidence for the plaintiff clearly established that the land

a fallo reading:
IN VIEW WHEREOF, judgment is hereby rendered declaring Original
Certificate of Title No. P-2823 issued in the name of defendant Angelito
Bugayong null and void. The following Transfer Certificate of Titles which were
originally part of the lot covered by O.C.T. No. P-2823 are likewise declared
void:
1.A. TCT No. 57348 in the name of
defendant Lourdes Farms mortgaged to
defendant Land Bank.
B. TCT No. 84749 in the name of defendants Johnny
and Catherine Du mortgaged to defendant
Development Bank of the Philippines.
C. TCT No. 37386 in the name of defendants spouses
Pahamotang mortgaged to defendant Lourdes
Du mortgaged with defendant Allied Bank.
E. TCT Nos. 68154 and 32768 in the names of
defendants/spouses Maglana Santamaria.
2. All private defendants shall give to the Davao City
Register of Deeds their titles, who shall cancel
the Transfer Certificate of Titles mentioned in
paragraph number one.
3. Lot No. 4159, Plan SI (VIII-1) 328-D covered by O.C.T.
P-2823 is hereby REVERTED to the mass of
public domain.
SO ORDERED.[27] (Underscoring supplied)
Disagreeing with the RTC judgment, LBP appealed to the CA on October 31, 1996. It asserted in its
appellants brief[28] that it validly acquired mortgage interest or lien over the subject property
covered by OCT No. P-2823 issued pursuant to a sales patent granted to defendant Angelito C.
Bugayong was still within the forestal zone at the time of the grant of the said patent.[33] It explained:
Forest lands or forest reserves, are incapable of private
appropriation and possession thereof, however long, cannot convert them
into private properties. This is premised on the Regalian Doctrine enshrined
not only in the 1935 and 1973 Constitutions but also in
the 1987 Constitution. Our Supreme Court has upheld this rule consistently
even in earlier cases. It has also been held that whatever possession of the
land prior to the date of release of forested land as alienable and disposable
cannot be credited to the 30-year requirement (now, since June 12, 1945)
under Section 48(b) of the Public Land Act. It is only from that date that the
period of occupancy for purposes of confirmation of imperfect or incomplete
title may be counted. Since the subject land was declared as alienable and
disposable only on March 25, 1981, appellants and their predecessors-in-
interest could not claim any vested right thereon prior to its release from
public forest zone.
The inclusion of forest land in a title, whether title be issued during
the Spanish regime or under the Torrens system, nullifies the title. It is, of
course, a well-recognized principle that the Director of Lands (now Land
Management Bureau) is bereft of any jurisdiction over public forest or any
lands not capable of registration. It is the Bureau of Forestry that has
jurisdiction and authority over the demarcation, protection, management,
reproduction, occupancy and use of all public forests and forest reservations
and over the granting of licenses for the taking of products therefrom. And
where the land applied for is part of the public forest, the land registration
court acquires no jurisdiction over the land, which is not yet alienable and
disposable.

because it was an innocent mortgagee for value and in good faith.[29] It also emphasized that it is a Thus, notwithstanding the issuance of a sales patent over the
subject parcel of land, the State may still take action to have the same land
government financial institution.
reverted to the mass of public domain and the certificate of title covering said
CA Disposition
forest land declared null and void for having been improperly and illegally
In a Decision[30] dated August 23, 2001, the CA ruled against the appellants,[31] disposing issued. Titles issued over non-alienable public lands have been held as void ab
initio.The defense of indefeasibility of title issued pursuant to such patent
thus: does not lie against the State. Public land fraudulently included in patents or
WHEREFORE, premises considered, the present appeals are hereby certificates of title may be recovered or reverted to the State in accordance
DISMISSED and the Decision of the trial court in Civil Case No. 17516 is hereby with Section 101 of the Public Land Act. In such cases, prescription does not
AFFIRMED.[32] lie against the State. Likewise, the government is not estopped by such
fraudulent or wrongful issuance of a patent over public forest land inasmuch
 as the principle of estoppel does not operate against the Government for the
acts of its agents. x x x.[34] (Citations omitted) It has been established and admitted by LBP that: (1) the subject land mortgaged to it by Lourdes

With respect to LBPs contention[35] that it was a mortgagee in good faith and for value, the CA Farms, Inc. is covered by TCT No. T-57348; and (2) the said TCT is derived from OCT No. P-2823

declared, citing Republic v. Reyes[36] that: mortgagees of non-disposable lands where titles thereto issued to Bugayong.[39]

were erroneously It was further ascertained by the courts below that at the time OCT No. P-2823 was issued to

issued acquire no protection under the land registration law. Appellants-mortgagees proper Bugayong on September 26, 1969, the land it covered was still within the forest zone. It was

recourse therefore is to pursue their claims against their respective mortgagors and debtors.[37] declared as alienable and disposable only on March 25, 1981.[40]

When LBPs motion for reconsideration was denied, it resorted to the petition at bar. Despite these established facts, LBP argues that its alleged interest as mortgagee of the subject land

Issues covered by TCT No. T-57348 must be respected. It avers that TCT No. T-57348 is a Torrens title

LBP seeks the reversal of the CA disposition on the following grounds which has no written indications of defect or vice affecting the ownership of Lourdes Farms,
A.
THE COURT OF APPEALS ERRED IN NOT FINDING THAT THE Inc. Hence, it posits that it was not and could not have been required to explore or go beyond what
PETITIONER LAND BANK OF THE PHILIPPINES MORTGAGE
the title indicates or to search for defects not indicated in it.
RIGHT AND INTEREST AS AN INNOCENT PURCHASER (MORTGAGEE) FOR
VALUE AND IN GOOD FAITH OVER THE SUBJECT LAND COVERED BY TCT NO. T- LBP cites cases where the Court ruled that a party is not required to explore further than what the
57348 IS VALID AND SUBSISTING IN ACCORDANCE WITH THE
LAW AND EXISTING JURISPRUDENCE IN OUR COUNTRY. Torrens title upon its face indicates in quest of any hidden defect of an inchoate right that may
B.
THE COURT OF APPEALS ERRED IN NOT FINDING PETITIONER LAND BANK OF subsequently defeat his right to it; and that a bank is not required before accepting a mortgage to
THE PHILIPPINES MORTGAGE RIGHT AND INTEREST OVER THE
SUBJECT LAND AS VALID AND SUBSISTING UNDER THE CONSTITUTIONAL make an investigation of the title of the property being given as security. LBP submits that its right
GUARANTEE OF NON-IMPAIRMENT OF OBLIGATION OF CONTRACTS.
C. as a mortgagee is binding against the whole world and may not be disregarded. [41]
THE COURT OF APPEALS ERRED IN NOT AWARDING TO
PETITIONER LAND BANK OF THE PHILIPPINES THE RELIEF PRAYED FOR It further argues that review or reopening of registration is proscribed, as the title has
UNDER ITS CROSS-CLAIM AGAINST CO-DEFENDANT LOURDES FARMS, INC.,
become incontrovertible pursuant to Section 32 of P.D. No. 1529; and that its mortgage rights and
THAT IS, ORDERING SAID CO-DEFENDANT LOURDES FARMS, INC. TO PAY ITS
OUTSTANDING OBLIGATION TO THE LANDBANK COVERED BY THE SUPPOSED interest over the subject land is protected by the constitutional guarantee of non-impairment of
NULL AND VOID TCT NO. T-57348, OR TO PROVIDE A SUBSTITUTE COLLATERAL
IN LIEU OF SAID TCT NO. T-57348.[38](Underscoring supplied) contracts.[42]

Our Ruling The contention that LBP has an interest over the subject land as a mortgagee has no
LBP has no valid and
subsisting mortgagees merit. The mortgagor, Lourdes Farms, Inc. from which LBP supposedly obtained its alleged interest
interest over the land
covered by TCT No. T- has never been the owner of the mortgaged land. Acquisition of the subject land by Lourdes Farms,
57348.
Inc. is legally impossible as the land was released as alienable and disposable only on March 25,
1981. Even at present, no one could have possessed the same under a claim of ownership for the
period of thirty (30) years required under Section 48(b) of Commonwealth Act No. 141, as
amended.[43] Hence, LBP acquired no rights over the land.
Under Article 2085 of the Civil Code, it is essential that the mortgagor be the absolute
owner of the thing mortgaged, to wit:
ARTICLE 2085. The following requisites are essential to the contracts
of pledge and mortgage:
(1) That they be constituted to secure the fulfillment of a principal
obligation;
(2) That the pledgor or mortgagor be the absolute owner of the
thing pledged or mortgaged;
(3) That the persons constituting the pledge or mortgage have the
free disposal of their property, and in the absence thereof, that they be legally
authorized for the purpose. (Emphasis ours)
Since Lourdes Farms, Inc. is not the owner of the land, it does not have the capacity to
mortgage it to LBP. In De la Cruz v. Court of Appeals,[44] the Court declared:
While it is true that the mortgagees, having entered into a contract
with petitioner as mortgagor, are estopped from questioning the latters
ownership of the mortgaged property and his concomitant capacity to
alienate or encumber the same, it must be considered that, in the first place,
petitioner did not possess such capacity to encumber the land at the time for
the stark reason that it had been classified as a forest land and remained a
part of the patrimonial property of the State. Assuming, without admitting,
that the mortgagees cannot subsequently question the fact of ownership of
petitioner after having dealt with him in that capacity, still, petitioner was
never vested with the proprietary power to encumber the property. In fact,
even if the mortgagees continued to acknowledge petitioner as the owner of
the disputed land, in the eyes of the law, the latter can never be presumed to
be owner.
As correctly pointed out by the OSG, mortgagees of non-disposable lands, titles to which
were erroneously issued, acquire no protection under the Land Registration Law.[45]
Even assuming that LBP was able to obtain its own TCT over the property by means of its
mortgage contract with Lourdes Farms, Inc., the title must also be cancelled as it was derived from
OCT No. P-2823 which was not validly issued to Bugayong. Forest lands cannot be owned by private
persons. It is not registerable whether the title is a Spanish title or a Torrens title.[46] It is well settled
that a certificate of title is void when it covers property of public domain classified as forest or
timber or mineral land. Any title issued covering non-disposable lots even in the hands of an alleged
innocent purchaser for value shall be cancelled.[47]
Moreover, the Court has already addressed the same issue in its Resolution of November
14, 2001 on the petition filed by the Philippine National Bank (PNB) in G. R. No. 149568
entitled Philippine National Bank v. Republic of the Philippines represented by the Director of Lands,
which also appealed the subject CA decision. PNB, like LBP, is also a mortgagee of another
derivative TCT of the same OCT No. 2823. Said resolution reads:
On September 22, 1969, Angelito C. Bugayong was issued a sales
patent covering a 41,276 square meter parcel of land in Bocana, Barrio
Kabacan, Davao City by the Bureau of Lands. On the basis of the sales patent,
the Register of Deeds of Davao City issued OCT No. P-2823 to Bugayong.
Bugayong later subdivided the land into four lots, one of which (Lot No. 4159-
B covered by TCT No. T-32770) was sold by him to the spouses Reynaldo
Rogacion and Corazon Pahamotang. After obtaining TCT No. T-37786 in their
names, the spouses mortgaged the lot to the Philippine National Bank
(PNB). As they defaulted in the payment of their loan, the PNB foreclosed the
property and purchased it at the foreclosure sale as the highest
bidder. Eventually, the PNB consolidated its title.
Sometime in 1981, upon the petition of the residents of the land,
the Bureau of Lands conducted an investigation into the sales patent issued in
favor of Angelito C. Bugayong and found the sales patent to have been
illegally issued because (1) the land was released as alienable and disposable
only on March 25, 1981; previous to that, the land was within the forest zone;
(2) the land is covered by sea water during high tide; and (3) the patentee,
Angelito C. Bugayong, had never been in actual possession of the land.
 Based on this investigation, the government instituted the present
suit in 1987 for cancellation of title/patent and reversion of the parcel of land
against Angelito C. Bugayong, the Rogacion spouses, and the PNB, among Petitioners contention that the government is now estopped from
others. questioning the validity of OCT No. 727 issued to them, considering that it
took the government 45 years to assail the same, is erroneous. We have ruled
On July 6, 1996, the trial court rendered a decision declaring OCT in a host of cases that prescription does not run against the government. In
No. P-2823 and all titles derived therefrom null and void and ordering point is the case of Republic v. Court of Appeals, wherein we declared:
reversion of the subject property to the mass of the public domain. On appeal,
the Court of Appeals affirmed the trial courts decision. Hence, this petition. And in so far as the timeliness of the action
of the Government is concerned, it is basic that
First. Petitioner contends that it had a right to rely on TCT No. T- prescription does not run against the State x x x. The
37786 showing the mortgagors Reynaldo Rogacion and Corazon Pahamotangs case law has also been:
ownership of the property.
When the government
The contention is without merit. It is well settled that a certificate is the real party in interest, and is
of title is void when it covers property of public domain classified as forest or proceeding mainly to assert its
timber or mineral lands. Any title issued covering non-disposable lots even in own rights and recover its own
the hands of an alleged innocent purchaser for value shall be cancelled property, there can be no
(Republic v. Reyes, 155 SCRA 313 (1987)). defense on the ground of laches
or limitation x x x.
(Republic v. Court of Appeals, 148 SCRA 480 (1987)). In this case,
petitioner does not dispute that its predecessor-in-interest, Angelito C. Public land
Bugayong, had the subject property registered in his name when it was forest fraudulently included in patents
land. Indeed, even if the subject property had been eventually segregated or certificates of title may be
from the forest zone, neither petitioner nor its predecessors-in- recovered or reverted to the
interest could have possessed the same under claim of ownership for the State in accordance with Section
requisite period of thirty (30) years because it was released as alienable and 101 of the Public Land
disposable only on March 25, 1981. Act. Prescription does not lie
against the State in such cases for
Second. Petitioners contention that respondents action for the Statute of Limitations does
reversion is barred by prescription for having been filed nearly two decades not run against the State. The
after the issuance of Bugayongs sales patent is likewise without right of reversion or reconveyance
merit. Prescription does not lie against the State for reversion of property to the State is not barred by
which is part of the public forest or of a forest reservation registered in favor prescription. (Emphasis ours)
of any party. Public land registered under the Land Registration Act may be There is no
recovered by the State at any time (Republic v. Court of Appeals, 258 SCRA impairment of
223 (1996)).[48] contract but a valid
exercise of police
Contrary to the argument of LBP, since the title is void, it could not have become power of the State.

incontrovertible. Even prescription may not be used as a defense against the Republic. On this The constitutional guarantee of non-impairment of contracts may not likewise be used by LBP to

aspect, the Court in Reyes v. Court of Appeals,[49] citing Republic v. Court of Appeals,[50] held: validate its interest over the land as mortgagee. The States restraint upon the right to have an

interest or ownership over forest lands does not violate the constitutional guarantee of non-
impairment of contracts. Said restraint is a valid exercise of the police power of the State. As
explained by the Court in Director of Forestry v. Muoz:[51]
absolute; for government cannot exist if the citizen may at will use his
property to the detriment of his fellows, or exercise his freedom of contract to
work them harm, and that, therefore, [e]qually fundamental with the private
right is that of the public to regulate it in the common interest. (Emphasis
ours and citations omitted)

The view this Court takes of the cases at bar is but in adherence to In Edu v. Ericta,[52] the Court defined police power as the authority of the state to enact
public policy that should be followed with respect to forest lands. Many have
written much, and many more have spoken, and quite often, about the legislation that may interfere with personal liberty or property in order to promote the general
pressing need for forest preservation, conservation, protection, development
and reforestation. Not without justification. For, forests constitute a vital welfare. It is the power to prescribe regulations to promote the health, morals, peace, education,
segment of any country's natural resources. It is of common knowledge by
now that absence of the necessary green cover on our lands produces a good order or safety, and general welfare of the people. It is that inherent and plenary power of the
number of adverse or ill effects of serious proportions.Without the trees,
watersheds dry up; rivers and lakes which they supply are emptied of their State which enables it to prohibit all things hurtful to the comfort, safety and welfare of society.[53] It
contents. The fish disappear. Denuded areas become dust bowls. As waterfalls
extends to all the great public needs and is described as the most pervasive, the least limitable and
cease to function, so will hydroelectric plants. With the rains, the fertile
topsoil is washed away; geological erosion results. With erosion come the the most demanding of the three inherent powers of the State, far outpacing taxation and eminent
dreaded floods that wreak havoc and destruction to property crops, livestock,
houses and highways not to mention precious human lives. Indeed, the domain.[54] It is a ubiquitous and often unwelcome intrusion. Even so, as long as the activity or the
foregoing observations should be written down in a lumbermans decalogue.
property has some relevance to the public welfare, its regulation under the police power is not only
Because of the importance of forests to the nation, the States
police power has been wielded to regulate the use and occupancy of forest proper but necessary.[55]
and forest reserves.
Preservation of our forest lands could entail intrusion upon contractual rights as in this
To be sure, the validity of the exercise of police power in the name
of the general welfare cannot be seriously attacked. Our government had case but it is justified by the Latin maxims Salus populi est suprema lex and Sic utere tuo ut alienum
definite instructions from the Constitutions preamble to promote the general
non laedas, which call for the subordination of individual interests to the benefit of the greater
welfare. Jurisprudence has time and again upheld the police power over
individual rights, because of the general welfare. Five decades ago, Mr. Justice number.[56]
Malcolm made it clear that the right of the individual is necessarily subject to
reasonable restraint by general law for the common good and that the liberty While We sympathize with petitioner, We nonetheless cannot, in this instance, yield to
of the citizen may be restrained in the interest of public health, or of the
public order and safety, or otherwise within the proper scope of the police compassion and equity. The rule must stand no matter how harsh it may seem.[57]
power. Mr. Justice Laurel, about twenty years later, affirmed the precept
when he declared that the state in order to promote the general welfare may
interfere with personal liberty, with property, and with business and
occupations and that [p]ersons and property may be subjected to all kinds of
restraints and burdens, in order to secure the general comfort, health, and
prosperity of the state. Recently, we quoted from leading American case,
which pronounced that neither property rights nor contract rights are
We cannot resolve the
cross-claim for lack of As held in De Liano v. Court of Appeals,[61] appellant has to specify in what aspect of the
factual basis. The cross-
claim must be remanded law or the facts the trial court erred. The conclusion, therefore, is that appellant must carefully
to the RTC for further
formulate his assignment of errors. Its importance cannot be underestimated, as Section 8, Rule 51
proceedings.
of the Rules of Court will attest:
LBP filed a cross-claim against Lourdes Farms, Inc. before the RTC.[58] The cross-claim is
Questions that may be decided. No error which does not affect the
for the payment of cross-defendant Lourdes Farms, Inc.s alleged obligation to LBP or its submission jurisdiction over the subject matter or the validity of the judgment appealed
from or the proceedings therein will be considered unless stated in the
of a substitute collateral security in lieu of the property covered by TCT No. T-57348. assignment of errors, or closely related to or dependent on an assigned error
and properly argued in the brief, save as the court may pass upon plain errors
However, the records do not show that Lourdes Farms, Inc. was required by the RTC to and clerical errors.

file an answer to the cross-claim. Likewise, Lourdes Farms, Inc. was not notified of the proceedings Apparently, the cross-claim was taken for granted not only by the RTC but also by

before the CA. It was not also made a party to this petition. LBP. The cross-claim was not included as a subject or issue in the pre-trial order and instead of

LPB now contends that the CA erred in not granting its cross-claim against Lourdes Farms, asking that the same be heard, LBP filed a motion[62] to submit the main case for resolution. The

Inc. We are thus confronted with the question: Should We now order Lourdes Farms, Inc. to comply main case was thus resolved by the RTC without touching on the merits of the cross-claim.

with the demand of LBP? On the other hand, while the CA did not make a categorical ruling on LBPs cross-claim, it

We rule in the negative. It may be true that Lourdes Farms, Inc. still has an obligation to LBP but We pointed out that: (1) as found by the RTC, there is a mortgage contract between LBP and Lourdes

cannot make a ruling regarding the same for lack of factual basis. There is no evidence-taking on the Farms, Inc., with LBP as mortgagee and Lourdes Farms, Inc. as mortgagor; and (2) LBPs proper

cross-claim. No evidence was adduced before the RTC or the CA regarding it. No factual finding or recourse is to pursue its claim against Lourdes Farms, Inc.[63]

ruling was made by the RTC or the CA about it. The CA thus impliedly ruled that LBPs cross-claim should not be included in this case.

It bears stressing that in a petition for review on certiorari, the scope of this Court's Instead of making a ruling on the same, it recommended that LBP pursue its claim against Lourdes

judicial review of decisions of the CA is generally confined only to errors of law. Questions of fact are Farms, Inc.

not entertained.[59] All told, although the relationship between LBP and Lourdes Farms, Inc. as mortgagee

Moreover, the failure to make a ruling on the cross-claim by the RTC was not assigned as and mortgagor was established, the cross-claim of LBP against Lourdes Farms, Inc. was left

an error in LBPs appellants brief[60] before the CA. Hence, the CA cannot be faulted for not making a unresolved.

ruling on it. The Court is not in a position to resolve the cross-claim based on the records. In order for

the cross-claim to be equitably decided, the Court, not being a trier of facts, is constrained to
remand the case to the RTC for further proceedings. Remand of the case for further proceedings is

proper due to absence of a definitive factual determination regarding the cross-claim.[64]

WHEREFORE, the appealed Decision of the Court of Appeals is hereby AFFIRMED with

the MODIFICATION that the cross-claim of petitioner Land Bank of the Philippines against Lourdes

Farms, Inc. is REMANDED to the Regional Trial Court, Branch 15, Davao City, for further proceedings.

SO ORDERED.
 SITUATED NAMED IN A LIST,
Republic of the Philippines
ANNEX A OF THIS PETITION,
Supreme Court Petitioners,
Manila

EN BANC - versus -

THE SECRETARY OF THE

THE SECRETARY OF THE G.R. No. 167707 DEPARTMENT OF ENVIRONMENT
DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES, THE
AND NATURAL RESOURCES, THE REGIONAL TECHNICAL
REGIONAL EXECUTIVE Present: DIRECTOR FOR LANDS, LANDS
DIRECTOR, DENR-REGION VI, MANAGEMENT BUREAU,
REGIONAL TECHNICAL PUNO, C.J., REGION VI, PROVINCIAL
DIRECTOR FOR LANDS, QUISUMBING, ENVIRONMENT AND NATURAL
LANDS MANAGEMENT BUREAU, YNARES-SANTIAGO, RESOURCES OFFICER, KALIBO,
REGION VI PROVINCIAL CARPIO, AKLAN,
ENVIRONMENT AND NATURAL AUSTRIA-MARTINEZ, Respondents.
RESOURCES OFFICER OF KALIBO, CORONA,*
AKLAN, REGISTER OF DEEDS, CARPIO MORALES, x--------------------------------------------------x
DIRECTOR OF LAND AZCUNA,
REGISTRATION AUTHORITY, TINGA, DECISION
DEPARTMENT OF TOURISM CHICO-NAZARIO,
SECRETARY, DIRECTOR OF VELASCO, JR.,
PHILIPPINE TOURISM NACHURA,** REYES, R.T., J.:
AUTHORITY, REYES,
Petitioners, LEONARDO-DE CASTRO, and
BRION, JJ.
- versus - AT stake in these consolidated cases is the right of the present occupants

of Boracay Island to secure titles over their occupied lands.

MAYOR JOSE S. YAP, LIBERTAD
TALAPIAN, MILA Y. SUMNDAD, and
ANICETO YAP, in their behalf and Promulgated: There are two consolidated petitions. The first is G.R. No. 167707, a petition for review
in behalf of all those similarly situated,
Respondents. October 8, 2008 on certiorari of the Decision[1] of the Court of Appeals (CA) affirming that[2] of the Regional Trial

x--------------------------------------------------x Court (RTC) in Kalibo, Aklan, which granted the petition for declaratory relief filed by respondents-

DR. ORLANDO SACAY and G.R. No. 173775 claimants Mayor Jose Yap, et al. and ordered the survey of Boracay for titling purposes. The second
WILFREDO GELITO, joined by
is G.R. No. 173775, a petition for prohibition, mandamus, and nullification of Proclamation No.
THE LANDOWNERS OF
BORACAY SIMILARLY
1064[3] issued by President Gloria Macapagal-Arroyo classifying Boracay into reserved forest and open, continuous, exclusive, and notorious possession and occupation in Boracay since June 12,

agricultural land. 1945, or earlier since time immemorial. They declared their lands for tax purposes and paid realty

The Antecedents taxes on them.[10]

G.R. No. 167707 Respondents-claimants posited that Proclamation No. 1801 and its implementing Circular

Boracay Island in the Municipality of Malay, Aklan, with its powdery white sand beaches did not place Boracay beyond the commerce of man. Since the Island was classified as a tourist zone,

and warm crystalline waters, is reputedly a premier Philippine tourist destination.The island is also it was susceptible of private ownership. Under Section 48(b) of Commonwealth Act (CA) No. 141,

home to 12,003 inhabitants[4] who live in the bone-shaped islands three barangays.[5] otherwise known as the Public Land Act, they had the right to have the lots registered in their

On April 14, 1976, the Department of Environment and Natural Resources (DENR) names through judicial confirmation of imperfect titles.

approved the National Reservation Survey of Boracay The Republic, through the Office of the Solicitor General (OSG), opposed the petition for

Island,[6] which identified several lots as being occupied or claimed by named persons.[7] declaratory relief. The OSG countered that Boracay Island was an unclassified land of the public

On November 10, 1978, then President Ferdinand Marcos issued Proclamation domain. It formed part of the mass of lands classified as public forest, which was not available for

No. 1801[8] declaring Boracay Island, among other islands, caves and peninsulas in the Philippines, disposition pursuant to Section 3(a) of Presidential Decree (PD) No. 705 or the Revised Forestry

as tourist zones and marine reserves under the administration of the Philippine Tourism Authority Code,[11] as amended.

(PTA). President Marcos later approved the issuance of PTACircular 3-82[9] dated September 3, 1982, The OSG maintained that respondents-claimants reliance on PD No. 1801

to implement Proclamation No. 1801. and PTA Circular No. 3-82 was misplaced. Their right to judicial confirmation of title was governed

Claiming that Proclamation No. 1801 and PTA Circular No 3-82 precluded them from by CA No. 141 and PD No. 705. Since Boracay Island had not been classified as alienable and

filing an application for judicial confirmation of imperfect title or survey of land for titling purposes, disposable, whatever possession they had cannot ripen into ownership.

respondents-claimants During pre-trial, respondents-claimants and the OSG stipulated on the following facts: (1)

Mayor Jose S. Yap, Jr., Libertad Talapian, Mila Y. Sumndad, and Aniceto Yap filed a petition for respondents-claimants were presently in possession of parcels of land in Boracay Island; (2) these

declaratory relief with the RTC in Kalibo, Aklan. parcels of land were planted with coconut trees and other natural growing trees; (3) the coconut

In their petition, respondents-claimants alleged that Proclamation No. 1801 trees had heights of more or less twenty (20) meters and were planted more or less fifty (50) years

and PTA Circular No. 3-82 raised doubts on their right to secure titles over their occupied ago; and (4) respondents-claimants declared the land they were occupying for tax purposes.[12]

lands. They declared that they themselves, or through their predecessors-in-interest, had been in
 The parties also agreed that the principal issue for resolution was purely legal: whether
Proclamation No. 1801 posed any legal hindrance or impediment to the titling of the lands in
Boracay. They decided to forego with the trial and to submit the case for resolution upon
submission of their respective memoranda.[13]
The RTC took judicial notice[14] that certain parcels of land in Boracay Island, more
particularly Lots 1 and 30, Plan PSU-5344, were covered by Original Certificate of Title No. 19502
(RO 2222) in the name of the Heirs of Ciriaco S. Tirol. These lots were involved in Civil Case Nos.
5222 and 5262 filed before the RTC of Kalibo, Aklan.[15]The titles were issued on
August 7, 1933.[16]
RTC and CA Dispositions
On July 14, 1999, the RTC rendered a decision in favor of respondents-claimants, with
a fallo reading:
WHEREFORE, in view of the foregoing, the Court declares that
Proclamation No. 1801 and PTA Circular No. 3-82 pose no legal obstacle to the
petitioners and those similarly situated to acquire title to their lands in
Boracay, in accordance with the applicable laws and in the manner prescribed
therein; and to have their lands surveyed and approved by respondent
Regional Technical Director of Lands as the approved survey does not in itself
constitute a title to the land.
SO ORDERED.[17]
The RTC upheld respondents-claimants right to have their occupied lands titled in their
name. It ruled that neither Proclamation No. 1801 nor PTA Circular No. 3-82 mentioned that lands in
Boracay were inalienable or could not be the subject of disposition.[18] The Circular itself recognized
private ownership of lands.[19] The trial court cited Sections 87[20] and 53[21] of the Public Land Act as
basis for acknowledging private ownership of lands in Boracay and that only those forested areas in
public lands were declared as part of the forest reserve.[22]
The OSG moved for reconsideration but its motion was denied.[23] The Republic then
appealed to the CA.
On December 9, 2004, the appellate court affirmed in toto the RTC decision, disposing as
follows:
WHEREFORE, in view of the foregoing premises, judgment is
hereby rendered by us DENYING the appeal filed in this case and AFFIRMING
the decision of the lower court.[24]
The CA held that respondents-claimants could not be prejudiced by a declaration that the
lands they occupied since time immemorial were part of a forest reserve.
Again, the OSG sought reconsideration but it was similarly denied.[25] Hence, the present
petition under Rule 45.
G.R. No. 173775
On May 22, 2006, during the pendency of G.R. No. 167707, President Gloria Macapagal-Arroyo
issued Proclamation No. 1064[26] classifying Boracay Island into four hundred (400) hectares of
reserved forest land (protection purposes) and six hundred twenty-eight and 96/100 (628.96)
hectares of agricultural land (alienable and disposable). The Proclamation likewise provided for a
fifteen-meter buffer zone on each side of the centerline of roads and trails, reserved for right-of-
way and which shall form part of the area reserved for forest land protection purposes.
On August 10, 2006, petitioners-claimants Dr. Orlando Sacay,[27] Wilfredo Gelito,[28] and
other landowners[29] in Boracay filed with this Court an original petition for prohibition, mandamus,
and nullification of Proclamation No. 1064.[30] They allege that the Proclamation infringed on their The OSG raises the lone issue of whether Proclamation No. 1801 and PTA Circular No. 3-

prior vested rights over portions of Boracay. They have been in continued possession of their 82 pose any legal obstacle for respondents, and all those similarly situated, to acquire title to their

respective lots in Boracay since time immemorial. They have also invested billions of pesos in occupied lands in Boracay Island.[34]

developing their lands and building internationally renowned first class resorts on their lots.[31] G.R. No. 173775

Petitioners-claimants contended that there is no need for a proclamation reclassifying Petitioners-claimants hoist five (5) issues, namely:
I.
Boracay into agricultural land. Being classified as neither mineral nor timber land, the island AT THE TIME OF THE ESTABLISHED POSSESSION OF PETITIONERS IN CONCEPT
OF OWNER OVER THEIR RESPECTIVE AREAS IN BORACAY, SINCE TIME
is deemed agricultural pursuant to the Philippine Bill of 1902 and Act No. 926, known as the first IMMEMORIAL OR AT THE LATEST SINCE 30 YRS. PRIOR TO THE FILING OF THE
PETITION FOR DECLARATORY RELIEF ON NOV. 19, 1997, WERE THE AREAS
Public Land Act.[32] Thus, their possession in the concept of owner for the required period entitled
OCCUPIED BY THEM PUBLIC AGRICULTURAL LANDS AS DEFINED
them to judicial confirmation of imperfect title. BY LAWS THEN ON JUDICIAL CONFIRMATION OF IMPERFECT TITLES OR PUBLIC
FOREST AS DEFINED BY SEC. 3a, PD 705?
Opposing the petition, the OSG argued that petitioners-claimants do not have a vested
II.
right over their occupied portions in the island. Boracay is an unclassified public forest land pursuant HAVE PETITIONERS OCCUPANTS ACQUIRED PRIOR VESTED RIGHT OF PRIVATE
OWNERSHIP OVER THEIR OCCUPIED PORTIONS OF BORACAY LAND, DESPITE
to Section 3(a) of PD No. 705. Being public forest, the claimed portions of the island are inalienable THE FACT THAT THEY HAVE NOT APPLIED YET FOR JUDICIAL CONFIRMATION
OF IMPERFECT TITLE?
and cannot be the subject of judicial confirmation of imperfect title. It is only the executive
III.
department, not the courts, which has authority to reclassify lands of the public domain into IS THE EXECUTIVE DECLARATION OF THEIR AREAS AS
ALIENABLE AND DISPOSABLE UNDER SEC 6, CA 141 [AN] INDISPENSABLE PRE-
alienable and disposable lands. There is a need for a positive government act in order to release the
REQUISITE FOR PETITIONERS TO OBTAIN TITLE UNDER THE TORRENS SYSTEM?
lots for disposition.
IV.
On November 21, 2006, this Court ordered the consolidation of the two petitions as they IS THE ISSUANCE OF PROCLAMATION 1064 ON MAY 22, 2006, VIOLATIVE OF
THE PRIOR VESTED RIGHTS TO PRIVATE OWNERSHIP OF PETITIONERS OVER
principally involve the same issues on the land classification of Boracay Island.[33] THEIR LANDS IN BORACAY, PROTECTED BY THE DUE PROCESS CLAUSE OF THE
CONSTITUTION OR IS PROCLAMATION 1064 CONTRARY TO SEC. 8, CA 141,
OR SEC. 4(a) OF RA 6657.

Issues V.
CAN RESPONDENTS BE COMPELLED BY MANDAMUS TO ALLOW THE
G.R. No. 167707
SURVEY AND TO APPROVE THE SURVEY PLANS FOR PURPOSES OF THE
APPLICATION FOR TITLING OF THE LANDS OF PETITIONERS IN
BORACAY?[35] (Underscoring supplied)
 In capsule, the main issue is whether private claimants (respondents-claimants in G.R. No. 22, 2006, Boracay Island had never been expressly and administratively classified under any of these

167707 and petitioners-claimants in G.R. No. 173775) have a right to secure titles over their grand divisions. Boracay was an unclassified land of the public domain.

occupied portions in Boracay. The twin petitions pertain to their right, if any, to judicial confirmation The Regalian Doctrine dictates that all lands of the public domain belong to the State,

of imperfect title under CA No. 141, as amended. They do not involve their right to secure title that the State is the source of any asserted right to ownership of land and charged with the

under other pertinent laws. conservation of such patrimony.[45] The doctrine has been consistently adopted under the 1935,

Our Ruling 1973, and 1987 Constitutions.[46]

All lands not otherwise appearing to be clearly within private ownership are presumed to
Regalian Doctrine and power of the executive
to reclassify lands of the public domain belong to the State.[47] Thus, all lands that have not been acquired from the government, either by

Private claimants rely on three (3) laws and executive acts in their bid for judicial purchase or by grant, belong to the State as part of the inalienable public domain.[48] Necessarily, it

confirmation of imperfect title, namely: (a) Philippine Bill of 1902[36] in relation to Act No. 926, later is up to the State to determine if lands of the public domain will be disposed of for private

amended and/or superseded by Act No. 2874 and CA No. 141;[37] (b) Proclamation No. ownership. The government, as the agent of the state, is possessed of the plenary power as the

1801[38] issued by then President Marcos; and (c) Proclamation No. 1064[39] issued by President persona in law to determine who shall be the favored recipients of public lands, as well as under

Gloria Macapagal-Arroyo. We shall proceed to determine their rights to apply for judicial what terms they may be granted such privilege, not excluding the placing of obstacles in the way of

confirmation of imperfect title under these laws and executive acts. their exercise of what otherwise would be ordinary acts of ownership.[49]

But first, a peek at the Regalian principle and the power of the executive to reclassify Our present land law traces its roots to the Regalian Doctrine. Upon the Spanish

lands of the public domain. conquest of the Philippines, ownership of all lands, territories and possessions in

The 1935 Constitution classified lands of the public domain into agricultural, forest or the Philippines passed to the Spanish Crown.[50] The Regalian doctrine was first introduced in

timber.[40] Meanwhile, the 1973 Constitution provided the following divisions: agricultural, industrial the Philippines through the Laws of the Indies and the Royal Cedulas, which laid the foundation that

or commercial, residential, resettlement, mineral, timber or forest and grazing lands, and such other all lands that were not acquired from the Government, either by purchase or by grant, belong to the

classes as may be provided by law,[41] giving the government great leeway for classification.[42] Then public domain.[51]

the 1987 Constitution reverted to the 1935 Constitution classification with one addition: national The Laws of the Indies was followed by the Ley Hipotecaria or the Mortgage Law of

parks.[43] Of these, onlyagricultural lands may be alienated.[44] Prior to Proclamation No. 1064 of May 1893. The Spanish Mortgage Law provided for the systematic registration of titles and deeds as well

as possessory claims.[52]
 The Royal Decree of 1894 or the Maura Law[53] partly amended the Spanish Mortgage
Law and the Laws of the Indies. It established possessory information as the method of legalizing
possession of vacant Crown land, under certain conditions which were set forth in said
decree.[54] Under Section 393 of the Maura Law, an informacion posesoria or possessory information
title,[55] when duly inscribed in the Registry of Property, is converted into a title of ownership only
after the lapse of twenty (20) years of uninterrupted possession which must be actual, public, and
adverse,[56] from the date of its inscription.[57] However, possessory information title had to be
perfected one year after the promulgation of the Maura Law, or until April 17, 1895. Otherwise, the
lands would revert to the State.[58]
In sum, private ownership of land under the Spanish regime could only be founded on
royal concessions which took various forms, namely: (1) titulo real or royal grant; (2) concesion
especial or special grant; (3) composicion con el estado or adjustment title; (4) titulo de compra or
title by purchase; and (5) informacion posesoria or possessory information title.[59]
The first law governing the disposition of public lands in the Philippines under American
rule was embodied in the Philippine Bill of 1902.[60] By this law, lands of the public domain in the
Philippine Islands were classified into three (3) grand divisions, to wit: agricultural, mineral, and
timber or forest lands.[61] The act provided for, among others, the disposal of mineral lands by
means of absolute grant (freehold system) and by lease (leasehold system).[62] It also provided the
definition by exclusion of agricultural public lands.[63] Interpreting the meaning of agricultural lands
under the Philippine Bill of 1902, the Court declared in Mapa v. Insular Government:[64]
x x x In other words, that the phrase agricultural land as used in
Act No. 926 means those public lands acquired from Spain which are not
timber or mineral lands. x x x[65](Emphasis Ours)
On February 1, 1903, the Philippine Legislature passed Act No. 496, otherwise known as
the Land Registration Act. The act established a system of registration by which recorded title
becomes absolute, indefeasible, and imprescriptible. This is known as the Torrens system.[66]
Concurrently, on October 7, 1903, the Philippine Commission passed Act No. 926, which
was the first Public Land Act. The Act introduced the homestead system and made provisions for
judicial and administrative confirmation of imperfect titles and for the sale or lease of public lands. It
permitted corporations regardless of the nationality of persons owning the controlling stock to lease
or purchase lands of the public domain.[67] Under the Act, open, continuous, exclusive, and
notorious possession and occupation of agricultural lands for the next ten (10) years preceding July
26, 1904 was sufficient for judicial confirmation of imperfect title.[68]
On November 29, 1919, Act No. 926 was superseded by Act No. 2874, otherwise known
as the second Public Land Act. This new, more comprehensive law limited the exploitation of
agricultural lands to Filipinos and Americans and citizens of other countries which gave Filipinos the
same privileges. For judicial confirmation of title, possession and occupation en concepto dueo since
time immemorial, or since July 26, 1894, was required.[69]
After the passage of the 1935 Constitution, CA No. 141 amended Act No. 2874
on December 1, 1936. To this day, CA No. 141, as amended, remains as the existing general law
governing the classification and disposition of lands of the public domain other than timber and
mineral lands,[70] and privately owned lands which reverted to the State.[71]
Section 48(b) of CA No. 141 retained the requirement under Act No. 2874 of possession
and occupation of lands of the public domain since time immemorial or since July 26,
1894. However, this provision was superseded by Republic Act (RA) No. 1942,[72] which provided for
a simple thirty-year prescriptive period for judicial confirmation of imperfect title. The provision was
last amended by PD No. 1073,[73] which now provides for possession and occupation of the land The burden of proof in overcoming the presumption of State ownership of the lands of

applied for since June 12, 1945, or earlier.[74] the public domain is on the person applying for registration (or claiming ownership), who must

prove that the land subject of the application is alienable or disposable.[83] To overcome this

The issuance of PD No. 892[75] on February 16, 1976 discontinued the use of Spanish titles presumption, incontrovertible evidence must be established that the land subject of the application

as evidence in land registration proceedings.[76] Under the decree, all holders of Spanish titles or (or claim) is alienable or disposable.[84] There must still be a positive act declaring land of the public

grants should apply for registration of their lands under Act No. 496 within six (6) months from the domain as alienable and disposable. To prove that the land subject of an application for registration

effectivity of the decree on February 16, 1976. Thereafter, the recording of all unregistered is alienable, the applicant must establish the existence of a positive act of the government such as a

lands[77] shall be governed by Section 194 of the Revised Administrative Code, as amended by Act No. presidential proclamation or an executive order; an administrative action; investigation reports of

3344. Bureau of Lands investigators; and a legislative act or a statute.[85] The applicant may also secure a

certification from the government that the land claimed to have been possessed for the required

On June 11, 1978, Act No. 496 was amended and updated by PD No. 1529, known as the number of years is alienable and disposable.[86]

Property Registration Decree. It was enacted to codify the various laws relative to registration of

property.[78] It governs registration of lands under the Torrens system as well as unregistered lands, In the case at bar, no such proclamation, executive order, administrative action, report,

including chattel mortgages.[79] statute, or certification was presented to the Court. The records are bereft of evidence showing that,

prior to 2006, the portions of Boracay occupied by private claimants were subject of a government

A positive act declaring land as alienable and disposable is required. In keeping with the proclamation that the land is alienable and disposable.Absent such well-nigh incontrovertible

presumption of State ownership, the Court has time and again emphasized that there must be evidence, the Court cannot accept the submission that lands occupied by private claimants were

a positive act of the government, such as an official proclamation,[80] declassifying inalienable public already open to disposition before 2006. Matters of land classification or reclassification cannot be

land into disposable land for agricultural or other purposes.[81] In fact, Section 8 of CA No. 141 limits assumed. They call for proof.[87]

alienable or disposable lands only to those lands which have been officially delimited and

classified.[82] Ankron and De Aldecoa did not make the whole of Boracay Island, or portions of it,

agricultural lands. Private claimants posit that Boracay was already an agricultural land pursuant to

the old cases Ankron v. Government of the Philippine Islands (1919)[88] and De Aldecoa v. The Insular

Government (1909).[89] These cases were decided under the provisions of the Philippine Bill of 1902
and Act No. 926. There is a statement in these old cases that in the absence of evidence to the
contrary, that in each case the lands are agricultural lands until the contrary is shown.[90]
Private claimants reliance on Ankron and De Aldecoa is misplaced. These cases did not
have the effect of converting the whole of Boracay Island or portions of it into agricultural lands. It
should be stressed that the Philippine Bill of 1902 and Act No. 926 merely provided the manner
through which land registration courts would classify lands of the public domain. Whether the land
would be classified as timber, mineral, or agricultural depended on proof presented in each case.
Ankron and De Aldecoa were decided at a time when the President of the Philippines had
no power to classify lands of the public domain into mineral, timber, and agricultural. At that time,
the courts were free to make corresponding classifications in justiciable cases, or were vested with
implicit power to do so, depending upon the preponderance of the evidence.[91] This was the Courts
ruling in Heirs of the Late Spouses Pedro S. Palanca and Soterranea Rafols Vda. De Palanca v.
Republic,[92] in which it stated, through Justice Adolfo Azcuna, viz.:
x x x Petitioners furthermore insist that a particular land need not
be formally released by an act of the Executive before it can be deemed open
to private ownership, citing the cases of Ramos v. Director of
Lands and Ankron v. Government of the Philippine Islands.
xxxx
Petitioners reliance upon Ramos v. Director of Lands and Ankron v.
Government is misplaced. These cases were decided under the Philippine Bill
of 1902 and the first Public Land Act No. 926 enacted by the Philippine
Commission on October 7, 1926, under which there was no legal provision
vesting in the Chief Executive or President of the Philippines the power to
classify lands of the public domain into mineral, timber and agricultural so
that the courts then were free to make corresponding classifications in
justiciable cases, or were vested with implicit power to do so, depending upon
the preponderance of the evidence.[93]
To aid the courts in resolving land registration cases under Act No. 926, it was then
necessary to devise a presumption on land classification. Thus evolved the dictum in Ankron that the
courts have a right to presume, in the absence of evidence to the contrary, that in each case the
lands are agricultural lands until the contrary is shown.[94]
ut We cannot unduly expand the presumption in Ankron and De Aldecoa to an
argument that all lands of the public domain had been automatically reclassified as disposable and
alienable agricultural lands. By no stretch of imagination did the presumption convert all lands of
the public domain into agricultural lands.
If We accept the position of private claimants, the Philippine Bill of 1902 and Act No. 926
would have automatically made all lands in the Philippines, except those already classified as timber
or mineral land, alienable and disposable lands. That would take these lands out of State ownership
and worse, would be utterly inconsistent with and totally repugnant to the long-entrenched
Regalian doctrine.
The presumption in Ankron and De Aldecoa attaches only to land registration cases
brought under the provisions of Act No. 926, or more specifically those cases dealing with judicial
and administrative confirmation of imperfect titles. The presumption applies to an applicant for
judicial or administrative conformation of imperfect title under Act No. 926. It certainly cannot apply
to landowners, such as private claimants or their predecessors-in-interest, who failed to avail

themselves of the benefits of Act No. 926. As to them, their land remained unclassified and, by
virtue of the Regalian doctrine, continued to be owned by the State.
In any case, the assumption in Ankron and De Aldecoa was not absolute. Land
classification was, in the end, dependent on proof. If there was proof that the land was better suited
by reservation, decide for itself what portions of public land shall be
considered forestry land, unless private interests have intervened before such
reservation is made. In the latter case, whether the land is agricultural,
forestry, or mineral, is a question of proof. Until private interests have
intervened, the Government, by virtue of the terms of said Act (No. 1148),
may decide for itself what portions of the public domain shall be set aside and
reserved as forestry or mineral land. (Ramos vs. Director of Lands, 39 Phil.
175; Jocson vs. Director of Forestry, supra)[95] (Emphasis ours)

for non-agricultural uses, the courts could adjudge it as a mineral or timber land despite the Since 1919, courts were no longer free to determine the classification of lands from the

presumption. In Ankron, this Court stated: facts of each case, except those that have already became private lands.[96] Act No. 2874,
In the case of Jocson vs. Director of Forestry (supra), the Attorney-
General admitted in effect that whether the particular land in question promulgated in 1919 and reproduced in Section 6 of CA No. 141, gave the Executive Department,
belongs to one class or another is a question of fact. The mere fact that a tract
through the President, the exclusive prerogative to classify or reclassify public lands into alienable
of land has trees upon it or has mineral within it is not of itself sufficient to
declare that one is forestry land and the other, mineral land. There must be or disposable, mineral or forest.96-a Since then, courts no longer had the authority, whether express
some proof of the extent and present or future value of the forestry and of
the minerals. While, as we have just said, many definitions have been given or implied, to determine the classification of lands of the public domain.[97]
for agriculture, forestry, and mineral lands, and that in each case it is a
question of fact, we think it is safe to say that in order to be forestry or
mineral land the proof must show that it is more valuable for the forestry or
the mineral which it contains than it is for agricultural purposes. (Sec. 7, Act Here, private claimants, unlike the Heirs of Ciriaco Tirol who were issued their title in
No. 1148.) It is not sufficient to show that there exists some trees upon the
land or that it bears some mineral. Land may be classified as forestry or 1933,[98] did not present a justiciable case for determination by the land registration court of the
mineral today, and, by reason of the exhaustion of the timber or mineral, be
propertys land classification. Simply put, there was no opportunity for the courts then to resolve if
classified as agricultural land tomorrow. And vice-versa, by reason of the rapid
growth of timber or the discovery of valuable minerals, lands classified as the land the Boracay occupants are now claiming were agricultural lands. When Act No. 926 was
agricultural today may be differently classified tomorrow. Each case must be
decided upon the proof in that particular case, having regard for its present supplanted by Act No. 2874 in 1919, without an application for judicial confirmation having been
or future value for one or the other purposes. We believe, however,
considering the fact that it is a matter of public knowledge that a majority of filed by private claimants or their predecessors-in-interest, the courts were no longer authorized to
the lands in the Philippine Islands are agricultural lands that the courts have a
right to presume, in the absence of evidence to the contrary, that in each case determine the propertys land classification. Hence, private claimants cannot bank on Act No. 926.
the lands are agricultural lands until the contrary is shown. Whatever the land
involved in a particular land registration case is forestry or mineral land
must, therefore, be a matter of proof. Its superior value for one purpose or
We note that the RTC decision[99] in G.R. No. 167707 mentioned Krivenko v. Register of
the other is a question of fact to be settled by the proof in each particular
case. The fact that the land is a manglar [mangrove swamp] is not sufficient
Deeds of Manila,[100] which was decided in 1947 when CA No. 141, vesting the Executive with the
for the courts to decide whether it is agricultural, forestry, or mineral land. It
may perchance belong to one or the other of said classes of land. The sole power to classify lands of the public domain was already in effect. Krivenko cited the old
Government, in the first instance, under the provisions of Act No. 1148, may,
 the public domain of the Philippine Islands, and
cases Mapa v. Insular Government,[101] De Aldecoa v. The Insular Government,[102] and Ankron v. prescribed the terms and conditions to enable persons
to perfect their titles to public lands in the Islands. It
Government of the Philippine Islands.[103] also provided for the issuance of patents to certain
native settlers upon public lands, for the establishment
of town sites and sale of lots therein, for the completion
Krivenko, however, is not controlling here because it involved a totally different issue. of imperfect titles, and for the cancellation or
confirmation of Spanish concessions and grants in
The pertinent issue in Krivenko was whether residential lots were included in the general the Islands. In short, the Public Land Act operated on the
assumption that title to public lands in the Philippine
classification of agricultural lands; and if so, whether an alien could acquire a residential lot. This Islands remained in the government; and that the
governments title to public land sprung from the Treaty
Court ruled that as an alien, Krivenko was prohibited by the 1935 Constitution[104] from acquiring of Paris and other subsequent treaties between Spain
and the United States. The term public land referred to
agricultural land, which included residential lots. Here, the issue is whether unclassified lands of the all lands of the public domain whose title still remained
in the government and are thrown open to private
public domain are automatically deemed agricultural. appropriation and settlement, and excluded the
patrimonial property of the government and the friar
Notably, the definition of agricultural public lands mentioned in Krivenko relied on the
lands.
old cases decided prior to the enactment of Act No. 2874, including Ankron and De Aldecoa.[105] As
Thus, it is plain error for petitioners to argue that under the Philippine Bill of
We have already stated, those cases cannot apply here, since they were decided when the Executive 1902 and Public Land Act No. 926, mere possession by private individuals of
lands creates the legal presumption that the lands are alienable and
did not have the authority to classify lands as agricultural, timber, or mineral. disposable.[108] (Emphasis Ours)

Private claimants continued possession under Act No. 926 does not create a Except for lands already covered by existing titles, Boracay was an unclassified land of

presumption that the land is alienable. Private claimants also contend that their continued the public domain prior to Proclamation No. 1064. Such unclassified lands are considered public

possession of portions of Boracay Island for the requisite period of ten (10) years under Act No. forest under PD No. 705. The DENR[109] and the National Mapping and Resource Information

926[106] ipso facto converted the island into private ownership. Hence, they may apply for a title in Authority[110] certify that Boracay Island is an unclassified land of the public domain.

their name. PD No. 705 issued by President Marcos categorized all unclassified lands of the public

A similar argument was squarely rejected by the Court in Collado v. Court of domain as public forest. Section 3(a) of PD No. 705 defines a public forest as a mass of lands of the

Appeals.[107] Collado, citing the separate opinion of now Chief Justice Reynato S. Puno in Cruz v. public domain which has not been the subject of the present system of classification for the

Secretary of Environment and Natural Resources,107-a ruled: determination of which lands are needed for forest purpose and which are not. Applying PD No. 705,
Act No. 926, the first Public Land Act, was
passed in pursuance of the provisions of the Philippine all unclassified lands, including those in Boracay Island, are ipso facto considered public forests. PD
Bill of 1902. The law governed the disposition of lands
of the public domain. It prescribed rules and regulations No. 705, however, respects titles already existing prior to its effectivity.
for the homesteading, selling and leasing of portions of
The Court notes that the classification of Boracay as a forest land under PD No. 705 may seem to be

out of touch with the present realities in the island. Boracay, no doubt, has been partly stripped of There is a big difference between forest as defined in a dictionary and forest or timber land as a

its forest cover to pave the way for commercial developments. As a premier tourist destination for classification of lands of the public domain as appearing in our statutes. One is descriptive of what

local and foreign tourists, Boracay appears more of a commercial island resort, rather than a forest appears on the land while the other is a legal status, a classification for legal purposes.[116] At any

land. rate, the Court is tasked to determine the legal status of Boracay Island, and not look into its

physical layout. Hence, even if its forest cover has been replaced by beach resorts, restaurants and

Nevertheless, that the occupants of Boracay have built multi-million peso beach resorts other commercial establishments, it has not been automatically converted from public forest to

on the island;[111] that the island has already been stripped of its forest cover; or that the alienable agricultural land.

implementation of Proclamation No. 1064 will destroy the islands tourism industry, do not negate

its character as public forest. Private claimants cannot rely on Proclamation No. 1801 as basis for judicial

confirmation of imperfect title. The proclamation did not convert Boracay into an agricultural

Forests, in the context of both the Public Land Act and the Constitution[112] classifying land. However, private claimants argue that Proclamation No. 1801 issued by then President Marcos

lands of the public domain into agricultural, forest or timber, mineral lands, and national parks, do in 1978 entitles them to judicial confirmation of imperfect title. The Proclamation classified Boracay,

not necessarily refer to large tracts of wooded land or expanses covered by dense growths of trees among other islands, as a tourist zone. Private claimants assert that, as a tourist spot, the island is

and underbrushes.[113] The discussion in Heirs of Amunategui v. Director of Forestry[114] is particularly susceptible of private ownership.

instructive:
A forested area classified as forest land of the public domain does
not lose such classification simply because loggers or settlers may have Proclamation No. 1801 or PTA Circular No. 3-82 did not convert the whole of Boracay
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 into an agricultural land. There is nothing in the law or the Circular which made Boracay Island an
other farmers. Forest lands do not have to be on mountains or in out of the
agricultural land. The reference in Circular No. 3-82 to private lands[117] and areas declared as
way places. Swampy areas covered by mangrove trees, nipa palms, and other
trees growing in brackish or sea water may also be classified as forest alienable and disposable[118] does not by itself classify the entire island as agricultural. Notably,
land. The classification is descriptive of its legal nature or status and does
not have to be descriptive of what the land actually looks like. Unless and Circular No. 3-82 makes reference not only to private lands and areas but also to public forested
until the land classified as forest is released in an official proclamation to that
effect so that it may form part of the disposable agricultural lands of the lands. Rule VIII, Section 3 provides:
public domain, the rules on confirmation of imperfect title do not No trees in forested private lands may be cut without prior
apply.[115] (Emphasis supplied) authority from the PTA. All forested areas in public lands are declared forest
reserves. (Emphasis supplied)
 Clearly, the reference in the Circular to both private and public lands merely recognizes Puerto Princesa and surrounding areas in Palawan, Camiguin Island in Cagayan de Oro, and Misamis

that the island can be classified by the Executive department pursuant to its powers under CA No. Oriental, to name a few. If the designation of Boracay Island as tourist zone makes it alienable and

141. In fact, Section 5 of the Circular recognizes the then Bureau of Forest Developments authority disposable by virtue of Proclamation No. 1801, all the other areas mentioned would likewise be

to declare areas in the island as alienable and disposable when it provides: declared wide open for private disposition. That could not have been, and is clearly beyond, the

intent of the proclamation.

Subsistence farming, in areas declared as alienable and disposable
by the Bureau of Forest Development. It was Proclamation No. 1064 of 2006 which positively declared part of Boracay as

alienable and opened the same to private ownership. Sections 6 and 7 of CA No. 141[120] provide

Therefore, Proclamation No. 1801 cannot be deemed the positive act needed to that it is only the President, upon the recommendation of the proper department head, who has the

classify Boracay Island as alienable and disposable land. If President Marcos intended to classify the authority to classify the lands of the public domain into alienable or disposable, timber and mineral

island as alienable and disposable or forest, or both, he would have identified the specific limits of lands.[121]

each, as President Arroyo did in Proclamation No. 1064. This was not done in Proclamation No. 1801.
In issuing Proclamation No. 1064, President Gloria Macapagal-Arroyo merely exercised

the authority granted to her to classify lands of the public domain, presumably subject to existing
The Whereas clauses of Proclamation No. 1801 also explain the rationale behind the
vested rights. Classification of public lands is the exclusive prerogative of the Executive Department,
declaration of Boracay Island, together with other islands, caves and peninsulas in the Philippines, as
through the Office of the President. Courts have no authority to do so.[122] Absent such classification,
a tourist zone and marine reserve to be administered by the PTA to ensure the concentrated efforts
the land remains unclassified until released and rendered open to disposition.[123]
of the public and private sectors in the development of the areas tourism potential with due regard
Proclamation No. 1064 classifies Boracay into 400 hectares of reserved forest land and
for ecological balance in the marine environment. Simply put, the proclamation is aimed at
628.96 hectares of agricultural land. The Proclamation likewise provides for a 15-meter buffer zone
administering the islands for tourism and ecological purposes. It does not address the areas
on each side of the center line of roads and trails, which are reserved for right of way and which
alienability.[119]
shall form part of the area reserved for forest land protection purposes.

Contrary to private claimants argument, there was nothing invalid or irregular, much less
More importantly, Proclamation No. 1801 covers not only Boracay Island, but sixty-four
unconstitutional, about the classification of Boracay Island made by the President through
(64) other islands, coves, and peninsulas in the Philippines, such as Fortune and Verde Islands in
Proclamation No. 1064. It was within her authority to make such classification, subject to existing
Batangas, Port Galera in Oriental Mindoro, Panglao and Balicasag Islands in Bohol, Coron Island,
vested rights.
 as mineral or timber land, the land remains unclassified land until released
Proclamation No. 1064 does not violate the Comprehensive Agrarian Reform and rendered open to disposition.[125] (Emphasis supplied)

Law. Private claimants further assert that Proclamation No. 1064 violates the provision of the Moreover, the prohibition under the CARL applies only to a reclassification of land. If the

Comprehensive Agrarian Reform Law (CARL) or RA No. 6657 barring conversion of public forests into land had never been previously classified, as in the case of Boracay, there can be no prohibited

agricultural lands. They claim that since Boracay is a public forest under PD No. 705, President reclassification under the agrarian law. We agree with the opinion of the Department of

Arroyo can no longer convert it into an agricultural land without running afoul of Section 4(a) of RA Justice[126] on this point:

No. 6657, thus:

Indeed, the key word to the correct application of the prohibition
in Section 4(a) is the word reclassification. Where there has been no previous
SEC. 4. Scope. The Comprehensive Agrarian Reform Law of 1988 classification of public forest [referring, we repeat, to the mass of the public
shall cover, regardless of tenurial arrangement and commodity produced, all domain which has not been the subject of the present system of classification
public and private agricultural lands as provided in Proclamation No. 131 and for purposes of determining which are needed for forest purposes and which
Executive Order No. 229, including other lands of the public domain suitable are not] into permanent forest or forest reserves or some other forest uses
for agriculture. under the Revised Forestry Code, there can be no reclassification of forest
lands to speak of within the meaning of Section 4(a).
More specifically, the following lands are covered by the
Comprehensive Agrarian Reform Program: Thus, obviously, the prohibition in Section 4(a) of the CARL against
the reclassification of forest lands to agricultural lands without a prior law
(a) All alienable and disposable lands of the public delimiting the limits of the public domain, does not, and cannot, apply to
domain devoted to or suitable for those lands of the public domain, denominated as public forest under the
agriculture. No reclassification of forest or Revised Forestry Code, which have not been previously determined, or
mineral lands to agricultural lands shall be classified, as needed for forest purposes in accordance with the provisions of
undertaken after the approval of this Act until the Revised Forestry Code.[127]
Congress, taking into account ecological,
developmental and equity considerations, shall Private claimants are not entitled to apply for judicial confirmation of imperfect title
have determined by law, the specific limits of the
public domain. under CA No. 141. Neither do they have vested rights over the occupied lands under the said

That Boracay Island was classified as a public forest under PD No. 705 did not bar the law. There are two requisites for judicial confirmation of imperfect or incomplete title under CA No.

Executive from later converting it into agricultural land. Boracay Island still remained an unclassified 141, namely: (1) open, continuous, exclusive, and notorious possession and occupation of the

land of the public domain despite PD No. 705. subject land by himself or through his predecessors-in-interest under a bona fide claim of ownership

In Heirs of the Late Spouses Pedro S. Palanca and Soterranea Rafols v. Republic,[124] the since time immemorial or from June 12, 1945; and (2) the classification of the land as alienable and

Court stated that unclassified lands are public forests. disposable land of the public domain.[128]
While it is true that the land classification map does not
categorically state that the islands are public forests, the fact that they were
unclassified lands leads to the same result.In the absence of the classification
 As discussed, the Philippine Bill of 1902, Act No. 926, and Proclamation No. 1801 did not claimants were issued in 1993. Being of recent dates, the tax declarations are not sufficient to

convert portions of Boracay Island into an agricultural land. The island remained an unclassified land convince this Court that the period of possession and occupation commenced on June 12, 1945.

of the public domain and, applying the Regalian doctrine, is considered State property.

Private claimants insist that they have a vested right in Boracay, having been in

Private claimants bid for judicial confirmation of imperfect title, relying on the Philippine possession of the island for a long time. They have invested millions of pesos in developing the

Bill of 1902, Act No. 926, and Proclamation No. 1801, must fail because of the absence of the second island into a tourist spot. They say their continued possession and investments give them a vested

element of alienable and disposable land. Their entitlement to a government grant under our right which cannot be unilaterally rescinded by Proclamation No. 1064.

present Public Land Act presupposes that the land possessed and applied for is already alienable

and disposable. This is clear from the wording of the law itself.[129] Where the land is not alienable The continued possession and considerable investment of private claimants do not

and disposable, possession of the land, no matter how long, cannot confer ownership or possessory automatically give them a vested right in Boracay. Nor do these give them a right to apply for a title

rights.[130] to the land they are presently occupying. This Court is constitutionally bound to decide cases based

on the evidence presented and the laws applicable. As the law and jurisprudence stand, private

Neither may private claimants apply for judicial confirmation of imperfect title under claimants are ineligible to apply for a judicial confirmation of title over their occupied portions in

Proclamation No. 1064, with respect to those lands which were classified as agricultural Boracay even with their continued possession and considerable investment in the island.

lands. Private claimants failed to prove the first element of open, continuous, exclusive, and

notorious possession of their lands in Boracay since June 12, 1945. One Last Note

We cannot sustain the CA and RTC conclusion in the petition for declaratory relief that The Court is aware that millions of pesos have been invested for the development

private claimants complied with the requisite period of possession. of Boracay Island, making it a by-word in the local and international tourism industry. The Court also

notes that for a number of years, thousands of people have called the island their home. While the

The tax declarations in the name of private claimants are insufficient to prove the first Court commiserates with private claimants plight, We are bound to apply the law strictly and

element of possession. We note that the earliest of the tax declarations in the name of private judiciously. This is the law and it should prevail. Ito ang batas at ito ang dapat umiral.
 All is not lost, however, for private claimants. While they may not be eligible to apply for
judicial confirmation of imperfect title under Section 48(b) of CA No. 141, as amended, this does not
denote their automatic ouster from the residential, commercial, and other areas they possess now
classified as agricultural. Neither will this mean the loss of their substantial investments on their
occupied alienable lands. Lack of title does not necessarily mean lack of right to possess.
For one thing, those with lawful possession may claim good faith as builders of
improvements. They can take steps to preserve or protect their possession. For another, they may
look into other modes of applying for original registration of title, such as by homestead[131] or sales
patent,[132] subject to the conditions imposed by law.
More realistically, Congress may enact a law to entitle private claimants to acquire title
to their occupied lots or to exempt them from certain requirements under the present land
laws. There is one such bill[133] now pending in the House of Representatives. Whether that bill or a
similar bill will become a law is for Congress to decide.
In issuing Proclamation No. 1064, the government has taken the step necessary to open
up the island to private ownership. This gesture may not be sufficient to appease some sectors
which view the classification of the island partially into a forest reserve as absurd. That the island is
no longer overrun by trees, however, does not becloud the vision to protect its remaining forest
cover and to strike a healthy balance between progress and ecology. Ecological conservation is as
important as economic progress.
To be sure, forest lands are fundamental to our nations survival. Their promotion and
protection are not just fancy rhetoric for politicians and activists. These are needs that become
more urgent as destruction of our environment gets prevalent and difficult to control. As aptly
observed by Justice Conrado Sanchez in 1968 in Director of Forestry v. Munoz:[134]
The view this Court takes of the cases at bar is but in adherence to
public policy that should be followed with respect to forest lands. Many have
written much, and many more have spoken, and quite often, about the
pressing need for forest preservation, conservation, protection, development
and reforestation. Not without justification. For, forests constitute a vital
segment of any country's natural resources. It is of common knowledge by
now that absence of the necessary green cover on our lands produces a
number of adverse or ill effects of serious proportions. Without the trees,
watersheds dry up; rivers and lakes which they supply are emptied of their
contents. The fish disappear. Denuded areas become dust bowls. As waterfalls
cease to function, so will hydroelectric plants. With the rains, the fertile
topsoil is washed away; geological erosion results. With erosion come the
dreaded floods that wreak havoc and destruction to property crops, livestock,
houses, and highways not to mention precious human lives. Indeed, the
foregoing observations should be written down in a lumbermans
decalogue.[135]
WHEREFORE, judgment is rendered as follows:
1. The petition for certiorari in G.R. No. 167707 is GRANTED and the Court of Appeals
Decision in CA-G.R. CV No. 71118 REVERSED AND SET ASIDE.
2. The petition for certiorari in G.R. No. 173775 is DISMISSED for lack of merit.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 186639 February 5, 2014
REPUBLIC OF THE PHILIPPINES, Petitioner,
vs.
EMMANUEL C. CORTEZ, Respondent.
DECISION
REYES, J.:
Before this Court is a petition for review on certiorari1 under Rule 45 of the Rules of Court seeking to
annul and set aside the Decision2 dated February 17, 2009 of the Court of Appeals (CA) in CA-G.R. CV
No. 87505. The CA affirmed the Decision3 dated February 7, 2006 of the Regional Trial Court (RTC) of
Pasig City, Branch 68, in LRC Case No. N-11496.
The Facts
On February 28, 2003, respondent Emmanuel C. Cortez (Cortez) filed with the RTC an
application4 for judicial confirmation of title over a parcel of land located at Barangay (Poblacion)
Aguho, P. Herrera Street, Pateros, Metro Manila. The said parcel of land has an area of 110 square
meters and more particularly described as Lot No. 2697-B of the Pateros Cadastre. In support of his
application, Cortez submitted, inter alia, the following documents: (1) tax declarations for various
years from 1966 until 2005; (2) survey plan of the property, with the annotation that the property is
classified as alienable and disposable; (3) technical description of the property, with a certification
issued by a geodetic engineer; (4) tax clearance certificate; (5) extrajudicial settlement of estate
dated March 21, 1998, conveying the subject property to Cortez; and (6) escritura de particion
extrajudicial dated July 19, 1946, allocating the subject property to Felicisima Cotas – Cortez’ mother.
As there was no opposition, the RTC issued an Order of General Default and Cortez was allowed to
present his evidence ex-parte.
Cortez claimed that the subject parcel of land is a portion of Lot No. 2697, which was declared for
taxation purposes in the name of his mother. He alleged that Lot No. 2697 was inherited by his
mother from her parents in 1946; that, on March 21, 1998, after his parents died, he and his siblings
executed an Extra-Judicial Settlement of Estate over the properties of their deceased parents and
one of the properties allocated to him was the subject property. He alleged that the subject
property had been in the possession of his family since time immemorial; that the subject parcel of
land is not part of the reservation of the Department of Environment and Natural Resources (DENR)
and is, in fact, classified as alienable and disposable by the Bureau of Forest Development (BFD).
Cortez likewise adduced in evidence the testimony of Ernesto Santos, who testified that he has
known the family of Cortez for over sixty (60) years and that Cortez and his predecessors-in-interest
have been in possession of the subject property since he came to know them.
On February 7, 2006, the RTC rendered a Decision,5 which granted Cortez’ application for
registration, viz:
WHEREFORE, finding the application meritorious, the Court DECLARES, CONFIRMS, and ORDERS the
registration of the applicant’s title thereto.
As soon as this Decision shall have become final and after payment of the required fees, let the
corresponding Decrees be issued in the name of the applicant, Emmanuel C. Cortez.
Let copies of this Decision be furnished the Office of the Solicitor General, Land Registration
Authority, Land Management Bureau, and the Registry of Deeds of Rizal.
SO ORDERED.6
In granting Cortez’ application for registration of title to the subject property, the RTC made the
following ratiocinations:
From the foregoing, the Court finds that there is sufficient basis to grant the relief prayed for. It
having been established by competent evidence that the possession of the land being applied for by
the applicant and his predecessor-in-interest have been in open, actual, uninterrupted, and adverse
possession, under claim of title and in the concept of owners, all within the time prescribed by law,
the title of the applicant should be and must be AFFIRMED and CONFIRMED.7
The Republic of the Philippines (petitioner), represented by the Office of the Solicitor General,
appealed to the CA, alleging that the RTC erred in granting the application for registration despite
the failure of Cortez to comply with the requirements for original registration of title. The petitioner
pointed out that, although Cortez declared that he and his predecessors-in-interest were in
possession of the subject parcel of land since time immemorial, no document was ever presented
that would establish his predecessors-in-interest’s possession of the same during the period
required by law. That petitioner claimed that Cortez’ assertion that he and his predecessors-in-
interest had been in open, adverse, and continuous possession of the subject property for more
than thirty (30) years does not constitute well-neigh incontrovertible evidence required in land
registration cases; that it is a mere claim, which should not have been given weight by the RTC.
Further, the petitioner alleged that there was no certification from any government agency that the
subject property had already been declared alienable and disposable. As such, the petitioner claims,
Cortez’ possession of the subject property, no matter how long, cannot confer ownership or
possessory rights.
On February 17, 2009, the CA, by way of the assailed Decision,8 dismissed the petitioner’s appeal
and affirmed the RTC Decision dated February 7, 2006. The CA ruled that Cortez was able to prove
that the subject property was indeed alienable and disposable, as evidenced by the
declaration/notation from the BFD.
Further, the CA found that Cortez and his predecessors-in-interest had been in open, continuous,
and exclusive possession of the subject property for more than 30 years, which, under Section 14(2)
of Presidential Decree (P.D.) No. 15299, sufficed to convert it to private property. Thus:
It has been settled that properties classified as alienable and disposable land may be converted into
private property by reason of open, continuous and exclusive possession of at least 30 years. Such
property now falls within the contemplation of "private lands" under Section 14(2) of PD 1529, over
which title by prescription can be acquired. Thus, under the second paragraph of Section 14 of PD
1529, those who are in possession of alienable and disposable land, and whose possession has been
characterized as open, continuous and exclusive for 30 years or more, may have the right to register
their title to such land despite the fact that their possession of the land commenced only after 12
June 1945. x x x
xxxx
While it is significant to note that applicant-appellee’s possession of the subject property can be
traced from his mother’s possession of the same, the records, indeed, show that his possession of
the subject property, following Section 14(2) [of PD 1529], is to be reckoned from January 3, 1968,
when the subject property was declared alienable and disposable and not way back in 1946, the
year when he inherited the same from his mother. At any rate, at the time the application for
registration was filed in 2003, there was already sufficient compliance with the requirement of
possession. His possession of the subject property has been characterized as open, continuous,
exclusive and notorious possession and occupation in the concept of an owner.10 (Citations omitted)
Hence, the instant petition.
The Issue
The sole issue to be resolved by the Court is whether the CA erred in affirming the RTC Decision
dated February 7, 2006, which granted the application for registration filed by Cortez.
The Court’s Ruling
The petition is meritorious.
At the outset, the Court notes that the RTC did not cite any specific provision of law under which
authority Cortez’ application for registration of title to the subject property was granted. In granting
the application for registration, the RTC merely stated that "the possession of the land being applied
for by [Cortez] and his predecessor-in-interest have been in open, actual, uninterrupted, and
adverse possession, under claim of title and in the concept of owners, all within the time prescribed
by law[.]"11 On the other hand, the CA assumed that Cortez’ application for registration was based
on Section 14(2) of P.D. No. 1529. Nevertheless, Cortez, in the application for registration he filed
with the RTC, proffered that should the subject property not be registrable under Section 14(2) of
P.D. No. 1529, it could still be registered under Section 48(b) of Commonwealth Act No. 141 (C.A. No.
141), or the Public Land Act, as amended by P.D. No. 107312 in relation to Section 14(1) of P.D. No.
1529. Thus, the Court deems it proper to discuss Cortez’ application for registration of title to the
subject property vis-à-vis the provisions of Section 14(1) and (2) of P.D. No. 1529.
Applicants for original registration of title to land must establish compliance with the provisions of
Section 14 of P.D. No. 1529, which pertinently provides that:
Sec. 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 of private lands by prescription under the
provision of existing laws.
 xxxx
After a careful scrutiny of the records of this case, the Court finds that Cortez failed to comply with
the legal requirements for the registration of the subject property under Section 14(1) and (2) of P.D.
No. 1529.
Section 14(1) of P.D. No. 1529 refers to the judicial confirmation of imperfect or incomplete titles to
public land acquired under Section 48(b) of C.A. No. 141, as amended by P.D. No. 1073. "Under
Section 14(1) [of P.D. No. 1529], applicants for registration of title must sufficiently establish first,
that the subject land forms part of the disposable and alienable lands of the public domain; second,
that the applicant and his predecessors-in-interest have been in open, continuous, exclusive, and
notorious possession and occupation of the same; and third, that it is under a bona fide claim of
ownership since June 12, 1945, or earlier."13
The first requirement was not satisfied in this case. To prove that the subject property forms part of
the alienable and disposable lands of the public domain, Cortez adduced in evidence a survey plan
Csd-00-00063314 (conversion-subdivision plan of Lot 2697, MCadm 594-D, Pateros Cadastral
Mapping) prepared by Geodetic Engineer Oscar B. Fernandez and certified by the Lands
Management Bureau of the DENR. The said survey plan contained the following annotation:
This survey is inside L.C. Map No. 2623, Project No. 29, classified as alienable & disposable by the
Bureau of Forest Development on Jan. 3, 1968.
However, Cortez’ reliance on the foregoing annotation in the survey plan is amiss; it does not
constitute incontrovertible evidence to overcome the presumption that the subject property
remains part of the inalienable public domain. In Republic of the Philippines v. Tri-Plus
Corporation,15 the Court clarified that, the applicant must at the very least submit a certification
from the proper government agency stating that the parcel of land subject of the application for
registration is indeed alienable and disposable, viz:
It must be stressed that incontrovertible evidence must be presented to establish that the land
subject of the application is alienable or disposable.
In the present case, the only evidence to prove the character of the subject lands as required by law
is the notation appearing in the Advance Plan stating in effect that the said properties are alienable
and disposable. However, this is hardly the kind of proof required by law. 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
statute. The applicant may also secure a certification from the Government that the lands applied
for are alienable and disposable. In the case at bar, while the Advance Plan bearing the notation was
certified by the Lands Management Services of the DENR, the certification refers only to the
technical correctness of the survey plotted in the said plan and has nothing to do whatsoever with
the nature and character of the property surveyed. Respondents failed to submit a certification
from the proper government agency to prove that the lands subject for registration are indeed
alienable and disposable.16 (Citations omitted and emphasis ours)
Similarly, in Republic v. Roche,17 the Court declared that:
Respecting the third requirement, the applicant bears the burden of proving the status of the land.
In this connection, the Court has held that he must present a certificate of land classification status
issued by the Community Environment and Natural Resources Office (CENRO) or the Provincial
Environment and Natural Resources Office (PENRO) of the DENR. He must also prove that the DENR
Secretary had approved the land classification and released the land as alienable and disposable,
and that it is within the approved area per verification through survey by the CENRO or PENRO.
Further, the applicant must present a copy of the original classification approved by the DENR
Secretary and certified as true copy by the legal custodian of the official records. These facts must
be established by the applicant to prove that the land is alienable and disposable.
Here, Roche did not present evidence that the land she applied for has been classified as alienable
or disposable land of the public domain. She submitted only the survey map and technical
description of the land which bears no information regarding the land’s classification. She did not
bother to establish the status of the land by any certification from the appropriate government
agency. Thus, it cannot be said that she complied with all requisites for registration of title under
Section 14(1) of P.D. 1529.18 (Citations omitted and emphasis ours)
The annotation in the survey plan presented by Cortez is not the kind of evidence required by law as
proof that the subject property forms part of the alienable and disposable land of the public domain.
Cortez failed to present a certification from the proper government agency as to the classification of
the subject property. Cortez likewise failed to present any evidence showing that the DENR
Secretary had indeed classified the subject property as alienable and disposable. Having failed to
present any incontrovertible evidence, Cortez’ claim that the subject property forms part of the
alienable and disposable lands of the public domain must fail.
Anent the second and third requirements, the Court finds that Cortez likewise failed to establish the
same.1âwphi1 Cortez failed to present any evidence to prove that he and his predecessors-in-
interest have been in open, continuous, exclusive, and notorious possession and occupation of the
subject property since June 12, 1945, or earlier. Cortez was only able to present oral and
documentary evidence of his and his mother’s ownership and possession of the subject property
since 1946, the year in which his mother supposedly inherited the same.
Other than his bare claim that his family possessed the subject property since time immemorial,
Cortez failed to present any evidence to show that he and his predecessors-in-interest indeed
possessed the subject property prior to 1946; it is a mere claim and not factual proof of possession.
"It is a rule that general statements that are mere conclusions of law and not factual proof of
possession are unavailing and cannot suffice. An applicant in a land registration case cannot just
harp on mere conclusions of law to embellish the application but must impress thereto the facts and
circumstances evidencing the alleged ownership and possession of the land."19
Further, the earliest tax declaration presented by Cortez was only in 1966. Cortez failed to explain
why, despite his claim that he and his predecessors-in-interest have been in possession of the
subject property since time immemorial, it was only in 1966 that his predecessors-in-interest started
to declare the same for purposes of taxation.
That Cortez and his predecessors-in-interest have been in possession of the subject property for
fifty-seven (57) years at the time he filed his application for registration in 2003 would likewise not
entitle him to registration thereof under Section 14(2) of P.D. No. 1529.
Section 14(2) of P.D. No. 1529 sanctions the original registration of lands acquired by prescription
under the provisions of existing laws. "As Section 14(2) [of P.D. No. 1529] categorically provides,
only private properties may be acquired thru prescription and under Articles 420 and 421 of the Civil
Code, only those properties, which are not for public use, public service or intended for the
development of national wealth, are considered private."20
In Heirs of Mario Malabanan v. Republic,21 the Court however clarified that lands of the public
domain that are patrimonial in character are susceptible to acquisitive prescription and, accordingly,
eligible for registration under Section 14(2) of P.D. No. 1529, viz:
The Civil Code makes it clear that patrimonial property of the State may be acquired by private
persons through prescription. This is brought about by Article 1113, which states that "[a]ll things
which are within the commerce of man are susceptible to prescription," and that property of the
State or any of its subdivisions not patrimonial in character shall not be the object of prescription."
There are two modes of prescription through which immovables may be acquired under the Civil
Code.1âwphi1 The first is ordinary acquisitive prescription, which, under Article 1117, requires
possession in good faith and with just title; and, under Article 1134, is completed through
possession of ten (10) years. There is nothing in the Civil Code that bars a person from acquiring
patrimonial property of the State through ordinary acquisitive prescription, nor is there any
apparent reason to impose such a rule. At the same time, there are indispensable requisites–good
faith and just title. The ascertainment of good faith involves the application of Articles 526, 527, and
528, as well as Article 1127 of the Civil Code, provisions that more or less speak for
themselves.22 (Citation omitted and emphasis ours)
The Court nevertheless emphasized that there must be an official declaration by the State that the
public dominion property is no longer intended for public use, public service, or for the
development of national wealth before it can be acquired by prescription; that a mere declaration
by government officials that a land of the public domain is already alienable and disposable would
not suffice for purposes of registration under Section 14(2) of P.D. No. 1529. The Court further
stressed that the period of acquisitive prescription would only begin to run from the time that the
State officially declares that the public dominion property is no longer intended for public use,
public service, or for the development of national wealth. Thus:
Let us now explore the effects under the Civil Code of a declaration by the President or any duly
authorized government officer of alienability and disposability of lands of the public domain. Would
such lands so declared alienable and disposable be converted, under the Civil Code, from property
of the public dominion into patrimonial property? After all, by connotative definition, alienable and
disposable lands may be the object of the commerce of man; Article 1113 provides that all things
within the commerce of man are susceptible to prescription; and the same provision further
provides that patrimonial property of the State may be acquired by prescription.
Nonetheless, Article 422 of the Civil Code states that "[p]roperty of public dominion, when no longer
intended for public use or for public service, shall form part of the patrimonial property of the
State." It is this provision that controls how public dominion property may be converted into
patrimonial property susceptible to acquisition by prescription. After all, Article 420 (2) makes clear
that those property "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" are public dominion property.
For as long as the property belongs to the State, although already classified as alienable or
disposable, it remains property of the public dominion if when it is "intended for some public service
or for the development of the national wealth."
Accordingly, there must be an express declaration by the State that the public dominion property is
no longer intended for public service or the development of the national wealth or that the property
has been converted into patrimonial. Without such express declaration, the property, even if
classified as alienable or disposable, remains property of the public dominion, pursuant to Article
420(2), and thus incapable of acquisition by prescription. It is only when such alienable and
disposable lands are expressly declared by the State to be no longer intended for public service or
for the development of the national wealth that the period of acquisitive prescription can begin to
run. Such declaration shall be in the form of a law duly enacted by Congress or a Presidential
Proclamation in cases where the President is duly authorized by law.23 (Emphasis supplied)
In Republic v. Rizalvo,24 the Court deemed it appropriate to reiterate the ruling in Malabanan, viz:
On this basis, respondent would have been eligible for application for registration because his claim
of ownership and possession over the subject property even exceeds thirty (30) years. However, it is
jurisprudentially clear that the thirty (30)-year period of prescription for purposes of acquiring
ownership and registration of public land under Section 14 (2) of P.D. No. 1529 only begins from the
moment the State expressly declares that the public dominion property is no longer intended for
public service or the development of the national wealth or that the property has been converted
into patrimonial. x x x.25 (Citation omitted and emphasis ours)

Accordingly, although lands of the public domain that are considered patrimonial may be acquired
by prescription under Section 14(2) of P.D. No. 1529, before acquisitive prescription could
commence, the property sought to be registered must not only be classified as alienable and
disposable; it must also be declared by the State that it is no longer intended for public use, public
service or the development of the national wealth. Thus, absent an express declaration by the State,
the land remains to be property of public dominion.26

The Court finds no evidence of any official declaration from the state attesting to the patrimonial
character of the subject property. Cortez failed to prove that acquisitive prescription has begun to
run against the State, much less that he has acquired title to the subject property by virtue thereof.
It is of no moment that Cortez and his predecessors-in-interest have been in possession of the
subject property for 57 years at the time he applied for the registration of title thereto. "[l]t is not
the notorious, exclusive and uninterrupted possession and occupation of an alienable and
disposable public land for the mandated periods that converts it to patrimonial. The indispensability
of an official declaration that the property is now held by the State in its private capacity or placed
within the commerce of man for prescription to have any effect against the State cannot be
overemphasized. "27

WHEREFORE, in consideration of the foregoing disquisitions, the instant petition is GRANTED. The
Decision dated February 17, 2009 of the Court of Appeals in CA-G.R. CV No. 87505, which affirmed
the Decision dated February 7, 2006 of the Regional Trial Court of Pasig City, Branch 68, in LRC Case
No. N-11496, is hereby REVERSED and SET ASIDE. The Application for Registration of Emmanuel C.
Cortez in LRC Case No. N-11496 is DENIED for lack of merit.

SO ORDERED.

BIENVENIDO L. REYES
Associate Justice \

WE CONCUR:
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 163767 March 10, 2014
REPUBLIC OF THE PHILIPPINES, represented by THE DIRECTOR OF LANDS, Petitioner,
vs.
ROSARIO DE GUZMAN VDA. DE JOSON, Respondent.
DECISION
BERSAMIN, J.:
This case concerns the discharge of the burden of proof by the applicant in proceedings for the
registration of land under Section 14 (1) and (2) of Presidential Decree No. 1529 (Property
Registration Decree).
The Republic appeals the adverse decision promulgated on January 30, 2004,1 whereby the Court of
Appeals (CA) affirmed the judgment rendered on August 10, 1981 by the erstwhile Court of First
Instance (CFI) of Bulacan (now the Regional Trial Court) in Registration Case No. 3446-M granting
the application of the respondent for the registration of her title covering a parcel of land situated in
San Isidro, Paombong, Bulacan.2
The respondent filed her application for land registration in the CFI in Bulacan.3 The jurisdictional
requirements were met when the notice of initial hearing was published in the Official Gazette for
two successive weeks,4 as evidenced by a certification of publication.5 The notice of initial hearing
was also posted by the Provincial Sheriff of Bulacan in a conspicuous place in the municipal building
of Paombong, Bulacan as well as on the property itself.6 On June 2, 1977, at the initial hearing of the
application, Fiscal Liberato L. Reyes interposed an opposition in behalf of the Director of Lands and
the Bureau of Public Works. Upon motion by the respondent and without objection from Fiscal
Reyes, the CFI commissioned the Acting Deputy Clerk of Court to receive evidence in the presence of
Fiscal Reyes.7
The records show that the land subject of the application was a riceland with an area of 12,342
square meters known as Lot 2633, Cad-297, Paombong, Bulacan, and covered by plan Ap-03-
001603;8 that the riceland had been originally owned and possessed by one Mamerto Dionisio since
1907;9 that on May 13, 1926, Dionisio, by way of a deed of sale,10 had sold the land to Romualda
Jacinto; that upon the death of Romualda Jacinto, her sister Maria Jacinto (mother of the
respondent) had inherited the land; that upon the death of Maria Jacinto in 1963, the respondent
had herself inherited the land, owning and possessing it openly, publicly, uninterruptedly, adversely
against the whole world, and in the concept of owner since then; that the land had been declared in
her name for taxation purposes; and that the taxes due thereon had been paid, as shown in Official
Receipt No. H-7100234.11
In their opposition filed by Fiscal Reyes,12 the Director of Lands and the Director of Forest
Development averred that whatever legal and possessory rights the respondent had acquired by
reason of any Spanish government grants had been lost, abandoned or forfeited for failure to
occupy and possess the land for at least 30 years immediately preceding the filing of the
application;13 and that the land applied for, being actually a portion of the Labangan Channel
operated by the Pampanga River Control System, could not be subject of appropriation or land
registration.14
The Office of the Solicitor General (OSG) also filed in behalf of the Government an opposition to the
application,15insisting that the land was within the unclassified region of Paombong, Bulacan, as
indicated in BF Map LC No. 637 dated March 1, 1927; that areas within the unclassified region were
denominated as forest lands and thus fell under the exclusive jurisdiction, control and authority of
the Bureau of Forest Development (BFD);16 and that the CFI did not acquire jurisdiction over the
application considering that: (1) the land was beyond the commerce of man; (2) the payment of
taxes vested no title or ownership in the declarant or taxpayer.17
Ruling ofthe CFI
On August 10, 1981, the CFI rendered its decision,18 ordering the registration of the land in favor of
the respondent on the ground that she had sufficiently established her open, public, continuous,
and adverse possession in the concept of an owner for more than 30 years, to wit:
Since it has been established that the applicants and her predecessors-in-interest have been in the
open, public, continuous, and adverse possession of the said parcel of land in the concept of an
owner for more than thirty (30) years, that it, since 1926 up to the present time, applicant therefore
is entitled to the registration thereof under the provisions od Act No. 496, in relation to
Commonwealth Act No. 141 as amended by Republic Act No. 6236 and other existing laws.
WHEREFORE, confirming the order of general default issued in this case, the Court hereby orders
the registration of this parcel of land Lot 2633, Cad 297. Case 5, Paombong Cadastre[)] described in
plan Ap-03-001603 (Exhibit D, page 7 of records) and in the technical description (Exhibit F, page 5
of records) in favor of Rosario de Guzman Vda de Joson, of legal age, Filipino, widow and resident of
Malolos, Bulacan.
After the decision shall have become final, let the corresponding decree be issued,
SO ORDERED19.
The Republic, through the OSG, appealed to the CA, contending that the trial court had erred in
granting the application for registration despite the land not being the subject of land registration
due to its being part of the unclassified region denominated as forest land of Paombong, Bulacan.20
Judgment of the CA
On January 30, 2004, the CA promulgated its assailed judgment,21 affirming the decision of the trial
court upon the following ratiocination:
The foregoing documentary and testimonial evidence stood unrebutted and uncontroverted by the
oppositor-appellant and they should serve as proof of the paucity of the claim of the applicant-
appellee over the subject property.
Upon the other hand, oppositor-appellant, in a lackluster fashion, advanced pro forma theories and
arguments in its Opposition which naturally failed to merit any consideration from the court a quo
and also from this Court. The indorsement from the Bureau of Forest Development, San Fernando,
Pampanga to the effect that the subject area is within the unclassified region of Paombong, Bulacan
does not warrant any evidentiary weight since the same had never been formally offered as
evidence by the oppositor-appellant. All the other allegations in the Opposition field (sic) by the
oppositor-appellant failed to persuade this Court as to the veracity thereof considering that no
evidence was ever presented to prove the said allegations.
Such being the case, this Court is not inclined to have the positive proofs of her registrable rights
over the subject property adduced by the applicant-appellee be defeated by the bare and
unsubstantiated allegations of the oppositor-appellant.
WHEREFORE, PREMISES CONSIDERED, the assailed Decision is hereby AFFIRMED IN TOTO.
SO ORDERED.22
Hence, the Republic appeals by petition for review on certiorari.
Issue
(1) WHETHER OR NOT THE LAND SUBJECT OF THE APPLICATION FOR REGISTRATION IS
SUSCEPTIBLE OF PRIVATE ACQUISITION; and
(2) WHETHER OR NOT THE TRIAL COURT, AS WELL AS THE COURT OF APPEALS, ERRED IN
GRANTING THE APPLICATION FOR REGISTRATION.23
Ruling
The appeal is impressed with merit.
Section 14 (1) and (2) of the Property Registration Decree state:
Section 14. Who may apply. — The following persons may file in the proper [Regional Trial Court] 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 of private lands by prescription under the
provision of existing laws.
xxxx
Section 14(1) deals with possession and occupation in the concept of an owner while Section 14(2)
involves prescription as a mode of acquiring ownership. In Heirs of Mario Malabanan v.
Republic,24 the Court set the guidelines concerning land registration proceedings brought under
these provisions of the Property Registration Decree in order provide clarity to the application and
scope of said provisions.
The respondent sought to have the land registered in her name by alleging that she and her
predecessors-in-interest had been in open, peaceful, continuous, uninterrupted and adverse
possession of the land in the concept of owner since time immemorial. However, the Republic
counters that the land was public land; and that it could not be acquired by prescription. The
determination of the issue hinges on whether or not the land was public; if so, whether the
respondent satisfactorily proved that the land had already been declared as alienable and
disposable land of the public domain; and that she and her predecessors-in-interest had been in
open, peaceful, continuous, uninterrupted and adverse possession of the land in the concept of
owner since June 12, 1945, or earlier.
In Republic vs. Tsai,25 the Court summarizes the amendments that have shaped the current
phraseology of Section 14(1), to wit:
Through the years, Section 48(b) of the CA 141 has been amended several times. The Court of
Appeals failed to consider the amendment introduced by PD 1073. In Republic v. Doldol, the Court
provided a summary of these amendments:
The original Section 48(b) of C.A. No.141 provided for possession and occupation of lands of the
public domain since July 26, 1894. This was superseded by R.A. No. 1942, which provided for a
simple thirty-year prescriptive period of occupation by an applicant for judicial confirmation of
imperfect title. The same, however, has already been amended by Presidential Decree No. 1073,
approved on January 25, 1977. As amended, Section 48(b) now reads:
(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 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)
As the law now stands, a mere showing of possession and occupation for 30 years or more is not
sufficient. Therefore, since the effectivity of PD 1073 on 25 January 1977, it must now be shown that
possession and occupation of the piece of land by the applicant, by himself or through his
predecessors-in-interest, started on 12 June 1945 or earlier. This provision is in total conformity
with Section 14(1) of PD 1529.26
Under Section 14(1), therefore, the respondent had to prove that: (1) the land formed part of the
alienable and disposable land of the public domain; and (2) she, by herself or through her
predecessors-in-interest, had been in open, continuous, exclusive, and notorious possession and
occupation of the subject land under a bona fide claim of ownership from June 12, 1945, or
earlier.27 It is the applicant who carries the burden of proving that the two requisites have been met.
Failure to do so warrants the dismissal of the application.
The respondent unquestionably complied with the second requisite by virtue of her having been in
open, continuous, exclusive and notorious possession and occupation of the land since June 12,
1945, or earlier. She testified on how the land had been passed on to her from her predecessors-in-
interest; and tendered documentary evidence like: (1) the Deed of Sale evidencing the transfer of
the property from Mamerto Dionisio to Romualda Jacinto in 1926;28 (2) Tax Declaration No. 4547
showing that she had declared the property for taxation purposes in 1976;29 and (3) Official Receipt
No. H-7100234 indicating that she had been paying taxes on the land since 1977.30 The CFI found
her possession of the land and that of her predecessors-in-interest to have been open, public,
continuous, and adverse in the concept of an owner since 1926 until the present time, or for more
than 30 years, entitling her to the registration under the provisions of Act No. 496, in relation to
Commonwealth Act No. 141, as amended by Republic Act No. 6236 and other existing laws.31 On its
part, the CA ruled that the documentary and testimonial evidence stood unrebutted and
uncontroverted by the Republic.32
Nonetheless, what is left wanting is the fact that the respondent did not discharge her burden to
prove the classification of the land as demanded by the first requisite. She did not present evidence
of the land, albeit public, having been declared alienable and disposable by the State. During trial,
she testified that the land was not within any military or naval reservation, and Frisco Domingo, her
other witness, corroborated her. Although the Republic countered that the verification made by the
Bureau of Forest Development showed that the land was within the unclassified region of
Paombong, Bulacan as per BF Map LC No. 637 dated March 1, 1927,33 such showing was based on
the 1st Indorsement dated July 22, 1977 issued by the Bureau of Forest Development,34 which the
CA did not accord any evidentiary weight to for failure of the Republic to formally offer it in
evidence. Still, Fiscal Reyes, in the opposition he filed in behalf of the Government, argued that the
land was a portion of the Labangan Channel operated by the Pampanga River Control System, and
could not be the subject of appropriation or land registration. Thus, the respondent as the applicant
remained burdened with proving her compliance with the first requisite.
Belatedly realizing her failure to prove the alienable and disposable classification of the land, the
petitioner attached as Annex A to her appellee’s brief35 the certification dated March 8, 2000 issued
by the Department of Environment and Natural Resources–Community Environment and Natural
Resources Office (DENR-CENRO),36 viz:
THIS IS TO CERTIFY that the parcel of land described on lot 2633 located at San Isidro, Paombong,
Bulacan as shown in the sketch plan surveyed by Geodetic Engineer Carlos G. Reyes falls within the
Alienable or Disposable Land Project No. 19 of Paombong, Bulacan per Land Classification Map No.
2934 certified on October 15, 1980.
However, in its resolution of July 31, 2000,37 the CA denied her motion to admit the appellee’s brief,
and expunged the appellee’s brief from the records. Seeing another opportunity to make the
certification a part of the records, she attached it as Annex A of her comment here.38 Yet, that
attempt to insert would not do her any good because only evidence that was offered at the trial
could be considered by the Court.
Even had the respondent’s effort to insert the certification been successful, the same would
nonetheless be vain and ineffectual. In Menguito v. Republic,39 the Court pronounced that a survey
conducted by a geodetic engineer that included a certification on the classification of the land as
alienable and disposable was not sufficient to overcome the presumption that the land still formed
part of the inalienable public domain, to wit:
To prove that the land in question formed part of the alienable and disposable lands of the public
domain, petitioners relied on the printed words which read: "This survey plan is inside Alienable and
Disposable Land Area, Project No. 27-B as per L.C. Map No. 2623, certified by the Bureau of Forestry
on January 3, 1968," appearing on Exhibit "E" (Survey Plan No. Swo-13-000227).
This proof is not sufficient. Section 2, Article XII of the 1987 Constitution, provides: "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. x x x." (Emphasis supplied.)
For the original registration of title, the applicant (petitioners in this case) must overcome the
presumption that the land sought to be registered forms part of the public domain. Unless public
land is shown to have been reclassified or alienated to a private person by the State, it remains part
of the inalienable public domain. Indeed, "occupation thereof in the concept of owner, no matter
how long, cannot ripen into ownership and be registered as a title." To overcome such presumption,
incontrovertible evidence must be shown by the applicant. Absent such evidence, the land sought to
be registered remains inalienable.
In the present case, petitioners cite a surveyor-geodetic engineer’s notation in Exhibit "E" indicating
that the survey was inside alienable and disposable land. Such notation does not constitute a
positive government act validly changing the classification of the land in question. Verily, a mere
surveyor has no authority to reclassify lands of the public domain. By relying solely on the said
surveyor’s assertion, petitioners have not sufficiently proven that the land in question has been
declared alienable.40
We reiterate the standing doctrine that land of the public domain, to be the subject of appropriation,
must be declared alienable and disposable either by the President or the Secretary of the DENR. In
Republic v. T.A.N. Properties, Inc.,41 we explicitly ruled:
The applicant for land registration must prove that the DENR Secretary had approved the land
classification and released the land of the public domain as alienable and disposable, and that the
land subject of the application for registration falls within the approved area per verification
through survey by the PENRO or CENRO. In addition, the applicant for land registration must present
a copy of the original classification approved by the DENR Secretary and certified as a true copy by
the legal custodian of the official records. These facts must be established to prove that the land is
alienable and disposable.42
This doctrine unavoidably means that the mere certification issued by the CENRO or PENRO did not
suffice to support the application for registration, because the applicant must also submit a copy of
the original classification of the land as alienable and disposable as approved by the DENR Secretary
and certified as a true copy by the legal custodian of the official records. As the Court said in
Republic v. Bantigue Point Development Corporation:43
The Regalian doctrine dictates that all lands of the public domain belong to the State. The applicant
for land registration has the burden of overcoming the presumption of State ownership by
establishing through incontrovertible evidence that the land sought to be registered is alienable or
disposable based on a positive act of the government. We held in Republic v. T.A.N. Properties, Inc.
that a CENRO certification is insufficient to prove the alienable and disposable character of the land
sought to be registered. The applicant must also show sufficient proof that the DENR Secretary has
approved the land classification and released the land in question as alienable and disposable.
Thus, the present rule is that an application for original registration must be accompanied by (1) a
CENRO or PENRO Certification; and (2) a copy of the original classification approved by the DENR
Secretary and certified as a true copy by the legal custodian of the official records.
Here, respondent Corporation only presented a CENRO certification in support of its application.
Clearly, this falls short of the requirements for original registration.44
Yet, even assuming that the DENR-CENRO certification alone would have sufficed, the respondent’s
application would still be denied considering that the reclassification of the land as alienable or
disposable came only after the filing of the application in court in 1976. The certification itself
indicated that the land was reclassified as alienable or disposable only on October 15, 1980. The
consequence of this is fittingly discussed in Heirs of Mario Malabanan v. Republic, to wit:
We noted in Naguit that it should be distinguished from Bracewell v. Court of Appeals since in the
latter, the application for registration had been filed before the land was declared alienable or
disposable. The dissent though pronounces Bracewell as the better rule between the two. Yet two
years after Bracewell, its ponente, the esteemed Justice Consuelo Ynares-Santiago, penned the
ruling in Republic v. Ceniza, which involved a claim of possession that extended back to 1927 over a
public domain land that was declared alienable and disposable only in 1980. Ceniza cited Bracewell,
quoted extensively from it, and following the mindset of the dissent, the attempt at registration in
Ceniza should have failed. Not so.
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.
In this case, private respondents presented a certification dated November 25, 1994, issued by
Eduardo M. Inting, the Community Environment and Natural Resources Officer in the Department of
Environment and Natural Resources Office in Cebu City, stating that the lots involved were "found to
be within the alienable and disposable (sic) Block-I, Land Classification Project No. 32-A, per map
2962 4-I555 dated December 9, 1980." This is sufficient evidence to show the real character of the
land subject of private respondents’ application. Further, the certification enjoys a presumption of
regularity in the absence of contradictory evidence, which is true in this case. Worth noting also was
the observation of the Court of Appeals stating that:
[n]o opposition was filed by the Bureaus of Lands and Forestry to contest the application of
appellees on the ground that the property still forms part of the public domain. Nor is there any
showing that the lots in question are forestal land...."
Thus, while the Court of Appeals erred in ruling that mere possession of public land for the period
required by law would entitle its occupant to a confirmation of imperfect title, it did not err in ruling
in favor of private respondents as far as the first requirement in Section 48(b) of the Public Land Act
is concerned, for they were able to overcome the burden of proving the alienability of the land
subject of their application.
As correctly found by the Court of Appeals, private respondents were able to prove their open,
continuous, exclusive and notorious possession of the subject land even before the year 1927. As a
rule, we are bound by the factual findings of the Court of Appeals. Although there are exceptions,
petitioner did not show that this is one of them."
Why did the Court in Ceniza, through the same eminent member who authored Bracewell, sanction
the registration under Section 48(b) of public domain lands declared alienable or disposable thirty-
five (35) years and 180 days after 12 June 1945? The telling difference is that in Ceniza, the
application for registration was filed nearly six (6) years after the land had been declared alienable
or disposable, while in Bracewell, the application was filed nine (9) years before the land was
declared alienable or disposable. That crucial difference was also stressed in Naguit to
contradistinguish it from Bracewell, a difference which the dissent seeks to belittle.45 (citations
omitted)
On the other hand, under Section 14(2), ownership of private lands acquired through prescription
may be registered in the owner’s name. Did the respondent then acquire the land through
prescription considering that her possession and occupation of the land by her and her
predecessors-in-interest could be traced back to as early as in 1926, and that the nature of their
possession and occupation was that of a bona fide claim of ownership for over 30 years?
Clearly, the respondent did not. Again, Heirs of Mario Malabanan v. Republic is enlightening, to wit:
It is clear that property of public dominion, which generally includes property belonging to the State,
cannot be the object of prescription or, indeed, be subject of the commerce of man. Lands of the
public domain, whether declared alienable and disposable or not, are property of public dominion
and thus insusceptible to acquisition by prescription.
Let us now explore the effects under the Civil Code of a declaration by the President or any duly
authorized government officer of alienability and disposability of lands of the public domain. Would
such lands so declared alienable and disposable be converted, under the Civil Code, from property
of the public dominion into patrimonial property? After all, by connotative definition, alienable and
disposable lands may be the object of the commerce of man; Article 1113 provides that all things
within the commerce of man are susceptible to prescription; and the same provision further
provides that patrimonial property of the State may be acquired by prescription.
Nonetheless, Article 422 of the Civil Code states that "[p]roperty of public dominion, when no longer
intended for public use or for public service, shall form part of the patrimonial property of the
State." It is this provision that controls how public dominion property may be converted into
patrimonial property susceptible to acquisition by prescription. After all, Article 420 (2) makes clear
that those property "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" are public dominion property.
For as long as the property belongs to the State, although already classified as alienable or
disposable, it remains property of the public dominion if when it is "intended for some public service
or for the development of the national wealth".1âwphi1
Accordingly, there must be an express declaration by the State that the public dominion property is
no longer intended for public service or the development of the national wealth or that the property
has been converted into patrimonial. Without such express declaration, the property, even if
classified as alienable or disposable, remains property of the public dominion, pursuant to Article
420(2), and thus incapable of acquisition by prescription. It is only when such alienable and
disposable lands are expressly declared by the State to be no longer intended for public service or
for the development of the national wealth that the period of acquisitive prescription can begin to
run. Such declaration shall be in the form of a law duly enacted by Congress or a Presidential
Proclamation in cases where the President is duly authorized by law.
It is comprehensible with ease that this reading of Section 14(2) of the Property Registration Decree
limits its scope and reach and thus affects the registrability even of lands already declared alienable
and disposable to the detriment of the bona fide possessors or occupants claiming title to the lands.
Yet this interpretation is in accord with the Regalian doctrine and its concomitant assumption that
all lands owned by the State, although declared alienable or disposable, remain as such and ought to
be used only by the Government.
Recourse does not lie with this Court in the matter.1âwphi1 The duty of the Court is to apply the
Constitution and the laws in accordance with their language and intent. The remedy is to change the
law, which is the province of the legislative branch. Congress can very well be entreated to amend
Section 14(2) of the Property Registration Decree and pertinent provisions of the Civil Code to
liberalize the requirements for judicial confirmation of imperfect or incomplete titles.46
The period of possession prior to the reclassification of the land as alienable and disposable land of
the public domain is not considered in reckoning the prescriptive period in favor of the possessor. As
pointedly clarified also in Heirs of Mario Malabanan v. Republic:47
Should public domain lands become patrimonial because they are declared as such in a duly enacted
law or duly promulgated proclamation that they are no longer intended for public service or for the
development of the national wealth, would the period of possession prior to the conversion of such
public dominion into patrimonial be reckoned in counting the prescriptive period in favor of the
possessors? We rule in the negative.
The limitation imposed by Article 1113 dissuades us from ruling that the period of possession before
the public domain land becomes patrimonial may be counted for the purpose of completing the
prescriptive period. Possession of public dominion property before it becomes patrimonial cannot
be the object of prescription according to the Civil Code. As the application for registration under
Section 14(2) falls wholly within the framework of prescription under the Civil Code, there is no way
that possession during the time that the land was still classified as public dominion property can be
counted to meet the requisites of acquisitive prescription and justify registration.48
In other words, the period of possession prior to the reclassification of the land, no matter how long,
was irrelevant because prescription did not operate against the State before then.
WHEREFORE, the Court REVERSES and SETS ASIDE the decision of the Court of Appeals promulgated
on January 30, 2004; DISMISSES the application for land registration of respondent Rosario de
Guzman Vda. De Joson respecting Lot 2633, Cad-297 with a total area of 12,342 square meters,
more or less, situated in San Isidro, Paombong, Bulacan; and DIRECTS the respondent to pay the
costs of suit.
SO ORDERED. UCAS P. BERSAMIN
Associate Justice
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-24950 March 25, 1926
VIUDA DE TAN TOCO, plaintiff-appellant,
vs.
THE MUNICIPAL COUNCIL OF ILOILO, defendant-appellee.
Arroyo & Evangelista for appellant.
Provincial Fiscal Borromeo Veloso for appelle.
VILLAMOR, J.:
It appears from the record that the widow of Tan Toco had sued the municipal council of Iloilo for
the amount of P42,966.40, being the purchase price of two strips of land, one on Calle J. M. Basa
consisting of 592 square meters, and the other on Calle Aldiguer consisting of 59 square meters,
which the municipality of Iloilo had appropriated for widening said street. The Court of First Instance
of Iloilo sentenced the said municipality to pay the plaintiff the amount so claimed, plus the interest,
and the said judgment was on appeal affirmed by this court.1
On account of lack of funds the municipality of Iloilo was unable to pay the said judgment,
wherefore plaintiff had a writ of execution issue against the property of the said municipality, by
virtue of which the sheriff attached two auto trucks used for street sprinkling, one police patrol
automobile, the police stations on Mabini street, and in Molo and Mandurriao and the concrete
structures, with the corresponding lots, used as markets by Iloilo, Molo, and Mandurriao.
After notice of the sale of said property had been made, and a few days before the sale, the
provincial fiscal of Iloilo filed a motion which the Court of First Instance praying that the attachment
on the said property be dissolved, that the said attachment be declared null and void as being illegal
and violative of the rights of the defendant municipality.
Plaintiffs counsel objected o the fiscal's motion but the court, by order of August 12, 1925, declared
the attachment levied upon the aforementioned property of the defendant municipality null and
void, thereby dissolving the said attachment.
From this order the plaintiff has appealed by bill of exceptions. The fundamental question raised by
appellant in her four assignments of error is whether or not the property levied upon is exempt
from execution.
The municipal law, section 2165 of the Administrative Code, provides that:
Municipalities are political bodies corporate, and as such are endowed with the faculties
of municipal corporations, to be exercised by and through their respective municipal
government in conformity with law.
It shall be competent for them, in their proper corporate name, to sue and be sued, to
contract and be contracted with, to acquire and hold real and personal property for
municipal purposes, and generally to exercise the powers hereinafter specified or
otherwise conferred upon them by law.
For the purposes of the matter here in question, the Administrative Code does not specify the kind
of property that a municipality may acquire. However, article 343 of the Civil Code divides the
property of provinces and towns (municipalities) into property for public use and patrimonial
property. According to article 344 of the same Code, provincial roads and foot-path, squares, streets,
fountains and public waters, drives and public improvements of general benefit built at the expense
of the said towns or provinces, are property for public use.
All other property possessed by the said towns and provinces is patrimonial and shall be subject to
the provisions of the Civil Code except as provided by special laws.
Commenting upon article 344, Mr. Manresa says that "In accordance with administrative legislation"
(Spanish) we must distinguish, as to the patrimonial property of the towns, "between that a
common benefit and that which is private property of the town. The first differs from property for
public use in that generally its enjoyment is less, as it is limited to neighbors or to a group or class
thereof; and, furthermore, such use, more or less general, is not intrinsic with this kind of property,
for by its very nature it may be enjoyed as though it were private property. The third group, that is,
private property, is used in the name of the town or province by the entities representing it and, like
and private property, giving a source of revenue."
Such distinction, however, is of little practical importance in this jurisdiction in view of the different
principles underlying the functions of a municipality under the American rule. Notwithstanding this,
we believe that the principle governing property of the public domain of the State is applicable to
property for public use of the municipalities as said municipal is similar in character. The principle is
that the property for public use of the State is not within the commerce of man and, consequently,
is inalienable and not subject to prescription. Likewise, property for public of the municipality is not
within the commerce of man so long as it is used by the public and, consequently, said property is
also inalienable.
The American Law is more explicit about this matter as expounded by Mcquilin in Municipal
Corporations, volume 3, paragraph 1160, where he says that:
States statutes often provide the court houses, jails and other buildings owned by
municipalities and the lots on which they stand shall be exempt from attachment and
execution. But independent of express statutory exemption, as a general proposition,
property, real and personal, held by municipal corporations, in trust for the benefit of
their inhabitants, and used for public purposes, is exempt.
For example, public buildings, school houses, streets, squares, parks, wharves, engines
and engine houses, and the like, are not subject to execution. So city waterworks, and a
stock of liquors carried in a town dispensary, are exempt. The reason for the exemption
is obvious. Municipal corporations are created for public purposes and for the good of
the citizens in their aggregate or public capacity. That they may properly discharge such
public functions corporate property and revenues are essential, and to deny them these
means the very purpose of their creation would be materially impeded, and in some
instances practically destroy it. Respecting this subject the Supreme Court of Louisiana
remarked: "On the first view of this question there is something very repugnant to the
moral sense in the idea that a municipal corporation should contract debts, and that,
having no resources but the taxes which are due to it, these should not be subjected by
legal process to the satisfaction of its creditors. This consideration, deduced from the
principles of moral equity has only given way to the more enlarged contemplation of the
great and paramount interests of public order and the principles of government."
It is generally held that property owned by a municipality, where not used for a public
purpose but for quasi private purposes, is subject to execution on a judgment against the
municipality, and may be sold. This rule applies to shares of stock owned by a municipal
corporation, and the like. But the mere fact that corporate property held for public uses
is being temporarily used for private purposes does not make it subject execution.
If municipal property exempt from execution is destroyed, the insurance money stands in
lieu thereof and is also exempt.
The members or inhabitants of a municipal corporation proper are not personally liable
for the debts of the municipality, except that in the New England States the individual
liability of the inhabitant is generally maintained.
In Corpus Juris, vol 23, page 355, the following is found:
Where property of a municipal or other public corporation is sough to be subjected to
execution to satisfy judgments recovered against such corporation, the question as to
whether such property is leviable or not is to be determined by the usage and purposes
for which it is held. The rule is that property held for public uses, such as public buildings,
streets, squares parks, promenades, wharves, landing places fire engines, hose and hose
carriages, engine houses, public markets, hospitals, cemeteries, and generally everything
held for governmental purposes, is not subject to levy and sale under execution against
such corporation. The rule also applies to funds in the hands of a public officer. Likewise
it has been held that taxes due to a municipal corporation or country cannot be seized
under execution by a creditor of such corporation. But where a municipal corporation or
country owns in its proprietary, as distinguished from its public or governmental capacity,
property not useful or used for a public purpose but for quasi private purposes, the
general rule is that such property may be seized and sold under execution against the
corporation, precisely as similar property of individuals is seized and sold. But property
held for public purposes is not subject to execution merely because it is temporarily used
for private purposes, although if the public use is wholly abandoned it becomes subject
to execution. Whether or not property held as public property is necessary for the public
use is a political, rather than a judicial question.
In the case of City of New Orleans vs. Louisiana Construction Co., Ltd. (140 U. S., 654; 35 Law. ed.,
556), it was held that a wharf for unloading sugar and molasses, open to the public, was property for
the public use of the City of New Orleans and was not subject to attachment for the payment of the
debts of the said city.
In that case it was proven that the said wharf was a parcel of land adjacent to the Mississippi River
where all shipments of sugar and molasses taken to New Orleans were unloaded.
That city leased the said wharf to the Louisiana Construction Company, Ltd., in order that it might
erect warehouses so that the merchandise upon discharge might not be spoiled by the elements.
The said company was given the privilege of charging certain fees for storing merchandise in the
said warehouses and the public in general had the right to unload sugar and molasses there by
paying the required fees, 10 per cent of which was turned over to the city treasury.
The United States Supreme Court on an appeal held that the wharf was public property, that it
never ceased to be such in order to become private property of the city; wherefore the company
could not levy execution upon the wharf in order to collect the amount of the judgment rendered in
favor thereof.
In the case of Klein vs. City of New Orleans (98 U. S., 149; 25 Law. ed., 430), the Supreme Court of
the United States that a public wharf on the banks of the Mississippi River was public property and
not subject to execution for the payment of a debt of the City of New Orleans where said wharf was
located.
In this case a parcel of land adjacent to the Mississippi River, which formerly was the shore of the
river and which later enlarged itself by accession, was converted into a wharf by the city for public
use, who charged a certain fee for its use.
It was held that the land was public property as necessary as a public street and was not subject to
execution on account of the debts of the city. It was further held that the fees collected where also
exempt from execution because they were a part of the income of the city.
In the case of Tufexis vs. Olaguera and Municipal Council of Guinobatan (32 Phil., 654), the question
raised was whether for the payment of a debt to a third person by the concessionaire of a public
market, the said public market could be attached and sold at public auction. The Supreme Court
held that:
Even though a creditor is unquestionably entitled to recover out of his debtor's property,
yet when among such property there is included the special right granted by the
Government of usufruct in a building intended for a public service, and when this
privilege is closely related to a service of a public character, such right of the creditor to
the collection of a debt owed him by the debtor who enjoys the said special privilege of
usufruct in a public market is not absolute and may be exercised only through the action
of court of justice with respect to the profits or revenue obtained under the special right
of usufruct enjoyed by debtor.
The special concession of the right of usufruct in a public market cannot be attached like
any ordinary right, because that would be to permit a person who has contracted with
the state or with the administrative officials thereof to conduct and manage a service of
a public character, to be substituted, without the knowledge and consent of the
administrative authorities, by one who took no part in the contract, thus giving rise to
the possibility of the regular course of a public service being disturbed by the more or
less legal action of a grantee, to the prejudice of the state and the public interests.
The privilege or franchise granted to a private person to enjoy the usufruct of a public
market cannot lawfully be attached and sold, and a creditor of such person can recover
his debt only out of the income or revenue obtained by the debtor from the enjoyment
or usufruct of the said privilege, in the same manner that the rights of such creditors of a
railroad company can be exercised and their credit collected only out of the gross
receipts remaining after deduction has been made therefrom of the operating expenses
 of the road. (Law of November 12, 1896, extended to the overseas provinces by the royal
order of August 3, 1886.)
For the reasons contained in the authorities above quoted we believe that this court would have
reached the same conclusion if the debtor had been municipality of Guinobatan and the public
market had been levied upon by virtue of the execution.
While this question is not necessarily included in the one which is the subject of this appeal, yet we
believe that the holding of the court, assigned as error by appellant's counsel, is true when, after a
judgment is rendered against a municipality, it has no property subject to execution. This doctrine is
maintained by Dillon (Municipal Corporations, vol. 4, par. 1507, 5th ed.) based upon the decisions of
several States of the Union upholding the same principle and which are cited on page 2679 of the
aforesaid work. In this sense this assignment of error, we believe, is groundless.

By virtue of all the foregoing, the judgment appealed from should be and is hereby affirmed with
It is evident that the movable and immovable property of a municipality, necessary for
costs against the appellant. So ordered.
governmental purpose, may not be attached and sold for the payment of a judgment against the
municipality. The supreme reason for this rule is the character of the public use to which such kind
of property is devoted. The necessity for government service justifies that the property of public of Avanceña, C. J., Street, Malcolm, Ostrand, Johns, Romualdez and Villa-Real., JJ., concur.
the municipality be exempt from execution just as it is necessary to exempt certain property of
private individuals in accordance with section 452 of the Code of Civil Procedure.

Even the municipal income, according to the above quoted authorities, is exempt from levy and
execution. In volume 1, page 467, Municipal Corporations by Dillon we find that:

Municipal corporations are instituted by the supreme authority of a state for the public
good. They exercise, by delegation from the legislature, a portion of the sovereign power.
The main object of their creation is to act as administrative agencies for the state, and to
provide for the police and local government of certain designated civil divisions of its
territory. To this end they are invested with certain governmental powers and charged
with civil, political, and municipal duties. To enable them beneficially to exercise these
powers and discharge these duties, they are clothed with the authority to raise revenues,
chiefly by taxation, and subordinately by other modes as by licenses, fines, and penalties.
The revenue of the public corporation is the essential means by which it is enabled to
perform its appointed work. Deprived of its regular and adequate supply of revenue,
such a corporation is practically destroyed and the ends of its erection thwarted. Based
upon considerations of this character, it is the settled doctrine of the law that only the
public property but also the taxes and public revenues of such corporations cannot be
seized under execution against them, either in the treasury or when in transit to it.
Judgments rendered for taxes, and the proceeds of such judgments in the hands of
officers of the law, are not subject to execution unless so declared by statute. The
doctrine of the inviolability of the public revenues by the creditor is maintained, although
the corporation is in debt, and has no means of payment but the taxes which it is
authorized to collect.

Another error assigned by counsel for appellant is the holding of the court a quo that the proper
remedy for collecting the judgment in favor of the plaintiff was by way or mandamus.
Republic of the Philippines xxx xxx xxx
SUPREME COURT
Manila
It is further argued that under the compromise, the plaintiff is required to
submit a performance bond upon the approval thereof and that he has not
SECOND DIVISION yet done so. At the hearing of the motion of June 21, it was in the amount of
P60,000.00 which was thereafter increased to P100,000.00 to make it equal to
20% of the cost of the next stage of the construction to be undertaken by the
G.R. No. L-32162 September 28, 1984
plaintiff. This is a sufficient compliance. Since the work is to be undertaken by
stages, it would be unreasonable to compel the plaintiff to submit a
THE PASAY CITY GOVERNMENT, THE CITY MAYOR OF DEFENDANT PASAY CITY GOVERNMENT, THE performance bond equal to the cost of the entire project, it not being known
MEMBERS OF THE MUNICIPAL BOARD OF PASAY ClTY and THE CITY TREASURER OF PASAY CITY when the City of Pasay shall have the funds for the completion thereof and it
GOVERNMENT, petitioners-appellants, claim it does not even have money to pay for the phase of the work finished
vs. years ago. Besides, there is nothing in the compromise which makes the
THE HONORABLE COURT OF FIRST INSTANCE OF MANILA, BRANCH X and VICENTE DAVID ISIP submission of the bond a condition precedent to the payment of P613,096.00
(doing business under the firm name V.D. ISIP SONS & ASSOCIATES), respondents-appellees. to the plaintiff (p. 76, rec.).

Enrico R Castro for petitioners-appellants. On August 12, 1964, respondent-appellee V.D. Isip, Sons & Associates represented by Vicente David
Isip entered into a contract with the City of Pasay represented by the then Mayor Pablo Cuneta. The
Lorenzo D. Fuggan and F. V. Castillo for respondents-appellees. contract entitled "Contract and Agreement" was for the construction of a new Pasay City Hall at F.B.
Harrison St., Pasay City. Pertinent provision of the said contract is as follows:

xxx xxx xxx

MAKASIAR, J., Chairman:

This is a petition for review on certiorari of the order rendered by the Court of First Instance of
Manila, Branch X, presided by Honorable Judge Jose L. Moya on July 23, 1969, the dispositive
portion of which is as follows:
WHEREFORE, the motions for reconsideration, dated July 21 and July 22, 1969,
are denied and it is ordered once more that the writ of execution as well as of
garnishment already issued be enforced by taking possession of the amount
of P613,096.00 from the deposits of the Pasay City government in the branch
of the Philippine National Bank in Pasay City and delivering them to the
plaintiff.
Whereas one of the conditions set forth in the proposal is that the Contractor
shag start the construction of the Pasay City Hall Building as per plans and
specifications by stages advancing the necessary amount needed for each
stage of work and the Party of the First Part (Pasay City) to reimburse the
amount spent on the work accomplished by the Contractor before proceeding
on the next stage ... ...
xxx xxx xxx
2. That the work shall be done in stages to be determined by the City Engineer
considering structural and functional criteria and consistent with funds
immediately available for the purpose;

SO ORDERED (p. 78, rec.).

3. That the Contractor shall advance the necessary amount needed for each
stage of work; Provided that the Contractor, shall before starting each stage
on the ground, among others, that: of work, inform the First Party in writing as to the amount necessary to be
advanced by the former; ... ...
 4. That the Party of the First Part shall reimburse the Contractor the cost of On March 12, 1969, the respondent Court approved the said Compromise Agreement including a
the work completed as estimated by the City Engineer for back stage of work Manifestation and Addendum thereto. Relevant provisions of the said compromise agreement are
before the Contractor proceed to the next stage; ... ... (pp. 33-34, rec.). as follows:

Pursuant to the aforesaid contract, the respondent-appellee proceeded with the construction of the 1. That the contract and agreement, Annex "A" here of dated August 12,
new Pasay City Hall building as per duly approved plans and specifications. The respondent-appellee 1964 ... is hereby formally confirmed and officially approved by the parties
accomplished under various stages of construction the amount of work (including supplies and hereto, subject to the following changes and/or modification only:
materials) equivalent to an estimated value of ONE MILLION SEVEN HUNDRED THIRTEEN
THOUSAND NINETY-SIX PESOS (P1,713,096.00) of the total contract price of FOUR MILLION NINE
xxx xxx xxx
HUNDRED FOURTEEN THOUSAND FIVE HUNDRED 80/100 PESOS (P4,914,500.80).

B. That immediately upon final approval hereof by this

The appellants paid only the total amount of ONE MILLION ONE HUNDRED THOUSAND PESOS
Honorable Court, the plaintiff contractor will submit
(P1,100,000.00) to the respondent-appellee leaving an amount of SIX HUNDRED THIRTEEN
and file in favor of Pasay City Government
THOUSAND NINETY SIX PESOS (P613,096.00) immediately due from the petitioner-appellants to the
a new performance bond in the amount required by
respondent-appellee.
pertinent law, rules and regulations, in proportion to
the remaining value or cost of the unfinished work of
Notwithstanding demands for payment thereof, the petitioner-appellants failed to remit the the construction as per approved plans and
aforesaid amount of P613,096.00 to the respondent-appellee. specification

On May 16, 1968, respondent appellee filed an action for specific performance with damages xxx xxx xxx
against herein petitioners-appellants before the respondent Court.
D. That if and when warranted by the finances and
On May 23, 1968, the appellants filed a motion for the amendment of the complaint and for bin of income of the Pasay City Government and subject to
particulars (p. 9, Appellant's Brief; p. 159, rec.). This was denied by the respondent Court. The the pertinent and applicable government auditing and
appellants later filed a motion for reconsideration. This was likewise denied. On August 10, 1968, accounting rules and procedure, the plaintiff contractor
the appellants filed their answer. shall without delay finish and complete the construction
as per attached plans and specifications ... within a
period of one (1) year from the date of final approval of
The parties arrived at a draft of amicable agreement which was submitted to the Municipal Board of
this compromise agreement by this Honorable Court,
Pasay City for its consideration. Protracted pre-trial hearings and conferences were held where the
provided, however that in any case or event the
respondent Court suggested and advised that "under the principle of quantum meruit, the plaintiff is
construction herein contemplated shall not extend
forthwith entitled to at least that which is due to him for defendants under the contract and that
beyond one and a half (1 1/2) years from the date of
public interest must perforce require the continuity of construction of a public work project, instead
the final approval hereof by this Honorable Court;
of delaying its immediate completion by litigating upon technical grounds which would undoubtedly
redound to public detriment (p. 40, rec.).
xxx xxx xxx
On February 25, 1969, the Municipal Board of Pasay enacted Ordinance No. 1012 which approved
the Compromise Agreement and also authorized and empowered the incumbent City Mayor Jovito 2. That within a reasonable period of time, at least ninety (90) days from the
Claudio to represent the appellant Pasay City Government, subject to the final approval of the final approval of this Compromise Agreement by this Honorable Court, the
respondent Court herein. defendant Pasay City Government shall pay and remit the amount of SIX
HUNDRED THIRTEEN THOUSAND NINETY-SIX PESOS (P613,096.00) ... to the
 plaintiff contractor, who, in turn, immediately upon receipt thereof, shall be
bound and obliged to commence and start the construction work
corresponding to the next stage thereof;
3. That within a similar period, the defendant Pasay City Government shall pay
and remit to plaintiff contractor an amount equivalent to three (3%) per cent
of the above mentioned amount of SIX HUNDRED THIRTEEN THOUSAND
NINETY-SIX PESOS (P613,096.00), for and as adverse attorney's fees in this
case;
4. That any and all other of plaintiff contractor in its complaint relative to and
arising out of the contract, Annex "A" hereof, are hereby waived and
relinquished and the case against the defendants City Mayor, Jovito 0. Claudio,
City Treasurer and Members of the Municipal Board of Pasay City, either in
their official or personal capacities, are hereby likewise waived, relinquished
and dismissed with prejudice;
5. That any willful, gross, deliberate and wanton violation and/or avoidance of
the terms and conditions of this Compromise Agreement by either of the
parties herein shall, with due notice, forthwith entitle the aggrieved party to
an immediate execution hereof and to the necessary and corresponding
reliefs and remedies therefor (pp. 43-46, rec.).
On April 10, 1969, the appellants filed an urgent motion seeking a declaration of legality of the
original contract and agreement dated August 4, 1964 from the respondent Court. On May 10, 1969,
the respondent Court issued an order declaring that the original contract is legal and valid (p. 59,
rec.).
On June 21, 1969, at the instance of the appellee, the respondent Court granted an order of
execution pursuant to which a writ of execution dated June 25, 1969 was issued.
On July 9, 1969, an application for and notice of garnishment were made and effected upon the
funds of appellant Pasay City Government with the Philippine National Bank (p. 61, rec.).
On July 11, 1969, the appellant filed an urgent motion to set aside the respondent Court's order of
June 21, 1969 and to quash the writ of execution issued pursuant thereto upon the following
grounds: 1) that the execution sought was then still premature, the period of 90 days stipulated not
having elapsed as yet; 2) that the obligations of the parties under the Compromise Agreement were
reciprocal and the appellee not having put up a new performance bond in the sufficient amount
equivalent to 20% of the remaining cost of construction as per agreement, the appellants cannot be
obliged to pay the sum due appellee as yet; 3) that the Sheriff has no power or authority to levy or
garnish on execution the general funds, especially more so, the trust funds of the defendant Pasay
City (pp. 6366, rec.).
On July 19, 1969, the respondent Court issued an order stating that inasmuch as the defendant has
not yet paid the plaintiff as of this date then "the writ of execution and of garnishment are declared
to be again in full force and effect ..." (p. 67, rec.).
On July 22, 1969, the appellants filed a motion for reconsideration on three grounds, to wit:
1. That the same is not supported by the facts and pertinent law, rule and
regulation on the matter;
2. That the funds of the defendant Pasay City Government which were
garnished by the City Sheriff are by law exempt from execution and/or
garnishment; and
3. That plaintiff's claim may not as yet be enforceable by ex- execution" (pp.
68-71, rec.).
On July 22, 1969, the respondent Court denied and rejected the appellants' motion for
reconsideration. The respondent Court ordered the enforcement of the garnishment already issued
to the City Sheriff for Pasay by taking possession of the amount of P613,096.00 from the deposits of
appellant Pasay City Government with the Philippine National Bank, Pasay City Branch and
delivering the same to the plaintiff.
On July 23, 1969, the respondent Court issued an order, the pertinent provision of which is now
being questioned by the appellants in this petition for review on certiorari, to wit:
It is further argued that under the compromise, the plaintiff is required to
submit a performance bond upon the approval thereof and that he has not
yet done so. At the hearing of the motion of June 21, it was shown that the
plaintiff has submitted a performance bond in the amount of P60,000.00
which was thereafter increased to P100,000.00 to make it equal to 20% of the
cost of the next stage of the construction to be undertaken by the plaintiff.
This is a sufficient compliance. Since the work is to be undertaken by stages, it
would be unreasonable to compel the plaintiff to submit a performance bond
equal to the cost of the entire project, it not being known when the City of
Pasay shall have the funds for the completion thereof and it claims it does not
even have money to pay for the phase of the work finished years ago. Besides,
 there is nothing in the compromise which makes the submission of the bond a
condition precedent to the payment of P613,096.00 to the plaintiff (p. 76,
rec.).
On July 23, 1969, the appellants Med their notice of appeal from the orders of the respondent Court
dated June 21, July 19 and July 23, 1969 (p. 2, rec.).
On July 24, 1969, the appellants filed their manifestation and petition to suspend the writ of
execution and garnishment (pp. 80-82, rec.).
On July 25, 1969, the appellants filed their manifestation and withdrawal of notice of appeal On July
28, 1969, the respondent Court approved said withdrawal (p. 85, rec.).
On August 22, 1969, the appellants filed an amended notice of appeal (pp. 86-87, rec.) and a record
on appeal which were duly approved as per order of the respondent Court dated January 7, 1970
and a notice of transmittal dated May 29, 1970 (p. 89, rec.).
On October 23, 1969, the plaintiff, Vicente David Isip, in the original complaint for specific
performance filed an urgent motion for permit to serve a supplemental complaint seeking rescission
of the original contract titled Contract and Agreement and of the Compromise Agreement and
claiming damages in the sum of P672,653.91 alleging the violations of the defendants specially the
Pasay City Government in complying with its obligations incumbent upon it in the compromise
agreement and in view of the rights granted to the plaintiff in paragraph 5 of the resolutory clause
of the compromise agreement.
On June 5, 1970, the Supreme Court resolved to require the petitioner-appellants to file a petition
for review on certiorari (p. 6, rec.).
On June 29, 1970, the defendants filed their cautionary answer to the supplemental complaint
alleging that the Court has no jurisdiction over the subject of the present supplemental complaint;
that the cause of action is already barred by prior judgment; that the principle of res judicata applies;
that plaintiff's supplemental complaint states no cause of action and that the present claim of
plaintiff has been paid, waived, abandoned and extinguished.
On July 14, 1970, the appellants filed their petition for review on certiorari (pp. 11-24, rec.). This was
denied for lack of merit by the Supreme Court.
On August 14, 1970, the respondent Court set for pre-trial the supplemental complaint.
On October 16, 1970, the Supreme Court granted the petitioner's motion for reconsideration and
their petition for review on certiorari was given due course (p. 102, rec.).
On July 21, 1971, the appellees filed their brief praying that the petition for review on certiorari be
dismissed since the issues involved in the supplemental complaint are prejudicial to the present
petition for review (p. 179, rec.). On December 6, 1971, the appellants filed their manifestation and
petition alleging that the supplemental complaint is not prejudicial to the present petition for
review (p. 199-201, rec.).
The two purposes of a compromise agreement are enunciated in Article 2028 of the New Civil Code,
to wit:
A. 2028. A compromise is a contract where by the parties,by making
reciprocal concessions, avoid a litigation or put an end to one already
commenced.
The first purpose — "to avoid a litigation" — occurs when there is a threat of an impending litigation.
At this point, no case has yet reached the courts. The moment a case has been filed in court then
the second purpose — "to put an end to one already commenced" — applies.
In the herein case, We are concerned with the second purpose. The latter purpose is given effect in
Article 2037 of the New Civil Code which reads:
Article 2037. A compromise has upon the parties the effect and authority
of res judicata; but there shall be no execution except in compliance with a
judicial compromise.
A compromise agreement not contrary to law, public order, public policy, morals or good customs is
a valid contract which is the law between the parties themselves (Municipal Board of Cabanatuan
City vs. Samahang Magsasaka, Inc., 62 SCRA 435). A judgment on a compromise is a final and
executory (Samonte vs. Samonte, 64 SCRA 524). It is immediately executory (Pamintuan vs. Muños
et al., L-26331, 22 SCRA 1109 [March 15, 1968]) in the absence of a motion to set the same aside on
the ground of fraud, mistake or duress (Cadano vs. Cadano L-34998, 49 SCRA 33 [January 11, 1973]).
In fact in the herein case before Us, execution has already been issued. Considering this in the light
of Article 2041 of the New Civil Code, to wit:
 Art. 2041. If one of the parties fails or refuses to abide by the compromise,
the other party may either enforce the compromise or regard it as rescinded
and insist upon his original demand.,
it is obvious that the respondent-appellee did not only succeed in enforcing the compromise but
said plaintiff-appellee likewise wants to rescind the said compromise. It is clear from the language of
the law, specifically Article 2041 of the New Civil Code that one of the parties to a compromise has
two options: 1) to enforce the compromise; or 2) to rescind the same and insist upon his original
demand. The respondent-appellee in the case herein before Us wants to avail of both of these
options. This can not be done. The respondent-appellee cannot ask for rescission of the compromise
agreement after it has already enjoyed the first option of enforcing the compromise by asking for a
writ of execution resulting thereby in the garnishment of the Pasay City funds deposited with the
Philippine National Bank which eventually was delivered to the respondent-appellee.
Upon the issuance of the writ of execution, the petitioner-appellants moved for its quashal alleging
among other things the exemption of the government from execution. This move on the part of the
petitioner-appellant is at first glance laudable for "all government funds deposited with the
Philippine National Bank by any agency or instrumentality of the government, whether by way of
general or special deposit, remain government funds and may not be subject to garnishment or levy
(Commissioner of Public Highways vs. San Diego, L-30098, 31 SCRA 616 [Feb. 18, 1970]). But,
inasmuch as an ordinance has already been enacted expressly appropriating the amount of
P613,096.00 of payment to the respondent-appellee, then the herein case is covered by the
exception to the general nile stated in the case of Republic vs. Palacio (L-20322, 23 SCRA 899 [May
29,1968]), to wit:
Judgments against a State in cases where it has consented to be sued,
generally operate merely to liquidate and establish plaintiff's claim in the
absence of express provision; otherwise they cannot be enforced by
processes of the law; and it is for the legislature to provide for the payment in
such manner as it sees fit.
Hence, the respondent Court was correct in refusing to quash the writ of execution it has issued.
Having established that the compromise agreement was final and immediately executory, and in
fact was already enforced, the respondent Court was in error when it still entertained the
supplemental complaint filed by the respondent-appellee for by then the respondent Court had no
more jurisdiction over the subject matter. When a decision has become final and executory, the
court no longer has the power and jurisdiction to alter, amend or revoke, and its only power thereof
is to order its execution (Ocampo vs. Caluag, L-21113, 19 SCRA 791 [April 27, 1967]).
After the perfection of an appeal, the trial court loses jurisdiction over its judgment and cannot
vacate the same Alama vs. Abbas, L-19616, 18 SCRA 679 [Nov. 29, 1966]; Commissioner of
Immigration vs. Romero, L-19782, 10 SCRA 216 [Jan. 31, 1964]; Valdez vs. CFI, etc., L-3366 [April 27,
1951] cited in Cabungcal vs. Fernandez, L-16520, 10 SCRA 731 [April 30, 1964]; Government vs.
Mendoza, 51 Phil. 403; Ayllon vs. Siojo, 26 Phil. 195).
Moreover, supplemental pleadings are meant to supply deficiencies in aid of original pleading, not
to entirely substitute the latter (British Traders' Insurance Co., Ltd. vs. Commissioner of Internal
Revenue, L-20501, 13 SCRA 719, 728 [April 30, 1965]). Here, the respondent-appellee originally
asked for specific performance which was later settled through a compromise agreement. After this,
the respondent-appellee asked for rescission of both the contract and agreement and the
compromise agreement using a supplemental complaint. It is clear that the supplemental complaint
We have before Us is not only to "supply deficiencies in aid of original pleading but is also meant as
an entirely new "substitute" to the latter. A supplemental complaint must be consistent with and in
aid of, the cause of action set forth in the original complaint and a new and independent cause of
action cannot be set up by such complaint (Bishop vs. Taylor, 210 App. Div. 1, 205 NVS 653),
especially where judgment has already been obtained by him in the original action (Anadarko First
National Bank vs. Anadarko First National Bank, 39 0kl. 225, 134 Phil. 866).
WE find no error in the order of the respondent Court dated July 23, 1969. From the reading of the
premises and provisions of the contract and agreement which was "formally confirmed and officially
approved by the parties" in the compromise agreement later entered into by the same parties,
subject only to the enumerated changes and/or modifications, it is obvious that the contracting
parties envisioned a stage by stage construction (on the part of the respondent-appellee) and
payment (on the part of the defendant-appellant). This is manifested in the contract and agreement,
to quote:
xxx xxx xxx
WHEREAS, one of the conditions set forth in the proposal is that the
Contractor shag start the construction of the Pasay City Hall building as per
plans and specifications by stages advancing the necessary amount needed
for each stage of work and the Party of the First Part to reimburse the amount
spent on the work accomplished by the Contractor before proceeding on the
next stage; Provided, the First Party shall supply the cement needed;
xxx xxx xxx
2. That the work shall be done in stages to be determined by the City Engineer
considering structural and functional criteria and consistent with funds
immediately available for the purpose;
 3. That the Contractor shall advance the necessary amount needed for each
stage of work; Provided that the Contractor shalt before starting each stage of
work, inform the First Party in writing as to the amount necessary to be
advanced by the former; ...
4. That the Party of the First Part shall reimburse the Contractor the cost of
the work completed as estimated by the City Engineer for each stage of work
before the Contractor proceed to the next stage; (pp. 33-34, rec.).
And sub-paragraph H of paragraph 1 and paragraph 2 of the compromise agreement also reiterated
the stage by stage construction and payment as follows:
H. That detailed, separate reports on the progress of the construction work
during each stage shall regularly be submitted to the City Enginer and the City
Mayor;
xxx xxx xxx
2. That within a reasonable period ,at least ninety(90) days from the final
approval of this Compromise Agreement by this Honorable Court, the
defendant Pasay City Government shall pay and remit the amount of SIX
HUNDRED THIRTEEN THOUSAND NINETY-SIX PESOS (P 613,096.00) ... ... to the
plaintiff contractor, who, in turn, immediately upon receipt thereof, shall be
bound and obliged to commence and start the construction work
corresponding to the next stage thereof; ... ... (p. 45, rec.).
Sub-paragraph B of paragraph 1 of the Compromise Agreement, to wit:
B. That immediately upon final approval hereof by this Honorable Court, the
plaintiff contractor will submit and file in favor of Pasay City Government
a new performance bond in the amount required by pertinent law, rules and
regulations, in proportion to the regular value or cost of the unfinished work
of the construction as per approved plans and specifications ... (p. 4, rec.),
read together with the stage-by-stage construction and payment approach, would inevitably lead to
the conclusion that the parties to the compromise contemplated a divisible obligation necessitating
therefore a performance bond "in proportion to" the uncompleted work.
What is crucial in sub-paragraph B of paragraph 1 of the compromise agreement are the words "in
proportion." If the parties really intended the legal rate of 20% performance bond to refer to the
whole unfinished work, then the provision should have required the plaintiff contractor to submit
and file a new performance bond to cover the remaining value cost of the unfinished work of the
construction. Using the words in proportion then significantly changed the meaning of the
paragraph to ultimately mean a performance bond equal to 20% of the next stage of work to be
done.
And, We note that in the Contract and Agreement, the respondent-appellee was allowed to file a
performance bond of P222,250.00 which is but 5% of the total bid of P4,914,500.80. A security bond
was likewise filed with an amount of P97,290.00. The sum total of bond then filed was P320,540.00
which is just 6.5% of the total Ibid. It is rather curious why all of a sudden the petitioners-appellants
are insisting on a 20% performance bond of the entire unfinished work when they were quite
content with a bond just 5% of the entire work. For Us to allow the petitioners-appellants to
adamantly stick to the 20% performance bond would be tantamount to allowing them to evade
their obligation in the compromise agreement. This cannot be allowed. The bond of a contractor for
a public work should not be extended beyond the reasonable intent as gathered from the purpose
and language of the instrument construed in connection with the proposals, plans and specifications,
and contract (John L. Roper Lumber Co. vs. Lawson, 195 NC 840, 143 SE 847,67 ALR 984).
The premium of the bond will be sizeable and will eat up the profit of the contractor, who is faced
with the fluctuation of prices of materials due to inflation and devaluation. Right now, many
contractors cannot proceed with the implementation of their contracts because of the extraordinary
rise in cost of materials and labor. No contractor would be willing to bid for public works contracts
under the oppressive interpretation by petitioners-appellants.
Again, the respondent Court was correct in ruling that the submission of the bond was not a
condition precedent to the payment of P613,096.00 to the plaintiff. Nowhere in the Contract and
Agreement nor in the Compromise Agreement could be found the fact that payment by the
petitioners- appellants of the amount of P613,096.00 was dependent upon the submission by the
respondent-appellee of the performance bond. It cannot be argued that reciprocal obligation was
created in the Compromise Agreement, for the obligation to pay on the part of the petitioners-
appellants was established several years ago when the respondent-appellee finished some of the
stages of construction. And, this argument is already moot and academic, for the amount of
P613,096.00 has already been collected through execution and garnishment upon the funds of
Pasay City with the Philippine National Bank.
Inasmuch as the parties in the herein case have agreed in the Compromise Agreement, to wit:
3. That within a similar period the defendant Pasay City Government shall pay
and remit to plaintiff contractor an amount equivalent to three (3%) percent
 of the above mentioned amount of SIX HUNDRED THIRTEEN NINETY SIX
PESOS (P613,096.00), for and as adverse attorney's fees in this case; ... (p. 45,
rec.).

WE hereby grant the amount of P 18,392.78 which is 3% of P613,096.00 as attorney's fees in favor
of the respondent-appellee.

WHEREFORE, THE ORDER OF THE RESPONDENT COURT DATED JULY 23, 1969 IS HEREBY AFFIRMED
AND THE PETITIONERS-APPELLANTS ARE HEREBY DIRECTED TO PAY ATTORNEY'S FEES IN THE
AMOUNT OF EIGHTEEN THOUSAND THREE HUNDRED NINETY-TWO AND 78/100 (P18,392.78) PESOS.
COSTS AGAINST PETITIONERS-APPELLANTS.

SO ORDERED.

Abad Santos, Escolin and Cuevas, JJ., concur.

Aquino, J., concurs in the result.

Concepcion, Jr. and Guerrero, JJ., are on leave.

Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-11014 January 21, 1958
VICTORIANA ESPIRITU, JORGE ROBLES, JOSEFINA DE VERA, FAUSTINO QINTIVES, LEONOR BRIONES,
EVANGELINA PATACSIL, TEOFILO ANCHETA and BRIGIDA MANGONON, petitioners-appellants,
vs.
THE MUNICIPAL COUNCIL, MUNICIPAL MAYOR and THE CHIEF OF POLICE OF POZORRUBIO,
PANGASINAN, respondents-appellees.
Teodulfo L. Reyes and Romulo M. Abarcar for appellants.
MONTEMAYOR, J.:
This is an appeal from the decision of the Court of First Instance of Pangasinan of April 28, 1956, dismissing the
petition for prohibition filed by appellants, lifting the preliminary injunction against the appellees and ordering the
removal of appellants' stalls from the public plaza of appellee municipality, within ten days from notice. Pending
appeal, counsel for the appellees filed a Manifestation on September 16, 1957, copy of which was duly served on
appellants, that several months after the oral argument held before this Tribunal on January 25, 1957, appellants
had voluntarily vacated the public plaza of Pozorrubio by transferring and removing their buildings and therefrom
to private lots fronting the plaza; and that the municipality had already begun the construction of concrete fences
in the premises, formerly occupied by appellants, without any complaint whatsover from them or their counsel;
and that consequently, the present case has become moot and academic, and asking that the present appeal be
dismissed. By resolution of this Court of October 21, 1957, appellants were required to comment on
this Manifestation and petition for dismissal, within ten days from notice. Despite notice of his resolution,
appellants failed to file their required comment. For this reason, we could well summarily dismiss this appeal by
resolution. However, for the satisfaction of the parties and for possible guidance of town officials and residents,
we havre deemed it convenient and necessary to decide the case by formal decision.
The facts are not disputed. In fact, no evidence was submitted at the hearing before the trial court, the parties
having petitioned that the case be decided on the pleadings. During the last world war, the market building of the
town of Pozorrubio was destroyed, and after Liberation, the market vendors began constructing temporary and
make-shifts stalls,, even small residences, on a portion of the town plaza. The Municipal Treasurer collected from
these stall owners fees at the rate of P.25 per square meter a month. In time, the whole municipal market was
rehabilitated, but the owners of the structures on the plaza failed and refused to transfer to said market place.
The Municipal Council of Pozorrubio received petitions from civic organizations like the Women's Club and the
Puericulture Center, for the removal of the market stalls on the plaza, which were being used not only as stalls, but
also for residence purposes, said organization desiring to convert said portion of the plaza into a children's park.
The Provincial Board of Pangasinan had also presented to the Council the petition of another civic organization of
Pozorrubio, asking for the removal of the stalls from the plaza, and the attention of the COuncil was also called to
the latter-circular of the Secretary of the Interior about the existence of these stalls on the public plaza, said to be
illegal.
As a result, the Municipal Council of Pozorrubio No. 20, Series of 1951, stating that the public market had already
been rehabilitated, and ordering the occupants and owners of the structures on the plaza to remove their
buildings within sixty days from receipt of the resolution. In answer to this resolution, eight of the market stall
building owners filed a petition for prohibition in the Cour of First Instance of Pangasinan against the Municipal
Council, the Municipal Mayor, and the Chief of Police of Pozorrubio. Pending hearing, the trial court issued a writ
of preliminary injunction.
The trial court found that the fee of P.25 per square meter collected by the Municipal Tresurer, was not for the
rent of the portion of the public plaza occupied by the market stalls, as claimed by appellants, but rather the
market stall fees charges on all market vendors in a public market; and that there was absolutely no contract or
agreement between the appellants on one side and the municipality on the other, about renting of the Plaza to
the former. There is reason to believe that the occupation of the plaza and the construction of temporary buildings
thereon by appellants mostly for market, even residence purposes, was merley tolerated by the municipality,
because of the destruction of the public market during thewar, but the trouble is that appellants, even after the
rehabilitationof the old market, refused to transfer to said market place, perhaps to save the trouble and expense
of transferring their buildings, or possibly to continue enjoying the benefits from the strategic position of their
stalls at the plaza. There is absolutelyno question that the town plaza cannot be used for the construction of
market stalls, specially of residences, and that such structures constitute a nuisance subject to abatement
according to law. Town Plazas are properties of public dominion, to be devoted to public use and to be made
available to the public in general. They are outside the commerce of man and cannot be disposed of or even
leased by the municipality to private parties. 1While in case of war or during an emergency, town plazas may be
occupied temporarily by private individuals, as was done and as was tolerated by the Municipality of Pozorrubio,
when the emergency has ceased, said temporary occupation or use must also cease, and the town officials should
see to it that the town plazas should ever be kept open to the public and free from encumbrances or illegal private
constructions.
Appellants must have realized the absolute lack of merit in their stand and the futility of their appeal because they
voluntarily removed their buildings on the plaza. As a matter f fact, after the filing of the prohibition with the trial
court, two out of the eight petitioners informed the trial court that they were included as petitioners without their
consent, and so asked that they be excluded from the case.
In view of the foregoing, the decision appealed from is hereby affirmed. With costs against appellants.
Bengzon, Paras, C.J., Padilla, Reyes, A., Bautista Angelo, Labrador, Concepcion, Reyes, J.B.L., Endencia, and Felix,
JJ., concur.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-24440 March 28, 1968
THE PROVINCE OF ZAMBOANGA DEL NORTE, plaintiff-appellee,
vs.
CITY OF ZAMBOANGA, SECRETARY OF FINANCE and COMMISSIONER OF INTERNAL
REVENUE,defendants-appellants.
Fortugaleza, Lood, Sarmiento, M. T. Yap & Associates for plaintiff-appellee.
Office of the Solicitor General for defendants-appellants.
BENGZON, J.P., J.:
Prior to its incorporation as a chartered city, the Municipality of Zamboanga used to be the
provincial capital of the then Zamboanga Province. On October 12, 1936, Commonwealth Act 39
was approved converting the Municipality of Zamboanga into Zamboanga City. Sec. 50 of the Act
also provided that —
Buildings and properties which the province shall abandon upon the transfer of
the capital to another place will be acquired and paid for by the City of Zamboanga at a
price to be fixed by the Auditor General.
The properties and buildings referred to consisted of 50 lots and some buildings
constructed thereon, located in the City of Zamboanga and covered individually by Torrens
certificates of title in the name of Zamboanga Province. As far as can be gleaned from the
records, 1 said properties were being utilized as follows —
No. of Lots Use
1 ................................................ Capitol Site
3 ................................................ School Site
3 ................................................ Hospital Site
3 ................................................ Leprosarium
1 ................................................ Curuan School
1 ................................................ Trade School
2 ................................................ Burleigh School
2 ................................................ High School Playground
9 ................................................ Burleighs
1 ................................................ Hydro-Electric Site (Magay)
1 ................................................ San Roque
23 ................................................ vacant
It appears that in 1945, the capital of Zamboanga Province was transferred to
Dipolog. 2 Subsequently, or on June 16, 1948, Republic Act 286 was approved creating the
municipality of Molave and making it the capital of Zamboanga Province.
On May 26, 1949, the Appraisal Committee formed by the Auditor General, pursuant to
Commonwealth Act 39, fixed the value of the properties and buildings in question left by
Zamboanga Province in Zamboanga City at P1,294,244.00. 3
On June 6, 1952, Republic Act 711 was approved dividing the province of Zamboanga into
two (2): Zamboanga del Norte and Zamboanga del Sur. As to how the assets and obligations of the
old province were to be divided between the two new ones, Sec. 6 of that law provided:
Upon the approval of this Act, the funds, assets and other properties and the
obligations of the province of Zamboanga shall be divided equitably between the
Province of Zamboanga del Norte and the Province of Zamboanga del Sur by the
President of the Philippines, upon the recommendation of the Auditor General.
Pursuant thereto, the Auditor General, on January 11, 1955, apportioned the assets and
obligations of the defunct Province of Zamboanga as follows: 54.39% for Zamboanga del Norte and
45.61% for Zamboanga del Sur. Zamboanga del Norte therefore became entitled to 54.39% of
P1,294,244.00, the total value of the lots and buildings in question, or P704,220.05 payable by
Zamboanga City.
On March 17, 1959, the Executive Secretary, by order of the President, issued a
ruling 4 holding that Zamboanga del Norte had a vested right as owner (should be co-owner pro-
indiviso) of the properties mentioned in Sec. 50 of Commonwealth Act 39, and is entitled to the
price thereof, payable by Zamboanga City. This ruling revoked the previous Cabinet Resolution of
July 13, 1951 conveying all the said 50 lots and buildings thereon to Zamboanga City for P1.00,
effective as of 1945, when the provincial capital of the then Zamboanga Province was transferred to
Dipolog.
The Secretary of Finance then authorized the Commissioner of Internal Revenue to deduct
an amount equal to 25% of the regular internal revenue allotment for the City of Zamboanga for the
quarter ending March 31, 1960, then for the quarter ending June 30, 1960, and again for the first
quarter of the fiscal year 1960-1961. The deductions, all aggregating P57,373.46, was credited to the
province of Zamboanga del Norte, in partial payment of the P764,220.05 due it.
However, on June 17, 1961, Republic Act 3039 was approved amending Sec. 50 of
Commonwealth Act 39 by providing that —
All buildings, properties and assets belonging to the former province of
Zamboanga and located within the City of Zamboanga are hereby transferred, free of
charge, in favor of the said City of Zamboanga. (Stressed for emphasis).
Consequently, the Secretary of Finance, on July 12, 1961, ordered the Commissioner of
Internal Revenue to stop from effecting further payments to Zamboanga del Norte and to return to
Zamboanga City the sum of P57,373.46 taken from it out of the internal revenue allotment of
Zamboanga del Norte. Zamboanga City admits that since the enactment of Republic Act 3039,
P43,030.11 of the P57,373.46 has already been returned to it.
This constrained plaintiff-appellee Zamboanga del Norte to file on March 5, 1962, a
complaint entitled "Declaratory Relief with Preliminary Mandatory Injunction" in the Court of First
Instance of Zamboanga del Norte against defendants-appellants Zamboanga City, the Secretary of
Finance and the Commissioner of Internal Revenue. It was prayed that: (a) Republic Act 3039 be
declared unconstitutional for depriving plaintiff province of property without due process and just
compensation; (b) Plaintiff's rights and obligations under said law be declared; (c) The Secretary of
Finance and the Internal Revenue Commissioner be enjoined from reimbursing the sum of
P57,373.46 to defendant City; and (d) The latter be ordered to continue paying the balance of
P704,220.05 in quarterly installments of 25% of its internal revenue allotments.
On June 4, 1962, the lower court ordered the issuance of preliminary injunction as prayed
for. After defendants filed their respective answers, trial was held. On August 12, 1963, judgment
was rendered, the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered declaring Republic Act No. 3039
unconstitutional insofar as it deprives plaintiff Zamboanga del Norte of its private
properties, consisting of 50 parcels of land and the improvements thereon under
certificates of title (Exhibits "A" to "A-49") in the name of the defunct province of
Zamboanga; ordering defendant City of Zamboanga to pay to the plaintiff the sum of
P704,220.05 payment thereof to be deducted from its regular quarterly internal revenue
allotment equivalent to 25% thereof every quarter until said amount shall have been
fully paid; ordering defendant Secretary of Finance to direct defendant Commissioner of
Internal Revenue to deduct 25% from the regular quarterly internal revenue allotment
for defendant City of Zamboanga and to remit the same to plaintiff Zamboanga del Norte
until said sum of P704,220.05 shall have been fully paid; ordering plaintiff Zamboanga del
Norte to execute through its proper officials the corresponding public instrument
deeding to defendant City of Zamboanga the 50 parcels of land and the improvements
thereon under the certificates of title (Exhibits "A" to "A-49") upon payment by the latter
of the aforesaid sum of P704,220.05 in full; dismissing the counterclaim of defendant City
of Zamboanga; and declaring permanent the preliminary mandatory injunction issued on
June 8, 1962, pursuant to the order of the Court dated June 4, 1962. No costs are
assessed against the defendants.
It is SO ORDERED.
Subsequently, but prior to the perfection of defendants' appeal, plaintiff province filed a
motion to reconsider praying that Zamboanga City be ordered instead to pay the P704,220.05 in
lump sum with 6% interest per annum. Over defendants' opposition, the lower court granted
plaintiff province's motion.
The defendants then brought the case before Us on appeal.
Brushing aside the procedural point concerning the property of declaratory relief filed in
the lower court on the assertion that the law had already been violated and that plaintiff sought to
give it coercive effect, since assuming the same to be true, the Rules anyway authorize the
conversion of the proceedings to an ordinary action, 5 We proceed to the more important and
principal question of the validity of Republic Act 3039.
The validity of the law ultimately depends on the nature of the 50 lots and buildings
thereon in question. For, the matter involved here is the extent of legislative control over the
properties of a municipal corporation, of which a province is one. The principle itself is simple: If the
property is owned by the municipality (meaning municipal corporation) in its public and
governmental capacity, the property is public and Congress has absolute control over it. But if the
property is owned in its private or proprietary capacity, then it is patrimonial and Congress has no
absolute control. The municipality cannot be deprived of it without due process and payment of just
compensation. 6
 The capacity in which the property is held is, however, dependent on the use to which it is Supporting jurisprudence are found in the following cases: (1) HINUNANGAN V. DIRECTOR
intended and devoted. Now, which of two norms, i.e., that of the Civil Code or that obtaining under OF LANDS, 11where it was stated that "... where the municipality has occupied lands distinctly for
the law of Municipal Corporations, must be used in classifying the properties in question? public purposes, such as for the municipal court house, the public school, the public market, or
other necessary municipal building, we will, in the absence of proof to the contrary, presume a grant
from the States in favor of the municipality; but, as indicated by the wording, that rule may be
The Civil Code classification is embodied in its Arts. 423 and 424 which provide:1äwphï1.ñët
invoked only as to property which is used distinctly for public purposes...." (2) VIUDA DE TANTOCO V.
MUNICIPAL COUNCIL OF ILOILO 12 held that municipal properties necessary for governmental
ART. 423. The property of provinces, cities, and municipalities is divided into purposes are public in nature. Thus, the auto trucks used by the municipality for street sprinkling,
property for public use and patrimonial property. the police patrol automobile, police stations and concrete structures with the corresponding lots
used as markets were declared exempt from execution and attachment since they were not
ART. 424. Property for public use, in the provinces, cities, and municipalities, patrimonial properties. (3) MUNICIPALITY OF BATANGAS VS. CANTOS 13 held squarely that a
consists of the provincial roads, city streets, municipal streets, the squares, fountains, municipal lot which had always been devoted to school purposes is one dedicated to public use and
public waters, promenades, and public works for public service paid for by said provinces, is not patrimonial property of a municipality.
cities, or municipalities.
Following this classification, Republic Act 3039 is valid insofar as it affects the lots used as
All other property possessed by any of them is patrimonial and shall be governed by this capitol site, school sites and its grounds, hospital and leprosarium sites and the high school
Code, without prejudice to the provisions of special laws. (Stressed for emphasis). playground sites — a total of 24 lots — since these were held by the former Zamboanga province in
its governmental capacity and therefore are subject to the absolute control of Congress. Said lots
considered as public property are the following:
Applying the above cited norm, all the properties in question, except the two (2) lots used
as High School playgrounds, could be considered as patrimonial properties of the former
Zamboanga province. Even the capital site, the hospital and leprosarium sites, and the school sites TCT
Lot Number Use
will be considered patrimonial for they are not for public use. They would fall under the phrase Number
"public works for public service" for it has been held that under the ejusdem generis rule, such 2200 ...................................... 4-B ...................................... Capitol Site
public works must be for free and indiscriminate use by anyone, just like the preceding enumerated
2816 ...................................... 149 ...................................... School Site
properties in the first paragraph of Art 424. 7 The playgrounds, however, would fit into this category.
3281 ...................................... 1224 ...................................... Hospital Site
This was the norm applied by the lower court. And it cannot be said that its actuation was 3282 ...................................... 1226 ...................................... Hospital Site
without jurisprudential precedent for in Municipality of Catbalogan v. Director of Lands, 8 and 3283 ...................................... 1225 ...................................... Hospital Site
in Municipality of Tacloban v. Director of Lands, 9 it was held that the capitol site and the school sites 3748 ...................................... 434-A-1 ...................................... School Site
in municipalities constitute their patrimonial properties. This result is understandable because,
unlike in the classification regarding State properties, properties for public service in the 5406 ...................................... 171 ...................................... School Site
municipalities are not classified as public. Assuming then the Civil Code classification to be the High School Play-
5564 ...................................... 168 ......................................
chosen norm, the lower court must be affirmed except with regard to the two (2) lots used as ground
playgrounds. 157 &
5567 ...................................... ...................................... Trade School
158
On the other hand, applying the norm obtaining under the principles constituting the law High School Play-
of Municipal Corporations, all those of the 50 properties in question which are devoted to public 5583 ...................................... 167 ......................................
ground
service are deemed public; the rest remain patrimonial. Under this norm, to be considered public, it
6181 ...................................... (O.C.T.) ...................................... Curuan School
is enough that the property be held and, devoted for governmental purposes like local
administration, public education, public health, etc. 10 11942 ...................................... 926 ...................................... Leprosarium
11943 ...................................... 927 ...................................... Leprosarium
 11944 ...................................... 925 ...................................... Leprosarium 5577 ...................................... 177 ...................................... Mydro, Magay
5557 ...................................... 170 ...................................... Burleigh School 13198 ...................................... 127-0 ...................................... San Roque
5562 ...................................... 180 ...................................... Burleigh School 5569 ...................................... 169 ...................................... Burleigh 15
5565 ...................................... 172-B ...................................... Burleigh 5558 ...................................... 175 ...................................... Vacant
5570 ...................................... 171-A ...................................... Burleigh 5559 ...................................... 188 ...................................... "
5571 ...................................... 172-C ...................................... Burleigh 5560 ...................................... 183 ...................................... "
5572 ...................................... 174 ...................................... Burleigh 5561 ...................................... 186 ...................................... "
5573 ...................................... 178 ...................................... Burleigh 5563 ...................................... 191 ...................................... "
5585 ...................................... 171-B ...................................... Burleigh 5566 ...................................... 176 ...................................... "
5586 ...................................... 173 ...................................... Burleigh 5568 ...................................... 179 ...................................... "
5587 ...................................... 172-A ...................................... Burleigh 5574 ...................................... 196 ...................................... "
5575 ...................................... 181-A ...................................... "
We noticed that the eight Burleigh lots above described are adjoining each other and in 5576 ...................................... 181-B ...................................... "
turn are between the two lots wherein the Burleigh schools are built, as per records appearing 5578 ...................................... 182 ...................................... "
herein and in the Bureau of Lands. Hence, there is sufficient basis for holding that said eight lots
5579 ...................................... 197 ...................................... "
constitute the appurtenant grounds of the Burleigh schools, and partake of the nature of the same.
5580 ...................................... 195 ...................................... "
Regarding the several buildings existing on the lots above-mentioned, the records do not 5581 ...................................... 159-B ...................................... "
disclose whether they were constructed at the expense of the former Province of Zamboanga. 5582 ...................................... 194 ...................................... "
Considering however the fact that said buildings must have been erected even before 1936 when 5584 ...................................... 190 ...................................... "
Commonwealth Act 39 was enacted and the further fact that provinces then had no power to
authorize construction of buildings such as those in the case at bar at their own expense, 14 it can be 5588 ...................................... 184 ...................................... "
assumed that said buildings were erected by the National Government, using national funds. Hence, 5589 ...................................... 187 ...................................... "
Congress could very well dispose of said buildings in the same manner that it did with the lots in 5590 ...................................... 189 ...................................... "
question.
5591 ...................................... 192 ...................................... "
5592 ...................................... 193 ...................................... "
But even assuming that provincial funds were used, still the buildings constitute mere
accessories to the lands, which are public in nature, and so, they follow the nature of said lands, 5593 ...................................... 185 ...................................... "
i.e., public. Moreover, said buildings, though located in the city, will not be for the exclusive use and 7379 ...................................... 4147 ...................................... "
benefit of city residents for they could be availed of also by the provincial residents. The province
then — and its successors-in-interest — are not really deprived of the benefits thereof.
Moreover, the fact that these 26 lots are registered strengthens the proposition that they
are truly private in nature. On the other hand, that the 24 lots used for governmental purposes are
But Republic Act 3039 cannot be applied to deprive Zamboanga del Norte of its share in the also registered is of no significance since registration cannot convert public property to private. 16
value of the rest of the 26 remaining lots which are patrimonial properties since they are not being
utilized for distinctly, governmental purposes. Said lots are:
We are more inclined to uphold this latter view. The controversy here is more along the
domains of the Law of Municipal Corporations — State vs. Province — than along that of Civil Law.
TCT Number Lot Number Use Moreover, this Court is not inclined to hold that municipal property held and devoted to public
service is in the same category as ordinary private property. The consequences are dire. As ordinary (1) Defendant Zamboanga City is hereby ordered to return to plaintiff Zamboanga del Norte
private properties, they can be levied upon and attached. They can even be acquired thru adverse in lump sum the amount of P43,030.11 which the former took back from the latter out of the sum of
possession — all these to the detriment of the local community. Lastly, the classification of P57,373.46 previously paid to the latter; and
properties other than those for public use in the municipalities as patrimonial under Art. 424 of the
Civil Code — is "... without prejudice to the provisions of special laws." For purpose of this article,
(2) Defendants are hereby ordered to effect payments in favor of plaintiff of whatever
the principles, obtaining under the Law of Municipal Corporations can be considered as "special
balance remains of plaintiff's 54.39% share in the 26 patrimonial properties, after deducting
laws". Hence, the classification of municipal property devoted for distinctly governmental purposes
therefrom the sum of P57,373.46, on the basis of Resolution No. 7 dated March 26, 1949 of the
as public should prevail over the Civil Code classification in this particular case.
Appraisal Committee formed by the Auditor General, by way of quarterly payments from the
allotments of defendant City, in the manner originally adopted by the Secretary of Finance and the
Defendants' claim that plaintiff and its predecessor-in-interest are "guilty of laches is Commissioner of Internal Revenue. No costs. So ordered.
without merit. Under Commonwealth Act 39, Sec. 50, the cause of action in favor of the defunct
Zamboanga Province arose only in 1949 after the Auditor General fixed the value of the properties
Reyes, J.B.L., Actg. C.J., Dizon, Makalintal, Zaldivar, Sanchez, Castro, Angeles and Fernando, JJ.,
in question. While in 1951, the Cabinet resolved transfer said properties practically for free to
concur.
Zamboanga City, a reconsideration thereof was seasonably sought. In 1952, the old province was
Concepcion, C.J., is on leave.
dissolved. As successor-in-interest to more than half of the properties involved, Zamboanga del
Norte was able to get a reconsideration of the Cabinet Resolution in 1959. In fact, partial payments
were effected subsequently and it was only after the passage of Republic Act 3039 in 1961 that the
present controversy arose. Plaintiff brought suit in 1962. All the foregoing, negative laches.

It results then that Zamboanga del Norte is still entitled to collect from the City of
Zamboanga the former's 54.39% share in the 26 properties which are patrimonial in nature, said
share to computed on the basis of the valuation of said 26 properties as contained in Resolution No.
7, dated March 26, 1949, of the Appraisal Committee formed by the Auditor General.

Plaintiff's share, however, cannot be paid in lump sum, except as to the P43,030.11 already
returned to defendant City. The return of said amount to defendant was without legal basis.
Republic Act 3039 took effect only on June 17, 1961 after a partial payment of P57,373.46 had
already been made. Since the law did not provide for retroactivity, it could not have validly affected
a completed act. Hence, the amount of P43,030.11 should be immediately returned by defendant
City to plaintiff province. The remaining balance, if any, in the amount of plaintiff's 54.39% share in
the 26 lots should then be paid by defendant City in the same manner originally adopted by the
Secretary of Finance and the Commissioner of Internal Revenue, and not in lump sum. Plaintiff's
prayer, particularly pars. 5 and 6, read together with pars. 10 and 11 of the first cause of action
recited in the complaint 17clearly shows that the relief sought was merely the continuance of the
quarterly payments from the internal revenue allotments of defendant City. Art. 1169 of the Civil
Code on reciprocal obligations invoked by plaintiff to justify lump sum payment is inapplicable since
there has been so far in legal contemplation no complete delivery of the lots in question. The titles
to the registered lots are not yet in the name of defendant Zamboanga City.

WHEREFORE, the decision appealed from is hereby set aside and another judgment is
hereby entered as follows:.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-24661 February 28, 1974
BENJAMIN RABUCO, VENANCIO G. GUIRNALDA, LEODEGARIO ALOBA, ELEUTERIO IBAÑES,
ROGELIO ARAGONES, ASENCIO ABANCO, BENEDICTO BAUTISTA, MAXIMO AQUINO, PAULINA
DALUMIAS, NENITA RAMOS, GUILLERMO VARIAS, EMELDA ARELLANO, PEDRO BILBAO, ERNESTO
BONBALES, ROSITA OCA BAUTISTA, TERESITA ESTEBAN, JOSE BENJAMIN, LORENZO BELDEVER,
LEODEGARIO TUMLOS, PATRICIO MALATE, ANSELMO CORTEJOS, ANACLETA ADUCA, SALOME
BARCELONA, ENRICO CELSO, IRENE CAMBA, MARIA COLLADO, RUFINO CANTIL, ANANIAS CANILLO,
MAXIMO DE CASTRO, CEFERINO SALAZAR, PATRIA ANAYA, FELISA VELASCO, IGNACIO SARASPI,
FLAVIO DINAGUIT, REMEDIOS BAROMETRO, PEDRO GEBANIA, RUBEN GEGABALEN, EMETRIO
EDAÑO, LUCIANO ARAGONES, ADRIANO ESTRELLADO, BONIFACIO EVARISTO, ISIDORO EDORIA,
TIMOTEA ECARUAN, BIENVENIDO COLLADO, CENON DAJUYA, RAFAELA FERNANDEZ, ALFONSO
FAUSTINO, AVELINO GARCIA, RICARDO GUIRNALDA, FRANCISCO HENERAL, CARMEN KIONESALA,
FELICIANO LUMACTOD, DOLORES VILLACAMPA, NARCISO LIM, EUFEMIO LEGASPI, MATILDE
MABAQUIAO, EULOGIO VIÑA, MACARIO ANTONIO, JEREMIAS DE LA CRUZ, MARTIN MANGABAN,
SIMEON MANGABA T., CARIDAD MER MILLA, FELIX MAHINAY, NAPOLEON MARZAN, ISAIAS
MANALASTAS, JOSEFA CORVERA, JOSE APRUEDO, ARSENIO REYES, EUGENIA A. ONO, CORNELIO
OPOLENCIA, SEDECIAS PASCUA, ABUNDIO PAGUNTALAN, ESPERANZA DE QUIROS, CRESENCIO
SALEM, MOISES FERNANDEZ, FORTUNATO GONZALES, SOCORRO R. VALEN, RODOLFO COLLADO,
VENERIO CELSO, GREGORIO DE LA CRUZ, CELSO ALCERA, NICOLAS ARAGONES, JOSEFINA
MANANSALA, ADELAIDA CALASIN , JOSE AGUSTIN, TOMAS JOSEPH, MANUEL DADOR, SERGIO
LIPATON, ERNESTO SUMAYDING, MARCELINO DIOSO, MIGUEL ALCERA, CRISANTA ENAMER, JUAN
VIADO HILARION CHIOCO, EUROPIA CABAHUG, VICTORIA DUERO, CONSORCIO ENOC, MAMERTO
GAMONIDO, BONIFACIO SABADO, MARIA INTROLIZO, HENRY ENOLBA, REYNALDO LIM,
FORTUNATO LIPON, ERNESTO MALLOS, FLORENTINA PATRICIO, MAMERTO PALAPALA, RAMON DE
PERALTA, JOSE PARRAS, APOLINARIO YAP, JUAN ROQUE, FELIX ROQUE, GLICERIA SALAZAR,
MIGUELA SABIO, AGAPITO SAYAS, PAULINO SARROZA, PACIFICO JUANICO, LIBERADO TULAWAN,
LIGAYA LAUS, ERNESTO VERZOSA, LEOPOLDO BERNALES, JAIME VISTA, ISAIAS AMURAO, BENITA
M. BARENG, and BRIGIDA SANCHEZ, petitioners,
vs.
HON. ANTONIO J. VILLEGAS substituted by HON. RAMON BAGATSING as CITY MAYOR OF MANILA,
HON. LADISLAO J. TOLENTINO, City Engineer of Manila, their agents, employees, assistants and all
persons acting under them; HON. BENJAMIN GOZON, Administrator, Land Reform Authority
substituted by HON CONRADO ESTRELLA as Secretary of the Department of Agrarian Reforms and
his agents, employees, assistants and all persons acting under his orders, respondent. 1
G.R. No. L-24915 February 28, 1974
BENJAMIN RABUCO, et al., (the same co-petitioners in L-24661), petitioners,
vs.
HON. ANTONIO J. VILLEGAS substituted by HON. RAMON BAGATSING as CITY MAYOR OF MANILA,
et al., (the same co-respondents in L-24661), respondents.
G.R. No. L-24916 February 28, 1974
BENJAMIN RABUCO, et al. (the same co-petitioners in L-24661), petitioners-appellants,
vs.
HON. ANTONIO J. VILLEGAS substituted by HON. RAMON BAGATSING as CITY MAYOR OF MANILA,
et al., (the same co-respondents in L-24661), respondents-appellees.
Manuel D. Melotindos and Ricardo M. Guirnalda for petitioners.
Second Assistant City Fiscal Manuel T. Reyes for respondents.
TEEHANKEE, J.:p
The Court herein upholds the constitutionality of Republic Act 3120 on the strength of the
established doctrine that the subdivision of communal land of the State (although titled in the name
of the municipal corporation) and conveyance of the resulting subdivision lots by sale on installment
basis to bona fide occupants by Congressional authorization and disposition does not constitute
infringements of the due process clause or the eminent domain provisions of the Constitution but
operates simply as a manifestation of the legislature's right of control and power to deal with State
property.
The origin and background of the cases at bar which deal with the decisive issue of constitutionality
of Republic Act 3120 enacted on June 17, 1961, as raised by respondent mayor of Manila in resisting
petitioners' pleas that respondent mayor not only lacks the authority to demolish their houses or
eject them as tenants and bona fide occupants of a parcel of land in San Andres, Malate 2 but is also
expressly prohibited from doing so by section 2 of the Act, may be summarized from the Court of
Appeals' 3 certification of resolution of May 31, 1965 as follows:
Case L-24916 involves petitioners' appeal to the Court of Appeals 4 from the decision of the Manila
court of first instance dismissing their petition for injunction and mandamus to enjoin the
demolition of their houses and the ejectment from the public lots in question and to direct
respondent administrator of the Land Authority (now Secretary of Agrarian Reform) to implement
the provisions of Republic Act 3120 for the subdivision and sale on installment basis of the
subdivided lots to them as the tenants and bona fide occupants thereof, and instead ordering their
ejectment.
Case L-24915 involves petitioners' independent petition for injunction filed directly with the Court of
Appeals January 29, 1965 5 to forestall the demolition overnight of their houses pursuant to the
order of demolition set for January 30, 1965 at 8 a.m. issued by respondents city officials pending
the elevation of their appeal. The appellate court gave due course thereto and issued the writ of
preliminary injunction as prayed for.
The two cases were ordered "consolidated into one" since they were "unavoidably interlaced." The
appellate court, finding that the constitutionality of Republic Act 3120 was "the dominant and
inextricable issue in the appeal" over which it had no jurisdiction and that the trial court incorrectly
"sidetracked" the issue, thereafter certified the said cases to this Court, as follows:
The validity of Republic Act 3120 which was seasonably posed in issue in the
court below was sidetracked by the trial court, thus:
The constitutionality of Republic Act No. 3120 need not
be passed upon as the principal question in issue is
whether the houses of the petitioners are public
nuisances, which the court resolved in the affirmative.
As a matter of fact even if the petitioners were already
the owners of the land on which their respected houses
are erected, the respondent city officials could cause
the removal thereof as they were constructed in
violation of city ordinances and constitute public
nuisance.
It is significant to note, however, that what is sought by the respondent City
Mayor and City Engineer of Manila is not only the demolition of the
petitioners' houses in the premises in controversy, but their ejectment as well.
Moreover, Republic Act 3120 does intend not only the dismissal of the
ejectment proceedings against the petitioners from the land in controversy
Case L-24661 for the continuation and maintenance of the writ of preliminary injunction previously
upon their motion, but as well that any demolition order issued against them
issued by the Court of Appeals for preservation of the status quo was filed by petitioners directly
shall also have to be dismissed. The law says:
with this Court on June 21, 1965, pending transmittal of the records of Cases L-24915 and L-24916 to
Upon approval of this Act no ejectment proceedings
against any tenants or bona fide occupant shall be
instituted and any proceedings against any such tenant
or bona fideoccupant shall be dismissed upon motion of
the defendant. Provided, That any demolition order
directed against any tenant or bona fide occupant
thereof, shall be dismissed. (Sec. 2, R. A. 3120).
Indeed, the petitioners-appellants, who contended in the court below that it
was not necessary to decide on the validity or constitutionality of the law,
now asseverate that 'Republic Act No. 3120 expressly prohibits ejectment and
demolition of petitioners' home.' The petitioners' argument in their appeal to
this Court runs as follows:
1. Petitioners-appellants are entitled to the remedies of
injunction and mandamus, being vested with lawful
possession over Lot 21-B, Block 610, granted by law,
Republic Act No. 3120.
2. Civil Case No. 56092 has not been barred by any prior
judgment, as wrongly claimed by respondents-appellees.
3. Ejectment and demolition against petitioners-
appellants are unlawful and clearly prohibited by
Republic Act No. 3120.
The defense of the respondents Mayor and City Engineer of Manila to
arguments 2 and 3 is the invalidity of the said Republic Act 3120 for being in
violation of the Constitutional prohibition against the deprivation of property
without due process of law and without just compensation. So that even if
argument 2 interposed by the petitioners-appellants should be rejected, still
they may claim a right, by virtue of the aforesaid provisions of Republic Act
3120, to continue possession and occupation of the premises and the lifting of
the order of demolition issued against them. The constitutionality of the said
Republic Act 3120, therefore, becomes the dominant and inextricable issue of
the appeal.
this Court as certified by the Court of Appeals which declared itself without jurisdiction over the principal and
decisive issue of constitutionality of Republic Act 3120.
The Court gave due course thereto and on August 17, 1965 issued upon a P1,000 — bond the writ of preliminary
injunction as prayed for enjoining respondents "from demolishing and/or continuing to demolish the houses of
herein petitioners situated in Lot No. 21-B, Block No. 610 of the Cadastral Survey of the City of Manila, or from
performing any act constituting an interference in or disturbance of their present possession."
The records of two cases certified by the appellate court, L-24915 and L-24916, were eventually forwarded to this
Court which per its resolution of August 24, 1965 ordered that they be docketed and be considered together with
case L-24661.
In the early morning of April 19, 1970, a large fire of undetermined origin gutted the Malate area including the lot
on which petitioners had built their homes and dwellings. Respondents city officials then took over the lot and
kept petitioners from reconstructing or repairing their burned dwellings. At petitioners' instance, the Court issued
on June 17, 1970 a temporary restraining order enjoining respondents city officials "from performing any act
constituting an interference in or disturbance of herein petitioners' possession of Lot No. 21-B, Block No. 610, of
the Cadastral Survey of the City of Manila" as safeguarded them under the Court's subsisting preliminary
injunction of August 17, 1965.
The "dominant and inextricable issue" at bar, as correctly perceived by the appellate court is the constitutionality
of Republic Act 3120 whereby Congress converted the lot in question together with another lot in San Andres,
Malate "which are reserved as communal property" into "disposable or alienable lands of the State to be placed
under the administration and disposal of the Land Tenure Administration" for subdivision into small lots not
exceeding 120 square meters per lot for sale on installment basis to the tenants or bona fide occupants
thereof 6 and expressly prohibited ejectment and demolition of petitioners' homes under section 2 of the Act as
quoted in the appellate court's certification resolution, supra.
The incidental issue seized upon by the trial court as a main issue for "sidetracking" the decisive issue of
constitutionality, to wit, that petitioners' houses as they stood at the time of its judgment in 1965 "were
constructed in violation of city ordinances and constituted public nuisances" whose removal could be ordered
"even if petitioners were already the owners of the land on which their respective houses are erected" has
become moot with the burning down of the petitioners' houses in the fire of April 19, 1970.
If the Act is invalid and unconstitutional for constituting deprivation of property without due process of law and
without just compensation as contended by respondents city officials, then the trial court's refusal to enjoin
ejectment and demolition of petitioners' houses may be upheld. Otherwise, petitioners' right under the Act to
continue possession and occupation of the premises and to the lifting and dismissal of the order of demolition
issued against them must be enforced and the trial court's judgment must be set aside.
Respondents city officials' contention that the Act must be stricken down as unconstitutional for depriving the city
of Manila of the lots in question and providing for their sale in subdivided small lots to bona fide occupants or
tenants without payment of just compensation is untenable and without basis, since the lots in question are
manifestly owned by the city in its public and governmental capacity and are therefore public property over which
Congress had absolute control as distinguished from patrimonial property owned by it in
its private or proprietary capacity of which it could not be deprived without due process and without just
compensation. 7
Here, Republic Act 3120 expressly declared that the properties were "reserved as communal property" and
ordered their conversion into "disposable and alienable lands of the State" for sale in small lots to the bona fide
occupants thereof. It is established doctrine that the act of classifying State property calls for the exercise of wide
discretionary legislative power which will not be interfered with by the courts.
The case of Salas vs. Jarencio 8 wherein the Court upheld the constitutionality of Republic Act 4118 whereby
Congress in identical terms as in Republic Act 3120 likewise converted another city lot (Lot 1-B-2-B of Block 557 of
the cadastral survey of Manila also in Malate) which was reserved as communal property into disposable land of
the State for resale in small lots by the Land Tenure, Administration to the bona fide occupants is controlling in the
case at bar.
The Court therein reaffirmed the established general rule that "regardless of the source or classification of land in
the possession of a municipality, excepting those acquired with its own funds in its private or corporate capacity,
such property is held in trust for the State for the benefit of its inhabitants, whether it be for governmental or
proprietary purposes. It holds such lands subject to the paramount power of the legislature to dispose of the same,
for after all it owes its creation to it as an agent for the performance of a part of its public work, the municipality
being but a subdivision or instrumentality thereof for purposes of local administration. Accordingly, the legal
situation is the same as if the State itself holds the property and puts it to a different use" 9 and stressed that "the
property, as has been previously shown, was not acquired by the City of Manila with its own funds in its private or
proprietary capacity. That it has in its name a registered title is not questioned, but this title should be deemed to
be held in trust for the State as the land covered thereby was part of the territory of the City of Manila granted by
the sovereign upon its creation." 10
There as here, the Court holds that the Acts in question (Republic Acts 4118 in Salas and Republic Act 3120 in the
case at bar) were intended to implement the social justice policy of the Constitution and the government program
of land for the landless and that they were not "intended to expropriate the property involved but merely
to confirm its character as communal land of the State and to make it available for disposition by the National
Government: ... The subdivision of the land and conveyane of the resulting subdivision lots to the occupants by
Congressional authorization does not operate as an exercise of the power of eminent domain without just
compensation in violation of Section 1, subsection (2), Article III of the Constitution, 11 but simply as
a manifestation of its right and power to deal with state property." 12 Since the challenge of respondents city
officials against the constitutionality of Republic Act 3120 must fail as the City was not deprived thereby of
anything it owns by acquisition with its private or corporate funds either under the due process clause or under
the eminent domain provisions of the Constitution, the provisions of said Act must be enforced and petitioners are
entitled to the injunction as prayed for implementing the Act's prohibition against their ejectment and demolition
of their houses.
WHEREFORE, the appealed decision of the lower court (in Case No. L-24916) is hereby set aside, and the
preliminary injunction heretofore issued on August 17, 1965 is hereby made permanent. The respondent Secretary
of Agrarian Reform as successor agency of the Land Tenure Administration may now proceed with the due
implementation of Republic Act 3120 in accordance with its terms and provisions. No costs.Makalintal, C.J.,
Zaldivar, Castro, Barredo, Makasiar, Antonio, Esguerra, Muñoz Palma and Aquino, JJ., concur.Fernandez, J., took no
part.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G. R. No. L-41001 September 30, 1976
MANILA LODGE NO. 761, BENEVOLENT AND PROTECTIVE ORDER OF THE ELKS, INC., petitioner,
vs.
THE HONORABLE COURT OF APPEALS, CITY OF MANILA, and TARLAC DEVELOPMENT
CORPORATION, respondents.
No. L-41012 September 30, 1976
TARLAC DEVELOPMENT CORPORATION, petitioner,
vs.
HONORABLE COURT OF APPEALS, CITY OF MANILA, LODGE NO. 761, BENEVOLENT AND
PROTECTIVE ORDER OF ELKS, INC., respondents.
CASTRO, C.J.:têñ.£îhqwâ£
STATEMENT OF THE CASE AND STATEMENTOF THE FACTS
These two cases are petitions on certiorari to review the decision dated June 30, 1975 of the Court
of Appeals in CA-G.R. No. 51590-R entitled "Tarlac Development Corporation vs. City of Manila, and
Manila Lodge No. 761, Benevolent and Protective Order of Elks, Inc.," affirming the trial court's
finding in Civil Case No. 83009 that the property subject of the decision a quo is a "public park or
plaza."
On June 26, 1905 the Philippine Commission enacted Act No. l360 which authorized the City of
Manila to reclaim a portion of Manila Bay. The reclaimed area was to form part of the Luneta
extension. The Act provided that the reclaimed area "Shall be the property of the City of Manila"
and that "the City of Manila is hereby authorized to set aside a tract of the reclaimed land formed by
the Luneta extension x x x at the north end not to exceed five hundred feet by six hundred feet in
size, for a hotel site, and to lease the same, with the approval of the Governor General, to a
responsible person or corporation for a term not exceed ninety-nine years."
Subsequently, the Philippine Commission passed on May 18, 1907 Act No. 1657, amending Act No.
1360, so as to authorize the City of' Manila either to lease or to sell the portion set aside as a hotel
site.
The total area reclaimed was a little over 25 hectares. The City of Manila applied for the registration
of the reclaimed area, and on January 20, 1911, O.C.T. No. 1909 was issued in the name of the City
of Manila. The title described the registered land as "un terreno conocido con el nombre de Luneta
Extension, situato en el distrito de la Ermita x x x." The registration was "subject, however to such of
the incumbrances mentioned in Article 39 of said law (Land Registration Act) as may be subsisting"
and "sujeto a las disposiciones y condiciones impuestas en la Ley No. 1360; y sujeto tambein a los
contratos de venta, celebrados y otorgados por la Ciudad de Manila a favor del Army and Navy Club
y la Manila Lodge No. 761, Benevolent and Protective Order of Elks, fechados respectivamente, en
29 de Diciembre de 1908 y 16 de Enero de 1909." 1
On July 13, 1911 the City of Manila, affirming a prior sale dated January 16, 1909 cancelled 5,543.07
square meters of the reclaimed area to the Manila Lodge No. 761, Benevolent and Protective Order
of Elks of the U.S.A. (BPOE, for short) on the basis of which TCT No. 2195 2 was issued to the latter
over the Marcela de terreno que es parte de la Luneta Extension, Situada en el Distrito le la
Ermita ... ." At the back of this title vas annotated document 4608/T-1635, which in part reads as
follows: "que la citada Ciusdad de Manila tendra derecho a su opcion, de recomparar la expresada
propiedad para fines publicos solamete in cualquier tiempo despues de cincuenta anos desde el 13
le Julio le 1911, precio de la misma propiedad, mas el valor que entonces tengan las mejoras."
For the remainder of the Luneta Extension, that is, after segregating therefrom the portion sold to
the Manila Lodge No. 761, PBOE, a new Certificate of Title No. 2196 3 was issued on July 17, 1911 to
the City of Manila.
Manila Lodge No. 761, BPOE, subsequently sold the said 5,543.07 square meters to the Elks Club,
Inc., to which was issued TCT No. 67488. 4 The registered owner, "The Elks Club, Inc.," was later
changed by court oder to "Manila Lodge No. 761, Benevolent and Protective Order of Elks, Inc."
In January 1963 the BPOE. petitioned the Court of First Instance of Manila, Branch IV, for the
cancellation of the right of the City of Manila to repurchase the property This petition was granted
on February 15, 1963.
On November 19, 1963 the BPOE sold for the sum of P4,700,000 the land together with all the
improvements thereon to the Tarlac Development Corporation (TDC, for short) which paid
P1,700.000 as down payment and mortgaged to the vendor the same realty to secure the payment
of the balance to be paid in quarterly installments.5At the time of the sale,, there was no annotation
of any subsisting lien on the title to the property. On December 12, 1963 TCT No. 73444 was issued
to TDC over the subject land still described as "UNA PARCELA DE TERRENO, que es parte de la
Luneta Extension, situada en el Distrito de Ermita ... ."
In June 1964 the City of Manila filed with the Court of First Instance of Manila a petition for the
reannotation of its right to repurchase; the court, after haering, issued an order, dated November
19, 1964, directing the Register of Deeds of the City of Manila to reannotate in toto the entry
regarind the right of the City of Manila to repurchase the property after fifty years. From this order
TDC and BPOE appealed to this Court which on July 31, 1968 affirmed in G.R. Nos. L-24557 and L-
24469 the trial court's order of reannotation, but reserved to TDC the right to bring another action
for the clarification of its rights.
As a consequence of such reservation, TDC filed on April 28, 1971 against the City of Manila and the
Manila Lodge No. 761, BPOE, a complaint, docketed as Civil Case No. 83009 of the Court of First
Instance of Manila, containing three causes of action and praying -
a) On the first cause of action, that the plaintiff TDC be declared to have purchased the parcel of
land now in question with the buildings and improvements thereon from the defendant BPOE for
value and in good faith, and accordingly ordering the cancellation of Entry No. 4608/T-1635 on
Transfer Certificate of Title No. 73444 in the name of the Plaintiff;
b) On the second cause of action, ordering the defendant City of Manila to pay the plaintiff TDC
damages in the sum of note less than one hundred thousand pesos (P100,000.00);
c) On the third cause of action, reserving to the plaintiff TDC the right to recover from the defendant
BPOE the amounts mentioned in par. XVI of the complaint in accordance with Art. 1555 of the Civil
Code, in the remote event that the final judgment in this case should be that the parcel of land now
in question is a public park; and
d) For costs, and for such other and further relief as the Court may deem just and equitable. 6
Therein defendant City of Manila, in its answer dated May 19, 1971, admitted all the facts alleged in
the first cause of action except the allegation that TDC purchased said property "for value and in
good faith," but denied for lack of knowledge or information the allegations in the second and third
causes of action. As, special and affirmative defense, the City of Manila claimed that TDC was not a
purchaser in good faith for it had actual notice of the City's right to repurchase which was annotated
at the back of the title prior to its cancellation, and that, assuming arguendo that TDC had no notice
of the right to repurchase, it was, nevertheless, under obligation to investigate inasmuch as its title
recites that the property is a part of the Luneta extension. 7
The Manila Lodge No. 761, BPOE, in its answer dated June 7, 1971, admitted having sold the land
together with the improvements thereon for value to therein plaintiff which was in good faith, but
denied for lack of knowledge as to their veracity the allegations under the second cause of action. It
furthermore admitted that TDC had paid the quarterly installments until October l5, 1964 but
claimed that the latter failed without justifiable cause to pay the subsequent installments. It also
asserted that it was a seller for value in good faith without having misrepresented or concealed
tacts relative to the title on the property. As counterclaim, Manila Lodge No. 761 (BPOE) sought to
recover the balance of the purchase price plus interest and costs. 8
On June 15, 1971 TDC answered the aforesaid counterclaim, alleging that its refusal to make further
payments was fully justified. 9
After due trial the court a quo rendered on July 14, 1972 its decision finding the subject land to be
part of the "public park or plaza" and, therefore, part of the public domain. The court consequently
declared that the sale of the subject land by the City of Manila to Manila Lodge No. 761, BPOE, was
null and void; that plaintiff TDC was a purchaser thereof in g faith and for value from BPOE and can
enforce its rights against the latter; and that BPOE is entitled to recover from the City of Manila
whatever consideration it had 'paid the latter. 'The dispositive part of the decision
reads: ñé+.£ªwph!1
WHEREFORE, the Court hereby declares that the parcel of land formerly
covered by Transfer Certificate of Title Nos 2195 and 67488 in the name of
BPOE and now by Transfer Certificate of Title No. 73444 in the name of Tarlac
Development Corporation is a public' park or plaza, and, consequently, instant
complaint is dimissed, without pronouncement as to costs.
In view of the reservation made by plaintiff Tarlac Development Corporation
to recover from defendant BPOE the amounts mentioned in paragraph XVI of
the complaint in accordance with Article 1555 of the Civil Code, the Court
makes no pronouncement on this point. 10
From said decision the therein plaintiff TDC as well as the defendant Manila Lodge No. 761, BPOE,
appealed to the Court of Appeals.
In its appeal docketed as CA-G.R. No. 51590-R, the Manila Lodge No. 761, BPOE, avers that the trial
court committed the following errors, namely:
1. In holding that the property subject of the action is not patrimonial property of the City of Manila;
and
2. In holding that the Tarlac Development Corporation may recover and enforce its right against the
defendant BPOE. 11
The Tarlac Development Corporation, on the other hand, asserts that the trial court erred:
(1) In finding that the property in question is or was a public park and in consequently nullifying the
sale thereof by the City of Manila to BPOE;
(2) In applying the cases of Municipality of Cavite vs. Rojas, 30 Phil. 602, and Government vs.
Cabangis, 53 Phil. 112, to the case at bar; and
(3) In not holding that the plaintiff-appellant is entitled to ,recover damages from the defendant City
of Manila. 12
Furthermore, TDC as appellee regarding the second assignment of error raised by BPOE, maintained
that it can recover and enforce its rigth against BPOE in the event that the land in question is
declared a public park or part thereof. 13
In its decision promulgated on June 30, 1975, the Court of Appeals concur ed in the findings and
conclusions of the lower court upon the ground that they are supported by he evidence and are in
accordance with law, and accordingly affirmed the lower court's judgment.
Hence, the present petitions for review on certiorari.
G.R. No. L-41001
The Manila Lodge No. 761, BPOE, contends, in its petition for review on certiorari docketed as G.R.
No. L-41001, that the Court of Appeals erred in (1) disregarding the very enabling acts and/or
statutes according to which the subject property was, and still is, patrimonial property of the City of
Manila and could therefore be sold and/or disposed of like any other private property; and (2) in
departing from the accepted and usual course of judicial proceedings when it simply made a general
affirmance of the court a quo's findings and conclusions without bothering to discuss or resolve
several vital points stressed by the BPOE in its assigned errrors. 14
G.R. No. L-41012
The Tarlac Development Corporation, in its petition for review on certiorari docketed as G.R. No. L-
41012, relies on the following grounds for the allowance of its petition:
1. that the Court of Appeals did not correctly interpret Act No. 1360, as amended by Act No. 1657,
of the Philippine Commission; and
2. that the Court of Appeals has departed from the accepted and usual course of judicial
proceedings in that it did not make its own findings but simply recited those of the lower court. 15
ISSUES AND ARGUMENTS
FIRST ISSUE
Upon the first issue, both petitioners claim that the property subject of the action, pursuant to the
provisions of Act No. 1360, as amended by Act No. 1657, was patrimonial property of the City of
Manila and not a park or plaza.
Arguments of Petitioners
In G.R. No. L-41001, the Manila Lodge No. 761, BPOE, admits that "there appears to be some logic in
the conclusion" of the Court of Appeals that "neither Act No. 1360 nor Act No. 1657 could have
meant to supply the City of Manila the authority to sell the subject property which is located at the
south end not the north — of the reclaimed area." 16 It argues, however, that when Act No. 1360, as
amended, authorized the City of Manila to undertake the construction of the Luneta extension by
reclaimed land from the Manila Bay, and declared that the reclaimed land shall be the "property of
the City of Manila," the State expressly granted the ownership thereof to the City of Manila which.
consequently. could enter into transactions involving it; that upon the issuance of O.C.T. No. 1909,
there could he no doubt that the reclaimed area owned by the City was its patrimonial property;"
that the south end of the reclaimed area could not be for public use for. as argued by TDC a street,
park or promenade can be property for public use pursuant to Article 344 of the Spanish Civil Code
only when it has already been so constructed or laid out, and the subject land, at the time it was
sold to the Elk's Club, was neither actually constructed as a street, park or promenade nor laid out
as a street, park or promenade;" that even assuming that the subject property was at the beginning
property of public dominion, it was subsequently converted into patrimonial property pursuant to
Art. 422 of the Civil Code, inasmuch as it had never been used, red or utilized since it was reclaimed
in 1905 for purpose other than this of an ordinary real estate for sale or lease; that the subject
property had never been intended for public use, is further shown by the fact that it was neither
included as a part of the Luneta Park under Plan No. 30 of the National Planning Commission nor
considered a part of the Luneta National Park (now Rizal Park) by Proclamation No. 234 dated
December 19, 1955 of President Ramon Magsaysay or by Proclamation Order No. 274 dated
October 4, 1967 of President Ferdinand E. Marcos;" 19 that, such being the case, there is no reason
why the subject property should -not be considered as having been converted into patrimonial
property, pursuant to the ruling in Municipality vs. Roa 7 Phil. 20, inasmuch as the City of Manila has
considered it as its patrimonial property not only bringing it under the operation of the Land
Registration Act but also by disposing of it; 20 and that to consider now the subject property as a
public plaza or park would not only impair the obligations of the parties to the contract of sale
(rated July 13, 1911, but also authorize deprivation of property without due process of law. 21
G.R. No. L-410112
America covering the land now occupied by the American Embassy, the boundaries of which were
delineated by the Philippine Legislature, states that the said land is bounded on the northwest by
properties of the Army and Navy Club (Block No. 321) and the Elks Club (Block No. 321), and this
circumstance shows that even the Philippine Legislature recognized the subject property as private
property of the Elks Club. 27

TDC furthermore contends that the City of Manila is estopped from questioning the validity of the
In L-41012, the petitioner TDC stresses that the principal issue is the interpretation of Act No. 1360,
sale of the subject property that it executed on July 13, 1911 to the Manila Lodge No. 761, BPOE, for
as amended by. Act No. 1657 of the Philippine Commission, 22 and avers that inasmuch as Section 6
several reasons, namely: (1) the City's petition for the reannotation of Entry No. 4608/T-1635 was
of Act No. 1360, as amended by Act 1657, provided that the reclamation of the Luneta extension
predicated on the validity of said sale; (2) when the property was bought by the petitioner TDC it
was to be paid for out of the funds of the City of Manila which was authorized to borrow P350,000
was not a public plaza or park as testified to by both Pedro Cojuanco, treasurer of TDC, and the
"to be expended in the construction of Luneta Extension," the reclaimed area became "public land"
surveyor, Manuel Añoneuvo, according to whom the subject property was from all appearances
belonging to the City of Manila that spent for the reclamation, conformably to the holding
private property as it was enclosed by fences; (3) the property in question was cadastrally surveyed
in Cabangis, 23 and consequently, said land was subject to sale and other disposition; that the Insular
and registered as property of the Elks Club, according to Manuel Anonuevo; (4) the property was
Government itself considered the reclaimed Luneta extension as patrimonial property subject to
never used as a public park, for, since the issuance of T.C.T. No. 2165 on July 17, 1911 in the name of
disposition as evidenced by the fact that See. 3 of Act 1360 declared that "the land hereby
the Manila Lodge NO. 761, the latter used it as private property, and as early as January 16, 1909
reclaimed shall be the property of the City of Manila;" that this property cannot be property for
the City of Manila had already executed a deed of sale over the property in favor of the Manila
public use for according to Article 344 of the Civil Code, the character of property for public use can
Lodge No. 761; and (5) the City of Manila has not presented any evidence to show that the subject
only attach to roads and squares that have already been constructed or at least laid out as such,
property has ever been proclaimed or used as a public park. 28
which conditions did not obtain regarding the subject land, that Sec. 5 of Act 1360 authorized the
City of Manila to lease the northern part of the reclaimed area for hotel purposes; that Act No. 1657
furthermore authorized the City of Manila to sell the same; 24 that the express statutory authority to TDC, moreover, contends that Sec. 60 of Com. Act No. 141 cannot apply to the subject land, for Com.
lease or sell the northern part of the reclaimed area cannot be interpreted to mean that the Act No. 141 took effect on December 1, 1936 and at that time the subject land was no longer part of
remaining area could not be sold inasmuch as the purpose of the statute was not merely to confer the part of the public domain. 29
authority to sell the northern portion but rather to limit the city's power of disposition thereof, to
wit: to prevent disposition of the northern portion for any purpose other than for a hotel site that
TDC also stresses that its rights as a purchaser in good faith cannot be disregarded, for the mere
the northern and southern ends of the reclaimed area cannot be considered as extension of the
mention in the certificate of title that the lot it purchased was "part of the Luneta extension" was
Luneta for they lie beyond the sides of the original Luneta when extended in the direction of the sea,
not a sufficient warning that tile title to the City of Manila was invalid; and that although the trial
and that is the reason why the law authorized the sale of the northern portion for hotel purposes,
court, in its decision affirmed by the Court of Appeals, found the TDC -to has been an innocent
and, for the same reason, it is implied that the southern portion could likewise be disposed of. 26
purchaser for value, the court disregarded the petitioner's rights as such purchaser that relied on
Torrens certificate of title. 30
TDC argues likewise that there are several items of uncontradicted circumstantial evidence which
may serve as aids in construing the legislative intent and which demonstrate that the subject
The Court, continues the petitioner TDC erred in not holding that the latter is entitled to recover
property is patrimonial in nature, to wit: (1) Exhibits "J" and "J-1", or Plan No. 30 of the National
from the City of Manila damages in the amount of P100,000 caused by the City's petition for-
Planning Commission showing the Luneta and its vicinity, do not include the subject property as part
reannotation of its right to repurchase.
of the Luneta Park; (2) Exhibit "K", which is the plan of the subject property covered by TCT No.
67488 of BPOE, prepared on November 11, 1963, indicates that said property is not a public park; (3)
Exhibit "T", which is a certified copy of Proclamation No. 234 issued on December 15, 1955 is DISCUSSION AND RESOLUTION OF FIRST ISSUE
President Magsaysay, and Exhibit "U" which is Proclamation Order No. 273 issued on October 4,
1967 by President Marcos, do not include the subject property in the Luneta Park-, (4) Exhibit "W", It is a cardinal rule of statutory construction that courts must give effect to the general legislative
which is the location plan of the Luneta National Park under Proclamations Nos. 234 and 273, intent that can be discovered from or is unraveled by the four corners of the statute, 31 and in order
further confirms that the subject property is not a public park; and (5) Exhibit "Y", which is a copy of to discover said intent, the whole statute, and not only a particular provision thereof, should be
O.C.T. No. 7333 in the name of the United States of America covering the land now occupied by the
considered. 32 It is, therefore, necessary to analyze all the provisions of Act No. 1360, as amended, in
order to unravel the legislative intent.
Act No. 1360 which was enacted by the Philippine Commission on June 26, 1905, as amended by Act
No. 1657 enacted on May 18, 1907, authorized the "construction of such rock and timber bulkheads
or sea walls as may be necessary for the making of an extension to the Luneta" (Sec. 1 [a]), and the
placing of the material dredged from the harbor of Manila "inside the bulkheads constructed to
inclose the Luneta extension above referred to" (Sec. 1 [a]). It likewise provided that the plan of
Architect D. H. Burnham as "a general outline for the extension and improvement of the Luneta in
the City of Manila" be adopted; that "the reclamation from the Bay of Manila of the land included in
said projected Luneta extension... is hereby authorized and the land thereby reclaimed shall be the
property of the City of Manila" (Sec. 3); that "the City of Manila is hereby authorized to set aside a
tract of the reclaimed land formed by the Luneta extension authorized by this Act at the worth
end of said tract, not to exceed five hundred feet by six hundred feet in size, for a hotel site, and to
lease the same with the approval of the Governor General, ... for a term not exceeding ninety-nine
years; that "should the Municipal Board ... deem it advisable it is hereby authorized to advertise for
sale to sell said tract of land ... ;" "that said tract shall be used for hotel purposes as herein
prescribed, and shall not be devoted to any other purpose or object whatever;" "that should the
grantee x x x fail to maintain on said tract a first-class hotel x x x then the title to said tract of land
sold, conveyed, and transferred, and shall not be devoted to any other purpose or object whatever;"
"that should the grantee x x x fail to maintain on said tract a first-class hotel x x x then the title to
said tract of land sold, conveyed, and transferred to the grantee shall revert to the City of Manila,
and said City of Manila shall thereupon become entitled to immediate possession of said tract of
land" (Sec. 5); that the construction of the rock and timber bulkheads or sea wall "shall be paid for
out of the funds of the City of Manila, but the area to be reclaimed by said proposed Luneta
extension shall be filled, without cost to the City of Manila, with material dredged from Manila Bay
at the expense of the Insular Government" (Sec. 6); and that "the City of Manila is hereby
authorized to borrow from the Insular Government ... the sum of three hundred thousand pesos, to
be expended in the construction of Luneta extension provided for by paragraph (a) of section one
hereof" (Sec.7).
The grant made by Act No. 1360 of the reclaimed land to the City of Manila is a grant of "public"
nature, the same having been made to a local political subdivision. Such grants have always
been strictly construed against the grantee. 33 One compelling reason given for the strict
interpretation of a public grant is that there is in such grant a gratuitous donation of, public money
or resources which results in an unfair advantage to the grantee and for that reason, the grant
should be narrowly restricted in favor of the public. 34 This reason for strict interpretation obtains
relative to the aforesaid grant, for, although the City of Manila was to pay for the construction of
such work and timber bulkheads or sea walls as may be necessary for the making of the Luneta
extension, the area to be reclaimed would be filled at the expense of the Insular Government and
without cost to the City of Manila, with material dredged from Manila Bay. Hence, the letter of the
statute should be narrowed to exclude maters which if included would defeat the policy of the
legislation.
The reclaimed area, an extension to the Luneta, is declared to be property of the City of Manila.
Property, however, is either of public ownership or of private ownership. 35 What kind of property
of the City is the reclaimed land? Is it of public ownership (dominion) or of private ownership?
We hold that it is of public dominion, intended for public use.
Firstly, if the reclaimed area was granted to the City of Manila as its patrimonial property, the City
could, by virtue of its ownership, dispose of the whole reclaimed area without need
of authorization to do so from the lawmaking body. Thus Article 348 of the Civil Code of Spain
provides that "ownership is the right to enjoy and dispose of a thing without further limitations than
those established by law." 36 The right to dispose (jus disponendi) of one's property is an attribute of
ownership. Act No. 1360, as amended, however, provides by necessary implication, that the City of
Manila could not dispose of the reclaimed area without being authorized by the lawmaking body.
Thus the statute provides that "the City of Manila is hereby authorized to set aside a tract ... at the
north end, for a hotel site, and to lease the same ... should the municipal board ... deem it advisable,
it is hereby authorized ...to sell said tract of land ... " (Sec. 5). If the reclaimed area were patrimonial
property of the City, the latter could dispose of it without need of the authorization provided by the
statute, and the authorization to set aside ... lease ... or sell ... given by the statute would indeed be
superfluous. To so construe the statute s to render the term "authorize," which is repeatedly used
by the statute, superfluous would violate the elementary rule of legal hermeneutics that effect must
be given to every word, clause, and sentence of the statute and that a statute should be so
interpreted that no part thereof becomes inoperative or superfluous. 37 To authorize means to
empower, to give a right to act. 38 Act No. 1360 furthermore qualifies the verb it authorize" with the
adverb "hereby," which means "by means of this statue or section," Hence without the
authorization expressly given by Act No. 1360, the City of Manila could not lease or sell even the
northern portion; much less could it dispose of the whole reclaimed area. Consequently, the
reclaimed area was granted to the City of Manila, not as its patrimonial property. At most, only the
northern portion reserved as a hotel site could be said to be patrimonial property for, by express
statutory provision it could be disposed of, and the title thereto would revert to the City should the
grantee fail to comply with the terms provided by the statute.
TDC however, contends that the purpose of the authorization provided in Act No. 1360 to lease or
sell was really to limit the City's power of disposition. To sustain such contention is to beg the
question. If the purpose of the law was to limit the City's power of disposition then it is necessarily
assumed that the City had already the power to dispose, for if such power did not exist, how could it
be limited? It was precisely Act 1360 that gave the City the power to dispose for it was hereby
authorized by lease of sale. Hence, the City of Manila had no power to dispose of the reclaimed land
had such power not been granted by Act No. 1360, and the purpose of the authorization was to
empower the city to sell or lease the northern part and not, as TDC claims, to limit only the power to
dispose. Moreover, it is presumed that when the lawmaking body enacted the statute, it had full
knowledge of prior and existing laws and legislation on the subject of the statute and acted in
accordance or with respect thereto. 39 If by another previous law, the City of Manila could already
dispose of the reclaimed area, which it could do if such area were given to it as its patrimonial
property, would it then not be a superfluity for Act No. 1360 to authorize the City to dispose of the
reclaimed land? Neither has petitioner TDC pointed to any other law that authorized the City to do
so, nor have we come across any. What we do know is that if the reclaimed land were patrimonial
property, there would be no need of giving special authorization to the City to dispose of it. Said
authorization was given because the reclaimed land was not intended to be patrimonial property of
the City of Manila, and without the express authorization to dispose of the northern portion, the
City could not dispose of even that part.
Secondly, the reclaimed area is an "extension to the Luneta in the City of Manila." 40 If the reclaimed
area is an extension of the Luneta, then it is of the same nature or character as the old Luneta.
Anent this matter, it has been said that a power to extend (or continue an act or business) cannot
authorize a transaction that is totally distinct. 41 It is not disputed that the old Luneta is a public park
or plaza and it is so considered by Section 859 of the Revised Ordinances of the City of
Manila. 42 Hence the "extension to the Luneta" must be also a public park or plaza and for public use.
TDC, however, contends that the subject property cannot be considered an extension of the old
Luneta because it is outside of the limits of the old Luneta when extended to the sea. This is a
strained interpretation of the term "extension," for an "extension," it has been held, "signifies
enlargement in any direction — in length, breadth, or circumstance." 43
Thirdly, the reclaimed area was formerly a part of the manila Bay. A bay is nothing more than an
inlet of the sea. Pursuant to Article 1 of the Law of Waters of 1866, bays, roadsteads, coast sea,
inlets and shores are parts of the national domain open to public use. These are also property of
public ownership devoted to public use, according to Article 339 of the Civil Code of Spain.
When the shore or part of the bay is reclaimed, it does not lose its character of being property for
public use, according to Government of the Philippine Islands vs. Cabangis. 44 The predecessor of the
claimants in this case was the owner of a big tract of land including the lots in question. From 1896
said land began to wear away due to the action of the waters of Manila Bay. In 1901 the lots in
question became completely submerged in water in ordinary tides. It remained in such a state until
1912 when the Government undertook the dredging of the Vitas estuary and dumped the Sand and
- silt from estuary on the low lands completely Submerged in water thereby gradually forming the
lots in question. Tomas Cabangis took possession thereof as soon as they were reclaimed hence, the
claimants, his successors in interest, claimed that the lots belonged to them. The trial court found
for the claimants and the Government appealed. This Court held that when the lots became a part
of the shore. As they remained in that condition until reclaimed by the filling done by the
Government, they belonged to the public domain. for public use .4' Hence, a part of the shore, and
for that purpose a part of the bay, did not lose its character of being for public use after it was
reclaimed.
Fourthly, Act 1360, as amended, authorized the lease or sale of the northern portion of the
reclaimed area as a hotel sites. The subject property is not that northern portion authorized to be
leased or sold; the subject property is the southern portion. Hence, applying the rule of expresio
unius est exlusio alterius, the City of Manila was not authorized to sell the subject property. The
application of this principle of statutory construction becomes the more imperative in the case at
bar inasmuch as not only must the public grant of the reclaimed area to the City of Manila be, as
above stated, strictly construed against the City of Manila, but also because a grant of power to a
municipal corporation, as happens in this case where the city is author ized to lease or sell the
northern portion of the Luneta extension, is strictly limited to such as are expressly or impliedly
authorized or necessarily incidental to the objectives of the corporation.
Fifthly, Article 344 of the Civil Code of Spain provides that to property of public use, in provinces and
in towns, comprises the provincial and town roads, the squares streets fountains, and public waters
the promenades, and public works of general service paid for by such towns or provinces." A park or
plaza, such as the extension to the Luneta, is undoubtedly comprised in said article.
The petitioners, however, argue that, according to said Article 344, in order that the character of
property for public use may be so attached to a plaza, the latter must be actually constructed or at
least laid out as such, and since the subject property was not yet constructed as a plaza or at least
laid out as a plaza when it was sold by the City, it could not be property for public use. It should be
noted, however, that properties of provinces and towns for public use are governed by the same
principles as properties of the same character belonging to the public domain. 46 In order to be
property of public domain an intention to devote it to public use is sufficient. 47 The, petitioners'
contention is refuted by Manresa himself who said, in his comments", on Article 344,
that: ñé+.£ªwph!1
Las plazas, calles y paseos publicos correspondent sin duda aiguna aldominio
publico municipal ), porque se hallan establecidos sobre suelo municipal y
estan destinadas al uso de todos Laurent presenta tratando de las plazas, una
question relativa a si deben conceptuarse como de dominio publico los
lugares vacios libres, que se encuenttan en los Municipios rurales ... Laurent
opina contra Pioudhon que toda vez que estan al servicio de todos pesos
lugares, deben considerable publicos y de dominion publico. Realmente, pala
decidir el punto, bastara siempre fijarse en el destino real y efectivo de los
citados lugares, y si este destino entraña un uso comun de todos, no hay duda
que son de dominio publico municipal si no patrimoniales.
It is not necessary, therefore, that a plaza be already constructed of- laid out as a plaza in order that
it be considered property for public use. It is sufficient that it be intended to be such In the case at
bar, it has been shown that the intention of the lawmaking body in giving to the City of Manila the
extension to the Luneta was not a grant to it of patrimonial property but a grant for public use as a
plaza.
We have demonstrated ad satietatem that the Luneta extension as intended to be property of the
City of Manila for public use. But, could not said property-later on be converted, as the petitioners
contend, to patrimonial property? It could be. But this Court has already said, in Ignacio vs. The
Director of Lands, 49 the executive and possibly the legislation department that has the authority and
the power to make the declaration that said property, is no longer required for public use, and until
such declaration i made the property must continue to form paint of the public domain. In the case
at bar, there has been no such explicit or unequivocal declaration It should be noted, furthermore,
anent this matter, that courts are undoubted v not. primarily called upon, and are not in a position,
to determine whether any public land is still needed for the purposes specified in Article 4 of the
Law of Waters . 50
Having disposed of the petitioners' principal arguments relative to the main issue, we now pass to
the items of circumstantial evidence which TDC claims may serve as aids in construing the legislative
intent in the enactment of Act No. 1360, as amended. It is noteworthy that all these items of alleged
circumstantial evidence are acts far removed in time from the date of the enactment of Act No.1360
such that they cannot be considered contemporaneous with its enactment. Moreover, it is not
farfetched that this mass of circumstantial evidence might have been influenced by the antecedent
series of invalid acts, to wit: the City's having obtained over the reclaimed area OCT No. 1909 on
January 20,1911; the sale made by the City of the subject property to Manila Lodge No. 761; and the
issuance to the latter of T.C.T. No. 2195. It cannot gainsaid that if the subsequent acts constituting
the circumstantial evidence have been base on, or at least influenced, by those antecedent invalid
acts and Torrens titles S they can hardly be indicative of the intent of the lawmaking body in
enacting Act No. 1360 and its amendatory act.
TDC claims that Exhs. "J," "J-l" "K," "T," "U," "W" and "Y" show that the subject property is not a park.
Exhibits "J" and "J-1," the "Luneta and vicinity showing proposed development" dated May 14, 1949,
were prepared by the National Urban Planning Commission of the Office of the President. It cannot
be reasonably expected that this plan for development of the Luneta should show that the subject
property occupied by the ElksClub is a public park, for it was made 38 years after the sale to the Elks,
and after T.C.T. No. 2195 had been issued to Elks. It is to be assumed that the Office of the President
was cognizant of the Torrens title of BPOE. That the subject property was not included as a part of
the Luneta only indicated that the National Urban Planning Commission that made the plan knew
that the subject property was occupied by Elks and that Elks had a Torrens title thereto. But this in
no way proves that the subject property was originally intended to be patrimonial property of the
City of Manila or that the sale to Elks or that the Torrens-title of the latter is valid.
Exhibit "K" is the "Plan of land covered by T.C.T . No ----, as prepared for Tarlac Development
Company." It was made on November 11, 1963 by Felipe F. Cruz, private land surveyor. This
surveyor is admittedly a surveyor for TDC. 51 This plan cannot be expected to show that the subject
property is a part of the Luneta Park, for he plan was made to show the lot that "was to be sold to
petitioner." This plan must have also assumed the existence of a valid title to the land in favor of
Elks.
Exhibits "T" and "U" are copies of Presidential Proclamations No. 234 issued on November 15, 1955
and No. 273 issued on October 4, 1967, respectively. The purpose of the said Proclamations was to
reserve certain parcels of land situated in the District of Ermita, City of Manila, for park site
purposes. Assuming that the subject property is not within the boundaries of the reservation, this
cannot be interpreted to mean that the subject property was not originally intended to be for public
use or that it has ceased to be such. Conversely, had the subject property been included in the
reservation, it would mean, if it really were private property, that the rights of the owners thereof
would be extinguished, for the reservations was "subject to private rights, if any there be." That the
subject property was not included in the reservation only indicates that the President knew of the
existence of the Torrens titles mentioned above. The failure of the Proclamations to include the
subject property in the reservation for park site could not change the character of the subject
property as originally for public use and to form part of the Luneta Park. What has been said here
applies to Exhibits "V", "V-1" to "V-3," and "W" which also refer to the area and location of the
reservation for the Luneta Park.
Exhibit "Y" is a copy of O.C.T. No. 7333 dated November 13, 1935, covering the lot where now
stands the American Embassy [Chancery]. It states that the property is "bounded ... on the
Northwest by properties of Army and Navy Club (Block No.321) and Elks Club (Block No. 321)."
Inasmuch as the said bounderies delineated by the Philippine Legislature in Act No. 4269, the
petitioners contend that the Legislature recognized and conceded the existence of the Elks Club
property as a primate property (the property in question) and not as a public park or plaza. This
argument is non sequitur plain and simple Said Original Certificate of Title cannot be considered as
an incontrovertible declaration that the Elks Club was in truth and in fact the owner of such
boundary lot. Such mention as boundary owner is not a means of acquiring title nor can it validate a
title that is null and void.
TDC finally claims that the City of Manila is estopped from questioning the validity of the sale it
executed on July 13,'1911 conconveying the subject property to the Manila Lodge No. 761, BPOE.
This contention cannot be seriously defended in the light of the doctrine repeatedly enunciated by
this Court that the Government is never estopped by mistakes or errors on the pan of its agents, and
estoppel does not apply to a municipal corporation to validate a contract that is prohibited by law or
its against Republic policy, and the sale of July 13, 1911 executed by the City of Manila to Manila
Lodge was certainly a contract prohibited by law. Moreover, estoppel cannot be urged even if the
City of Manila accepted the benefits of such contract of sale and the Manila Lodge No. 761 had
performed its part of the agreement, for to apply the doctrine of estoppel against the City of Manila We have shown in our discussion of the first issue that the decision of the trial court is fully in
in this case would be tantamount to enabling it to do indirectly what it could not do directly. 52 accordance with law. To follows that when such decision was affirmed by the Court of Appeals, the
affirmance was likewise in accordance with law. Hence, no useful purpose will be served in further
discussing the second issue.
The sale of the subject property executed by the City of Manila to the Manila Lodge No. 761, BPOE,
was void and inexistent for lack of subject matter. 53 It suffered from an incurable defect that could
not be ratified either by lapse of time or by express ratification. The Manila Lodge No. 761 therefore CONCLUSION
acquired no right by virtue of the said sale. Hence to consider now the contract inexistent as it
always has seen, cannot be, as claimed by the Manila Lodge No. 761, an impairment of the
ACCORDINGLY, the petitions in both G.R. Nos. L-41001 and L-41012 are denied for lack of merit, and
obligations of contracts, for there was it, contemplation of law, no contract at all.
the decision of the Court of Appeals of June 30, 1975, is hereby affirmed, at petitioner's cost.

The inexistence of said sale can be set up against anyone who asserts a right arising from it, not only
Makasiar, Munoz Palma and Martin, JJ., concur.1äwphï1.ñët
against the first vendee, the Manila Lodge No. 761, BPOE, but also against all its suceessors,
including the TDC which are not protected the doctrine of bona fide ii purchaser without notice,
being claimed by the TDC does not apply where there is a total absence of title in the vendor, and Teehankee, concurs in the result which is wholly consistent with the basic rulings and jugdment of
the good faith of the purchaser TDC cannot create title where none exists. 55 this Court in its decision of July 31, 1968.

The so-called sale of the subject property having been executed, the restoration or restitution of
what has been given is order 56

SECOND ISSUE

The second ground alleged in support of the instant petitions for review on certiorari is that the
Court of Appeals has departed from the accepted and usual course of judicial proceedings as to call
for an exercise of the power of supervision. TDC in L-41012, argues that the respondent Court did
not make its own findings but simply recited those of the lower court and made a general
affirmance, contrary to the requirements of the Constitution; that the respondent Court made
glaring and patent mistakes in recounting even the copied findings, palpably showing lack of
deliberate consideration of the matters involved, as, for example, when said court said that Act No.
1657 authorized the City of Manila to set aside a portion of the reclaimed land "formed by the
Luneta Extension of- to lease or sell the same for park purposes;" and that respondent Court.
further more, did not resolve or dispose of any of the assigned errors contrary to the mandate of
the Judiciary Act.. 57

The Manila Lodge No. 761, in L-41001, likewise alleges, as one of the reasons warranting review,
that the Court of Appeals departed from the accepted and usual course of Judicial proceedings by
simply making a general affirmance of the court a quo findings without bothering to resolve several
vital points mentioned by the BPOE in its assigned errors. 58

COMMENTS ON SECOND ISSUE

Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-30098 February 18, 1970
THE COMMISSIONER OF PUBLIC HIGHWAYS and the AUDITOR GENERAL, petitioners,
vs.
HON. LOURDES P. SAN DIEGO as Presiding Judge of the Court of First Instance of Rizal, Branch IX,
sitting in Quezon City, TESTATE ESTATE OF N. T. HASHIM (Special Proceedings No. 71131 of the
Court of First Instance of Manila) represented by its Judicial Administrator, Tomas N. Hashim,
TOMAS N. HASHIM, personally, and as Judicial Administrator of the Estate of Hashim, Special
Proceedings No. 71131 of the Court of ]First instance of Manila, ALL THE LEGAL OR
TESTAMENTARY HEIRS of the Estate of Hashim, MANUELA C. FLORENDO, personally as Deputy
Clerk, Court of First Instance of Rizal, Quezon City, Branch IX, BENJAMIN GARCIA as "Special
Sheriff" appointed by respondent Judge Lourdes P. San Diego, BENJAMIN V. CORUÑA, personally
and as Chief Documentation Staff, Legal Department, Philippine National Bank, and the
PHILIPPINE NATIONAL BANK, respondents.
Office of the Solicitor General for petitioners.
Paredes, Poblador, Nazareno, Abada and Tomacruz for respondent Judge Lourdes P. San Diego.
Jesus B. Santos for respondent Testate estate of N. T. Hashim.
Jose A. Buendia for respondent Manuela C. Florendo.
Emata, Magkawas and Associates for respondent legal heir Jose H. Hashim.
Alberto O. Villaraza for respondents Estate of N.T. Hashim and Tomas N. Hashim.
Conrado E. Medina for respondent Philippine National Bank.
Benjamin V. Coruña for and in his own behalf.
TEEHANKEE, J.:
In this special civil action for certiorari and prohibition, the Court declares null and void the two
questioned orders of respondent Court levying upon funds of petitioner Bureau of Public Highways
on deposit with the Philippine National Bank, by virtue of the fundamental precept that government
funds are not subject to execution or garnishment.
The background facts follow:
On or about November 20, 1940, the Government of the Philippines filed a complaint for eminent
domain in the Court of First Instance of Rizal1 for the expropriation of a parcel of land belonging to N.
T. Hashim, with an area of 14,934 square meters, needed to construct a public road, now known as
Epifanio de los Santos Avenue. On November 25, 1940, the Government took possession of the
property upon deposit with the City Treasurer of the sum of P23,413.64 fixed by the Court therein
as the provisional value of all the lots needed to construct the road, including Hashim's property.
The records of the expropriation case were destroyed and lost during the second world war, and
neither party took any step thereafter to reconstitute the proceedings.
In 1958, however, the estate of N.T. Hashim, deceased, through its Judicial Administrator, Tomas N.
Hashim, filed a money claim with the Quezon City Engineer's Office in the sum of P522,620.00,
alleging said amount to be the fair market value of the property in question, now already converted
and used as a public highway. Nothing having come out of its claim, respondent estate filed on
August 6, 1963, with the Court of First Instance of Rizal, Quezon City Branch, assigned to Branch IX,
presided by respondent judge,2 a complaint for the recovery of the fair market price of the said
property in the sum of P672,030.00 against the Bureau of Public Highways, which complaint was
amended on August 26, 1963, to include as additional defendants, the Auditor General and the City
Engineer of Quezon City.3
The issues were joined in the case with the filing by then Solicitor General Arturo A. Alafriz of the
State's answer, stating that the Hashim estate was entitled only to the sum of P3,203.00 as the fair
market value of the property at the time that the State took possession thereof on November 25,
1940, with legal interest thereon at 6% per annum, and that said amount had been available and
tendered by petitioner Bureau since 1958. The parties thereafter worked out a compromise
agreement, respondent estate having proposed on April 28, 1966, a payment of P14.00 per sq. m.
for its 14,934 sq.m.-parcel of land or the total amount of P209,076.00, equivalent to the land's total
assessed value,4 which was confirmed, ratified and approved in November, 1966 by the
Commissioner of Public Highways and the Secretary of Public Works and Communications. On
November 7, 1966, the Compromise Agreement subscribed by counsel for respondent estate and by
then Solicitor General Antonio P. Barredo, now a member of this Court, was submitted to the lower
Court and under date of November 8, 1966, respondent judge, as prayed for, rendered judgment
approving the Compromise Agreement and ordering petitioners, as defendants therein, to pay
respondent estate as plaintiff therein, the total sum of P209,076.00 for the expropriated lot.
On October 10, 1968, respondent estate filed with the lower Court a motion for the issuance of a
writ of execution, alleging that petitioners had failed to satisfy the judgment in its favor. It further
filed on October 12, 1968, an ex-partemotion for the appointment of respondent Benjamin Garcia
as special sheriff to serve the writ of execution. No opposition having been filed by the Solicitor
General's office to the motion for execution at the hearing thereof on October 12, 1968, respondent
judge, in an order dated October 14, 1968, granted both motions.
On the same date, October 14, 1968, respondent Garcia, as special sheriff, forthwith served a Notice
of Garnishment, together with the writ of execution dated October 14, 1968, issued by respondent
Manuela C. Florendo as Deputy Clerk of Court, on respondent Philippine National Bank, notifying
said bank that levy was thereby made upon funds of petitioners Bureau of Public Highways and the
Auditor General on deposit, with the bank to cover the judgment of P209,076.00 in favor of
respondent estate, and requesting the bank to reply to the garnishment within five days. On
October 16, 1968, three days before the expiration of the five-day deadline, respondent Benjamin V.
Coruña in his capacity as Chief, Documentation Staff, of respondent bank's Legal Department,
allegedly acting in excess of his authority and without the knowledge and consent of the Board of
Directors and other ranking officials of respondent bank, replied to the notice of garnishment that in
compliance therewith, the bank was holding the amount of P209,076.00 from the account of
petitioner Bureau of Public Highways. Respondent bank alleged that when it was served with Notice
to Deliver Money signed by respondent Garcia, as special sheriff, on October 17, 1968, it sent a
letter to the officials of the Bureau of Public Highways notifying them of the notice of garnishment.
Under date of October 16, 1968, respondent estate further filed with the lower Court an ex-
parte motion for the issuance of an order ordering respondent bank to release and deliver to the
special sheriff, respondent Garcia, the garnished amount of P209,076.00 deposited under the
account of petitioner Bureau, which motion was granted by respondent judge in an order of
October 18, 1968. On the same day, October 18, 1968, respondent Coruña allegedly taking
advantage of his position, authorized the issuance of a cashier's check of the bank in the amount of
P209,076.00, taken out of the funds of petitioner Bureau deposited in current account with the bank
and paid the same to respondent estate, without notice to said petitioner.
Later on December 20, 1968, petitioners, through then Solicitor General Felix V. Makasiar, wrote
respondent bank complaining that the bank acted precipitately in having delivered such a
substantial amount to the special sheriff without affording petitioner Bureau a reasonable time to
contest the validity of the garnishment, notwithstanding the bank's being charged with legal
knowledge that government funds are exempt from execution or garnishment, and demanding that
the bank credit the said petitioner's account in the amount of P209,076.00, which the bank had
allowed to be illegally garnished. Respondent bank replied on January 6, 1969 that it was not liable
for the said garnishment of government funds, alleging that it was not for the bank to decide the
question of legality of the garnishment order and that much as it wanted to wait until it heard from
the Bureau of Public Highways, it was "helpless to refuse delivery under the teeth" of the special
order of October 18, 1968, directing immediate delivery of the garnished amount.
Petitioners therefore filed on January 28, 1969 the present action against respondents, in their
capacities as above stated in the title of this case, praying for judgment declaring void the question
orders of respondent Court. Petitioners also sought the issuance of a writ of preliminary mandatory
injunction for the immediate reimbursement of the garnished sum of P209,076.00, constituting
funds of petitioner Bureau on deposit with the Philippine National Bank as official depository of
Philippine Government funds, to the said petitioner's account with the bank, so as to forestall the
dissipation of said funds, which the government had allocated to its public highways and
infrastructure projects. The Court ordered on January 31, 1969 the issuance of the writ against the
principal respondents solidarily, including respondent judge therein so that she would take
forthwith all the necessary measures and processes to compel the immediate return of the said
government funds to petitioner Bureau's account with respondent bank.5
In compliance with the writ, respondent bank restored the garnished sum of P209,076.00 to
petitioner Bureau's account with it.6 The primary responsibility for the reimbursement of said
amount to petitioner Bureau's account with the respondent bank, however, rested solely on
respondent estate, since it is the judgment creditor that received the amount upon the questioned
execution.
Strangely enough, as appears now from respondent bank's memorandum in lieu of oral
argument,7 what respondent bank did, acting through respondent Coruña as its counsel, was not to
ask respondent estate to reimburse it in turn in the same amount, but to file with the probate court
with jurisdiction over respondent estate,8 a motion for the estate to depositthe said amount with it,
purportedly in compliance with the writ. Respondent estate thereupon deposited with respondent
bank as a savings account the sum of P125,446.00, on which the bank presumably would pay the
usual interest, besides. As to the balance of P83,630.00, this sum had been in the interval paid as
attorney's fees to Atty. Jesus B. Santos, counsel for the estate, by the administrator, allegedly
without authority of the probate court.9 Accordingly, respondent estate has not reimbursed the
respondent bank either as to this last amount, and the bank has complacently not taken any steps in
the lower court to require such reimbursement.
The ancillary questions now belatedly raised by the State may readily be disposed of. Petitioners
may not invoke the State's immunity from suit, since the case below was but a continuation in effect
of the pre-war expropriation proceedings instituted by the State itself. The expropriation of the
property, which now forms part of Epifanio, de los Santos Avenue, is a fait accompli and is not
questioned by the respondent state. The only question at issue was the amount of the just
compensation due to respondent estate in payment of the expropriated property, which properly
pertained to the jurisdiction of the lower court. 10 It is elementary that in expropriation proceedings,
the State precisely submits to the Court's jurisdiction and asks the Court to affirm its lawful right to
take the property sought to be expropriated for the public use or purpose described in its complaint
and to determine the amount of just compensation to be paid therefor.
Neither may the State impugn the validity of the compromise agreement executed by the Solicitor
General on behalf of the State with the approval of the proper government officials, on the ground
that it was executed only by the lawyer of respondent estate, without any showing of having been
specially authorized to bind the estate thereby, because such alleged lack of authority may be
questioned only by the principal or client, and respondent estate as such principal has on the
contrary confirmed and ratified the compromise agreement. 11 As a matter of fact, the Solicitor
General, in representation of the State, makes in the petition no prayer for the annulment of the
compromise agreement or of the respondent court's decision approving the same.
On the principal issue, the Court holds that respondent Court's two questioned orders (1) for
execution of the judgment, in pursuance whereof respondent deputy clerk issued the corresponding
writ of execution and respondent special sheriff issued the notice of garnishment, and (2) for
delivery of the garnished amount of P209,076.00 to respondent estate as judgment creditor through
respondent special sheriff, are null and void on the fundamental ground that government funds are
not subject to execution or garnishment.
1. As early as 1919, the Court has pointed out that although the Government, as plaintiff in
expropriation proceedings, submits itself to the jurisdiction of the Court and thereby waives its
immunity from suit, the judgment that is thus rendered requiring its payment of the award
determined as just compensation for the condemned property as a condition precedent to the
transfer to the title thereto in its favor, cannot be realized upon execution. 12The Court there added
that it is incumbent upon the legislature to appropriate any additional amount, over and above the
provisional deposit, that may be necessary to pay the award determined in the judgment, since the
Government cannot keep the land and dishonor the judgment.
In another early case, where the government by an act of the Philippine Legislature, expressly
consented to be sued by the plaintiff in an action for damages and waived its immunity from suit,
the Court adjudged the Government as not being legally liable on the complaint, since the State
under our laws would be liable only for torts caused by its special agents, specially commissioned to
carry out the acts complained of outside of such agents' regular duties. We held that the plaintiff
would have to look to the legislature for another legislative enactment and appropriation of
sufficient funds, if the Government intended itself to be legally liable only for the damages sustained
by plaintiff as a result of the negligent act of one of its employees. 13
The universal rule that where the State gives its consent to be sued by private parties either by
general or special law, it may limit claimant's action "only up to the completion of proceedings
anterior to the stage of execution" and that the power of the Courts ends when the judgment is
rendered, since government funds and properties may not be seized under writs of execution or
garnishment to satisfy such judgments, is based on obvious considerations of public policy.
Disbursements of Public funds must be covered by the corresponding appropriation as required by
law. The functions and public services rendered by the State cannot be allowed to be paralyzed or
disrupted by the diversion of public funds from their legitimate and specific objects, as appropriated
by law.
Thus, as pointed out by the Court in Belleng vs. Republic, 14 while the State has given its consent to
be sued in compensation cases, the pauper-claimant therein must look specifically to the
Compensation Guarantee Fund provided by the Workmen's Compensation Act for the
corresponding disbursement in satisfaction of his claim, since the State in Act 3083, the general law
waiving its immunity from suit "upon any money claim involving liability arising from contract
express or implied," imposed the limitation in Sec. 7 thereof that "no execution shall issue upon any
judgment rendered by any Court against the Government of the (Philippines) under the provisions
of this Act;" and that otherwise, the claimant would have to prosecute his money claim against the
State under Commonwealth Act 327.
This doctrine was again stressed by. the Court in Republic vs. Palacio, 15 setting aside as null and void
the order of garnishment issued by the sheriff pursuant to the lower Court's writ of execution on
funds of the Pump Irrigation Trust Fund in the account of the Government's Irrigation Service Unit
with the Philippine National Bank. The Court emphasized then and re-emphasizes now that
judgments against the State or its agencies and instrumentalities in cases where the State has
consented to be sued, operate merely to liquidate and establish the plaintiff's claim; such judgments
may not be enforced by writs of execution or garnishment and it is for the legislature to provide for
their payment through the corresponding appropriation, as indicated in Act 3083.
2. Respondent bank and its Chief, Documentation Staff, respondent Coruña have advanced two
specious arguments to justify their wrongful delivery of the garnished public funds to respondent
estate. Their first contention that the said government funds by reason of their being deposited by
petitioner Bureau under a current account subject to withdrawal by check, instead of being
deposited as special trust funds, "lost their kind and character as government funds," 16 is untenable.
As the official depositary of the Philippine Government, respondent bank and its officials should be
the first ones to know that all government funds deposited with it by any agency or instrumentality
of the government, whether by way of general or special deposit, remain government funds, since
such government agencies or instrumentalities do not have any non-public or private funds of their
own.
Their second contention that said government funds lost their character as such "the moment they
were deposited with the respondent bank", 17 since the relation between a depositor and a
depository bank is that of creditor and debtor, is just as untenable, absolutely. Said respondents
shockingly ignore the fact that said government funds were deposited with respondent bank as the
official depositary of the Philippine Government. Assuming for the nonce the creation of such
relationship of creditor and debtor, petitioner Bureau thereby held a credit against respondent bank
whose obligation as debtor was to pay upon demand of said petitioner-creditor the public funds
thus deposited with it; even though title to the deposited funds passes to the bank under this theory
since the funds become mingled with other funds which the bank may employ in its ordinary
business, what was garnished was not the bank's own funds but the credit of petitioner bureau
against the bank to receive payment of its funds, as a consequence of which respondent bank
delivered to respondent estate the garnished amount of P209,076.00 belonging to said petitioner.
Petitioner bureau's credit against respondent bank thereby never lost its character as a credit
representing government funds thus deposited. The moment the payment is made by respondent
bank on such deposit, what it pays out represents the public funds thus deposited which are not
garnishable and may be expended only for their legitimate objects as authorized by the
corresponding legislative appropriation. Neither respondent bank nor respondent Coruña are the
duly authorized disbursing officers and auditors of the Government to authorize and cause payment
of the public funds of petitioner Bureau for the benefit or private persons, as they wrongfully did in
this case.
3. Respondents bank and Coruña next pretend that refusal on their part to obey respondent judge's
order to deliver the garnished amount, "which is valid and binding unless annulled, would have
exposed them for contempt of court." 18 They make no excuse for not having asked the lower court
for time and opportunity to consult petitioner Bureau or the Solicitor General with regard to the
garnishment and execution of said deposited public funds which were allocated to specific
government projects, or for not having simply replied to the sheriff that what they held on deposit
for petitioner Bureau were non-garnishable government funds. They have not given any cogent
reason or explanation, — charged as they were with knowledge of the nullity of the writ of
execution and notice of garnishment against government funds, for in the earlier case of Republic vs.
Palacio, supra, they had then prudently and timely notified the proper government officials of the
attempted levy on the funds of the Irrigation Service Unit deposited with it, thus enabling the
Solicitor General to take the corresponding action to annul the garnishment — for their failure to
follow the same prudent course in this case. Indeed, the Court is appalled at the improper haste and
lack of circumspection with which respondent Coruña and other responsible officials of respondent
bank precipitately allowed the garnishment and delivery of the large amount involved, all within the
period of just four days, even before the expiration of the five-day reglementary period to reply to
the sheriff's notice of garnishment. Failure on the State's part to oppose the issuance of the writ of
execution, which was patently null and void as an execution against government funds, could not
relieve them of their own responsibility.
4. Respondents bank and Coruña further made common cause with respondent estate beyond the
legal issues that should solely concern them, by reason of their having wrongfully allowed the
garnishment and delivery of government funds, instead assailing petitioners for not having come to
court with "clean hands" and asserting that in fairness, justice and equity, petitioners should not
impede, obstruct or in any way delay the payment of just compensation to the land owners for their
property that was occupied way back in 1940. This matter of payment of respondent estate's
judgment credit is of no concern to them as custodian and depositary of the public funds deposited
with them, whereby they are charged with the obligation of assuring that the funds are not illegally
or wrongfully paid out.
Since they have gone into the records of the expropriation case, then it should be noted that they
should have considered the vital fact that at the time that the compromise agreement therein was
executed in November, 1966, respondent estate was well aware of the fact that the funds for the
payment of the property in the amount of P209,076.00 still had to be released by the Budget
Commissioner and that at the time of the garnishment, respondent estate was still making the
necessary representations for the corresponding release of such amount, pursuant to the Budget
Commissioner's favorable
recommendation.19 And with regard to the merits of the case, they should have likewise considered
that respondent estate could have no complaint against the fair attitude of the authorities in not
having insisted on their original stand in their answer that respondent estate was entitled only to
the sum of P3,203.00 as the fair market value of the property at the time the State took possession
thereof on November 25, 1940, with legal interests thereon, but rather agreed to pay therefor the
greatly revised and increased amount of P209,076.00 at P14.00 per square meter, not to mention
the consequential benefits derived by said respondent from the construction of the public highway
with the resultant enhanced value of its remaining properties in the area.
5. The manner in which respondent bank's counsel and officials proceeded to comply with the writ
of preliminary mandatory injunction issued by the Court commanding respondent estate, its judicial
administrator and respondents bank and Coruña, in solidum, to reimburse forthwith the account of
petitioner Bureau in the garnished amount of P209,076.00, does not speak well of their fidelity to
the bank's interests. For while respondent bank had restored with its own funds the said amount of
P209,076.00 to petitioner Bureau's account, it has not required respondent estate as the party
primarily liable therefor as the recipient of the garnished amount to reimburse it in turn in this same
amount. Rather, said bank officials have allowed respondent estate to keep all this time the whole
amount of P209,076.00 wrongfully garnished by it. For as stated above, respondent bank allowed
respondent estate merely to deposit with it as a savings account, of respondent estate, the lesser
sum of P125,446.00 on which the bank presumably has paid and continues paying respondent
estate, besides the usual interest rates on such savings accounts, and neither has it taken any steps
to require reimbursement to it from respondent estate of the remainder of P83,630.00 which
respondent estate of its own doing and responsibility paid by way of attorney's fees.
It thus appears that all this time, respondent bank has not been reimbursed by respondent estate as
the party primarily liable for the whole amount of P209,076.00 wrongfully and illegally garnished
and received by respondent estate. This grave breach of trust and dereliction of duty on the part of
respondent bank's officials should be brought to the attention of respondent bank's Board of
Directors and management for the appropriate administrative action and other remedial action for
the bank to recover the damages it has been made to incur thereby.
6. The Solicitor General has likewise questioned the legality of respondent Court's Order of October
14, 1968, appointing respondent Garcia as "special sheriff" for the purpose of effecting service of
the writ of execution, simply on respondent estate's representation that it was desirable "for a
speedy enforcement of the writ."
The Court finds this general practice of the lower courts of appointing "special sheriffs" for the The Clerk of Court is directed to furnish copies of this decision to the Board of Directors and to the
service of writs of execution to be unauthorized by law. The duty of executing all processes" of the president of respondent Philippine National Bank for their information and appropriate action. So
courts in civil cases, particularly, writs of execution, devolves upon the sheriff or his deputies, under ordered.
Section 183 of the Revised Administrative Code and Rule 39, section 8 of the Rules of Court. Unlike
the service of summons which may be made, aside from the sheriff or other proper court officers,
Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Sanchez, Castro, Fernando and Villamor.
"for special reasons by any person especially authorized by the judge of the court issuing the
JJ., concur.
summons" under Rule 14, section 5 of the Rules of Court, the law requires that the responsibility of
serving writs of execution, which involve the taking delivery of money or property in trust for the
judgment creditor, should be carried out by regularly bonded sheriffs or other proper court officers.
(Sections 183 and 330, Revised Administrative Code). The bond required by law of the sheriff is
conditioned inter alia, "for the delivery or payment to the Government, or the persons entitled
thereto, of all the property or sums of money that shall officially come into his or their (his deputies')
hands" (Section 330, idem), and thus avoids the risk of embezzlement of such properties and
moneys.

Section 185 of the Revised Administrative Code restrictively authorizes the judge of the Court
issuing the process or writ to deputize some suitable person only "when the sheriff is party to any
action or proceeding or is otherwise incompetent to serve process therein." The only other
contingency provided by law is when the office of sheriff is vacant, and the judge is then authorized,
"in case of emergency, (to) make a temporary appointment to the office of sheriff ... pending the
appointment and qualification of the sheriff in due course; and he may appoint the deputy clerk of
the court or other officer in the government service to act in said capacity." (Section 189, idem).

None of the above contingencies having been shown to be present, respondent Court's order
appointing respondent Garcia as "special sheriff" to serve the writ of execution was devoid of
authority.

7. No civil liability attaches, however, to respondents special sheriff and deputy clerk, since they
acted strictly pursuant to orders issued by respondent judge in the discharge of her judicial
functions as presiding judge of the lower court, and respondent judge's immunity from civil
responsibility covers them, although the said orders are herein declared null and void. 20

ACCORDINGLY, the writs of certiorari and prohibition are granted. The respondent court's
questioned Orders of October 14, and 18, 1968, are declared null and void, and all further
proceedings in Civil Case No. Q-7441 of the Court of First Instance of Rizal, Quezon City, Branch IX
are abated. The writ of preliminary mandatory injunction heretofore issued is made permanent,
except as to respondent judge who is excluded therefrom, without prejudice to any cause of action
that private respondents may have, inter se. Respondent estate and respondent Tomas N. Hashim
as prayed for by respondent Philippine National Bank in its Answer, are ordered jointly and severally
to reimburse said respondent bank in the amount of P209,076.00 with legal interest until the date
of actual reimbursement. Respondents Estate of N. T. Hashim, Philippine National Bank and
Benjamin Coruña are ordered jointly to pay treble costs.
SECOND DIVISION
b. the RTCs August 24, 2001 Order[5] denying respondent TESDAs motion to

discharge/quash writ of attachment.

PROFESSIONAL VIDEO, INC., G.R. No. 155504
Petitioner, THE FACTUAL BACKGROUND
Present:
PROVI is an entity engaged in the sale of high technology equipment, information
QUISUMBING, J., Chairperson,
* technology products and broadcast devices, including the supply of plastic card printing and security
YNARES-SANTIAGO,
**CHICO-NAZARIO,
***LEONARDO-DE CASTRO, and facilities.
- versus - BRION, JJ.

Promulgated:
TESDA is an instrumentality of the government established under Republic Act (R.A.) No.

7796 (the TESDA Act of 1994) and attached to the Department of Labor and Employment (DOLE) to
TECHNICAL EDUCATION AND SKILLS DEVELOPMENT AUTHORITY, June 26, 2009
Respondent. develop and establish a national system of skills standardization, testing, and certification in the

x ---------------------------------------------------------------------------------------------------------- x country.[6] To fulfill this mandate, it sought to issue security-printed certification and/or

identification polyvinyl (PVC) cards to trainees who have passed the certification process.

DECISION
TESDAs Pre-Qualification Bids Award Committee (PBAC) conducted two (2) public
BRION, J.: biddings on June 25, 1999 and July 22, 1999 for the printing and encoding of PVC cards. A failure of

bidding resulted in both instances since only two (2) bidders PROVI and Sirex Phils. Corp. submitted
We resolve the petition filed by Professional Video, Inc. (PROVI)[1] to annul and set aside the proposals.
[2]
Decision of the Court of Appeals (CA) in CA-G.R. SP No. 67599, and its subsequent Order denying

PROVIs motion for reconsideration.[3] The assailed CA decision nullified:
a. the Order[4] dated July 16, 2001 of the Regional Trial Court (RTC), Pasig City, in
Civil Case No. 68527, directing the attachment/garnishment of the properties
of respondent Technical Education and Skills Development Authority (TESDA)
amounting to Thirty Five Million Pesos (P35,000,000.00); and
Due to the failed bidding, the PBAC recommended that TESDA enter into a negotiated
contract with PROVI. On December 29, 1999, TESDA and PROVI signed and executed their Contract
Agreement Project: PVC ID Card Issuance (the Contract Agreement) for the provision of goods and
services in the printing and encoding of PVC cards.[7] Under this Contract Agreement, PROVI was to
provide TESDA with the system and equipment compliant with the specifications defined in the

Technical Proposal. In return, TESDA would pay PROVI the amount of Thirty-Nine Million Four
Hundred and Seventy-Five Thousand Pesos (P39,475,000) within fifteen (15) days after TESDAs
acceptance of the contracted goods and services.
On August 24, 2000, TESDA and PROVI executed an Addendum to the Contract
Agreement Project: PVC ID Card Issuance (Addendum),[8] whose terms bound PROVI to deliver one
hundred percent (100%) of the enumerated supplies to TESDA consisting of five hundred thousand
(500,000) pieces of security foil; five (5) pieces of security die with TESDA seal; five hundred
thousand (500,000) pieces of pre-printed and customized identification cards; one hundred
thousand (100,000) pieces of scannable answer sheets; and five hundred thousand (500,000)
customized TESDA holographic laminate. In addition, PROVI would install and maintain the following
equipment: one (1) unit of Micropoise, two (2) units of card printer, three (3) units of flatbed
scanner, one (1) unit of OMR scanner, one (1) unit of Server, and seven (7) units of personal
computer.
TESDA in turn undertook to pay PROVI thirty percent (30%) of the total cost of the
supplies within thirty (30) days after receipt and acceptance of the contracted supplies, with the
balance payable within thirty (30) days after the initial payment.
According to PROVI, it delivered the following items to TESDA on the dates indicated:
Date Particulars Amount
26 April 2000 48,500 pre-printed cards P 2,764,500.00
07 June 2000 330,000 pre-printed cards 18,810,000.00
07 August 2000 121,500 pre-printed cards 6,925,500.00
26 April 2000 100,000 scannable answer sheets 600,000.00
06 June 2000 5 Micro-Poise customized die 375,000.00
13 June 2000 35 boxes @ 15,000 imp/box 10,000,000.00
Custom hologram Foil
Total P 39,475,000.00
PROVI further alleged that out of TESDAs liability of P39,475,000.00, TESDA paid PROVI
only P3,739,500.00, leaving an outstanding balance of P35,735,500.00, as evidenced by PROVIs
Statement of Account.[9] Despite the two demand letters dated March 8 and April 27, 2001 that
PROVI sent TESDA,[10] the outstanding balance remained unpaid.
On July 11, 2001, PROVI filed with the RTC a complaint for sum of money with damages
against TESDA. PROVI additionally prayed for the issuance of a writ of preliminary
attachment/garnishment against TESDA. The case was docketed as Civil Case No. 68527. In an Order
dated July 16, 2001, the RTC granted PROVIs prayer and issued a writ of preliminary attachment
against the properties of TESDA not exempt from execution in the amount of P35,000,000.00.[11]
TESDA responded on July 24, 2001 by filing a Motion to Discharge/Quash the Writ of
Attachment, arguing mainly that public funds cannot be the subject of garnishment.[12] The RTC
denied TESDAs motion, and subsequently ordered the manager of the Land Bank of
the Philippines to produce TESDAs bank statement for the garnishment of the covered amount.[13]
 Faced with these rulings, TESDA filed a Petition for Certiorari with the CA to question the preliminary attachment. Lastly, PROVI maintains that sufficient basis existed for the RTCs grant of

RTC orders, imputing grave abuse of discretion amounting to lack or excess of jurisdiction on the the writ of preliminary attachment, since TESDA fraudulently misapplied or embezzled the money

trial court for issuing a writ of preliminary attachment against TESDAs public funds.[14] earmarked for the payment of the contracted supplies and services, as evidenced by the

Certification as to Availability of Funds.

The CA set aside the RTCs orders after finding that: (a) TESDAs funds are public in nature

and, therefore, exempt from garnishment; and (b) TESDAs purchase of the PVC cards was a TESDA claims that it entered the Contract Agreement and Addendum in the performance of its

necessary incident of its governmental function; consequently, it ruled that there was no legal basis governmental function to develop and establish a national system of skills standardization, testing,

for the issuance of a writ of preliminary attachment/garnishment.[15] The CA subsequently denied and certification; in the performance of this governmental function, TESDA is immune from suit.

PROVIs motion for reconsideration;[16] hence, the present petition. Even assuming that it had impliedly consented to be sued by entering into a contract with PROVI,

TESDA posits that the RTC still did not have the power to garnish or attach its funds since these are

THE PETITION public funds. Lastly, TESDA points out that PROVI failed to comply with the elements for the valid

issuance of a writ of preliminary attachment, as set forth in Section 1, Rule 57 of the 1997 Rules of

The petition submits to this Court the single issue of whether or not the writ of attachment against Civil Procedure.

TESDA and its funds, to cover PROVIs claim against TESDA, is valid. The issue involves a pure

question of law and requires us to determine whether the CA was correct in ruling that the RTC THE COURTS RULING

gravely abused its discretion in issuing a writ of attachment against TESDA.

We find, as the CA did, that the RTCs questioned order involved a gross misreading of

PROVI argues that the CA should have dismissed TESDAs petition for certiorari as the RTC did not the law and jurisprudence amounting to action in excess of its jurisdiction.Hence, we resolve to

commit any grave abuse of discretion when it issued the Orders dated July 16, 2001 and August 24, DENY PROVIs petition for lack of merit.

2001. According to PROVI, the RTC correctly found that when TESDA entered into a purely TESDA is an instrumentality
of the government undertaking
commercial contract with PROVI, TESDA went to the level of an ordinary private citizen and could no governmental functions.
longer use the defense of state immunity from suit. PROVI further contends that it has alleged R.A. No. 7796 created the Technical Education and Skills Development
sufficient ultimate facts in the affidavit it submitted to support its application for a writ of Authority or TESDA under the declared policy of the State to provide relevant, accessible, high
quality and efficient technical education and skills development in support of the development of country.[20] The law likewise mandates that [T]here shall be national occupational skills standards to

high quality Filipino middle-level manpower responsive to and in accordance with Philippine be established by TESDA-accredited industry committees. The TESDA shall develop and implement a

development goals and priorities.[17] TESDA replaced and absorbed the National Manpower and certification and accreditation program in which private groups and trade associations are

Youth Council, the Bureau of Technical and Vocational Education and the personnel and functions accredited to conduct approved trade tests, and the local government units to promote such trade

pertaining to technical-vocational education in the regional offices of the Department of Education, testing activities in their respective areas in accordance with the guidelines to be set by the TESDA.

Culture and Sports and the apprenticeship program of the Bureau of Local Employment of the The Secretary of Labor and Employment shall determine the occupational trades for mandatory

DOLE.[18] Thus, TESDA is an unincorporated instrumentality of the government operating under its certification. All certificates relating to the national trade skills testing and certification system shall

own charter. be issued by the TESDA through its Secretariat.[21]

All these measures are undertaken pursuant to the constitutional command that [T]he
Among others, TESDA is empowered to: approve trade skills standards and trade tests as
State affirms labor as a primary social economic force, and shall protect the rights of workers and
established and conducted by private industries; establish and administer a system of accreditation
promote their welfare;[22] that [T]he State shall protect and promote the right of all citizens to
of both public and private institutions; establish, develop and support the institutions' trainors'
quality education at all levels, and shall take appropriate steps to make such education accessible to
training and/or programs; exact reasonable fees and charges for such tests and trainings conducted,
all;[23] in order to afford protection to labor and promote full employment and equality of
and retain such earnings for its own use, subject to guidelines promulgated by the Authority;
employment opportunities for all.[24]
and perform such other duties and functions necessary to carry out the provisions of the Act,

consistent with the purposes of the creation of TESDA.[19]

Under these terms, both constitutional and statutory, we do not believe that the role and

status of TESDA can seriously be contested: it is an unincorporated instrumentality of the

Within TESDAs structure, as provided by R.A. No. 7769, is a Skills Standards and government, directly attached to the DOLE through the participation of the Secretary of Labor as its

Certification Office expressly tasked, among others, to develop and establish a national system of Chairman, for the performance of governmental functions i.e., the handling of formal and non-

skills standardization, testing and certification in the country; and to conduct research and formal education and training, and skills development. As an unincorporated instrumentality

development on various occupational areas in order to recommend policies, rules and regulations operating under a specific charter, it is equipped with both express and implied powers,[25] and all

for effective and efficient skills standardization, testing and certification system in the State immunities fully apply to it.[26]
TESDA, as an agency
of the State, cannot by suits, nor can these suits control the use and disposition of the means for the performance of
be sued without its
consent. governmental functions. In Providence Washington Insurance Co. v. Republic of the

Philippines,[31] we said:
The rule that a state may not be sued without its consent is embodied in Section 3,
Article XVI of the 1987 Constitution and has been an established principle that antedates this
Constitution.[27] It is as well a universally recognized principle of international law that exempts a
state and its organs from the jurisdiction of another state.[28] The principle is based on the very
essence of sovereignty, and on the practical ground that there can be no legal right as against the
[A] continued adherence to the doctrine of non-suability is not to be deplored
for as against the inconvenience that may be caused private parties, the loss
of governmental efficiency and the obstacle to the performance of its
multifarious functions are far greater if such a fundamental principle were
abandoned and the availability of judicial remedy were not thus restricted.
With the well known propensity on the part of our people to go to court, at
the least provocation, the loss of time and energy required to defend against
law suits, in the absence of such a basic principle that constitutes such an
effective obstacle, could very well be imagined.

authority that makes the law on which the right depends.[29] It also rests on reasons of public policy
PROVI argues that TESDA can be sued because it has effectively waived its immunity
that public service would be hindered, and the public endangered, if the sovereign authority could
when it entered into a contract with PROVI for a commercial purpose. According to PROVI, since the
be subjected to law suits at the instance of every citizen and, consequently, controlled in the uses
purpose of its contract with TESDA is to provide identification PVC cards with security seal which
and dispositions of the means required for the proper administration of the government.[30]
TESDA will thereafter sell to TESDA trainees, TESDA thereby engages in commercial transactions not

incidental to its governmental functions.

The proscribed suit that the state immunity principle covers takes on various forms,

namely: a suit against the Republic by name; a suit against an unincorporated government agency; a
TESDAs response to this position is to point out that it is not engaged in business, and there is
suit against a government agency covered by a charter with respect to the agencys performance of
nothing in the records to show that its purchase of the PVC cards from PROVI is for a business
governmental functions; and a suit that on its face is against a government officer, but where the
purpose. While TESDA admits that it will charge the trainees with a fee for the PVC cards, it claims
ultimate liability will fall on the government. In the present case, the writ of attachment was issued
that this fee is only to recover their costs and is not intended for profit.
against a government agency covered by its own charter. As discussed above, TESDA performs

governmental functions, and the issuance of certifications is a task within its function of developing
We agree with TESDA. As the appellate court found, the PVC cards purchased by TESDA
and establishing a system of skills standardization, testing, and certification in the country. From the
from PROVI are meant to properly identify the trainees who passed TESDAs National Skills
perspective of this function, the core reason for the existence of state immunity applies i.e., the
Certification Program the program that immediately serves TESDAs mandated function of
public policy reason that the performance of governmental function cannot be hindered or delayed
developing and establishing a national system of skills standardization, testing, and certification in
the country.[32] Aside from the express mention of this function in R.A. No. 7796, the details of this
function are provided under DOLE Administrative Order No. 157, S. 1992, as supplemented by
Department Order Nos. 3 thru 3-F, S. 1994 and Department Order No. 13, S. 1994.[33]
Admittedly, the certification and classification of trainees may be undertaken in ways
other than the issuance of identification cards, as the RTC stated in its assailed Order. [34] How the
mandated certification is to be done, however, lies within the discretion of TESDA as an incident of
its mandated function, and is a properly delegated authority that this Court cannot inquire into,
unless its exercise is attended by grave abuse of discretion.
That TESDA sells the PVC cards to its trainees for a fee does not characterize the
transaction as industrial or business; the sale, expressly authorized by the TESDA Act, [35] cannot be
considered separately from TESDAs general governmental functions, as they are undertaken in the
discharge of these functions. Along this line of reasoning, we held in Mobil Philippines v. Customs
Arrastre Services:[36]
Now, the fact that a non-corporate government entity performs a function
proprietary in nature does not necessarily result in its being suable. If said
non-governmental function is undertaken as an incident to its governmental
function, there is no waiver thereby of the sovereign immunity from suit
extended to such government entity.
TESDAs funds are
public in character,
hence exempt from
attachment or
garnishment.
Even assuming that TESDA entered into a proprietary contract with PROVI and thereby gave its
implied consent to be sued, TESDAs funds are still public in nature and, thus, cannot be the valid
subject of a writ of garnishment or attachment. Under Section 33 of the TESDA Act, the TESDA
budget for the implementation of the Act shall be included in the annual General Appropriation Act;
hence, TESDA funds, being sourced from the Treasury, are moneys belonging to the government, or
any of its departments, in the hands of public officials.[37] We specifically spoke of the limits in
dealing with this fund in Republic v. Villasor[38] when we said:
This fundamental postulate underlying the 1935 Constitution is
now made explicit in the revised charter. It is therein expressly provided, The
State may not be sued without its consent. A corollary, both dictated by logic
and sound sense, from such a basic concept, is that public funds cannot be
the object of garnishment proceedings even if the consent to be sued had
been previously granted and the state liability adjudged. Thus in the recent
case of Commissioner of Public Highways vs. San Diego, such a well-settled
doctrine was restated in the opinion of Justice Teehankee:
The universal rule that where the State gives its consent
to be sued by private parties either by general or special
law, it may limit claimant's action 'only up to the
completion of proceedings anterior to the stage of
execution' and that the power of the Courts ends when
the judgment is rendered, since government funds and
properties may not be seized under writs of execution
or garnishment to satisfy such judgments, is based on
obvious considerations of public policy. Disbursements
of public funds must be covered by the corresponding
appropriation as required by law. The functions and
public services rendered by the State cannot be
allowed to be paralyzed or disrupted by the diversion
of public funds from their legitimate and specific
objects, as appropriated by law. [Emphasis supplied.]
We reiterated this doctrine in Traders Royal Bank v. Intermediate Appellate
Court,[39] where we said:

The NMPCs implied consent to be sued notwithstanding, the trial
court did not have the power to garnish NMPC deposits to answer for any
eventual judgment against it. Being public funds, the deposits are not within
the reach of any garnishment or attachment proceedings. [Emphasis
supplied.]
As pointed out by TESDA in its Memorandum,[40] the garnished funds constitute TESDAs lifeblood in
government parlance, its MOOE[41] whose withholding via a writ of attachment, even on a
temporary basis, would paralyze TESDAs functions and services. As well, these funds also include
TESDAs Personal Services funds from which salaries of TESDA personnel are sourced. Again and for
obvious reasons, the release of these funds cannot be delayed.
PROVI has not shown
that it is entitled to
the writ of
attachment.
Even without the benefit of any immunity from suit, the attachment of TESDA funds
should not have been granted, as PROVI failed to prove that TESDA fraudulently misapplied or
converted funds allocated under the Certificate as to Availability of Funds. Section 1, Rule 57 of the
Rules of Court sets forth the grounds for issuance of a writ of preliminary attachment, as follows:
SECTION 1. Grounds upon which attachment may issue. A plaintiff or any
proper party may, at the commencement of the action or at any time
thereafter, have the property of the adverse party attached as security for the
satisfaction of any judgment that may be recovered in the following cases:
(a) In an action for recovery of a specified amount of money or damages,
other than moral and exemplary, on a cause of action arising from law,
contract, quasi-contract, delict or quasi-delict against a party who is about to
depart from the Philippines with intent to defraud his creditors;
(b) In an action for money or property embezzled or fraudulently misapplied
or converted to his use by a public officer, or an officer of a corporation, or
an attorney, factor, broker, agent or clerk, in the course of his employment
as such, or by any other person in a fiduciary capacity, or for a willful
violation of duty;
(c) In an action to recover the possession of property unjustly or fraudulently
taken, detained or converted, when the property or any part thereof, has
been concealed, removed or disposed of to prevent its being found or taken
by the applicant or an authorized person;
(d) In an action against a party who has been guilty of fraud in contracting
the debt or incurring the obligation upon which the action is brought, or in
concealing or disposing of the property for the taking, detention or
conversion of which the action is brought;
(e) In an action against a party who has removed or disposed of his property,
or is about to do so, with intent to defraud his creditors;
(f) In an action against a party who does not reside and is not found in
the Philippines, or on whom summons may be served by publication.
[Emphasis supplied.]
Jurisprudence teaches us that the rule on the issuance of a writ of attachment must be
construed strictly in favor of the defendant. Attachment, a harsh remedy, must be issued only on
concrete and specific grounds and not on general averments merely quoting the words of the
pertinent rules.[42] Thus, the applicants affidavit must contain statements clearly showing that the
ground relied upon for the attachment exists.
Section 1(b), Rule 57 of the Rules of Court, that PROVI relied upon, applies only where
money or property has been embezzled or converted by a public officer, an officer of a corporation,
or some other person who took advantage of his fiduciary position or who willfully violated his duty.
PROVI, in this case, never entrusted any money or property to TESDA. While the Contract
Agreement is supported by a Certificate as to Availability of Funds (Certificate) issued by the Chief of
TESDAs Accounting Division, this Certificate does not automatically confer ownership over the funds circumstances of the alleged fraud because fraudulent intent cannot be inferred from the debtors

to PROVI. Absent any actual disbursement, these funds form part of TESDAs public funds, and mere non-payment of the debt or failure to comply with his obligation. The affidavit, being the

TESDAs failure to pay PROVI the amount stated in the Certificate cannot be construed as an act of foundation of the writ, must contain particulars showing how the imputed fraud was committed for

fraudulent misapplication or embezzlement. In this regard, Section 86 of Presidential Decree No. the court to decide whether or not to issue the writ. To reiterate, a writ of attachment can only be

1445 (The Accounting Code) provides: granted on concrete and specific grounds and not on general averments merely quoting the words

of the rules.[44]
Section 86. Certificate showing appropriation to meet contract. Except in a
case of a contract for personal service, for supplies for current consumption
or to be carried in stock not exceeding the estimated consumption for three
months, or banking transactions of government-owned or controlled banks, The affidavit filed by PROVI through Elmer Ramiro, its President and Chief Executive
no contract involving the expenditure of public funds by any government
Officer, only contained a general allegation that TESDA had fraudulent misapplied or converted the
agency shall be entered into or authorized unless the proper accounting
official or the agency concerned shall have certified to the officer entering amount of P10,975,000.00 that was allotted to it. Clearly, we cannot infer any finding of fraud from
into the obligation that funds have been duly appropriated for the purpose
and that the amount necessary to cover the proposed contract for the current PROVIs vague assertion, and the CA correctly ruled that the lower court acted with grave abuse of
fiscal year is available for expenditure on account thereof, subject to
verification by the auditor concerned. The certification signed by the proper discretion in granting the writ of attachment despite want of any valid ground for its issuance.
accounting official and the auditor who verified it, shall be attached to and
become an integral part of the proposed contract, and the sum so certified For all these reasons, we support the appellate courts conclusion that no valid ground
shall not thereafter be available for expenditure for any other purpose until
the obligation of the government agency concerned under the contract is exists to support the grant of the writ of attachment against TESDA. The CAs annulment and setting
fully extinguished. [Emphasis supplied.]
aside of the Orders of the RTC were therefore fully in order.

WHEREFORE, premises considered, we hereby DENY the petition filed by petitioner Professional
By law, therefore, the amount stated in the Certification should be intact and remains devoted to its
Video, Inc., and AFFIRM the Court of Appeals Decision dated July 23, 2002, and Resolution
purpose since its original appropriation. PROVI can rebut the presumption that necessarily arises
of September 27, 2002, in CA-G.R. SP No. 67599. Costs against the petitioner.
from the cited provision only by evidence to the contrary. No such evidence has been adduced.

SO ORDERED.
Section 1 (d), Rule 57 of the Rules of Court applies where a party is guilty of fraud in

contracting a debt or incurring an obligation, or in concealing or disposing of the property for the

taking, detention or conversion of which the action is brought. In Wee v. Tankiansee,[43] we held that

for a writ of attachment to issue under this Rule, the applicant must sufficiently show the factual