Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. 11095 December 16, 1916

THE MUNICIPALITY OF TIGBAUAN, petitioner-appellee,

vs.
THE DIRECTOR OF LANDS, objector-appellant.

Attorney-General Avanceña for appellant.

Provincial Fiscal Enaje for appellee.

ARAULLO, J.:

In representation of the municipal corporation of Tigbauan, Province of Iloilo, the president of said municipality applied for the registration in the property
registry of a tract of land situate within said town, barrio of Supa, and composed of seven parcels described in the application and the plans presented
therewith. The application was based on the claim that the municipality had acquired the land by continuous possession since time immemorial, and was
opposed by the Director of the Bureau of Lands, through the Attorney-General in representation of the Government of the Philippine Islands, in so far as
concerned the registration of the parcels Nos. 1, 6, and 7, on the ground that the first of these was a public square in the public use of said municipality, and
that the other two were property of the Government of the United States under the control and administration of the Government of the Philippine Islands.

The applicant withdrew in favor of the Insular Government its application for the registration of the parcel No. 1, as being a public square of the
municipality of Tigbauan, but maintained its claim with respect to the other two parcels, Nos. 6 and 7. The Director of Lands, in representation of the
Government, maintained his also. After trial and the introduction of evidence by both parties, the Court of First Instance of Iloilo on April 14, 1915,
rendered judgment (subsequently supplemented by an order of the 16th of the same month) in which he held that the application was entitled to the
adjudication and registration of the parcels Nos. 6 and 7, together with their respective improvements, and disallowed the adverse claim of the Director of
Lands, represented by the Attorney-General, in respect to these same parcels. The objector excepted to this judgment and asked for its annulment and a new
trial on the grounds that the judgment and order were contrary to law and to the rule laid down by this Supreme Court in the case of Municipality of
Tacloban vs. Director of Lands (18 Phil. Rep., 201), and were unsupported by the evidence.

This motion for a new trial was overruled, the court holding that, in adjudicating the parcels Nos. 6 and 7 to the applicant municipality, he had taken into
account sections 38 and 41 of the Code of Civil Procedure, relative to prescription. The objector excepted to this ruling and appealed the case to us, through
the proper bill of exceptions. He alleges that the trial court erred in applying to said lots or parcels Nos. 6 and 7 the provisions of sections 38 and 41 of the
Code of Civil Procedure, which regulate prescription, and in denying on this account a new trial; and that it likewise erred in decreeing the adjudication and
registration of said parcels in favor of the applicant disallowing the adverse claim filed in respect thereto.lawphi1.net

In the applicant's plan, Exhibit A (record, p. 36), and in the one containing a drawing of said two parcels, Nos. 6 and 7, there is a note which reads thus:

The lands around these parcels are public lands. The names of the persons appearing on (the plan of) these parcels are those of the present occupants of the
same.

From the testimony of the municipal president of Tigbauan, Constantino B. Benedicto, and from that of a resident of this same municipality, Francisco de
Paula Tina, the former 42 and the latter 56 years of age, it appears that, since the time of the Spanish Government, the municipality was wont to gather cane
for its own use from the canebreaks growing on said two parcels of land; that it had subsequently planted thereon cañas espinas, which were already
yielding product at the time this testimony was given (March, 1915); and that these witnesses had known of these facts ever since their early childhood.
They further testified that the municipality's possession of the parcels of land in question had been continuous, and that no one had opposed the same or
claimed any right, title or interest in said land. The first of these witnesses, Benedicto, designated the boundaries of the parcel No. 6 as follows: On the
north, Francisco Gotera; on the east, Paulo Totay; on the south, Ignacio Totay; and on the west Benito Totay. The boundaries of the parcel No. 7 as being:
on the north, public lands; on the southeast, Ignacio Totay; on the southwest, Nicolas Guimbal and public lands; and on the northeast, Francisco Garda.

There is no proof that said parcels were private property at any time prior to the possession mentioned by the two above-named witnesses. They are
surrounded by the public lands, as shown by the plan presented by the applicant, and the persons whom one of these witnesses designated as adjacent
property owners are mere occupants of the lands situated around the parcels, as also so stated in the plan itself.

1
Said parcels are public or government lands, as shown by the evidence. It was neither established in the record that this land had been granted by the
Government to the municipality of Tigbauan to form a part of its municipal assets or estate; nor that there was erected thereon any building belonging to
the municipality and intended for public service, such as might induce the presumption that the land had been granted to the municipality; nor that the latter
had used these parcels for recognized public purposes. Therefore, under the rule laid down by this Supreme Court in several decisions, among others the
case of Municipality of Tacloban vs. Director of Lands (18 Phil. Rep., 201), it is evident that the applicant municipality cannot be held to be the owner of
said two parcels of land or to be entitled to enter them in its name in the property registry.

In the decision above cited the following considerations appears:itc@a1f

The mere fact that a municipality continued to collect revenues or rentals from the residents who occupy any parcel of land comprised within its district is
not proof that the said municipality is the proprietor of such realty; at the most, it might be considered to be a usufructuary of the land in question, but
without the right to enter it in the property registry.

The benefit granted by section 54 of Act No. 926, for the purpose of fostering agriculture and increasing the wealth of the country, can not be deemed to be
granted, according to economic principles, to municipal corporations which, on account of their special conditions, the idiosyncrasy and character of the
functions which they exercise, and, because of the administrative mission which they have to fulfill in the name of the Government and in representation of
the people who elected them, can not engage in agriculture and other industries nor can they attend to the administration of agricultural land and give
particular attention to strictly private business, without serious detriment to the interests of the community.

In another decision of this Supreme Court, in the case of Municipality of Luzuriaga vs. Director of Lands and Roman Catholic Bishop of Jaro (24 Phil.
Rep., 193), cited in the aforementioned decision, and also in the case of Municipality of Catbalogan vs. Director of Lands (17 Phil. Rep., 216), we said:

It is apparent from these quotations that, as we have said before, in order that the municipality may rely upon a presume grant from the State in its favor,
the land concerning which the grant is to be presumed must have been used by the municipality for the purposes specified in said quotations, namely, to
meet a public necessity, and therefore must be land which would have been originally granted by the State for such purposes. In other words, the lands
susceptible of this presumption cannot be agricultural or communal lands; they must be lands which the municipality itself can exclusively own, i. e., they
must be lands used to meet a public necessity.

The mere facts that during many years the municipality of Tigbauan has been cutting can from the cane brakes which have been growing on said two
parcels land from the time of the Spanish Government, and the further fact that it is subsequently planted thereon caña espina trees now yielding product,
do not prove that the municipality is the owner of these parcels, but only that it has been enjoying their usufruct, which does, not give it the right to have
them entered as its own in the property registry.

As the property in question is agricultural land, aside from the possible presumption that the government might have granted it to the applicant municipality
to enable this latter to meet public needs, it cannot be understood, in accordance with the holding made by this court in the first of the decisions aforecited,
that this corporation was accorded the benefits allowed by Act No. 926, section 54, to wit, those of applying to the Court of Land Registration for the
confirmation of its claim of alleged right is said parcels and for the issuance of a certificate of title therefore; and consequently neither may said
municipality, in order to obtain said title, allege the right of prescription provided for in sections 38 and 41 of the Code of Civil Procedure, for section 55 of
Act No. 926 clearly prescribes that all persons claiming title to government lands who do come not within the classes specified in the section 55 are
excluded from the benefits of Chapter VI of said Act which comprises these two sections. On the other hand, pursuant to Act No. 648 of the Philippine
Commission, the Governor-General is authorized to reserve for public uses the public lands comprised within certain boundaries, whether they belong to
the Insular Government or to provincial or municipal governments. This provision unquestionably shows that the municipalities or municipal corporations
of these Islands cannot appropriate to themselves public or Government lands without a prior grant from the Government and without reservation in the
manner and by the procedure specified in said Act No. 648 and in the Act cited, No. 627. It is also evident that municipalities cannot acquire the ownership
of public lands through prescription, as provided in the aforementioned sections 38 and 41 of the Code of Civil Procedure, nor do they need to avail
themselves of this means for acquiring the same. Therefore, the trial court erred in taking account of the provisions of the two sections above cited for the
purpose of decreeing the adjudication and registration of said parcels of land in the applicant's behalf.

For the foregoing reasons we reverse the judgment and order appealed from — the latter in the part thereof that is complementary of the former and relative
to the two parcels of land Nos. 6 and 7 described in the application — and hold that the adjudication and registration of these parcels in behalf of the
applicant municipality must be denied, whereby we sustain the adverse claim filed in connection therewith by the Director of Lands in representation of the
Government of the Philippine Islands. No special finding is made in regard to costs. So ordered.

Torres, Johnson, Carson and Trent, JJ., concur.

Moreland J., concurs in the result.

2
Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. L-29788 August 30, 1972

RAFAEL S. SALAS, in his capacity as Executive Secretary; CONRADO F. ESTRELLA, in his capacity as Governor of the Land Authority; and
LORENZO GELLA, in his capacity as Register of Deeds of Manila, petitioners-appellants,
vs.
HON. HILARION U. JARENCIO, as Presiding Judge of Branch XXIII, Court of First Instance of Manila; ANTONIO J. VILLEGAS, in his
capacity as Mayor of the City of Manila; and the CITY OF MANILA, respondents-appellees.

Office of the Solicitor General Felix V. Makasiar, Assistant Solicitor-General Antonio A. Torres, Solicitor Raul I. Goco and Magno B. Pablo & Cipriano
A. Tan, Legal Staff, Land Authority for petitioners-appellants.

Gregorio A. Ejercito and Felix C. Chavez for respondents-appellees.

ESGUERRA, J.:p

This is a petition for review of the decision of the Court of First Instance of Manila, Branch XXIII, in Civil Case No. 67946, dated September 23, 1968, the
dispositive portion of which is as follows:

WHEREFORE, the Court renders judgment declaring Republic Act No. 4118 unconstitutional and invalid in that it deprived the City of Manila of its
property without due process and payment of just compensation. Respondent Executive Secretary and Governor of the Land Authority are hereby
restrained and enjoined from implementing the provisions of said law. Respondent Register of Deeds of the City of Manila is ordered to cancel Transfer
Certificate of Title No. 80876 which he had issued in the name of the Land Tenure Administration and reinstate Transfer Certificate of Title No. 22547 in
the name of the City of Manila which he cancelled, if that is feasible, or issue a new certificate of title for the same parcel of land in the name of the City of
Manila. 1

The facts necessary for a clear understanding of this case are as follows:

On February 24, 1919, the 4th Branch of the Court of First Instance of Manila, acting as a land registration court, rendered judgment in Case No. 18,
G.L.R.O. Record No. 111, declaring the City of Manila the owner in fee simple of a parcel of land known as Lot No. 1, Block 557 of the Cadastral Survey
of the City of Mani1a, containing an area of 9,689.8 square meters, more or less. Pursuant to said judgment the Register of Deeds of Manila on August 21,
1920, issued in favor of the City of Manila, Original Certificate of Title No. 4329 covering the aforementioned parcel of land. On various dates in 1924, the
City of Manila sold portions of the aforementioned parcel of land in favor of Pura Villanueva. As a consequence of the transactions Original Certificate of
Title No. 4329 was cancelled and transfer certificates of title were issued in favor of Pura Villanueva for the portions purchased by her. When the last sale
to Pura Villanueva was effected on August 22, 1924, Transfer Certificate of Title No. 21974 in the name of the City of Manila was cancelled and in lieu
thereof Transfer Certificate of Title (TCT) No. 22547 covering the residue thereof known as Lot 1-B-2-B of Block 557, with an area of 7,490.10 square
meters, was issued in the name of the City of Manila.

On September 21, 1960, the Municipal Board of Manila, presided by then Vice-Mayor Antono J. Villegas, adopted a resolution requesting His Excellency,
the President of the Philippines to consider the feasibility of declaring the City property bounded by Florida, San Andres, and Nebraska Streets, under
Transfer Certificate of Title Nos. 25545 and 22547, containing a total area of 7,450 square meters as a patrimonial property of the City of Manila for the
purpose of reselling these lots to the actual occupants thereof. 2

The said resolution of the Municipil Board of the City of Manila was officially transmitted to the President of the Philippines by then Vice-Mayor Antonio
J. Villegas on September 21, 1960, with the information that the same resolution was, on the same date, transmitted to the Senate and House of
Representatives of the Congress of the Philippines. 3

3
During the First Session of the Fifth Congress of the Philippines, House Bill No. 191 was filed in the House of Representatives by then Congressman
Bartolome Cabangbang seeking to declare the property in question as patrimonial property of the City of Manila, and for other purposes. The explanatory
note of the Bill gave the grounds for its enactment, to wit:

In the particular case of the property subject of this bill, the City of Manila does not seem to have use thereof as a public communal property. As a matter
of fact, a resolution was adopted by the Municipal Board of Manila at its regular session held on September 21, 1960, to request the feasibility of declaring
the city property bounded by Florida, San Andres and Nebraska Streets as a patrimonial property of the City of Manila for the purpose of reselling these
lots to the actual occupants thereof. Therefore, it will be to the best interest of society that the said property be used in one way or another. Since this
property has been occupied for a long time by the present occupants thereof and since said occupants have expressed their willingness to buy the said
property, it is but proper that the same be sold to them. 4

Subsequently, a revised version of the Bill was introduced in the House of Representatives by Congressmen Manuel Cases, Antonio Raquiza and Nicanor
Yñiguez as House Bill No. 1453, with the following explanatory note:

The accompanying bill seeks to convert one (1) parcel of land in the district of Malate, which is reserved as communal property into a disposable or
alienable property of the State and to provide its subdivision and sale to bona fide occupants or tenants.

This parcel of land in question was originally an aggregate part of a piece of land with an area of 9,689.8 square meters, more or less. ... On September 21,
1960, the Municipal Board of Manila in its regular session unanimously adopted a resolution requesting the President of the Philippines and Congress of
the Philippines the feasibility of declaring this property into disposable or alienable property of the State. There is therefore a precedent that this parcel of
land could be subdivided and sold to bona fide occupants. This parcel of land will not serve any useful public project because it is bounded on all sides by
private properties which were formerly parts of this lot in question.

Approval of this bill will implement the policy of the Administration of land for the landless and the Fifth Declaration of Principles of the Constitution,
which states that the promotion of Social Justice to insure the well-being and economic security of all people should be the concern of the State. We are
ready and willing to enact legislation promoting the social and economic well-being of the people whenever an opportunity for enacting such kind of
legislation arises.

In view of the foregoing consideration and to insure fairness and justice to the present bona fide occupants thereof, approval of this Bill is strongly urged. 5

The Bill having been passed by the House of Representatives, the same was thereafter sent to the Senate where it was thoroughly discussed, as evidenced
by the Congressional Records for May 20, 1964, pertinent portion of which is as follows:

SENATOR FERNANDEZ: Mr. President, it will be re called that when the late Mayor Lacson was still alive, we approved a similar bill. But afterwards,
the late Mayor Lacson came here and protested against the approval, and the approval was reconsidered. May I know whether the defect in the bill which
we approved, has already been eliminated in this present bill?

SENATOR TOLENTINO: I understand Mr. President, that that has already been eliminated and that is why the City of Manila has no more objection to
this bill.

SENATOR FERNANDEZ: Mr. President, in view of that manifestation and considering that Mayor Villegas and Congressman Albert of the Fourth
District of Manila are in favor of the bill. I would not want to pretend to know more what is good for the City of Manila.

SENATOR TOLENTINO: Mr. President, there being no objection, I move that we approve this bill on second reading.

PRESIDENT PRO-TEMPORE: The biII is approved on second reading after several Senetors said aye and nobody said nay.

The bill was passed by the Senate, approved by the President on June 20, 1964, and became Republic Act No. 4118. It reads as follows:

Lot I-B-2-B of Block 557 of the cadastral survey of the City of Manila, situated in the District of Malate, City of Manila, which is reserved as communal
property, is hereby converted into disposal or alienable land of the State, to be placed under the disposal of the Land Tenure Administration. The Land
Tenure Administration shall subdivide the property into small lots, none of which shall exceed one hundred and twenty square meters in area and sell the
same on installment basis to the tenants or bona fide occupants thereof and to individuals, in the order mentioned: Provided, That no down payment shall
be required of tenants or bona fide occupants who cannot afford to pay such down payment: Provided, further, That no person can purchase more than one
lot: Provided, furthermore, That if the tenant or bona fide occupant of any given lot is not able to purchase the same, he shall be given a lease from month
to month until such time that he is able to purchase the lot: Provided, still further, That in the event of lease the rentals which may be charged shall not

4
exceed eight per cent per annum of the assessed value of the property leased: And provided, finally, That in fixing the price of each lot, which shall not
exceed twenty pesos per square meter, the cost of subdivision and survey shall not be included.

Sec. 2. Upon approval of this Act no ejectment proceedings against any tenant or bona fide occupant of the above lots shall be instituted and any ejectment
proceedings pending in court against any such tenant or bona fide occupant shall be dismissed upon motion of the defendant: Provided, That any
demolition order directed against any tenant or bona fide occupant shall be lifted.

Sec. 3. Upon approval of this Act, if the tenant or bona fide occupant is in arrears in the payment of any rentals, the amount legally due shall be liquidated
and shall be payable in twenty-four equal monthly installments from the date of liquidation.

Sec. 4. No property acquired by virtue of this Act shall be transferred, sold, mortgaged, or otherwise disposed of within a period of five years from the date
full ownership thereof has been vested in the purchaser without the consent of the Land Tenure Administration.

Sec. 5. In the event of the death of the purchaser prior to the complete payment of the price of the lot purchased by him, his widow and children shall
succeed in all his rights and obligations with respect to his lot.

Sec. 6. The Chairman of the Land Tenure Administration shall implement and issue such rules and regulations as may be necessary to carry out the
provisions of this Act.

Sec. 7. The sum of one hundred fifty thousand pesos is appropriated out of any funds in the National Treasury not otherwise appropriated, to carry out the
purposes of this Act.

Sec. 8. All laws or parts of laws inconsistent with this Act are repealed or modified accordingly.

Sec. 9. This Act shall take effect upon its approval.

Approved, June 20, 1964.

To implement the provisions of Republic Act No. 4118, and pursuant to the request of the occupants of the property involved, then Deputy Governor Jose
V. Yap of the Land Authority (which succeeded the Land Tenure Administration) addressed a letter, dated February 18, 1965, to Mayor Antonio Villegas,
furnishing him with a copy of the proposed subdivision plan of said lot as prepared for the Republic of the Philippines for resale of the subdivision lots by
the Land Authority to bona fide applicants. 6

On March 2, 1965, the City Mayor of Manila, through his Executive and Technical Adviser, acknowledged receipt of the proposed subdivision plan of the
property in question and informed the Land Authority that his office would interpose no objection to the implementation of said law, provided that its
provisions be strictly complied with. 7

With the above-mentioned written conformity of the City of Manila for the implementation of Republic Act No. 4118, the Land Authority, thru then
Deputy Governor Jose V. Yap, requested the City Treasurer of Manila, thru the City Mayor, for the surrender and delivery to the former of the owner's
duplicate of Transfer Certificate of Title No. 22547 in order to obtain title thereto in the name of the Land Authority. The request was duly granted with the
knowledge and consent of the Office of the City Mayor. 8

With the presentation of Transfer Certificate of Title No. 22547, which had been yielded as above stated by the, City authorities to the Land Authority,
Transfer Certificate of Title (T.C.T. No. 22547) was cancelled by the Register of Deeds of Manila and in lieu thereof Transfer Certificate of Title No.
80876 was issued in the name of the Land Tenure Administration (now Land Authority) pursuant to the provisions of Republic Act No.
4118. 9

But due to reasons which do not appear in the record, the City of Manila made a complete turn-about, for on December 20, 1966, Antonio J. Villegas, in his
capacity as the City Mayor of Manila and the City of Manila as a duly organized public corporation, brought an action for injunction and/or prohibition
with preliminary injunction to restrain, prohibit and enjoin the herein appellants, particularly the Governor of the Land Authority and the Register of Deeds
of Manila, from further implementing Republic Act No. 4118, and praying for the declaration of Republic Act No. 4118 as unconstitutional.

With the foregoing antecedent facts, which are all contained in the partial stipulation of facts submitted to the trial court and approved by respondent Judge,
the parties waived the presentation of further evidence and submitted the case for decision. On September 23, 1968, judgment was rendered by the trial
court declaring Republic Act No. 4118 unconstitutional and invalid on the ground that it deprived the City of Manila of its property without due process of
law and payment of just compensation. The respondents were ordered to undo all that had been done to carry out the provisions of said Act and were
restrained from further implementing the same.

5
Two issues are presented for determination, on the resolution of which the decision in this case hinges, to wit:

I. Is the property involved private or patrimonial property of the City of Manila?

II. Is Republic Act No. 4118 valid and not repugnant to the Constitution?

I.

As regards the first issue, appellants maintain that the land involved is a communal land or "legua comunal" which is a portion of the public domain owned
by the State; that it came into existence as such when the City of Manila, or any pueblo or town in the Philippines for that matter, was founded under the
laws of Spain, the former sovereign; that upon the establishment of a pueblo, the administrative authority was required to allot and set aside portions of the
public domain for a public plaza, a church site, a site for public buildings, lands to serve as common pastures and for streets and roads; that in assigning
these lands some lots were earmarked for strictly public purposes, and ownership of these lots (for public purposes) immediately passed to the new
municipality; that in the case of common lands or "legua comunal", there was no such immediate acquisition of ownership by the pueblo, and the land
though administered thereby, did not automatically become its property in the absence of an express grant from the Central Government, and that the
reason for this arrangement is that this class of land was not absolutely needed for the discharge of the municipality's governmental functions.

It is argued that the parcel of land involved herein has not been used by the City of Manila for any public purpose and had not been officially earmarked as
a site for the erection of some public buildings; that this circumstance confirms the fact that it was originally "communal" land alloted to the City of Manila
by the Central Government not because it was needed in connection with its organization as a municipality but simply for the common use of its
inhabitants; that the present City of Manila as successor of the Ayuntamiento de Manila under the former Spanish sovereign merely enjoys the usufruct
over said land, and its exercise of acts of ownership by selling parts thereof did not necessarily convert the land into a patrimonial property of the City of
Manila nor divest the State of its paramount title.

Appellants further argue that a municipal corporation, like a city is a governmental agent of the State with authority to govern a limited portion of its
territory or to administer purely local affairs in a given political subdivision, and the extent of its authority is strictly delimited by the grant of power
conferred by the State; that Congress has the exclusive power to create, change or destroy municipal corporations; that even if We admit that legislative
control over municipal corporations is not absolute and even if it is true that the City of Manila has a registered title over the property in question, the mere
transfer of such land by an act of the legislature from one class of public land to another, without compensation, does not invade the vested rights of the
City.

Appellants finally argue that Republic Act No. 4118 has treated the land involved as one reserved for communal use, and this classification is conclusive
upon the courts; that if the City of Manila feels that this is wrong and its interests have been thereby prejudiced, the matter should be brought to the
attention of Congress for correction; and that since Congress, in the exercise of its wide discretionary powers has seen fit to classify the land in question as
communal, the Courts certainly owe it to a coordinate branch of the Government to respect such determination and should not interfere with the
enforcement of the law.

Upon the other hand, appellees argue by simply quoting portions of the appealed decision of the trial court, which read thus:

The respondents (petitioners-appellants herein) contend, among other defenses, that the property in question is communal property. This contention is,
however, disproved by Original Certificate of Title No. 4329 issued on August 21, 1920 in favor of the City of Manila after the land in question was
registered in the City's favor. The Torrens Title expressly states that the City of Manila was the owner in 'fee simple' of the said land. Under Sec. 38 of the
Land Registration Act, as amended, the decree of confirmation and registration in favor of the City of Manila ... shall be conclusive upon and against all
persons including the Insular Government and all the branches there ... There is nothing in the said certificate of title indicating that the land was
'communal' land as contended by the respondents. The erroneous assumption by the Municipal Board of Manila that the land in question was communal
land did not make it so. The Municipal Board had no authority to do that.

The respondents, however, contend that Congress had the power and authority to declare that the land in question was 'communal' land and the courts have
no power or authority to make a contrary finding. This contention is not entirely correct or accurate. Congress has the power to classify 'land of the public
domain', transfer them from one classification to another and declare them disposable or not. Such power does not, however, extend to properties which are
owned by cities, provinces and municipalities in their 'patrimonial' capacity.

Art. 324 of the Civil Code provides that properties of provinces, cities and municipalities are divided into properties for public use and patrimonial
property. Art. 424 of the same code provides that properties for public use consist of provincial roads, city streets, municipal streets, the squares, fountains,
public waters, promenades and public works for public service paid for by said province, cities or municipalities. All other property possessed by any of
them is patrimonial. Tested by this criterion the Court finds and holds that the land in question is patrimonial property of the City of Manila.

6
Respondents contend that Congress has declared the land in question to be 'communal' and, therefore, such designation is conclusive upon the courts. The
Courts holds otherwise. When a statute is assailed as unconstitutional the Courts have the power and authority to inquire into the question and pass upon it.
This has long ago been settled in Marbury vs. Madison, 2 L. ed. 60, when the United States Supreme Court speaking thru Chief Justice Marshall held:

... If an act of the legislature, repugnant to the constitution, is void, does it, notwithstanding its validity, bind the courts, and oblige them to give effect? It is
emphatically the province and duty of the judicial department to say what the law is ... So if a law be in opposition to the constitution; if both the law and
the constitution apply to a particular case, so that the court must either decide that case conformable to the constitution, disregarding the law, the court must
determine which of these conflicting rules governs the case. This is of the very essence of unconstitutional judicial duty.

Appellees finally concluded that when the courts declare a law unconstitutional it does not mean that the judicial power is superior to the legislative power.
It simply means that the power of the people is superior to both and that when the will of the legislature, declared in statutes, stands in opposition to that of
the people, declared in the Constitution, the judges ought to be governed by the Constitution rather than by the statutes.

There is one outstanding factor that should be borne in mind in resolving the character of the land involved, and it is that the City of Manila, although
declared by the Cadastral Court as owner in fee simple, has not shown by any shred of evidence in what manner it acquired said land as its private or
patrimonial property. It is true that the City of Manila as well as its predecessor, the Ayuntamiento de Manila, could validly acquire property in its
corporate or private capacity, following the accepted doctrine on the dual character — public and private — of a municipal corporation. And when it
acquires property in its private capacity, it acts like an ordinary person capable of entering into contracts or making transactions for the transmission of title
or other real rights. When it comes to acquisition of land, it must have done so under any of the modes established by law for the acquisition of ownership
and other real rights. In the absence of a title deed to any land claimed by the City of Manila as its own, showing that it was acquired with its private or
corporate funds, the presumption is that such land came from the State upon the creation of the municipality (Unson vs. Lacson, et al., 100 Phil. 695).
Originally the municipality owned no patrimonial property except those that were granted by the State not for its public but for private use. Other properties
it owns are acquired in the course of the exercise of its corporate powers as a juridical entity to which category a municipal corporation pertains.

Communal lands or "legua comunal" came into existence when a town or pueblo was established in this country under the laws of Spain (Law VII, Title
III, Book VI, Recopilacion de las Leyes de Indios). The municipalities of the Philippines were not entitled, as a matter of right, to any part of the public
domain for use as communal lands. The Spanish law provided that the usufruct of a portion of the public domain adjoining municipal territory might be
granted by the Government for communal purposes, upon proper petition, but, until granted, no rights therein passed to the municipalities, and, in any
event, the ultimate title remained in the sovereign (City of Manila vs. Insular Government, 10 Phil. 327).

For the establishment, then, of new pueblos the administrative authority of the province, in representation of the Governor General, designated the territory
for their location and extension and the metes and bounds of the same; and before alloting the lands among the new settlers, a special demarcation was
made of the places which were to serve as the public square of the pueblo, for the erection of the church, and as sites for the public buildings, among others,
the municipal building or the casa real, as well as of the lands whick were to constitute the common pastures, and propios of the municipality and the
streets and roads which were to intersect the new town were laid out, ... . (Municipality of Catbalogan vs. Director of Lands, 17 Phil. 216, 220) (Emphasis
supplied)

It may, therefore, be laid down as a 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 (2 McQuilin,Municipal
Corporations, 3rd Ed., p. 197, citing Monagham vs. Armatage, 218 Minn. 27, 15 N. W. 2nd 241).

True it is that the legislative control over a municipal corporation is not absolute even when it comes to its property devoted to public use, for such control
must not be exercised to the extent of depriving persons of their property or rights without due process of law, or in a manner impairing the obligations of
contracts. Nevertheless, when it comes to property of the municipality which it did not acquire in its private or corporate capacity with its own funds, the
legislature can transfer its administration and disposition to an agency of the National Government to be disposed of according to its discretion. Here it did
so in obedience to the constitutional mandate of promoting social justice to insure the well-being and economic security of the people.

It has been held that a statute authorizing the transfer of a Municipal airport to an Airport Commission created by the legislature, even without
compensation to the city, was not violative of the due process clause of the American Federal Constitution. The Supreme Court of Minnessota in
Monagham vs. Armatage, supra, said:

... The case is controlled by the further rule that the legislature, having plenary control of the local municipality, of its creation and of all its affairs, has the
right to authorize or direct the expenditures of money in its treasury, though raised, for a particular purpose, for any legitimate municipal purpose, or to
order and direct a distribution thereof upon a division of the territory into separate municipalities ... . The local municipality has no such vested right in or
to its public funds, like that which the Constitution protects in the individual as precludes legislative interferences. People vs. Power, 25 Ill. 187; State
Board (of Education) vs. City, 56 Miss. 518. As remarked by the supreme court of Maryland in Mayor vs. Sehner, 37 Md. 180: "It is of the essence of such

7
a corporation, that the government has the sole right as trustee of the public interest, at its own good will and pleasure, to inspect, regulate, control, and
direct the corporation, its funds, and franchises."

We therefore hold that c.500, in authorizing the transfer of the use and possession of the municipal airport to the commission without compensation to the
city or to the park board, does not violate the Fourteenth Amendment to the Constitution of the United States.

The Congress has dealt with the land involved as one reserved for communal use (terreno comunal). The act of classifying State property calls for the
exercise of wide discretionary legislative power and it should not be interfered with by the courts.

This brings Us to the second question as regards the validity of Republic Act No. 4118, viewed in the light of Article III, Sections 1, subsection (1) and (2)
of the Constitution which ordain that no person shall be deprived of his property without due process of law and that no private property shall be taken for
public use without just compensation.

II .

The trial court declared Republic Act No. 4118 unconstitutional for allegedly depriving the City of Manila of its property without due process of law and
without payment of just compensation. It is now well established that the presumption is always in favor of the constitutionality of a law (U S. vs. Ten Yu,
24 Phil. 1; Go Ching, et al. vs. Dinglasan, et al., 45 O.G. No. 2, pp. 703, 705). To declare a law unconstitutional, the repugnancy of that law to the
Constitution must be clear and unequivocal, for even if a law is aimed at the attainment of some public good, no infringement of constitutional rights is
allowed. To strike down a law there must be a clear showing that what the fundamental law condemns or prohibits, the statute allows it to be done (Morfe
vs. Mutuc, et al., G.R. No. L-20387, Jan. 31, 1968; 22 SCRA 424). That situation does not obtain in this case as the law assailed does not in any manner
trench upon the constitution as will hereafter be shown. Republic Act No. 4118 was intended to implement the social justice policy of the Constitution and
the Government program of "Land for the Landless". The explanatory note of House Bill No. 1453 which became Republic Act No. 4118, reads in part as
follows:

Approval of this bill will implement the policy of the administration of "land for the landless" and the Fifth Declaration of Principles of the Constitution
which states that "the promotion of social justice to insure the well-being and economic security of all people should be the concern of the State." We are
ready and willing to enact legislation promoting the social and economic well-being of the people whenever an opportunity for enacting such kind of
legislation arises.

The respondent Court held that Republic Act No. 4118, "by converting the land in question — which is the patrimonial property of the City of Manila into
disposable alienable land of the State and placing it under the disposal of the Land Tenure Administration — violates the provisions of Article III (Secs. 1
and 2) of the Constitution which ordain that "private property shall not be taken for public use without just compensation, and that no person shall be
deprived of life, liberty or property without due process of law". In support thereof reliance is placed on the ruling in Province of Zamboanga del Norte vs.
City of Zamboanga, G.R. No. 2440, March 28, 1968; 22 SCRA 1334, which holds that Congress cannot deprive a municipality of its private or patrimonial
property without due process of law and without payment of just compensation since it has no absolute control thereof. There is no quarrel over this rule if
it is undisputed that the property sought to be taken is in reality a private or patrimonial property of the municipality or city. But it would be simply begging
the question to classify the land in question as such. 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. That the National Government,
through the Director of Lands, represented by the Solicitor General, in the cadastral proceedings did not contest the claim of the City of Manila that the
land is its property, does not detract from its character as State property and in no way divests the legislature of its power to deal with it as such, the state
not being bound by the mistakes and/or negligence of its officers.

One decisive fact that should be noted is that the City of Manila expressly recognized the paramount title of the State over said land when by its resolution
of September 20, 1960, the Municipal Board, presided by then Vice-Mayor Antonio Villegas, requested "His Excellency the President of the Philippines to
consider the feasibility of declaring the city property bounded by Florida, San Andres and Nebraska Streets, under Transfer Certificate of Title Nos. 25545
and 25547, containing an area of 7,450 square meters, as patrimonial property of the City of Manila for the purpose of reselling these lots to the actual
occupants thereof." (See Annex E, Partial Stipulation of Facts, Civil Case No. 67945, CFI, Manila, p. 121, Record of the Case) [Emphasis Supplied]

The alleged patrimonial character of the land under the ownership of the City of Manila is totally belied by the City's own official act, which is fatal to its
claim since the Congress did not do as bidden. If it were its patrimonial property why should the City of Manila be requesting the President to make
representation to the legislature to declare it as such so it can be disposed of in favor of the actual occupants? There could be no more blatant recognition of
the fact that said land belongs to the State and was simply granted in usufruct to the City of Manila for municipal purposes. But since the City did not
actually use said land for any recognized public purpose and allowed it to remain idle and unoccupied for a long time until it was overrun by squatters, no
presumption of State grant of ownership in favor of the City of Manila may be acquiesced in to justify the claim that it is its own private or patrimonial
property (Municipality of Tigbauan vs. Director of Lands, 35 Phil. 798; City of Manila vs. Insular Government, 10 Phil. 327; Municipality of Luzuriaga vs.
Director of Lands, 24 Phil. 193). The conclusion of the respondent court that Republic Act No. 4118 converted a patrimonial property of the City of Manila
into a parcel of disposable land of the State and took it away from the City without compensation is, therefore, unfounded. In the last analysis the land in

8
question pertains to the State and the City of Manila merely acted as trustee for the benefit of the people therein for whom the State can legislate in the
exercise of its legitimate powers.

Republic Act No. 4118 was never 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: And this was done at the instance or upon the request of the City of Manila itself. The
subdivision of the land and conveyance 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, but simply as a
manifestation of its right and power to deal with state property.

It should be emphasized that the law assailed was enacted upon formal written petition of the Municipal Board of Manila in the form of a legally approved
resolution. The certificate of title over the property in the name of the City of Manila was accordingly cancelled and another issued to the Land Tenure
Administration after the voluntary surrender of the City's duplicate certificate of title by the City Treasurer with the knowledge and consent of the City
Mayor. To implement the provisions of Republic Act No. 4118, the then Deputy Governor of the Land Authority sent a letter, dated February 18, 1965, to
the City Mayor furnishing him with a copy of the "proposed subdivision plan of the said lot as prepared for the Republic of the Philippines for subdivision
and resale by the Land Authority to bona fide applicants." On March 2, 1965, the Mayor of Manila, through his Executive and Technical Adviser,
acknowledged receipt of the subdivision plan and informed the Land Authority that his Office "will interpose no objection to the implementation of said
law provided that its provisions are strictly complied with." The foregoing sequence of events, clearly indicate a pattern of regularity and observance of due
process in the reversion of the property to the National Government. All such acts were done in recognition by the City of Manila of the right and power of
the Congress to dispose of the land involved.

Consequently, the City of Manila was not deprived of anything it owns, either under the due process clause or under the eminent domain provisions of the
Constitution. If it failed to get from the Congress the concession it sought of having the land involved given to it as its patrimonial property, the Courts
possess no power to grant that relief. Republic Act No. 4118 does not, therefore, suffer from any constitutional infirmity.

WHEREFORE, the appealed decision is hereby reversed, and petitioners shall proceed with the free and untrammeled implementation of Republic Act No.
4118 without any obstacle from the respondents. Without costs.

Concepcion, C.J., Makalintal, Zaldivar, Castro, Fernando, Teehankee and Antonio, JJ., concur.

Barredo and Makasiar, JJ., took no part.

9
Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. L-14518 August 29, 1960

EUGENIA NELAYAN, ET AL., plaintiffs-appellants,

vs.
CECILIA NELAYAN, ET AL., defendants-appellees.

Antonio Pandes for appellants.

Reyes and Dy-Liacco for appellees.

REYES, J.B.L., J.:

On December 15, 1952, plaintiffs filed versus Cecilia Nelayan and the Director of Lands a complaint with the Court of First Instance of Camarines Sur for
"Cancellation of Title and Reconveyance ", alleging that they (plaintiffs) have been since time immemorial, in actual possession as owners, respectively, of
various parcels of land described therein; that such possession has been public, uninterrupted and in the concept of owner; that on October 23, 1952,
Original Certificate of Title No. 518 was issued in the name of defendant Cecilia Nelayan as a result of her application for free patent over the parcels of
land in dispute; that said certificate of title is null and void with respect to the parcels claimed by plaintiffs, as the same were no longer part of the public
domain, and that the Director of Lands was without jurisdiction in entertaining the application for, and in granting the free patent; that plaintiffs were never
informed nor had they any knowledge of the survey of the said lands or of the proceedings instituted by Cecilia Nelayan; and that the latter, who very well
knew that said parcels of land were being possessed by the plaintiffs as owners thereof, is guilty of fraud in failing to notify them of the said proceedings.
Plaintiffs, therefore, prayed that Original Certificate of Title No. 518 be annulled and that they be declared owners of the parcels of land in question. They
further asked for such other relief as the court might deem just and equitable.

Answering the complaint, defendant Cecilia Nelayan denied all material allegations of the complaint, and by way of special defense, asserted ownership
over the disputed parcels, having been in continuous, peaceful, public, adverse and material possession over it for a period of over 50 years. Defendant
Director of Lands, in his answer, likewise denied the material allegations of the complaint and attested, as special defense, to the regularity of the
proceedings leading to the issuance in Cecilia's favor of the certificate of title in question.

On February 11, 1957, defendant Cecilia Nelayan filed a motion to dismiss the complaint on the ground that (1) the complaint failed to state facts sufficient
to constitute a cause of action and (2) that the lower court had no jurisdiction to annul or set aside the certificate of title already issued to her. Over
plaintiff's objections, the lower court ordered the dismissal of the case for lack of jurisdiction (Order of April 30, 1957). From this order of dismissal and
from the orders denying their motions for reconsideration and another motion for leave to amend the complaint so as to add a specific prayer for
reconveyance, 36 3 plaintiffs interposed the present appeal to the Court of Appeals, that certified the same to us, because it involves only questions of law.

Appellants contend, while appellees deny (1) that the Court of First Instance of Camarines Sur, notwithstanding the certificate of title under free patent
already issued to defendant Nelayan, still had the right to exercise its jurisdiction to try the case; (2) that the complaint stated good cause of action against
the defendant; and lastly, (3) that the lower court erred in denying plaintiffs' motion for leave to accept the amended complaint.

Pertinent to the first issue is the rule that once a patent is issued, the land acquires the character of registered property under section 122 of Act No. 496,
and is, therefore, deemed brought within the operation of the said Land Registration Act (see Tomas Roco, et al., vs. Juan Gimeda,* 55 Off. Gaz. [37]
7922). It follows that after issuance of the patent, an aggrieved party is accorded the same or similar remedies as are extended in ordinary registration
proceedings after entry of the decree of confirmation or registration. One of such remedies may be found under section 38 of Act 496, which, in part
provides:

. . . subject, however, to the right of any person deprived of land or of any estate or interest therein by decree of registration obtained by fraud to file in the
competent Court of First Instance a petition for review within one year after entry of the decree provided no innocent purchaser for value has acquired an
interest. Upon expiration of said term of one year, every decree of certificate of title issued in accordance with this section shall be incontrovertible. . . .

In Diwaling Sumail vs. Court of First Instance of Cotabato, et al., 96 Phil., 946; 51 Off. Gaz.[5] 2413, this Court opined that the one-year period provided
under section 38 should, in the case of public land grants (patents), be counted from the issuance of the patent by the Government under the Public Land
Act (C.A. 141). Free Patent No. V-2371 was issued only on October 9, 1952, while the complaint in the case at bar was filed on December 15, 1952, or
after a period of only two months and six days. Having been filed in due time, the case should have been given its regular course by the lower court, instead
of having been ordered dismissed outright.

10
Neither is the complaint insufficient in stating a cause of action. Among other matters, it contains allegations to the effect that the plaintiffs have been,
since time immemorial, in possession as owners of the disputed parcels of land, but that through actual fraud, defendant Cecilia Nelayan succeeded in
securing for herself the certificate of title in question. Defendants-appellees must base their claim of ownership or right of action on Section 48 (B) of the
Public Land Act, providing that:

Those who by themselves or through their predecessors in interest have been in the open, continuous, exclusive and notorious possession and occupation of
agricultural lands of the public domain, under a bona fide claim of acquisition of ownership for at least thirty years immediately 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 certificate of title under the provisions of this chapter. (As amended by Republic Act No. 1942, June 22,
1957)1

under which they may ask for the judicial confirmation of their imperfect or incomplete title; but which course of action, appellees argue, is no longer
available to the appellants because section 48, in connection with section 47 of the Public Land Act ceased to become operative on the day following
December 31, 1938, the original period fixed in the said Act within which possessors or occupants of public lands could avail of its benefits. Appellees
evidently overlook that this period has been extended from time to time by the legislature, the latest prorogation being by Republic Act No. 2061, which
extends the terms of its effectivity until December 31, 1968.

There is likewise no merit in appellees' contention that the complaint does not aver sufficient facts of ownership to hold against either the appellee Nelayan
or the government.

Plaintiffs' allegation that they have been in continued possession of the properties in dispute since time immemorial as owners thereof is a sufficient
averment of private ownership.2 It should be remembered that possession since time immemorial carries the presumption that the land had never been part
of the public domain or that it had been a private property even before the Spanish conquest. And so, we said in one case —

... All lands that were not acquired from the Government, either by purchase or by grant, belong to the public domain. An exception to the rule would be
any land that should have been in the possession of an occupant and of his predecessors in interest since time immemorial for such possession would
justify the presumption that the land had never been part of the public domain or that it had been a private property even before the Spanish conquest. (Oh
Cho vs. Director of Lands, 75 Phil., 890 892, Citing Cariño vs. Insular Government, 212 U.S. 449, 53 L. ed. 394). (Emphasis supplied).

Whether this presumption should hold as a fact or not is a question appropriately determinable only after the parties have already adduced, or at least, are
given the opportunity to adduce, their respective evidence.

The ruling of this Court in Susi vs. Razon, and Director of Lands, 48 Phil., 424, 428 (reaffirmed in Mesina vs. Pineda, 108 Phil., 251; 58 Off. Gaz [25]
4603), is also conclusive in favor of appellants herein. It said:

In favor of Valentin Susi, there is moreover, the presumption juris et de jure established in paragraph (b) of section 45 of Act No. 2874, amending Act No.
926, that all the necessary requirements for a grant by the Government were complied with, for he has been in actual and physical possession, personally
and through his predecessors, of an agricultural land of the public domain openly, continuously, exclusively and publicly since July 26, 1894, with a right
to a certificate of title to said land under the provisions of Chapter VIII of said Act. So that when Angela Razon applied for the grant in her favor, Valentin
Susi had already acquired, by operation of law, not only a right to grant, but a grant of the Government for it is not necessary that certificate of title should
be issued in order that said grant may be sanctioned by the courts, an application therefor is sufficient, under the provisions of section 47 of Act No. 2874.
If by a legal fiction, Valentin Susi had acquired the land in question by a grant of the State, it had already at least by presumption, of Valentin Susi, beyond
the control of the Director of Lands. Consequently, in selling the land in question to Angela Razon, the Director of Lands disposed of a land over which he
had no longer any title or control, and the sale thus made was void and of no effect, and Angela did not thereby acquire any right.

The Director of Lands contends that the land in question being of the public domain, the plaintiff-appellee cannot maintain an action to recover possession
thereof.

If, as above-stated, the land, the possession of which is in dispute, had already become, by operation of law, private property of the plaintiff, there lacking
only the judicial sanction of his title, Valentin Susi has the right to bring an action to recover the possession thereof and hold it.

The case of Reyes, et al., vs. Rodriguez, et al., 62 Phil., 771, cited by the appellees, is not the authority to the contrary. In said case, there was a trial and
upon the evidence at hand, it did not appear that the appellant really had any title or interest in the land in question, presumed or proven, to hold against the
appellee or the government. The presumption of ownership could not likewise hold because appellants' possession was neither alleged nor proven to be
since time immemorial. In fact, the averment made there, that the claimant's possession started in 1883, was not even believed by the Court. For similar
reasons, Li Seng Giap and Co. vs. Director of Lands, 59 Phil., 687 does not govern the case at bar, considering that the possession therein averred started
only during the Spanish regime.

11
It may not be amiss to state, furthermore, that the remedial provisions of section 38 of the Land Registration Act, prescribing a mode by which a decree
may be set aside upon petition by private individuals, are expressly made applicable even to those who may have been deprived merely of an estate or
interest in (not necessarily ownership of) the land.

The fraud averred by plaintiffs is actual fraud, consisting in the alleged concealment from the plaintiffs of the proceedings leading to the issuance of
defendant Nelayan of the questioned free patent, notwithstanding her knowledge that the land covered under her application was being possessed by the
appellants as the owners thereof. This is fraud as contemplated under section 38 of the Land Registration Act (Angelo vs. Director of Lands, et al., 49 Phil.,
838).

The third issue, presented by the parties in this appeal, is whether or not the amended complaint should have been admitted by the court a quo. No
discussion is called for, since in substance and in contents, the original complaint (which has been captioned "For Cancellation of Title and
Reconveyance"), as shown in the preceding discussion, contains sufficient averments for either the cancellation of defendant Nelayan's title or the
reconveyance of the property, thereby negating further need for an amendment. As authorized by the Rules (Section 9, Rule 15, Rules of Court; see also
Section 1, Rule 2, ibid), plaintiff may allege causes of action in the alternative, be they compatible with each other or not, to the end that the real matter in
the controversy may be resolved and determined.

Wherefore the order of dismissal appealed from is hereby set aside, and the case ordered remanded to the lower court for further proceedings. Costs in this
appeal against appellee Cecilia Nelayan.

Paras, C.J., Bengzon, Padilla, Bautista Angelo, Labrador, Concepcion, Barrera and Gutierrez David, JJ., concur.

12
THIRD DIVISION

G.R. No. 149750. June 16, 2003]

AURORA ALCANTARA-DAUS, Petitioner, v. Spouses HERMOSO and SOCORRO DE LEON, Respondents.

DECISION

PANGANIBAN, J.:

While a contract of sale is perfected by mere consent, ownership of the thing sold is acquired only upon its delivery to the buyer. Upon the perfection of the
sale, the seller assumes the obligation to transfer ownership and to deliver the thing sold, but the real right of ownership is transferred only by tradition or
delivery thereof to the buyer.

The Case

Before us is a Petition for Review[1 under Rule 45 of the Rules of Court, seeking to set aside the February 9, 2001 Decision and the August 31, 2001
Resolution of the Court of Appeals[2(CA) in CA-GR CV No. 47587. The dispositive portion of the assailed Decision reads as follows:

WHEREFORE, premises considered, the decision of the trial court is hereby REVERSED, and judgment rendered:

1. Declaring null and void and of no effect, the [D]eed of [A]bsolute [S]ale dated December 6, 1975, the [D]eed of [E]xtra-judicial [P]artition and
[Q]uitclaim dated July 1, 1985, and T.C.T. No. T-31262;

2. Declaring T.C.T. No. 42238 as valid and binding;

3. Eliminating the award of P5,000.00 each to be paid to defendants-appellees.[3

The assailed Resolution[4 denied petitioners Motion for Reconsideration.

The Facts

The antecedents of the case were summarized by the Regional Trial Court (RTC) and adopted by the CA as follows:

This is a [C]omplaint for annulment of documents and title, ownership, possession, injunction, preliminary injunction, restraining order and damages.

[Respondents] alleged in their [C]omplaint that they are the owners of a parcel of land hereunder described as follows, to wit:

A parcel of land (Lot No. 4786 of the Cadastral Survey of San Manuel) situated in the Municipality of San Manuel, Bounded on the NW., by Lot No. 4785;
and on the SE., by Lot Nos. 11094 & 11096; containing an area of Four Thousand Two Hundred Twelve (4,212) sq. m., more or less. Covered by Original
Certificate of Title No. 22134 of the Land Records of Pangasinan.

which [Respondent] Hermoso de Leon inherited from his father Marcelino de Leon by virtue of a [D]eed of [E]xtra-judicial [P]artition. Sometime in the
early 1960s, [respondents] engaged the services of the late Atty. Florencio Juan to take care of the documents of the properties of his parents. Atty. Juan let
them sign voluminous documents. After the death of Atty. Juan, some documents surfaced and most revealed that their properties had been conveyed by
sale or quitclaim to [Respondent] Hermosos brothers and sisters, to Atty. Juan and his sisters, when in truth and in fact, no such conveyances were ever
intended by them. His signature in the [D]eed of [E]xtra-judicial [P]artition with [Q]uitclaim made in favor of x x x Rodolfo de Leon was forged. They
discovered that the land in question was sold by x x x Rodolfo de Leon to [Petitioner] Aurora Alcantara. They demanded annulment of the document and
reconveyance but defendants refused x x x.

xxx

[Petitioner] Aurora Alcantara-Daus [averred] that she bought the land in question in good faith and for value on December 6, 1975. [She] has been in
continuous, public, peaceful, open possession over the same and has been appropriating the produce thereof without objection from anyone.5

13
On August 23, 1994, the RTC (Branch 48) of Urdaneta, Pangasinan[6 rendered its Decision[7 in favor of herein petitioner. It ruled that respondents claim
was barred by laches, because more than 18 years had passed since the land was sold. It further ruled that since it was a notarial document, the Deed of
Extrajudicial Partition in favor of Rodolfo de Leon was presumptively authentic.

Ruling of the Court of Appeals

In reversing the RTC, the CA held that laches did not bar respondents from pursuing their claim. Notwithstanding the delay, laches is a doctrine in equity
and may not be invoked to resist the enforcement of a legal right.

The appellate court also held that since Rodolfo de Leon was not the owner of the land at the time of the sale, he could not transfer any land rights to
petitioner. It further declared that the signature of Hermoso de Leon on the Deed of Extrajudicial Partition and Quitclaim -- upon which petitioner bases her
claim -- was a forgery. It added that under the above circumstances, petitioner could not be said to be a buyer in good faith.

Hence, this Petition.[8

The Issues

Petitioner raises the following issues for our consideration:

1. Whether or not the Deed of Absolute Sale dated December 6, 1975 executed by Rodolfo de Leon (deceased) over the land in question in favor of
petitioner was perfected and binding upon the parties therein?

2. Whether or not the evidentiary weight of the Deed of Extrajudicial Partition with Quitclaim, executed by [R]espondent Hermoso de Leon, Perlita de
Leon and Carlota de Leon in favor of Rodolfo de Leon was overcome by more than [a] preponderance of evidence of respondents?

3. Whether or not the possession of petitioner including her predecessor-in-interest Rodolfo de Leon over the land in question was in good faith?

4. And whether or not the instant case initiated and filed by respondents on February 24, 1993 before the trial court has prescribed and respondents are
guilty of laches?[9

The Courts Ruling

The Petition has no merit.

First Issue:

Validity of the Deed of Absolute Sale

Petitioner argues that, having been perfected, the Contract of Sale executed on December 6, 1975 was thus binding upon the parties thereto.

A contract of sale is consensual. It is perfected by mere consent,[10 upon a meeting of the minds[11 on the offer and the acceptance thereof based on
subject matter, price and terms of payment.[12 At this stage, the sellers ownership of the thing sold is not an element in the perfection of the contract of
sale.

The contract, however, creates an obligation on the part of the seller to transfer ownership and to deliver the subject matter of the contract.[13 It is during
the delivery that the law requires the seller to have the right to transfer ownership of the thing sold.[14 In general, a perfected contract of sale cannot be
challenged on the ground of the sellers non-ownership of the thing sold at the time of the perfection of the contract.[15

Further, even after the contract of sale has been perfected between the parties, its consummation by delivery is yet another matter. It is through tradition or
delivery that the buyer acquires the real right of ownership over the thing sold.[16

Undisputed is the fact that at the time of the sale, Rodolfo de Leon was not the owner of the land he delivered to petitioner. Thus, the consummation of the
contract and the consequent transfer of ownership would depend on whether he subsequently acquired ownership of the land in accordance with Article
1434 of the Civil Code.[17 Therefore, we need to resolve the issue of the authenticity and the due execution of the Extrajudicial Partition and Quitclaim in
his favor.

14
Second Issue:

Authenticity of the Extrajudicial Partition

Petitioner contends that the Extrajudicial Partition and Quitclaim is authentic, because it was notarized and executed in accordance with law. She claims
that there is no clear and convincing evidence to set aside the presumption of regularity in the issuance of such public document. We disagree.

As a general rule, the due execution and authenticity of a document must be reasonably established before it may be admitted in evidence.[18 Notarial
documents, however, may be presented in evidence without further proof of their authenticity, since the certificate of acknowledgment is prima facie
evidence of the execution of the instrument or document involved.[19 To contradict facts in a notarial document and the presumption of regularity in its
favor, the evidence must be clear, convincing and more than merely preponderant.[20

The CA ruled that the signature of Hermoso de Leon on the Extrajudicial Partition and Quitclaim was forged. However, this factual finding is in conflict
with that of the RTC. While normally this Court does not review factual issues,[21 this rule does not apply when there is a conflict between the holdings of
the CA and those of the trial court,[22 as in the present case.

After poring over the records, we find no reason to reverse the factual finding of the appellate court. A comparison of the genuine signatures of Hermoso de
Leon[23 with his purported signature on the Deed of Extrajudicial Partition with Quitclaim[24 will readily reveal that the latter is a forgery. As aptly held
by the CA, such variance cannot be attributed to the age or the mechanical acts of the person signing.[25

Without the corroborative testimony of the attesting witnesses, the lone account of the notary regarding the due execution of the Deed is insufficient to
sustain the authenticity of this document. He can hardly be expected to dispute the authenticity of the very Deed he notarized.[26 For this reason, his
testimony was -- as it should be --minutely scrutinized by the appellate court, and was found wanting.

Third Issue:

Possession in Good Faith

Petitioner claims that her possession of the land is in good faith and that, consequently, she has acquired ownership thereof by virtue of prescription. We
are not persuaded.

It is well-settled that no title to registered land in derogation of that of the registered owner shall be acquired by prescription or adverse possession.27
Neither can prescription be allowed against the hereditary successors of the registered owner, because they merely step into the shoes of the decedent and
are merely the continuation of the personality of their predecessor in interest.[28 Consequently, since a certificate of registration29 covers it, the disputed
land cannot be acquired by prescription regardless of petitioners good faith.

Fourth Issue:

Prescription of Action and Laches

Petitioner also argues that the right to recover ownership has prescribed, and that respondents are guilty of laches. Again, we disagree.

Article 1141 of the New Civil Code provides that real actions over immovable properties prescribe after thirty years. This period for filing an action is
interrupted when a complaint is filed in court.[30 Rodolfo de Leon alleged that the land had been allocated to him by his brother Hermoso de Leon in
March 1963,31 but that the Deed of Extrajudicial Partition assigning the contested land to the latter was executed only on September 16, 1963.32 In any case,
the Complaint to recover the land from petitioner was filed on February 24, 1993,33 which was within the 30-year prescriptive period.

On the claim of laches, we find no reason to reverse the ruling of the CA. Laches is based upon equity and the public policy of discouraging stale claims.
[34 Since laches is an equitable doctrine, its application is controlled by equitable considerations.[35 It cannot be used to defeat justice or to perpetuate
fraud and injustice.[36 Thus, the assertion of laches to thwart the claim of respondents is foreclosed, because the Deed upon which petitioner bases her
claim is a forgery.

WHEREFORE, the Petition is DENIED and the assailed Decision AFFIRMED. Costs against petitioner.

SO ORDERED.

15
Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 155206 October 28, 2003

GOVERNMENT SERVICE INSURANCE SYSTEM, petitioner,

vs.
EDUARDO M. SANTIAGO, substituted by his widow ROSARIO ENRIQUEZ VDA. DE SANTIAGO, respondent.

DECISION

CALLEJO, SR., J.:

Before the Court is the petition for review on certiorari filed by the Government Service Insurance System (GSIS), seeking to reverse and set aside the
Decision1 dated February 22, 2002 of the Court of Appeals (CA) in CA-G.R. CV No. 62309 and its Resolution dated September 5, 2002 denying its motion
for reconsideration.

The antecedent facts of the case, as culled from the assailed CA decision and that of the trial court, are as follows:

Deceased spouses Jose C. Zulueta and Soledad Ramos obtained various loans from defendant GSIS for (the) period September, 1956 to October, 1957 in
the total amount of P3,117,000.00 secured by real estate mortgages over parcels of land covered by TCT Nos. 26105, 37177 and 50365. The Zuluetas
failed to pay their loans to defendant GSIS and the latter foreclosed the real estate mortgages dated September 25, 1956, March 6, 1957, April 4, 1957 and
October 15, 1957.

On August 14, 1974, the mortgaged properties were sold at public auction by defendant GSIS submitting a bid price of P5,229,927.84. Not all lots covered
by the mortgaged titles, however, were sold. Ninety-one (91) lots were expressly excluded from the auction since the lots were sufficient to pay for all the
mortgage debts. A Certificate of Sale (Annex "F," Records, Vol. I, pp. 23-28) was issued by then Provincial Sheriff Nicanor D. Salaysay.

The Certificate of Sale dated August 14, 1974 had been annotated and inscribed in TCT Nos. 26105, 37177 and 50356, with the following notations: "(T)he
following lots which form part of this title (TCT No. 26105) are not covered by the mortgage contract due to sale to third parties and donation to the
government: 50-H-5-C-9-J-65-H-8, 50-H-5-C-9J-M-7; 50-H-5-C-9-J-65-H-5; 1 lots Nos. 1 to 13, Block No. 1 –-6,138 sq.m. 2. Lots Nos. 1 to 11, Block
No. 2 –4,660 sq.m. 3. Lot No. 15, Block No. 3 –487 sq.m. 4. Lot No. 17, Block No. 4 –263 sq.m. 5. Lot No. 1, Block No. 7 – 402 sq.m. 6. Road Lots Nos.
1, 2, 3, & 4 – 2,747 sq.m."

In another "NOTE: The following lots in the Antonio Subdivision were already released by the GSIS and therefore are not included in this sale, namely:
LOT NO. 1, 6, 7, 8, 9, 10, and 13 (Old Plan) Block I; 1, 3, 4, 5, 7, 8 and 10 (Old Plan) Block II; 3, 10, 12 and 13 (New Plan) Block I (Old Plan) Block III;
7, 14 and 20 (New Plan) Block III (Old Plan) Block V; 13 and 20 (New Plan) Block IV (Old Plan) Block VI; 1, 2, 3 and 10 (New Plan) Block V (Old Plan)
Block VII; 1, 5, 8, 15, 26 and 27 (New Plan) Block VI (Old Plan) Block VIII; 7, 12 and 20 (New Plan) Block VII (Old Plan) Block II; 1, 4 and 6 (New
Plan) Block VIII (Old Plan) Block X; 5 (New Plan) Block X (Old Plan) Block ZXII; 6 (New Plan) Block XI (Old Plan) Block XII; 1, Block 9; 12 Block 1;
11 Block 2; 19 Block 1; 10 Block 6; 23 Block 3."

And the lots on "ADDITIONAL EXCLUSION FROM PUBLIC SALE" are "LOTS NO. 6 Block 4; 2 Block 2; 5 Block 5; 1, 2 and 3 Block 11, 1, 2, 3 and 4
Block 10; 5 Block 11 (New); 1 Block 3; 5 Block 1; 15 Block 7; 11 Block 9; 13 Block 5; 12 Block 5; 3 Block 10; 6."

On November 25, 1975, an Affidavit of Consolidation of Ownership (Annex "G," Records, Vol. I, pp. 29-31) was executed by defendant GSIS over
Zulueta’s lots, including the lots, which as earlier stated, were already excluded from the foreclosure.

On March 6, 1980, defendant GSIS sold the foreclosed properties to Yorkstown Development Corporation which sale was disapproved by the Office of the
President of the Philippines. The sold properties were returned to defendant GSIS.

The Register of Deeds of Rizal cancelled the land titles issued to Yorkstown Development Corporation. On July 2, 1980, TCT No. 23552 was issued
cancelling TCT No. 21926; TCT No. 23553 cancelled TCT No. 21925; and TCT No. 23554 cancelling TCT No. 21924, all in the name of defendant
GSIS.1awphi1.nét

16
After defendant GSIS had re-acquired the properties sold to Yorkstown Development Corporation, it began disposing the foreclosed lots including the
excluded ones.

On April 7, 1990, representative Eduardo Santiago and then plaintiff Antonio Vic Zulueta executed an agreement whereby Zulueta transferred all his rights
and interests over the excluded lots. Plaintiff Eduardo Santiago’s lawyer, Atty. Wenceslao B. Trinidad, wrote a demand letter dated May 11, 1989 (Annex
"H," Records, Vol. I, pp. 32-33) to defendant GSIS asking for the return of the eighty-one (81) excluded lots.2

On May 7, 1990, Antonio Vic Zulueta, represented by Eduardo M. Santiago, filed with the Regional Trial Court (RTC) of Pasig City, Branch 71, a
complaint for reconveyance of real estate against the GSIS. Spouses Alfeo and Nenita Escasa, Manuel III and Sylvia G. Urbano, and Marciana P. Gonzales
and the heirs of Mamerto Gonzales moved to be included as intervenors and filed their respective answers in intervention. Subsequently, the petitioner, as
defendant therein, filed its answer alleging inter alia that the action was barred by the statute of limitations and/or laches and that the complaint stated no
cause of action. Subsequently, Zulueta was substituted by Santiago as the plaintiff in the complaint a quo. Upon the death of Santiago on March 6, 1996, he
was substituted by his widow, Rosario Enriquez Vda. de Santiago, as the plaintiff.

After due trial, the RTC rendered judgment against the petitioner ordering it to reconvey to the respondent, Rosario Enriquez Vda. de Santiago, in
substitution of her deceased husband Eduardo, the seventy-eight lots excluded from the foreclosure sale.1awphi1.nét The dispositive portion of the RTC
decision reads:

WHEREFORE, judgment is hereby rendered in favor of plaintiff and against the defendant:

1. Ordering defendant to reconvey to plaintiff the seventy-eight (78) lots released and excluded from the foreclosure sale including the additional exclusion
from the public sale, namely:

a. Lot Nos. 1, 6, 7, 8, 0, 10, 13, Block I (Old Plan).

b. Lot Nos. 1, 3, 4, 5, 7, 8 and 10, Block II (Old Plan).

c. Lot Nos. 3, 10, 12, and 13, Block I (New Plan), Block III (Old Plan),

d. Lot Nos. 7, 14 and 20, Block III (New Plan), Block V (Old Plan).

e. Lot Nos. 13 and 20, Block IV (New Plan), Block VI (Old Plan).

f. Lot Nos. 1, 2, 3 and 10, Block V (New Plan), Block VII (Old Plan).

g. Lot Nos. 1, 5, 8, 15, 26 and 27, Block VI (New Plan), Block VIII (Old Plan).

h. Lot Nos. 7 and 12, Block VII (New Plan), Block II (Old Plan).

i. Lot Nos. 1, 4 and 6, Block VIII (New Plan), Block X (Old Plan).

j. Lot 5, Block X (New Plan), Block XII (Old Plan).

k. Lot 6, Block XI (New Plan), Block XII (Old Plan).

l. Lots 2, 5, 12 and 15, Block I.

m. Lots 6, 9 and 11, Block 2.

n. Lots 1, 5, 6, 7, 16 and 23, Block 3.

o. Lot 6, Block 4.

p. Lots 5, 12, 13 and 24, Block 5.

17
q. Lots 10 and 16, Block 6.

r. Lots 6 and 15, Block 7.

s. Lots 13, 24, 28 and 29, Block 8.

t. Lots 1, 11, 17 and 22, Block 9.

u. Lots 1, 2, 3 and 4, Block 10.

v. Lots 1, 2, 3 and 5 (New), Block 11.

2. Ordering defendant to pay plaintiff, if the seventy-eight (78) excluded lots could not be reconveyed, the fair market value of each of said lots.

3. Ordering the Registry of Deeds of Pasig City to cancel the land titles covering the excluded lots in the name of defendant or any of its successors-in-
interest including all derivative titles therefrom and to issue new land titles in plaintiff’s name.

4. Ordering the Registry of Deeds of Pasig City to cancel the Notices of Lis Pendens inscribed in TCT No. PT-80342 under Entry No. PT-12267/T-23554;
TCT No. 81812 under Entry No. PT-12267/T-23554; and TCT No. PT-84913 under Entry No. PT-12267/T-23554.

5. Costs of suit.3

The petitioner elevated the case to the CA which rendered the assailed decision affirming that of the RTC. The dispositive portion of the assailed decision
reads:

WHEREFORE, premises considered, the herein appeal is DISMISSED for lack of merit. The Decision of December 17, 1997 of Branch 71 of the Regional
Trial Court of Pasig City is hereby AFFIRMED.4

The petitioner moved for a reconsideration of the aforesaid decision but the same was denied in the assailed CA Resolution of September 5, 2002.

The petitioner now comes to this Court alleging that:

THE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR IN RULING THAT A) PETITIONER WAS GUILTY OF BAD FAITH WHEN
IN TRUTH AND IN FACT, THERE WAS NO SUFFICIENT GROUND TO SUPPORT SUCH CONCLUSION; AND B) THERE WAS NO
PRESCRIPTION IN THIS CASE.5

In its petition, the petitioner maintains that it did not act in bad faith when it erroneously included in its certificate of sale, and subsequently consolidated
the titles in its name over the seventy-eight lots ("subject lots") that were excluded from the foreclosure sale. There was no proof of bad faith nor could
fraud or malice be attributed to the petitioner when it erroneously caused the issuance of certificates of title over the subject lots despite the fact that these
were expressly excluded from the foreclosure sale.

The petitioner asserts that the action for reconveyance instituted by the respondent had already prescribed after the lapse of ten years from November 25,
1975 when the petitioner consolidated its ownership over the subject lots. According to the petitioner, an action for reconveyance based on implied or
constructive trust prescribes in ten years from the time of its creation or upon the alleged fraudulent registration of the property. In this case, when the
action was instituted on May 7, 1990, more than fourteen years had already lapsed. Thus, the petitioner contends that the same was already barred by
prescription as well as laches.

The petitioner likewise takes exception to the holding of the trial court and the CA that it (the petitioner) failed to apprise or return to the Zuluetas, the
respondent’s predecessors-in-interest, the seventy-eight lots excluded from the foreclosure sale because the petitioner had no such obligation under the
pertinent loan and mortgage agreement.

The petitioner’s arguments fail to persuade.1awphi1.nét

At the outset, it bears emphasis that the jurisdiction of this Court in a petition for review on certiorari under Rule 45 of the Rules of Court, as amended, is
limited to reviewing only errors of law. This Court is not a trier of facts. Case law has it that the findings of the trial court especially when affirmed by the

18
CA are binding and conclusive upon this Court. Although there are exceptions to the said rule, we find no reason to deviate therefrom.6 By assailing the
findings of facts of the trial court as affirmed by the CA, that it acted in bad faith, the petitioner thereby raised questions of facts in its petition.

Nonetheless, even if we indulged the petition and delved into the factual issues, we find the petition barren of merit.

That the petitioner acted in bad faith in consolidating ownership and causing the issuance of titles in its name over the subject lots, notwithstanding that
these were expressly excluded from the foreclosure sale was the uniform ruling of the trial court and appellate court. As declared by the CA:

The acts of defendant-appellant GSIS in concealing from the Zuluetas [the respondent’s predecessors-in-interest] the existence of these lots, in failing to
notify or apprise the spouses Zulueta about the excluded lots from the time it consolidated its titles on their foreclosed properties in 1975, in failing to
inform them when it entered into a contract of sale of the foreclosed properties to Yorkstown Development Corporation in 1980 as well as when the said
sale was revoked by then President Ferdinand E. Marcos during the same year demonstrated a clear effort on its part to defraud the spouses Zulueta and
appropriate for itself the subject properties. Even if titles over the lots had been issued in the name of the defendant-appellant, still it could not legally claim
ownership and absolute dominion over them because indefeasibility of title under the Torrens system does not attach to titles secured by fraud or
misrepresentation. The fraud committed by defendant-appellant in the form of concealment of the existence of said lots and failure to return the same to the
real owners after their exclusion from the foreclosure sale made defendant-appellant holders in bad faith. It is well-settled that a holder in bad faith of a
certificate of title is not entitled to the protection of the law for the law cannot be used as a shield for fraud.7

The Court agrees with the findings and conclusion of the trial court and the CA. The petitioner is not an ordinary mortgagee. It is a government financial
institution and, like banks, is expected to exercise greater care and prudence in its dealings, including those involving registered lands.8 The Court’s ruling
in Rural Bank of Compostela v. CA9 is apropos:

Banks, indeed, should exercise more care and prudence in dealing even with registered lands, than private individuals, for their business is one affected
with public interest, keeping in trust money belonging to their depositors, which they should guard against loss by not committing any act of negligence
which amounts to lack of good faith by which they would be denied the protective mantle of land registration statute, Act [No.] 496, extended only to
purchasers for value and in good faith, as well as to mortgagees of the same character and description.10

Due diligence required of banks extend even to persons, or institutions like the petitioner, regularly engaged in the business of lending money secured by
real estate mortgages.11

In this case, the petitioner executed an affidavit in consolidating its ownership and causing the issuance of titles in its name over the subject lots despite the
fact that these were expressly excluded from the foreclosure sale. By so doing, the petitioner acted in gross and evident bad faith. It cannot feign ignorance
of the fact that the subject lots were excluded from the sale at public auction. At the least, its act constituted gross negligence amounting to bad faith.
Further, as found by the CA, the petitioner’s acts of concealing the existence of these lots, its failure to return them to the Zuluetas and even its attempt to
sell them to a third party is proof of the petitioner’s intent to defraud the Zuluetas and appropriate for itself the subject lots.

On the issue of prescription, generally, an action for reconveyance of real property based on fraud prescribes in four years from the discovery of fraud; such
discovery is deemed to have taken place upon the issuance of the certificate of title over the property. Registration of real property is a constructive notice
to all persons and, thus, the four-year period shall be counted therefrom.12 On the other hand, Article 1456 of the Civil Code provides:

Art. 1456. If property is acquired through mistake or fraud, the person obtaining it is, by force of law, considered a trustee of an implied trust for the benefit
of the person from whom the property comes.

An action for reconveyance based on implied or constructive trust prescribes in ten years from the alleged fraudulent registration or date of issuance of the
certificate of title over the property.13

The petitioner’s defense of prescription is untenable. As held by the CA, the general rule that the discovery of fraud is deemed to have taken place upon the
registration of real property because it is "considered a constructive notice to all persons" does not apply in this case. The CA correctly cited the cases of
Adille v. Court of Appeals14 and Samonte v. Court of Appeals,15 where this Court reckoned the prescriptive period for the filing of the action for
reconveyance based on implied trust from the actual discovery of fraud.

In ruling that the action had not yet prescribed despite the fact that more than ten years had lapsed between the date of registration and the institution of the
action for reconveyance, the Court in Adille ratiocinated:

It is true that registration under the Torrens system is constructive notice of title, but it has likewise been our holding that the Torrens title does not furnish
a shield for fraud. It is therefore no argument to say that the act of registration is equivalent to notice of repudiation, assuming there was one,
notwithstanding the long-standing rule that registration operates as a universal notice of title.

19
For the same reason, we cannot dismiss private respondents’ claims commenced in 1974 over the estate registered in 1955. While actions to enforce a
constructive trust prescribes in ten years, reckoned from the date of the registration of the property, we, as we said, are not prepared to count the period
from such a date in this case. We note the petitioner’s sub rosa efforts to get hold of the property exclusively for himself beginning with his fraudulent
misrepresentation in his unilateral affidavit of extrajudicial settlement that he is "the only heir and child of his mother Feliza with the consequence that he
was able to secure title in his name [alone]." Accordingly, we hold that the right of the private respondents commenced from the time they actually
discovered the petitioner’s act of defraudation. According to the respondent Court of Appeals, they "came to know [of it] apparently only during the
progress of the litigation." Hence, prescription is not a bar.16

The above ruling was reiterated in the more recent case of Samonte. In this case, as established by the CA, the respondent actually discovered the
fraudulent act of the petitioner only in 1989:

... [T]he prescriptive period of the action is to be reckoned from the time plaintiff-appellee (then Eduardo M. Santiago) had actually discovered the
fraudulent act of defendant-appellant which was, as borne out by the records, only in 1989. Plaintiff-appellee Eduardo M. Santiago categorically testified
(TSN of July 11, 1995, pp. 14-15) that he came to know that there were 91 excluded lots in Antonio Village which were foreclosed by the GSIS and
included in its consolidation of ownership in 1975 when, in 1989, he and Antonio Vic Zulueta discussed it and he was given by Zulueta a special power of
attorney to represent him to recover the subject properties from GSIS. The complaint for reconveyance was filed barely a year from the discovery of the
fraud.17

Following the Court’s pronouncements in Adille and Samonte, the institution of the action for reconveyance in the court a quo in 1990 was thus well within
the prescriptive period. Having acted in bad faith in securing titles over the subject lots, the petitioner is a holder in bad faith of certificates of title over the
subject lots. The petitioner is not entitled to the protection of the law for the law cannot be used as a shield for frauds.18

Contrary to its claim, the petitioner unarguably had the legal duty to return the subject lots to the Zuluetas. The petitioner’s attempts to justify its omission
by insisting that it had no such duty under the mortgage contract is obviously clutching at straw. Article 22 of the Civil Code explicitly provides that "every
person who, through an act of performance by another, or any other means, acquires or comes into possession of something at the expense of the latter
without just or legal ground, shall return the same to him."

WHEREFORE, the petition is DENIED for lack of merit.1a\^/phi1.net The assailed Decision dated February 22, 2002 and Resolution dated September 5,
2002 of the Court of Appeals in CA-G.R. CV No. 62309 are AFFIRMED IN TOTO. Costs against the petitioner.

SO ORDERED.

Bellosillo, (Chairman), Quisumbing, Austria-Martinez, and Tinga, JJ., concur.

20
SECOND DIVISION

[G.R. No. 122249. January 29, 2004]

REYNALDO, TELESFORO, REMEDIOS, ALFREDO and BELEN, all surnamed AGUIRRE, VICENTA, HORACIO and FLORENCIO, all
surnamed MAGTIBAY and LEONILA, CECILIA, ANTONIO, and VENANCIO, all surnamed MEDRANO, and ZOSIMA QUIAMBAO,
petitioners, vs. COURT OF APPEALS and ELIAS, JOSE, ARSENIA and ROGELIO, all surnamed BALITAAN, and MARIA ROSALES,
respondents.

DECISION

AUSTRIA-MARTINEZ, J.:

Before us is a petition for review on certiorari under Rule 45 of the Rules of Court seeking the reversal of the Decision[1] dated July 26, 1995 rendered by
the Court of Appeals in CA-G.R. CV No. 42350 which set aside the Decision[2] dated April 28, 1992 of the Regional Trial Court of Batangas City (Branch
2) in Civil Case No. 202,[3] and declared private respondents Heirs of Tiburcio Balitaan, as owners of the parcel of unregistered land with an approximate
area of 1,695 square meters, located at Aplaya, Bauan, Batangas.

The facts of the case are as follows:

In his lifetime, Leocadio Medrano was the owner and possessor of a parcel of residential land, situated in Aplaya, Bauan, Batangas, containing an area of
2,611 square meters.[4] The parcel of land was conjugal property, having been acquired by Leocadio during his first marriage with one Emiliana Narito.
Their union begot four children, namely: (a) Gertrudes Medrano, now deceased, represented in this case by her children, herein petitioners Telesforo,
Reynaldo, Remedios, Alfredo, and Belen, all surnamed Aguirre; (b) Isabel Medrano, likewise deceased, represented by her children, herein petitioners
Vicenta, Horacio, and Florencio, all surnamed Magtibay; (c) Placido Medrano, also deceased, represented by his only child, herein petitioner Zosima
Quiambao; and (d) Sixto Medrano.

After the death of his first wife, Leocadio contracted a second marriage with Miguela Cariño. Their union bore four children, herein co-petitioners,
namely: Venancio, Leonila, Antonio and Cecilia, all surnamed Medrano.

Upon the death of Leocadio on March 19, 1945, the surviving heirs agreed that Sixto should manage and administer the subject property.

Sixto died on May 17, 1974. It was only after his death that petitioners heard rumors that Sixto had, in fact, sold significant portions of the estate of
Leocadio. It appears that on September 7, 1953, Sixto, without the knowledge and consent of the petitioners, executed an Affidavit of Transfer of Real
Property stating therein that he was the only heir of Leocadio.[5] Sixto declared that Leocadio died on September 16, 1949, instead of the actual date of his
death on March 19, 1945. With the use of said affidavit and a survey plan,[6] Tax Declaration No. 40105 in the name of Leocadio was cancelled and Tax
Declaration No. 44984 was issued in the name of Sixto.[7] On August 29, 1957, Sixto sold to Maria Bacong a 160- square meter portion of the subject
land.[8] On September 28, 1959, Sixto sold to Tiburcio Balitaan a 1,695 square meter portion of the same land.[9] Sometime in November 1967, Maria
Bacong sold her property to Rosendo Bacong.[10]

Petitioners demanded the reconveyance of the portions sold by Sixto but Tiburcio Balitaan, Maria Bacong and Rosendo Bacong refused to do so. Hence,
petitioners filed against them before the Regional Trial Court of Batangas (Branch 2), a complaint for Declaration of Nullity of Documents, Partition,
Malicious Prosecution and Damages, docketed as Civil Case No. 202.[11]

In their Answer, Maria Bacong and Rosendo Bacong contend that petitioners have no cause of action because they acquired their property thru a valid deed
of sale dated August 29, 1957, executed by Sixto and, alternatively, petitioners’ cause of action, if any, was barred by prescription and laches.[12]

In his Answer, Tiburcio Balitaan contends that petitioners have no cause of action since petitioners were well-aware of the sale of the property to him by
Sixto; and that he was an innocent purchaser for value, in possession and enjoyment of the land in the concept of absolute owner, peacefully and publicly.
He further echoed the contention of Maria and Rosendo Bacong that any cause of action petitioners may have was barred by prescription and laches.[13]

Maria Bacong died during the pendency of the suit in the trial court and she was substituted by her surviving heirs, namely, Lorenza, Elena, Felipa,
Manuel, Marilou, Ricardo, Medel, Monchito and Milag, all surnamed Medrano.[14] Tiburcio Balitaan also died and was substituted by his heirs, herein
private respondents, namely: his wife, Maria Rosales and their four children: Elias, Jose, Arsenia and Rogelio, all surnamed Balitaan.[15]

On July 28, 1989, petitioners and Rosendo Bacong, for himself and as attorney-in-fact of the heirs of Maria Bacong, entered into a compromise agreement
to settle the case between them.[16] The compromise agreement, as approved by the trial court, provided that Rosendo Bacong and the heirs of Maria

21
Bacong agreed to pay P30,000.00 to petitioners in recognition of petitioners’ ownership of a 269-square meter portion[17] and in consideration of which,
petitioners recognized the full ownership, rights, interest and participation of the former over said land.[18] The area of the subject land is thus reduced
to 2,342 square meters (2,611 square meters minus 269 square meters).

After trial on the merits, the trial court rendered judgment dated April 28, 1992, ruling that private respondents did not dispute, by any evidence, the falsity
of the Affidavit of Transfer, as well as the fact that Sixto had co-owners to the property. It found that private respondents’ affirmative defense of laches
and/or prescription are unavailing against a property held in co-ownership as long as the state of co-ownership is recognized. Consequently, the trial court
upheld the sale made by Sixto in favor of private respondents only to the extent that Sixto is entitled to by virtue of his being a co-owner.[19]

In determining the area that Sixto could have validly sold to private respondents, the trial court, in its decision, provided for the manner of partition among
the parties, based on the memorandum submitted by petitioners, thus:

For the four (4) children of the first marriage, namely:

(1) Gertrudes, who is already dead represented by her children Tefesforo, Reynaldo, Remedios, Alfredo and Belen, all surnamed Aguirre – 399.42
square meters;

(2) Isabel Medrano, who is already dead, represented by the plaintiffs, her children Vicenta, Horacio and Florencio, all surnamed Magtibay – 399.42
square meters;

(3) Placido Medrano (dead), represented by his only child Zosima Medrano – 399.42 square meters; and

(4) Sixto Medrano – 399.42 square meters only which he had the right to dispose of in favor of Tiburcio Balitaan and Maria Rosales.

The above consist of undivided interest, shares and participations from the inheritance or succession to the conjugal estate of Leocadio Medrano and
Emiliana Narito.

For the children of the second marriage their shares in the inheritance from the property of Leocadio Medrano are as follows:

(1) To Venancio Medrano - 138.32 square meters

(2) To Leonila Medrano - 138.32 square meters

(3) To Antonio Medrano - 138.32 square meters

(4) To Cecilia Medrano - 138.32 square meters

with all the above consisting of undivided shares, interest and participation in the estate.

For the defendants Maria Rosales, surviving spouse of the deceased Tiburcio Balitaan and their Children, an area of 399.42 square meters, the only area
and extent which Sixto Medrano could have legally dispensed of in their favor.[20]

Thus, the dispositive portion of the trial court’s decision reads as follows:

WHEREFORE, in view of the foregoing, the Court renders judgment in favor of the plaintiffs and against the defendants, to wit:

(a) Ordering the partition of the property in question among the plaintiffs and the defendants; and

(b) Ordering the parties, plaintiffs and defendants, to make a partition among themselves by proper instruments of conveyance and to submit before this
Court a project of partition should the parties be able to agree for the confirmation of the Court within two (2) months upon receipt of this decision,
otherwise this Court will be constrained to appoint commissioners to make the partition in accordance with law.

All other claims not having been duly proved are ordered dismissed.

SO ORDERED.[21]

22
Aggrieved, private respondents appealed to the Court of Appeals.[22]

On July 26, 1995, the appellate court rendered judgment recognizing the validity of the sale only with respect to the undivided share of Sixto Medrano as
co-owner; but nonetheless, declaring respondents as absolute owners of 1,695 square meters of the subject property, reasoning that:

. . . Defendants-appellees have been in possession, in the concept of owner, of the entire parcel of land sold to Tiburcio Balitaan by Sixto Medrano for more
than ten years, seventeen years to be exact (1958-1975). Relying on the affidavit of transfer (Exhibit “B”) the tax declaration (Exhibit “C”) and the survey
plan (Exhibit “D”) shown to him by Sixto Medrano which indicate the latter as owner of the property in dispute, Tiburcio Balitaan believed transfer to him
was effected. (TSN, April 17, 1991, pp. 14-17) and thus, entered the property as owner (Ibid. at p. 13) Tiburcio Balitaan, believing himself as the lawful
transferee, in addition, caused Tax Declaration No. 51038 to be issued in his name (Exhibits “6”, “6-A”, “6-B”, and “6-C”). Thus, although the sale of the
co-owned property is only valid as to the undivided share of Sixto Medrano, defendants, by virtue of their open, adverse and uninterrupted possession from
1958 (Exhibit “G”) to 1975, obtained title to the entire property and not just Sixto’s undivided share. This is pursuant to Article 1134 (1957a) of the New
Civil Code which provides that:

Ownership and other real rights over immovable property are acquired by ordinary prescription through possession of ten years.

...

Plaintiffs did not at all inquire as to the status of their property all this time and thus have been remiss of their duties as owners of the property. Plaintiffs
waited until Sixto’s death to learn more about their property. Even though the co-ownership is to be preserved in accordance with the wishes of the
deceased, the plaintiffs should have taken it upon themselves to look into the status of the property once in a while, to assure themselves that it is managed
well and that they are receiving what is due them as co-owners of the parcel of land or to at least manifest their continued interest in the property as normal
owners would do. But the plaintiffs did not show any interest in the way Sixto Medrano was managing the property which in effect gave the latter carte
blanche powers over the same. Such passivity is aggravated by the fact that one of the plaintiffs resides a mere 600 meters away from the disputed
property (TSN, April 17, 1991, p. 13). By not showing any interest, the plaintiffs have, in fact, slept on their rights and thus, cannot now exercise a stale
right.[23]

Petitioners sought reconsideration[24] but the appellate court denied it in a Resolution dated October 5, 1995.[25]

In their present recourse, petitioners take exception from the appellate court’s findings that respondents have been in possession, in the concept of owner of
the entire parcel of land sold to Tiburcio Balitaan by Sixto Medrano for seventeen years (1958-1975), relying on the Affidavit of Transfer and Tax
Declaration No. 51038 in the name of Sixto; and that Tiburcio acquired ownership of the whole property from Sixto through ordinary prescription for ten
years.

Petitioners submit that Tiburcio Balitaan was not a purchaser in good faith and for value since there are enough circumstances which should have put him
on guard and prompted him to be more circumspect and inquire further about the true status of Sixto Medrano’s ownership; that during his lifetime,
Tiburcio was a neighbor of petitioners and was well-aware that Sixto had other siblings but Tiburcio chose to rely on the Affidavit of Transfer executed by
Sixto Medrano declaring that he was the only heir of Leocadio; that the Court of Appeals should not have faulted them for failing to inquire about the status
of the disputed property until after the death of Sixto Medrano; that they are not guilty of laches.

It is settled that in the exercise of the Supreme Court’s power of review, the findings of facts of the Court of Appeals are conclusive and binding on the
Supreme Court.[26] The exceptions to this rule are: (1) when the findings are grounded entirely on speculation, surmises or conjectures; (2) when the
inference made is manifestly mistaken, absurd or impossible; (3) when there is grave abuse of discretion; (4) when the judgment is based on a
misapprehension of facts; (5) when the findings of fact are conflicting; (6) when in making its findings the Court of Appeals went beyond the issues of the
case, or its findings are contrary to the admissions of both the appellant and the appellee; (7) when the findings are contrary to the trial court; (8) when the
findings are conclusions without citation of specific evidence on which they are based; (9) when the facts set forth in the petition as well as in the
petitioner’s main and reply briefs are not disputed by the respondent; (10) when the findings of fact are premised on the supposed absence of evidence and
contradicted by the evidence on record; and (11) when the Court of Appeals manifestly overlooked certain relevant facts not disputed by the parties, which,
if properly considered, would justify a different conclusion.[27] Exceptions (4), (7), (10) and (11) are present in the instant case.

We find the petition meritorious.[28] We agree with the petitioners that the Court of Appeals committed a reversible error in upholding the claim of
petitioners that they acquired ownership of the subject property through prescription.

Acquisitive prescription of real rights may be ordinary or extraordinary. Ordinary acquisitive prescription requires possession of things in good faith and
with just title for the time fixed by law;[29] without good faith and just title, acquisitive prescription can only be extraordinary in character. Regarding real
or immovable property, ordinary acquisitive prescription requires a period of possession of ten years,[30] while extraordinary acquisitive prescription
requires an uninterrupted adverse possession of thirty years.[31]

23
Ordinary acquisitive prescription demands that possession be “in good faith”, which consists in the reasonable belief that the person from whom the thing
is received has been the owner thereof and could thereby transmit that ownership.[32] There is “just title” when the adverse claimant comes into possession
of the property through any of the modes recognized by law for the acquisition of ownership or other real rights, but that the grantor is neither the owner
nor in a position to transmit the right.[33]

Article 1130 of the Civil Code states that the “title for prescription must be true and valid.” In Doliendo vs. Biarnesa,[34] we elucidated on this provision,
thus:

We think that this contention is based on a misconception of the scope and effect of the provisions of this article of the Code in its application to “ordinary
prescription.” It is evident that by a “titulo verdadero y valido” in this connection we are not to understand a “titulo que por si solo tiene fuerza de
transferir el dominio sin necesidad de la prescricion” (a title which of itself is sufficient to transfer the ownership without the necessity of the lapse of the
prescription period); and we accept the opinion of a learned Spanish law writer who holds that the “titulo verdadero y valido” as used in this article of the
code prescribes a “titulo Colorado” and not merely “putativo;” a “titulo Colorado” being one ‘which a person has when he buys a thing, in good faith, from
one whom he believes to be the owner,’ and a “titulo putativo” “being one which is supposed to have preceded the acquisition of a thing, although in fact it
did not, as might happen when one is in possession of a thing in the belief that it had been bequeathed to him.” (Viso Derecho Civil, Parte Segunda, p. 541)
[35]

The requirements for ordinary acquisitive prescription as hereinabove described have not been met in this case.

It must be remembered that the burden of proving the status of a purchaser in good faith lies upon him who asserts that status. It is not sufficient to invoke
the ordinary presumption of good faith, that is, that everyone is presumed to have acted in good faith, since the good faith that is here essential is integral
with the very status that must be established.[36]

After a careful examination of the records, we find that private respondents failed to discharge the burden of proof that Tiburcio Balitaan was a purchaser
in good faith. It is undisputed that Tiburcio practically lived his entire lifetime in the area where the property in dispute is located and had been a neighbor
of petitioners. He knew that Sixto Medrano had other siblings because his son, Dr. Elias Balitaan, is the godson by baptism of spouses Jose Aguirre and
Gertrudes Medrano, the latter being a deceased sister of Sixto. Thus, Tiburcio was not a complete stranger to the Medrano clan. Yet, he deliberately chose
to close his eyes to said facts and despite his personal knowledge to the contrary, he purchased the disputed property from Sixto on the basis of the
misrepresentation of the latter in his Affidavit of Transfer that he is the sole surviving heir of Leocadio. A purchaser cannot close his eyes to facts which
should put a reasonable man upon his guard, and then claim that he acted in good faith under the belief that there was no defect in the title of the vendor.
[37]

Since the disputed property is an unregistered land, Tiburcio as buyer thereof did so at his peril. Private respondents’ claim that Tiburcio bought the land in
good faith, that is, without notice that some other person has a right to or interest in the property, would not protect them if it turns out, as it actually did in
this case, that the seller, Sixto Medrano, did not own the entire property at the time of the sale, but only an undivided portion of the land as a co-owner.
Private respondents failed to show that the petitioners were notified of the subject sale or that respondents gave their consent to the sale. Not being in
“good faith”, the ten-year period required for ordinary acquisitive prescription does not apply.

Even the thirty-year period under extraordinary acquisitive prescription has not been met in this case. Private respondents claim to have been in
possession, in the concept of owner, of the entire parcel of land sold to Tiburcio Balitaan by Sixto Medrano for only seventeen years (1958-1975).

In addition, as we have enunciated in Salvador vs. Court of Appeals,[38] to wit:

This Court has held that the possession of a co-owner is like that of a trustee and shall not be regarded as adverse to the other co-owners but in fact as
beneficial to all of them. Acts which may be considered adverse to strangers may not be considered adverse insofar as co-owners are concerned. A
mere silent possession by a co-owner, his receipt of rents, fruits or profits from the property, the erection of buildings and fences and the planting
of trees thereon, and the payment of land taxes, cannot serve as proof of exclusive ownership, if it is not borne out by clear and convincing evidence
that he exercised acts of possession which unequivocably constituted an ouster or deprivation of the rights of the other co-owners.

Thus, in order that a co-owner’s possession may be deemed adverse to the cestui que trust or the other co-owners, the following elements must concur: (1)
that he has performed unequivocal acts of repudiation amounting to an ouster of the cestui que trust or the other co-owners; (2) that such positive
acts of repudiation have been made known to the cestui que trust or the other co-owners; and (3) that the evidence thereon must be clear and
convincing.[39] (Emphasis supplied)

Tested against these guidelines, respondents failed to present competent evidence that the acts of Sixto adversely and clearly repudiated the existing co-
ownership among the heirs of Leocadio Medrano.

24
Private respondents’ reliance on the tax declaration in the name of Sixto Medrano is unworthy of credit since we have held on several occasions that tax
declarations by themselves do not conclusively prove title to land.[40] Further, private respondents failed to show that the Affidavit executed by Sixto to
the effect that he is the sole owner of the subject property was known or made known to the other co-heirs of Leocadio Medrano.

Neither can we subscribe to the appellate court’s view that petitioners are guilty of laches. Laches is the negligence or omission to assert a right within a
reasonable time, warranting a presumption that the party entitled to assert it has abandoned it or declined to assert it.[41] It does not involve mere lapse or
passage of time, but is principally an impediment to the assertion or enforcement of a right, which has become under the circumstances inequitable or
unfair to permit.[42] The rule that each co-owner may demand at any time the partition of the common property implies that an action to demand partition
is imprescriptible or cannot be barred by laches.[43]

We have consistently held that if a co-owner sells the whole property as his, the sale will affect only his own share but not those of the other co-owners
who did not consent to the sale.[44] Article 493 of the Civil Code provides:

Art. 493. Each co-owner shall have the full ownership of his part and the fruits and benefits pertaining thereto, and he may therefore alienate, assign or
mortgage it, and even substitute another person in its enjoyment, except when personal rights are involved. But the effect of the alienation or the mortgage,
with respect to the co-owners, shall be limited to the portion which may be allotted to him in the division upon the termination of the co-ownership.

It clearly provides that the sale or other disposition affects only the seller’s share pro indiviso, and the transferee gets only what corresponds to his grantor’s
share in the partition of the property owned in common. Since a co-owner is entitled to sell his undivided share, a sale of the entire property by one co-
owner without the consent of the other co-owners is not null and void; only the rights of the co-owner/seller are transferred, thereby making the buyer a co-
owner of the property.[45] Accordingly, we held in Bailon-Casilao vs. Court of Appeals:

From the foregoing, it may be deduced that since a co-owner is entitled to sell his undivided share, a sale of the entire property by one-co-owner without
the consent of the other co-owners is not null and void. However, only the rights of the co-owner-seller are transferred, thereby making the buyer a co-
owner of the property.

The proper action in cases like this is not for the nullification of the sale or for the recovery of possession of the thing owned in common from the third
person who substituted the co-owner or co-owners who alienated their shares, but the DIVISION of the common property as if it continued to remain in the
possession of the co-owners who possessed and administered it [Mainit v. Bandoy, supra].

Thus, it is now settled that the appropriate recourse of co-owners in cases where their consent were not secured in a sale of the entire property as well as in
a sale merely of the undivided shares of some of the co-owners is an action for PARTITION under Rule 69 of the Revised Rules of Court. Neither
recovery of possession nor restitution can be granted since the defendant buyers are legitimate proprietors and possessors in joint ownership of the common
property claimed [Ramirez v. Bautista, supra].[46]

It is clear therefore that the deed of sale executed by Sixto Medrano in favor of Tiburcio Balitaan is a valid conveyance only insofar as the share of Sixto
Medrano in the co-ownership is concerned. Thus, the respondent court erred in declaring the ownership of the entire 1,695-square meter property sold by
Sixto, in favor of the private respondents.

The next question is what is the area of the pro indiviso share pertaining to Sixto Medrano that was sold to private respondents? The trial court endeavored
to determine the same by ascertaining the inheritance of each of the heirs of Leocadio. However, the manner of partition as set out by the trial court in the
text of its decision needs to be amended so as to conform to the laws on intestate succession under the Old Civil Code absent any allegation or showing that
Leocadio left any last will and testament.

It is not disputed that the 2,342-square meter property was a conjugal property of Leocadio and Emiliana. Upon the death of Emiliana, which occurred
many years before the death of Leocadio in 1945, both deaths occurring before the enactment of the New Civil Code in 1950, all the four children of the
first marriage and the four children of the second marriage shall share equally. The subject property should have been divided into eight equal parts,
pursuant to Articles 921 and 931 of the old Civil Code,[47] or 292.75 square meters each. The respective heirs of the now deceased children of Leocadio
inherit by way of representation the respective shares of their respective parents, pursuant to Articles 933 and 934 of the Old Civil Code.[48]

At the time of death of Leocadio in 1945, Miguela was entitled only to the usufruct of the land pursuant to Article 834 of the Old Civil Code,[49] which
provides that “[i]f only one legitimate child or descendant survives, the widower or widow shall have the usufruct of the third available for betterment, such
child or descendant to have the naked ownership until, on the death of the surviving spouse, the whole title is merged in him”.

Thus, to recapitulate, each of the heirs of Leocadio should inherit 292.75 square meters, pro-indiviso (2,342 square meters ¸ 8 = 292.75 square meters) after
deducting from the original 2,611 square meters of the subject property the 269 square meters ceded to the heirs of Maria Bacong in a compromise
agreement among the petitioners and the heirs of Maria Bacong. The deceased children of Leocadio are represented by their respective heirs by right of
representation under Articles 933 and 934 of the Old Civil Code.

25
Accordingly, the undivided shares of Leocadio’s eight children or their heirs by right of representation, upon the death of Leocadio in 1945 are as follows:

(1) Venancio Medrano - 292.75 square meters

(2) Leonila Medrano - 292.75 square meters

(3) Antonio Medrano - 292.75 square meters

(4) Cecilia Medrano - 292.75 square meters

(5) Heirs of Gertrudes M. Aguirre, Telesforo, Reynaldo, Remedios, Alfredo and Belen, all surnamed Aguirre- -
292.75 square meters

(6) Heirs of Isabel M. Magtibay, Vicenta, Horacio and Florencio, all surnamed Magtibay - 292.75 square meters

(7) Heirs of Placido Medrano, plaintiff Zosima Medrano Quimbao - 292.75 square meters

(8) Sixto Medrano - 292.75 square meters

During the pendency of the case in the trial court but after the death of Sixto, petitioners sold 460 square meters to one Mateo Castillo. Consequently, the
460 square meters should be charged against the shares of petitioners only and should not affect the 292.75 square meters undivided share of Sixto
Medrano which he had sold in 1959.[50] Accordingly, 460 square meters divided by 7 equals 65.71 square meters. Deducting said area from 292.75 square
meters, the final undivided share of each of the seven heirs of Leocadio should be 227.04 square meters (292.75 - 65.71 = 227.04) and that pertaining to
Sixto in 292.75 square meters.

Thus, the manner of partition set forth by the trial court in its decision should be amended, as follows:

(1) Gertrudes M. Aguirre, deceased, represented by her children, herein petitioners Telesforo, Reynaldo, Remedios, Alfredo and Belen, all surnamed
Aguirre - 227.04 square meters

(2) Isabel M. Magtibay, deceased, represented by her children, herein petitioners Vicenta, Horacio and Florencio, all surnamed Magtibay
- 227.04 square meters

(3) Placido Medrano, deceased, represented by his only child, Placido Medrano - 227.04 square
meters

(4) Private respondents Maria Rosales and heirs of Tiburcio Balitaan, namely: Elias, Jose, Arsenia and Rogelio all surnamed Balitaan (in lieu of
Sixto Medrano) - 292.75 square meters

(5) Venancio Medrano - 227.04 square meters

(6) Leonila Medrano - 227.04 square meters

(7) Antonio Medrano - 227.04 square meters

(8) Cecilia Medrano - 227.04 square meters

(9) Rosendo Bacong - 269 square meters

(10) Mateo Castillo - 460 square meters

WHEREFORE, we GRANT the petition. The assailed decision of the Court of Appeals in CA-G.R. CV No. 42350, dated July 26, 1995, is REVERSED
and SET ASIDE. The decision of the Regional Trial Court is REINSTATED with the following MODIFICATIONS:

26
The sale in favor of private respondents is declared VALID but only insofar as the 292.75 square meters undivided share of Sixto Medrano in the subject
property is concerned.

Let the parcel of land, located at Aplaya, Bauan, Batangas, consisting of 2,611 square meters, be partitioned and distributed as determined by the Court in
the text of herein decision. Accordingly, let the records of the case be remanded to the Regional Trial Court of Batangas City (Branch 2) in Civil Case No.
202 for further appropriate proceedings under Rule 69 of the Rules of Court.

No pronouncement as to costs.

SO ORDERED.

Puno, (Chairman), Quisumbing, Callejo Sr. and Tinga, JJ., concur.

[1] Penned by Justice Jorge S. Imperial (now deceased) and concurred in by Justice Pacita Cañizares-Nye (now deceased) and Justice Romeo J. Callejo, Sr.
(now Associate Justice of the Supreme Court), Rollo, pp. 32-46.

[2] Penned by Judge Ireneo V. Mendoza.

[3] Entitled, “Reynaldo, Telesforo, Remedios, Alfredo and Belen all surnamed Aguirre, Vicenta, Horacio and Florencio all surnamed Magtibay, Leonila,
Cecilia, Antonio and Venancio all surnamed Medrano and Zosima Quiambao vs. Tiburcio Balitaan, Maria Bacong and Rosendo Bacong”

[4] 1,791 square meters of which was declared in Tax Declaration No. 40105 while 820 square meters remained undeclared for taxation purposes until
1953 in Tax Declaration No. 44984 issued in the name of Sixto Medrano; Original Records, pp. 8,10.

[5] Id., p. 9.

[6] Id., p. 11.

[7] Id., p. 10.

[8] Id., p. 16.

[9] Id., pp. 14-15.

[10] Id., p. 18.

[11] Entitled “Reynaldo, Telesforo, Remedios, Alfredo and Belen all surnamed Aguirre, Vicenta, Horacio and Florencio all surnamed Magtibay, Leonila,
Cecilia, Antonio and Venancio all surnamed Medrano and Zosima Quiambao vs. Tiburcio Balitaan, Maria Bacong and Rosendo Bacong”, Id., p. 1.

[12] Id., p. 28-29.

[13] Id., p. 32.

[14] Id., p. 102.

[15] Id., p. 254.

[16] Id., p. 338.

[17] Id., p. 520.

27
[18] Id., p. 339.

[19] Rollo, pp. 66-74.

[20] Id., pp. 72-73.

[21] Id., pp. 73-74.

[22] Id., pp. 75-120. Private respondents initially filed a Notice of Appeal with the trial court which the latter denied on the ground that “the decision
promulgated on April 28, 1992 is not yet final and executory considering that there are still many things to be done”. On petition for mandamus with the
Court of Appeals (CA-G.R. SP No. 30446), the Court of Appeals granted the petition and directed the trial court to give due course to private respondents’
appeal. (Court of Appeals’ Rollo, pp. 89)

[23] Rollo, pp. 40-42.

[24] Id., pp. 47-65.

[25] Id., p. 30.

[26] Pestaño vs. Sumayang, 346 SCRA 870, 878 (2000); Bañas, Jr. vs. Court of Appeals, 325 SCRA 259, 271 (2000); Borromeo vs. Sun, 317 SCRA 176,
182 (1999); Lagrosa vs. Court of Appeals, 312 SCRA 298, 310 (1999); Security Bank and Trust Company vs. Triumph Lumber and Construction
Corporation, 301 SCRA 537, 548 (1999).

[27] Langkaan Realty Development, Inc. vs. United Coconut Planters Bank, 347 SCRA 542, 549 (2000); Nokom vs. National Labor Relations
Commission, 336 SCRA 97, 110 (2000); Commissioner of Internal Revenue vs. Embroidery and Garments Industries (Phil.), Inc., 305 SCRA 70, 74
(1999); Sta. Maria vs. Court of Appeals, 285 SCRA 351, 357 (1998).

[28] Original Records of Civil Case No. 42350 were received by the Court only on September 4, 2003.

[29] Article 1117, Civil Code.

[30] Article 1134, Civil Code.

[31] Article 1137, Civil Code.

[32] Article 1127, Civil Code.

[33] Article 1129, Civil Code.

[34] 7 Phil. 232 (1906).

[35] Id., p. 234.

[36] Embrado vs. Court of Appeals, 233 SCRA 335, 344 (1994).

[37] Development Bank of the Philippines vs. Court of Appeals, 331 SCRA 267, 290 (2000); Lucena vs. Court of Appeals, 313 SCRA 47, 57 (1999).

[38] 243 SCRA 239 (1995).

[39] Id., p. 251

[40] Hemedes vs. Court of Appeals, 316 SCRA 347, 370 (1999); Heirs of Leopoldo Vencilao, Sr. vs. Court of Appeals, 288 SCRA 574, 581 (1998); Titong
vs. Court of Appeals (4th Division), 287 SCRA 102, 115 (1998).

28
[41] Ignacio vs. Basilio, 366 SCRA 15, 23 (2001); Lim Tay vs. Court of Appeals, 293 SCRA 634, 659 (1998).

[42] Philippine Bank of Communications vs. Court of Appeals, 289 SCRA 178, 186 (1998).

[43] Deiparine vs. Court of Appeals, 299 SCRA 668, 679 (1998); Sandoval vs. Court of Appeals, 243 SCRA 239, 250 (1995).

[44] Tomas Claudio Memorial College, Inc. vs. Court of Appeals, 316 SCRA 502, 509 (1999); Bailon-Casilao vs. Court of Appeals, 160 SCRA 738, 746
(1988).

[45] Fernandez vs. Fernandez, 363 SCRA 811, 829 (2001).

[46] Supra, Note 44 at p. 745.

[47] Art. 921. In every inheritance the relative nearest in degree excludes the one more remote, except in cases in which the right of representation exists.

Relatives in the same degree shall inherit in equal portions, subject to the provisions of Article 949 with respect to relationship by the whole blood.

Art. 931. Legitimate children and their descendants succeed the parents and other ascendants, without distinction of sex or age, even though they spring
from different marriages.

[48] Art. 933. The grandchildren and other descendants shall inherit by right or representation, and if any one of them should have died, leaving several
heirs, the portion pertaining to him shall be divided among the latter in equal portions.

Art. 934. Should children and descendants of other deceased children survive, the former shall inherit in their own right, and the latter by right of
representation.

[49] NOW ART. 996 of the New Civil Code. [a widow or widower and legitimate children or descendants are left, the surviving spouse has in the
succession the same share as that of each of the children].

[50] Rollo, pp. 523,524.

29
Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 155080 February 5, 2004

SOLEDAD CALICDAN, represented by her guardian GUADALUPE CASTILLO, petitioner

vs.
SILVERiO CENDAÑA, substituted by his legal heir CELSA CENDAÑA-ALARAS, respondent.

DECISION

YNARES-SANTIAGO, J.:

This petition for review seeks the reversal of the April 4, 2002 decision of the Court of Appeals in CA-G.R. CV No. 67266,1 which set aside the November
12, 1996 decision of the Regional Trial Court of Dagupan City, Branch 44 in Civil Case No. D-10270.2

The instant controversy involves a 760 square meter parcel of unregistered land located in Poblacion, Mangaldan, Pangasinan. The land was formerly
owned by Sixto Calicdan, who died intestate on November 4, 1941. He was survived by his wife, Fermina, and three children, namely, petitioner Soledad,
Jose and Benigno, all surnamed Calicdan.3

On August 25, 1947, Fermina executed a deed of donation inter vivos whereby she conveyed the land to respondent Silverio Cendaña,4 who immediately
entered into possession of the land, built a fence around the land and constructed a two-storey residential house thereon sometime in 1949, where he
resided until his death in 1998.5

On June 29, 1992, petitioner, through her legal guardian Guadalupe Castillo, filed a complaint for "Recovery of Ownership, Possession and Damages"
against the respondent, alleging that the donation was void; that respondent took advantage of her incompetence in acquiring the land; and that she merely
tolerated respondent’s possession of the land as well as the construction of his house thereon.6

In his "Answer with Motion to Dismiss", respondent alleged, by way of affirmative defenses, that the land was donated to him by Fermina in 1947; and that
he had been publicly, peacefully, continuously, and adversely in possession of the land for a period of 45 years. Moreover, he argued that the complaint
was barred by prior judgment in the special proceedings for the "Inventory of Properties of Incompetent Soledad Calicdan", where the court decreed the
exclusion of the land from the inventory of properties of the petitioner.7

On November 12, 1996, the trial court rendered a decision in favor of the petitioner, the dispositive portion of which reads as follows:

WHEREFORE, judgment is rendered in favor of plaintiff and against the defendant as follows:

1. Ordering defendant Silverio Cendaña to vacate the land in question and surrender ownership and possession of the same to plaintiff; and

2. Ordering defendant to pay plaintiff P20,000.00 as moral damages, P20,000.00 as exemplary damages, P10,000.00 by way of attorney’s fees and other
litigation expenses, plus cost of suit.

SO ORDERED.8

On appeal by the respondent, the Court of Appeals reversed the trial court’s decision and declared that the donation was valid. Furthermore, it held that
petitioner lost her ownership of the property by prescription.

Hence, the instant petition for review on the following issues:

(1) whether or not the donation inter vivos is valid; and

(2) whether or not petitioner lost ownership of the land by prescription.

30
As a rule, our jurisdiction in cases brought from the Court of Appeals is limited to the review and revision of errors of law allegedly committed by the
appellate court. This is because its findings of fact are deemed conclusive and we are not duty-bound to analyze and weigh all over again the evidence
already considered in the proceedings below.9

The rule, however, admits of the following exceptions:

(1) when the findings are grounded on speculation, surmises or conjectures;

(2) when the inference made is manifestly mistaken, absurd or impossible;

(3) when there is grave abuse of discretion in the appreciation of facts;

(4) when the factual findings of the trial and appellate courts are conflicting;

(5) when the Court of Appeals, in making its findings, has gone beyond the issues of the case and such findings are contrary to the admissions of both
appellant and appellee;

(6) when the judgment of the appellate court is premised on a misapprehension of facts or when it has failed to consider certain relevant facts which, if
properly taken into account, will justify a different conclusion;

(7) when the findings of fact are conclusions without citation of specific evidence upon which they are based; and

(8) when findings of fact of the Court of Appeals are premised on the absence of evidence but are contradicted by the evidence on record.10

In the case at bar, the factual findings of the trial court and the Court of Appeals are conflicting; thus, we are constrained to review the findings of facts.

The trial court found the donation of the land void because Fermina was not the owner thereof, considering that it was inherited by Sixto from his parents.
Thus, the land was not part of the conjugal property of the spouses Sixto and Fermina Calicdan, because under the Spanish Civil Code, the law applicable
when Sixto died in 1941, the surviving spouse had a right of usufruct only over the estate of the deceased spouse. Consequently, respondent, who derived
his rights from Fermina, only acquired the right of usufruct as it was the only right which the latter could convey.

After a review of the evidence on record, we find that the Court of Appeals’ ruling that the donation was valid was not supported by convincing proof.
Respondent himself admitted during the cross examination that he had no personal knowledge of whether Sixto Calicdan in fact purchased the subject land
from Felomino Bautista. Pertinent portions of his testimony read:

Q. And Sixto Calicdan inherited this property from his parents?

A. No, sir.

Q. What do you mean by no?

A. To my knowledge and information, Sixto Calicdan bought the property from his cousin, I think Flaviano or Felomino Bautista.

Q. So, in other words, you have no personal knowledge about how Sixto Calicdan acquired this property?

A. I think it was by purchase.

Q. According to information, so you have no actual personal knowledge how Sixto Calicadan acquired this property?

A. Yes, because when the property was bought by my uncle, I was not yet born, so information only.

Q. So when you were born, you came to know already that Sixto Calicdan is the owner of this property?

A. Yes, thru the son of Felomino Bautista who is now, I think, in Baguio.

31
Q. You have not seen any document to show that Sixto Calicdan purchased the property from one Felomino Bautista?

A. None, sir.11

In People v. Guittap,12 we held that:

Under Rule 130, Section 36 of the Rules of Court, a witness can testify only to those facts which he knows of his own personal knowledge, i.e., which are
derived from his own perception; otherwise, such testimony would be hearsay. Hearsay evidence is defined as "evidence not of what the witness knows
himself but of what he has heard from others." The hearsay rule bars the testimony of a witness who merely recites what someone else has told him,
whether orally or in writing. In Sanvicente v. People, we held that when evidence is based on what was supposedly told the witness, the same is without
any evidentiary weight for being patently hearsay. Familiar and fundamental is the rule that hearsay testimony is inadmissible as evidence.

The Court of Appeals thus erred in ruling based on respondent’s bare hearsay testimony as evidence of the donation made by Fermina.

Notwithstanding the invalidity of the donation, we find that respondent has become the rightful owner of the land by extraordinary acquisitive prescription.

Prescription is another mode of acquiring ownership and other real rights over immovable property. It is concerned with lapse of time in the manner and
under conditions laid down by law, namely, that the possession should be in the concept of an owner, public, peaceful, uninterrupted and adverse.
Acquisitive prescription is either ordinary or extraordinary. Ordinary acquisitive prescription requires possession in good faith and with just title for ten
years. In extraordinary prescription ownership and other real rights over immovable property are acquired through uninterrupted adverse possession thereof
for thirty years without need of title or of good faith.13

The good faith of the possessor consists in the reasonable belief that the person from whom he received the thing was the owner thereof, and could transmit
his ownership.14 For purposes of prescription, there is just title when the adverse claimant came into possession of the property through one of the modes
recognized by law for the acquisition of ownership or other real rights, but the grantor was not the owner or could not transmit any right.15

Assuming arguendo that ordinary acquisitive prescription is unavailing in the case at bar as it demands that the possession be "in good faith and with just
title,"16 and there is no evidence on record to prove respondent’s "good faith", nevertheless, his adverse possession of the land for more than 45 years aptly
shows that he has met the requirements for extraordinary acquisitive prescription to set in.

The records show that the subject land is an unregistered land. When the petitioner filed the instant case on June 29, 1992, respondent was in possession of
the land for 45 years counted from the time of the donation in 1947. This is more than the required 30 years of uninterrupted adverse possession without
just title and good faith. Such possession was public, adverse and in the concept of an owner. Respondent fenced the land and built his house in 1949, with
the help of Guadalupe’s father as his contractor. His act of cultivating and reaping the fruits of the land was manifest and visible to all. He declared the land
for taxation purposes and religiously paid the realty taxes thereon.17 Together with his actual possession of the land, these tax declarations constitute strong
evidence of ownership of the land occupied by him. As we said in the case of Heirs of Simplicio Santiago v. Heirs of Mariano Santiago:18

Although tax declarations or realty tax payment of property are not conclusive evidence of ownership, nevertheless, they are good indicia of possession in
the concept of owner, for no one in his right mind would be paying taxes for a property that is not in his actual or constructive possession. They constitute
at least proof that the holder has a claim of title over the property. The voluntary declaration of a piece of property for taxation purposes manifests not only
one’s sincere and honest desire to obtain title to the property and announces his adverse claim against the State and all other interested parties, but also the
intention to contribute needed revenues to the Government. Such an act strengthens one’s bona fide claim of acquisition of ownership.

Moreover, the deed of donation inter vivos, albeit void for having been executed by one who was not the owner of the property donated, may still be used
to show the exclusive and adverse character of respondent’s possession. Thus, in Heirs of Segunda Maningding v. Court of Appeals,19 we held:

Even assuming that the donation propter nuptias is void for failure to comply with formal requisites, it could still constitute a legal basis for adverse
possession. With clear and convincing evidence of possession, a private document of donation may serve as basis for a claim of ownership. In Pensader v.
Pensader we ruled that while the verbal donation under which the defendant and his predecessors-in-interest have been in possession of the lands in
question is not effective as a transfer of title, still it is a circumstance which may explain the adverse and exclusive character of the possession.
(Underscoring ours)

In sum, the Court of Appeals correctly ordered the dismissal of Civil Case No. D-10270 before the Regional Trial Court of Dagupan City, Branch 44, and
declared respondent the rightful owner of the subject property, not on the basis of the Deed of Donation Inter Vivos, which is hereby declared void, but on
extraordinary acquisitive prescription.

32
WHEREFORE, in view of the foregoing, the petition is DENIED. The Decision of the Court of Appeals dated April 4, 2002 in CA-G.R. CV No. 67266,
which ordered the dismissal of Civil Case No. D-10270 before the Regional Trial Court of Dagupan City, Branch 44, is AFFIRMED.

SO ORDERED.

Davide, Jr., C.J., (Chairman), Panganiban, and Carpio, JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 95608 January 21, 1997

SPOUSES IGNACIO PALOMO and TRINIDAD PASCUAL, and CARMEN PALOMO VDA. DE BUENAVENTURA, petitioners,
vs.
THE HONORABLE COURT OF APPEALS, THE REPUBLIC OF THE PHILIPPINES, FAUSTINO J. PERFECTO, RAFFY SANTILLAN,
BOY ARIADO, LORENZO BROCALES, SALVADOR DOE, and other DOES, respondents.

ROMERO, J.:

The issue in the case at bar pertains to ownership of 15 parcels of land in Tiwi, Albay which form part of the "Tiwi Hot Spring National Park." The facts of
the case are as follows.

On June 13, 1913, then Governor General of the Philippine Islands, William Cameron Forbes issued Executive Order No. 40 which reserved for provincial
park purposes some 440,530 square meters of land situated in Barrio Naga, Municipality of Tiwi, Province of Albay pursuant to the provisions of Act 648
of the Philippine Commission. 1

Subsequently, the then Court of First Instance of Albay, 15th Judicial District, United States of America, ordered the registration of 15 parcels of land
covered by Executive Order No. 40 in the name of Diego Palomo on December 9, 1916; 2 December 28, 3 and January 17, 1917. 4 Diego Palomo donated
these parcels of land consisting of 74,872 square meters which were allegedly covered by Original Certificates of Title Nos. 513, 169, 176 and 173 5 to his
heirs, herein petitioners, Ignacio and Carmen Palomo two months before his death in April 1937. 6

Claiming that the aforesaid original certificates of title were lost during the Japanese occupation, Ignacio Palomo filed a petition for reconstitution with the
Court of First Instance of Albay on May 30, 1950. 7 The Register of Deeds of Albay issued Transfer Certificates of Title Nos. 3911, 3912, 3913 and 3914
sometime in October 1953. 8

On July 10, 1954 President Ramon Magsaysay issued Proclamation No. 47 converting the area embraced by Executive Order No. 40 into the "Tiwi Hot
Spring National Park," under the control, management, protection and administration of the defunct Commission of Parks and Wildlife, now a division of
the Bureau of Forest Development. The area was never released as alienable and disposable portion of the public domain and, therefore, is neither
susceptible to disposition under the provisions of the Public Land Law (CA 141) nor registrable under the Land Registration Act (Act No. 496).

The Palomos, however, continued in possession of the property, paid real estate taxes thereon 9 and introduced improvements by planting rice, bananas,
pandan and coconuts. On April 8, 1971, petitioner Carmen vda. de Buenaventura and spouses Ignacio Palomo and Trinidad Pascual mortgaged the parcels
of land covered by TCT 3911, 3912, 3913 and 3914 to guarantee a loan of P200,000 from the Bank of the Philippine Islands.

33
In May 7, 1974 petitioner Carmen vda. de Buenaventura and spouses Ignacio Palomo and Trinidad Pascual filed Civil Case No. T-143 before the then
Court of First Instance of Albay for Injunction with damages against private respondents Faustino J. Perfecto, Raffy Santillan, Boy Ariado, Lorenzo
Brocales, Salvador Doe and other Does who are all employees of the Bureau of Forest Development who entered the land covered by TCT No. 3913 and/or
TCT 3914 and cut down bamboos thereat, totally leveling no less than 4 groves worth not less than P2,000.00.

On October 11, 1974, the Republic of the Philippines filed Civil Case No. T-176 for annulment and cancellation of Certificates of Title involving the 15
parcels of land registered in the name of the petitioners and subject of Civil Case T-143. Impleaded with the petitioners as defendants were the Bank of the
Philippine Islands, Legazpi Branch and the Register of Deeds of Albay.

The case against the Bank of Philippine Islands was dismissed because the loan of P200,000 with the Bank was already paid and the mortgage in its favor
cancelled.

A joint trial of Civil Case T-143 and T-176 was conducted upon agreement of the parties and on July 31, 1986, the trial court rendered the following
decision:

WHEREFORE, premises considered, judgment is hereby rendered:

IN CIVIL CASE No. T-143, in favor of the defendants and against the plaintiffs, dismissing the complaint for injunction and damages, as it is hereby
DISMISSED.

Costs against the plaintiffs.

In CIVIL CASE No. T-176, in favor of the plaintiffs and against the defendants:

(1) Declaring null and void and no force and effect the Order dated September 14, 1953, as well as the Original Certificate of Titles Nos. 153, 10 169, 173
and 176 and Transfer Certificates of Titles Nos. 3911, T-3912, T-3913, and T-3914, all of the Register of Deeds of Albay and all transactions based on said
titles.

(2) Forfeiting in favor of the plaintiff Government any and all improvements on the lands in question that are found therein and introduced by the
defendants;

(3) Declaring Lot Nos. 1, 2, 3, 4, 5, 6, 7 8, 9,10, 11 and 12, Plan II-9299 and Lots 1, 21, 11 3 and 4 of Plan II-9205 as part of the Tiwi Hot Spring National
Park;

(4) and Finally, the Register of Deeds of Albay is hereby ordered to cancel the alleged Original Certificates of Titles Nos. 513, 169, 173 and 176, Transfer
Certificates of Title Nos. T-3911, T-3912, T-3913 and T-3914.

Costs against the defendants.

So Ordered. 12

The court a quo in ruling for the Republic found no sufficient proof that the Palomos have established property rights over the parcels of land in question
before the Treaty of Paris which ended the Spanish-American War at the end of the century. The court further stated that assuming that the decrees of the
Court of First Instance of Albay were really issued, the Palomos obtained no right at all over the properties because these were issued only when Executive
Order No. 40 was already in force. At this point, we take note that although the Geodetic Engineer of the Bureau of Lands appointed as one of the
Commissioners in the relocation survey of the properties stated in his reamended report that of the 3,384 square meters covered by Lot 2, Plan II-9205,
only 1,976 square meters fall within the reservation area, 13 the RTC ordered TCT 3913 covering the entire Lot 21 (sic) Plan II-9205 cancelled.

The petitioners appealed to the Court of Appeals which affirmed in toto the findings of the lower Court; hence this petition raising the following issues:

1. The respondent Court of Appeals committed grave abuse of discretion in affirming in toto the decision of the lower court.

2. The declaration of nullity of the original certificates of title and subsequent transfer certificates of titles of the petitioners over the properties in question
is contrary to law and jurisprudence on the matter.

3. The forfeiture of all improvements introduced by the petitioners in the premises in favor of the government is against our existing law and jurisprudence.

34
The issues raised essentially boil down to whether or not the alleged original certificate of titles issued pursuant to the order of the Court of First Instance in
1916-1917 and the subsequent TCTs issued in 1953 pursuant to the petition for reconstitution are valid.

Petitioners contend that the Treaty of Paris which ended the Spanish-American War at the end of the 19th century recognized the property rights of Spanish
and Filipino citizens and the American government had no inherent power to confiscate properties of private citizens and declare them part of any kind of
government reservation. They allege that their predecessors in interest have been in open, adverse and continuous possession of the subject lands for 20-50
years prior to their registration in 1916-1917. Hence, the reservation of the lands for provincial purposes in 1913 by then Governor-general Forbes was
tantamount to deprivation of private property without due process of law.

In support of their claim, the petitioners presented copies of a number of decisions of the Court of First Instance of Albay, 15th Judicial District of the
United States of America which state that the predecessors in interest of the petitioners' father Diego Palomo, were in continuous, open and adverse
possession of the lands from 20 to 50 years at the time of their registration in 1916.

We are not convinced.

The Philippines passed to the Spanish Crown by discovery and conquest in the 16th century. Before the Treaty of Paris in April 11, 1899, our lands,
whether agricultural, mineral or forest were under the exclusive patrimony and dominion of the Spanish Crown. Hence, private ownership of land could
only be acquired through royal concessions which were documented in various forms, such as (1) Titulo Real or Royal Grant," (2) Concesion Especial or
Special Grant, (3) Titulo de Compra or Title by Purchase and (4) Informacion Posesoria or Possessory Information title obtained under the Spanish
Mortgage Law or under the Royal Decree of January 26, 1889.

Unfortunately, no proof was presented that the petitioners' predecessors in interest derived title from an old Spanish grant. Petitioners placed much reliance
upon the declarations in Expediente No. 5, G.L.R.O. Record Decision No. 9820, dated January 17, 1917; Expediente No. 6, G.L.R.O. Record No. 9821,
dated December 28, 1916; Expediente No. 7, G.L.R.O. Record No. 9822, dated December 9, 1916; Expediente No. 8, G.L.R.O. Record No. 9823, dated
December 28, 1916 and Expediente No. 10, G.L.R.O. Record No. 9868, dated December 9, 1916 of the Court of First Instance of Albay, 15th Judicial
District of the United States of America presided by Judge Isidro Paredes that their predecessors in interest were in open, adverse and continuous
possession of the subject lands for 20-50 years. 14 The aforesaid "decisions" of the Court of First Instance, however, were not signed by the judge but were
merely certified copies of notification to Diego Palomo bearing the signature of the clerk of court.

Moreover, despite claims by the petitioners that their predecessors in interest were in open, adverse and continuous possession of the lands for 20 to 50
years prior to their registration in 1916-1917, the lands were surveyed only in December 1913, the very same year they were acquired by Diego Palomo.
Curiously , in February 1913 or 10 months before the lands were surveyed for Diego Palomo, the government had already surveyed the area in preparation
for its reservation for provincial park purposes. If the petitioners' predecessors in interest were indeed in possession of the lands for a number of years prior
to their registration in 1916-1917, they would have undoubtedly known about the inclusion of these properties in the reservation in 1913. It certainly is a
trifle late at this point to argue that the government had no right to include these properties in the reservation when the question should have been raised 83
years ago.

As regards the petitioners' contention that inasmuch as they obtained the titles without government opposition, the government is now estopped from
questioning the validity of the certificates of title which were granted. As correctly pointed out by the respondent Court of Appeals, the principle of
estoppel, does not operate against the Government for the act of its agents. 15

Assuming that the decrees of the Court of First Instance were really issued, the lands are still not capable of appropriation. The adverse possession which
may be the basis of a grant of title in confirmation of imperfect title cases applies only to alienable lands of the public domain.

There is no question that the lands in the case at bar were not alienable lands of the public domain. As testified by the District Forester, records in the
Bureau of Forestry show that the subject lands were never declared as alienable and disposable and subject to private alienation prior to 1913 up to the
present. 16 Moreover, as part of the reservation for provincial park purposes, they form part of the forest zone.

It is elementary in the law governing natural resources that forest land cannot be owned by private persons. It is not registrable and possession thereof, no
matter how lengthy, cannot convert it into private property, 17 unless such lands are reclassified and considered disposable and alienable.

Neither do the tax receipts which were presented in evidence prove ownership of the parcels of land inasmuch as the weight of authority is that tax
declarations are not conclusive proof of ownership in land registration cases. 18

Having disposed of the issue of ownership, we now come to the matter regarding the forfeiture of improvements introduced on the subject lands. It bears
emphasis that Executive Order No. 40 was already in force at the time the lands in question were surveyed for Diego Palomo. Petitioners also apparently
knew that the subject lands were covered under the reservation when they filed a petition for reconstitution of the lost original certificates of title inasmuch
as the blueprint of Survey Work Order Number 21781 of Plan II-9299 approved by the Chief of the Land Registration Office Enrique Altavas in 1953 as a

35
true and correct copy of the Original Plan No. II-9299 filed in the Bureau of Lands dated September 11, 1948 19 contains the following note, "in conflict
with provincial reservation." 20 In any case, petitioners are presumed to know the law and the failure of the government to oppose the registration of the
lands in question is no justification for the petitioners to plead good faith in introducing improvements on the lots.

Finally, since 1,976 square meters of the 3,384 square meters covered by TCT 3913 fall within the reservation, TCT 3913 should be annulled only with
respect to the aforesaid area. Inasmuch as the bamboo groves leveled in TCT 3913 and subject of Civil Case T-143, 21 were within the perimeter of the
national park, 22 no pronouncement as to damages is in order.

WHEREFORE, the decision of the Court of Appeals is hereby AFFIRMED with the modification that TCT 3913 be annulled with respect to the 1,976
square meter area falling within the reservation zone.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. 133250 July 9, 2002

FRANCISCO I. CHAVEZ, petitioner,

vs.
PUBLIC ESTATES AUTHORITY and AMARI COASTAL BAY DEVELOPMENT CORPORATION, respondents.

CARPIO, J.:

This is an original Petition for Mandamus with prayer for a writ of preliminary injunction and a temporary restraining order. The petition seeks to compel
the Public Estates Authority ("PEA" for brevity) to disclose all facts on PEA's then on-going renegotiations with Amari Coastal Bay and Development
Corporation ("AMARI" for brevity) to reclaim portions of Manila Bay. The petition further seeks to enjoin PEA from signing a new agreement with
AMARI involving such reclamation.

The Facts

On November 20, 1973, the government, through the Commissioner of Public Highways, signed a contract with the Construction and Development
Corporation of the Philippines ("CDCP" for brevity) to reclaim certain foreshore and offshore areas of Manila Bay. The contract also included the
construction of Phases I and II of the Manila-Cavite Coastal Road. CDCP obligated itself to carry out all the works in consideration of fifty percent of the
total reclaimed land.

On February 4, 1977, then President Ferdinand E. Marcos issued Presidential Decree No. 1084 creating PEA. PD No. 1084 tasked PEA "to reclaim land,
including foreshore and submerged areas," and "to develop, improve, acquire, x x x lease and sell any and all kinds of lands."1 On the same date, then
President Marcos issued Presidential Decree No. 1085 transferring to PEA the "lands reclaimed in the foreshore and offshore of the Manila Bay"2 under the
Manila-Cavite Coastal Road and Reclamation Project (MCCRRP).

On December 29, 1981, then President Marcos issued a memorandum directing PEA to amend its contract with CDCP, so that "[A]ll future works in
MCCRRP x x x shall be funded and owned by PEA." Accordingly, PEA and CDCP executed a Memorandum of Agreement dated December 29, 1981,
which stated:

"(i) CDCP shall undertake all reclamation, construction, and such other works in the MCCRRP as may be agreed upon by the parties, to be paid according
to progress of works on a unit price/lump sum basis for items of work to be agreed upon, subject to price escalation, retention and other terms and
conditions provided for in Presidential Decree No. 1594. All the financing required for such works shall be provided by PEA.

xxx

(iii) x x x CDCP shall give up all its development rights and hereby agrees to cede and transfer in favor of PEA, all of the rights, title, interest and
participation of CDCP in and to all the areas of land reclaimed by CDCP in the MCCRRP as of December 30, 1981 which have not yet been sold,
transferred or otherwise disposed of by CDCP as of said date, which areas consist of approximately Ninety-Nine Thousand Four Hundred Seventy Three
(99,473) square meters in the Financial Center Area covered by land pledge No. 5 and approximately Three Million Three Hundred Eighty Two Thousand

36
Eight Hundred Eighty Eight (3,382,888) square meters of reclaimed areas at varying elevations above Mean Low Water Level located outside the Financial
Center Area and the First Neighborhood Unit."3

On January 19, 1988, then President Corazon C. Aquino issued Special Patent No. 3517, granting and transferring to PEA "the parcels of land so reclaimed
under the Manila-Cavite Coastal Road and Reclamation Project (MCCRRP) containing a total area of one million nine hundred fifteen thousand eight
hundred ninety four (1,915,894) square meters." Subsequently, on April 9, 1988, the Register of Deeds of the Municipality of Parañaque issued Transfer
Certificates of Title Nos. 7309, 7311, and 7312, in the name of PEA, covering the three reclaimed islands known as the "Freedom Islands" located at the
southern portion of the Manila-Cavite Coastal Road, Parañaque City. The Freedom Islands have a total land area of One Million Five Hundred Seventy
Eight Thousand Four Hundred and Forty One (1,578,441) square meters or 157.841 hectares.

On April 25, 1995, PEA entered into a Joint Venture Agreement ("JVA" for brevity) with AMARI, a private corporation, to develop the Freedom Islands.
The JVA also required the reclamation of an additional 250 hectares of submerged areas surrounding these islands to complete the configuration in the
Master Development Plan of the Southern Reclamation Project-MCCRRP. PEA and AMARI entered into the JVA through negotiation without public
bidding.4 On April 28, 1995, the Board of Directors of PEA, in its Resolution No. 1245, confirmed the JVA.5 On June 8, 1995, then President Fidel V.
Ramos, through then Executive Secretary Ruben Torres, approved the JVA.6

On November 29, 1996, then Senate President Ernesto Maceda delivered a privilege speech in the Senate and denounced the JVA as the "grandmother of
all scams." As a result, the Senate Committee on Government Corporations and Public Enterprises, and the Committee on Accountability of Public Officers
and Investigations, conducted a joint investigation. The Senate Committees reported the results of their investigation in Senate Committee Report No. 560
dated September 16, 1997.7 Among the conclusions of their report are: (1) the reclaimed lands PEA seeks to transfer to AMARI under the JVA are lands of
the public domain which the government has not classified as alienable lands and therefore PEA cannot alienate these lands; (2) the certificates of title
covering the Freedom Islands are thus void, and (3) the JVA itself is illegal.

On December 5, 1997, then President Fidel V. Ramos issued Presidential Administrative Order No. 365 creating a Legal Task Force to conduct a study on
the legality of the JVA in view of Senate Committee Report No. 560. The members of the Legal Task Force were the Secretary of Justice,8 the Chief
Presidential Legal Counsel,9 and the Government Corporate Counsel.10 The Legal Task Force upheld the legality of the JVA, contrary to the conclusions
reached by the Senate Committees.11

On April 4 and 5, 1998, the Philippine Daily Inquirer and Today published reports that there were on-going renegotiations between PEA and AMARI
under an order issued by then President Fidel V. Ramos. According to these reports, PEA Director Nestor Kalaw, PEA Chairman Arsenio Yulo and retired
Navy Officer Sergio Cruz composed the negotiating panel of PEA.

On April 13, 1998, Antonio M. Zulueta filed before the Court a Petition for Prohibition with Application for the Issuance of a Temporary Restraining
Order and Preliminary Injunction docketed as G.R. No. 132994 seeking to nullify the JVA. The Court dismissed the petition "for unwarranted disregard of
judicial hierarchy, without prejudice to the refiling of the case before the proper court."12

On April 27, 1998, petitioner Frank I. Chavez ("Petitioner" for brevity) as a taxpayer, filed the instant Petition for Mandamus with Prayer for the Issuance
of a Writ of Preliminary Injunction and Temporary Restraining Order. Petitioner contends the government stands to lose billions of pesos in the sale by
PEA of the reclaimed lands to AMARI. Petitioner prays that PEA publicly disclose the terms of any renegotiation of the JVA, invoking Section 28, Article
II, and Section 7, Article III, of the 1987 Constitution on the right of the people to information on matters of public concern. Petitioner assails the sale to
AMARI of lands of the public domain as a blatant violation of Section 3, Article XII of the 1987 Constitution prohibiting the sale of alienable lands of the
public domain to private corporations. Finally, petitioner asserts that he seeks to enjoin the loss of billions of pesos in properties of the State that are of
public dominion.

After several motions for extension of time,13 PEA and AMARI filed their Comments on October 19, 1998 and June 25, 1998, respectively. Meanwhile, on
December 28, 1998, petitioner filed an Omnibus Motion: (a) to require PEA to submit the terms of the renegotiated PEA-AMARI contract; (b) for issuance
of a temporary restraining order; and (c) to set the case for hearing on oral argument. Petitioner filed a Reiterative Motion for Issuance of a TRO dated May
26, 1999, which the Court denied in a Resolution dated June 22, 1999.

In a Resolution dated March 23, 1999, the Court gave due course to the petition and required the parties to file their respective memoranda.

On March 30, 1999, PEA and AMARI signed the Amended Joint Venture Agreement ("Amended JVA," for brevity). On May 28, 1999, the Office of the
President under the administration of then President Joseph E. Estrada approved the Amended JVA.

Due to the approval of the Amended JVA by the Office of the President, petitioner now prays that on "constitutional and statutory grounds the renegotiated
contract be declared null and void."14

The Issues

37
The issues raised by petitioner, PEA15 and AMARI16 are as follows:

I. WHETHER THE PRINCIPAL RELIEFS PRAYED FOR IN THE PETITION ARE MOOT AND ACADEMIC BECAUSE OF SUBSEQUENT
EVENTS;

II. WHETHER THE PETITION MERITS DISMISSAL FOR FAILING TO OBSERVE THE PRINCIPLE GOVERNING THE HIERARCHY OF
COURTS;

III. WHETHER THE PETITION MERITS DISMISSAL FOR NON-EXHAUSTION OF ADMINISTRATIVE REMEDIES;

IV. WHETHER PETITIONER HAS LOCUS STANDI TO BRING THIS SUIT;

V. WHETHER THE CONSTITUTIONAL RIGHT TO INFORMATION INCLUDES OFFICIAL INFORMATION ON ON-GOING NEGOTIATIONS
BEFORE A FINAL AGREEMENT;

VI. WHETHER THE STIPULATIONS IN THE AMENDED JOINT VENTURE AGREEMENT FOR THE TRANSFER TO AMARI OF CERTAIN
LANDS, RECLAIMED AND STILL TO BE RECLAIMED, VIOLATE THE 1987 CONSTITUTION; AND

VII. WHETHER THE COURT IS THE PROPER FORUM FOR RAISING THE ISSUE OF WHETHER THE AMENDED JOINT VENTURE
AGREEMENT IS GROSSLY DISADVANTAGEOUS TO THE GOVERNMENT.

The Court's Ruling

First issue: whether the principal reliefs prayed for in the petition are moot and academic because of subsequent events.

The petition prays that PEA publicly disclose the "terms and conditions of the on-going negotiations for a new agreement." The petition also prays that the
Court enjoin PEA from "privately entering into, perfecting and/or executing any new agreement with AMARI."

PEA and AMARI claim the petition is now moot and academic because AMARI furnished petitioner on June 21, 1999 a copy of the signed Amended JVA
containing the terms and conditions agreed upon in the renegotiations. Thus, PEA has satisfied petitioner's prayer for a public disclosure of the
renegotiations. Likewise, petitioner's prayer to enjoin the signing of the Amended JVA is now moot because PEA and AMARI have already signed the
Amended JVA on March 30, 1999. Moreover, the Office of the President has approved the Amended JVA on May 28, 1999.

Petitioner counters that PEA and AMARI cannot avoid the constitutional issue by simply fast-tracking the signing and approval of the Amended JVA
before the Court could act on the issue. Presidential approval does not resolve the constitutional issue or remove it from the ambit of judicial review.

We rule that the signing of the Amended JVA by PEA and AMARI and its approval by the President cannot operate to moot the petition and divest the
Court of its jurisdiction. PEA and AMARI have still to implement the Amended JVA. The prayer to enjoin the signing of the Amended JVA on
constitutional grounds necessarily includes preventing its implementation if in the meantime PEA and AMARI have signed one in violation of the
Constitution. Petitioner's principal basis in assailing the renegotiation of the JVA is its violation of Section 3, Article XII of the Constitution, which
prohibits the government from alienating lands of the public domain to private corporations. If the Amended JVA indeed violates the Constitution, it is the
duty of the Court to enjoin its implementation, and if already implemented, to annul the effects of such unconstitutional contract.

The Amended JVA is not an ordinary commercial contract but one which seeks to transfer title and ownership to 367.5 hectares of reclaimed lands and
submerged areas of Manila Bay to a single private corporation. It now becomes more compelling for the Court to resolve the issue to insure the
government itself does not violate a provision of the Constitution intended to safeguard the national patrimony. Supervening events, whether intended or
accidental, cannot prevent the Court from rendering a decision if there is a grave violation of the Constitution. In the instant case, if the Amended JVA runs
counter to the Constitution, the Court can still prevent the transfer of title and ownership of alienable lands of the public domain in the name of AMARI.
Even in cases where supervening events had made the cases moot, the Court did not hesitate to resolve the legal or constitutional issues raised to formulate
controlling principles to guide the bench, bar, and the public.17

Also, the instant petition is a case of first impression. All previous decisions of the Court involving Section 3, Article XII of the 1987 Constitution, or its
counterpart provision in the 1973 Constitution,18 covered agricultural lands sold to private corporations which acquired the lands from private parties. The
transferors of the private corporations claimed or could claim the right to judicial confirmation of their imperfect titles19 under Title II of Commonwealth
Act. 141 ("CA No. 141" for brevity). In the instant case, AMARI seeks to acquire from PEA, a public corporation, reclaimed lands and submerged areas
for non-agricultural purposes by purchase under PD No. 1084 (charter of PEA) and Title III of CA No. 141. Certain undertakings by AMARI under the
Amended JVA constitute the consideration for the purchase. Neither AMARI nor PEA can claim judicial confirmation of their titles because the lands

38
covered by the Amended JVA are newly reclaimed or still to be reclaimed. Judicial confirmation of imperfect title requires open, continuous, exclusive and
notorious occupation of agricultural lands of the public domain for at least thirty years since June 12, 1945 or earlier. Besides, the deadline for filing
applications for judicial confirmation of imperfect title expired on December 31, 1987.20

Lastly, there is a need to resolve immediately the constitutional issue raised in this petition because of the possible transfer at any time by PEA to AMARI
of title and ownership to portions of the reclaimed lands. Under the Amended JVA, PEA is obligated to transfer to AMARI the latter's seventy percent
proportionate share in the reclaimed areas as the reclamation progresses. The Amended JVA even allows AMARI to mortgage at any time the entire
reclaimed area to raise financing for the reclamation project.21

Second issue: whether the petition merits dismissal for failing to observe the principle governing the hierarchy of courts.

PEA and AMARI claim petitioner ignored the judicial hierarchy by seeking relief directly from the Court. The principle of hierarchy of courts applies
generally to cases involving factual questions. As it is not a trier of facts, the Court cannot entertain cases involving factual issues. The instant case,
however, raises constitutional issues of transcendental importance to the public.22 The Court can resolve this case without determining any factual issue
related to the case. Also, the instant case is a petition for mandamus which falls under the original jurisdiction of the Court under Section 5, Article VIII of
the Constitution. We resolve to exercise primary jurisdiction over the instant case.

Third issue: whether the petition merits dismissal for non-exhaustion of administrative remedies.

PEA faults petitioner for seeking judicial intervention in compelling PEA to disclose publicly certain information without first asking PEA the needed
information. PEA claims petitioner's direct resort to the Court violates the principle of exhaustion of administrative remedies. It also violates the rule that
mandamus may issue only if there is no other plain, speedy and adequate remedy in the ordinary course of law.

PEA distinguishes the instant case from Tañada v. Tuvera23 where the Court granted the petition for mandamus even if the petitioners there did not initially
demand from the Office of the President the publication of the presidential decrees. PEA points out that in Tañada, the Executive Department had an
affirmative statutory duty under Article 2 of the Civil Code24 and Section 1 of Commonwealth Act No. 63825 to publish the presidential decrees. There was,
therefore, no need for the petitioners in Tañada to make an initial demand from the Office of the President. In the instant case, PEA claims it has no
affirmative statutory duty to disclose publicly information about its renegotiation of the JVA. Thus, PEA asserts that the Court must apply the principle of
exhaustion of administrative remedies to the instant case in view of the failure of petitioner here to demand initially from PEA the needed information.

The original JVA sought to dispose to AMARI public lands held by PEA, a government corporation. Under Section 79 of the Government Auditing Code,26
the disposition of government lands to private parties requires public bidding. PEA was under a positive legal duty to disclose to the public the terms and
conditions for the sale of its lands. The law obligated PEA to make this public disclosure even without demand from petitioner or from anyone. PEA
failed to make this public disclosure because the original JVA, like the Amended JVA, was the result of a negotiated contract, not of a public bidding.
Considering that PEA had an affirmative statutory duty to make the public disclosure, and was even in breach of this legal duty, petitioner had the right to
seek direct judicial intervention.

Moreover, and this alone is determinative of this issue, the principle of exhaustion of administrative remedies does not apply when the issue involved is a
purely legal or constitutional question.27 The principal issue in the instant case is the capacity of AMARI to acquire lands held by PEA in view of the
constitutional ban prohibiting the alienation of lands of the public domain to private corporations. We rule that the principle of exhaustion of administrative
remedies does not apply in the instant case.

Fourth issue: whether petitioner has locus standi to bring this suit

PEA argues that petitioner has no standing to institute mandamus proceedings to enforce his constitutional right to information without a showing that PEA
refused to perform an affirmative duty imposed on PEA by the Constitution. PEA also claims that petitioner has not shown that he will suffer any concrete
injury because of the signing or implementation of the Amended JVA. Thus, there is no actual controversy requiring the exercise of the power of judicial
review.

The petitioner has standing to bring this taxpayer's suit because the petition seeks to compel PEA to comply with its constitutional duties. There are two
constitutional issues involved here. First is the right of citizens to information on matters of public concern. Second is the application of a constitutional
provision intended to insure the equitable distribution of alienable lands of the public domain among Filipino citizens. The thrust of the first issue is to
compel PEA to disclose publicly information on the sale of government lands worth billions of pesos, information which the Constitution and statutory law
mandate PEA to disclose. The thrust of the second issue is to prevent PEA from alienating hundreds of hectares of alienable lands of the public domain in
violation of the Constitution, compelling PEA to comply with a constitutional duty to the nation.

Moreover, the petition raises matters of transcendental importance to the public. In Chavez v. PCGG,28 the Court upheld the right of a citizen to bring a
taxpayer's suit on matters of transcendental importance to the public, thus -

39
"Besides, petitioner emphasizes, the matter of recovering the ill-gotten wealth of the Marcoses is an issue of 'transcendental importance to the public.' He
asserts that ordinary taxpayers have a right to initiate and prosecute actions questioning the validity of acts or orders of government agencies or
instrumentalities, if the issues raised are of 'paramount public interest,' and if they 'immediately affect the social, economic and moral well being of the
people.'

Moreover, the mere fact that he is a citizen satisfies the requirement of personal interest, when the proceeding involves the assertion of a public right, such
as in this case. He invokes several decisions of this Court which have set aside the procedural matter of locus standi, when the subject of the case involved
public interest.

xxx

In Tañada v. Tuvera, the Court asserted that when the issue concerns a public right and the object of mandamus is to obtain the enforcement of a public
duty, the people are regarded as the real parties in interest; and because it is sufficient that petitioner is a citizen and as such is interested in the execution of
the laws, he need not show that he has any legal or special interest in the result of the action. In the aforesaid case, the petitioners sought to enforce their
right to be informed on matters of public concern, a right then recognized in Section 6, Article IV of the 1973 Constitution, in connection with the rule that
laws in order to be valid and enforceable must be published in the Official Gazette or otherwise effectively promulgated. In ruling for the petitioners' legal
standing, the Court declared that the right they sought to be enforced 'is a public right recognized by no less than the fundamental law of the land.'

Legaspi v. Civil Service Commission, while reiterating Tañada, further declared that 'when a mandamus proceeding involves the assertion of a public right,
the requirement of personal interest is satisfied by the mere fact that petitioner is a citizen and, therefore, part of the general 'public' which possesses the
right.'

Further, in Albano v. Reyes, we said that while expenditure of public funds may not have been involved under the questioned contract for the development,
management and operation of the Manila International Container Terminal, 'public interest [was] definitely involved considering the important role [of the
subject contract] . . . in the economic development of the country and the magnitude of the financial consideration involved.' We concluded that, as a
consequence, the disclosure provision in the Constitution would constitute sufficient authority for upholding the petitioner's standing.

Similarly, the instant petition is anchored on the right of the people to information and access to official records, documents and papers — a right
guaranteed under Section 7, Article III of the 1987 Constitution. Petitioner, a former solicitor general, is a Filipino citizen. Because of the satisfaction of the
two basic requisites laid down by decisional law to sustain petitioner's legal standing, i.e. (1) the enforcement of a public right (2) espoused by a Filipino
citizen, we rule that the petition at bar should be allowed."

We rule that since the instant petition, brought by a citizen, involves the enforcement of constitutional rights - to information and to the equitable diffusion
of natural resources - matters of transcendental public importance, the petitioner has the requisite locus standi.

Fifth issue: whether the constitutional right to information includes official information on on-going negotiations before a final agreement.

Section 7, Article III of the Constitution explains the people's right to information on matters of public concern in this manner:

"Sec. 7. The right of the people to information on matters of public concern shall be recognized. Access to official records, and to documents, and papers
pertaining to official acts, transactions, or decisions, as well as to government research data used as basis for policy development, shall be afforded the
citizen, subject to such limitations as may be provided by law." (Emphasis supplied)

The State policy of full transparency in all transactions involving public interest reinforces the people's right to information on matters of public concern.
This State policy is expressed in Section 28, Article II of the Constitution, thus:

"Sec. 28. Subject to reasonable conditions prescribed by law, the State adopts and implements a policy of full public disclosure of all its transactions
involving public interest." (Emphasis supplied)

These twin provisions of the Constitution seek to promote transparency in policy-making and in the operations of the government, as well as provide the
people sufficient information to exercise effectively other constitutional rights. These twin provisions are essential to the exercise of freedom of expression.
If the government does not disclose its official acts, transactions and decisions to citizens, whatever citizens say, even if expressed without any restraint,
will be speculative and amount to nothing. These twin provisions are also essential to hold public officials "at all times x x x accountable to the people,"29
for unless citizens have the proper information, they cannot hold public officials accountable for anything. Armed with the right information, citizens can
participate in public discussions leading to the formulation of government policies and their effective implementation. An informed citizenry is essential to
the existence and proper functioning of any democracy. As explained by the Court in Valmonte v. Belmonte, Jr.30 –

40
"An essential element of these freedoms is to keep open a continuing dialogue or process of communication between the government and the people. It is in
the interest of the State that the channels for free political discussion be maintained to the end that the government may perceive and be responsive to the
people's will. Yet, this open dialogue can be effective only to the extent that the citizenry is informed and thus able to formulate its will intelligently. Only
when the participants in the discussion are aware of the issues and have access to information relating thereto can such bear fruit."

PEA asserts, citing Chavez v. PCGG,31 that in cases of on-going negotiations the right to information is limited to "definite propositions of the
government." PEA maintains the right does not include access to "intra-agency or inter-agency recommendations or communications during the stage when
common assertions are still in the process of being formulated or are in the 'exploratory stage'."

Also, AMARI contends that petitioner cannot invoke the right at the pre-decisional stage or before the closing of the transaction. To support its contention,
AMARI cites the following discussion in the 1986 Constitutional Commission:

"Mr. Suarez. And when we say 'transactions' which should be distinguished from contracts, agreements, or treaties or whatever, does the Gentleman refer
to the steps leading to the consummation of the contract, or does he refer to the contract itself?

Mr. Ople: The 'transactions' used here, I suppose is generic and therefore, it can cover both steps leading to a contract and already a consummated
contract, Mr. Presiding Officer.

Mr. Suarez: This contemplates inclusion of negotiations leading to the consummation of the transaction.

Mr. Ople: Yes, subject only to reasonable safeguards on the national interest.

Mr. Suarez: Thank you."32 (Emphasis supplied)

AMARI argues there must first be a consummated contract before petitioner can invoke the right. Requiring government officials to reveal their
deliberations at the pre-decisional stage will degrade the quality of decision-making in government agencies. Government officials will hesitate to express
their real sentiments during deliberations if there is immediate public dissemination of their discussions, putting them under all kinds of pressure before
they decide.

We must first distinguish between information the law on public bidding requires PEA to disclose publicly, and information the constitutional right to
information requires PEA to release to the public. Before the consummation of the contract, PEA must, on its own and without demand from anyone,
disclose to the public matters relating to the disposition of its property. These include the size, location, technical description and nature of the property
being disposed of, the terms and conditions of the disposition, the parties qualified to bid, the minimum price and similar information. PEA must prepare
all these data and disclose them to the public at the start of the disposition process, long before the consummation of the contract, because the Government
Auditing Code requires public bidding. If PEA fails to make this disclosure, any citizen can demand from PEA this information at any time during the
bidding process.

Information, however, on on-going evaluation or review of bids or proposals being undertaken by the bidding or review committee is not immediately
accessible under the right to information. While the evaluation or review is still on-going, there are no "official acts, transactions, or decisions" on the bids
or proposals. However, once the committee makes its official recommendation, there arises a "definite proposition" on the part of the government. From
this moment, the public's right to information attaches, and any citizen can access all the non-proprietary information leading to such definite proposition.
In Chavez v. PCGG,33 the Court ruled as follows:

"Considering the intent of the framers of the Constitution, we believe that it is incumbent upon the PCGG and its officers, as well as other government
representatives, to disclose sufficient public information on any proposed settlement they have decided to take up with the ostensible owners and holders of
ill-gotten wealth. Such information, though, must pertain to definite propositions of the government, not necessarily to intra-agency or inter-agency
recommendations or communications during the stage when common assertions are still in the process of being formulated or are in the "exploratory"
stage. There is need, of course, to observe the same restrictions on disclosure of information in general, as discussed earlier – such as on matters involving
national security, diplomatic or foreign relations, intelligence and other classified information." (Emphasis supplied)

Contrary to AMARI's contention, the commissioners of the 1986 Constitutional Commission understood that the right to information "contemplates
inclusion of negotiations leading to the consummation of the transaction." Certainly, a consummated contract is not a requirement for the exercise of the
right to information. Otherwise, the people can never exercise the right if no contract is consummated, and if one is consummated, it may be too late for the
public to expose its defects.1âwphi1.nêt

Requiring a consummated contract will keep the public in the dark until the contract, which may be grossly disadvantageous to the government or even
illegal, becomes a fait accompli. This negates the State policy of full transparency on matters of public concern, a situation which the framers of the
Constitution could not have intended. Such a requirement will prevent the citizenry from participating in the public discussion of any proposed contract,

41
effectively truncating a basic right enshrined in the Bill of Rights. We can allow neither an emasculation of a constitutional right, nor a retreat by the State
of its avowed "policy of full disclosure of all its transactions involving public interest."

The right covers three categories of information which are "matters of public concern," namely: (1) official records; (2) documents and papers pertaining to
official acts, transactions and decisions; and (3) government research data used in formulating policies. The first category refers to any document that is
part of the public records in the custody of government agencies or officials. The second category refers to documents and papers recording, evidencing,
establishing, confirming, supporting, justifying or explaining official acts, transactions or decisions of government agencies or officials. The third category
refers to research data, whether raw, collated or processed, owned by the government and used in formulating government policies.

The information that petitioner may access on the renegotiation of the JVA includes evaluation reports, recommendations, legal and expert opinions,
minutes of meetings, terms of reference and other documents attached to such reports or minutes, all relating to the JVA. However, the right to information
does not compel PEA to prepare lists, abstracts, summaries and the like relating to the renegotiation of the JVA.34 The right only affords access to records,
documents and papers, which means the opportunity to inspect and copy them. One who exercises the right must copy the records, documents and papers at
his expense. The exercise of the right is also subject to reasonable regulations to protect the integrity of the public records and to minimize disruption to
government operations, like rules specifying when and how to conduct the inspection and copying.35

The right to information, however, does not extend to matters recognized as privileged information under the separation of powers.36 The right does not
also apply to information on military and diplomatic secrets, information affecting national security, and information on investigations of crimes by law
enforcement agencies before the prosecution of the accused, which courts have long recognized as confidential.37 The right may also be subject to other
limitations that Congress may impose by law.

There is no claim by PEA that the information demanded by petitioner is privileged information rooted in the separation of powers. The information does
not cover Presidential conversations, correspondences, or discussions during closed-door Cabinet meetings which, like internal deliberations of the
Supreme Court and other collegiate courts, or executive sessions of either house of Congress,38 are recognized as confidential. This kind of information
cannot be pried open by a co-equal branch of government. A frank exchange of exploratory ideas and assessments, free from the glare of publicity and
pressure by interested parties, is essential to protect the independence of decision-making of those tasked to exercise Presidential, Legislative and Judicial
power.39 This is not the situation in the instant case.

We rule, therefore, that the constitutional right to information includes official information on on-going negotiations before a final contract. The
information, however, must constitute definite propositions by the government and should not cover recognized exceptions like privileged information,
military and diplomatic secrets and similar matters affecting national security and public order.40 Congress has also prescribed other limitations on the right
to information in several legislations.41

Sixth issue: whether stipulations in the Amended JVA for the transfer to AMARI of lands, reclaimed or to be reclaimed, violate the Constitution.

The Regalian Doctrine

The ownership of lands reclaimed from foreshore and submerged areas is rooted in the Regalian doctrine which holds that the State owns all lands and
waters of the public domain. Upon the Spanish conquest of the Philippines, ownership of all "lands, territories and possessions" in the Philippines passed to
the Spanish Crown.42 The King, as the sovereign ruler and representative of the people, acquired and owned all lands and territories in the Philippines
except those he disposed of by grant or sale to private individuals.

The 1935, 1973 and 1987 Constitutions adopted the Regalian doctrine substituting, however, the State, in lieu of the King, as the owner of all lands and
waters of the public domain. The Regalian doctrine is the foundation of the time-honored principle of land ownership that "all lands that were not acquired
from the Government, either by purchase or by grant, belong to the public domain."43 Article 339 of the Civil Code of 1889, which is now Article 420 of
the Civil Code of 1950, incorporated the Regalian doctrine.

Ownership and Disposition of Reclaimed Lands

The Spanish Law of Waters of 1866 was the first statutory law governing the ownership and disposition of reclaimed lands in the Philippines. On May 18,
1907, the Philippine Commission enacted Act No. 1654 which provided for the lease, but not the sale, of reclaimed lands of the government to
corporations and individuals. Later, on November 29, 1919, the Philippine Legislature approved Act No. 2874, the Public Land Act, which authorized the
lease, but not the sale, of reclaimed lands of the government to corporations and individuals. On November 7, 1936, the National Assembly passed
Commonwealth Act No. 141, also known as the Public Land Act, which authorized the lease, but not the sale, of reclaimed lands of the government to
corporations and individuals. CA No. 141 continues to this day as the general law governing the classification and disposition of lands of the public
domain.

The Spanish Law of Waters of 1866 and the Civil Code of 1889

42
Under the Spanish Law of Waters of 1866, the shores, bays, coves, inlets and all waters within the maritime zone of the Spanish territory belonged to the
public domain for public use.44 The Spanish Law of Waters of 1866 allowed the reclamation of the sea under Article 5, which provided as follows:

"Article 5. Lands reclaimed from the sea in consequence of works constructed by the State, or by the provinces, pueblos or private persons, with proper
permission, shall become the property of the party constructing such works, unless otherwise provided by the terms of the grant of authority."

Under the Spanish Law of Waters, land reclaimed from the sea belonged to the party undertaking the reclamation, provided the government issued the
necessary permit and did not reserve ownership of the reclaimed land to the State.

Article 339 of the Civil Code of 1889 defined property of public dominion as follows:

"Art. 339. Property of public dominion is –

1. That devoted to public use, such as roads, canals, rivers, torrents, ports and bridges constructed by the State, riverbanks, shores, roadsteads, and that of a
similar character;

2. That belonging exclusively to the State which, without being of general public use, is employed in some public service, or in the development of the
national wealth, such as walls, fortresses, and other works for the defense of the territory, and mines, until granted to private individuals."

Property devoted to public use referred to property open for use by the public. In contrast, property devoted to public service referred to property used for
some specific public service and open only to those authorized to use the property.

Property of public dominion referred not only to property devoted to public use, but also to property not so used but employed to develop the national
wealth. This class of property constituted property of public dominion although employed for some economic or commercial activity to increase the
national wealth.

Article 341 of the Civil Code of 1889 governed the re-classification of property of public dominion into private property, to wit:

"Art. 341. Property of public dominion, when no longer devoted to public use or to the defense of the territory, shall become a part of the private property
of the State."

This provision, however, was not self-executing. The legislature, or the executive department pursuant to law, must declare the property no longer needed
for public use or territorial defense before the government could lease or alienate the property to private parties.45

Act No. 1654 of the Philippine Commission

On May 8, 1907, the Philippine Commission enacted Act No. 1654 which regulated the lease of reclaimed and foreshore lands. The salient provisions of
this law were as follows:

"Section 1. The control and disposition of the foreshore as defined in existing law, and the title to all Government or public lands made or reclaimed by
the Government by dredging or filling or otherwise throughout the Philippine Islands, shall be retained by the Government without prejudice to vested
rights and without prejudice to rights conceded to the City of Manila in the Luneta Extension.

Section 2. (a) The Secretary of the Interior shall cause all Government or public lands made or reclaimed by the Government by dredging or filling or
otherwise to be divided into lots or blocks, with the necessary streets and alleyways located thereon, and shall cause plats and plans of such surveys to be
prepared and filed with the Bureau of Lands.

(b) Upon completion of such plats and plans the Governor-General shall give notice to the public that such parts of the lands so made or reclaimed as
are not needed for public purposes will be leased for commercial and business purposes, x x x.

xxx

(e) The leases above provided for shall be disposed of to the highest and best bidder therefore, subject to such regulations and safeguards as the Governor-
General may by executive order prescribe." (Emphasis supplied)

43
Act No. 1654 mandated that the government should retain title to all lands reclaimed by the government. The Act also vested in the government control
and disposition of foreshore lands. Private parties could lease lands reclaimed by the government only if these lands were no longer needed for public
purpose. Act No. 1654 mandated public bidding in the lease of government reclaimed lands. Act No. 1654 made government reclaimed lands sui generis
in that unlike other public lands which the government could sell to private parties, these reclaimed lands were available only for lease to private parties.

Act No. 1654, however, did not repeal Section 5 of the Spanish Law of Waters of 1866. Act No. 1654 did not prohibit private parties from reclaiming parts
of the sea under Section 5 of the Spanish Law of Waters. Lands reclaimed from the sea by private parties with government permission remained private
lands.

Act No. 2874 of the Philippine Legislature

On November 29, 1919, the Philippine Legislature enacted Act No. 2874, the Public Land Act.46 The salient provisions of Act No. 2874, on reclaimed
lands, were as follows:

"Sec. 6. The Governor-General, upon the recommendation of the Secretary of Agriculture and Natural Resources, shall from time to time classify the
lands of the public domain into –

(a) Alienable or disposable,

(b) Timber, and

(c) Mineral lands, x x x.

Sec. 7. For the purposes of the government and disposition of alienable or disposable public lands, the Governor-General, upon recommendation by the
Secretary of Agriculture and Natural Resources, shall from time to time declare what lands are open to disposition or concession under this Act."

Sec. 8. Only those lands shall be declared open to disposition or concession which have been officially delimited or classified x x x.

xxx

Sec. 55. Any tract of land of the public domain which, being neither timber nor mineral land, shall be classified as suitable for residential purposes or for
commercial, industrial, or other productive purposes other than agricultural purposes, and shall be open to disposition or concession, shall be disposed
of under the provisions of this chapter, and not otherwise.

Sec. 56. The lands disposable under this title shall be classified as follows:

(a) Lands reclaimed by the Government by dredging, filling, or other means;

(b) Foreshore;

(c) Marshy lands or lands covered with water bordering upon the shores or banks of navigable lakes or rivers;

(d) Lands not included in any of the foregoing classes.

x x x.

Sec. 58. The lands comprised in classes (a), (b), and (c) of section fifty-six shall be disposed of to private parties by lease only and not otherwise, as soon
as the Governor-General, upon recommendation by the Secretary of Agriculture and Natural Resources, shall declare that the same are not necessary
for the public service and are open to disposition under this chapter. The lands included in class (d) may be disposed of by sale or lease under the
provisions of this Act." (Emphasis supplied)

Section 6 of Act No. 2874 authorized the Governor-General to "classify lands of the public domain into x x x alienable or disposable"47 lands. Section 7 of
the Act empowered the Governor-General to "declare what lands are open to disposition or concession." Section 8 of the Act limited alienable or
disposable lands only to those lands which have been "officially delimited and classified."

44
Section 56 of Act No. 2874 stated that lands "disposable under this title48 shall be classified" as government reclaimed, foreshore and marshy lands, as well
as other lands. All these lands, however, must be suitable for residential, commercial, industrial or other productive non-agricultural purposes. These
provisions vested upon the Governor-General the power to classify inalienable lands of the public domain into disposable lands of the public domain.
These provisions also empowered the Governor-General to classify further such disposable lands of the public domain into government reclaimed,
foreshore or marshy lands of the public domain, as well as other non-agricultural lands.

Section 58 of Act No. 2874 categorically mandated that disposable lands of the public domain classified as government reclaimed, foreshore and marshy
lands "shall be disposed of to private parties by lease only and not otherwise." The Governor-General, before allowing the lease of these lands to private
parties, must formally declare that the lands were "not necessary for the public service." Act No. 2874 reiterated the State policy to lease and not to sell
government reclaimed, foreshore and marshy lands of the public domain, a policy first enunciated in 1907 in Act No. 1654. Government reclaimed,
foreshore and marshy lands remained sui generis, as the only alienable or disposable lands of the public domain that the government could not sell to
private parties.

The rationale behind this State policy is obvious. Government reclaimed, foreshore and marshy public lands for non-agricultural purposes retain their
inherent potential as areas for public service. This is the reason the government prohibited the sale, and only allowed the lease, of these lands to private
parties. The State always reserved these lands for some future public service.

Act No. 2874 did not authorize the reclassification of government reclaimed, foreshore and marshy lands into other non-agricultural lands under Section 56
(d). Lands falling under Section 56 (d) were the only lands for non-agricultural purposes the government could sell to private parties. Thus, under Act No.
2874, the government could not sell government reclaimed, foreshore and marshy lands to private parties, unless the legislature passed a law allowing
their sale.49

Act No. 2874 did not prohibit private parties from reclaiming parts of the sea pursuant to Section 5 of the Spanish Law of Waters of 1866. Lands reclaimed
from the sea by private parties with government permission remained private lands.

Dispositions under the 1935 Constitution

On May 14, 1935, the 1935 Constitution took effect upon its ratification by the Filipino people. The 1935 Constitution, in adopting the Regalian doctrine,
declared in Section 1, Article XIII, that –

"Section 1. All agricultural, timber, and mineral lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all forces of potential
energy and other natural resources of the Philippines belong to the State, and their disposition, exploitation, development, or utilization shall be limited to
citizens of the Philippines or to corporations or associations at least sixty per centum of the capital of which is owned by such citizens, subject to any
existing right, grant, lease, or concession at the time of the inauguration of the Government established under this Constitution. Natural resources, with the
exception of public agricultural land, shall not be alienated, and no license, concession, or lease for the exploitation, development, or utilization of any of
the natural resources shall be granted for a period exceeding twenty-five years, renewable for another twenty-five years, except as to water rights for
irrigation, water supply, fisheries, or industrial uses other than the development of water power, in which cases beneficial use may be the measure and limit
of the grant." (Emphasis supplied)

The 1935 Constitution barred the alienation of all natural resources except public agricultural lands, which were the only natural resources the State could
alienate. Thus, foreshore lands, considered part of the State's natural resources, became inalienable by constitutional fiat, available only for lease for 25
years, renewable for another 25 years. The government could alienate foreshore lands only after these lands were reclaimed and classified as alienable
agricultural lands of the public domain. Government reclaimed and marshy lands of the public domain, being neither timber nor mineral lands, fell under
the classification of public agricultural lands.50 However, government reclaimed and marshy lands, although subject to classification as disposable public
agricultural lands, could only be leased and not sold to private parties because of Act No. 2874.

The prohibition on private parties from acquiring ownership of government reclaimed and marshy lands of the public domain was only a statutory
prohibition and the legislature could therefore remove such prohibition. The 1935 Constitution did not prohibit individuals and corporations from acquiring
government reclaimed and marshy lands of the public domain that were classified as agricultural lands under existing public land laws. Section 2, Article
XIII of the 1935 Constitution provided as follows:

"Section 2. No private corporation or association may acquire, lease, or hold public agricultural lands in excess of one thousand and twenty four
hectares, nor may any individual acquire such lands by purchase in excess of one hundred and forty hectares, or by lease in excess of one thousand
and twenty-four hectares, or by homestead in excess of twenty-four hectares. Lands adapted to grazing, not exceeding two thousand hectares, may be
leased to an individual, private corporation, or association." (Emphasis supplied)

45
Still, after the effectivity of the 1935 Constitution, the legislature did not repeal Section 58 of Act No. 2874 to open for sale to private parties government
reclaimed and marshy lands of the public domain. On the contrary, the legislature continued the long established State policy of retaining for the
government title and ownership of government reclaimed and marshy lands of the public domain.

Commonwealth Act No. 141 of the Philippine National Assembly

On November 7, 1936, the National Assembly approved Commonwealth Act No. 141, also known as the Public Land Act, which compiled the then
existing laws on lands of the public domain. CA No. 141, as amended, remains to this day the existing general law governing the classification and
disposition of lands of the public domain other than timber and mineral lands.51

Section 6 of CA No. 141 empowers the President to classify lands of the public domain into "alienable or disposable"52 lands of the public domain, which
prior to such classification are inalienable and outside the commerce of man. Section 7 of CA No. 141 authorizes the President to "declare what lands are
open to disposition or concession." Section 8 of CA No. 141 states that the government can declare open for disposition or concession only lands that are
"officially delimited and classified." Sections 6, 7 and 8 of CA No. 141 read as follows:

"Sec. 6. The President, upon the recommendation of the Secretary of Agriculture and Commerce, shall from time to time classify the lands of the
public domain into –

(a) Alienable or disposable,

(b) Timber, and

(c) Mineral lands,

and may at any time and in like manner transfer such lands from one class to another,53 for the purpose of their administration and disposition.

Sec. 7. For the purposes of the administration and disposition of alienable or disposable public lands, the President, upon recommendation by the
Secretary of Agriculture and Commerce, shall from time to time declare what lands are open to disposition or concession under this Act.

Sec. 8. Only those lands shall be declared open to disposition or concession which have been officially delimited and classified and, when practicable,
surveyed, and which have not been reserved for public or quasi-public uses, nor appropriated by the Government, nor in any manner become private
property, nor those on which a private right authorized and recognized by this Act or any other valid law may be claimed, or which, having been reserved
or appropriated, have ceased to be so. x x x."

Thus, before the government could alienate or dispose of lands of the public domain, the President must first officially classify these lands as alienable or
disposable, and then declare them open to disposition or concession. There must be no law reserving these lands for public or quasi-public uses.

The salient provisions of CA No. 141, on government reclaimed, foreshore and marshy lands of the public domain, are as follows:

"Sec. 58. Any tract of land of the public domain which, being neither timber nor mineral land, is intended to be used for residential purposes or for
commercial, industrial, or other productive purposes other than agricultural, and is open to disposition or concession, shall be disposed of under the
provisions of this chapter and not otherwise.

Sec. 59. The lands disposable under this title shall be classified as follows:

(a) Lands reclaimed by the Government by dredging, filling, or other means;

(b) Foreshore;

(c) Marshy lands or lands covered with water bordering upon the shores or banks of navigable lakes or rivers;

(d) Lands not included in any of the foregoing classes.

Sec. 60. Any tract of land comprised under this title may be leased or sold, as the case may be, to any person, corporation, or association authorized to
purchase or lease public lands for agricultural purposes. x x x.

46
Sec. 61. The lands comprised in classes (a), (b), and (c) of section fifty-nine shall be disposed of to private parties by lease only and not otherwise, as
soon as the President, upon recommendation by the Secretary of Agriculture, shall declare that the same are not necessary for the public service and are
open to disposition under this chapter. The lands included in class (d) may be disposed of by sale or lease under the provisions of this Act." (Emphasis
supplied)

Section 61 of CA No. 141 readopted, after the effectivity of the 1935 Constitution, Section 58 of Act No. 2874 prohibiting the sale of government
reclaimed, foreshore and marshy disposable lands of the public domain. All these lands are intended for residential, commercial, industrial or other non-
agricultural purposes. As before, Section 61 allowed only the lease of such lands to private parties. The government could sell to private parties only lands
falling under Section 59 (d) of CA No. 141, or those lands for non-agricultural purposes not classified as government reclaimed, foreshore and marshy
disposable lands of the public domain. Foreshore lands, however, became inalienable under the 1935 Constitution which only allowed the lease of these
lands to qualified private parties.

Section 58 of CA No. 141 expressly states that disposable lands of the public domain intended for residential, commercial, industrial or other productive
purposes other than agricultural "shall be disposed of under the provisions of this chapter and not otherwise." Under Section 10 of CA No. 141, the term
"disposition" includes lease of the land. Any disposition of government reclaimed, foreshore and marshy disposable lands for non-agricultural purposes
must comply with Chapter IX, Title III of CA No. 141,54 unless a subsequent law amended or repealed these provisions.

In his concurring opinion in the landmark case of Republic Real Estate Corporation v. Court of Appeals,55 Justice Reynato S. Puno summarized succinctly
the law on this matter, as follows:

"Foreshore lands are lands of public dominion intended for public use. So too are lands reclaimed by the government by dredging, filling, or other means.
Act 1654 mandated that the control and disposition of the foreshore and lands under water remained in the national government. Said law allowed only the
'leasing' of reclaimed land. The Public Land Acts of 1919 and 1936 also declared that the foreshore and lands reclaimed by the government were to be
"disposed of to private parties by lease only and not otherwise." Before leasing, however, the Governor-General, upon recommendation of the Secretary of
Agriculture and Natural Resources, had first to determine that the land reclaimed was not necessary for the public service. This requisite must have been
met before the land could be disposed of. But even then, the foreshore and lands under water were not to be alienated and sold to private parties. The
disposition of the reclaimed land was only by lease. The land remained property of the State." (Emphasis supplied)

As observed by Justice Puno in his concurring opinion, "Commonwealth Act No. 141 has remained in effect at present."

The State policy prohibiting the sale to private parties of government reclaimed, foreshore and marshy alienable lands of the public domain, first
implemented in 1907 was thus reaffirmed in CA No. 141 after the 1935 Constitution took effect. The prohibition on the sale of foreshore lands, however,
became a constitutional edict under the 1935 Constitution. Foreshore lands became inalienable as natural resources of the State, unless reclaimed by the
government and classified as agricultural lands of the public domain, in which case they would fall under the classification of government reclaimed lands.

After the effectivity of the 1935 Constitution, government reclaimed and marshy disposable lands of the public domain continued to be only leased and not
sold to private parties.56 These lands remained sui generis, as the only alienable or disposable lands of the public domain the government could not sell to
private parties.

Since then and until now, the only way the government can sell to private parties government reclaimed and marshy disposable lands of the public domain
is for the legislature to pass a law authorizing such sale. CA No. 141 does not authorize the President to reclassify government reclaimed and marshy lands
into other non-agricultural lands under Section 59 (d). Lands classified under Section 59 (d) are the only alienable or disposable lands for non-agricultural
purposes that the government could sell to private parties.

Moreover, Section 60 of CA No. 141 expressly requires congressional authority before lands under Section 59 that the government previously transferred
to government units or entities could be sold to private parties. Section 60 of CA No. 141 declares that –

"Sec. 60. x x x The area so leased or sold shall be such as shall, in the judgment of the Secretary of Agriculture and Natural Resources, be reasonably
necessary for the purposes for which such sale or lease is requested, and shall not exceed one hundred and forty-four hectares: Provided, however, That this
limitation shall not apply to grants, donations, or transfers made to a province, municipality or branch or subdivision of the Government for the purposes
deemed by said entities conducive to the public interest; but the land so granted, donated, or transferred to a province, municipality or branch or
subdivision of the Government shall not be alienated, encumbered, or otherwise disposed of in a manner affecting its title, except when authorized by
Congress: x x x." (Emphasis supplied)

The congressional authority required in Section 60 of CA No. 141 mirrors the legislative authority required in Section 56 of Act No. 2874.

One reason for the congressional authority is that Section 60 of CA No. 141 exempted government units and entities from the maximum area of public
lands that could be acquired from the State. These government units and entities should not just turn around and sell these lands to private parties in

47
violation of constitutional or statutory limitations. Otherwise, the transfer of lands for non-agricultural purposes to government units and entities could be
used to circumvent constitutional limitations on ownership of alienable or disposable lands of the public domain. In the same manner, such transfers could
also be used to evade the statutory prohibition in CA No. 141 on the sale of government reclaimed and marshy lands of the public domain to private parties.
Section 60 of CA No. 141 constitutes by operation of law a lien on these lands.57

In case of sale or lease of disposable lands of the public domain falling under Section 59 of CA No. 141, Sections 63 and 67 require a public bidding.
Sections 63 and 67 of CA No. 141 provide as follows:

"Sec. 63. Whenever it is decided that lands covered by this chapter are not needed for public purposes, the Director of Lands shall ask the Secretary of
Agriculture and Commerce (now the Secretary of Natural Resources) for authority to dispose of the same. Upon receipt of such authority, the Director of
Lands shall give notice by public advertisement in the same manner as in the case of leases or sales of agricultural public land, x x x.

Sec. 67. The lease or sale shall be made by oral bidding; and adjudication shall be made to the highest bidder. x x x." (Emphasis supplied)

Thus, CA No. 141 mandates the Government to put to public auction all leases or sales of alienable or disposable lands of the public domain.58

Like Act No. 1654 and Act No. 2874 before it, CA No. 141 did not repeal Section 5 of the Spanish Law of Waters of 1866. Private parties could still
reclaim portions of the sea with government permission. However, the reclaimed land could become private land only if classified as alienable
agricultural land of the public domain open to disposition under CA No. 141. The 1935 Constitution prohibited the alienation of all natural resources
except public agricultural lands.

The Civil Code of 1950

The Civil Code of 1950 readopted substantially the definition of property of public dominion found in the Civil Code of 1889. Articles 420 and 422 of the
Civil Code of 1950 state that –

"Art. 420. The following things are property of public dominion:

(1) Those intended for public use, such as roads, canals, rivers, torrents, ports and bridges constructed by the State, banks, shores, roadsteads, and others of
similar character;

(2) Those which belong to the State, without being for public use, and are intended for some public service or for the development of the national wealth.

x x x.

Art. 422. Property of public dominion, when no longer intended for public use or for public service, shall form part of the patrimonial property of the
State."

Again, the government must formally declare that the property of public dominion is no longer needed for public use or public service, before the same
could be classified as patrimonial property of the State.59 In the case of government reclaimed and marshy lands of the public domain, the declaration of
their being disposable, as well as the manner of their disposition, is governed by the applicable provisions of CA No. 141.

Like the Civil Code of 1889, the Civil Code of 1950 included as property of public dominion those properties of the State which, without being for public
use, are intended for public service or the "development of the national wealth." Thus, government reclaimed and marshy lands of the State, even if not
employed for public use or public service, if developed to enhance the national wealth, are classified as property of public dominion.

Dispositions under the 1973 Constitution

The 1973 Constitution, which took effect on January 17, 1973, likewise adopted the Regalian doctrine. Section 8, Article XIV of the 1973 Constitution
stated that –

"Sec. 8. All lands of the public domain, waters, minerals, coal, petroleum and other mineral oils, all forces of potential energy, fisheries, wildlife, and other
natural resources of the Philippines belong to the State. With the exception of agricultural, industrial or commercial, residential, and resettlement lands
of the public domain, natural resources shall not be alienated, and no license, concession, or lease for the exploration, development, exploitation, or
utilization of any of the natural resources shall be granted for a period exceeding twenty-five years, renewable for not more than twenty-five years, except

48
as to water rights for irrigation, water supply, fisheries, or industrial uses other than the development of water power, in which cases, beneficial use may be
the measure and the limit of the grant." (Emphasis supplied)

The 1973 Constitution prohibited the alienation of all natural resources with the exception of "agricultural, industrial or commercial, residential, and
resettlement lands of the public domain." In contrast, the 1935 Constitution barred the alienation of all natural resources except "public agricultural lands."
However, the term "public agricultural lands" in the 1935 Constitution encompassed industrial, commercial, residential and resettlement lands of the public
domain.60 If the land of public domain were neither timber nor mineral land, it would fall under the classification of agricultural land of the public domain.
Both the 1935 and 1973 Constitutions, therefore, prohibited the alienation of all natural resources except agricultural lands of the public domain.

The 1973 Constitution, however, limited the alienation of lands of the public domain to individuals who were citizens of the Philippines. Private
corporations, even if wholly owned by Philippine citizens, were no longer allowed to acquire alienable lands of the public domain unlike in the 1935
Constitution. Section 11, Article XIV of the 1973 Constitution declared that –

"Sec. 11. The Batasang Pambansa, taking into account conservation, ecological, and development requirements of the natural resources, shall determine by
law the size of land of the public domain which may be developed, held or acquired by, or leased to, any qualified individual, corporation, or association,
and the conditions therefor. No private corporation or association may hold alienable lands of the public domain except by lease not to exceed one
thousand hectares in area nor may any citizen hold such lands by lease in excess of five hundred hectares or acquire by purchase, homestead or grant, in
excess of twenty-four hectares. No private corporation or association may hold by lease, concession, license or permit, timber or forest lands and other
timber or forest resources in excess of one hundred thousand hectares. However, such area may be increased by the Batasang Pambansa upon
recommendation of the National Economic and Development Authority." (Emphasis supplied)

Thus, under the 1973 Constitution, private corporations could hold alienable lands of the public domain only through lease. Only individuals could now
acquire alienable lands of the public domain, and private corporations became absolutely barred from acquiring any kind of alienable land of the public
domain. The constitutional ban extended to all kinds of alienable lands of the public domain, while the statutory ban under CA No. 141 applied only to
government reclaimed, foreshore and marshy alienable lands of the public domain.

PD No. 1084 Creating the Public Estates Authority

On February 4, 1977, then President Ferdinand Marcos issued Presidential Decree No. 1084 creating PEA, a wholly government owned and controlled
corporation with a special charter. Sections 4 and 8 of PD No. 1084, vests PEA with the following purposes and powers:

"Sec. 4. Purpose. The Authority is hereby created for the following purposes:

(a) To reclaim land, including foreshore and submerged areas, by dredging, filling or other means, or to acquire reclaimed land;

(b) To develop, improve, acquire, administer, deal in, subdivide, dispose, lease and sell any and all kinds of lands, buildings, estates and other forms of
real property, owned, managed, controlled and/or operated by the government;

(c) To provide for, operate or administer such service as may be necessary for the efficient, economical and beneficial utilization of the above properties.

Sec. 5. Powers and functions of the Authority. The Authority shall, in carrying out the purposes for which it is created, have the following powers and
functions:

(a)To prescribe its by-laws.

xxx

(i) To hold lands of the public domain in excess of the area permitted to private corporations by statute.

(j) To reclaim lands and to construct work across, or otherwise, any stream, watercourse, canal, ditch, flume x x x.

xxx

(o) To perform such acts and exercise such functions as may be necessary for the attainment of the purposes and objectives herein specified." (Emphasis
supplied)

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PD No. 1084 authorizes PEA to reclaim both foreshore and submerged areas of the public domain. Foreshore areas are those covered and uncovered by the
ebb and flow of the tide.61 Submerged areas are those permanently under water regardless of the ebb and flow of the tide.62 Foreshore and submerged areas
indisputably belong to the public domain63 and are inalienable unless reclaimed, classified as alienable lands open to disposition, and further declared no
longer needed for public service.

The ban in the 1973 Constitution on private corporations from acquiring alienable lands of the public domain did not apply to PEA since it was then, and
until today, a fully owned government corporation. The constitutional ban applied then, as it still applies now, only to "private corporations and
associations." PD No. 1084 expressly empowers PEA "to hold lands of the public domain" even "in excess of the area permitted to private corporations
by statute." Thus, PEA can hold title to private lands, as well as title to lands of the public domain.

In order for PEA to sell its reclaimed foreshore and submerged alienable lands of the public domain, there must be legislative authority empowering PEA
to sell these lands. This legislative authority is necessary in view of Section 60 of CA No.141, which states –

"Sec. 60. x x x; but the land so granted, donated or transferred to a province, municipality, or branch or subdivision of the Government shall not be
alienated, encumbered or otherwise disposed of in a manner affecting its title, except when authorized by Congress; x x x." (Emphasis supplied)

Without such legislative authority, PEA could not sell but only lease its reclaimed foreshore and submerged alienable lands of the public domain.
Nevertheless, any legislative authority granted to PEA to sell its reclaimed alienable lands of the public domain would be subject to the constitutional ban
on private corporations from acquiring alienable lands of the public domain. Hence, such legislative authority could only benefit private individuals.

Dispositions under the 1987 Constitution

The 1987 Constitution, like the 1935 and 1973 Constitutions before it, has adopted the Regalian doctrine. The 1987 Constitution declares that all natural
resources are "owned by the State," and except for alienable agricultural lands of the public domain, natural resources cannot be alienated. Sections 2 and
3, Article XII of the 1987 Constitution state that –

"Section 2. All lands of the public domain, waters, minerals, coal, petroleum and other mineral oils, all forces of potential energy, fisheries, forests or
timber, wildlife, flora and fauna, and other natural resources are owned by the State. With the exception of agricultural lands, all other natural resources
shall not be alienated. The exploration, development, and utilization of natural resources shall be under the full control and supervision of the State. x x x.

Section 3. Lands of the public domain are classified into agricultural, forest or timber, mineral lands, and national parks. Agricultural lands of the public
domain may be further classified by law according to the uses which they may be devoted. Alienable lands of the public domain shall be limited to
agricultural lands. Private corporations or associations may not hold such alienable lands of the public domain except by lease, for a period not
exceeding twenty-five years, renewable for not more than twenty-five years, and not to exceed one thousand hectares in area. Citizens of the Philippines
may lease not more than five hundred hectares, or acquire not more than twelve hectares thereof by purchase, homestead, or grant.

Taking into account the requirements of conservation, ecology, and development, and subject to the requirements of agrarian reform, the Congress shall
determine, by law, the size of lands of the public domain which may be acquired, developed, held, or leased and the conditions therefor." (Emphasis
supplied)

The 1987 Constitution continues the State policy in the 1973 Constitution banning private corporations from acquiring any kind of alienable land of the
public domain. Like the 1973 Constitution, the 1987 Constitution allows private corporations to hold alienable lands of the public domain only through
lease. As in the 1935 and 1973 Constitutions, the general law governing the lease to private corporations of reclaimed, foreshore and marshy alienable
lands of the public domain is still CA No. 141.

The Rationale behind the Constitutional Ban

The rationale behind the constitutional ban on corporations from acquiring, except through lease, alienable lands of the public domain is not well
understood. During the deliberations of the 1986 Constitutional Commission, the commissioners probed the rationale behind this ban, thus:

"FR. BERNAS: Mr. Vice-President, my questions have reference to page 3, line 5 which says:

`No private corporation or association may hold alienable lands of the public domain except by lease, not to exceed one thousand hectares in area.'

If we recall, this provision did not exist under the 1935 Constitution, but this was introduced in the 1973 Constitution. In effect, it prohibits private
corporations from acquiring alienable public lands. But it has not been very clear in jurisprudence what the reason for this is. In some of the cases
decided in 1982 and 1983, it was indicated that the purpose of this is to prevent large landholdings. Is that the intent of this provision?

50
MR. VILLEGAS: I think that is the spirit of the provision.

FR. BERNAS: In existing decisions involving the Iglesia ni Cristo, there were instances where the Iglesia ni Cristo was not allowed to acquire a mere 313-
square meter land where a chapel stood because the Supreme Court said it would be in violation of this." (Emphasis supplied)

In Ayog v. Cusi,64 the Court explained the rationale behind this constitutional ban in this way:

"Indeed, one purpose of the constitutional prohibition against purchases of public agricultural lands by private corporations is to equitably diffuse land
ownership or to encourage 'owner-cultivatorship and the economic family-size farm' and to prevent a recurrence of cases like the instant case. Huge
landholdings by corporations or private persons had spawned social unrest."

However, if the constitutional intent is to prevent huge landholdings, the Constitution could have simply limited the size of alienable lands of the public
domain that corporations could acquire. The Constitution could have followed the limitations on individuals, who could acquire not more than 24 hectares
of alienable lands of the public domain under the 1973 Constitution, and not more than 12 hectares under the 1987 Constitution.

If the constitutional intent is to encourage economic family-size farms, placing the land in the name of a corporation would be more effective in preventing
the break-up of farmlands. If the farmland is registered in the name of a corporation, upon the death of the owner, his heirs would inherit shares in the
corporation instead of subdivided parcels of the farmland. This would prevent the continuing break-up of farmlands into smaller and smaller plots from one
generation to the next.

In actual practice, the constitutional ban strengthens the constitutional limitation on individuals from acquiring more than the allowed area of alienable
lands of the public domain. Without the constitutional ban, individuals who already acquired the maximum area of alienable lands of the public domain
could easily set up corporations to acquire more alienable public lands. An individual could own as many corporations as his means would allow him. An
individual could even hide his ownership of a corporation by putting his nominees as stockholders of the corporation. The corporation is a convenient
vehicle to circumvent the constitutional limitation on acquisition by individuals of alienable lands of the public domain.

The constitutional intent, under the 1973 and 1987 Constitutions, is to transfer ownership of only a limited area of alienable land of the public domain to a
qualified individual. This constitutional intent is safeguarded by the provision prohibiting corporations from acquiring alienable lands of the public domain,
since the vehicle to circumvent the constitutional intent is removed. The available alienable public lands are gradually decreasing in the face of an ever-
growing population. The most effective way to insure faithful adherence to this constitutional intent is to grant or sell alienable lands of the public domain
only to individuals. This, it would seem, is the practical benefit arising from the constitutional ban.

The Amended Joint Venture Agreement

The subject matter of the Amended JVA, as stated in its second Whereas clause, consists of three properties, namely:

1. "[T]hree partially reclaimed and substantially eroded islands along Emilio Aguinaldo Boulevard in Paranaque and Las Pinas, Metro Manila, with a
combined titled area of 1,578,441 square meters;"

2. "[A]nother area of 2,421,559 square meters contiguous to the three islands;" and

3. "[A]t AMARI's option as approved by PEA, an additional 350 hectares more or less to regularize the configuration of the reclaimed area."65

PEA confirms that the Amended JVA involves "the development of the Freedom Islands and further reclamation of about 250 hectares x x x," plus an
option "granted to AMARI to subsequently reclaim another 350 hectares x x x."66

In short, the Amended JVA covers a reclamation area of 750 hectares. Only 157.84 hectares of the 750-hectare reclamation project have been reclaimed,
and the rest of the 592.15 hectares are still submerged areas forming part of Manila Bay.

Under the Amended JVA, AMARI will reimburse PEA the sum of P1,894,129,200.00 for PEA's "actual cost" in partially reclaiming the Freedom Islands.
AMARI will also complete, at its own expense, the reclamation of the Freedom Islands. AMARI will further shoulder all the reclamation costs of all the
other areas, totaling 592.15 hectares, still to be reclaimed. AMARI and PEA will share, in the proportion of 70 percent and 30 percent, respectively, the
total net usable area which is defined in the Amended JVA as the total reclaimed area less 30 percent earmarked for common areas. Title to AMARI's share
in the net usable area, totaling 367.5 hectares, will be issued in the name of AMARI. Section 5.2 (c) of the Amended JVA provides that –

51
"x x x, PEA shall have the duty to execute without delay the necessary deed of transfer or conveyance of the title pertaining to AMARI's Land share based
on the Land Allocation Plan. PEA, when requested in writing by AMARI, shall then cause the issuance and delivery of the proper certificates of title
covering AMARI's Land Share in the name of AMARI, x x x; provided, that if more than seventy percent (70%) of the titled area at any given time
pertains to AMARI, PEA shall deliver to AMARI only seventy percent (70%) of the titles pertaining to AMARI, until such time when a corresponding
proportionate area of additional land pertaining to PEA has been titled." (Emphasis supplied)

Indisputably, under the Amended JVA AMARI will acquire and own a maximum of 367.5 hectares of reclaimed land which will be titled in its name.

To implement the Amended JVA, PEA delegated to the unincorporated PEA-AMARI joint venture PEA's statutory authority, rights and privileges to
reclaim foreshore and submerged areas in Manila Bay. Section 3.2.a of the Amended JVA states that –

"PEA hereby contributes to the joint venture its rights and privileges to perform Rawland Reclamation and Horizontal Development as well as own the
Reclamation Area, thereby granting the Joint Venture the full and exclusive right, authority and privilege to undertake the Project in accordance with the
Master Development Plan."

The Amended JVA is the product of a renegotiation of the original JVA dated April 25, 1995 and its supplemental agreement dated August 9, 1995.

The Threshold Issue

The threshold issue is whether AMARI, a private corporation, can acquire and own under the Amended JVA 367.5 hectares of reclaimed foreshore and
submerged areas in Manila Bay in view of Sections 2 and 3, Article XII of the 1987 Constitution which state that:

"Section 2. All lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all forces of potential energy, fisheries, forests or
timber, wildlife, flora and fauna, and other natural resources are owned by the State. With the exception of agricultural lands, all other natural resources
shall not be alienated. x x x.

xxx

Section 3. x x x Alienable lands of the public domain shall be limited to agricultural lands. Private corporations or associations may not hold such
alienable lands of the public domain except by lease, x x x."(Emphasis supplied)

Classification of Reclaimed Foreshore and Submerged Areas

PEA readily concedes that lands reclaimed from foreshore or submerged areas of Manila Bay are alienable or disposable lands of the public domain. In its
Memorandum,67 PEA admits that –

"Under the Public Land Act (CA 141, as amended), reclaimed lands are classified as alienable and disposable lands of the public domain:

'Sec. 59. The lands disposable under this title shall be classified as follows:

(a) Lands reclaimed by the government by dredging, filling, or other means;

x x x.'" (Emphasis supplied)

Likewise, the Legal Task Force68 constituted under Presidential Administrative Order No. 365 admitted in its Report and Recommendation to then
President Fidel V. Ramos, "[R]eclaimed lands are classified as alienable and disposable lands of the public domain."69 The Legal Task Force concluded
that –

"D. Conclusion

Reclaimed lands are lands of the public domain. However, by statutory authority, the rights of ownership and disposition over reclaimed lands have been
transferred to PEA, by virtue of which PEA, as owner, may validly convey the same to any qualified person without violating the Constitution or any
statute.

52
The constitutional provision prohibiting private corporations from holding public land, except by lease (Sec. 3, Art. XVII,70 1987 Constitution), does not
apply to reclaimed lands whose ownership has passed on to PEA by statutory grant."

Under Section 2, Article XII of the 1987 Constitution, the foreshore and submerged areas of Manila Bay are part of the "lands of the public domain, waters
x x x and other natural resources" and consequently "owned by the State." As such, foreshore and submerged areas "shall not be alienated," unless they are
classified as "agricultural lands" of the public domain. The mere reclamation of these areas by PEA does not convert these inalienable natural resources of
the State into alienable or disposable lands of the public domain. There must be a law or presidential proclamation officially classifying these reclaimed
lands as alienable or disposable and open to disposition or concession. Moreover, these reclaimed lands cannot be classified as alienable or disposable if the
law has reserved them for some public or quasi-public use.71

Section 8 of CA No. 141 provides that "only those lands shall be declared open to disposition or concession which have been officially delimited and
classified."72 The President has the authority to classify inalienable lands of the public domain into alienable or disposable lands of the public domain,
pursuant to Section 6 of CA No. 141. In Laurel vs. Garcia,73 the Executive Department attempted to sell the Roppongi property in Tokyo, Japan, which was
acquired by the Philippine Government for use as the Chancery of the Philippine Embassy. Although the Chancery had transferred to another location
thirteen years earlier, the Court still ruled that, under Article 42274 of the Civil Code, a property of public dominion retains such character until formally
declared otherwise. The Court ruled that –

"The fact that the Roppongi site has not been used for a long time for actual Embassy service does not automatically convert it to patrimonial property. Any
such conversion happens only if the property is withdrawn from public use (Cebu Oxygen and Acetylene Co. v. Bercilles, 66 SCRA 481 [1975]. A
property continues to be part of the public domain, not available for private appropriation or ownership 'until there is a formal declaration on the part
of the government to withdraw it from being such' (Ignacio v. Director of Lands, 108 Phil. 335 [1960]." (Emphasis supplied)

PD No. 1085, issued on February 4, 1977, authorized the issuance of special land patents for lands reclaimed by PEA from the foreshore or submerged
areas of Manila Bay. On January 19, 1988 then President Corazon C. Aquino issued Special Patent No. 3517 in the name of PEA for the 157.84 hectares
comprising the partially reclaimed Freedom Islands. Subsequently, on April 9, 1999 the Register of Deeds of the Municipality of Paranaque issued TCT
Nos. 7309, 7311 and 7312 in the name of PEA pursuant to Section 103 of PD No. 1529 authorizing the issuance of certificates of title corresponding to
land patents. To this day, these certificates of title are still in the name of PEA.

PD No. 1085, coupled with President Aquino's actual issuance of a special patent covering the Freedom Islands, is equivalent to an official proclamation
classifying the Freedom Islands as alienable or disposable lands of the public domain. PD No. 1085 and President Aquino's issuance of a land patent also
constitute a declaration that the Freedom Islands are no longer needed for public service. The Freedom Islands are thus alienable or disposable lands of
the public domain, open to disposition or concession to qualified parties.

At the time then President Aquino issued Special Patent No. 3517, PEA had already reclaimed the Freedom Islands although subsequently there were
partial erosions on some areas. The government had also completed the necessary surveys on these islands. Thus, the Freedom Islands were no longer part
of Manila Bay but part of the land mass. Section 3, Article XII of the 1987 Constitution classifies lands of the public domain into "agricultural, forest or
timber, mineral lands, and national parks." Being neither timber, mineral, nor national park lands, the reclaimed Freedom Islands necessarily fall under the
classification of agricultural lands of the public domain. Under the 1987 Constitution, agricultural lands of the public domain are the only natural resources
that the State may alienate to qualified private parties. All other natural resources, such as the seas or bays, are "waters x x x owned by the State" forming
part of the public domain, and are inalienable pursuant to Section 2, Article XII of the 1987 Constitution.

AMARI claims that the Freedom Islands are private lands because CDCP, then a private corporation, reclaimed the islands under a contract dated
November 20, 1973 with the Commissioner of Public Highways. AMARI, citing Article 5 of the Spanish Law of Waters of 1866, argues that "if the
ownership of reclaimed lands may be given to the party constructing the works, then it cannot be said that reclaimed lands are lands of the public domain
which the State may not alienate."75 Article 5 of the Spanish Law of Waters reads as follows:

"Article 5. Lands reclaimed from the sea in consequence of works constructed by the State, or by the provinces, pueblos or private persons, with proper
permission, shall become the property of the party constructing such works, unless otherwise provided by the terms of the grant of authority." (Emphasis
supplied)

Under Article 5 of the Spanish Law of Waters of 1866, private parties could reclaim from the sea only with "proper permission" from the State. Private
parties could own the reclaimed land only if not "otherwise provided by the terms of the grant of authority." This clearly meant that no one could reclaim
from the sea without permission from the State because the sea is property of public dominion. It also meant that the State could grant or withhold
ownership of the reclaimed land because any reclaimed land, like the sea from which it emerged, belonged to the State. Thus, a private person reclaiming
from the sea without permission from the State could not acquire ownership of the reclaimed land which would remain property of public dominion like the
sea it replaced.76 Article 5 of the Spanish Law of Waters of 1866 adopted the time-honored principle of land ownership that "all lands that were not
acquired from the government, either by purchase or by grant, belong to the public domain."77

53
Article 5 of the Spanish Law of Waters must be read together with laws subsequently enacted on the disposition of public lands. In particular, CA No. 141
requires that lands of the public domain must first be classified as alienable or disposable before the government can alienate them. These lands must not be
reserved for public or quasi-public purposes.78 Moreover, the contract between CDCP and the government was executed after the effectivity of the 1973
Constitution which barred private corporations from acquiring any kind of alienable land of the public domain. This contract could not have converted the
Freedom Islands into private lands of a private corporation.

Presidential Decree No. 3-A, issued on January 11, 1973, revoked all laws authorizing the reclamation of areas under water and revested solely in the
National Government the power to reclaim lands. Section 1 of PD No. 3-A declared that –

"The provisions of any law to the contrary notwithstanding, the reclamation of areas under water, whether foreshore or inland, shall be limited to the
National Government or any person authorized by it under a proper contract. (Emphasis supplied)

x x x."

PD No. 3-A repealed Section 5 of the Spanish Law of Waters of 1866 because reclamation of areas under water could now be undertaken only by the
National Government or by a person contracted by the National Government. Private parties may reclaim from the sea only under a contract with the
National Government, and no longer by grant or permission as provided in Section 5 of the Spanish Law of Waters of 1866.

Executive Order No. 525, issued on February 14, 1979, designated PEA as the National Government's implementing arm to undertake "all reclamation
projects of the government," which "shall be undertaken by the PEA or through a proper contract executed by it with any person or entity." Under such
contract, a private party receives compensation for reclamation services rendered to PEA. Payment to the contractor may be in cash, or in kind consisting of
portions of the reclaimed land, subject to the constitutional ban on private corporations from acquiring alienable lands of the public domain. The reclaimed
land can be used as payment in kind only if the reclaimed land is first classified as alienable or disposable land open to disposition, and then declared no
longer needed for public service.

The Amended JVA covers not only the Freedom Islands, but also an additional 592.15 hectares which are still submerged and forming part of Manila Bay.
There is no legislative or Presidential act classifying these submerged areas as alienable or disposable lands of the public domain open to disposition.
These submerged areas are not covered by any patent or certificate of title. There can be no dispute that these submerged areas form part of the public
domain, and in their present state are inalienable and outside the commerce of man. Until reclaimed from the sea, these submerged areas are, under the
Constitution, "waters x x x owned by the State," forming part of the public domain and consequently inalienable. Only when actually reclaimed from the
sea can these submerged areas be classified as public agricultural lands, which under the Constitution are the only natural resources that the State may
alienate. Once reclaimed and transformed into public agricultural lands, the government may then officially classify these lands as alienable or disposable
lands open to disposition. Thereafter, the government may declare these lands no longer needed for public service. Only then can these reclaimed lands be
considered alienable or disposable lands of the public domain and within the commerce of man.

The classification of PEA's reclaimed foreshore and submerged lands into alienable or disposable lands open to disposition is necessary because PEA is
tasked under its charter to undertake public services that require the use of lands of the public domain. Under Section 5 of PD No. 1084, the functions of
PEA include the following: "[T]o own or operate railroads, tramways and other kinds of land transportation, x x x; [T]o construct, maintain and operate
such systems of sanitary sewers as may be necessary; [T]o construct, maintain and operate such storm drains as may be necessary." PEA is empowered to
issue "rules and regulations as may be necessary for the proper use by private parties of any or all of the highways, roads, utilities, buildings and/or any
of its properties and to impose or collect fees or tolls for their use." Thus, part of the reclaimed foreshore and submerged lands held by the PEA would
actually be needed for public use or service since many of the functions imposed on PEA by its charter constitute essential public services.

Moreover, Section 1 of Executive Order No. 525 provides that PEA "shall be primarily responsible for integrating, directing, and coordinating all
reclamation projects for and on behalf of the National Government." The same section also states that "[A]ll reclamation projects shall be approved by the
President upon recommendation of the PEA, and shall be undertaken by the PEA or through a proper contract executed by it with any person or entity; x x
x." Thus, under EO No. 525, in relation to PD No. 3-A and PD No.1084, PEA became the primary implementing agency of the National Government to
reclaim foreshore and submerged lands of the public domain. EO No. 525 recognized PEA as the government entity "to undertake the reclamation of lands
and ensure their maximum utilization in promoting public welfare and interests."79 Since large portions of these reclaimed lands would obviously be
needed for public service, there must be a formal declaration segregating reclaimed lands no longer needed for public service from those still needed for
public service.1âwphi1.nêt

Section 3 of EO No. 525, by declaring that all lands reclaimed by PEA "shall belong to or be owned by the PEA," could not automatically operate to
classify inalienable lands into alienable or disposable lands of the public domain. Otherwise, reclaimed foreshore and submerged lands of the public
domain would automatically become alienable once reclaimed by PEA, whether or not classified as alienable or disposable.

The Revised Administrative Code of 1987, a later law than either PD No. 1084 or EO No. 525, vests in the Department of Environment and Natural
Resources ("DENR" for brevity) the following powers and functions:

54
"Sec. 4. Powers and Functions. The Department shall:

(1) x x x

xxx

(4) Exercise supervision and control over forest lands, alienable and disposable public lands, mineral resources and, in the process of exercising such
control, impose appropriate taxes, fees, charges, rentals and any such form of levy and collect such revenues for the exploration, development, utilization or
gathering of such resources;

xxx

(14) Promulgate rules, regulations and guidelines on the issuance of licenses, permits, concessions, lease agreements and such other privileges
concerning the development, exploration and utilization of the country's marine, freshwater, and brackish water and over all aquatic resources of the
country and shall continue to oversee, supervise and police our natural resources; cancel or cause to cancel such privileges upon failure, non-compliance
or violations of any regulation, order, and for all other causes which are in furtherance of the conservation of natural resources and supportive of the
national interest;

(15) Exercise exclusive jurisdiction on the management and disposition of all lands of the public domain and serve as the sole agency responsible for
classification, sub-classification, surveying and titling of lands in consultation with appropriate agencies."80 (Emphasis supplied)

As manager, conservator and overseer of the natural resources of the State, DENR exercises "supervision and control over alienable and disposable public
lands." DENR also exercises "exclusive jurisdiction on the management and disposition of all lands of the public domain." Thus, DENR decides whether
areas under water, like foreshore or submerged areas of Manila Bay, should be reclaimed or not. This means that PEA needs authorization from DENR
before PEA can undertake reclamation projects in Manila Bay, or in any part of the country.

DENR also exercises exclusive jurisdiction over the disposition of all lands of the public domain. Hence, DENR decides whether reclaimed lands of PEA
should be classified as alienable under Sections 681 and 782 of CA No. 141. Once DENR decides that the reclaimed lands should be so classified, it then
recommends to the President the issuance of a proclamation classifying the lands as alienable or disposable lands of the public domain open to disposition.
We note that then DENR Secretary Fulgencio S. Factoran, Jr. countersigned Special Patent No. 3517 in compliance with the Revised Administrative Code
and Sections 6 and 7 of CA No. 141.

In short, DENR is vested with the power to authorize the reclamation of areas under water, while PEA is vested with the power to undertake the physical
reclamation of areas under water, whether directly or through private contractors. DENR is also empowered to classify lands of the public domain into
alienable or disposable lands subject to the approval of the President. On the other hand, PEA is tasked to develop, sell or lease the reclaimed alienable
lands of the public domain.

Clearly, the mere physical act of reclamation by PEA of foreshore or submerged areas does not make the reclaimed lands alienable or disposable lands of
the public domain, much less patrimonial lands of PEA. Likewise, the mere transfer by the National Government of lands of the public domain to PEA
does not make the lands alienable or disposable lands of the public domain, much less patrimonial lands of PEA.

Absent two official acts – a classification that these lands are alienable or disposable and open to disposition and a declaration that these lands are not
needed for public service, lands reclaimed by PEA remain inalienable lands of the public domain. Only such an official classification and formal
declaration can convert reclaimed lands into alienable or disposable lands of the public domain, open to disposition under the Constitution, Title I and Title
III83 of CA No. 141 and other applicable laws.84

PEA's Authority to Sell Reclaimed Lands

PEA, like the Legal Task Force, argues that as alienable or disposable lands of the public domain, the reclaimed lands shall be disposed of in accordance
with CA No. 141, the Public Land Act. PEA, citing Section 60 of CA No. 141, admits that reclaimed lands transferred to a branch or subdivision of the
government "shall not be alienated, encumbered, or otherwise disposed of in a manner affecting its title, except when authorized by Congress: x x x."85
(Emphasis by PEA)

In Laurel vs. Garcia,86 the Court cited Section 48 of the Revised Administrative Code of 1987, which states that –

"Sec. 48. Official Authorized to Convey Real Property. Whenever real property of the Government is authorized by law to be conveyed, the deed of
conveyance shall be executed in behalf of the government by the following: x x x."

55
Thus, the Court concluded that a law is needed to convey any real property belonging to the Government. The Court declared that -

"It is not for the President to convey real property of the government on his or her own sole will. Any such conveyance must be authorized and approved
by a law enacted by the Congress. It requires executive and legislative concurrence." (Emphasis supplied)

PEA contends that PD No. 1085 and EO No. 525 constitute the legislative authority allowing PEA to sell its reclaimed lands. PD No. 1085, issued on
February 4, 1977, provides that –

"The land reclaimed in the foreshore and offshore area of Manila Bay pursuant to the contract for the reclamation and construction of the Manila-Cavite
Coastal Road Project between the Republic of the Philippines and the Construction and Development Corporation of the Philippines dated November 20,
1973 and/or any other contract or reclamation covering the same area is hereby transferred, conveyed and assigned to the ownership and administration
of the Public Estates Authority established pursuant to PD No. 1084; Provided, however, That the rights and interests of the Construction and
Development Corporation of the Philippines pursuant to the aforesaid contract shall be recognized and respected.

Henceforth, the Public Estates Authority shall exercise the rights and assume the obligations of the Republic of the Philippines (Department of Public
Highways) arising from, or incident to, the aforesaid contract between the Republic of the Philippines and the Construction and Development Corporation
of the Philippines.

In consideration of the foregoing transfer and assignment, the Public Estates Authority shall issue in favor of the Republic of the Philippines the
corresponding shares of stock in said entity with an issued value of said shares of stock (which) shall be deemed fully paid and non-assessable.

The Secretary of Public Highways and the General Manager of the Public Estates Authority shall execute such contracts or agreements, including
appropriate agreements with the Construction and Development Corporation of the Philippines, as may be necessary to implement the above.

Special land patent/patents shall be issued by the Secretary of Natural Resources in favor of the Public Estates Authority without prejudice to the
subsequent transfer to the contractor or his assignees of such portion or portions of the land reclaimed or to be reclaimed as provided for in the above-
mentioned contract. On the basis of such patents, the Land Registration Commission shall issue the corresponding certificate of title." (Emphasis
supplied)

On the other hand, Section 3 of EO No. 525, issued on February 14, 1979, provides that -

"Sec. 3. All lands reclaimed by PEA shall belong to or be owned by the PEA which shall be responsible for its administration, development, utilization or
disposition in accordance with the provisions of Presidential Decree No. 1084. Any and all income that the PEA may derive from the sale, lease or use of
reclaimed lands shall be used in accordance with the provisions of Presidential Decree No. 1084."

There is no express authority under either PD No. 1085 or EO No. 525 for PEA to sell its reclaimed lands. PD No. 1085 merely transferred "ownership and
administration" of lands reclaimed from Manila Bay to PEA, while EO No. 525 declared that lands reclaimed by PEA "shall belong to or be owned by
PEA." EO No. 525 expressly states that PEA should dispose of its reclaimed lands "in accordance with the provisions of Presidential Decree No. 1084," the
charter of PEA.

PEA's charter, however, expressly tasks PEA "to develop, improve, acquire, administer, deal in, subdivide, dispose, lease and sell any and all kinds of
lands x x x owned, managed, controlled and/or operated by the government."87 (Emphasis supplied) There is, therefore, legislative authority granted to
PEA to sell its lands, whether patrimonial or alienable lands of the public domain. PEA may sell to private parties its patrimonial properties in
accordance with the PEA charter free from constitutional limitations. The constitutional ban on private corporations from acquiring alienable lands of the
public domain does not apply to the sale of PEA's patrimonial lands.

PEA may also sell its alienable or disposable lands of the public domain to private individuals since, with the legislative authority, there is no longer any
statutory prohibition against such sales and the constitutional ban does not apply to individuals. PEA, however, cannot sell any of its alienable or
disposable lands of the public domain to private corporations since Section 3, Article XII of the 1987 Constitution expressly prohibits such sales. The
legislative authority benefits only individuals. Private corporations remain barred from acquiring any kind of alienable land of the public domain, including
government reclaimed lands.

The provision in PD No. 1085 stating that portions of the reclaimed lands could be transferred by PEA to the "contractor or his assignees" (Emphasis
supplied) would not apply to private corporations but only to individuals because of the constitutional ban. Otherwise, the provisions of PD No. 1085
would violate both the 1973 and 1987 Constitutions.

The requirement of public auction in the sale of reclaimed lands

56
Assuming the reclaimed lands of PEA are classified as alienable or disposable lands open to disposition, and further declared no longer needed for public
service, PEA would have to conduct a public bidding in selling or leasing these lands. PEA must observe the provisions of Sections 63 and 67 of CA No.
141 requiring public auction, in the absence of a law exempting PEA from holding a public auction.88 Special Patent No. 3517 expressly states that the
patent is issued by authority of the Constitution and PD No. 1084, "supplemented by Commonwealth Act No. 141, as amended." This is an
acknowledgment that the provisions of CA No. 141 apply to the disposition of reclaimed alienable lands of the public domain unless otherwise provided by
law. Executive Order No. 654,89 which authorizes PEA "to determine the kind and manner of payment for the transfer" of its assets and properties, does not
exempt PEA from the requirement of public auction. EO No. 654 merely authorizes PEA to decide the mode of payment, whether in kind and in
installment, but does not authorize PEA to dispense with public auction.

Moreover, under Section 79 of PD No. 1445, otherwise known as the Government Auditing Code, the government is required to sell valuable government
property through public bidding. Section 79 of PD No. 1445 mandates that –

"Section 79. When government property has become unserviceable for any cause, or is no longer needed, it shall, upon application of the officer
accountable therefor, be inspected by the head of the agency or his duly authorized representative in the presence of the auditor concerned and, if found to
be valueless or unsaleable, it may be destroyed in their presence. If found to be valuable, it may be sold at public auction to the highest bidder under the
supervision of the proper committee on award or similar body in the presence of the auditor concerned or other authorized representative of the
Commission, after advertising by printed notice in the Official Gazette, or for not less than three consecutive days in any newspaper of general
circulation, or where the value of the property does not warrant the expense of publication, by notices posted for a like period in at least three public places
in the locality where the property is to be sold. In the event that the public auction fails, the property may be sold at a private sale at such price as may
be fixed by the same committee or body concerned and approved by the Commission."

It is only when the public auction fails that a negotiated sale is allowed, in which case the Commission on Audit must approve the selling price.90 The
Commission on Audit implements Section 79 of the Government Auditing Code through Circular No. 89-29691 dated January 27, 1989. This circular
emphasizes that government assets must be disposed of only through public auction, and a negotiated sale can be resorted to only in case of "failure of
public auction."

At the public auction sale, only Philippine citizens are qualified to bid for PEA's reclaimed foreshore and submerged alienable lands of the public domain.
Private corporations are barred from bidding at the auction sale of any kind of alienable land of the public domain.

PEA originally scheduled a public bidding for the Freedom Islands on December 10, 1991. PEA imposed a condition that the winning bidder should
reclaim another 250 hectares of submerged areas to regularize the shape of the Freedom Islands, under a 60-40 sharing of the additional reclaimed areas in
favor of the winning bidder.92 No one, however, submitted a bid. On December 23, 1994, the Government Corporate Counsel advised PEA it could sell the
Freedom Islands through negotiation, without need of another public bidding, because of the failure of the public bidding on December 10, 1991.93

However, the original JVA dated April 25, 1995 covered not only the Freedom Islands and the additional 250 hectares still to be reclaimed, it also granted
an option to AMARI to reclaim another 350 hectares. The original JVA, a negotiated contract, enlarged the reclamation area to 750 hectares.94 The failure
of public bidding on December 10, 1991, involving only 407.84 hectares,95 is not a valid justification for a negotiated sale of 750 hectares, almost double
the area publicly auctioned. Besides, the failure of public bidding happened on December 10, 1991, more than three years before the signing of the original
JVA on April 25, 1995. The economic situation in the country had greatly improved during the intervening period.

Reclamation under the BOT Law and the Local Government Code

The constitutional prohibition in Section 3, Article XII of the 1987 Constitution is absolute and clear: "Private corporations or associations may not hold
such alienable lands of the public domain except by lease, x x x." Even Republic Act No. 6957 ("BOT Law," for brevity), cited by PEA and AMARI as
legislative authority to sell reclaimed lands to private parties, recognizes the constitutional ban. Section 6 of RA No. 6957 states –

"Sec. 6. Repayment Scheme. - For the financing, construction, operation and maintenance of any infrastructure projects undertaken through the build-
operate-and-transfer arrangement or any of its variations pursuant to the provisions of this Act, the project proponent x x x may likewise be repaid in the
form of a share in the revenue of the project or other non-monetary payments, such as, but not limited to, the grant of a portion or percentage of the
reclaimed land, subject to the constitutional requirements with respect to the ownership of the land: x x x." (Emphasis supplied)

A private corporation, even one that undertakes the physical reclamation of a government BOT project, cannot acquire reclaimed alienable lands of the
public domain in view of the constitutional ban.

Section 302 of the Local Government Code, also mentioned by PEA and AMARI, authorizes local governments in land reclamation projects to pay the
contractor or developer in kind consisting of a percentage of the reclaimed land, to wit:

"Section 302. Financing, Construction, Maintenance, Operation, and Management of Infrastructure Projects by the Private Sector. x x x

57
xxx

In case of land reclamation or construction of industrial estates, the repayment plan may consist of the grant of a portion or percentage of the reclaimed
land or the industrial estate constructed."

Although Section 302 of the Local Government Code does not contain a proviso similar to that of the BOT Law, the constitutional restrictions on land
ownership automatically apply even though not expressly mentioned in the Local Government Code.

Thus, under either the BOT Law or the Local Government Code, the contractor or developer, if a corporate entity, can only be paid with leaseholds on
portions of the reclaimed land. If the contractor or developer is an individual, portions of the reclaimed land, not exceeding 12 hectares96 of non-agricultural
lands, may be conveyed to him in ownership in view of the legislative authority allowing such conveyance. This is the only way these provisions of the
BOT Law and the Local Government Code can avoid a direct collision with Section 3, Article XII of the 1987 Constitution.

Registration of lands of the public domain

Finally, PEA theorizes that the "act of conveying the ownership of the reclaimed lands to public respondent PEA transformed such lands of the public
domain to private lands." This theory is echoed by AMARI which maintains that the "issuance of the special patent leading to the eventual issuance of title
takes the subject land away from the land of public domain and converts the property into patrimonial or private property." In short, PEA and AMARI
contend that with the issuance of Special Patent No. 3517 and the corresponding certificates of titles, the 157.84 hectares comprising the Freedom Islands
have become private lands of PEA. In support of their theory, PEA and AMARI cite the following rulings of the Court:

1. Sumail v. Judge of CFI of Cotabato,97 where the Court held –

"Once the patent was granted and the corresponding certificate of title was issued, the land ceased to be part of the public domain and became private
property over which the Director of Lands has neither control nor jurisdiction."

2. Lee Hong Hok v. David,98 where the Court declared -

"After the registration and issuance of the certificate and duplicate certificate of title based on a public land patent, the land covered thereby automatically
comes under the operation of Republic Act 496 subject to all the safeguards provided therein."3. Heirs of Gregorio Tengco v. Heirs of Jose Aliwalas,99
where the Court ruled -

"While the Director of Lands has the power to review homestead patents, he may do so only so long as the land remains part of the public domain and
continues to be under his exclusive control; but once the patent is registered and a certificate of title is issued, the land ceases to be part of the public
domain and becomes private property over which the Director of Lands has neither control nor jurisdiction."

4. Manalo v. Intermediate Appellate Court,100 where the Court held –

"When the lots in dispute were certified as disposable on May 19, 1971, and free patents were issued covering the same in favor of the private respondents,
the said lots ceased to be part of the public domain and, therefore, the Director of Lands lost jurisdiction over the same."

5.Republic v. Court of Appeals,101 where the Court stated –

"Proclamation No. 350, dated October 9, 1956, of President Magsaysay legally effected a land grant to the Mindanao Medical Center, Bureau of Medical
Services, Department of Health, of the whole lot, validly sufficient for initial registration under the Land Registration Act. Such land grant is constitutive of
a 'fee simple' title or absolute title in favor of petitioner Mindanao Medical Center. Thus, Section 122 of the Act, which governs the registration of grants or
patents involving public lands, provides that 'Whenever public lands in the Philippine Islands belonging to the Government of the United States or to the
Government of the Philippines are alienated, granted or conveyed to persons or to public or private corporations, the same shall be brought forthwith under
the operation of this Act (Land Registration Act, Act 496) and shall become registered lands.'"

The first four cases cited involve petitions to cancel the land patents and the corresponding certificates of titles issued to private parties. These four cases
uniformly hold that the Director of Lands has no jurisdiction over private lands or that upon issuance of the certificate of title the land automatically comes
under the Torrens System. The fifth case cited involves the registration under the Torrens System of a 12.8-hectare public land granted by the National
Government to Mindanao Medical Center, a government unit under the Department of Health. The National Government transferred the 12.8-hectare
public land to serve as the site for the hospital buildings and other facilities of Mindanao Medical Center, which performed a public service. The Court
affirmed the registration of the 12.8-hectare public land in the name of Mindanao Medical Center under Section 122 of Act No. 496. This fifth case is an
example of a public land being registered under Act No. 496 without the land losing its character as a property of public dominion.

58
In the instant case, the only patent and certificates of title issued are those in the name of PEA, a wholly government owned corporation performing public
as well as proprietary functions. No patent or certificate of title has been issued to any private party. No one is asking the Director of Lands to cancel PEA's
patent or certificates of title. In fact, the thrust of the instant petition is that PEA's certificates of title should remain with PEA, and the land covered by
these certificates, being alienable lands of the public domain, should not be sold to a private corporation.

Registration of land under Act No. 496 or PD No. 1529 does not vest in the registrant private or public ownership of the land. Registration is not a mode of
acquiring ownership but is merely evidence of ownership previously conferred by any of the recognized modes of acquiring ownership. Registration does
not give the registrant a better right than what the registrant had prior to the registration.102 The registration of lands of the public domain under the Torrens
system, by itself, cannot convert public lands into private lands.103

Jurisprudence holding that upon the grant of the patent or issuance of the certificate of title the alienable land of the public domain automatically becomes
private land cannot apply to government units and entities like PEA. The transfer of the Freedom Islands to PEA was made subject to the provisions of CA
No. 141 as expressly stated in Special Patent No. 3517 issued by then President Aquino, to wit:

"NOW, THEREFORE, KNOW YE, that by authority of the Constitution of the Philippines and in conformity with the provisions of Presidential Decree
No. 1084, supplemented by Commonwealth Act No. 141, as amended, there are hereby granted and conveyed unto the Public Estates Authority the
aforesaid tracts of land containing a total area of one million nine hundred fifteen thousand eight hundred ninety four (1,915,894) square meters; the
technical description of which are hereto attached and made an integral part hereof." (Emphasis supplied)

Thus, the provisions of CA No. 141 apply to the Freedom Islands on matters not covered by PD No. 1084. Section 60 of CA No. 141 prohibits, "except
when authorized by Congress," the sale of alienable lands of the public domain that are transferred to government units or entities. Section 60 of CA No.
141 constitutes, under Section 44 of PD No. 1529, a "statutory lien affecting title" of the registered land even if not annotated on the certificate of title.104
Alienable lands of the public domain held by government entities under Section 60 of CA No. 141 remain public lands because they cannot be alienated or
encumbered unless Congress passes a law authorizing their disposition. Congress, however, cannot authorize the sale to private corporations of reclaimed
alienable lands of the public domain because of the constitutional ban. Only individuals can benefit from such law.

The grant of legislative authority to sell public lands in accordance with Section 60 of CA No. 141 does not automatically convert alienable lands of the
public domain into private or patrimonial lands. The alienable lands of the public domain must be transferred to qualified private parties, or to government
entities not tasked to dispose of public lands, before these lands can become private or patrimonial lands. Otherwise, the constitutional ban will become
illusory if Congress can declare lands of the public domain as private or patrimonial lands in the hands of a government agency tasked to dispose of public
lands. This will allow private corporations to acquire directly from government agencies limitless areas of lands which, prior to such law, are concededly
public lands.

Under EO No. 525, PEA became the central implementing agency of the National Government to reclaim foreshore and submerged areas of the public
domain. Thus, EO No. 525 declares that –

"EXECUTIVE ORDER NO. 525

Designating the Public Estates Authority as the Agency Primarily Responsible for all Reclamation Projects

Whereas, there are several reclamation projects which are ongoing or being proposed to be undertaken in various parts of the country which need to be
evaluated for consistency with national programs;

Whereas, there is a need to give further institutional support to the Government's declared policy to provide for a coordinated, economical and efficient
reclamation of lands;

Whereas, Presidential Decree No. 3-A requires that all reclamation of areas shall be limited to the National Government or any person authorized by it
under proper contract;

Whereas, a central authority is needed to act on behalf of the National Government which shall ensure a coordinated and integrated approach in the
reclamation of lands;

Whereas, Presidential Decree No. 1084 creates the Public Estates Authority as a government corporation to undertake reclamation of lands and ensure
their maximum utilization in promoting public welfare and interests; and

Whereas, Presidential Decree No. 1416 provides the President with continuing authority to reorganize the national government including the transfer,
abolition, or merger of functions and offices.

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NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the powers vested in me by the Constitution and pursuant to
Presidential Decree No. 1416, do hereby order and direct the following:

Section 1. The Public Estates Authority (PEA) shall be primarily responsible for integrating, directing, and coordinating all reclamation projects for
and on behalf of the National Government. All reclamation projects shall be approved by the President upon recommendation of the PEA, and shall be
undertaken by the PEA or through a proper contract executed by it with any person or entity; Provided, that, reclamation projects of any national
government agency or entity authorized under its charter shall be undertaken in consultation with the PEA upon approval of the President.

x x x ."

As the central implementing agency tasked to undertake reclamation projects nationwide, with authority to sell reclaimed lands, PEA took the place of
DENR as the government agency charged with leasing or selling reclaimed lands of the public domain. The reclaimed lands being leased or sold by PEA
are not private lands, in the same manner that DENR, when it disposes of other alienable lands, does not dispose of private lands but alienable lands of the
public domain. Only when qualified private parties acquire these lands will the lands become private lands. In the hands of the government agency tasked
and authorized to dispose of alienable of disposable lands of the public domain, these lands are still public, not private lands.

Furthermore, PEA's charter expressly states that PEA "shall hold lands of the public domain" as well as "any and all kinds of lands." PEA can hold both
lands of the public domain and private lands. Thus, the mere fact that alienable lands of the public domain like the Freedom Islands are transferred to PEA
and issued land patents or certificates of title in PEA's name does not automatically make such lands private.

To allow vast areas of reclaimed lands of the public domain to be transferred to PEA as private lands will sanction a gross violation of the constitutional
ban on private corporations from acquiring any kind of alienable land of the public domain. PEA will simply turn around, as PEA has now done under the
Amended JVA, and transfer several hundreds of hectares of these reclaimed and still to be reclaimed lands to a single private corporation in only one
transaction. This scheme will effectively nullify the constitutional ban in Section 3, Article XII of the 1987 Constitution which was intended to diffuse
equitably the ownership of alienable lands of the public domain among Filipinos, now numbering over 80 million strong.

This scheme, if allowed, can even be applied to alienable agricultural lands of the public domain since PEA can "acquire x x x any and all kinds of lands."
This will open the floodgates to corporations and even individuals acquiring hundreds of hectares of alienable lands of the public domain under the guise
that in the hands of PEA these lands are private lands. This will result in corporations amassing huge landholdings never before seen in this country -
creating the very evil that the constitutional ban was designed to prevent. This will completely reverse the clear direction of constitutional development in
this country. The 1935 Constitution allowed private corporations to acquire not more than 1,024 hectares of public lands.105 The 1973 Constitution
prohibited private corporations from acquiring any kind of public land, and the 1987 Constitution has unequivocally reiterated this prohibition.

The contention of PEA and AMARI that public lands, once registered under Act No. 496 or PD No. 1529, automatically become private lands is contrary
to existing laws. Several laws authorize lands of the public domain to be registered under the Torrens System or Act No. 496, now PD No. 1529, without
losing their character as public lands. Section 122 of Act No. 496, and Section 103 of PD No. 1529, respectively, provide as follows:

Act No. 496

"Sec. 122. Whenever public lands in the Philippine Islands belonging to the x x x Government of the Philippine Islands are alienated, granted, or conveyed
to persons or the public or private corporations, the same shall be brought forthwith under the operation of this Act and shall become registered lands."

PD No. 1529

"Sec. 103. Certificate of Title to Patents. Whenever public land is by the Government alienated, granted or conveyed to any person, the same shall be
brought forthwith under the operation of this Decree." (Emphasis supplied)

Based on its legislative history, the phrase "conveyed to any person" in Section 103 of PD No. 1529 includes conveyances of public lands to public
corporations.

Alienable lands of the public domain "granted, donated, or transferred to a province, municipality, or branch or subdivision of the Government," as
provided in Section 60 of CA No. 141, may be registered under the Torrens System pursuant to Section 103 of PD No. 1529. Such registration, however, is
expressly subject to the condition in Section 60 of CA No. 141 that the land "shall not be alienated, encumbered or otherwise disposed of in a manner
affecting its title, except when authorized by Congress." This provision refers to government reclaimed, foreshore and marshy lands of the public domain
that have been titled but still cannot be alienated or encumbered unless expressly authorized by Congress. The need for legislative authority prevents the
registered land of the public domain from becoming private land that can be disposed of to qualified private parties.

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The Revised Administrative Code of 1987 also recognizes that lands of the public domain may be registered under the Torrens System. Section 48, Chapter
12, Book I of the Code states –

"Sec. 48. Official Authorized to Convey Real Property. Whenever real property of the Government is authorized by law to be conveyed, the deed of
conveyance shall be executed in behalf of the government by the following:

(1) x x x

(2) For property belonging to the Republic of the Philippines, but titled in the name of any political subdivision or of any corporate agency or
instrumentality, by the executive head of the agency or instrumentality." (Emphasis supplied)

Thus, private property purchased by the National Government for expansion of a public wharf may be titled in the name of a government corporation
regulating port operations in the country. Private property purchased by the National Government for expansion of an airport may also be titled in the name
of the government agency tasked to administer the airport. Private property donated to a municipality for use as a town plaza or public school site may
likewise be titled in the name of the municipality.106 All these properties become properties of the public domain, and if already registered under Act No.
496 or PD No. 1529, remain registered land. There is no requirement or provision in any existing law for the de-registration of land from the Torrens
System.

Private lands taken by the Government for public use under its power of eminent domain become unquestionably part of the public domain. Nevertheless,
Section 85 of PD No. 1529 authorizes the Register of Deeds to issue in the name of the National Government new certificates of title covering such
expropriated lands. Section 85 of PD No. 1529 states –

"Sec. 85. Land taken by eminent domain. Whenever any registered land, or interest therein, is expropriated or taken by eminent domain, the National
Government, province, city or municipality, or any other agency or instrumentality exercising such right shall file for registration in the proper Registry a
certified copy of the judgment which shall state definitely by an adequate description, the particular property or interest expropriated, the number of the
certificate of title, and the nature of the public use. A memorandum of the right or interest taken shall be made on each certificate of title by the Register of
Deeds, and where the fee simple is taken, a new certificate shall be issued in favor of the National Government, province, city, municipality, or any other
agency or instrumentality exercising such right for the land so taken. The legal expenses incident to the memorandum of registration or issuance of a new
certificate of title shall be for the account of the authority taking the land or interest therein." (Emphasis supplied)

Consequently, lands registered under Act No. 496 or PD No. 1529 are not exclusively private or patrimonial lands. Lands of the public domain may also be
registered pursuant to existing laws.

AMARI makes a parting shot that the Amended JVA is not a sale to AMARI of the Freedom Islands or of the lands to be reclaimed from submerged areas
of Manila Bay. In the words of AMARI, the Amended JVA "is not a sale but a joint venture with a stipulation for reimbursement of the original cost
incurred by PEA for the earlier reclamation and construction works performed by the CDCP under its 1973 contract with the Republic." Whether the
Amended JVA is a sale or a joint venture, the fact remains that the Amended JVA requires PEA to "cause the issuance and delivery of the certificates of
title conveying AMARI's Land Share in the name of AMARI."107

This stipulation still contravenes Section 3, Article XII of the 1987 Constitution which provides that private corporations "shall not hold such alienable
lands of the public domain except by lease." The transfer of title and ownership to AMARI clearly means that AMARI will "hold" the reclaimed lands
other than by lease. The transfer of title and ownership is a "disposition" of the reclaimed lands, a transaction considered a sale or alienation under CA No.
141,108 the Government Auditing Code,109 and Section 3, Article XII of the 1987 Constitution.

The Regalian doctrine is deeply implanted in our legal system. Foreshore and submerged areas form part of the public domain and are inalienable. Lands
reclaimed from foreshore and submerged areas also form part of the public domain and are also inalienable, unless converted pursuant to law into alienable
or disposable lands of the public domain. Historically, lands reclaimed by the government are sui generis, not available for sale to private parties unlike
other alienable public lands. Reclaimed lands retain their inherent potential as areas for public use or public service. Alienable lands of the public domain,
increasingly becoming scarce natural resources, are to be distributed equitably among our ever-growing population. To insure such equitable distribution,
the 1973 and 1987 Constitutions have barred private corporations from acquiring any kind of alienable land of the public domain. Those who attempt to
dispose of inalienable natural resources of the State, or seek to circumvent the constitutional ban on alienation of lands of the public domain to private
corporations, do so at their own risk.

We can now summarize our conclusions as follows:

1. The 157.84 hectares of reclaimed lands comprising the Freedom Islands, now covered by certificates of title in the name of PEA, are alienable lands of
the public domain. PEA may lease these lands to private corporations but may not sell or transfer ownership of these lands to private corporations. PEA
may only sell these lands to Philippine citizens, subject to the ownership limitations in the 1987 Constitution and existing laws.

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2. The 592.15 hectares of submerged areas of Manila Bay remain inalienable natural resources of the public domain until classified as alienable or
disposable lands open to disposition and declared no longer needed for public service. The government can make such classification and declaration only
after PEA has reclaimed these submerged areas. Only then can these lands qualify as agricultural lands of the public domain, which are the only natural
resources the government can alienate. In their present state, the 592.15 hectares of submerged areas are inalienable and outside the commerce of man.

3. Since the Amended JVA seeks to transfer to AMARI, a private corporation, ownership of 77.34 hectares110 of the Freedom Islands, such transfer is void
for being contrary to Section 3, Article XII of the 1987 Constitution which prohibits private corporations from acquiring any kind of alienable land of the
public domain.

4. Since the Amended JVA also seeks to transfer to AMARI ownership of 290.156 hectares111 of still submerged areas of Manila Bay, such transfer is void
for being contrary to Section 2, Article XII of the 1987 Constitution which prohibits the alienation of natural resources other than agricultural lands of the
public domain. PEA may reclaim these submerged areas. Thereafter, the government can classify the reclaimed lands as alienable or disposable, and further
declare them no longer needed for public service. Still, the transfer of such reclaimed alienable lands of the public domain to AMARI will be void in view
of Section 3, Article XII of the 1987 Constitution which prohibits private corporations from acquiring any kind of alienable land of the public domain.

Clearly, the Amended JVA violates glaringly Sections 2 and 3, Article XII of the 1987 Constitution. Under Article 1409112 of the Civil Code, contracts
whose "object or purpose is contrary to law," or whose "object is outside the commerce of men," are "inexistent and void from the beginning." The Court
must perform its duty to defend and uphold the Constitution, and therefore declares the Amended JVA null and void ab initio.

Seventh issue: whether the Court is the proper forum to raise the issue of whether the Amended JVA is grossly disadvantageous to the government.

Considering that the Amended JVA is null and void ab initio, there is no necessity to rule on this last issue. Besides, the Court is not a trier of facts, and this
last issue involves a determination of factual matters.

WHEREFORE, the petition is GRANTED. The Public Estates Authority and Amari Coastal Bay Development Corporation are PERMANENTLY
ENJOINED from implementing the Amended Joint Venture Agreement which is hereby declared NULL and VOID ab initio.

SO ORDERED.

Davide, Jr., C.J., Bellosillo, Puno, Vitug, Kapunan, Mendoza, Panganiban, Quisumbing, Ynares-Santiago, Sandoval-Gutierrez, Austria-Martinez, and
Corona, JJ., concur.

Footnote

1
Section 4 of PD No. 1084.

2
PEA's Memorandum dated August 4, 1999, p. 3.

3
PEA's Memorandum, supra note 2 at 7. PEA's Memorandum quoted extensively, in its Statement of Facts and the Case, the Statement of Facts in Senate
Committee Report No. 560 dated September 16, 1997.

4
In Opinion No. 330 dated December 23, 1994, the Government Corporate Counsel, citing COA Audit Circular No. 89-296, advised PEA that PEA could
negotiate the sale of the 157.84-hectare Freedom Islands in view of the failure of the public bidding held on December 10, 1991 where there was not a
single bidder. See also Senate Committee Report No. 560, p. 12.

5
PEA's Memorandum, supra note 2 at 9.

6
Ibid.

7
The existence of this report is a matter of judicial notice pursuant to Section 1, Rule 129 of the Rules of Court which provides, "A court shall take judicial
notice, without the introduction of evidence, of x x x the official acts of the legislature x x x."

8
Teofisto Guingona, Jr.

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9
Renato Cayetano.

10
Virgilio C. Abejo.

11
Report and Recommendation of the Legal Task Force, Annex "C", AMARI's Memorandum dated June 19, 1999.

12
AMARI's Comment dated June 24, 1998, p. 3; Rollo, p. 68.

13
AMARI filed three motions for extension of time to file comment (Rollo, pp. 32, 38, 48), while PEA filed nine motions for extension of time (Rollo, pp.
127, 139).

14
Petitioner's Memorandum dated July 6, 1999, p. 42.

15
Represented by the Office of the Solicitor General, with Solicitor General Ricardo P. Galvez, Assistant Solicitor General Azucena R. Balanon-Corpuz,
and Associate Solicitor Raymund I. Rigodon signing PEA's Memorandum.

16
Represented by Azcuna Yorac Arroyo & Chua Law Offices, and Romulo Mabanta Sayoc & De los Angeles Law Offices.

17
Salonga v. Paño, 134 SCRA 438 (1985); Gonzales v. Marcos, 65 SCRA 624 (1975 ); Aquino v. Enrile, 59 SCRA 183 (1974 ); Dela Camara v. Enage, 41
SCRA 1 (1971 ).

18
Section 11, Article XIV.

19
Manila Electric Co. v. Judge F. Castro-Bartolome, 114 SCRA 799 (1982); Republic v. CA and Iglesia, and Republic v. Cendana and Iglesia ni Cristo,
119 SCRA 449 (1982); Republic v. Villanueva and Iglesia ni Cristo, 114 SCRA 875 (1982); Director of Lands v. Lood, 124 SCRA 460 (1983); Republic v.
Iglesia ni Cristo, 128 SCRA 44 (1984); Director of Lands v. Hermanos y Hermanas de Sta. Cruz de Mayo, Inc., 141 SCRA 21 (1986); Director of Lands v.
IAC and Acme Plywood & Veneer Co., 146 SCRA 509 (1986); Republic v. IAC and Roman Catholic Bishop of Lucena, 168 SCRA 165 (1988); Natividad
v. CA, 202 SCRA 493 (1991); Villaflor v. CA and Nasipit Lumber Co., 280 SCRA 297 (1997). In Ayog v. Cusi, 118 SCRA 492 (1982), the Court did not
apply the constitutional ban in the 1973 Constitution because the applicant corporation, Biñan Development Co., Inc., had fully complied with all its
obligations and even paid the full purchase price before the effectivity of the 1973 Constitution, although the sales patent was issued after the 1973
Constitution took effect.

20
PD No. 1073.

21
Annex "B", AMARI's Memorandum dated June 19, 1999, Section 5.2 (c) and (e) of the Amended JVA, pp. 16-17.

22
Chavez v. PCGG, 299 SCRA 744 (1998).

23
136 SCRA 27 (1985).

24
Article 2 of the Civil Code (prior to its amendment by EO No. 200) provided as follows: "Laws shall take effect after fifteen days following the
completion of their publication in the Official Gazette, unless it is provided otherwise, x x x."

25
Section 1 of CA No. 638 provides as follows: "There shall be published in the Official Gazette all important legislative acts and resolutions of the
Congress of the Philippines; all executive and administrative orders and proclamations, except such as have no general applicability; x x x."

26
Section 79 of the Government Auditing Codes provides as follows: "When government property has become unserviceable for any cause, or is no
longer needed, it shall, upon application of the officer accountable therefor, be inspected by the head of the agency or his duly authorized representative in
the presence of the auditor concerned and, if found to be valueless or unsaleable, it may be destroyed in their presence. If found to be valuable, it may be
sold at public auction to the highest bidder under the supervision of the proper committee on award or similar body in the presence of the auditor
concerned or other authorized representative of the Commission, after advertising by printed notice in the Official Gazette, or for not less than three
consecutive days in any newspaper of general circulation, or where the value of the property does not warrant the expense of publication, by notices
posted for a like period in at least three public places in the locality where the property is to be sold. In the event that the public auction fails, the property
may be sold at a private sale at such price as may be fixed by the same committee or body concerned and approved by the Commission."

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27
Paat v. Court of Appeals, 266 SCRA 167 (1997); Quisumbing v. Judge Gumban, 193 SCRA 520 (1991); Valmonte v. Belmonte, Jr., 170 SCRA 256
(1989).

28
See note 22.

29
Section 1, Article XI of the 1987 Constitution states as follows: "Public office is a public trust. Public officers and employees must at all times be
accountable to the people, serve them with utmost responsibility, integrity, loyalty, and efficiency, act with patriotism and justice, and lead modest lives."

30
170 SCRA 256 (1989).

31
See note 22.

32
Record of the Constitutional Commission, Vol. V, pp. 24-25, (1986).

33
Supra, Note 22.

34
Ibid.

35
Legaspi v. Civil Service Commission, 150 SCRA 530 (1987).

36
Almonte v. Vasquez, 244 SCRA 286 (1995).

37
See Note 22.

38
Chavez v. PCGG, see note 22; Aquino-Sarmiento v. Morato, 203 SCRA 515 (1991).

39
Almonte v. Vasquez, see note 36.

40
People's Movement for Press Freedom, et al. v. Hon. Raul Manglapus, G.R. No. 84642, En Banc Resolution dated April 13, 1988; Chavez v. PCGG, see
note 22.

41
Section 270 of the National Internal Revenue Code punishes any officer or employee of the Bureau of Internal Revenue who divulges to any person,
except as allowed by law, information regarding the business, income, or estate of any taxpayer, the secrets, operation, style of work, or apparatus of any
manufacturer or producer, or confidential information regarding the business of any taxpayer, knowledge of which was acquired by him in the discharge of
his official duties. Section 14 of R.A. No. 8800 (Safeguard Measures Act) prohibits the release to the public of confidential information submitted in
evidence to the Tariff Commission. Section 3 (n) of R.A. No. 8504 (Philippine AIDS Prevention and Control Act) classifies as confidential the medical
records of HIV patients. Section 6 (j) of R.A. No. 8043 (Inter-Country Adoption Act) classifies as confidential the records of the adopted child, adopting
parents, and natural parents. Section 94 (f) of R.A. No. 7942 (Philippine Mining Act) requires the Department of Environment and Natural Resources to
maintain the confidentiality of confidential information supplied by contractors who are parties to mineral agreements or financial and technical assistance
agreements.

42
The Recopilacion de Leyes de las Indias declared that: "We, having acquired full sovereignty over the Indies, and all lands, territories, and possessions
not heretofore ceded away by our royal predecessors, or by us, or in our name, still pertaining to the royal crown and patrimony, it is our will that all lands
which are held without proper and true deeds of grant be restored to us according as they belong to us, in order that after reserving before all what to us or
to our viceroys, audiencias, and governors may seem necessary for public squares, ways, pastures, and commons in those places which are peopled, taking
into consideration not only their present condition, but also their future and their probable increase, and after distributing to the natives what may be
necessary for tillage and pasturage, confirming them in what they now have and giving them more if necessary, all the rest of said lands may remain free
and unencumbered for us to dispose of as we may wish." See concurring opinion of Justice Reynato S. Puno in Republic Real Estate Corporation v. Court
of Appeals, 299 SCRA 199 (1998).

43
Cariño v. Insular Government, 41 Phil. 935 (1909). The exception mentioned in Cariño, referring to lands in the possession of an occupant and of his
predecessors-in-interest, since time immemorial, is actually a species of a grant by the State. The United States Supreme Court, speaking through Justice
Oliver Wendell Holmes, Jr., declared in Cariño: "Prescription is mentioned again in the royal cedula of October 15, 1754, cited in 3 Philippine, 546;
'Where such possessors shall not be able to produce title deeds, it shall be sufficient if they shall show that ancient possession, as a valid title by
prescription.' It may be that this means possession from before 1700; but, at all events, the principle is admitted. As prescription, even against the Crown

64
lands, was recognized by the laws of Spain, we see no sufficient reason for hesitating to admit that it was recognized in the Philippines in regard to lands
over which Spain had only a paper sovereignty." See also Republic v. Lee, 197 SCRA 13 (1991).

44
Article 1 of the Spanish Law of Waters of 1866.

45
Ignacio v. Director of Lands, 108 Phil. 335 (1960); Joven v. Director of Lands, 93 Phil. 134 (1953); Laurel v. Garcia, 187 SCRA 797 (1990). See
concurring opinion of Justice Reynato S. Puno in Republic Real Estate Corporation v. Court of Appeals, 299 SCRA 199 (1998).

46
Act No. 926, enacted on October 7, 1903, was also titled the Public Land Act. This Act, however, did not cover reclaimed lands. Nevertheless, Section
23 of this Act provided as follows: "x x x In no case may lands leased under the provisions of this chapter be taken so as to gain control of adjacent land,
water, stream, shore line, way, roadstead, or other valuable right which in the opinion of the Chief of the Bureau of Public Lands would be prejudicial to
the interests of the public."

47
Section 10 of Act No. 2874 provided as follows: "The words "alienation," "disposition," or "concession" as used in this Act, shall mean any of the
methods authorized by this Act for the acquisition, lease, use, or benefit of the lands of the public domain other than timber or mineral lands."

48
Title II of Act No. 2874 governed alienable lands of the public domain for agricultural purposes, while Title III of the same Act governed alienable lands
of the public domain for non-agricultural purposes.

49
Section 57 of Act No. 2874 provided as follows: "x x x; but the land so granted, donated, or transferred to a province, municipality, or branch or
subdivision of the Government shall not be alienated, encumbered, or otherwise disposed of in a manner affecting its title, except when authorized by the
legislature; x x x."

50
Krivenko v. Register of Deeds, 79 Phil. 461 (1947).

51
Section 2 of CA No. 141 states as follows: "The provisions of this Act shall apply to the lands of the public domain; but timber and mineral lands shall be
governed by special laws and nothing in this Act provided shall be understood or construed to change or modify the administration and disposition of the
lands commonly called "friar lands" and those which, being privately owned, have reverted to or become the property of the Commonwealth of the
Philippines, which administration and disposition shall be governed by the laws at present in force or which may hereafter be enacted."

52
Like Act No. 2874, Section 10 of CA No. 141 defined the terms "alienation" and "disposition" as follows: "The words "alienation," "disposition," or
"concession" as used in this Act, shall mean any of the methods authorized by this Act for the acquisition, lease, use, or benefit of the lands of the public
domain other than timber or mineral lands."

53
R.A. No. 6657 has suspended the authority of the President to reclassify forest or mineral lands into agricultural lands. Section 4 (a) of RA No. 6657
(Comprehensive Agrarian Reform Law of 1988) states, "No reclassification of forest or mineral lands to agricultural lands shall be undertaken after the
approval of this Act until Congress, taking into account ecological, developmental and equity considerations, shall have delimited by law, the specific
limits of the public domain."

54
Covering Sections 58 to 68 of CA No. 141.

55
299 SCRA 199 (1998).

56
Section 1, Article XIII of the 1935 Constitution limited the disposition and utilization of public agricultural lands to Philippine citizens or to corporations
at least sixty percent owned by Philippine citizens. This was, however, subject to the original Ordinance appended to the 1935 Constitution stating, among
others, that until the withdrawal of United States sovereignty in the Philippines, "Citizens and corporations of the United States shall enjoy in the
Commonwealth of the Philippines all the civil rights of the citizens and corporations, respectively, thereof."

57
Section 44 of PD No. 1529 (previously Section 39 of Act No. 496) provides that "liens, claims or rights arising or existing under the laws and the
Constitution of the Philippines which are not by law required to appear of record in the Registry of Deeds in order to be valid against subsequent
purchasers or encumbrancers of record" constitute statutory liens affecting the title.1âwphi1.nêt

58
RA No. 730, which took effect on June 18, 1952, authorized the private sale of home lots to actual occupants of public lands not needed for public
service. Section 1 of RA No. 730 provided as follows: "Notwithstanding the provisions of Sections 61 and 67 of Commonwealth Act No. 141, as amended
by RA No. 293, any Filipino citizen of legal age who is not the owner of a home lot in the municipality or city in which he resides and who had in good
faith established his residence on a parcel of land of the Republic of the Philippines which is not needed for public service, shall be given preference to
purchase at a private sale of which reasonable notice shall be given to him, not more than one thousand square meters at a price to be fixed by the Director

65
of Lands with the approval of the Secretary of Agriculture and Natural Resources. x x x." In addition, on June 16, 1948, Congress enacted R.A. No. 293
allowing the private sale of marshy alienable or disposable lands of the public domain to lessees who have improved and utilized the same as farms,
fishponds or other similar purposes for at least five years from the date of the lease contract with the government. R.A. No. 293, however, did not apply to
marshy lands under Section 56 (c), Title III of CA No. 141 which refers to marshy lands leased for residential, commercial, industrial or other non-
agricultural purposes.

66