Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 83609 October 26, 1989
DIRECTOR OF LANDS, petitioner,
vs.
COURT OF APPEALS, IBARRA BISNAR and AMELIA BISNAR, respondents.
Ibarra L. Bisnar for himself and for and in behalf of co-private respondent Amelia Bisnar.
GRIO-AQUINO, J.:
Petitioner Director of Lands, through the Solicitor General, seeks a review of the decision dated May 27,
1988, of the Court of Appeals in CA-G.R. CV No. 66426, entitled "Ibarra Bisnar, et al. vs. Director of Lands,"
affirming in totothe decision of the Court of First Instance of Capiz, granting the private respondents'
application for confirmation and registration of their title to two (2) parcels of land in LRC Cad. Rec. 1256.
In their joint application for registration of title to two (2) parcels of land filed on July 20,1976, the
applicants Ibarra and Amelia Bisnar claimed to be the owners in fee simple of Lots 866 and 870 of the Pilar
Cadastre Plan AP-06-000869, respectively containing an area of 28 hectares (284,424 sq. m.) and 34
hectares (345,385 sq. m.) situated in barrio Gen. Hizon, Municipality of President Roxas, Province of Capiz
(p. 14, Rollo). The applicants alleged that they inherited those parcels of land (p. 41, Rollo) and they had
been paying the taxes thereon (p. 40, Rollo).
On December 16,1976, the Director of Lands and the Director of the Bureau of Forest Development,
opposed the application on the grounds that:
1. Neither the applicants nor their predecessors-in-interest possess sufficient title to
acquire ownership in fee simple of the land or lots applied for, the same not having
been acquired by any of the various types of title issued by the Spanish Government,
such as, (1) 'titulo real' or royal grant, (2) the 'concession especial' or special grant,
(3) the 'composicion con el estado titulo' or adjustment title, (4) the 'titulo de
compra 'or title by purchase, and (5) the 'informacion possessoria' or possessory
information under the Royal Decree of 13 February 1894, or any other recognized
mode of acquisition of title over realty under pertinent applicable laws.
2. Neither the applicants nor their predecessors-in-interest have been in open,
continuous, exclusive and notorious possession and occupation of the land in
question for at least thirty (30) years immediately preceding the filing of the
application.
3. The properties in question are a portion of the public domain belonging to the
Republic of the Philippines, not subject to private appropriation, (pp. 17-19, Record
on Appeal). (pp. 14-15, Rollo.)
On February 24,1977, the applicants filed an amended application, which was approved on March 14,
1977, and included the following allegation:
Should the Land Registration Act invoked be not applicable to the case, they hereby
apply for the benefits of Chapter 8, Commonwealth Act 141, as amended, as they
and their predecessors-in-interest have been in possession of the land as owners for
more than fifty (50) years. (p. 16, Rollo.)
After hearing, the trial court ordered the registration of the title of the lots in the names of the applicants,
herein private respondents. It found that applicants and their predecessors- in-interest have been in open,
public, continuous, peaceful and adverse possession of the subject parcels of land under bona fide claims
of ownership for more than eighty (80) years (not only 30) prior to the filing of the application for
registration, introduced improvements on the lands by planting coconuts, bamboos and other plants, and
converted a part of the land into productive fishponds (p. 68, Rollo).
On appeal, the Appellate Court affirmed the trial court's decision. It held that the classification of the lots
as timberland by the Director of Forestry cannot prevail in the absence of proof that the said lots are
indeed more valuable as forest land than as agricultural land, citing as authority the case of Ankron vs.
Government of the Philippine Islands (40 Phil. 10). In this petition, the government alleges that:
 1. the classification or reclassification of public lands into alienable or disposable
agricultural land, mineral land or forest land is a prerogative of the Executive
Department of the government and not of the courts;
2. that possession of forest lands, no matter how long, cannot ripen into private
ownership; and
Thus, possession of forest lands, however long, cannot ripen into private ownership (Vano vs.
Government, 41 Phil. 161 [1920]; Adorable vs. Director of Forestry, 107 Phil. 401 [1960]). A parcel of
forest land is within the exclusive jurisdiction of the Bureau of Forestry and beyond the power and
jurisdiction of the cadastral court to register under the Torrens System (Republic vs. Court of Appeals, 89
SCRA 648; Republic vs. Vera, 120 SCRA 210 [1983]; Director of Lands vs. Court of Appeals, 129 SCRA 689
[1984]).

Section 48 (b) of Commonwealth Act No. 141, as amended, applies exclusively to public agricultural land.
3. that an applicant for registration of title has the burden of proving that he meets
Forest lands or areas covered with forests are excluded (p. 26, Rollo). We reiterate our ruling
the requirements of Section 48 of Com. Act No. 141, as amended. (p. 19, Rollo.)
in Amunategui that:

The principal issue in this appeal is whether the lots in question may be registered under Section 48 (b) of
CA 141, as amended.
The petition is impressed with merit.
In the case of Bureau of Forestry vs. Court of Appeals, 153 SCRA 351, we ruled:
As provided for under Section 6 of Commonwealth Act 141, which was lifted from
Act 2874, the classification or reclassification of public lands into alienable or
disposable, mineral or forest lands is now a prerogative of the Executive Department
of the government and not the courts. With these rules, there should be no more
room for doubt that it is not the court which determines the classification of lands of
the public domain into agricultural, forest or mineral but the Executive Branch of the
government, through the Office of the President. Hence, it was grave error and/or
abuse of discretion for respondent court to ignore the uncontroverted facts that (1)
the disputed area is within a timberland block, and (2) as certified to by the then
Director of Forestry, the area is needed for forest purposes. (pp. 21-22, Rollo.)
In confirmation of imperfect title cases, the applicant shoulders the burden of
proving that he meets the requirements of Section 48, Commonwealth Act No. 141,
as amended by Republic Act 1942. He must overcome the presumption that the
land he is applying for is part of the public domain but that he has an interest
therein sufficient to warrant registration in his name because of an imperfect title
such as those derived from old Spanish grants or that he has had continuous, open
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 (30) years
preceding the filing of his application. (Heirs of Amunategui vs. Director of Forestry,
126 SCRA 69.)
WHEREFORE, the appealed decision is reversed and set aside. The application for registration in LRC Cad.
Rec. 1256 of the former Court of First Instance, is hereby dismissed without costs.
SO ORDERED.
Narvasa, Cruz, Gancayco and Medialdea, JJ., concur.

It bears emphasizing that a positive act of the government is needed to declassify land which is classified
as forest and to convert it into alienable or disposable land for agricultural or other purposes (Republic vs.
Animas, 56 SCRA 499). Unless and until the land classified as forest is released in an official proclamation
to that effect so that it may form part of the disposable agricultural lands of the public domain, the rules
on confirmation of imperfect title do not apply (Amunategui vs. Director of Forestry, 126 SCRA 69;
Director of Lands vs. Court of Appeals, 129 SCRA 689; Director of Lands vs. Court of Appeals, 133 SCRA 701;
Republic vs. Court of Appeals, 148 SCRA 480; Vallarta vs. Intermediate Appellate Court, 151 SCRA 679).
Republic of the Philippines WILFREDO GELITO, joined by
Supreme Court THE LANDOWNERS OF
Manila BORACAY SIMILARLY
SITUATED NAMED IN A LIST,
EN BANC ANNEX A OF THIS PETITION,
Petitioners,

THE SECRETARY OF THE G.R. No. 167707

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

MAYOR JOSE S. YAP, LIBERTAD
TALAPIAN, MILA Y. SUMNDAD, and
ANICETO YAP, in their behalf and Promulgated:
in behalf of all those similarly situated,
Respondents. October 8, 2008
x--------------------------------------------------x
DR. ORLANDO SACAY and G.R. No. 173775
AT stake in these consolidated cases is the right of the present occupants of Boracay Island to
secure titles over their occupied lands.
There are two consolidated petitions. The first is G.R. No. 167707, a petition for review
on certiorari of the Decision[1] of the Court of Appeals (CA) affirming that[2] of the Regional Trial Court (RTC)
in Kalibo, Aklan, which granted the petition for declaratory relief filed by respondents-claimants Mayor
Jose Yap, et al. and ordered the survey of Boracay for titling purposes. The second is G.R. No. 173775, a
petition for prohibition, mandamus, and nullification of Proclamation No. 1064[3] issued by President
Gloria Macapagal-Arroyo classifying Boracay into reserved forest and agricultural land.

The Antecedents
G.R. No. 167707
Boracay Island in the Municipality of Malay, Aklan, with its powdery white sand beaches and
warm crystalline waters, is reputedly a premier Philippine tourist destination.The island is also home to
12,003 inhabitants[4] who live in the bone-shaped islands three barangays.[5]
On April 14, 1976, the Department of Environment and Natural Resources (DENR)
approved the National Reservation Survey of Boracay
Island,[6] which identified several lots as being occupied or claimed by named persons.[7]
On November 10, 1978, then President Ferdinand Marcos issued Proclamation
No. 1801[8] declaring Boracay Island, among other islands, caves and peninsulas in the Philippines,
as tourist zones and marine reserves under the administration of the Philippine Tourism Authority
(PTA). President Marcos later approved the issuance of PTACircular 3-82[9] dated September 3, 1982, to
implement Proclamation No. 1801.
Claiming that Proclamation No. 1801 and PTA Circular No 3-82 precluded them from filing an
application for judicial confirmation of imperfect title or survey of land for titling purposes, respondents-
claimants
Mayor Jose S. Yap, Jr., Libertad Talapian, Mila Y. Sumndad, and Aniceto Yap filed a petition for declaratory
relief with the RTC in Kalibo, Aklan.
In their petition, respondents-claimants alleged that Proclamation No. 1801 and PTA Circular
No. 3-82 raised doubts on their right to secure titles over their occupied lands. They declared that they
themselves, or through their predecessors-in-interest, had been in open, continuous, exclusive, and
notorious possession and occupation in Boracay since June 12, 1945, or earlier since time
immemorial. They declared their lands for tax purposes and paid realty taxes on them.[10]
Respondents-claimants posited that Proclamation No. 1801 and its implementing Circular did
not place Boracay beyond the commerce of man. Since the Island was classified as a tourist zone, it was
susceptible of private ownership. Under Section 48(b) of Commonwealth Act (CA) No. 141, otherwise
known as the Public Land Act, they had the right to have the lots registered in their names through judicial
confirmation of imperfect titles.
The Republic, through the Office of the Solicitor General (OSG), opposed the petition for
declaratory relief. The OSG countered that Boracay Island was an unclassified land of the public domain. It
formed part of the mass of lands classified as public forest, which was not available for disposition
pursuant to Section 3(a) of Presidential Decree (PD) No. 705 or the Revised Forestry Code,[11] as amended.
The OSG maintained that respondents-claimants reliance on PD No. 1801 and PTA Circular No.
3-82 was misplaced. Their right to judicial confirmation of title was governed by CA No. 141 and PD No.
705. Since Boracay Island had not been classified as alienable and disposable, whatever possession they
had cannot ripen into ownership.
During pre-trial, respondents-claimants and the OSG stipulated on the following facts: (1)
respondents-claimants were presently in possession of parcels of land in Boracay Island; (2) these parcels
of land were planted with coconut trees and other natural growing trees; (3) the coconut trees had
heights of more or less twenty (20) meters and were planted more or less fifty (50) years ago; and (4)
respondents-claimants declared the land they were occupying for tax purposes.[12]
The parties also agreed that the principal issue for resolution was purely legal: whether
Proclamation No. 1801 posed any legal hindrance or impediment to the titling of the lands in
Boracay. They decided to forego with the trial and to submit the case for resolution upon submission of
their respective memoranda.[13]
The RTC took judicial notice[14] that certain parcels of land in Boracay Island, more particularly
Lots 1 and 30, Plan PSU-5344, were covered by Original Certificate of Title No. 19502 (RO 2222) in the
name of the Heirs of Ciriaco S. Tirol. These lots were involved in Civil Case Nos. 5222 and 5262 filed before
the RTC of Kalibo, Aklan.[15]The titles were issued on
August 7, 1933.[16]
RTC and CA Dispositions
On July 14, 1999, the RTC rendered a decision in favor of respondents-claimants, with
a fallo reading:
WHEREFORE, in view of the foregoing, the Court declares that
Proclamation No. 1801 and PTA Circular No. 3-82 pose no legal obstacle to the
petitioners and those similarly situated to acquire title to their lands in Boracay, in
accordance with the applicable laws and in the manner prescribed therein; and to
have their lands surveyed and approved by respondent Regional Technical Director
of Lands as the approved survey does not in itself constitute a title to the land.
SO ORDERED.[17]
 The RTC upheld respondents-claimants right to have their occupied lands titled in their
name. It ruled that neither Proclamation No. 1801 nor PTA Circular No. 3-82 mentioned that lands in
Boracay were inalienable or could not be the subject of disposition.[18] The Circular itself recognized
private ownership of lands.[19] The trial court cited Sections 87[20] and 53[21] of the Public Land Act as basis
for acknowledging private ownership of lands in Boracay and that only those forested areas in public lands
were declared as part of the forest reserve.[22]
The OSG moved for reconsideration but its motion was denied.[23] The Republic then appealed
to the CA.
On December 9, 2004, the appellate court affirmed in toto the RTC decision, disposing as
follows:
WHEREFORE, in view of the foregoing premises, judgment is hereby
rendered by us DENYING the appeal filed in this case and AFFIRMING the decision of
the lower court.[24]
The CA held that respondents-claimants could not be prejudiced by a declaration that the lands
they occupied since time immemorial were part of a forest reserve.
Again, the OSG sought reconsideration but it was similarly denied.[25] Hence, the present
petition under Rule 45.
G.R. No. 173775
On May 22, 2006, during the pendency of G.R. No. 167707, President Gloria Macapagal-Arroyo issued
Proclamation No. 1064[26] classifying Boracay Island into four hundred (400) hectares of reserved forest
land (protection purposes) and six hundred twenty-eight and 96/100 (628.96) hectares of agricultural land
(alienable and disposable). The Proclamation likewise provided for a fifteen-meter buffer zone on each
side of the centerline of roads and trails, reserved for right-of-way and which shall form part of the area
reserved for forest land protection purposes.
On August 10, 2006, petitioners-claimants Dr. Orlando Sacay,[27] Wilfredo Gelito,[28] and other
landowners[29] in Boracay filed with this Court an original petition for prohibition, mandamus, and
nullification of Proclamation No. 1064.[30] They allege that the Proclamation infringed on their prior vested
rights over portions of Boracay. They have been in continued possession of their respective lots in Boracay
since time immemorial. They have also invested billions of pesos in developing their lands and building
internationally renowned first class resorts on their lots.[31]
Petitioners-claimants contended that there is no need for a proclamation reclassifying Boracay
into agricultural land. Being classified as neither mineral nor timber land, the island is deemed agricultural
pursuant to the Philippine Bill of 1902 and Act No. 926, known as the first Public Land Act.[32] Thus, their
possession in the concept of owner for the required period entitled them to judicial confirmation of
imperfect title.
Opposing the petition, the OSG argued that petitioners-claimants do not have a vested right
over their occupied portions in the island. Boracay is an unclassified public forest land pursuant to Section
3(a) of PD No. 705. Being public forest, the claimed portions of the island are inalienable and cannot be
the subject of judicial confirmation of imperfect title. It is only the executive department, not the courts,
which has authority to reclassify lands of the public domain into alienable and disposable lands. There is a
need for a positive government act in order to release the lots for disposition.
On November 21, 2006, this Court ordered the consolidation of the two petitions as they
principally involve the same issues on the land classification of Boracay Island.[33]
Issues
G.R. No. 167707
The OSG raises the lone issue of whether Proclamation No. 1801 and PTA Circular No. 3-82
pose any legal obstacle for respondents, and all those similarly situated, to acquire title to their occupied
lands in Boracay Island.[34]
G.R. No. 173775
Petitioners-claimants hoist five (5) issues, namely:
I.
AT THE TIME OF THE ESTABLISHED POSSESSION OF PETITIONERS IN CONCEPT OF
OWNER OVER THEIR RESPECTIVE AREAS IN BORACAY, SINCE TIME IMMEMORIAL OR
AT THE LATEST SINCE 30 YRS. PRIOR TO THE FILING OF THE PETITION FOR
DECLARATORY RELIEF ON NOV. 19, 1997, WERE THE AREAS OCCUPIED BY THEM
PUBLIC AGRICULTURAL LANDS AS DEFINED BY LAWS THEN ON JUDICIAL
 CONFIRMATION OF IMPERFECT TITLES OR PUBLIC FOREST AS DEFINED BY SEC. 3a,
PD 705?
II.
HAVE PETITIONERS OCCUPANTS ACQUIRED PRIOR VESTED RIGHT OF PRIVATE
OWNERSHIP OVER THEIR OCCUPIED PORTIONS OF BORACAY LAND, DESPITE
THE FACT THAT THEY HAVE NOT APPLIED YET FOR JUDICIAL CONFIRMATION OF
IMPERFECT TITLE?
III.
IS THE EXECUTIVE DECLARATION OF THEIR AREAS AS
ALIENABLE AND DISPOSABLE UNDER SEC 6, CA 141 [AN] INDISPENSABLE PRE-
REQUISITE FOR PETITIONERS TO OBTAIN TITLE UNDER THE TORRENS SYSTEM?
IV.
IS THE ISSUANCE OF PROCLAMATION 1064 ON MAY 22, 2006, VIOLATIVE OF THE
PRIOR VESTED RIGHTS TO PRIVATE OWNERSHIP OF PETITIONERS OVER THEIR
LANDS IN BORACAY, PROTECTED BY THE DUE PROCESS CLAUSE OF THE
CONSTITUTION OR IS PROCLAMATION 1064 CONTRARY TO SEC. 8, CA 141, OR SEC.
4(a) OF RA 6657.
V.
CAN RESPONDENTS BE COMPELLED BY MANDAMUS TO ALLOW THE
SURVEY AND TO APPROVE THE SURVEY PLANS FOR PURPOSES OF THE APPLICATION
FOR TITLING OF THE LANDS OF PETITIONERS IN BORACAY?[35] (Underscoring
supplied)
In capsule, the main issue is whether private claimants (respondents-claimants in G.R. No.
167707 and petitioners-claimants in G.R. No. 173775) have a right to secure titles over their occupied
portions in Boracay. The twin petitions pertain to their right, if any, to judicial confirmation of imperfect
title under CA No. 141, as amended. They do not involve their right to secure title under other pertinent
laws.
Private claimants rely on three (3) laws and executive acts in their bid for judicial confirmation
of imperfect title, namely: (a) Philippine Bill of 1902[36] in relation to Act No. 926, later amended and/or
superseded by Act No. 2874 and CA No. 141;[37] (b) Proclamation No. 1801[38] issued by then President
Marcos; and (c) Proclamation No. 1064[39] issued by President Gloria Macapagal-Arroyo. We shall proceed
to determine their rights to apply for judicial confirmation of imperfect title under these laws and
executive acts.
But first, a peek at the Regalian principle and the power of the executive to reclassify lands of
the public domain.
The 1935 Constitution classified lands of the public domain into agricultural, forest or
timber.[40] Meanwhile, the 1973 Constitution provided the following divisions: agricultural, industrial or
commercial, residential, resettlement, mineral, timber or forest and grazing lands, and such other classes
as may be provided by law,[41] giving the government great leeway for classification.[42] Then the 1987
Constitution reverted to the 1935 Constitution classification with one addition: national parks. [43] Of
these, onlyagricultural lands may be alienated.[44] Prior to Proclamation No. 1064 of May 22,
2006, Boracay Island had never been expressly and administratively classified under any of these grand
divisions. Boracay was an unclassified land of the public domain.
The Regalian Doctrine dictates that all lands of the public domain belong to the State, that the
State is the source of any asserted right to ownership of land and charged with the conservation of such
patrimony.[45] The doctrine has been consistently adopted under the 1935, 1973, and 1987
Constitutions.[46]
All lands not otherwise appearing to be clearly within private ownership are presumed to
belong to the State.[47] Thus, all lands that have not been acquired from the government, either by
purchase or by grant, belong to the State as part of the inalienable public domain.[48] Necessarily, it is up
to the State to determine if lands of the public domain will be disposed of for private ownership. The
government, as the agent of the state, is possessed of the plenary power as the persona in law to
determine who shall be the favored recipients of public lands, as well as under what terms they may be
granted such privilege, not excluding the placing of obstacles in the way of their exercise of what
otherwise would be ordinary acts of ownership.[49]

Our Ruling Our present land law traces its roots to the Regalian Doctrine. Upon the Spanish conquest of
the Philippines, ownership of all lands, territories and possessions in the Philippines passed to the Spanish
Regalian Doctrine and power of the executive Crown.[50] The Regalian doctrine was first introduced in the Philippines through the Laws of the Indies and
to reclassify lands of the public domain the Royal Cedulas, which laid the foundation that all lands that were not acquired from the Government,
either by purchase or by grant, belong to the public domain.[51]
 The Laws of the Indies was followed by the Ley Hipotecaria or the Mortgage Law of 1893. The
Spanish Mortgage Law provided for the systematic registration of titles and deeds as well as possessory
claims.[52]
The Royal Decree of 1894 or the Maura Law[53] partly amended the Spanish Mortgage Law and
the Laws of the Indies. It established possessory information as the method of legalizing possession of
vacant Crown land, under certain conditions which were set forth in said decree.[54] Under Section 393 of
the Maura Law, an informacion posesoria or possessory information title,[55] when duly inscribed in the
Registry of Property, is converted into a title of ownership only after the lapse of twenty (20) years of
uninterrupted possession which must be actual, public, and adverse,[56] from the date of its
inscription.[57] However, possessory information title had to be perfected one year after the promulgation
of the Maura Law, or until April 17, 1895. Otherwise, the lands would revert to the State.[58]
In sum, private ownership of land under the Spanish regime could only be founded on royal
concessions which took various forms, namely: (1) titulo real or royal grant; (2) concesion especial or
special grant; (3) composicion con el estado or adjustment title; (4) titulo de compra or title by purchase;
and (5) informacion posesoria or possessory information title.[59]
The first law governing the disposition of public lands in the Philippines under American rule
was embodied in the Philippine Bill of 1902.[60] By this law, lands of the public domain in the Philippine
Islands were classified into three (3) grand divisions, to wit: agricultural, mineral, and timber or forest
lands.[61] The act provided for, among others, the disposal of mineral lands by means of absolute grant
(freehold system) and by lease (leasehold system).[62] It also provided the definition by exclusion of
agricultural public lands.[63] Interpreting the meaning of agricultural lands under the Philippine Bill of 1902,
the Court declared in Mapa v. Insular Government:[64]
x x x In other words, that the phrase agricultural land as used in Act No.
926 means those public lands acquired from Spain which are not timber or
mineral lands. x x x[65](Emphasis Ours)
On February 1, 1903, the Philippine Legislature passed Act No. 496, otherwise known as the
Land Registration Act. The act established a system of registration by which recorded title becomes
absolute, indefeasible, and imprescriptible. This is known as the Torrens system.[66]
Concurrently, on October 7, 1903, the Philippine Commission passed Act No. 926, which was
the first Public Land Act. The Act introduced the homestead system and made provisions for judicial and
administrative confirmation of imperfect titles and for the sale or lease of public lands. It permitted
corporations regardless of the nationality of persons owning the controlling stock to lease or purchase
lands of the public domain.[67] Under the Act, open, continuous, exclusive, and notorious possession and
occupation of agricultural lands for the next ten (10) years preceding July 26, 1904 was sufficient for
judicial confirmation of imperfect title.[68]
On November 29, 1919, Act No. 926 was superseded by Act No. 2874, otherwise known as the
second Public Land Act. This new, more comprehensive law limited the exploitation of agricultural lands to
Filipinos and Americans and citizens of other countries which gave Filipinos the same privileges. For
judicial confirmation of title, possession and occupation en concepto dueo since time immemorial, or
since July 26, 1894, was required.[69]
After the passage of the 1935 Constitution, CA No. 141 amended Act No. 2874 on December 1,
1936. To this day, CA No. 141, as amended, remains as the existing general law governing the
classification and disposition of lands of the public domain other than timber and mineral lands, [70] and
privately owned lands which reverted to the State.[71]
Section 48(b) of CA No. 141 retained the requirement under Act No. 2874 of possession and
occupation of lands of the public domain since time immemorial or since July 26, 1894. However, this
provision was superseded by Republic Act (RA) No. 1942,[72] which provided for a simple thirty-year
prescriptive period for judicial confirmation of imperfect title. The provision was last amended by PD No.
1073,[73] which now provides for possession and occupation of the land applied for since June 12, 1945, or
earlier.[74]
The issuance of PD No. 892[75] on February 16, 1976 discontinued the use of Spanish titles as
evidence in land registration proceedings.[76] Under the decree, all holders of Spanish titles or grants
should apply for registration of their lands under Act No. 496 within six (6) months from the effectivity of
the decree on February 16, 1976. Thereafter, the recording of all unregistered lands[77] shall be governed
by Section 194 of the Revised Administrative Code, as amended by Act No. 3344.
On June 11, 1978, Act No. 496 was amended and updated by PD No. 1529, known as the
Property Registration Decree. It was enacted to codify the various laws relative to registration of
property.[78] It governs registration of lands under the Torrens system as well as unregistered lands,
including chattel mortgages.[79]
A positive act declaring land as alienable and disposable is required. In keeping with the
presumption of State ownership, the Court has time and again emphasized that there must be a positive
act of the government, such as an official proclamation,[80] declassifying inalienable public land into
disposable land for agricultural or other purposes.[81] In fact, Section 8 of CA No. 141 limits alienable or
disposable lands only to those lands which have been officially delimited and classified.[82]
 The burden of proof in overcoming the presumption of State ownership of the lands of the
public domain is on the person applying for registration (or claiming ownership), who must prove that the
land subject of the application is alienable or disposable.[83] To overcome this presumption,
incontrovertible evidence must be established that the land subject of the application (or claim) is
alienable or disposable.[84] There must still be a positive act declaring land of the public domain as
alienable and disposable. To prove that the land subject of an application for registration is alienable, the
applicant must establish the existence of a positive act of the government such as a presidential
proclamation or an executive order; an administrative action; investigation reports of Bureau of Lands
investigators; and a legislative act or a statute.[85] The applicant may also secure a certification from the
government that the land claimed to have been possessed for the required number of years is alienable
and disposable.[86]
In the case at bar, no such proclamation, executive order, administrative action, report, statute,
or certification was presented to the Court. The records are bereft of evidence showing that, prior to 2006,
the portions of Boracay occupied by private claimants were subject of a government proclamation that
the land is alienable and disposable.Absent such well-nigh incontrovertible evidence, the Court cannot
accept the submission that lands occupied by private claimants were already open to disposition before
2006. Matters of land classification or reclassification cannot be assumed. They call for proof.[87]
Ankron and De Aldecoa did not make the whole of Boracay Island, or portions of it,
agricultural lands. Private claimants posit that Boracay was already an agricultural land pursuant to the
old cases Ankron v. Government of the Philippine Islands (1919)[88] and De Aldecoa v. The Insular
Government (1909).[89] These cases were decided under the provisions of the Philippine Bill of 1902 and
Act No. 926. There is a statement in these old cases that in the absence of evidence to the contrary, that
in each case the lands are agricultural lands until the contrary is shown.[90]
Private claimants reliance on Ankron and De Aldecoa is misplaced. These cases did not have the
effect of converting the whole of Boracay Island or portions of it into agricultural lands. It should be
stressed that the Philippine Bill of 1902 and Act No. 926 merely provided the manner through which land
registration courts would classify lands of the public domain. Whether the land would be classified as
timber, mineral, or agricultural depended on proof presented in each case.
Ankron and De Aldecoa were decided at a time when the President of the Philippines had no
power to classify lands of the public domain into mineral, timber, and agricultural. At that time, the courts
were free to make corresponding classifications in justiciable cases, or were vested with implicit power to
do so, depending upon the preponderance of the evidence.[91] This was the Courts ruling in Heirs of the
Late Spouses Pedro S. Palanca and Soterranea Rafols Vda. De Palanca v. Republic,[92] in which it stated,
through Justice Adolfo Azcuna, viz.:
x x x Petitioners furthermore insist that a particular land need not be
formally released by an act of the Executive before it can be deemed open to
private ownership, citing the cases of Ramos v. Director of Lands and Ankron v.
Government of the Philippine Islands.
xxxx
Petitioners reliance upon Ramos v. Director of Lands and Ankron v.
Government is misplaced. These cases were decided under the Philippine Bill of
1902 and the first Public Land Act No. 926 enacted by the Philippine Commission
on October 7, 1926, under which there was no legal provision vesting in the Chief
Executive or President of the Philippines the power to classify lands of the public
domain into mineral, timber and agricultural so that the courts then were free to
make corresponding classifications in justiciable cases, or were vested with implicit
power to do so, depending upon the preponderance of the evidence.[93]
To aid the courts in resolving land registration cases under Act No. 926, it was then necessary
to devise a presumption on land classification. Thus evolved the dictum in Ankron that the courts have a
right to presume, in the absence of evidence to the contrary, that in each case the lands are agricultural
lands until the contrary is shown.[94]
But We cannot unduly expand the presumption in Ankron and De Aldecoa to an argument that
all lands of the public domain had been automatically reclassified as disposable and alienable agricultural
lands. By no stretch of imagination did the presumption convert all lands of the public domain into
agricultural lands.
If We accept the position of private claimants, the Philippine Bill of 1902 and Act No. 926 would
have automatically made all lands in the Philippines, except those already classified as timber or mineral
land, alienable and disposable lands. That would take these lands out of State ownership and worse,
would be utterly inconsistent with and totally repugnant to the long-entrenched Regalian doctrine.
The presumption in Ankron and De Aldecoa attaches only to land registration cases brought
under the provisions of Act No. 926, or more specifically those cases dealing with judicial and
administrative confirmation of imperfect titles. The presumption applies to an applicant for judicial or
administrative conformation of imperfect title under Act No. 926. It certainly cannot apply to landowners,
such as private claimants or their predecessors-in-interest, who failed to avail themselves of the benefits
of Act No. 926. As to them, their land remained unclassified and, by virtue of the Regalian doctrine,
continued to be owned by the State.
In any case, the assumption in Ankron and De Aldecoa was not absolute. Land classification was,
in the end, dependent on proof. If there was proof that the land was better suited for non-agricultural
uses, the courts could adjudge it as a mineral or timber land despite the presumption. In Ankron, this
Court stated:
In the case of Jocson vs. Director of Forestry (supra), the Attorney-
General admitted in effect that whether the particular land in question belongs to
one class or another is a question of fact. The mere fact that a tract of land has trees
upon it or has mineral within it is not of itself sufficient to declare that one is
forestry land and the other, mineral land. There must be some proof of the extent
and present or future value of the forestry and of the minerals. While, as we have
just said, many definitions have been given for agriculture, forestry, and mineral
lands, and that in each case it is a question of fact, we think it is safe to say that in
order to be forestry or mineral land the proof must show that it is more valuable for
the forestry or the mineral which it contains than it is for agricultural purposes. (Sec.
7, Act No. 1148.) It is not sufficient to show that there exists some trees upon the
land or that it bears some mineral. Land may be classified as forestry or mineral
today, and, by reason of the exhaustion of the timber or mineral, be classified as
agricultural land tomorrow. And vice-versa, by reason of the rapid growth of timber
or the discovery of valuable minerals, lands classified as agricultural today may be
differently classified tomorrow. Each case must be decided upon the proof in that
particular case, having regard for its present or future value for one or the other
purposes. We believe, however, considering the fact that it is a matter of public
knowledge that a majority of the lands in the Philippine Islands are agricultural
lands that the courts have a right to presume, in the absence of evidence to the
contrary, that in each case the lands are agricultural lands until the contrary is
shown. Whatever the land involved in a particular land registration case is forestry
or mineral land must, therefore, be a matter of proof. Its superior value for one
purpose or the other is a question of fact to be settled by the proof in each
particular case. The fact that the land is a manglar [mangrove swamp] is not
sufficient for the courts to decide whether it is agricultural, forestry, or mineral
land. It may perchance belong to one or the other of said classes of land. The
Government, in the first instance, under the provisions of Act No. 1148, may, by
reservation, decide for itself what portions of public land shall be considered
forestry land, unless private interests have intervened before such reservation is
made. In the latter case, whether the land is agricultural, forestry, or mineral, is a
question of proof. Until private interests have intervened, the Government, by
virtue of the terms of said Act (No. 1148), may decide for itself what portions of the
public domain shall be set aside and reserved as forestry or mineral land. (Ramos vs.
Director of Lands, 39 Phil. 175; Jocson vs. Director of Forestry, supra)[95] (Emphasis
ours)
Since 1919, courts were no longer free to determine the classification of lands from the facts of
each case, except those that have already became private lands.[96] Act No. 2874, promulgated in 1919
and reproduced in Section 6 of CA No. 141, gave the Executive Department, through the President,
the exclusive prerogative to classify or reclassify public lands into alienable or disposable, mineral or
forest.96-a Since then, courts no longer had the authority, whether express or implied, to determine the
classification of lands of the public domain.[97]
Here, private claimants, unlike the Heirs of Ciriaco Tirol who were issued their title in
1933,[98] did not present a justiciable case for determination by the land registration court of the propertys
land classification. Simply put, there was no opportunity for the courts then to resolve if the land the
Boracay occupants are now claiming were agricultural lands. When Act No. 926 was supplanted by Act No.
2874 in 1919, without an application for judicial confirmation having been filed by private claimants or
their predecessors-in-interest, the courts were no longer authorized to determine the propertys land
classification. Hence, private claimants cannot bank on Act No. 926.
We note that the RTC decision[99] in G.R. No. 167707 mentioned Krivenko v. Register of Deeds
of Manila,[100] which was decided in 1947 when CA No. 141, vesting the Executive with the sole power to
classify lands of the public domain was already in effect. Krivenko cited the old cases Mapa v. Insular
Government,[101] De Aldecoa v. The Insular Government,[102] and Ankron v. Government of the
Philippine Islands.[103]
Krivenko, however, is not controlling here because it involved a totally different issue. The
pertinent issue in Krivenko was whether residential lots were included in the general classification of
agricultural lands; and if so, whether an alien could acquire a residential lot. This Court ruled that as an
alien, Krivenko was prohibited by the 1935 Constitution[104] from acquiring agricultural land, which
included residential lots. Here, the issue is whether unclassified lands of the public domain are
automatically deemed agricultural.
Notably, the definition of agricultural public lands mentioned in Krivenko relied on the old
cases decided prior to the enactment of Act No. 2874, including Ankron and De Aldecoa.[105] As We have
already stated, those cases cannot apply here, since they were decided when the Executive did not have
the authority to classify lands as agricultural, timber, or mineral.
Private claimants continued possession under Act No. 926 does not create a presumption that
the land is alienable. Private claimants also contend that their continued possession of portions
of Boracay Island for the requisite period of ten (10) years under Act No. 926[106] ipso facto converted the
island into private ownership. Hence, they may apply for a title in their name.
 A similar argument was squarely rejected by the Court in Collado v. Court of
Appeals.[107] Collado, citing the separate opinion of now Chief Justice Reynato S. Puno in Cruz v. Secretary
of Environment and Natural Resources,107-a ruled:
Act No. 926, the first Public Land Act, was passed
in pursuance of the provisions of the Philippine Bill of 1902.
The law governed the disposition of lands of the public
domain. It prescribed rules and regulations for the
homesteading, selling and leasing of portions of the public
domain of the Philippine Islands, and prescribed the terms
and conditions to enable persons to perfect their titles to
public lands in the Islands. It also provided for the issuance of
patents to certain native settlers upon public lands, for the
establishment of town sites and sale of lots therein, for the
completion of imperfect titles, and for the cancellation or
confirmation of Spanish concessions and grants in
the Islands. In short, the Public Land Act operated on the
assumption that title to public lands in the Philippine Islands
remained in the government; and that the governments title
to public land sprung from the Treaty of Paris and other
subsequent treaties between Spain and the United States. The
term public land referred to all lands of the public domain
whose title still remained in the government and are thrown
open to private appropriation and settlement, and excluded
the patrimonial property of the government and the friar
lands.
Thus, it is plain error for petitioners to argue that under the Philippine Bill of 1902
and Public Land Act No. 926, mere possession by private individuals of lands
creates the legal presumption that the lands are alienable and
disposable.[108] (Emphasis Ours)
Except for lands already covered by existing titles, Boracay was an unclassified land of the
public domain prior to Proclamation No. 1064. Such unclassified lands are considered public forest under
PD No. 705. The DENR[109] and the National Mapping and Resource Information Authority[110] certify
that Boracay Island is an unclassified land of the public domain.
PD No. 705 issued by President Marcos categorized all unclassified lands of the public domain
as public forest. Section 3(a) of PD No. 705 defines a public forest as a mass of lands of the public domain
which has not been the subject of the present system of classification for the determination of which lands
are needed for forest purpose and which are not. Applying PD No. 705, all unclassified lands, including
those in Boracay Island, are ipso facto considered public forests. PD No. 705, however, respects titles
already existing prior to its effectivity.
The Court notes that the classification of Boracay as a forest land under PD No. 705 may seem
to be out of touch with the present realities in the island. Boracay, no doubt, has been partly stripped of
its forest cover to pave the way for commercial developments. As a premier tourist destination for local
and foreign tourists, Boracay appears more of a commercial island resort, rather than a forest land.
Nevertheless, that the occupants of Boracay have built multi-million peso beach resorts on the
island;[111] that the island has already been stripped of its forest cover; or that the implementation of
Proclamation No. 1064 will destroy the islands tourism industry, do not negate its character as public
forest.
Forests, in the context of both the Public Land Act and the Constitution[112] classifying lands of
the public domain into agricultural, forest or timber, mineral lands, and national parks, do not necessarily
refer to large tracts of wooded land or expanses covered by dense growths of trees and
underbrushes.[113] The discussion in Heirs of Amunategui v. Director of Forestry[114] is particularly
instructive:
A forested area classified as forest land of the public domain does not
lose such classification simply because loggers or settlers may have stripped it of its
forest cover. Parcels of land classified as forest land may actually be covered with
grass or planted to crops by kaingin cultivators or other farmers. Forest lands do not
have to be on mountains or in out of the way places. Swampy areas covered by
mangrove trees, nipa palms, and other trees growing in brackish or sea water may
also be classified as forest land. The classification is descriptive of its legal nature
or status and does not have to be descriptive of what the land actually looks
like. Unless and until the land classified as forest is released in an official
proclamation to that effect so that it may form part of the disposable agricultural
lands of the public domain, the rules on confirmation of imperfect title do not
apply.[115] (Emphasis supplied)
There is a big difference between forest as defined in a dictionary and forest or timber land as a
classification of lands of the public domain as appearing in our statutes. One is descriptive of what
appears on the land while the other is a legal status, a classification for legal purposes. [116] At any rate, the
Court is tasked to determine the legal status of Boracay Island, and not look into its physical layout. Hence,
even if its forest cover has been replaced by beach resorts, restaurants and other commercial
establishments, it has not been automatically converted from public forest to alienable agricultural land.
Private claimants cannot rely on Proclamation No. 1801 as basis for judicial confirmation of
imperfect title. The proclamation did not convert Boracay into an agricultural land. However, private
claimants argue that Proclamation No. 1801 issued by then President Marcos in 1978 entitles them to
judicial confirmation of imperfect title. The Proclamation classified Boracay, among other islands, as a
tourist zone. Private claimants assert that, as a tourist spot, the island is susceptible of private ownership.
Proclamation No. 1801 or PTA Circular No. 3-82 did not convert the whole of Boracay into an
agricultural land. There is nothing in the law or the Circular which made Boracay Island an agricultural
land. The reference in Circular No. 3-82 to private lands[117] and areas declared as alienable and
disposable[118] does not by itself classify the entire island as agricultural. Notably, Circular No. 3-82 makes
reference not only to private lands and areas but also to public forested lands. Rule VIII, Section 3 provides:
No trees in forested private lands may be cut without prior authority
from the PTA. All forested areas in public lands are declared forest
reserves. (Emphasis supplied)
Clearly, the reference in the Circular to both private and public lands merely recognizes that
the island can be classified by the Executive department pursuant to its powers under CA No. 141. In fact,
Section 5 of the Circular recognizes the then Bureau of Forest Developments authority to declare areas in
the island as alienable and disposable when it provides:
Subsistence farming, in areas declared as alienable and disposable by the
Bureau of Forest Development.
Therefore, Proclamation No. 1801 cannot be deemed the positive act needed to
classify Boracay Island as alienable and disposable land. If President Marcos intended to classify the island
as alienable and disposable or forest, or both, he would have identified the specific limits of each, as
President Arroyo did in Proclamation No. 1064. This was not done in Proclamation No. 1801.
The Whereas clauses of Proclamation No. 1801 also explain the rationale behind the
declaration of Boracay Island, together with other islands, caves and peninsulas in the Philippines, as a
tourist zone and marine reserve to be administered by the PTA to ensure the concentrated efforts of the
public and private sectors in the development of the areas tourism potential with due regard for
ecological balance in the marine environment. Simply put, the proclamation is aimed at administering the
islands for tourism and ecological purposes. It does not address the areas alienability.[119]
More importantly, Proclamation No. 1801 covers not only Boracay Island, but sixty-four (64)
other islands, coves, and peninsulas in the Philippines, such as Fortune and Verde Islands in Batangas, Port
Galera in Oriental Mindoro, Panglao and Balicasag Islands in Bohol, Coron Island, Puerto Princesa and
surrounding areas in Palawan, Camiguin Island in Cagayan de Oro, and Misamis Oriental, to name a few. If
the designation of Boracay Island as tourist zone makes it alienable and disposable by virtue of
Proclamation No. 1801, all the other areas mentioned would likewise be declared wide open for private
disposition. That could not have been, and is clearly beyond, the intent of the proclamation.
It was Proclamation No. 1064 of 2006 which positively declared part of Boracay as alienable
and opened the same to private ownership. Sections 6 and 7 of CA No. 141[120] provide that it is only the
President, upon the recommendation of the proper department head, who has the authority to classify
the lands of the public domain into alienable or disposable, timber and mineral lands.[121]
In issuing Proclamation No. 1064, President Gloria Macapagal-Arroyo merely exercised the
authority granted to her to classify lands of the public domain, presumably subject to existing vested
rights. Classification of public lands is the exclusive prerogative of the Executive Department, through the
Office of the President. Courts have no authority to do so.[122] Absent such classification, the land remains
unclassified until released and rendered open to disposition.[123]
Proclamation No. 1064 classifies Boracay into 400 hectares of reserved forest land and 628.96
hectares of agricultural land. The Proclamation likewise provides for a 15-meter buffer zone on each side
of the center line of roads and trails, which are reserved for right of way and which shall form part of the
area reserved for forest land protection purposes.
Contrary to private claimants argument, there was nothing invalid or irregular, much less
unconstitutional, about the classification of Boracay Island made by the President through Proclamation
No. 1064. It was within her authority to make such classification, subject to existing vested rights.
Proclamation No. 1064 does not violate the Comprehensive Agrarian Reform Law. Private
claimants further assert that Proclamation No. 1064 violates the provision of the Comprehensive Agrarian
Reform Law (CARL) or RA No. 6657 barring conversion of public forests into agricultural lands. They claim
that since Boracay is a public forest under PD No. 705, President Arroyo can no longer convert it into an
agricultural land without running afoul of Section 4(a) of RA No. 6657, thus:
SEC. 4. Scope. The Comprehensive Agrarian Reform Law of 1988 shall
cover, regardless of tenurial arrangement and commodity produced, all public and
private agricultural lands as provided in Proclamation No. 131 and Executive Order
No. 229, including other lands of the public domain suitable for agriculture.
 More specifically, the following lands are covered by the Comprehensive
Agrarian Reform Program:
(a) All alienable and disposable lands of the public domain
devoted to or suitable for
agriculture. No reclassification of forest or mineral
lands to agricultural lands shall be undertaken after the
approval of this Act until Congress, taking into account
ecological, developmental and equity considerations,
shall have determined by law, the specific limits of the
public domain.
That Boracay Island was classified as a public forest under PD No. 705 did not bar the Executive
from later converting it into agricultural land. Boracay Island still remained an unclassified land of the
public domain despite PD No. 705.
In Heirs of the Late Spouses Pedro S. Palanca and Soterranea Rafols v. Republic,[124] the Court
stated that unclassified lands are public forests.
While it is true that the land classification map does not categorically
state that the islands are public forests, the fact that they were unclassified lands
leads to the same result.In the absence of the classification as mineral or timber
land, the land remains unclassified land until released and rendered open to
disposition.[125] (Emphasis supplied)
Moreover, the prohibition under the CARL applies only to a reclassification of land. If the land
had never been previously classified, as in the case of Boracay, there can be no prohibited reclassification
under the agrarian law. We agree with the opinion of the Department of Justice[126] on this point:
Indeed, the key word to the correct application of the prohibition in
Section 4(a) is the word reclassification. Where there has been no previous
classification of public forest [referring, we repeat, to the mass of the public domain
which has not been the subject of the present system of classification for purposes of
determining which are needed for forest purposes and which are not] into
permanent forest or forest reserves or some other forest uses under the Revised
Forestry Code, there can be no reclassification of forest lands to speak of within the
meaning of Section 4(a).
Thus, obviously, the prohibition in Section 4(a) of the CARL against the
reclassification of forest lands to agricultural lands without a prior law delimiting
the limits of the public domain, does not, and cannot, apply to those lands of the
public domain, denominated as public forest under the Revised Forestry Code,
which have not been previously determined, or classified, as needed for forest
purposes in accordance with the provisions of the Revised Forestry Code.[127]
Private claimants are not entitled to apply for judicial confirmation of imperfect title under
CA No. 141. Neither do they have vested rights over the occupied lands under the said law. There are
two requisites for judicial confirmation of imperfect or incomplete title under CA No. 141, namely: (1)
open, continuous, exclusive, and notorious possession and occupation of the subject land by himself or
through his predecessors-in-interest under a bona fide claim of ownership since time immemorial or
from June 12, 1945; and (2) the classification of the land as alienable and disposable land of the public
domain.[128]
As discussed, the Philippine Bill of 1902, Act No. 926, and Proclamation No. 1801 did not
convert portions of Boracay Island into an agricultural land. The island remained an unclassified land of
the public domain and, applying the Regalian doctrine, is considered State property.
Private claimants bid for judicial confirmation of imperfect title, relying on the Philippine Bill of
1902, Act No. 926, and Proclamation No. 1801, must fail because of the absence of the second element of
alienable and disposable land. Their entitlement to a government grant under our present Public Land Act
presupposes that the land possessed and applied for is already alienable and disposable. This is clear from
the wording of the law itself.[129] Where the land is not alienable and disposable, possession of the land,
no matter how long, cannot confer ownership or possessory rights.[130]
Neither may private claimants apply for judicial confirmation of imperfect title under
Proclamation No. 1064, with respect to those lands which were classified as agricultural lands. Private
claimants failed to prove the first element of open, continuous, exclusive, and notorious possession of
their lands in Boracay since June 12, 1945.
We cannot sustain the CA and RTC conclusion in the petition for declaratory relief that private
claimants complied with the requisite period of possession.
The tax declarations in the name of private claimants are insufficient to prove the first element
of possession. We note that the earliest of the tax declarations in the name of private claimants were
issued in 1993. Being of recent dates, the tax declarations are not sufficient to convince this Court that the
period of possession and occupation commenced on June 12, 1945.
 Private claimants insist that they have a vested right in Boracay, having been in possession of
the island for a long time. They have invested millions of pesos in developing the island into a tourist
spot. They say their continued possession and investments give them a vested right which cannot be
unilaterally rescinded by Proclamation No. 1064.
The continued possession and considerable investment of private claimants do not
automatically give them a vested right in Boracay. Nor do these give them a right to apply for a title to the
land they are presently occupying. This Court is constitutionally bound to decide cases based on the
evidence presented and the laws applicable. As the law and jurisprudence stand, private claimants are
ineligible to apply for a judicial confirmation of title over their occupied portions in Boracay even with
their continued possession and considerable investment in the island.
One Last Note
The Court is aware that millions of pesos have been invested for the development
of Boracay Island, making it a by-word in the local and international tourism industry. The Court also notes
that for a number of years, thousands of people have called the island their home. While the Court
commiserates with private claimants plight, We are bound to apply the law strictly and judiciously. This is
the law and it should prevail. Ito ang batas at ito ang dapat umiral.
All is not lost, however, for private claimants. While they may not be eligible to apply for
judicial confirmation of imperfect title under Section 48(b) of CA No. 141, as amended, this does not
denote their automatic ouster from the residential, commercial, and other areas they possess now
classified as agricultural. Neither will this mean the loss of their substantial investments on their occupied
alienable lands. Lack of title does not necessarily mean lack of right to possess.
For one thing, those with lawful possession may claim good faith as builders of
improvements. They can take steps to preserve or protect their possession. For another, they may look
into other modes of applying for original registration of title, such as by homestead[131] or sales
patent,[132] subject to the conditions imposed by law.
More realistically, Congress may enact a law to entitle private claimants to acquire title to their
occupied lots or to exempt them from certain requirements under the present land laws. There is one
such bill[133] now pending in the House of Representatives. Whether that bill or a similar bill will become a
law is for Congress to decide.
In issuing Proclamation No. 1064, the government has taken the step necessary to open up the
island to private ownership. This gesture may not be sufficient to appease some sectors which view the
classification of the island partially into a forest reserve as absurd. That the island is no longer overrun by
trees, however, does not becloud the vision to protect its remaining forest cover and to strike a healthy
balance between progress and ecology. Ecological conservation is as important as economic progress.
To be sure, forest lands are fundamental to our nations survival. Their promotion and
protection are not just fancy rhetoric for politicians and activists. These are needs that become more
urgent as destruction of our environment gets prevalent and difficult to control. As aptly observed by
Justice Conrado Sanchez in 1968 in Director of Forestry v. Munoz:[134]
The view this Court takes of the cases at bar is but in adherence to public
policy that should be followed with respect to forest lands. Many have written
much, and many more have spoken, and quite often, about the pressing need for
forest preservation, conservation, protection, development and reforestation. Not
without justification. For, forests constitute a vital segment of any country's natural
resources. It is of common knowledge by now that absence of the necessary green
cover on our lands produces a number of adverse or ill effects of serious
proportions. Without the trees, watersheds dry up; rivers and lakes which they
supply are emptied of their contents. The fish disappear. Denuded areas become
dust bowls. As waterfalls cease to function, so will hydroelectric plants. With the
rains, the fertile topsoil is washed away; geological erosion results. With erosion
come the dreaded floods that wreak havoc and destruction to property crops,
livestock, houses, and highways not to mention precious human lives. Indeed, the
foregoing observations should be written down in a lumbermans decalogue.[135]
WHEREFORE, judgment is rendered as follows:
1. The petition for certiorari in G.R. No. 167707 is GRANTED and the Court of Appeals Decision
in CA-G.R. CV No. 71118 REVERSED AND SET ASIDE.
2. The petition for certiorari in G.R. No. 173775 is DISMISSED for lack of merit.
SO ORDERED.
FIRST DIVISION 38, pages 6793 to 6794,[4] and in the 18 October 1999 issue of Peoples Journal Taliba,[5] a newspaper of
general circulation in the Philippines. The Notice of Initial Hearing was also posted in a conspicuous place
REPUBLIC OF THE PHILIPPINES, G.R. No. 154953 on the bulletin board of the Municipal Building of Sto. Tomas, Batangas, as well as in a conspicuous place
Petitioner, on the land.[6] All adjoining owners and all government agencies and offices concerned were notified of
Present: the initial hearing.[7]
PUNO, C.J., Chairperson,
CARPIO, On 11 November 1999, when the trial court called the case for initial hearing, there was no oppositor
- versus - CORONA, other than the Opposition dated 7 October 1999 of the Republic of the Philippines represented by the
AZCUNA, and Director of Lands (petitioner). On 15 November 1999, the trial court issued an Order[8] of General Default
LEONARDO-DE CASTRO, JJ. against the whole world except as against petitioner.

T.A.N. PROPERTIES, INC., Promulgated:

Respondent. June 26, 2008
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x
DECISION
CARPIO, J.:
The Case
Before the Court is a petition for review[1] assailing the 21 August 2002 Decision[2] of the Court of Appeals
in CA-G.R. CV No. 66658. The Court of Appeals affirmed in totothe 16 December 1999 Decision[3] of the
Regional Trial Court of Tanauan, Batangas, Branch 6 (trial court) in Land Registration Case No. T-635.
The Antecedent Facts
This case originated from an Application for Original Registration of Title filed by T.A.N. Properties, Inc.
covering Lot 10705-B of the subdivision plan Csd-04-019741 which is a portion of the
consolidated Lot 10705, Cad-424, Sto. Tomas Cadastre. The land, with an area of 564,007 square meters,
or 56.4007 hectares, is located at San Bartolome, Sto. Tomas, Batangas.
On 31 August 1999, the trial court set the case for initial hearing at 9:30 a.m. on 11 November 1999. The
Notice of Initial Hearing was published in the Official Gazette, 20 September 1999 issue, Volume 95, No.
During the hearing on 19 November 1999, Ceferino Carandang (Carandang) appeared as oppositor. The
trial court gave Carandang until 29 November 1999 within which to file his written
opposition.[9] Carandang failed to file his written opposition and to appear in the succeeding hearings. In
an Order[10] dated 13 December 1999, the trial court reinstated the Order of General Default.
During the hearings conducted on 13 and 14 December 1999, respondent presented three
witnesses: Anthony Dimayuga Torres (Torres), respondents Operations Manager and its authorized
representative in the case; Primitivo Evangelista (Evangelista), a 72-year old resident of San Bartolome,
Sto. Tomas, Batangas since birth; and Regalado Marquez, Records Officer II of the Land Registration
Authority (LRA), Quezon City.
The testimonies of respondents witnesses showed that Prospero Dimayuga (Kabesang Puroy) had
peaceful, adverse, open, and continuous possession of the land in the concept of an owner since
1942. Upon his death, Kabesang Puroy was succeeded by his son Antonio Dimayuga (Antonio). On 27
September 1960, Antonio executed a Deed of Donation covering the land in favor of one of his children,
Fortunato Dimayuga (Fortunato). Later, however, Antonio gave Fortunato another piece of land. Hence,
on 26 April 1961, Antonio executed a Partial Revocation of Donation, and the land was adjudicated to one
of Antonios children, Prospero Dimayuga (Porting).[11] On 8 August 1997, Porting sold the land to
respondent.
The Ruling of the Trial Court
In its 16 December 1999 Decision, the trial court adjudicated the land in favor of respondent.
The trial court ruled that a juridical person or a corporation could apply for registration of land provided
such entity and its predecessors-in-interest have possessed the land for 30 years or more. The trial court
ruled that the facts showed that respondents predecessors-in-interest possessed the land in the concept
of an owner prior to 12 June 1945, which possession converted the land to private property.
The dispositive portion of the trial courts Decision reads:
WHEREFORE, and upon previous confirmation of the Order of General Default, the
Court hereby adjudicates and decrees Lot 10705-B, identical to Lot 13637, Cad-424,
Sto. Tomas Cadastre, on plan Csd-04-019741, situated in Barangay of San
Bartolome, Municipality of Sto. Tomas, Province of Batangas, with an area of
564,007 square meters, in favor of and in the name of T.A.N. Properties, Inc., a
domestic corporation duly organized and existing under Philippine laws with
principal office at 19th Floor, PDCP Bank Building, 8737 Paseo de Roxas, Makati City.
Once this Decision shall have become final, let the corresponding decree of
registration be issued.
SO ORDERED.[12]
of the land became public knowledge because San Bartolome was a small community. On the matter of
additional witnesses, the Court of Appeals ruled that petitioner failed to cite any law requiring the
corroboration of the sole witness testimony.
The Court of Appeals further ruled that Torres was a competent witness since he was only testifying on
the fact that he had caused the filing of the application for registration and that respondent acquired the
land from Porting.
Petitioner comes to this Court assailing the Court of Appeals Decision. Petitioner raises the following
grounds in its Memorandum:
The Court of Appeals erred on a question of law in allowing the grant of title to
applicant corporation despite the following:
1. Absence of showing that it or its predecessors-in-interest had open,
continuous, exclusive, and notorious possession and occupation in
the concept of an owner since 12 June 1945 or earlier; and
2. Disqualification of applicant corporation to acquire the subject tract
of land.[13]

Petitioner appealed from the trial courts Decision. Petitioner alleged that the trial court erred in granting The Issues
the application for registration absent clear evidence that the applicant and its predecessors-in-interest
have complied with the period of possession and occupation as required by law. Petitioner alleged that The issues may be summarized as follows:
the testimonies of Evangelista and Torres are general in nature. Considering the area involved, petitioner
argued that additional witnesses should have been presented to corroborate Evangelistas testimony. 1. Whether the land is alienable and disposable;
2. Whether respondent or its predecessors-in-interest had open, continuous, exclusive, and
The Ruling of the Court of Appeals notorious possession and occupation of the land in the concept of an owner since June
1945 or earlier; and
In its 21 August 2002 Decision, the Court of Appeals affirmed in toto the trial courts Decision.
3. Whether respondent is qualified to apply for registration of the land under the Public Land
The Court of Appeals ruled that Evangelistas knowledge of the possession and occupation of the land Act.
stemmed not only from the fact that he worked there for three years but also because he and Kabesang
Puroy were practically neighbors. On Evangelistas failure to mention the name of his uncle who
continuously worked on the land, the Court of Appeals ruled that Evangelista should not be faulted as he The Ruling of this Court
was not asked to name his uncle when he testified. The Court of Appeals also ruled that at the outset,
Evangelista disclaimed knowledge of Fortunatos relation to Kabesang Puroy, but this did not affect The petition has merit.
Evangelistas statement that Fortunato took over the possession and cultivation of the land after Kabesang
Puroys death. The Court of Appeals further ruled that the events regarding the acquisition and disposition Respondent Failed to Prove
that the Land is Alienable and Disposable
Petitioner argues that anyone who applies for registration has the burden of overcoming the presumption
that the land forms part of the public domain. Petitioner insists that respondent failed to prove that the
land is no longer part of the public domain.
The well-entrenched rule is that all lands not appearing to be clearly of private dominion presumably
belong to the State.[14] The onus to overturn, by incontrovertible evidence, the presumption that the land
subject of an application for registration is alienable and disposable rests with the applicant.[15]
In this case, respondent submitted two certifications issued by the Department of Environment and
Natural Resources (DENR). The 3 June 1997 Certification by the Community Environment and Natural
Resources Offices (CENRO), Batangas City,[16] certified that lot 10705, Cad-424, Sto. Tomas Cadastre
situated at Barangay San Bartolome, Sto. Tomas, Batangas with an area of 596,116 square meters falls
within the ALIENABLE AND DISPOSABLE ZONE under Project No. 30, Land Classification Map No. 582
certified [on] 31 December 1925. The second certification[17] in the form of a memorandum to the trial
court, which was issued by the Regional Technical Director, Forest Management Services of the DENR
(FMS-DENR), stated that the subject area falls within an alienable and disposable land, Project No. 30 of
Sto. Tomas, Batangas certified on Dec. 31, 1925 per LC No. 582.
The certifications are not sufficient. DENR Administrative Order (DAO) No. 20,[18] dated 30 May 1988,
delineated the functions and authorities of the offices within the DENR. Under DAO No. 20, series of 1988,
the CENRO issues certificates of land classification status for areas below 50 hectares. The Provincial
Environment and Natural Resources Offices (PENRO) issues certificate of land classification status for
lands covering over 50 hectares. DAO No. 38,[19] dated 19 April 1990, amended DAO No. 20, series of
1988.DAO No. 38, series of 1990 retained the authority of the CENRO to issue certificates of land
classification status for areas below 50 hectares, as well as the authority of the PENRO to issue certificates
of land classification status for lands covering over 50 hectares.[20] In this case, respondent applied for
registration of Lot 10705-B. The area covered by Lot 10705-B is over 50 hectares (564,007 square
meters). The CENRO certificate covered the entire Lot 10705 with an area of 596,116 square meters which,
as per DAO No. 38, series of 1990, is beyond the authority of the CENRO to certify as alienable and
disposable.
The Regional Technical Director, FMS-DENR, has no authority under DAO Nos. 20 and 38 to issue
certificates of land classification. Under DAO No. 20, the Regional Technical Director, FMS-DENR:
1. Issues original and renewal of ordinary minor products (OM) permits except rattan;
2. Approves renewal of resaw/mini-sawmill permits;
3. Approves renewal of special use permits covering over five hectares for public
infrastructure projects; and
4. Issues renewal of certificates of registration for logs, poles, piles, and lumber dealers.
Under DAO No. 38, the Regional Technical Director, FMS-DENR:
1. Issues original and renewal of ordinary minor [products] (OM) permits except rattan;
2. Issues renewal of certificate of registration for logs, poles, and piles and lumber dealers;
3. Approves renewal of resaw/mini-sawmill permits;
4. Issues public gratuitous permits for 20 to 50 cubic meters within calamity declared areas for
public infrastructure projects; and
5. Approves original and renewal of special use permits covering over five hectares for public
infrastructure projects.
Hence, the certification issued by the Regional Technical Director, FMS-DENR, in the form of a
memorandum to the trial court, has no probative value.
Further, it is not enough for the PENRO or CENRO to certify that a land is alienable and disposable. The
applicant for land registration must prove that the DENR Secretary had approved the land classification
and released the land of the public domain as alienable and disposable, and that the land subject of the
application for registration falls within the approved area per verification through survey by the PENRO or
CENRO. In addition, the applicant for land registration must present a copy of the original classification
approved by the DENR Secretary and certified as a true copy by the legal custodian of the official
records. These facts must be established to prove that the land is alienable and disposable. Respondent
failed to do so because the certifications presented by respondent do not, by themselves, prove that the
land is alienable and disposable.
Only Torres, respondents Operations Manager, identified the certifications submitted by respondent. The
government officials who issued the certifications were not presented before the trial court to testify on
their contents. The trial court should not have accepted the contents of the certifications as proof of the
facts stated therein. Even if the certifications are presumed duly issued and admissible in evidence, they
have no probative value in establishing that the land is alienable and disposable.
Public documents are defined under Section 19, Rule 132 of the Revised Rules on Evidence as follows:
(a) The written official acts, or records of the official acts of the sovereign authority,
official bodies and tribunals, and public officers, whether of the Philippines, or of a
foreign country;
 (b) Documents acknowledged before a notary public except last wills and
testaments; and
(c) Public records, kept in the Philippines, of private documents required by law to
be entered therein.
Applying Section 24 of Rule 132, the record of public documents referred to in Section 19(a), when
admissible for any purpose, may be evidenced by an official publication thereof or by a copy attested by
the officer having legal custody of the record, or by his deputy x x x. The CENRO is not the official
repository or legal custodian of the issuances of the DENR Secretary declaring public lands as alienable
and disposable. The CENRO should have attached an official publication[21] of the DENR Secretarys
issuance declaring the land alienable and disposable.
Section 23, Rule 132 of the Revised Rules on Evidence provides:
Sec. 23. Public documents as evidence. Documents consisting of entries in public
records made in the performance of a duty by a public officer are prima facie
evidence of the facts stated therein. All other public documents are evidence, even
against a third person, of the fact which gave rise to their execution and of the date
of the latter.
The CENRO and Regional Technical Director, FMS-DENR, certifications do not fall within the class of public
documents contemplated in the first sentence of Section 23 of Rule 132. The certifications do not reflect
entries in public records made in the performance of a duty by a public officer, such as entries made by
the Civil Registrar[22] in the books of registries, or by a ship captain in the ships logbook.[23] The
certifications are not the certified copies or authenticated reproductions of original official records in the
legal custody of a government office. The certifications are not even records of public documents.[24] The
certifications are conclusions unsupported by adequate proof, and thus have no probative
value.[25] Certainly, the certifications cannot be considered prima facie evidence of the facts stated therein.
The CENRO and Regional Technical Director, FMS-DENR, certifications do not prove that Lot 10705-B falls
within the alienable and disposable land as proclaimed by the DENR Secretary. Such government
certifications do not, by their mere issuance, prove the facts stated therein.[26] Such government
certifications may fall under the class of documents contemplated in the second sentence of Section 23 of
Rule 132. As such, the certifications are prima facie evidence of their due execution and date of issuance
but they do not constitute prima facie evidence of the facts stated therein.
The Court has also ruled that a document or writing admitted as part of the testimony of a witness does
not constitute proof of the facts stated therein.[27] Here, Torres, a private individual and respondents
representative, identified the certifications but the government officials who issued the certifications did
not testify on the contents of the certifications. As such, the certifications cannot be given probative
value.[28] The contents of the certifications are hearsay because Torres was incompetent to testify on the
veracity of the contents of the certifications.[29] Torres did not prepare the certifications, he was not an
officer of CENRO or FMS-DENR, and he did not conduct any verification survey whether the land falls
within the area classified by the DENR Secretary as alienable and disposable.
Petitioner also points out the discrepancy as to when the land allegedly became alienable and
disposable. The DENR Secretary certified that based on Land Classification Map No. 582, the land became
alienable and disposable on 31 December 1925. However, the certificate on the blue print plan states that
it became alienable and disposable on 31 December 1985.
We agree with petitioner that while the certifications submitted by respondent show that under the Land
Classification Map No. 582, the land became alienable and disposable on 31 December 1925, the blue
print plan states that it became alienable and disposable on 31 December 1985. Respondent alleged that
the blue print plan merely serves to prove the precise location and the metes and bounds of the land
described therein x x x and does not in any way certify the nature and classification of the land
involved.[30] It is true that the notation by a surveyor-geodetic engineer on the survey plan that the land
formed part of the alienable and disposable land of the public domain is not sufficient proof of the lands
classification.[31] However, respondent should have at least presented proof that would explain the
discrepancy in the dates of classification. Marquez, LRA Records Officer II, testified that the documents
submitted to the court consisting of the tracing cloth plan, the technical description of Lot 10705-B, the
approved subdivision plan, and the Geodetic Engineers certification were faithful reproductions of the
original documents in the LRA office. He did not explain the discrepancy in the dates. Neither was the
Geodetic Engineer presented to explain why the date of classification on the blue print plan was different
from the other certifications submitted by respondent.
There was No Open, Continuous, Exclusive, and Notorious
Possession and Occupation in the Concept of an Owner
Petitioner alleges that the trial courts reliance on the testimonies of Evangelista and Torres was
misplaced. Petitioner alleges that Evangelistas statement that the possession of respondents
predecessors-in-interest was open, public, continuous, peaceful, and adverse to the whole world was a
general conclusion of law rather than factual evidence of possession of title. Petitioner alleges that
respondent failed to establish that its predecessors-in-interest had held the land openly, continuously,
and exclusively for at least 30 years after it was declared alienable and disposable.
We agree with petitioner.

Evangelista testified that Kabesang Puroy had been in possession of the land before 1945. Yet, Evangelista
only worked on the land for three years. Evangelista testified that his family owned a lot near Kabesang
Puroys land. The Court of Appeals took note of this and ruled that Evangelistas knowledge of Kabesang
Puroys possession of the land stemmed not only from the fact that he had worked thereat but more so
that they were practically neighbors.[32] The Court of Appeals observed:
In a small community such as that of San Bartolome, Sto. Tomas, Batangas, it is not
difficult to understand that people in the said community knows each and
everyone. And, because of such familiarity with each other, news or events
regarding the acquisition or disposition for that matter, of a vast tract of land
spreads like wildfire, thus, the reason why such an event became of public
knowledge to them.[33]
Evangelista testified that Kabesang Puroy was succeeded by Fortunato. However, he admitted that he did
not know the exact relationship between Kabesang Puroy and Fortunato, which is rather unusual for
neighbors in a small community. He did not also know the relationship between Fortunato and Porting. In
fact, Evangelistas testimony is contrary to the factual finding of the trial court that Kabesang Puroy was
succeeded by his son Antonio, not by Fortunato who was one of Antonios children. Antonio was not even
mentioned in Evangelistas testimony.
The Court of Appeals ruled that there is no law that requires that the testimony of a single witness needs
corroboration. However, in this case, we find Evangelistas uncorroborated testimony insufficient to prove
that respondents predecessors-in-interest had been in possession of the land in the concept of an owner
for more than 30 years. We cannot consider the testimony of Torres as sufficient corroboration. Torres
testified primarily on the fact of respondents acquisition of the land. While he claimed to be related to the
Dimayugas, his knowledge of their possession of the land was hearsay. He did not even tell the trial court
where he obtained his information.
The tax declarations presented were only for the years starting 1955. While tax declarations are not
conclusive evidence of ownership, they constitute proof of claim of ownership.[34] Respondent did not
present any credible explanation why the realty taxes were only paid starting 1955 considering the claim
that the Dimayugas were allegedly in possession of the land before 1945. The payment of the realty taxes
starting 1955 gives rise to the presumption that the Dimayugas claimed ownership or possession of the
land only in that year.
Land Application by a Corporation
Petitioner asserts that respondent, a private corporation, cannot apply for registration of the land of the
public domain in this case.
We agree with petitioner.
Section 3, Article XII of the 1987 Constitution provides:
Sec. 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 to 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.
The 1987 Constitution absolutely prohibits private corporations from acquiring any kind of alienable land
of the public domain. In Chavez v. Public Estates Authority,[35] the Court traced the law on disposition of
lands of the public domain. Under the 1935 Constitution, there was no prohibition against private
corporations from acquiring agricultural land. The 1973 Constitution limited the alienation of lands of the
public domain to individuals who were citizens of the Philippines. Under the 1973 Constitution, private
corporations, even if wholly owned by Filipino citizens, were no longer allowed to acquire alienable lands
of the public domain. The present 1987 Constitution continues the prohibition against private
corporations from acquiring any kind of alienable land of the public domain.[36] The Court explained
in Chavez:
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. x x x x
[I]f 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.[37]
In Director of Lands v. IAC,[38] the Court allowed the land registration proceeding filed by Acme Plywood &
Veneer Co., Inc. (Acme) for five parcels of land with an area of 481,390 square meters, or 48.139 hectares,
which Acme acquired from members of the Dumagat tribe. The issue in that case was whether the title
could be confirmed in favor of Acme when the proceeding was instituted after the effectivity of the 1973
Constitution which prohibited private corporations or associations from holding alienable lands of the
public domain except by lease not to exceed 1,000 hectares. The Court ruled that the land was already
private land when Acme acquired it from its owners in 1962, and thus Acme acquired a registrable
title. Under the 1935 Constitution, private corporations could acquire public agricultural lands not
exceeding 1,024 hectares while individuals could acquire not more than 144 hectares.[39]
In Director of Lands, the Court further ruled that open, exclusive, and undisputed possession of alienable
land for the period prescribed by law created the legal fiction whereby the land, upon completion of the
requisite period, ipso jure and without the need of judicial or other sanction ceases to be public land and
becomes private property. The Court ruled:
Nothing can more clearly demonstrate the logical inevitability of considering
possession of public land which is of the character and duration prescribed by
statute as the equivalent of an express grant from the State than the dictum of the
statute itself that the possessor(s) x x x shall be conclusively presumed to have
performed all the conditions essential to a Government grant and shall be entitled
to a certificate of title x x x. No proof being admissible to overcome a conclusive
presumption, confirmation proceedings would, in truth be little more than a
formality, at the most limited to ascertaining whether the possession claimed is of
the required character and length of time; and registration thereunder would not
confer title, but simply recognize a title already vested. The proceedings would
not originally convert the land from public to private land, but only confirm such a
conversion already effected by operation of law from the moment the required
period of possession became complete.
x x x [A]lienable public land held by a possessor, personally or through his
predecessors-in-interest, openly, continuously and exclusively for the prescribed
statutory period of (30 years under The Public Land Act, as amended) is converted
to private property by the mere lapse or completion of said period, ipso
jure. Following that rule and on the basis of the undisputed facts, the land subject
of this appeal was already private property at the time it was acquired from the
Infiels by Acme. Acme thereby acquired a registrable title, there being at the time
no prohibition against said corporations holding or owning private land. x x
x.[40] (Emphasis supplied)
Director of Lands is not applicable to the present case. In Director of Lands, the land x x x was already
private property at the time it was acquired x x x by Acme. In this case, respondent acquired the land
on 8 August 1997 from Porting, who, along with his predecessors-in-interest, has not shown to have been,
as of that date, in open, continuous, and adverse possession of the land for 30 years since 12 June 1945.
In short, when respondent acquired the land from Porting, the land was not yet private property.
For Director of Lands to apply and enable a corporation to file for registration of alienable and disposable
land, the corporation must have acquired the land when its transferor had already a vested right to a
judicial confirmation of title to the land by virtue of his open, continuous and adverse possession of the
land in the concept of an owner for at least 30 years since 12 June 1945. Thus, in Natividad v. Court of
Appeals,[41] the Court declared:
Under the facts of this case and pursuant to the above rulings, the parcels of land in
question had already been converted to private ownership through acquisitive
prescription by the predecessors-in-interest of TCMC when the latter purchased
them in 1979. All that was needed was the confirmation of the titles of the previous
owners or predecessors-in-interest of TCMC.
Being already private land when TCMC bought them in 1979, the prohibition in the
1973 Constitution against corporations acquiring alienable lands of the public
domain except through lease (Article XIV, Section 11, 1973 Constitution) did not
apply to them for they were no longer alienable lands of the public domain but
private property.
What is determinative for the doctrine in Director of Lands to apply is for the corporate applicant for land
registration to establish that when it acquired the land, the same was already private land by operation of
law because the statutory acquisitive prescriptive period of 30 years had already lapsed. The length of
possession of the land by the corporation cannot be tacked on to complete the statutory 30 years
acquisitive prescriptive period. Only an individual can avail of such acquisitive prescription since both the
1973 and 1987 Constitutions prohibit corporations from acquiring lands of the public domain.
Section Forty-five of this Act shall apply also to the lands comprised in the
provisions of this Chapter, but this Section shall not be construed as prohibiting
any of said persons from acting under this Chapter at any time prior to the
period fixed by the President.
Sec. 3. All pending applications filed before the effectivity of this amendatory Act
shall be treated as having been filed in accordance with the provisions of this Act.
Under RA 9176, the application for judicial confirmation is limited only to 12 hectares, consistent with
Section 3, Article XII of the 1987 Constitution that a private individual may only acquire not more than 12
hectares of alienable and disposable land. Hence, respondent, as successor-in-interest of an individual
owner of the land, cannot apply for registration of land in excess of 12 hectares. Since respondent applied
for 56.4007 hectares, the application for the excess area of 44.4007 hectares is contrary to law, and thus
void ab initio. In applying for land registration, a private corporation cannot have any right higher than its
predecessor-in-interest from whom it derived its right. This assumes, of course, that the corporation
acquired the land, not exceeding 12 hectares, when the land had already become private land by
operation of law. In the present case, respondent has failed to prove that any portion of the land was
already private land when respondent acquired it from Porting in 1997.
WHEREFORE, we SET ASIDE the 21 August 2002 Decision of the Court of Appeals in CA-G.R. CV No. 66658
and the 16 December 1999 Decision of the Regional Trial Court of Tanauan, Batangas, Branch 6 in Land
Registration Case No. T-635. We DENY the application for registration filed by T.A.N. Properties, Inc.
SO ORDERED

Admittedly, a corporation can at present still apply for original registration of land under the doctrine
in Director of Lands. Republic Act No. 9176[42] (RA 9176) further amended the Public Land Act[43] and
extended the period for the filing of applications for judicial confirmation of imperfect and incomplete
titles to alienable and disposable lands of the public domain until 31 December 2020. Thus:

Sec. 2. Section 47, Chapter VIII of the same Act, as amended, is hereby further
amended to read as follows:

Sec. 47. The persons specified in the next following section are hereby granted
time, not to extend beyond December 31, 2020 within which to avail of the
benefits of this Chapter: Provided, That this period shall apply only where the
area applied for does not exceed twelve (12) hectares: Provided, further, That
the several periods of time designated by the President in accordance with
Republic of the Philippines The City of Paraaque (the City) opposed the application for land registration, stating that it needed the
SUPREME COURT property for its flood control program; that the property was within the legal easement of 20 meters from
Manila the river bank; and that assuming that the property was not covered by the legal easement, title to the
property could not be registered in favor of the applicants for the reason that the property was an orchard
that had dried up and had not resulted from accretion.3
FIRST DIVISION

Ruling of the RTC

G.R. No. 160453 November 12, 2012

On May 10, 2000,4 the RTC granted the application for land registration, disposing:
REPUBLIC OF THE PHILIPPINES, Petitioner,
vs.
ARCADIO IVAN A. SANTOS III, and ARCADIO C. SANTOS, JR., Respondents. WHEREFORE, the Court hereby declares the applicants, ARCADIO IVAN A. SANTOS, III and ARCADIO C.
SANTOS, JR., both Filipinos and of legal age, as the TRUE and ABSOLUTE OWNERS of the land being
applied for which is situated in the Barangay of San Dionisio, City of Paraaque with an area of one
DECISION
thousand forty five (1045) square meters more or less and covered by Subdivision Plan Csd-00-000343,
being a portion of Lot 4998, Cad. 299, Case 4, Paraaque Cadastre, LRC Rec. No. and orders the
BERSAMIN, J.: registration of Lot 4998-B in their names with the following technical description, to wit:

By law, accretion - the gradual and imperceptible deposit made through the effects of the current of the xxxx
water- belongs to the owner of the land adjacent to the banks of rivers where it forms. The drying up of
the river is not accretion. Hence, the dried-up river bed belongs to the State as property of public
Once this Decision became (sic) final and executory, let the corresponding Order for the Issuance of the
dominion, not to the riparian owner, unless a law vests the ownership in some other person.
Decree be issued.

Antecedents
SO ORDERED.

Alleging continuous and adverse possession of more than ten years, respondent Arcadio Ivan A. Santos III
The Republic, through the Office of the Solicitor General (OSG), appealed.
(Arcadio Ivan) applied on March 7, 1997 for the registration of Lot 4998-B (the property) in the Regional
Trial Court (RTC) in Parafiaque City. The property, which had an area of 1,045 square meters, more or less,
was located in Barangay San Dionisio, Paraaque City, and was bounded in the Northeast by Lot 4079 Ruling of the CA
belonging to respondent Arcadio C. Santos, Jr. (Arcadio, Jr.), in the Southeast by the Paraaque River, in
the Southwest by an abandoned road, and in the Northwest by Lot 4998-A also owned by Arcadio Ivan.1
In its appeal, the Republic ascribed the following errors to the RTC,5 to wit:

On May 21, 1998, Arcadio Ivan amended his application for land registration to include Arcadio, Jr. as his
I
co-applicant because of the latters co-ownership of the property. He alleged that the property had been
formed through accretion and had been in their joint open, notorious, public, continuous and adverse
possession for more than 30 years.2 THE TRIAL COURT ERRED IN RULING THAT THE PROPERTY SOUGHT TO BE REGISTERED IS AN ACCRETION
TO THE ADJOINING PROPERTY OWNED BY APPELLEES DESPITE THE ADMISSION OF APPELLEE ARCADIO C.
SANTOS JR. THAT THE SAID PROPERTY WAS NOT FORMED AS A RESULT OF THE GRADUAL FILLING UP OF III
SOIL THROUGH THE CURRENT OF THE RIVER.
THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN NOT RULING THAT THE FAILURE OF
II RESPONDENTS TO FORMALLY OFFER IN EVIDENCE AN OFFICIAL CERTIFICATION THAT THE SUBJECT
PROPERTY IS ALIENABLE AND DISPOSABLE IS FATAL TO THEIR APPLICATION FOR LAND REGISTRATION.
THE TRIAL COURT ERRED IN GRANTING THE APPLICATION FOR LAND REGISTRATION DESPITE APPELLEES
FAILURE TO FORMALLY OFFER IN EVIDENCE AN OFFICIAL CERTIFICATION THAT THE SUBJECT PARCEL OF IV
LAND IS ALIENABLE AND DISPOSABLE.
THE FINDING OF THE COURT OF APPEALS THAT RESPONDENTS HAVE CONTINUOUSLY, OPENLY, PUBLICLY
III AND ADVERSELY OCCUPIED THE SUBJECT PROPERTY FOR MORE THAN THIRTY (30) YEARS IS NOT
SUPPORTED BY WELL-NIGH INCONTROVERTIBLE EVIDENCE.
THE TRIAL COURT ERRED IN RULING THAT APPELLEES HAD SUFFICIENTLY ESTABLISHED THEIR
CONTINUOUS, OPEN, PUBLIC AND ADVERSE OCCUPATION OF THE SUBJECT PROPERTY FOR A PERIOD OF To be resolved are whether or not Article 457 of the Civil Code was applicable herein; and whether or not
MORE THAN THIRTY (30) YEARS. respondents could claim the property by virtue of acquisitive prescription pursuant to Section 14(1) of
Presidential Decree No. 1529 (Property Registration Decree).
On May 27, 2003, the CA affirmed the RTC.6
Ruling
The Republic filed a motion for reconsideration, but the CA denied the motion on October 20, 2003.7
The appeal is meritorious.
Issues
I.
Hence, this appeal, in which the Republic urges that:8
The CA grossly erred in applying Article 457 of the Civil Code to respondents benefit
I
Article 457 of the Civil Code provides that "(t)o the owners of lands adjoining the banks of rivers belong
the accretion which they gradually receive from the effects of the currents of the waters."
RESPONDENTS CLAIM THAT THE SUBJECT PROPERTY IS AN ACCRETION TO THEIR ADJOINING LAND THAT
WOULD ENTITLE THEM TO REGISTER IT UNDER ARTICLE 457 OF THE NEW CIVIL CODE IS CONTRADICTED
BY THEIR OWN EVIDENCE. In ruling for respondents, the RTC pronounced as follows:

II On the basis of the evidence presented by the applicants, the Court finds that Arcadio Ivan A. Santos III
and Arcadio C. Santos, Jr., are the owners of the land subject of this application which was previously a
part of the Paraaque River which became an orchard after it dried up and further considering that Lot 4
ASSUMING THAT THE LAND SOUGHT TO BE REGISTERED WAS "PREVIOUSLY A PART OF THE PARAAQUE
which adjoins the same property is owned by applicant, Arcadio C. Santos, Jr., after it was obtained by him
RIVER WHICH BECAME AN ORCHARD AFTER IT DRIED UP," THE REGISTRATION OF SAID PROPERTY IN
FAVOR OF RESPONDENTS CANNOT BE ALTERNATIVELY JUSTIFIED UNDER ARTICLE 461 OF THE CIVIL CODE.
through inheritance from his mother, Concepcion Cruz, now deceased. Conformably with Art. 457 of the
New Civil Code, it is provided that:
"Article 457. To the owners of the lands adjoining the bank of rivers belong the accretion which they
gradually receive from the effects of the current of the waters."9
The CA upheld the RTCs pronouncement, holding:
It could not be denied that "to the owners of the lands adjoining the banks of rivers belong the accretion
which they gradually receive from the effects of the current of the waters" (Article 457 New Civil Code) as
in this case, Arcadio Ivan Santos III and Arcadio Santos, Jr., are the owners of the land which was
previously part of the Paraaque River which became an orchard after it dried up and considering that Lot
4 which adjoins the same property is owned by the applicant which was obtained by the latter from his
mother (Decision, p. 3; p. 38 Rollo).10
The Republic submits, however, that the application by both lower courts of Article 457 of the Civil Code
was erroneous in the face of the fact that respondents evidence did not establish accretion, but instead
the drying up of the Paraaque River.
The Republics submission is correct.
Respondents as the applicants for land registration carried the burden of proof to establish the merits of
their application by a preponderance of evidence, by which is meant such evidence that is of greater
weight, or more convincing than that offered in opposition to it.11 They would be held entitled to claim the
property as their own and apply for its registration under the Torrens system only if they established that,
indeed, the property was an accretion to their land.
Accretion is the process whereby the soil is deposited along the banks of rivers.12 The deposit of soil, to be
considered accretion, must be: (a) gradual and imperceptible; (b) made through the effects of the current
of the water; and (c) taking place on land adjacent to the banks of rivers.13
Accordingly, respondents should establish the concurrence of the elements of accretion to warrant the
grant of their application for land registration.
However, respondents did not discharge their burden of proof. They did not show that the gradual and
imperceptible deposition of soil through the effects of the current of the river had formed Lot 4998-B.
Instead, their evidence revealed that the property was the dried-up river bed of the Paraaque River,
leading both the RTC and the CA to themselves hold that Lot 4998-B was "the land which was previously
part of the Paraaque River xxx (and) became an orchard after it dried up."
Still, respondents argue that considering that Lot 4998-B did not yet exist when the original title of Lot 4
was issued in their mothers name in 1920, and that Lot 4998-B came about only thereafter as the land
formed between Lot 4 and the Paraaque River, the unavoidable conclusion should then be that soil and
sediments had meanwhile been deposited near Lot 4 by the current of the Paraaque River, resulting in
the formation of Lot 4998-B.
The argument is legally and factually groundless. For one, respondents thereby ignore that the effects of
the current of the river are not the only cause of the formation of land along a river bank. There are
several other causes, including the drying up of the river bed. The drying up of the river bed was, in fact,
the uniform conclusion of both lower courts herein. In other words, respondents did not establish at all
that the increment of land had formed from the gradual and imperceptible deposit of soil by the effects of
the current. Also, it seems to be highly improbable that the large volume of soil that ultimately comprised
the dry land with an area of 1,045 square meters had been deposited in a gradual and imperceptible
manner by the current of the river in the span of about 20 to 30 years the span of time intervening
between 1920, when Lot 4 was registered in the name of their deceased parent (at which time Lot 4998-B
was not yet in existence) and the early 1950s (which respondents witness Rufino Allanigue alleged to be
the time when he knew them to have occupied Lot 4988-B). The only plausible explanation for the
substantial increment was that Lot 4988-B was the dried-up bed of the Paraaque River. Confirming this
explanation was Arcadio, Jr.s own testimony to the effect that the property was previously a part of the
Paraaque River that had dried up and become an orchard.
We observe in this connection that even Arcadio, Jr.s own Transfer Certificate of Title No. 44687
confirmed the uniform conclusion of the RTC and the CA that Lot 4998-B had been formed by the drying
up of the Paraaque River. Transfer Certificate of Title No. 44687 recited that Lot 4 of the consolidated
subdivision plan Pcs-13-002563, the lot therein described, was bounded "on the SW along line 5-1 by
Dried River Bed."14
That boundary line of "SW along line 5-1" corresponded with the location of Lot 4998-B, which was
described as "bounded by Lot 4079 Cad. 299, (Lot 1, Psu-10676), in the name of respondent Arcadio
Santos, Jr. (Now Lot 4, Psd-13-002563) in the Northeast."15
The RTC and the CA grossly erred in treating the dried-up river bed as an accretion that became the subject property is not a portion of the Paraaque River and that it does not fall nor overlap with Lot
respondents property pursuant to Article 457 of the Civil Code. That land was definitely not an accretion. 5000, thus, the Court opts to grant the application.
The process of drying up of a river to form dry land involved the recession of the water level from the river
banks, and the dried-up land did not equate to accretion, which was the gradual and imperceptible
Finally, in the light of the evidence adduced by the applicants in this case and in view of the foregoing
deposition of soil on the river banks through the effects of the current. In accretion, the water level did
reports of the Department of Agrarian Reforms, Land Registration Authority and the Department of
not recede and was more or less maintained. Hence, respondents as the riparian owners had no legal right
Environment and Natural Resources, the Court finds and so holds that the applicants have satisfied all the
to claim ownership of Lot 4998-B. Considering that the clear and categorical language of Article 457 of the
requirements of law which are essential to a government grant and is, therefore, entitled to the issuance
Civil Code has confined the provision only to accretion, we should apply the provision as its clear and
of a certificate of title in their favor. So also, oppositor failed to prove that the applicants are not entitled
categorical language tells us to. Axiomatic it is, indeed, that where the language of the law is clear and
thereto, not having presented any witness.
categorical, there is no room for interpretation; there is only room for application. 16 The first and
fundamental duty of courts is then to apply the law.17
In fine, the application is GRANTED.
The State exclusively owned Lot 4998-B and may not be divested of its right of ownership. Article 502 of
the Civil Code expressly declares that rivers and their natural beds are public dominion of the State. 18 It As already mentioned, the CA affirmed the RTC.
follows that the river beds that dry up, like Lot 4998-B, continue to belong to the
Both lower courts erred.
State as its property of public dominion, unless there is an express law that provides that the dried-up
river beds should belong to some other person.19 The relevant legal provision is Section 14(1) of Presidential Decree No. 1529 (Property Registration
Decree), which pertinently states:
II
Section 14. Who may apply. The following persons may file in the proper [Regional Trial Court] an
Acquisitive prescription was application for registration of title to land, whether personally or through their duly authorized
representatives:
not applicable in favor of respondents
(1) Those who by themselves or through their predecessors-in-interest have been in open, continuous,
exclusive and notorious possession and occupation of alienable and disposable lands of the public domain
The RTC favored respondents application for land registration covering Lot 4998-B also because they had
under a bona fide claim of ownership since June 12, 1945, or earlier.
taken possession of the property continuously, openly, publicly and adversely for more than 30 years
based on their predecessor-in-interest being the adjoining owner of the parcel of land along the river bank.
It rendered the following ratiocination, viz:20 xxxx

In this regard, the Court found that from the time the applicants became the owners thereof, they took
possession of the same property continuously, openly, publicly and adversely for more than thirty (30)
years because their predecessors-in-interest are the adjoining owners of the subject parcel of land along
the river bank. Furthermore, the fact that applicants paid its realty taxes, had it surveyed per subdivision
plan Csd-00-000343 (Exh. "L") which was duly approved by the Land Management Services and the fact
that Engr. Chito B. Cainglet, OICChief, Surveys Division Land Registration Authority, made a Report that
Under Section 14(1), then, applicants for confirmation of imperfect title must prove the following, namely:
(a) that the land forms part of the disposable and alienable agricultural lands of the public domain; and (b)
that they have been in open, continuous, exclusive, and notorious possession and occupation of the land
under a bona fide claim of ownership either since time immemorial or since June 12, 1945.21
The Republic assails the findings by the lower courts that respondents "took possession of the same
property continuously, openly, publicly and adversely for more than thirty (30) years."22
Although it is well settled that the findings of fact of the trial court, especially when affirmed by the CA,
are accorded the highest degree of respect, and generally will not be disturbed on appeal, with such
findings being binding and conclusive on the Court,23 the Court has consistently recognized exceptions to
this rule, including the following, to wit: (a) when the findings are grounded entirely on speculation,
surmises, or conjectures; (b) when the inference made is manifestly mistaken, absurd, or impossible; (c)
when there is grave abuse of discretion; (d) when the judgment is based on a misapprehension of facts; (e)
when the findings of fact are conflicting; (f) when in making its findings the CA went beyond the issues of
the case, or its findings are contrary to the admissions of both the appellant and the appellee; (g) when
the findings are contrary to those of the trial court; (h) when the findings are conclusions without citation
of specific evidence on which they are based; (i) when the facts set forth in the petition as well as in the
petitioners main and reply briefs are not disputed by respondent; and (j) when the findings of fact are
premised on the supposed absence of evidence and contradicted by the evidence on record.24
Here, the findings of the RTC were obviously grounded on speculation, surmises, or conjectures; and that
the inference made by the RTC and the CA was manifestly mistaken, absurd, or impossible. Hence, the
Court should now review the findings.
In finding that respondents had been in continuous, open, public and adverse possession of the land for
more than 30 years, the RTC declared:
In this regard, the Court found that from the time the applicant became the owners thereof, they took
possession of the same property continuously, openly, publicly and adversely for more than thirty years
because their predecessor in interest are the adjoining owners of the subject parcel of land along the river
banks. Furthermore, the fact that the applicant paid its realty taxes, had it surveyed per subdivision plan
Csd-00-000343 (Exh. "L") which was duly approved by the Land Management Services and the fact that
Engr. Chito B. Cainglet, OIC Chief, Surveys Division Land Registration Authority, made a Report that the
subject property is not a portion of the Paraaque River and that it does not fall nor overlap with Lot 5000,
thus, the Court opts to grant the application.
The RTC apparently reckoned respondents period of supposed possession to be "more than thirty years"
from the fact that "their predecessors in interest are the adjoining owners of the subject parcel of land."
Yet, its decision nowhere indicated what acts respondents had performed showing their possession of the
property "continuously, openly, publicly and adversely" in that length of time. The decision mentioned
only that they had paid realty taxes and had caused the survey of the property to be made. That, to us,
was not enough to justify the foregoing findings, because, firstly, the payment of realty taxes did not
conclusively prove the payors ownership of the land the taxes were paid for, 25 the tax declarations and
payments being mere indicia of a claim of ownership;26 and, secondly, the causing of surveys of the
property involved was not itself an of continuous, open, public and adverse possession.
The principle that the riparian owner whose land receives the gradual deposits of soil does not need to
make an express act of possession, and that no acts of possession are necessary in that instance because
it is the law itself that pronounces the alluvium to belong to the riparian owner from the time that the
deposit created by the current of the water becomes manifest27 has no applicability herein. This is simply
because Lot 4998-B was not formed through accretion. Hence, the ownership of the land adjacent to the
river bank by respondents predecessor-in-interest did not translate to possession of Lot 4998-B that
would ripen to acquisitive prescription in relation to Lot 4998-B.
On the other hand, the claim of thirty years of continuous, open, public and adverse possession of Lot
4998-B was not even validated or preponderantly established. The admission of respondents themselves
that they declared the property for taxation purposes only in 1997 and paid realty taxes only from
199928 signified that their alleged possession would at most be for only nine years as of the filing of their
application for land registration on March 7, 1997.
Yet, even conceding, for the sake of argument, that respondents possessed Lot 4998-B for more than
thirty years in the character they claimed, they did not thereby acquire the land by prescription or by
other means without any competent proof that the land was already declared as alienable and disposable
by the Government. Absent that declaration, the land still belonged to the State as part of its public
dominion.
Article 419 of the Civil Code distinguishes property as being either of public dominion or of private
ownership. Article 420 of the Civil Code lists the properties considered as part of public dominion, namely:
(a) 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; and (b) 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. As earlier mentioned, Article 502 of the Civil Code declares that rivers and their
natural beds are of public dominion.
Whether the dried-up river bed may be susceptible to acquisitive prescription or not was a question that
the Court resolved in favor of the State in Celestial v. Cachopero,29 a case involving the registration of land
found to be part of a dried-up portion of the natural bed of a creek. There the Court held:
As for petitioners claim of ownership over the subject land, admittedly a dried-up bed of the Salunayan active intervention of man, it follows that Article 370 does not apply to the case at bar and, hence, the Del
Creek, based on (1) her alleged long term adverse possession and that of her predecessor-in-interest, Rosarios cannot be entitled thereto supposedly as riparian owners.
Marcelina Basadre, even prior to October 22, 1966, when she purchased the adjoining property from the
latter, and (2) the right of accession under Art. 370 of the Spanish Civil Code of 1889 and/or Article 461 of
The dried-up portion of Estero Calubcub should thus be considered as forming part of the land of the
the Civil Code, the same must fail.
public domain which cannot be subject to acquisition by private ownership. xxx (Emphasis supplied)

Since property of public dominion is outside the commerce of man and not susceptible to private
appropriation and acquisitive prescription, the adverse possession which may be the basis of a grant of
title in the confirmation of an imperfect title refers only to alienable or disposable portions of the public
domain. It is only after the Government has declared the land to be alienable and disposable agricultural
land that the year of entry, cultivation and exclusive and adverse possession can be counted for purposes
of an imperfect title.
A creek, like the Salunayan Creek, is a recess or arm extending from a river and participating in the ebb
and flow of the sea. As such, under Articles 420(1) and 502(1) of the Civil Code, the Salunayan Creek,
including its natural bed, is property of the public domain which is not susceptible to private appropriation
and acquisitive prescription. And, absent any declaration by the government, that a portion of the creek
has dried-up does not, by itself, alter its inalienable character.
xxxx
Had the disputed portion of the Salunayan Creek dried up after the present Civil Code took effect, the
subject land would clearly not belong to petitioner or her predecessor-in-interest since under the
aforementioned provision of Article 461, "river beds which are abandoned through the natural change in
the course of the waters ipso facto belong to the owners of the land occupied by the new course," and the
owners of the adjoining lots have the right to acquire them only after paying their value.
Furthermore, both provisions pertain to situations where there has been a change in the course of a river,
not where the river simply dries up. In the instant Petition, it is not even alleged that the Salunayan Creek
changed its course. In such a situation, commentators are of the opinion that the dry river bed remains
property of public dominion. (Bold emphases supplied)
Indeed, under the Regalian doctrine, all lands not otherwise appearing to be clearly within private
ownership are presumed to belong to the State.30 No public land can be acquired by private persons
without any grant, express or implied, from the Government. It is indispensable, therefore, that there is a
showing of a title from the State.31Occupation of public land in the concept of owner, no matter how long,
cannot ripen into ownership and be registered as a title.32
Subject to the exceptions defined in Article 461 of the Civil Code (which declares river beds that are
abandoned through the natural change in the course of the waters as ipso facto belonging to the owners
of the land occupied by the new course, and which gives to the owners of the adjoining lots the right to
acquire only the abandoned river beds not ipso facto belonging to the owners of the land affected by the
natural change of course of the waters only after paying their value), all river beds remain property of
public dominion and cannot be acquired by acquisitive prescription unless previously declared by the
Government to be alienable and disposable. Considering that Lot 4998-B was not shown to be already
declared to be alienable and disposable, respondents could not be deemed to have acquired the property
through prescription.

And both Article 370 of the Old Code and Article 461 of the present Civil Code are applicable only when
"river beds are abandoned through the natural change in the course of the waters." It is uncontroverted,
however, that, as found by both the Bureau of Lands and the DENR Regional Executive Director, the
subject land became dry as a result of the construction an irrigation canal by the National Irrigation
Administration. Thus, in Ronquillo v. Court of Appeals, this Court held:
Nonetheless, respondents insist that the property was already classified as alienable and disposable by
the Government. They cite as proof of the classification as alienable and disposable the following notation
found on the survey plan, to wit:33
NOTE

The law is clear and unambiguous. It leaves no room for interpretation. Article 370 applies only if there is
ALL CORNERS NOT OTHERWISE DESCRIBED ARE OLD BL CYL. CONC. MONS 15 X 60CM
a natural change in the course of the waters. The rules on alluvion do not apply to man-made or artificial
accretions nor to accretions to lands that adjoin canals or esteros or artificial drainage systems.
Considering our earlier finding that the dried-up portion of Estero Calubcub was actually caused by the All corners marked PS are cyl. conc. mons 15 x 60 cm
Surveyed in accordance with Survey Authority NO. 007604-48 of the Regional Executive Director issued by
the CENR-OFFICER dated Dec. 2, 1996.
This survey is inside L.C. Map No. 2623, Proj. No. 25 classified as alienable/disposable by the Bureau of
Forest Devt. on Jan. 3, 1968.
Lot 4998-A = Lot 5883} Cad 299
Lot 4998-B = Lot 5884} Paranaque Cadastre.
Was the notation on the survey plan to the effect that Lot 4998-B was "inside" the map "classified as
alienable/disposable by the Bureau of Forest Development on 03 Jan. 1968" sufficient proof of the
propertys nature as alienable and disposable public land?
To prove that the land subject of an application for registration is alienable, an applicant must conclusively
establish the existence of a positive act of the Government, such as a presidential proclamation, executive
order, administrative action, investigation reports of the Bureau of Lands investigator, or a legislative act
or statute. Until then, the rules on confirmation of imperfect title do not apply.
As to the proofs that are admissible to establish the alienability and disposability of public land, we said in
Secretary of the Department of Environment and Natural Resources v. Yap34 that:
The burden of proof in overcoming the presumption of State ownership of the lands of the public domain
is on the person applying for registration (or claiming ownership), who must prove that the land subject of
the application is alienable or disposable. To overcome this presumption, incontrovertible evidence must
be established that the land subject of the application (or claim) is alienable or disposable.There must still
be a positive act declaring land of the public domain as alienable and disposable. To prove that the land
subject of an application for registration is alienable, the applicant must establish the existence of a
positive act of the government such as a presidential proclamation or an executive order; an
administrative action; investigation reports of Bureau of Lands investigators; and a legislative act or a
statute. The applicant may also secure a certification from the government that the land claimed to have
been possessed for the required number of years is alienable and disposable.
In the case at bar, no such proclamation, executive order, administrative action, report, statute, or
certification was presented to the Court. The records are bereft of evidence showing that, prior to 2006,
the portions of Boracay occupied by private claimants were subject of a government proclamation that
the land is alienable and disposable. Absent such well-nigh incontrovertible evidence, the Court cannot
accept the submission that lands occupied by private claimants were already open to disposition before
2006. Matters of land classification or reclassification cannot be assumed. They call for proof." (Emphasis
supplied)
In Menguito v. Republic,35 which we reiterated in Republic v. Sarmiento,36 we specifically resolved the
issue of whether the notation on the survey plan was sufficient evidence to establish the alienability and
disposability of public land, to wit:
To prove that the land in question formed part of the alienable and disposable lands of the public domain,
petitioners relied on the printed words which read: "This survey plan is inside Alienable and Disposable
Land Area, Project No. 27-B as per L.C. Map No. 2623, certified by the Bureau of Forestry on January 3,
1968," appearing on Exhibit "E" (Survey Plan No. Swo-13-000227).
This proof is not sufficient. Section 2, Article XII of the 1987 Constitution, provides: "All lands of the public
domain, waters, minerals, coal, petroleum, and other mineral oils, all forces of potential energy, fisheries,
forests or timber, wildlife, flora and fauna, and other natural resources are owned by the State. x x x."
For the original registration of title, the applicant (petitioners in this case) must overcome the
presumption that the land sought to be registered forms part of the public domain. Unless public land is
shown to have been reclassified or alienated to a private person by the State, it remains part of the
inalienable public domain. Indeed, "occupation thereof in the concept of owner, no matter how long,
cannot ripen into ownership and be registered as a title." To overcome such presumption,
incontrovertible evidence must be shown by the applicant. Absent such evidence, the land sought to be
registered remains inalienable.
In the present case, petitioners cite a surveyor-geodetic engineers notation in Exhibit "E" indicating that
the survey was inside alienable and disposable land. Such notation does not constitute a positive
government act validly changing the classification of the land in question. Verily, a mere surveyor has no
authority to reclassify lands of the public domain. By relying solely on the said surveyors assertion,
petitioners have not sufficiently proven that the land in question has been declared alienable. (Emphasis
supplied)
In Republic v. T.A.N. Properties, Inc.,37 we dealt with the sufficiency of the certification by the Provincial
Environmental Officer (PENRO) or Community Environmental Officer (CENRO) to the effect that a piece of
public land was alienable and disposable in the following manner, viz:
x x x it is not enough for the PENRO or CENRO to certify that a land is alienable and disposable. The Respondents shall pay the costs of suit.
applicant for land registration must prove that the DENR Secretary had approved the land classification
and released the land of the public domain as alienable and disposable, and that the land subject of the
SO ORDERED.
application for registration falls within the approved area per verification through survey by the PENRO or
CENRO. In addition, the applicant for land registration must present a copy of the original classification
approved by the DENR Secretary and certified as a true copy by the legal custodian of the official records. LUCAS P. BERSAMIN
These facts must be established to prove that the land is alienable and disposable. Respondent failed to Associate Justice
do so because the certifications presented by respondent do not, by themselves, prove that the land is
alienable and disposable.

Only Torres, respondents Operations Manager, identified the certifications submitted by

respondent.1wphi1 The government officials who issued the certifications were not presented before
the trial court to testify on their contents. The trial court should not have accepted the contents of the
certifications as proof of the facts stated therein. Even if the certifications are presumed duly issued and
admissible in evidence, they have no probative value in establishing that the land is alienable and
disposable.

xxxx

The CENRO and Regional Technical Director, FMS-DENR, certifications do not prove that Lot 10705-B falls
within the alienable and disposable land as proclaimed by the DENR Secretary. Such government
certifications do not, by their mere issuance, prove the facts stated therein. Such government
certifications may fall under the class of documents contemplated in the second sentence of Section 23 of
Rule 132. As such, the certifications are prima facie evidence of their due execution and date of issuance
but they do not constitute prima facie evidence of the facts stated therein. (Emphasis supplied)

These rulings of the Court indicate that the notation on the survey plan of Lot 4998-B, Cad-00-000343 to
the effect that the "survey is inside a map classified as alienable/disposable by the Bureau of Forest Devt"
did not prove that Lot 4998-B was already classified as alienable and disposable. Accordingly, respondents
could not validly assert acquisitive prescription of Lot 4988-B.

WHEREFORE, the Court REVERSES and SETS ASIDE the decision of the Court of Appeals promulgated on
May 27, 2003; DISMISSES the application for registration of Arcadio C. Santos, Jr. and Arcadio Ivan S.
Santos III respecting Lot 4998-B with a total area of 1,045 square meters, more or less, situated in
Barangay San Dionisio, Paraaque City, Metro Manila; and DECLARES Lot 4998-B as exclusively belonging
to the State for being part of the dried--up bed of the Parat1aque River.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-28021 December 15, 1977
JULIAN SANTULAN substituted by his children named PATROCINIO, ADORACION, ARTURO, CONSTANCIA,
and PEPITA, all surnamed SANTULAN and minor grandchildren, JOCELYN, ROSAURO and ROBERTO, all
surnamed SANTULAN assisted by their guardian ad litem, PATROCINIO SANTULAN petitioners-
appellants,
vs.
THE EXECUTIVE SECRETARY, THE SECRETARY OF AGRICULTURE AND NATURAL RESOURCES, THE
DIRECTOR OF LANDS, and ANTONIO LUSIN, substituted by his Heirs named TEODOSIA BALANZA (widow)
and Children LEOPOLDO, ARMANDO. ALFONSO, EMILIANO, MAGDALENA, ERLINDA and ESTRELLA
(ESTER), all surnamed LUSIN, and Heirs of CAROLINA LUSIN-LUCERO named MANOLITO LUCERO and
MARIO LUCERO, respondents-appellees.
Isidoro Crisostomo for appellants Heirs of Julian Santulan.
Romulo C. Felizmea for appellees Heirs of Antonio Lusin.
Solicitor General Arturo A. Alafriz Assistant Solicitor General Esmeraldo Umali and Solicitor Conrado T.
Limcaoco for The Executive Secretary, etc.
AQUINO, J.
This case is about the lease of a parcel of foreshore land of the public domain with an area of about four
and one-half hectares located at Barrio Kaingin, Kawit, Cavite abutting on Bacoor Bay and the Ankaw
Creek.
It is protracted controversy that has been pending for more than thirty years between the rival claimants
Julian Santulan plan and Antonio Lusin, who have been succeeded by their heirs.
Santulan claimed that foreshore land was an extension of his land, Lot No. 986 of the Kawit cadastre, with
an area of 17,301 square meters, registered in his name in 1937 under Original Certificate of Title No. 6
which was issued by virtue of a free patent. The northern boundary of Lot No. 986 is Bacoor (Manila) Bay
(Exh. A). The said foreshore land was allegedly formed by soil deposits accumulated by the alluvial action
of the sea.
On December 5, 1942 Santulan caused the said land to be surveyed. The survey plan was approved by the
Director of Lands in 1944 (Exh. B). On December 29, 1942 Santulan, pursuant to Lands Administrative
Order No. 7-1, filed an application, F.L.A. No. V 562, to lease for five years for agricultural purposes an
area of 36,120 square meters of the said foreshore land (Exh. F).
On that same date, December 29, 1942, Santulan, pursuant to Act No. 3077 and Lands Administrative
Order No. 8-3, filed with the Bureau of Lands an application for a revocable permit to occupy the said land.
He indicated therein that he would use the land for 11 capiz beds and oyster beds, the planting of
bakawan and pagatpat and later to be developed into a fishpond" (Exh. G).
Seven years later, or on December 22, 1949, Santulan filed with the Bureau of Fisheries an application for
an ordinary fishpond permit or lease of the said foreshore land (Special Use Permit, pp. A. No. 5114, Exh.
H).
At the instance of the Director of Fisheries, the Director of Forestry investigated the condition of the said
foreshore land. The latter in his first indorsement dated June 19, 1950 found that it was swampy "and not
an improved fishpond as alleged by Antonio Lusin" and that it is within the disposable areas for
agricultural purposes under the jurisdiction of the Bureau of Lands (Exh. L-1).
The chief of the division of commercial fisheries sent a letter to Lusin dated April 28, 1950 apprising him
that he was reported to have illegally entered the area covered by Santulan's fishpond permit application
and directing him to refrain from introducing improvements, with the warning that court proceedings
would be taken against him (Exh. J).
On January 12, 1951 an attorney, acting for the Director of Lands wrote the following letter to Lusin
advising him to vacate the disputed land and maintain the status quo:
 Mr. Antonio Lusin water breakers to protect the mud dikes from being washed away by the action of the sea. Lusin
Caigin, Kawit, Cavite introduced the alleged improvements from 1951 to 1953.

S i r:
We have been informed that the area which is presently controverted by and
between you and Julian Santulan, under the applications noted above, was recently
entered by you and some companion and that you are destroying the dikes and
other improvements previously constructed thereon by said Julian Santulan.
The 1942 foreshore lease applications of Santulan and Lusin gave rise to Bureau of Lands Conflict No. 8 (N).
The Director of Lands in his decision in that case dated February 1, 1951 found that the disputed land is
foreshore land covered and uncovered by the flow and ebb of the ordinary tides that it is an extension of
Santulan's Lot No. 986 and it was formerly a part of the sea; that Santulan was the first to enter the land
and to make dikes thereon, and that Lusin entered the land later and made dikes also (Exh. K made a part
hereof for reference as Annex A).

The Director ruled that the disputed foreshore land was subject "to reparian rights which may he invoked
If this information is true, and inasmuch as you are aware that the controversy is
by Santulan as owner of the upland in accordance with section 32 of Lands Administrative Order No. 7-1"
still pending final adjudgment in this Office, is desired that you take proper advice
(Exh. K). Hence the Director rejected Lusin's application for a foreshore lease and for a revocable permit
and leave the area and its existing improvements in status quo in order to avoid
and gave due course to Santulan's foreshore lease application.
possible confusion of rights which ma delay the final disposition of the area in
question.
Lusin filed a motion for reconsideration. The Director in his order of October 19, 1951 denied that motion.
lie found that Lusin was a possessor in bad faith: that it is not true that Lusin had improved and possessed
You are advised further that the acts imputed to you may make you liable to
the said foreshore land for twenty years, that the disputed area is covered by water, two to three feet
prosecution and punishment under the law; and that whatever improvements you
deep during ordinary tides and is exposed land after the ebb of the tides, and that Lusin's alleged
may make for yourself in the premises will not legally accrue to your benefit, nor
possession and improvements could not nullify Santulan's preferential right to lease the land by reason of
will they serve as basis for a claim to preferential rights. (Paragraphing supplied, Exh,
his riparian rights. The Director ordered Lusin to vacate the land within sixty days from notice (Exh. L made
J-1).
a part hereof for reference as Annex B).

Santulan declared the said foreshore land in his name for tax purposes. Tax Declaration No. 2923, which
Lusin appealed to the Acting Secretary of Agriculture and Natural Resources who in his decision of
took effect in 1948 and which cancelled Tax Declaration No. 13816 also in Santulan's name, shows that
October 13, 1952 dismissed the appeal and affirmed the Director's 1951 decision (Exh. M made a part
the land was assessed at P460. He paid the realty taxes due on the said land for the years 1945-46, 1948-
hereof for reference as Annex C). Lusin's motion for reconsideration was denied in the Secretary's order of
55 and 195760 (Exh. C, D and E, el seq.).
February 28, 1953 (Exh. N made a part hereof for reference as Annex D).

On the other hand, Antonio Lusin in 1942 and 1945 (he died in 1962) filed with the Bureau of Lands
Lusin asked for a reinvestigation of the case. His request was granted. The Department ordered a
applications for a revocable-permit and lease of a foreshore land, respectively, for the purpose of
reinvestigation on May 12, 1953.
producing salt on the said land. He claimed that he had been in the continuous and exclusive possession
of the land since 1920, when it was still under water, and that he had used it as a site of his fish corrals.
After receipt of the report of reinvestigation, the Undersecretary of Agriculture and Natural Resources, by
authority of the Secretary, in his order of December 14, 1954, reaffirmed the rejection of Lusin's revocable
He allegedly converted two hectares of the said land into a fishpond. The entire area was enclosed with
permit and foreshore lease applications but ordered Santulan to reimburse to Lusin the appraised value of
mud dikes and provided with a concrete sluice gate and another sluice gate made of wood On the
his improvements (Exh. O made a part hereof for reference as Annex E).
northern part of the land bordering the bay were bamboo stakes placed at close intervals to serve as
Lusin appealed to the President of the Philippines after his motion for reconsideration was denied in the
Undersecretary's order of May 19, 1955 (Exh. OO made a part hereof for reference as Annex F).
Executive Secretary Juan C. Pajo, by authority of the President, held in his decision of April 10, 1958 that
section 32 of Lands Administrative Order No. 7-1 (promulgated by the Secretary of Agriculture and Natural
Resources on April 30, 1936 pursuant to Acts Nos. 2874 and 3038) was "rendered obsolete" by section 67
of the Public Land Law which took effect on December 1, 1936 (Exh. P made a part hereof for reference as
Annex G).
On the basis of the foregoing ruling and since the record is silent as to whether or not the land in question
has been declared by the President as not necessary for the public service and as open to disposition (Sec.
61, Public Land Law), the Executive Secretary sustained Lusin's appeal and reversed the orders of the
Director of Lands and the Secretary of Agriculture and Natural Resources in favor of Santulan. Secretary
Pajo decided the case in the alternative as follows:
On the assumption that the land in question has been declared open for disposition
and is not necessary for the public service, this Office directs that an oral bidding for
the leasing thereof to interested parties pursuant to the provisions of Section 67 of
Commonwealth Act .No. 141 be conducted and the contract of lease awarded to
the highest bidder whoever shall be the highest bidder, if other than the appellant,
shall be required to pay to the appellant the appraised value of the improvements
introduced by him on the land to be determined by that Department.
If the land in question has not been so declared, this Office directs that a revocable
permit under Section 68 of Commonwealth Act No. 141 be Id to the appellant
requiring him to pay permit fees since the year 1951.
Accordingly, the orders and decisions of that Department and the Bureau of Lands
are hereby revoked.
Santulan's case was distinguished from that of Gonzalo Monzon whose Lot No. 987 adjoins Santulan's Lot
No. 986. Executive Secretary Fred Ruiz Castro (now Chief Justice) in his decision of May 10, 1954 upheld
the preferential right of Monzon to lease the foreshore land north of his lot, which foreshore land is
adjacent to the foreshore land now in dispute in this case (Exh. Q made a part hereof for reference as
Annex H).
Santulan's motion for reconsideration was denied in the letter of the Acting Executive Secretary dated
August 20, 1959 (Exh. W).
On October 22, 1959 Santulan filed in the Court of First Instance of Cavite a petition for certiorari wherein
he alleged that the Executive Secretary committed a grave abuse of discretion in misinterpreting certain
provisions of Act No. 2874, Commonwealth Act No. 141, and Lands Administrative Order No. 7-1.
In the lower court the parties agreed that the case Involves only a question of law. On August 18. 1961 the
lower court dismissed the petition and affirmed the Executive Secretary's decision. Santulan appealed to
the Court of Appeals which in its resolution of July 21, 1967 elevated the record to this Court on the
ground that Santulan in his brief raised only the legal questions of whether the Public Land Law repealed
section 32 of Lands Administrative Order No. 7 1 and whether the Executive Secretary's decision is "legally
sound and correct" (CA-G. R. No. 30708-R).
It should be emphasized that. as found by tile investigators of the Bureau of Lands, Santulan was the prior
possessor of the foreshore land in question. lie had it surveyed in 1942. The survey plan Psu-115357) was
approved by the Director of Lands in 1944. Santulan paid the realty taxes on that land .
It should further be underscored that the regulations pie him a preferential right to lease the land as a
riparian owner. Lands Administrative Order No. 7-1 dated April 30. 1936. which was issued by the
Secretary of Agriculture and Natural Resources upon the recommendation of the Director of Lands for the
disposition of alienable lands of the public domain, provides:
32. Preference of the Reparian Owner The owner of the property adjoining
foreshore lands, marshy lands or lands covered with water bordering upon shores
or banks of navigable lakes or rivers, shall be given preference to apply for such
lands adjoining his property as may not be needed for the public service, subject to
the laws and regulations governing lands of this nature, provided that he applies
therefor within sixty (60) days from the date he receives a communication from the
Director of Lands advising him of his preferential right.
Paragraph 32 quoted above is a substantial copy of paragraph 4 of Lands Administrative Order No. 8-3
dated April 20, 1936, which was promulgated by the Secretary of Agriculture and Natural Resources upon
the recommendation of the Director of Lands for issuance of temporary permits of occupation and use of
agricultural lands of the public domain.
The word "riparian" in paragraphs 32 and 4 of the departmental regulations is used in a broad sense as
referring to any property having a water frontage (Shepard's Point Land Co. vs. Atlantic Hotel, 44 S. E. 39,
45, 132 N. C. 517, 65 C. J. S. 143, note 84). Strictly speaking, "riparian" refers to rivers. A riparian owner is
a person who owns land situated on the bank of a river.
But in paragraphs 32 and 4, the term "riparian owner" embraces not only the owners of lands on the
banks of rivers but also the littoral owners, meaning the owners of lands bordering the shore of the sea or
lake or other tidal waters. The littoral is the coastal region including both the land along the coast and the
water near the coast or the shore zone between the high and low watermarks.
SEC. 67. The lease or sale shall be made through oral bidding-, and ajudication shall
be made to the highest bidder. However, where m applicant has made
improvements on the land by virtue of a permit issued to him by competent
authority, the sale or lease shall be made by sealed bidding as prescribed in section
twenty-six of this Act, the provisions of which shall be applied wherever applicable.
If all or Dart of the lots remain unleased or unsold. the Director of Lands shall from
time to time announce in the Official Gazzate, or in any other newspapers of
general circulation, the lease or sale of those lots, if necessary. (Section 26, like
section 27 of Act No. 2874, refers to sealed bidding).

The Executive Secretary noted that under section 64 of Act No. 2874 sealed bidding was the general rule
Therefore, on the basis of paragraphs 32 and 4 of the said administrative regulations, Santulan or his heirs
of procedure in an award of a lease of foreshore land and that the t is entitled to equal the bid of the
Should be allowed to leased or occupy the said foreshore land.
highest bidder. On the other hand, under 67, oral bidding is the general rule.

But the Executive Secretary ruled that paragraph 32 was rendered obsolete by Commonwealth Act No.
Hence, the Executive Secretary assumed that, while under section 64 of the 1919 old Public Land Act, the
141 or, as held by the trial court, Lands Administrative Order No. 7-1 was repealed by the Public Land Law.
fact that the applicant has a preferential right to lease foreshore land was a crucial factor it is thus under
Is that conclusion correct? We hold that it is wrong.
section 67 of the 1936 Public Land Law because in oral bidding the appellant is not entitled to equal the
bid of the highest bidder.
It is true that Lands Administrative Orders Nos. 7-1 and 8-3 were issued when the 1919 Public Land Act
was in force or before the present Public Land Law took effect on December 1, 1936. But that
The Executive Secretary concluded that, because the preferential right of the applicant to lease foreshore
circumstance would not necessarily mean that the said departmental regulations are not good under the
land was immaterial under 67 of the present Public Land Law, paragraph 32 of Lands Administrative Order
1936 Public Land Law.
No. 7-1, which gives such preference. had become "idle and useless".

In rationalizing the alleged repeal of paragraph 32, the Executive Secretary cited the following provisions
That conclusion is wrong because it is based on the erroneous hypothesis that section 64 of the 1919
of Act No. 2874, the 1919 Public Land Act (15 Public Land laws 24):
Public Land Act is different from section 67 of the 1936 Public Land Law. They are not different. The truth
is that section 64 was amended by Act No. 3517 which took effect on February 4, 1919 (24 Public Laws
SEC. 64. The lease or sale shall be adjudicated to the highest bidder; and if there is 416). Section 64, as thus amended, is substantially the same as section 67 of the 1936 Public Land Law.
no bidder besides the applicant, it shall be adjudicated to him. The provisions of
section twenty-seven of this Act shall be applied wherever applicable. If all or part
That fact was overlooked by the Executive Secretary. Hence, his conclusion, that paragraph 32 of Lands
of the lots remain unleased or unsold the Director of Lands Shall from time to time
Administrative Order No. 71 was repealed or rendered obsolete by section 67 of the present Public Land
announce in the Offcial Gazette or otherwise the lease or sale of those lots if
Law, is wrong because its premise is wrong.
necessary . (Section 27 refers to sealed bidding).

In other words, paragraph 32 of Lands Administrative Order No. 7-1, issued on April 30, 1936, was
The Executive Secretary held that the above-quoted section 64 was by the for provisions of on wealth Act
promulgated under section 64 of the old Public Land Law, as amended. And since the amended section 64
No. 141 which took effect on December 1, 1936:
was substantially reproduced in section 67 of the 1936 Public Land Law, it is glaringly incorrect to say that
section 67 rendered obsolete the said paragraph 32. Paragraph 32 is still in force and is good under the
existing Public Land Law.
The foregoing discussion reveals that the Executive Summary's rationalization of the alleged repeal of
Belonging to Belonging to
paragraph 32 of Lands Administrative Order No. 7-1 (identical to paragraph 4 of Lands Administrative
Order No. 8-3) is not only deficient in clarity and cogency but is predicated on the false assumption that
section 64 of the 1919 Public Land Act is different from section 67 of the present Public Land Law. Julian Santulan Gonzalo Monzon
Consequently, the aforementioned decision of Executive Secretary Juan C. Pajo under review bas to be set
aside.
Considering that the foreshore land abutting upon Santolan's lot is in the same situation as the foreshore
land abutting upon Monzon's lot, there is no reason why Santulan should not enjoy, with respect to the
This case is governed by the precedent established in the case of Gonzalo Monzon, which, as already disputed foreshore land, the rights given to Monzon over the foreshore land adjacent to his lot.
noted, is similar to this cm since the foreshore land involved in the Monzon case is adjacent to the
foreshore land involved in this case.
Now, then, is there any justification for giving to the littoral owner the preferential right to lease the
foreshore land abutting on his land?
In the Monzon case, the Office of the President, applying the oft-cited paragraph 32 of Lands
Administrative Order No. 7-1 held that Monzon, the littoral owner of the registered land abutting upon
That rule in paragraph 32 is in consonance with article 4 of the Spanish Law of Waters of 1866 which
the foreshore land, has the preferential right to lease the foreshore land,
provides that, while lands added to the shores by accretions and alluvial deposits caused by the action of
the sea form part of the public domain, such lands, "when they are no longer washed by the waters of the
The location of the lots of Santulan and Monzon and the foreshore lands abutting thereon is shown in the sea and are not necessary for purposes of public utility, or for the establishment of special industries, or
following sketch bawd on the plan, Psu-115357 (Exh. B): for the coast guard service", shall be declared by the Government "to be the property of the owner of the
estates adjacent thereto and as increment thereof" (cited in Ignacio vs. Director of Lands, 108 Phil. 335,
Manila Bay or Bacoor Bay 338).

In other words, article 4 recognizes the preferential right of the littoral owner (riparian according to
Disputed Area paragraph 32) to the foreshore land formed by accretions or alluvial deposits due to the action of the sea
(Ker & Co. vs. Cauden 6 Phil. 732, 736, 223 U.S. 268, 56 L. Ed. 432, 435; Jover vs. Insular Government, 10
Psu-1 15357 Psu- 1 15358 Phil. 522, 40 Phil. 1094, 1100, 221 U.S. 623, 55 L. Ed. 884).

Foreshore land Forshore land

The reason for that preferential right is the same as the justification for giving accretions to the riparian
owner, which is that accretion compensates the riparian owner for the diminutions which his land suffers
claimed by leased to by reason of the destructive force of the waters (Cortes vs. City of Manila, 10 Phil. 567). So, in the case of
littoral lands, he who loses by the encroachments of the sea should gain by its recession (Banks vs. Ogden
Julian Santulan Gonzalo Monzon 2 Wall. 57, 67, 17 L. Ed. 818, 821).

and
That preferential right is recognized in American jurisprudence where the rule is that the owner of the
Antonio Lusin land adjacent to navigable waters has certain riparian or littoral rights of a proprietary nature not
possessed by the general public which rights are incident to the ownership of the banks or the uplands:
riparian as respects the waters of a river and littoral as to sea waters or the waters of a lake (65 C.J. S. 143-
Lot No. 986 Lot no. 987
145).
It may be mentioned that the Director of Lands stated in his manifestation of October 26, 1977 that Lands Julian Santolan, Applicant-Appellant vs. Antonio Lusin, Applicant-Appellant, D.A.N.R.
Administrative Orders Nos. 7-1 and 8-3 are still in force and have not been superseded by any later Case No. 625, Psu- 1 15357, Kawit, Cavite.
regulations and that the directive of the President of the Philippines to the Director of Lands dated May
24, 1966, stopping the grant of foreshore leases all along Manila Bay, towards Cavite and Bataan, has not
Annex A Order of Director of Lands dated February 1, 1951.
rendered the instant case moot and academic "because the foreshore lease application involved is
pending award."
Annex B Order of Director of Lands dated October 19, 1951.
In view of the foregoing considerations, the trial court's decision and the decision of the Executive
Secretary dated April 10, 1958 are reversed and set aside and the order of the Undersecretary of Annex C Decision of Acting Secretary of Agriculture and Natural Resources dated October 13, 1952.
Agriculture and Natural Resources dated December 14, 1954 and the orders of the Director of Lands dated
February I and October 19, 1951 are affirmed. Annex D Order of Secretary of Agriculture and Natural Resources dated February 28,1953.

The lease application of Julian Santulan mentioned in the order of February 1, 1951 should be recorded in Annex E Order of Undersecretary of Agriculture and Natural Resource dated December 14, 1954.
the names of his heirs and the obligation to make reimbursement mentioned in the dispositive part of the
Undersecretary's order should now devolve upon the heirs of Santolan. The reimbursement should be
made to the heirs of the late Antonio Lusin The obligation to vacate the disputed land, as required in the Annex F Order of Undersecretary of Agriculture and Natural Resources dated May 19, 1955.
Director's order of October 19, 1951 devolves upon the heirs of Lusin Costs in both instances against
respondent heirs of Lusin (As amended by Resolution of February 17, 1977. Annex G Decision of Executive Secretary Juan C. Pajo dated April 10, 1958.

SO ORDERED. Annex H Decision of Executive Secretary Fred Ruiz Castro dated -May 10, 1954 in Emiliano del Rosario
vs. Gonzalo Monzon.
Barredo (Actg. Chairman), Antonio, Concepcion Jr. and Guerrero, JJ., concur.
ANNEX A
Guerrero, J., was designated to sit in the Second Division.
ORDER
Fernando and Santos, JJ., are on leave.
Julian Santolan, who owns Lot No. 986 of the Kawit Cadastre, under a free patent grant with Original
Certificate of Title No. 6 issued to him on June 9, 1937, claims preferential rights to all the areas extending
seaward from the said lot. He caused the said areas to be surveyed for him in 1942, and the survey plan
thereof was approved in 1944, as may be seen in the Survey Plan Psu-115357 of this Office which is
Annexes to Opinion in L-28021, Julian Santolan reproduced in the sketch drawn. on the back of the last page hereof. Except the portion marked "A" in the
vs. Executive , et al. sketch, he made a foreshore lease application and a revocable permit application for these areas in 1942
to devote the areas applied for to fishpond purposes. Presently, he now includes the portion "A" in his
F. L. A. No. V-562, R. P. A. (New). Julian Santolan, Applicant & Contestant vs. F. L. A. (New), R. P. A. (New), applications herein mentioned to be devoted to the same purposes in fact, he now intends to utilize
B. L. Conflict No. 8 (N) Psu- 1 15357, Kawit, Cavite. the entire area comprised in his Survey Psu-115357 for fishery purposes and has filed therefor with the
Bureau of Fisheries fishpond permit application No. 5114. Upon this claim he contests the revocable
permit (new) application and the foreshore lease (new) application for the portion O these mm marked
"X" in the sketch which were filed by Antonio Lusin in 1942 and 1945, respectively, for salt-producing
purposes.
Manila, Philippines, February 1, 1951.
Lot No. 986 of the Kawit Cadastre, mentioned above as owned by Julian Santolan, a to be bounded on the
north by the Bacoor Bay. It is evident therefore that the areas now in Santolan's Survey Psu-115357, were
formerly parts of the bay, and that presently they exist as a result of the of the waters of the sea.
Investigation disclosed that these areas are now foreshore lands, covered and uncovered by the flow
and ebb of the tides. Santolan was found to have entered the areas first and made dikes Lusin was found
to have entered lately and made does also. None of them, however, has obtained from this Office any
permit of occupancy and use, and their applications are not yet approved.
On the basis alone of actual occupancy or introduction of improvements neither of the parties here may
claim preferential rights, for under the law and regulations, it is only such occupancy and introduction of
improvements as are made upon the authority of an official permit issued by this Office which could serve
as a reason for holding a sealed bidding in a public auction of the right to low at which the permittee is
given the preferred right to equal the highest bid that might be put by any other party. This is the rule
prescribed by Section 67 of Commonwealth Act No. 141 (the Public land Act)' It appears, however, that
the areas portions "A", "X" and the parts extending up to the Bar Bay now, as may be seen in the sketch,
which are comprised by Santolan's Survey Plan -Psu-115357, are immediately adjoining Lot No. 986,
which is his private property, and are extensions of the said lot to the sea. The areas, being foreshore
lands, are therefore subject to riparian fights which may be invoked by Santolan as owner of the upland in
accordance With Section 32 of lands Administrative Order No. 7-1 which provides the following:
Sec. 32. The owner of the property adjoining foreshore lands, marshy lands, or lands
covered with water bordering upon the shores or banks of navigable lakes or rivers,
shall be given preference to apply for such lands adjoining his property as may not
be needed for the public service, subject to the laws and regulations governing
lands of this nature, provided that he applies therefor within 60 days from the date
he receives a communication from the Director of Lands advising him of his
preferential right
As Julian Santolan is interested in utilizing the entire area covered by his Survey Psu- 1 15357 over which
he is fully entitled to exercise his riparian rights, the above-noted foreshore lease (new) application and
revocable (new) application of Antonio Lusin, both covering the portion marked "X" in the sketch, are
hereby rejected. The lease application of Santolan, shall be recorded as Foreshore Urn Application No. 562
and given due course for the whole area (including portion "A) shown in the said sketch.
SO ORDERED.
JOSE P. DANS
Director of Lands
ANNEX B
ORDER
Counsel for respondent Antonio Lusin has filed in due time a motion for the reconsideration of
our Order of February 1, 1951, which resolved this case in favor of contestant Julian Santolan,
praying that the said order be set aside and the case, reopened for purposes of a formal
hearing for the submission of evidence. Substantially stated, respondent Lusin claims that he is
entitled to preference because he has been in possession of the premises for a period of over
twenty years, placing stakes and planting aquatic trees for the raising and cultivation of shell
fish and sea shells, besides constructing dikes for pending fish and making salt beds, all
these works undertaken by him being the cause for the gradual filling of the area and its
conversion into a productive state. He contends that the areas under question had been
formed thru "artificial accretion" caused by his own labor and, consequently, he has the right
of pre-emption.
There is no question, however, that the areas under question are parts of the foreshore. Under
Section 61 of Commonwealth Act No. 141 (Public Land Act), they are disposable to private
parties by k only and not otherwise; and under Section 67 of the same Act, the lease shall be
made thru oral bidding, the adjudication to be made to the highest bidder.
There is no question also that the areas under question extend to the sea from lot No. 986 of
the Kawit Cadastre, which is actually owned by respondent Santolan under Original Certificate
of Title No. 6 of the land records of Cavite. Undoubtedly, respondent has riparian rights to the
foreshore in question which he can invoke against contestant Lusin under the provisions of
Section 32 of Lands Administrative Order No. 7-1, quoted in toto in the order sought to be
reconsidered.
Records show that the areas under question are also involved in the Fishpond Application No.
5114 of Julian Santolan with the Bureau of Fisheries which is also contested by Antonio. lt
appears that upon request of the Director of Fisheries to the Bureau of Forestry for
certification as to the availability of the areas for fishery purposes, the latter made
investigation, inquiring at the same time into the claim of Antonio Lusin, made formally in
writing, that he has improved the areas into a fishpond and has been in occupation thereof for
more than 20 years. The Bureau of Forestry made the findings that those areas are within the
disposable areas for agricultural purposes under the jurisdiction of the Bureau of Lands; and
that they are swampy lands, formerly under sea water of the Bacoor Bay, "and not an
improved fishpond as alleged by Antonio Lusin". These findings were transmitted to the
Director of Fisheries under first indorsement dated June 19, 1950.
Our own investigating officer, reporting on this case on January 25, 1951, stated the following:
"On December 15, 1950, when I conducted the first ocular inspection of the premises in the
presence of both parties, the only visible improvements found thereon are the newly-
constructed dikes made thereon by Julian Santolan, a few bacauan and ape-ape trees of about
two to three years old, bamboo stakes placed thereon at intervals, and a small old hut located
at almost the middle of the land in question. All these improvements were claimed to have
been introduced by Julian Santolan. Antonio Lusin, however, claimed that those bamboo
stakes found therein were his."
It is evident from the findings of both the inspecting officer of the Bureau of Forestry and our
own investigating officer that the areas under question are foreshore lands, and that they have
not been really improved and possessed by respondent Lusin for over twenty years as he
alleged. The improvements found therein have been recently made, and they are not of such
nature and extent as would have changed the character of the areas as foreshore. In fact,
according to the investigating officer, the areas have been seen by him on different occasions,
and he found that the same, as well as the neighboring areas in the same belt, were covered by
tidal waters of from 2 to 3 feet deep during ordinary rise of the tides, and uncovered by the
tides at ebb.
There is, therefore, no reason for changing our disposition in our order of February 1, 1951. It
is not necessary to re-open the case to receive evidence on respondent's allegation that he has
been in possession of the premises for over 20 years and has gradually improved them because,
aside from the fact that the allegation is belied by the physical condition of the premises,
whatever evidence may be gathered on that allegation could not change the nature of the
areas as foreshore, nor would it avoid the rights of contestant as riparian owner. The presence
of the respondent in the premises has not been authorize by competent authorities, and his
introduction of improvements thereon was not done with proper permit of temporary
occupancy and -use such as is prescribed in our administrative practice. The circumstances
under which he made improvements cannot justify his claim for a preferred right under Section
67 of the Public Land Act; on the contrary, he stands to forfeit the improvements to the
Government for, as reported by our investigating officer, he entered the Premises and
commenced making the improvements after contestant Santolan himself has already made
improvements, and after he has been warned on December 15, 1950 by the investigating
officer not to continue working, which warning was confirmed by us in our letter to him of
January 12, 1951. His bad faith is quite evident, and he cannot avail of his presence in the
premises now to demand the issuance to him of a provisional or revocable permit of
temporary occupancy and use under our rules and regulations in order to legal his entry and
give validity to his improvements. The right to demand issuance of such a permit is
concomittant to the right of contestant Santolan to be a preferred applicant by virtue of his
riparian right recognized in Section 32 of Lands Administrative Order No. 7-1 cited hereinabove.
IN VIEW HEREOF, the instant motion for reconsideration and reinvestigation of respondent
Antonio Lusin is hereby denied, and he shall vacate the premises within 60 days from receipt of
notice hereof.
SO ORDERED.
Manila, Philippines, October 19, 1951.
JOSE P. DANS
Director of Lands
ANNEX C
DECISION
The order of the Director of Lands dated February 1, 1951, rejected Foreshore Lease Application (New)
and Revocable Permit Application (New) of Antonio Lusin and gave due course to the Foreshore Lease
Application No. 562 of Julian Santolan. Antonio Lusin claims that the order is against the fact and the law.
He presented three (3) motions for reconsideration: one on October 19, 1951; the other on December 12,
1951; and the last on April 9, 1952. Said motions were all denied. Hence, the present appeal. The subject
of contention is the strip of land having an area of 41/2 hectares from Lot No. 986 of the Kawit Cadastre
No. 203 to the waters of Bacoor Bay. Lot No. 986 is covered by I Certificate of Title No. 6 issued to Julian
Santolan on June 9, 1937. Santolan's titled property is bounded on the north by Bacoor Bay.
On December 5, 1942, Santolan filed his foreclosure km application for the entire tract entervening
between his property and Bacoor Bay. So he caused Psu- 115357 to be executed and same was approved
in 1944 by the Director of Lands.
On November 26, 1945, Antonio Lusin applied for permit for an area of 4.5 for salt bed purposes. The area
for which permit was asked is by his F.L.A. (New) filed on November 17, 1945, the boundaries of which are
as follows:
NE V. del Rosario and E. del Rosario
SE Julian Santolan
SW Ankaw River
NW Bacoor Bay
The two applications of Santolan and Lusin cover the same area. Julian Santolan duly protested in 1946
against Lusin's application. The question to be decided in this appeal is: Which of the two applicants,
Julian Santolan or Antonio Lusin, has right of preference to the land in controversy?
By virtue of the fact that he is a riparian owner, Julian Santolan has the right of preference pursuant to the
provisions of Section 32 Of Administrative Order No. 7-1, which reads as follows:
Sec. 32. The owner of the property adjoining foreshore lands, marshy lands, or
hinds covered with water bordering upon the shores or banks of navigable lakes or
rivers, shall be given preference to apply for such lands adjoining his property as
may not be needed for the public service, subject in the laws and regulations
governing lands of this nature, provided that he applies therefor within sixty (60)
days from the date he receives communication from the Director of Lands advising
him of his preferential right.
It is true that appellant Lusin introduced improvements on the in question, but that fact does not give him
preferential right , not only because he had not acquired any permit from the Bureau of Lands before
doing so, but also because his entry on the was duly protested by Santolan.
IN VIEW OF ALL THE FOREGOING, and finding that the order of the Director of lands on Feb. 1, 1951, is in
accordance with the facts of record and the provisions of the law on the matter, the herein appeal from
said order should be, as hereby it is, dismissed.
SO ORDERED.
Manila, Philippines, October 13, 1952.
JOSE S. CAMUS
Acting Secretary of Agriculture
and Natural Resources
ANNEX D
ORDER
This is a motion filed by Antonio Lusin, thru counsel, for the reconsideration of the decision of this Office
dated October 13, 1952, dismissing his appeal from the decision of the Director of Lands under date of
February 1, 1951.
In support of the said motion for reconsideration, Lusin substantially alleges that he has been improving
the land in question since 1920, spending for such improvements no more than P20,000.00, and for that
reason, he should be given the preferential right to acquire the said land. To reinforce his allegation,
movant cites the case of Rosalia Vida Vda. de Tirona vs. Magdaleno Tragico, CA G.R. No. 9050, decided by
the Court of Appeals on June 30, 1943, wherein it was held that because Tragico has constructed fishpond
on a portion of the land in question by means of the improvements he has introduced thereon and has
possessed the land for sufficient time to acquire the land by right of prescription, he was awarded the
land in dispute.
We have found this allegation of movant to be far from the truth. lt is the finding of the investigating
officer who made an investigation of this case that it is Julian Santolan and not movant Lusin who has
been actually occupying the land in question and introducing improvements thereon. The pertinent
portion of his M reads as follows:
On December 16, 1950,, when I conducted the first ocular inspection of the
premises in the presence of both parties, the only visible improvements found
thereon were the newly constructed dikes made thereon by Julius Santolan, a few
bacauan and ape-ape trees of about two to three years old, bamboo stakes placed
thereon at intervals and a small old hut located at almost the middle of the land in
question. All these improvements were claimed to have been introduced thereon
by Julian Santolan. Antonio Lusin, however, claimed that the bamboo stakes found
thereon were his.
Moreover, according to the further finding of the said investigating officer, the WW in question fails under
the category of foreshore land. That portion of his report referring to this finding is hereby quoted as
follows:
It may not be amiss to state in this connection that I have. or different occassions,
the opportunity to inspect the land subject hereof on both high and low tides.
During ordinary low tide, the whole area. and further seaward, is entirely ex to the
surface while during ordinary high tide, it is wholly covered with tidal water with an
approximate depth of two to three feet. The land in question in its entirety is
marshy covered and uncovered by the ebb and flow of tidal water.
Manila, Philippines, February 28,1953.
FERNANDO LOPEZ
Secretary of Agriculture and
Natural Resources
ANNEX E
ORDER
On October 13, 1952, the Office a in connection with the above-case can, the dispositive portion of which
reads as follows:
In view of all the foregoing and that the order of the Director of Lands on February 1,
1961, is in with the facts of record and the provisions of law on the matter the
herein appeal from the said order should be, as hereby it is dismissed.
From the said decision Antonio Lusin filed a motion for reconsideration which was denied as per order of
this Office dated February 28, 1953. Still not satisfied with the aforementioned order, Lusin again filed a
second notion for reconsideration predicating his motion on the following grounds:

1. That he (Lusin) is in actual ion of the land in question since 1920;

As the land is a foreshore land, the same is susceptible to the riparian right of the owner of the adjoining
land. According to Section 32 of Lands Administrative Order No. 7-1, the owner of the property adjoining
foreshore land, shall be given preference to apply for such land adjoining his property as may not be 2. That said area is an agricultural land actually devoted to fishpond and, therefore, is not a foreshore land;
needed for the public service. Inasmuch as the land in question adjoins Lot No. 980, Kawit Cadastre, which
is a private property of Julian Santolan, said Julian Santolan shall have the preference right to apply 3. That even granting without admitting that Santolan is a riparian owner, Santolan had lost his riparian
therefor over and above any other applicant. It may be mentioned, in this connection, that the said case right thereto in view of the continuous ion by Lusin of the area since 1920; and
of Rosalia Vida Vda. de Tirona vs. Magdaleno Tragicowho had and improved the land claimed by him, it is
Santolan and riot movant Lusin who has been actually occupying and improving the land subject of the
present controversy. 4. That in the investigation relied upon by the Director of Lands in his decision and confirmed by this
Office, the movant herein was not given opportunity to be heard because the said investigation was never
completed, and as a result, the conclusions of the investigator thereat were one sided
WHEREFORE, the instant motion for reconsideration filed by Antonio Lusin, as well as his request for
reinvestigation of this case, should be, as hereby it is, denied.

SO ORDERED.
Adhering to its Policy of giving party litigants the outmost opportunity to present their respective sides of
the case, this Office ordered a reinvestigation of the case to determine whether or not the allegations of
Antonio Lusin are true.
From the said reinvestigation, the facts of this case may be stated as follows:
The disputed area is a strip of land containing an approximate area of 4-1/2 hectares located at the Barrio
of Kaingin, Municipality of Kawit, Province of Cavite- lt is bounded on the North by Bacoor Bay, on the East
by the property occupied by Vicente del Rosario and E. del Rosario, on the South by Lot No. 896 of Kawit
Cadastre No. 203; and on the West by Ankaw River. Lot 986, mentioned above as the boundary of the
area in question on the South, is owned and possessed by Julian Santolan, his ownership thereof being
evidenced by a free patent grant with Original Certificate of Title No. 6 issued on June 9, 1937. The only
issue to be resolved in this case is whether or not Julian Santolan, as riparian owner, is entitled to the
preference provided for in Section 32, Lands Administrative Order No. 7-1, which reads as follows:
32. Preference of Riparian Owner. The owner of the property adjoining foreshore
lands, marshy lands, or lands covered with water bordering upon the shores or
banks of navigable lakes or rivers, shall be given preference to apply or such lands
adjoining his property as may not be needed for the public service, subject to the
laws and regulations governing Ian of this nature, provided that he applies therefor
within sixty (60) days from the date he receives a communication from the Director
of Lands advising him of his preferential right.
During the reinvestigation of this case by a representative of this Office, it was disclosed that Antonio
Lusin is the actual occupant of the area in question - his present possession thereof dating back as of 1951.
During his occupation, Lusin has introduced considerable improvements in the area investing his fife sa
therein. Today, a portion of approximately two hectares of the said area is a complete fishpond
surrounded with dikes. A concrete gate was constructed on the western side of the fishpond in 1951.
Water breakers were constructed around the dikes to protect them from the action of the waves. The
remaining portion of the area in question is fenced with bamboo stakes.
On the other hand, it is apparent that the area in question is an extension of Lot 986 to the sea and that
its present existence is the result of the continuous recession of the water of the sea. There is no doubt
that the area in question is a foreshore, it being situated along the shore lying between medium high and
low water marks and is covered and uncovered by the flow and ebb of ordinary tide.
Both Parties claim prior ion of the disputed area, Santolan's claim dating way back in 1907, the year he
claims said area was donated to him by his father-in-law while Lusin alleges that he was already in
possession of the same since 1920. The evidence presented by both parties during the reinvestigation
were so diametrically opposed with each other that they only create doubts as to the veracity of the
respective claims of said parties. From the testimonies of witnesses for both sides, there could be
gathered sufficient grounds to believe that prior to 1942, neither Party Possessed the area to the
exclusion of the other. Rather, there are good reasons to believe that both parties fished in the premises
jointly and/or simultaneously without claiming the property exclusively for themselves because then the
area was covered with water which at that time was still deep. It was only in 1942 that Julian Santolan
took positive step to claim the property by filing a foreshore lease and a revocable permit application for
said area with the intention of converting the same into a fishpond. Santolan caused said area to be
surveyed in 1942, the survey plan was approved in 1944 as may be seen in survey Plan Psu- 115357 of the
Bureau of Lands. Since 1942, Santolan exercised dominion over the property although Lusin occasionally
entered the premises with a similar intention of claiming the area for himself. In January of 1951 Lusin
entered the area in question and wrested the n thereof from Santolan. Since then up to the present, Lusin
is in continuous possession of the same notwithstanding the vigorous opposition of Santolan.
Lusin alleges that the area in question does not fall within the purview of the above quoted Section 32 of
Lands Administrative Order No. 7-1 on the theory that the lands enumerated in said provision, whether
foreshore lands, marshy lands, or lands covered with water, must be bordering upon the shores or banks
of navigable lakes or rivers. And it is argued that the area in question is bordering the shores of Manila Bay,
which is neither a lake nor a river, the owner of the adjoining property is not en to the preferential right
accorded by said Lands Administrative Order.
We cannot agree with this contention. This Office is of the opinion and so holds that the said provision of
Lands Administrative Order No. 7-1, Section 32 speaks of the following kinds of lands, distinct and
separate from one another:
(1) Foreshore lands
(2) Marshy lands, or
(3) Land covered with water bordering upon the shores of navigable lakes or rivers.
The phrase "bordering upon the shores of navigable lakes or river" in said provision modifies only the
third classification, that is, "lands covered with water", for if the law that said phrase should modify the
three types of land enumerated are then the punctuation mark, comma, should not have been placed
before the alternative "or" but instead between the words "water" and "bordering" making said provision improvements now existing in the area as may be appraised by the Committee on Appraisal of the Bureau
to appear as follows: of Lands.

The owner of the property adjoining foreshore ands marshy lands or lands covered WHEREFORE, the above-noted foreshore lease (New) application and revocable permit (New) application
with water, bordering upon the shores or banks of navigable lakes or rivers ... . of Antonio Lusin should remain, as hereby it is, REJECTED; and Foreshore Lease Application No. V-65 of
Julian Santolan given due course, PROVIDED, he reimburses Antonio Lusin of the appraised value of the
improvements now existing in the area within sixty (60) days after notification of said appraisal.
The use of the alternative "or" instead of the conjunction "and" shows the intention of the law in
segregating foreshore lands from marshy lands and those two from lands covered with water bordering
upon shores of navigable lakes or rivers. The Director of Lands is hereby directed to instruct the Committee on Appraisal concerned to make the
necessary appraisal of the value of the improvements now existing in the area in question within thirty (30)
days from receipt of this order and to notify Julian Santolan of the result of said appraisal.
It is also alleged that even granting that Santolan was the preferential rights accorded to a riparian owner,
said right has prescribed on the ground that Lusin has been in continuous ion of the said area since 1920.
This allegation was not duly proven during the reinvestigation. While Lusin claims ion of the disputed area In the event that Julian Santolan fails to reimburse Antonio Lusin of the appraisal value of the said
since 1920, on the other hand. Santolan claims that he possessed the same since 1907 when it was improvements within the period specified in this order, he shall lose his preferential rights over the area
donated to him by his father-in-law. As we have- already stated, it is the - finding of this Office that prior and Antonio Lusin will be allowed to file an appropriate public land application therefor.
to 1942, neither party the premises exclusively. It was only in 1942 when Santolan took positive steps to
claim the area for himself. There are even evidence on record that Santolan paid the land taxes for the
SO ORDERED.
area in 1936. In 1951, Lusin effected his entry to the area up to the present. It may be recalled, however,
that these actuations of Lusin had been the subject of a criminal complaint filed by Santolan before the
Justice of the Peace Court of Kawit, Cavite, wherein Lusin was acquitted on the ground that his guilt was Manila, Philippines, December 14, 1954.
not proven beyond reasonable doubt.

Needless to say, proof beyond reasonable doubt is absolutely necessary before conviction in criminal
cases could be had. On the other hand, preponderance of evidence is sufficient to prove a matter of fact
in civil and/or administrative cases. The preponderance of evidence adduced at the reinvestigation of this
case conducted by a representative of this Office, shows that the present occupation of Lusin of the area
in question was effected by force, although there are good reasons to believe that such force was
employed by Lusin to assert what he believed was his right over the property in question.

From the foregoing facts and circumstances, it is therefore, apparent that the area in question is a
foreshore land, and Santolan, being the riparian owner, is entitled to the preferential rights accorded by
the provision of Section 32 of Lands Administrative Order No. 7-1. Considering, however, the fact that
during the reinvestigation of this case, it was disclosed that Antonio Lusin had introduced considerable
improvements in the premises and had invested his life savings therefor, and considering further that if
Santolan were the one who converted the area into a fishpond, as he intends to do, he would have
incurred the same expenses as was incurred by Lusin in the premises in question, it is the belief of this
Office that justice would be fully served if Santolan be required to reimburse Lusin of the value of the
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-39473 April 30, 1979
REPUBLIC OF THE PHILIPPINES, petitioner,
vs.
HON. COURT OF APPEALS and ISABEL LASTIMADO, respondents.
Eduardo G. Makalintal for private respondent.
MELENCIO-HERRERA, J.:
This is a Petition for Review (Appeal) by certiorari filed by the Republic of the Philippines from the
Decision of the Court of Appeals promulgated on September 30, 1974 in CA-G.R. No. Sp-01504 denying
the State's Petition for certiorari and Mandamus.
Briefly, the facts of the case are as follows:
Private respondent, Isabel Lastimado, filed on September 11, 1967, in the Court of First Instance of Bataan,
Branch I, a Petition for the reopening of cadastral proceedings over a portion of Lot No. 626 of the
Mariveles Cadastre, consisting of 971.0569 hectares, pursuant to Republic Act No. 931, as amended by
Republic Act No. 2061, docketed as Cad. Case No. 19, LRC Cad. Rec. No. 1097. In the absence of any
opposition, whether from the Government or from private individuals, private respondent was allowed to
present her evidence ex-parte. On October 14, 1967, the trial Court rendered a Decision granting the
Petition and adjudicating the land in favor of private respondent. The trial Court issued an order for the
issuance of a decree of registration on November 20, 1967, and on November 21, 1967, the Land
Registration Commission issued Decree No. N-117573 in favor of private respondent. Eventually, Original
Certificate of Title No. N-144 was also issued in her favor. Private respondent thereafter subdivided the
land into ten lots, and the corresponding titles. Transfer Certificates of Title Nos. 18905 to 18914 inclusive,
were issued by the Register of Deeds.
On June 3, 1968, or within one year from the entry of the decree of registration, petitioner filed a Petition
for Review pursuant to Sec. 38, Act No. 496, on the ground of fraud alleging that during the period of
alleged adverse possession by private respondent, said parcel of land was part of the U.S. Military
Reservation in Bataan. which was formally turned over to the Republic of the Philippines only on
December 22, 1965, and that the same is inside the public forest of Mariveles, Bataan and, therefore, not
subject to disposition or acquisition under the Public Land Law. Respondent field an Opposition thereto,
which was considered by the trial Court, as a Motion to Dismiss, and on December 20,1968, said Court
(Judge Tito V. Tizon, presiding) issued an Order dismissing the Petition for Review mainly on the ground
that the Solicitor General had failed to file opposition to the original Petition for reopening of the
cadastral proceedings and was, therefore, estopped from questioning the decree of registration ordered
issued therein. On January 28, 1969, petitioner moved for reconsideration, which was denied by the trial
Court in its Order dated May 20, 1969, for lack of merit.
Petitioner seasonably filed a Notice of Appeal and a Record on Appeal, which was objected to by private
respondent. On July 15, 1972, or three years later, * the trial Court (Judge Abraham P. Vera, presiding)
refused to give due course to the appeal. Petitioner filed a Motion for Reconsideration but the trial Court
denied it in its Order of October 14, 1972 on the ground that the proper remedy of petitioner was a
certiorari petition, not an ordinary appeal, and that the Order sought to be appealed from had long
become final and executory as petitioner's Motion for Reconsideration was pro-forma and did not
suspend the running of the reglementary period of appeal.
On November 9, 1972, petitioner filed a Petition for certiorari and mandamus with the Court of Appeals
claiming that the trial Court gravely abused its discretion, amounting to lack of jurisdiction when, without
the benefit of hearing, it summarily dismissed the Petition for Review; and since said Petition raised
certain issues of fact which cannot be decided except in a trial on the merits, the dismissal of the Petition
on the basis of private respondent's Opposition, considered as a Motion to Dismiss, constituted a denial of
due process of law. Petitioner then prayed that the Order of the trial Court, dated December 20, 1968
dismissing the Petition for Review, be declared null and void, and that said trial Court be directed to give
due course to the Petition for Review; or, in the alternative, to give due course to petitioner's appeal.
On September 30, 1974, the Court of Appeals upheld the trial Court's dismissal of the Petition for Review
stating:
 ... We cannot find any allegation in the petition for review which shows that private
respondent had committed fraud against petitioner. Its representations and officials
were duly notified of private respondent's petition for reopening and registration of
title in her name. In said petition, the technical descriptions of the portion of Lot No.
626 of the Mariveles (Bataan) Cadastre, subject-matter of the petition were
expressly stated, the boundaries, specifically delineated. The alleged ground that
the land forms part of a forest land exists at the time petitioner was duly notified of
said petition. Failure to file opposition is in effect, an admission that the petition is
actually not part of a forest land. Indubitably, therefore, no justifiable reason exists
for the annulment of the Order, dated December 20, 1968 (Annex D-Petition) of the
lower court dismissing herein petitioner's petition for review of the decree issued in
favor of private respondent Lastimado. 1
The Court of Appeals then disposed as follows:
WHEREFORE, finding that the respondent Judge has not committed any grave abuse
of discretion amounting to lack of jurisdiction in the issuance of an Order, dated
December 20, 1968 (Annex D-Petition) dismissing herein petitioner's petition for
review, the present petition for review is hereby denied.
The issuance of the writ of mandamus as prayed for in the petition is no longer
necessary as this Court, in the exercise of its appellate jurisdiction and authority to
supervise orderly administration of justice, has already resolved on the merits the
question whether or not the dismissal of the petition for review had been done with
grave abuse of discretion amounting to lack of jurisdiction. 2
From this Decision, petitioner filed the present Petition for Review (Appeal) by certiorari assigning the
following errors to the Court of Appeals and to the trial Court:
1. The Lower Court as well as the Court of Appeals erred in finding that there can be
possession, even for the purpose of claiming title, of land which at the time of
possession is subject to a military reservation.
2. The Lower Court as well as the Court of Appeals erred in finding that such land
which is subject to a government reservation, may appropriately be the subject of
cadastral proceedings, and hence. also of a petition to reopen cadastral proceedings.
3. The Lower Court as well as the Court of Appeals erred in finding that a parcel of
land which is part of the public forest is susceptible of occupation and registration in
favor of private individual.
4. The Lower Court as well as the Court of Appeals erred in not finding that the
Republic of the Philippines is not estopped from questioning the decree of
registration and the title issued pursuant thereto in favor of respondent Lastimado
over the parcel of land in question.
5. The Lower Court erred in dismissing the petition for review of the Republic of the
Philippines.
6. The Court of Appeals erred in denying Petitioner's petition for certiorari and
mandamus.
Section 38 of the Land Registration Act (Act 496) provides:
Section 38. Decree of registration, and remedies after entry of decree.
If the court after hearing finds that the applicant or adverse claimant has title as
stated in his application or adverse claim and proper for registration, a decree of
confirmation and registration shall be entered. Every decree of registration shall
bind the land, and quiet title thereto. subject only to the exceptions stated in the
following section. It shall be conclusive upon and against all persons, including the
Insular Government and all the branches thereof, whether mentioned by name in
the application, notice of citation, or included in the general description "To all
whom it may concern". Such decree shall not be opened by reason of the absence,
infancy, or other disability of any person affect thereby, nor by any proceeding in
any court for reversing judgments or decrees; subject, however, to the right of any
person deprived of land or of any estate or interest therein by decree of registration
obtained by fraud to file in the 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. ... 3
The essential elements for the allowance of the reopening or review of a decree are: a) that the petitioner
has a real and dominical right; b) that he has been deprived thereof; c) through fraud; d) that the petition
is filed within one year from the issuance of the decree; and e) that the property has not as yet been or justify the neglect." With the foregoing as the essential basis, the trial Court dismissed the Petition for
transferred to an innocent purchaser. 4 Review.

However, for fraud to justify the review of a decree, it must be extrinsic or collateral and the facts upon
which it is based have not been controverted or resolved in the case where the judgment sought to be
annulled was rendered. 5 The following ruling spells out the difference between extrinsic and intrinsic
fraud:
Extrinsic or collateral fraud, as distinguished from intrinsic fraud, connotes any
fraudulent scheme executed by a prevailing litigant "outside the trial of a case
against the defeated party, or his agents, attorneys or witnesses, whereby said
defeated party is prevented from presenting fully and fairly his side of the case." But
intrinsic fraud takes the form of "acts of a party in a litigation during the trial such as
the use of forged instruments or perjured testimony, which did not affect the
present action of the case, but did prevent a fair and just determination of the
case. 6
The fraud is one that affects and goes into the jurisdiction of the Court. 7
We find reversible error. Although there was an agreement by the parties to submit for resolution the
Opposition to the Petition for Review, which was treated as a motion to dismiss, the trial Court, in the
exercise of sound judicial discretion, should not have dismissed the Petition outright but should have
afforded petitioner an opportunity to present evidence in support of the facts alleged to constitute actual
and extrinsic fraud committed by private respondent. Thus, in the case of Republic vs. Sioson, et al., 8 it
was held that "the action of the lower Court in denying the petition for review of a decree of registration
filed within one year from entry of the d without hearing the evidence in support of the allegation and
claim that actual and extrinsic fraud upon which the petition is predicated, is held to be in error, because
the lower Court should have afforded the petitioner an opportunity to prove it."
If the allegation of petitioner that the land in question was inside the military reservation at the time it
was claimed is true, then, it cannot be the object of any cadastral p nor can it be the object of reopening
under Republic Act No. 931. 9 Similarly, if the land in question, indeed forms part of the public forest, then,
possession thereof, however long, cannot convert it into private property as it is within the exclusive
jurisdiction of the Bureau of Forestry and beyond the power and jurisdiction of the Cadastral Court to
register under the Torrens System. 10

In its Petition for Review filed before the trial Court, petitioner alleged that fraud was committed by
Even assuming that the government agencies can be faulted for inaction and neglect (although the
private respondent when she misrepresented that she and her predecessors-in-interest had been in
Solicitor General claims that it received no notice), yet, the same cannot operate to bar action by the State
possession of the land publicly, peacefully, exclusively and adversely against the whole world as owner for
as it cannot be estopped by the mistake or error of its officials or agents. 11 Further, we cannot lose sight
more than forty years when, in fact, the subject land was in. side the former U.S. Military Reservation,
of the cardinal consideration that "the State as persona in law is the juridical entity, which is the source of
which was formally turned over to the Republic of the Philippines only on December 22, 1965, and that
any asserted right to ownership in land" under basic Constitutional Precepts, and that it is moreover
she likewise contended that her rights, as derived from the original and primitive occupants of the land in
charged with the conservation of such patrimony. 12
question, are capable of judicial confirmation under existing laws, when the truth is, said parcel of land is
within the public forest of Mariveles, Bataan, and is not subject to disposition or acquisition by private
persons under the Public Land Law. WHEREFORE, the Decision of the Court of Appeals dated September 30, 1974, dismissing the Petition for
certiorari and mandamus filed before it, as well as the Order of the Court of First Instance of Bataan
(Branch I) dated December 20, 1968, dismissing the Petition for Review, are hereby set aside and the
The trial Court ruled, and was upheld by the Court of Appeals, that no fraud was committed by private
records of this case hereby ed to the latter Court for further proceedings to enable petitioner to present
respondent, which deprived petitioner of its day in Court as there was no showing that she was aware of
evidence in support of its Petition for Review.
the facts alleged by the Government, so that she could not have suppressed them with intent to deceive.
The trial Court also noted that petitioner had failed to file an opposition to the reopening of the cadastral
proceedings despite notices sent not only to the Solicitor General as required by Republic Act No. 931. but No pronouncement as to costs.
to the Bureau of Lands and the Bureau of Forestry as well. It then concluded that "the remedy granted by
section 38 of the Land Registration Act is designed to give relief to victims of fraud, not to those who are
SO ORDERED.Teehankee (Chairman), Fernandez, Guerrero and De Castro, JJ., concur.Makasiar, J., took no
victims of their own neglect, inaction or carelessness, especially when no attempt is ever made to excuse
part.
EN BANC
[G.R. No. 133250. July 9, 2002]
FRANCISCO I. CHAVEZ, petitioner, vs. PUBLIC ESTATES AUTHORITY and AMARI COASTAL BAY
DEVELOPMENT CORPORATION, respondents.
DECISION
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 PEAs then on-going renegotiations with Amari Coastal Bay and Development
Corporation (AMARI for brevity) to reclaim portions of Manila Bay. The petition further seeks to enjoin
PEA from signing a new agreement with AMARI involving such reclamation.
The Facts
On November 20, 1973, the government, through the Commissioner of Public Highways, signed a
contract with the Construction and Development Corporation of the Philippines (CDCP for brevity) to
reclaim certain foreshore and offshore areas of Manila Bay. The contract also included the construction of
Phases I and II of the Manila-Cavite Coastal Road. CDCP obligated itself to carry out all the works in
consideration of fifty percent of the total reclaimed land.
On February 4, 1977, then President Ferdinand E. Marcos issued Presidential Decree No. 1084
creating PEA. PD No. 1084 tasked PEA to reclaim land, including foreshore and submerged areas, and to
develop, improve, acquire, x x x lease and sell any and all kinds of lands.[1] On the same date, then
President Marcos issued Presidential Decree No. 1085 transferring to PEA the lands reclaimed in the
foreshore and offshore of the Manila Bay[2] under the Manila-Cavite Coastal Road and Reclamation Project
(MCCRRP).
On December 29, 1981, then President Marcos issued a memorandum directing PEA to amend its
contract with CDCP, so that [A]ll future works in MCCRRP x x x shall be funded and owned by
PEA. Accordingly, PEA and CDCP executed a Memorandum of Agreement dated December 29, 1981,
which stated:
(i) CDCP shall undertake all reclamation, construction, and such other works in the MCCRRP as may be
agreed upon by the parties, to be paid according to progress of works on a unit price/lump sum basis for
items of work to be agreed upon, subject to price escalation, retention and other terms and conditions
provided for in Presidential Decree No. 1594. All the financing required for such works shall be provided
by PEA.
xxx
(iii) x x x CDCP shall give up all its development rights and hereby agrees to cede and transfer in favor of
PEA, all of the rights, title, interest and participation of CDCP in and to all the areas of land reclaimed by
CDCP in the MCCRRP as of December 30, 1981 which have not yet been sold, transferred or otherwise
disposed of by CDCP as of said date, which areas consist of approximately Ninety-Nine Thousand Four
Hundred Seventy Three (99,473) square meters in the Financial Center Area covered by land pledge No. 5
and approximately Three Million Three Hundred Eighty Two Thousand Eight Hundred Eighty Eight
(3,382,888) square meters of reclaimed areas at varying elevations above Mean Low Water Level located
outside the Financial Center Area and the First Neighborhood Unit.[3]
On January 19, 1988, then President Corazon C. Aquino issued Special Patent No. 3517, granting
and transferring to PEA the parcels of land so reclaimed under the Manila-Cavite Coastal Road and
Reclamation Project (MCCRRP) containing a total area of one million nine hundred fifteen thousand eight
hundred ninety four (1,915,894) square meters. Subsequently, on April 9, 1988, the Register of Deeds of
the Municipality of Paraaque issued Transfer Certificates of Title Nos. 7309, 7311, and 7312, in the name
of PEA, covering the three reclaimed islands known as the Freedom Islands located at the southern
portion of the Manila-Cavite Coastal Road, Paraaque City. The Freedom Islands have a total land area of
One Million Five Hundred Seventy Eight Thousand Four Hundred and Forty One (1,578,441) square meters
or 157.841 hectares.
On April 25, 1995, PEA entered into a Joint Venture Agreement (JVA for brevity) with AMARI, a
private corporation, to develop the Freedom Islands. The JVA also required the reclamation of an
additional 250 hectares of submerged areas surrounding these islands to complete the configuration in
the Master Development Plan of the Southern Reclamation Project-MCCRRP. PEA and AMARI entered into
the JVA through negotiation without public bidding.[4] On April 28, 1995, the Board of Directors of PEA, in
its Resolution No. 1245, confirmed the JVA. [5] On June 8, 1995, then President Fidel V. Ramos, through
then Executive Secretary Ruben Torres, approved the JVA.[6]
 On November 29, 1996, then Senate President Ernesto Maceda delivered a privilege speech in the
Senate and denounced the JVA as the grandmother of all scams. As a result, the Senate Committee on
Government Corporations and Public Enterprises, and the Committee on Accountability of Public Officers
and Investigations, conducted a joint investigation. The Senate Committees reported the results of their
investigation in Senate Committee Report No. 560 dated September 16, 1997.[7] Among the conclusions of
their report are: (1) the reclaimed lands PEA seeks to transfer to AMARI under the JVA are lands of the
public domain which the government has not classified as alienable lands and therefore PEA cannot
alienate these lands; (2) the certificates of title covering the Freedom Islands are thus void, and (3) the JVA
itself is illegal.
On December 5, 1997, then President Fidel V. Ramos issued Presidential Administrative Order No.
365 creating a Legal Task Force to conduct a study on the legality of the JVA in view of Senate Committee
Report No. 560. The members of the Legal Task Force were the Secretary of Justice,[8] the Chief
Presidential Legal Counsel,[9] and the Government Corporate Counsel.[10] The Legal Task Force upheld the
legality of the JVA, contrary to the conclusions reached by the Senate Committees.[11]
On April 4 and 5, 1998, the Philippine Daily Inquirer and Today published reports that there were
on-going renegotiations between PEA and AMARI under an order issued by then President Fidel V.
Ramos. According to these reports, PEA Director Nestor Kalaw, PEA Chairman Arsenio Yulo and retired
Navy Officer Sergio Cruz composed the negotiating panel of PEA.
On April 13, 1998, Antonio M. Zulueta filed before the Court a Petition for Prohibition with
Application for the Issuance of a Temporary Restraining Order and Preliminary Injunction docketed as G.R.
No. 132994 seeking to nullify the JVA. The Court dismissed the petition for unwarranted disregard of
judicial hierarchy, without prejudice to the refiling of the case before the proper court.[12]
On April 27, 1998, petitioner Frank I. Chavez (Petitioner for brevity) as a taxpayer, filed the
instant Petition for Mandamus with Prayer for the Issuance of a Writ of Preliminary Injunction and
Temporary Restraining Order. Petitioner contends the government stands to lose billions of pesos in the
sale by PEA of the reclaimed lands to AMARI. Petitioner prays that PEA publicly disclose the terms of any
renegotiation of the JVA, invoking Section 28, Article II, and Section 7, Article III, of the 1987 Constitution
on the right of the people to information on matters of public concern. Petitioner assails the sale to
AMARI of lands of the public domain as a blatant violation of Section 3, Article XII of the 1987 Constitution
prohibiting the sale of alienable lands of the public domain to private corporations. Finally, petitioner
asserts that he seeks to enjoin the loss of billions of pesos in properties of the State that are of public
dominion.
After several motions for extension of time,[13] PEA and AMARI filed their Comments on October 19,
1998 and June 25, 1998, respectively. Meanwhile, on December 28, 1998, petitioner filed an Omnibus
Motion: (a) to require PEA to submit the terms of the renegotiated PEA-AMARI contract; (b) for issuance
of a temporary restraining order; and (c) to set the case for hearing on oral argument. Petitioner filed a
Reiterative Motion for Issuance of a TRO dated May 26, 1999, which the Court denied in a Resolution
dated June 22, 1999.
In a Resolution dated March 23, 1999, the Court gave due course to the petition and required the
parties to file their respective memoranda.
On March 30, 1999, PEA and AMARI signed the Amended Joint Venture Agreement (Amended JVA,
for brevity). On May 28, 1999, the Office of the President under the administration of then President
Joseph E. Estrada approved the Amended JVA.
Due to the approval of the Amended JVA by the Office of the President, petitioner now prays that
on constitutional and statutory grounds the renegotiated contract be declared null and void.[14]
The Issues
The issues raised by petitioner, PEA[15] and AMARI[16] 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 Courts 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 petitioners prayer for a public disclosure of the
renegotiations. Likewise, petitioners 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. Petitioners 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 titles[19] under Title II of Commonwealth Act. 141 (CA No. 141 for
brevity). In the instant case, AMARI seeks to acquire from PEA, a public corporation, reclaimed lands and
submerged areas for non-agricultural purposes by purchase under PD No. 1084 (charter of PEA) and Title
III of CA No. 141. Certain undertakings by AMARI under the Amended JVA constitute the consideration for
the purchase. Neither AMARI nor PEA can claim judicial confirmation of their titles because the lands
covered by the Amended JVA are newly reclaimed or still to be reclaimed. Judicial confirmation of
imperfect title requires open, continuous, exclusive and notorious occupation of agricultural lands of the
public domain for at least thirty years since June 12, 1945 or earlier. Besides, the deadline for filing
applications for judicial confirmation of imperfect title expired on December 31, 1987.[20]
Lastly, there is a need to resolve immediately the constitutional issue raised in this petition because
of the possible transfer at any time by PEA to AMARI of title and ownership to portions of the reclaimed
lands. Under the Amended JVA, PEA is obligated to transfer to AMARI the latters 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 originaljurisdiction 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 petitioners direct resort to the
Court violates the principle of exhaustion of administrative remedies. It also violates the rule that
mandamus may issue only if there is no other plain, speedy and adequate remedy in the ordinary course
of law.
PEA distinguishes the instant case from Taada v. Tuvera[23] where the Court granted the petition
for mandamus even if the petitioners there did not initially demand from the Office of the President the
publication of the presidential decrees. PEA points out that in Taada, the Executive Department had
an affirmative statutory duty under Article 2 of the Civil Code[24] and Section 1 of Commonwealth Act No.
638[25] to publish the presidential decrees. There was, therefore, no need for the petitioners in Taada to
make an initial demand from the Office of the President. In the instant case, PEA claims it has no
affirmative statutory duty to disclose publicly information about its renegotiation of the JVA. Thus, PEA
asserts that the Court must apply the principle of exhaustion of administrative remedies to the instant
case in view of the failure of petitioner here to demand initially from PEA the needed information.
The original JVA sought to dispose to AMARI public lands held by PEA, a government
corporation. Under Section 79 of the Government Auditing Code,[26]2 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 taxpayers 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 taxpayers suit on matters of transcendental
importance to the public, thus -
Besides, petitioner emphasizes, the matter of recovering the ill-gotten wealth of the Marcoses is an issue
of transcendental importance to the public. He asserts that ordinary taxpayers have a right to initiate and
prosecute actions questioning the validity of acts or orders of government agencies or instrumentalities, if
the issues raised are of paramount public interest, and if they immediately affect the social, economic and
moral well being of the people.
Moreover, the mere fact that he is a citizen satisfies the requirement of personal interest, when the
proceeding involves the assertion of a public right, such as in this case. He invokes several decisions of this
Court which have set aside the procedural matter of locus standi, when the subject of the case involved
public interest.
xxx
In Taada v. Tuvera, the Court asserted that when the issue concerns a public right and the object of
mandamus is to obtain the enforcement of a public duty, the people are regarded as the real parties in
interest; and because it is sufficient that petitioner is a citizen and as such is interested in the execution of
the laws, he need not show that he has any legal or special interest in the result of the action. In the
aforesaid case, the petitioners sought to enforce their right to be informed on matters of public concern, a
right then recognized in Section 6, Article IV of the 1973 Constitution, in connection with the rule that
laws in order to be valid and enforceable must be published in the Official Gazette or otherwise effectively
promulgated. In ruling for the petitioners' legal standing, the Court declared that the right they sought to
be enforced is a public right recognized by no less than the fundamental law of the land.
Legaspi v. Civil Service Commission, while reiterating Taada, further declared that when a mandamus
proceeding involves the assertion of a public right, the requirement of personal interest is satisfied by the
mere fact that petitioner is a citizen and, therefore, part of the general 'public' which possesses the right.
Further, in Albano v. Reyes, we said that while expenditure of public funds may not have been involved
under the questioned contract for the development, management and operation of the Manila
International Container Terminal, public interest [was] definitely involved considering the important role
[of the subject contract] . . . in the economic development of the country and the magnitude of the
financial consideration involved. We concluded that, as a consequence, the disclosure provision in the
Constitution would constitute sufficient authority for upholding the petitioner's standing.
Similarly, the instant petition is anchored on the right of the people to information and access to official
records, documents and papers a right guaranteed under Section 7, Article III of the 1987 Constitution.
Petitioner, a former solicitor general, is a Filipino citizen. Because of the satisfaction of the two basic
requisites laid down by decisional law to sustain petitioner's legal standing, i.e. (1) the enforcement of a
public right (2) espoused by a Filipino citizen, we rule that the petition at bar should be allowed.
We rule that since the instant petition, brought by a citizen, involves the enforcement of
constitutional rights - to information and to the equitable diffusion of natural resources - matters of
transcendental public importance, the petitioner has the requisite locus standi.
Fifth issue: whether the constitutional right to information includes official information on on-going
negotiations before a final agreement.
Section 7, Article III of the Constitution explains the peoples 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 peoples
right to information on matters of public concern. This State policy is expressed in Section 28, Article II of
the Constitution, thus:
Sec. 28. Subject to reasonable conditions prescribed by law, the State adopts and implements a policy of
full public disclosure of all its transactions involving public interest. (Emphasis supplied)
These twin provisions of the Constitution seek to promote transparency in policy-making and in the
operations of the government, as well as provide the people sufficient information to exercise effectively
other constitutional rights. These twin provisions are essential to the exercise of freedom of expression. If
the government does not disclose its official acts, transactions and decisions to citizens, whatever citizens
say, even if expressed without any restraint, will be speculative and amount to nothing. These twin
provisions are also essential to hold public officials at all times x x x accountable to the people, [29] for
unless citizens have the proper information, they cannot hold public officials accountable for
anything. Armed with the right information, citizens can participate in public discussions leading to the
formulation of government policies and their effective implementation. An informed citizenry is essential
to the existence and proper functioning of any democracy. As explained by the Court in Valmonte v.
Belmonte, Jr.[30]
An essential element of these freedoms is to keep open a continuing dialogue or process of
communication between the government and the people. It is in the interest of the State that the
channels for free political discussion be maintained to the end that the government may perceive and be
responsive to the peoples 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 publics 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 AMARIs 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.
Requiring a consummated contract will keep the public in the dark until the contract, which may be
grossly disadvantageous to the government or even illegal, becomes a fait accompli.This negates the State
policy of full transparency on matters of public concern, a situation which the framers of the Constitution
could not have intended. Such a requirement will prevent the citizenry from participating in the public
discussion of any proposed contract, effectively truncating a basic right enshrined in the Bill of Rights. We
can allow neither an emasculation of a constitutional right, nor a retreat by the State of its avowed policy
of full disclosure of all its transactions involving public interest.
The right covers three categories of information which are matters of public concern, namely: (1)
official records; (2) documents and papers pertaining to official acts, transactions and decisions; and (3)
government research data used in formulating policies. The first category refers to any document that is
part of the public records in the custody of government agencies or officials. The second category refers
to documents and papers recording, evidencing, establishing, confirming, supporting, justifying or
explaining official acts, transactions or decisions of government agencies or officials. The third category
refers to research data, whether raw, collated or processed, owned by the government and used in
formulating government policies.
The information that petitioner may access on the renegotiation of the JVA includes evaluation
reports, recommendations, legal and expert opinions, minutes of meetings, terms of reference and other
documents attached to such reports or minutes, all relating to the JVA. However, the right to information
does not compel PEA to prepare lists, abstracts, summaries and the like relating to the renegotiation of
the JVA.[34] The right only affords access to records, documents and papers, which means the opportunity
to inspect and copy them. One who exercises the right must copy the records, documents and papers at
his expense. The exercise of the right is also subject to reasonable regulations to protect the integrity of
the public records and to minimize disruption to government operations, like rules specifying when and
how to conduct the inspection and copying.[35]
The right to information, however, does not extend to matters recognized as privileged information
under the separation of powers.[36] The right does not also apply to information on military and diplomatic
secrets, information affecting national security, and information on investigations of crimes by law
enforcement agencies before the prosecution of the accused, which courts have long recognized as
confidential.[37] The right may also be subject to other limitations that Congress may impose by law.
There is no claim by PEA that the information demanded by petitioner is privileged information
rooted in the separation of powers. The information does not cover Presidential conversations,
correspondences, or discussions during closed-door Cabinet meetings which, like internal deliberations of
the Supreme Court and other collegiate courts, or executive sessions of either house of Congress, [38] are
recognized as confidential. This kind of information cannot be pried open by a co-equal branch of
government. A frank exchange of exploratory ideas and assessments, free from the glare of publicity and
pressure by interested parties, is essential to protect the independence of decision-making of those
tasked to exercise Presidential, Legislative and Judicial power.[39] This is not the situation in the instant
case.
We rule, therefore, that the constitutional right to information includes official information on on-
going 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
Under the Spanish Law of Waters of 1866, the shores, bays, coves, inlets and all waters within the
maritime zone of the Spanish territory belonged to the public domain for public use.[44] The Spanish Law of
Waters of 1866 allowed the reclamation of the sea under Article 5, which provided as follows:
Article 5. Lands reclaimed from the sea in consequence of works constructed by the State, or by the
provinces, pueblos or private persons, with proper permission, shall become the property of the party
constructing such works, unless otherwise provided by the terms of the grant of authority.
Under the Spanish Law of Waters, land reclaimed from the sea belonged to the party undertaking the
reclamation, provided the government issued the necessary permit and did not reserve ownership of the
reclaimed land to the State.
Article 339 of the Civil Code of 1889 defined property of public dominion as follows:
Art. 339. Property of public dominion is
1. That devoted to public use, such as roads, canals, rivers, torrents, ports and bridges
constructed by the State, riverbanks, shores, roadsteads, and that of a similar character;
 2. That belonging exclusively to the State which, without being of general public use, is
employed in some public service, or in the development of the national wealth, such as
walls, fortresses, and other works for the defense of the territory, and mines, until
granted to private individuals.
Property devoted to public use referred to property open for use by the public. In contrast, property
devoted to public service referred to property used for some specific public service and open only to
those authorized to use the property.
Property of public dominion referred not only to property devoted to public use, but also to
property not so used but employed to develop the national wealth. This class of property constituted
property of public dominion although employed for some economic or commercial activity to increase the
national wealth.
Article 341 of the Civil Code of 1889 governed the re-classification of property of public dominion
into private property, to wit:
Art. 341. Property of public dominion, when no longer devoted to public use or to the defense of the
territory, shall become a part of the private property of the State.
This provision, however, was not self-executing. The legislature, or the executive department pursuant to
law, must declare the property no longer needed for public use or territorial defense before the
government could lease or alienate the property to private parties.[45]
Act No. 1654 of the Philippine Commission
On May 8, 1907, the Philippine Commission enacted Act No. 1654 which regulated the lease of
reclaimed and foreshore lands. The salient provisions of this law were as follows:
Section 1. The control and disposition of the foreshore as defined in existing law, and the title to all
Government or public lands made or reclaimed by the Government by dredging or filling or otherwise
throughout the Philippine Islands, shall be retained by the Government without prejudice to vested rights
and without prejudice to rights conceded to the City of Manila in the Luneta Extension.
Section 2. (a) The Secretary of the Interior shall cause all Government or public lands made or reclaimed
by the Government by dredging or filling or otherwise to be divided into lots or blocks, with the necessary
streets and alleyways located thereon, and shall cause plats and plans of such surveys to be prepared and
filed with the Bureau of Lands.
(b) Upon completion of such plats and plans the Governor-General shall give notice to the public that
such parts of the lands so made or reclaimed as are not needed for public purposes will be leased for
commercial and business purposes, x x x.
xxx
(e) The leases above provided for shall be disposed of to the highest and best bidder therefore, subject
to such regulations and safeguards as the Governor-General may by executive order prescribe. (Emphasis
supplied)
Act No. 1654 mandated that the government should retain title to all lands reclaimed by the
government. The Act also vested in the government control and disposition of foreshore lands. Private
parties could lease lands reclaimed by the government only if these lands were no longer needed for
public purpose. Act No. 1654 mandated public bidding in the lease of government reclaimed lands. Act No.
1654 made government reclaimed lands sui generis in that unlike other public lands which the
government could sell to private parties, these reclaimed lands were available only for lease to private
parties.
Act No. 1654, however, did not repeal Section 5 of the Spanish Law of Waters of 1866. Act No. 1654
did not prohibit private parties from reclaiming parts of the sea under Section 5 of the Spanish Law of
Waters. Lands reclaimed from the sea by private parties with government permission remained private
lands.
Act No. 2874 of the Philippine Legislature
On November 29, 1919, the Philippine Legislature enacted Act No. 2874, the Public Land Act.[46] The
salient provisions of Act No. 2874, on reclaimed lands, were as follows:
Sec. 6. The Governor-General, upon the recommendation of the Secretary of Agriculture and Natural
Resources, shall from time to time classify the lands of the public domain into
(a) Alienable or disposable,
(b) Timber, and
(c) Mineral lands, x x x.
Sec. 7. For the purposes of the government and disposition of alienable or disposable public lands, the
Governor-General, upon recommendation by the Secretary of Agriculture and Natural Resources, shall
from time to time declare what lands are open to disposition or concession under this Act.
Sec. 8. Only those lands shall be declared open to disposition or concession which have been officially
delimited or classified x x x.
xxx
Sec. 55. Any tract of land of the public domain which, being neither timber nor mineral land, shall be
classified as suitable for residential purposes or for commercial, industrial, or other productive purposes
other than agricultural purposes, and shall be open to disposition or concession, shall be disposed of
under the provisions of this chapter, and not otherwise.
Sec. 56. The lands disposable under this title shall be classified as follows:
(a) Lands reclaimed by the Government by dredging, filling, or other means;
(b) Foreshore;
(c) Marshy lands or lands covered with water bordering upon the shores or banks of
navigable lakes or rivers;
(d) Lands not included in any of the foregoing classes.
x x x.
Sec. 58. The lands comprised in classes (a), (b), and (c) of section fifty-six shall be disposed of to private
parties by lease only and not otherwise, as soon as the Governor-General, upon recommendation by the
Secretary of Agriculture and Natural Resources, shall declare that the same are not necessary for the
public service and are open to disposition under this chapter. The lands included in class (d) may be
disposed of by sale or lease under the provisions of this Act. (Emphasis supplied)
Section 6 of Act No. 2874 authorized the Governor-General to classify lands of the public domain
into x x x alienable or disposable[47] lands. Section 7 of the Act empowered the Governor-General to
declare what lands are open to disposition or concession. Section 8 of the Act limited alienable or
disposable lands only to those lands which have been officially delimited and classified.
Section 56 of Act No. 2874 stated that lands disposable under this title [48] 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 States natural resources, became inalienable by constitutional fiat, available only for lease for 25 years,
renewable for another 25 years. The government could alienate foreshore lands only after these lands
were reclaimed and classified as alienable agricultural lands of the public domain. Government reclaimed
and marshy lands of the public domain, being neither timber nor mineral lands, fell under the
classification of public agricultural lands.[50] However, government reclaimed and marshy lands, although
subject to classification as disposable public agricultural lands, could only be leased and not sold to private
parties because of Act No. 2874.
The prohibition on private parties from acquiring ownership of government reclaimed and marshy
lands of the public domain was only a statutory prohibition and the legislature could therefore remove
such prohibition. The 1935 Constitution did not prohibit individuals and corporations from acquiring
government reclaimed and marshy lands of the public domain that were classified as agricultural lands
under existing public land laws. Section 2, Article XIII of the 1935 Constitution provided as follows:
Section 2. No private corporation or association may acquire, lease, or hold public agricultural lands in
excess of one thousand and twenty four hectares, nor may any individual acquire such lands by
purchase in excess of one hundred and forty hectares, or by lease in excess of one thousand and twenty-
four hectares, or by homestead in excess of twenty-four hectares. Lands adapted to grazing, not
exceeding two thousand hectares, may be leased to an individual, private corporation, or
association. (Emphasis supplied)
Still, after the effectivity of the 1935 Constitution, the legislature did not repeal Section 58 of Act No. 2874
to open for sale to private parties government reclaimed and marshy lands of the public domain. On the
contrary, the legislature continued the long established State policy of retaining for the government title
and ownership of government reclaimed and marshy lands of the public domain.
Commonwealth Act No. 141 of the Philippine National Assembly
On November 7, 1936, the National Assembly approved Commonwealth Act No. 141, also known as
the Public Land Act, which compiled the then existing laws on lands of the public domain. CA No. 141, as
amended, remains to this day the existing general law governing the classification and disposition of
lands of the public domain other than timber and mineral lands.[51]
Section 6 of CA No. 141 empowers the President to classify lands of the public domain into
alienable or disposable[52] lands of the public domain, which prior to such classification are inalienable and
outside the commerce of man. Section 7 of CA No. 141 authorizes the President to declare what lands are
open to disposition or concession. Section 8 of CA No. 141 states that the government can declare open
for disposition or concession only lands that are officially delimited and classified. Sections 6, 7 and 8 of
CA No. 141 read as follows:
Sec. 6. The President, upon the recommendation of the Secretary of Agriculture and Commerce, shall
from time to time classify the lands of the public domain into
(a) Alienable or disposable,
(b) Timber, and
(c) Mineral lands,
and may at any time and in like manner transfer such lands from one class to another, [53] for the purpose
of their administration and disposition.
Sec. 7. For the purposes of the administration and disposition of alienable or disposable public lands, the
President, upon recommendation by the Secretary of Agriculture and Commerce, shall from time to time
declare what lands are open to disposition or concession under this Act.
Sec. 8. Only those lands shall be declared open to disposition or concession which have been officially
delimited and classified and, when practicable, surveyed, and which have not been reserved for public or
quasi-public uses, nor appropriated by the Government, nor in any manner become private property, nor
those on which a private right authorized and recognized by this Act or any other valid law may be
claimed, or which, having been reserved or appropriated, have ceased to be so. x x x.
Thus, before the government could alienate or dispose of lands of the public domain, the President must
first officially classify these lands as alienable or disposable, and then declare them open to disposition or
concession. There must be no law reserving these lands for public or quasi-public uses.
The salient provisions of CA No. 141, on government reclaimed, foreshore and marshy lands of the
public domain, are as follows:
Sec. 58. Any tract of land of the public domain which, being neither timber nor mineral land, is intended
to be used for residential purposes or for commercial, industrial, or other productive purposes other
than agricultural, and is open to disposition or concession, shall be disposed of under the provisions of
this chapter and not otherwise.
Sec. 59. The lands disposable under this title shall be classified as follows:
(a) Lands reclaimed by the Government by dredging, filling, or other means;
(b) Foreshore;
 (c) Marshy lands or lands covered with water bordering upon the shores or banks of
navigable lakes or rivers;
(d) Lands not included in any of the foregoing classes.
Sec. 60. Any tract of land comprised under this title may be leased or sold, as the case may be, to any
person, corporation, or association authorized to purchase or lease public lands for agricultural
purposes. x x x.
Sec. 61. The lands comprised in classes (a), (b), and (c) of section fifty-nine shall be disposed of to private
parties by lease only and not otherwise, as soon as the President, upon recommendation by the
Secretary of Agriculture, shall declare that the same are not necessary for the public service and are open
to disposition under this chapter. The lands included in class (d) may be disposed of by sale or lease
under the provisions of this Act. (Emphasis supplied)
Section 61 of CA No. 141 readopted, after the effectivity of the 1935 Constitution, Section 58 of Act
No. 2874 prohibiting the sale of government reclaimed, foreshore and marshy disposable lands of the
public domain. All these lands are intended for residential, commercial, industrial or other non-
agricultural purposes. As before, Section 61 allowed only the lease of such lands to private parties. The
government could sell to private parties only lands falling under Section 59 (d) of CA No. 141, or those
lands for non-agricultural purposes not classified as government reclaimed, foreshore and marshy
disposable lands of the public domain. Foreshore lands, however, became inalienable under the 1935
Constitution which only allowed the lease of these lands to qualified private parties.
Section 58 of CA No. 141 expressly states that disposable lands of the public domain intended for
residential, commercial, industrial or other productive purposes other than agricultural shall be disposed
of under the provisions of this chapter and not otherwise. Under Section 10 of CA No. 141, the term
disposition includes lease of the land. Any disposition of government reclaimed, foreshore and marshy
disposable lands for non-agricultural purposes must comply with Chapter IX, Title III of CA No.
141,[54] unless a subsequent law amended or repealed these provisions.
In his concurring opinion in the landmark case of Republic Real Estate Corporation v. Court of
Appeals,[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
violation of constitutional or statutory limitations. Otherwise, the transfer of lands for non-agricultural
purposes to government units and entities could be used to circumvent constitutional limitations on
ownership of alienable or disposable lands of the public domain. In the same manner, such transfers could
also be used to evade the statutory prohibition in CA No. 141 on the sale of government reclaimed and
marshy lands of the public domain to private parties. Section 60 of CA No. 141 constitutes by operation of
law a lien on these lands.[57]
In case of sale or lease of disposable lands of the public domain falling under Section 59 of CA No.
141, Sections 63 and 67 require a public bidding. Sections 63 and 67 of CA No. 141 provide as follows:
Sec. 63. Whenever it is decided that lands covered by this chapter are not needed for public purposes, the
Director of Lands shall ask the Secretary of Agriculture and Commerce (now the Secretary of Natural
Resources) for authority to dispose of the same. Upon receipt of such authority, the Director of Lands shall
give notice by public advertisement in the same manner as in the case of leases or sales of agricultural
public land, x x x.
Sec. 67. The lease or sale shall be made by oral bidding; and adjudication shall be made to the highest
bidder. x x x. (Emphasis supplied)
Thus, CA No. 141 mandates the Government to put to public auction all leases or sales of alienable or
disposable lands of the public domain.[58]
Like Act No. 1654 and Act No. 2874 before it, CA No. 141 did not repeal Section 5 of the Spanish
Law of Waters of 1866. Private parties could still reclaim portions of the sea with government
permission. However, the reclaimed land could become private land only if classified as alienable
agricultural land of the public domain open to disposition under CA No. 141. The 1935 Constitution
prohibited the alienation of all natural resources except public agricultural lands.
The Civil Code of 1950
The Civil Code of 1950 readopted substantially the definition of property of public dominion found
in the Civil Code of 1889. Articles 420 and 422 of the Civil Code of 1950 state that
Art. 420. The following things are property of public dominion:
(1) Those intended for public use, such as roads, canals, rivers, torrents, ports and bridges
constructed by the State, banks, shores, roadsteads, and others of similar character;
(2) Those which belong to the State, without being for public use, and are intended for some
public service or for the development of the national wealth.
x x x.
Art. 422. Property of public dominion, when no longer intended for public use or for public service, shall
form part of the patrimonial property of the State.
Again, the government must formally declare that the property of public dominion is no longer
needed for public use or public service, before the same could be classified as patrimonial property of the
State.[59] In the case of government reclaimed and marshy lands of the public domain, the declaration of
their being disposable, as well as the manner of their disposition, is governed by the applicable provisions
of CA No. 141.
Like the Civil Code of 1889, the Civil Code of 1950 included as property of public dominion those
properties of the State which, without being for public use, are intended for public service or
the development of the national wealth. Thus, government reclaimed and marshy lands of the State,
even if not employed for public use or public service, if developed to enhance the national wealth, are
classified as property of public dominion.
Dispositions under the 1973 Constitution
The 1973 Constitution, which took effect on January 17, 1973, likewise adopted the Regalian
doctrine. Section 8, Article XIV of the 1973 Constitution stated that
Sec. 8. All lands of the public domain, waters, minerals, coal, petroleum and other mineral oils, all forces
of potential energy, fisheries, wildlife, and other natural resources of the Philippines belong to the
State. With the exception of agricultural, industrial or commercial, residential, and resettlement lands of
the public domain, natural resources shall not be alienated, and no license, concession, or lease for the
exploration, development, exploitation, or utilization of any of the natural resources shall be granted for a
period exceeding twenty-five years, renewable for not more than twenty-five years, except as to water
rights for irrigation, water supply, fisheries, or industrial uses other than the development of water power,
in which cases, beneficial use may be the measure and the limit of the grant. (Emphasis supplied)
The 1973 Constitution prohibited the alienation of all natural resources with the exception of
agricultural, industrial or commercial, residential, and resettlement lands of the public domain. In contrast,
the 1935 Constitution barred the alienation of all natural resources except public agricultural lands.
However, the term public agricultural lands in the 1935 Constitution encompassed industrial, commercial,
residential and resettlement lands of the public domain.[60] If the land of public domain were neither
timber nor mineral land, it would fall under the classification of agricultural land of the public
domain. Both the 1935 and 1973 Constitutions, therefore, prohibited the alienation of all natural
resources except agricultural lands of the public domain.
The 1973 Constitution, however, limited the alienation of lands of the public domain to individuals
who were citizens of the Philippines. Private corporations, even if wholly owned by Philippine citizens,
were no longer allowed to acquire alienable lands of the public domain unlike in the 1935
Constitution. Section 11, Article XIV of the 1973 Constitution declared that
Sec. 11. The Batasang Pambansa, taking into account conservation, ecological, and development
requirements of the natural resources, shall determine by law the size of land of the public domain which
may be developed, held or acquired by, or leased to, any qualified individual, corporation, or association,
and the conditions therefor. No private corporation or association may hold alienable lands of the public
domain except by lease not to exceed one thousand hectares in area nor may any citizen hold such lands
by lease in excess of five hundred hectares or acquire by purchase, homestead or grant, in excess of
twenty-four hectares. No private corporation or association may hold by lease, concession, license or
permit, timber or forest lands and other timber or forest resources in excess of one hundred thousand
hectares. However, such area may be increased by the Batasang Pambansa upon recommendation of the
National Economic and Development Authority. (Emphasis supplied)
Thus, under the 1973 Constitution, private corporations could hold alienable lands of the public
domain only through lease. Only individuals could now acquire alienable lands of the public domain,
and private corporations became absolutely barred from acquiring any kind of alienable land of the
public domain. The constitutional ban extended to all kinds of alienable lands of the public domain, while
the statutory ban under CA No. 141 applied only to government reclaimed, foreshore and marshy
alienable lands of the public domain.
PD No. 1084 Creating the Public Estates Authority
On February 4, 1977, then President Ferdinand Marcos issued Presidential Decree No. 1084
creating PEA, a wholly government owned and controlled corporation with a special charter. Sections 4
and 8 of PD No. 1084, vests PEA with the following purposes and powers:
Sec. 4. Purpose. The Authority is hereby created for the following purposes:
(a) To reclaim land, including foreshore and submerged areas, by dredging, filling or other
means, or to acquire reclaimed land;
(b) To develop, improve, acquire, administer, deal in, subdivide, dispose, lease and sell any
and all kinds of lands, buildings, estates and other forms of real property, owned, managed,
controlled and/or operated by the government;
(c) To provide for, operate or administer such service as may be necessary for the efficient, economical
and beneficial utilization of the above properties.
Sec. 5. Powers and functions of the Authority. The Authority shall, in carrying out the purposes for which it
is created, have the following powers and functions:
(a)To prescribe its by-laws.
xxx
(i) To hold lands of the public domain in excess of the area permitted to private
corporations by statute.
(j) To reclaim lands and to construct work across, or otherwise, any stream, watercourse,
canal, ditch, flume x x x.
xxx
(o) To perform such acts and exercise such functions as may be necessary for the attainment of the
purposes and objectives herein specified. (Emphasis supplied)
PD No. 1084 authorizes PEA to reclaim both foreshore and submerged areas of the public
domain. Foreshore areas are those covered and uncovered by the ebb and flow of the tide.[61] Submerged
areas are those permanently under water regardless of the ebb and flow of the tide.[62] Foreshore and
submerged areas indisputably belong to the public domain[63] and are inalienable unless reclaimed,
classified as alienable lands open to disposition, and further declared no longer needed for public service.
The ban in the 1973 Constitution on private corporations from acquiring alienable lands of the
public domain did not apply to PEA since it was then, and until today, a fully owned government
corporation. The constitutional ban applied then, as it still applies now, only to private corporations and
associations. PD No. 1084 expressly empowers PEA to hold lands of the public domain even in excess of
the area permitted to private corporations by statute. Thus, PEA can hold title to private lands, as well as
title to lands of the public domain.
In order for PEA to sell its reclaimed foreshore and submerged alienable lands of the public domain,
there must be legislative authority empowering PEA to sell these lands. This legislative authority is
necessary in view of Section 60 of CA No.141, which states
Sec. 60. x x x; but the land so granted, donated or transferred to a province, municipality, or branch or
subdivision of the Government shall not be alienated, encumbered or otherwise disposed of in a manner
affecting its title, except when authorized by Congress; x x x. (Emphasis supplied)
Without such legislative authority, PEA could not sell but only lease its reclaimed foreshore and
submerged alienable lands of the public domain. Nevertheless, any legislative authority granted to PEA to
sell its reclaimed alienable lands of the public domain would be subject to the constitutional ban on
private corporations from acquiring alienable lands of the public domain. Hence, such legislative authority
could only benefit private individuals.
Dispositions under the 1987 Constitution
The 1987 Constitution, like the 1935 and 1973 Constitutions before it, has adopted the Regalian
doctrine. The 1987 Constitution declares that all natural resources are owned by the State, and except for
alienable agricultural lands of the public domain, natural resources cannot be alienated. Sections 2 and 3,
Article XII of the 1987 Constitution state that
Section 2. All lands of the public domain, waters, minerals, coal, petroleum and other mineral oils, all
forces of potential energy, fisheries, forests or timber, wildlife, flora and fauna, and other natural
resources are owned by the State. With the exception of agricultural lands, all other natural resources
shall not be alienated. The exploration, development, and utilization of natural resources shall be under
the full control and supervision of the State. x x x.
Section 3. Lands of the public domain are classified into agricultural, forest or timber, mineral lands, and
national parks. Agricultural lands of the public domain may be further classified by law according to the
uses which they may be devoted. Alienable lands of the public domain shall be limited to agricultural
lands. Private corporations or associations may not hold such alienable lands of the public domain
except by lease, for a period not exceeding twenty-five years, renewable for not more than twenty-five
years, and not to exceed one thousand hectares in area. Citizens of the Philippines may lease not more
than five hundred hectares, or acquire not more than twelve hectares thereof by purchase, homestead, or
grant.
Taking into account the requirements of conservation, ecology, and development, and subject to the
requirements of agrarian reform, the Congress shall determine, by law, the size of lands of the public
domain which may be acquired, developed, held, or leased and the conditions therefor. (Emphasis
supplied)
The 1987 Constitution continues the State policy in the 1973 Constitution banning private
corporations from acquiring any kind of alienable land of the public domain. Like the 1973 Constitution,
the 1987 Constitution allows private corporations to hold alienable lands of the public domain only
through lease. As in the 1935 and 1973 Constitutions, the general law governing the lease to private
corporations of reclaimed, foreshore and marshy alienable lands of the public domain is still CA No. 141.
The Rationale behind the Constitutional Ban
The rationale behind the constitutional ban on corporations from acquiring, except through lease,
alienable lands of the public domain is not well understood. During the deliberations of the 1986
Constitutional Commission, the commissioners probed the rationale behind this ban, thus:
FR. BERNAS: Mr. Vice-President, my questions have reference to page 3, line 5 which says:
`No private corporation or association may hold alienable lands of the public domain except
by lease, not to exceed one thousand hectares in area.
If we recall, this provision did not exist under the 1935 Constitution, but this was introduced in the 1973
Constitution. In effect, it prohibits private corporations from acquiring alienable public lands. But it has
not been very clear in jurisprudence what the reason for this is. In some of the cases decided in 1982 and
1983, it was indicated that the purpose of this is to prevent large landholdings. Is that the intent of this
provision?
MR. VILLEGAS: I think that is the spirit of the provision.
FR. BERNAS: In existing decisions involving the Iglesia ni Cristo, there were instances where the Iglesia ni
Cristo was not allowed to acquire a mere 313-square meter land where a chapel stood because the
Supreme Court said it would be in violation of this. (Emphasis supplied)
In Ayog v. Cusi,[64] the Court explained the rationale behind this constitutional ban in this way:
Indeed, one purpose of the constitutional prohibition against purchases of public agricultural lands by
private corporations is to equitably diffuse land ownership or to encourage owner-cultivatorship and the
economic family-size farm and to prevent a recurrence of cases like the instant case. Huge landholdings by
corporations or private persons had spawned social unrest.
However, if the constitutional intent is to prevent huge landholdings, the Constitution could have simply
limited the size of alienable lands of the public domain that corporations could acquire. The Constitution
could have followed the limitations on individuals, who could acquire not more than 24 hectares of
alienable lands of the public domain under the 1973 Constitution, and not more than 12 hectares under
the 1987 Constitution.
If the constitutional intent is to encourage economic family-size farms, placing the land in the name
of a corporation would be more effective in preventing the break-up of farmlands. If the farmland is
registered in the name of a corporation, upon the death of the owner, his heirs would inherit shares in the
corporation instead of subdivided parcels of the farmland. This would prevent the continuing break-up of
farmlands into smaller and smaller plots from one generation to the next.
In actual practice, the constitutional ban strengthens the constitutional limitation on individuals
from acquiring more than the allowed area of alienable lands of the public domain.Without the
constitutional ban, individuals who already acquired the maximum area of alienable lands of the public
domain could easily set up corporations to acquire more alienable public lands. An individual could own as
many corporations as his means would allow him. An individual could even hide his ownership of a
corporation by putting his nominees as stockholders of the corporation. The corporation is a convenient
vehicle to circumvent the constitutional limitation on acquisition by individuals of alienable lands of the
public domain.
The constitutional intent, under the 1973 and 1987 Constitutions, is to transfer ownership of only a
limited area of alienable land of the public domain to a qualified individual. This constitutional intent is
safeguarded by the provision prohibiting corporations from acquiring alienable lands of the public domain,
since the vehicle to circumvent the constitutional intent is removed. The available alienable public lands
are gradually decreasing in the face of an ever-growing population. The most effective way to insure
faithful adherence to this constitutional intent is to grant or sell alienable lands of the public domain only
to individuals. This, it would seem, is the practical benefit arising from the constitutional ban.
The Amended Joint Venture Agreement
The subject matter of the Amended JVA, as stated in its second Whereas clause, consists of three
properties, namely:
1. [T]hree partially reclaimed and substantially eroded islands along Emilio Aguinaldo
Boulevard in Paranaque and Las Pinas, Metro Manila, with a combined titled area of
1,578,441 square meters;
2. [A]nother area of 2,421,559 square meters contiguous to the three islands; and
3. [A]t AMARIs 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 PEAs 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 AMARIs share in the net usable
area, totaling 367.5 hectares, will be issued in the name of AMARI. Section 5.2 (c) of the Amended JVA
provides that
x x x, PEA shall have the duty to execute without delay the necessary deed of transfer or conveyance of
the title pertaining to AMARIs 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
AMARIs 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
PEAs 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 Force[68] constituted under Presidential Administrative Order No. 365
admitted in its Report and Recommendation to then President Fidel V. Ramos, [R]eclaimed lands are
classified as alienable and disposable lands of the public domain.[69] The Legal Task Force concluded that
D. Conclusion
Reclaimed lands are lands of the public domain. However, by statutory authority, the rights of ownership
and disposition over reclaimed lands have been transferred to PEA, by virtue of which PEA, as owner, may
validly convey the same to any qualified person without violating the Constitution or any statute.
The constitutional provision prohibiting private corporations from holding public land, except by lease
(Sec. 3, Art. XVII,[70] 1987 Constitution), does not apply to reclaimed lands whose ownership has passed on
to PEA by statutory grant.
Under Section 2, Article XII of the 1987 Constitution, the foreshore and submerged areas of Manila
Bay are part of the lands of the public domain, waters x x x and other natural resources and consequently
owned by the State. As such, foreshore and submerged areas shall not be alienated, unless they are
classified as agricultural lands of the public domain. The mere reclamation of these areas by PEA does not
convert these inalienable natural resources of the State into alienable or disposable lands of the public
domain. There must be a law or presidential proclamation officially classifying these reclaimed lands as
alienable or disposable and open to disposition or concession. Moreover, these reclaimed lands cannot be
classified as alienable or disposable if the law has reserved them for some public or quasi-public use.[71]
Section 8 of CA No. 141 provides that only those lands shall be declared open to disposition or
concession which have been officially delimited and classified.[72] The President has the authority to
classify inalienable lands of the public domain into alienable or disposable lands of the public domain,
pursuant to Section 6 of CA No. 141. In Laurel vs. Garcia,[73] the Executive Department attempted to sell
the Roppongi property in Tokyo, Japan, which was acquired by the Philippine Government for use as the
Chancery of the Philippine Embassy.Although the Chancery had transferred to another location thirteen
years earlier, the Court still ruled that, under Article 422[74] 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 Aquinos 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 Aquinos issuance of a land patent also
constitute a declaration that the Freedom Islands are no longer needed for public service. The Freedom
Islands are thus alienable or disposable lands of the public domain, open to disposition or concession to
qualified parties.
At the time then President Aquino issued Special Patent No. 3517, PEA had already reclaimed the
Freedom Islands although subsequently there were partial erosions on some areas. The government had
also completed the necessary surveys on these islands. Thus, the Freedom Islands were no longer part of
Manila Bay but part of the land mass. Section 3, Article XII of the 1987 Constitution classifies lands of the
public domain into agricultural, forest or timber, mineral lands, and national parks. Being neither timber,
mineral, nor national park lands, the reclaimed Freedom Islands necessarily fall under the classification of
agricultural lands of the public domain. Under the 1987 Constitution, agricultural lands of the public
domain are the only natural resources that the State may alienate to qualified private parties. All other
natural resources, such as the seas or bays, are waters x x x owned by the State forming part of the public
domain, and are inalienable pursuant to Section 2, Article XII of the 1987 Constitution.
AMARI claims that the Freedom Islands are private lands because CDCP, then a private corporation,
reclaimed the islands under a contract dated November 20, 1973 with the Commissioner of Public
Highways. AMARI, citing Article 5 of the Spanish Law of Waters of 1866, argues that if the ownership of
reclaimed lands may be given to the party constructing the works, then it cannot be said that reclaimed
lands are lands of the public domain which the State may not alienate.[75] Article 5 of the Spanish Law of
Waters reads as follows:
Article 5. Lands reclaimed from the sea in consequence of works constructed by the State, or by the
provinces, pueblos or private persons, with proper permission, shall become the property of the party
constructing such works, unless otherwise provided by the terms of the grant of authority. (Emphasis
supplied)
Under Article 5 of the Spanish Law of Waters of 1866, private parties could reclaim from the sea
only with proper permission from the State. Private parties could own the reclaimed land only if not
otherwise provided by the terms of the grant of authority. This clearly meant that no one could reclaim
from the sea without permission from the State because the sea is property of public dominion. It also
meant that the State could grant or withhold ownership of the reclaimed land because any reclaimed land,
like the sea from which it emerged, belonged to the State. Thus, a private person reclaiming from the sea
without permission from the State could not acquire ownership of the reclaimed land which would remain
property of public dominion like the sea it replaced.[76] Article 5 of the Spanish Law of Waters of 1866
adopted the time-honored principle of land ownership that all lands that were not acquired from the
government, either by purchase or by grant, belong to the public domain.[77]
Article 5 of the Spanish Law of Waters must be read together with laws subsequently enacted on
the disposition of public lands. In particular, CA No. 141 requires that lands of the public domain must first
be classified as alienable or disposable before the government can alienate them. These lands must not be
reserved for public or quasi-public purposes.[78]Moreover, the contract between CDCP and the
government was executed after the effectivity of the 1973 Constitution which barred private corporations
from acquiring any kind of alienable land of the public domain. This contract could not have converted the
Freedom Islands into private lands of a private corporation.
Presidential Decree No. 3-A, issued on January 11, 1973, revoked all laws authorizing the
reclamation of areas under water and revested solely in the National Government the power to reclaim
lands. Section 1 of PD No. 3-A declared that
The provisions of any law to the contrary notwithstanding, the reclamation of areas under water,
whether foreshore or inland, shall be limited to the National Government or any person authorized by it
under a proper contract. (Emphasis supplied)
x x x.
PD No. 3-A repealed Section 5 of the Spanish Law of Waters of 1866 because reclamation of areas under
water could now be undertaken only by the National Government or by a person contracted by the
National Government. Private parties may reclaim from the sea only under a contract with the National
Government, and no longer by grant or permission as provided in Section 5 of the Spanish Law of Waters
of 1866.
Executive Order No. 525, issued on February 14, 1979, designated PEA as the National
Governments 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 PEAs 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.
Section 3 of EO No. 525, by declaring that all lands reclaimed by PEA shall belong to or be owned by
the PEA, could not automatically operate to classify inalienable lands into alienable or disposable lands of
the public domain. Otherwise, reclaimed foreshore and submerged lands of the public domain would
automatically become alienable once reclaimed by PEA, whether or not classified as alienable or
disposable.
The Revised Administrative Code of 1987, a later law than either PD No. 1084 or EO No. 525, vests
in the Department of Environment and Natural Resources (DENR for brevity) the following powers and
functions:
Sec. 4. Powers and Functions. The Department shall:
(1) x x x
xxx
(4) Exercise supervision and control over forest lands, alienable and disposable public lands, mineral
resources and, in the process of exercising such control, impose appropriate taxes, fees, charges, rentals
and any such form of levy and collect such revenues for the exploration, development, utilization or
gathering of such resources;
xxx
(14) Promulgate rules, regulations and guidelines on the issuance of licenses, permits, concessions, lease
agreements and such other privileges concerning the development, exploration and utilization of the
countrys 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 6[81] and 7[82] 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 III[83] of CA No. 141 and other applicable laws.[84]
PEAs Authority to Sell Reclaimed Lands
PEA, like the Legal Task Force, argues that as alienable or disposable lands of the public domain, the
reclaimed lands shall be disposed of in accordance with CA No. 141, the Public Land Act. PEA, citing
Section 60 of CA No. 141, admits that reclaimed lands transferred to a branch or subdivision of the
government shall not be alienated, encumbered, or otherwise disposed of in a manner affecting its
title, except when authorized by Congress: x x x.[85] (Emphasis by PEA)
In Laurel vs. Garcia,[86] the Court cited Section 48 of the Revised Administrative Code of 1987,
which states that
Sec. 48. Official Authorized to Convey Real Property. Whenever real property of the Government
is authorized by law to be conveyed, the deed of conveyance shall be executed in behalf of the
government by the following: x x x.
Thus, the Court concluded that a law is needed to convey any real property belonging to the
Government. The Court declared that -
It is not for the President to convey real property of the government on his or her own sole will. Any such
conveyance must be authorized and approved by a law enacted by the Congress. It requires executive
and legislative concurrence. (Emphasis supplied)
PEA contends that PD No. 1085 and EO No. 525 constitute the legislative authority allowing PEA
to sell its reclaimed lands. PD No. 1085, issued on February 4, 1977, provides that
The land reclaimed in the foreshore and offshore area of Manila Bay pursuant to the contract for the
reclamation and construction of the Manila-Cavite Coastal Road Project between the Republic of the
Philippines and the Construction and Development Corporation of the Philippines dated November 20,
1973 and/or any other contract or reclamation covering the same area is hereby transferred, conveyed
and assigned to the ownership and administration of the Public Estates Authority established pursuant
to PD No. 1084; Provided, however, That the rights and interests of the Construction and Development
Corporation of the Philippines pursuant to the aforesaid contract shall be recognized and respected.
Henceforth, the Public Estates Authority shall exercise the rights and assume the obligations of the
Republic of the Philippines (Department of Public Highways) arising from, or incident to, the aforesaid
contract between the Republic of the Philippines and the Construction and Development Corporation of
the Philippines.
In consideration of the foregoing transfer and assignment, the Public Estates Authority shall issue in favor
of the Republic of the Philippines the corresponding shares of stock in said entity with an issued value of
said shares of stock (which) shall be deemed fully paid and non-assessable.
The Secretary of Public Highways and the General Manager of the Public Estates Authority shall execute
such contracts or agreements, including appropriate agreements with the Construction and Development
Corporation of the Philippines, as may be necessary to implement the above.
Special land patent/patents shall be issued by the Secretary of Natural Resources in favor of the Public
Estates Authority without prejudice to the subsequent transfer to the contractor or his assignees of such
portion or portions of the land reclaimed or to be reclaimed as provided for in the above-mentioned
contract. On the basis of such patents, the Land Registration Commission shall issue the corresponding
certificate of title. (Emphasis supplied)
On the other hand, Section 3 of EO No. 525, issued on February 14, 1979, provides that -
Sec. 3. All lands reclaimed by PEA shall belong to or be owned by the PEA which shall be responsible for
its administration, development, utilization or disposition in accordance with the provisions of Presidential
Decree No. 1084. Any and all income that the PEA may derive from the sale, lease or use of reclaimed
lands shall be used in accordance with the provisions of Presidential Decree No. 1084.
There is no express authority under either PD No. 1085 or EO No. 525 for PEA to sell its reclaimed
lands. PD No. 1085 merely transferred ownership and administration of lands reclaimed from Manila Bay
to PEA, while EO No. 525 declared that lands reclaimed by PEA shall belong to or be owned by PEA. EO No.
525 expressly states that PEA should dispose of its reclaimed lands in accordance with the provisions of
Presidential Decree No. 1084, the charter of PEA.
PEAs 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 PEAs patrimonial lands.
PEA may also sell its alienable or disposable lands of the public domain to private individuals since,
with the legislative authority, there is no longer any statutory prohibition against such sales and the
constitutional ban does not apply to individuals. PEA, however, cannot sell any of its alienable or
disposable lands of the public domain to private corporations since Section 3, Article XII of the 1987
Constitution expressly prohibits such sales. The legislative authority benefits only individuals. Private
corporations remain barred from acquiring any kind of alienable land of the public domain, including
government reclaimed lands.
The provision in PD No. 1085 stating that portions of the reclaimed lands could be transferred by
PEA to the contractor or his assignees (Emphasis supplied) would not apply to private corporations but
only to individuals because of the constitutional ban. Otherwise, the provisions of PD No. 1085 would
violate both the 1973 and 1987 Constitutions.
The requirement of public auction in the sale of reclaimed lands
Assuming the reclaimed lands of PEA are classified as alienable or disposable lands open to
disposition, and further declared no longer needed for public service, PEA would have to conduct a public
bidding in selling or leasing these lands. PEA must observe the provisions of Sections 63 and 67 of CA No.
141 requiring public auction, in the absence of a law exempting PEA from holding a public
auction.[88] Special Patent No. 3517 expressly states that the patent is issued by authority of the
Constitution and PD No. 1084, supplemented by Commonwealth Act No. 141, as amended. This is an
acknowledgment that the provisions of CA No. 141 apply to the disposition of reclaimed alienable lands of
the public domain unless otherwise provided by law. Executive Order No. 654,[89] which authorizes PEA to
determine the kind and manner of payment for the transfer of its assets and properties, does not exempt
PEA from the requirement of public auction. EO No. 654 merely authorizes PEA to decide the mode of
payment, whether in kind and in installment, but does not authorize PEA to dispense with public auction.
Moreover, under Section 79 of PD No. 1445, otherwise known as the Government Auditing Code,
the government is required to sell valuable government property through public bidding. Section 79 of PD
No. 1445 mandates that
Section 79. When government property has become unserviceable for any cause, or is no longer needed,
it shall, upon application of the officer accountable therefor, be inspected by the head of the agency or his
duly authorized representative in the presence of the auditor concerned and, if found to be valueless or
unsaleable, it may be destroyed in their presence. If found to be valuable, it may be sold at public
auction to the highest bidder under the supervision of the proper committee on award or similar body in
the presence of the auditor concerned or other authorized representative of the Commission, after
advertising by printed notice in the Official Gazette, or for not less than three consecutive days in any
newspaper of general circulation, or where the value of the property does not warrant the expense of
publication, by notices posted for a like period in at least three public places in the locality where the
property is to be sold. In the event that the public auction fails, the property may be sold at a private
sale at such price as may be fixed by the same committee or body concerned and approved by the
Commission.
It is only when the public auction fails that a negotiated sale is allowed, in which case the Commission on
Audit must approve the selling price.[90] The Commission on Audit implements Section 79 of the
Government Auditing Code through Circular No. 89-296[91] 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 PEAs reclaimed foreshore
and submerged alienable lands of the public domain. Private corporations are barred from bidding at the
auction sale of any kind of alienable land of the public domain.
PEA originally scheduled a public bidding for the Freedom Islands on December 10, 1991. PEA
imposed a condition that the winning bidder should reclaim another 250 hectares of submerged areas to
regularize the shape of the Freedom Islands, under a 60-40 sharing of the additional reclaimed areas in
favor of the winning bidder.[92] No one, however, submitted a bid. On December 23, 1994, the
Government Corporate Counsel advised PEA it could sell the Freedom Islands through negotiation,
without need of another public bidding, because of the failure of the public bidding on December 10,
1991.[93]
However, the original JVA dated April 25, 1995 covered not only the Freedom Islands and the
additional 250 hectares still to be reclaimed, it also granted an option to AMARI to reclaim another 350
hectares. The original JVA, a negotiated contract, enlarged the reclamation area to 750 hectares.[94] The
failure of public bidding on December 10, 1991, involving only 407.84 hectares,[95] is not a valid
justification for a negotiated sale of 750 hectares, almost double the area publicly auctioned. Besides, the
failure of public bidding happened on December 10, 1991, more than three years before the signing of the
original JVA on April 25, 1995. The economic situation in the country had greatly improved during the
intervening period.
Reclamation under the BOT Law and the Local Government Code
The constitutional prohibition in Section 3, Article XII of the 1987 Constitution is absolute and clear:
Private corporations or associations may not hold such alienable lands of the public domain except by
lease, x x x. Even Republic Act No. 6957 (BOT Law, for brevity), cited by PEA and AMARI as legislative
authority to sell reclaimed lands to private parties, recognizes the constitutional ban. Section 6 of RA No.
6957 states
Sec. 6. Repayment Scheme. - For the financing, construction, operation and maintenance of any
infrastructure projects undertaken through the build-operate-and-transfer arrangement or any of its
variations pursuant to the provisions of this Act, the project proponent x x x may likewise be repaid in the
form of a share in the revenue of the project or other non-monetary payments, such as, but not limited to,
the grant of a portion or percentage of the reclaimed land, subject to the constitutional requirements
with respect to the ownership of the land: x x x. (Emphasis supplied)
A private corporation, even one that undertakes the physical reclamation of a government BOT project,
cannot acquire reclaimed alienable lands of the public domain in view of the constitutional ban.
Section 302 of the Local Government Code, also mentioned by PEA and AMARI, authorizes local
governments in land reclamation projects to pay the contractor or developer in kind consisting of a
percentage of the reclaimed land, to wit:
Section 302. Financing, Construction, Maintenance, Operation, and Management of Infrastructure
Projects by the Private Sector. x x x
xxx
In case of land reclamation or construction of industrial estates, the repayment plan may consist of the
grant of a portion or percentage of the reclaimed land or the industrial estate constructed.
Although Section 302 of the Local Government Code does not contain a proviso similar to that of the BOT
Law, the constitutional restrictions on land ownership automatically apply even though not expressly
mentioned in the Local Government Code.
Thus, under either the BOT Law or the Local Government Code, the contractor or developer, if a
corporate entity, can only be paid with leaseholds on portions of the reclaimed land. If the contractor or
developer is an individual, portions of the reclaimed land, not exceeding 12 hectares[96] of non-agricultural
lands, may be conveyed to him in ownership in view of the legislative authority allowing such
conveyance. This is the only way these provisions of the BOT Law and the Local Government Code can
avoid a direct collision with Section 3, Article XII of the 1987 Constitution.
Registration of lands of the public domain
Finally, PEA theorizes that the act of conveying the ownership of the reclaimed lands to public
respondent PEA transformed such lands of the public domain to private lands. This theory is echoed by
AMARI which maintains that the issuance of the special patent leading to the eventual issuance of title
takes the subject land away from the land of public domain and converts the property into patrimonial or
private property. In short, PEA and AMARI contend that with the issuance of Special Patent No. 3517 and
the corresponding certificates of titles, the 157.84 hectares comprising the Freedom Islands have become
private lands of PEA. In support of their theory, PEA and AMARI cite the following rulings of the Court:
1. Sumail v. Judge of CFI of Cotabato,[97] where the Court held
Once the patent was granted and the corresponding certificate of title was issued, the
land ceased to be part of the public domain and became private property over which the
Director of Lands has neither control nor jurisdiction.
2. Lee Hong Hok v. David,[98] where the Court declared -
After the registration and issuance of the certificate and duplicate certificate of title
based on a public land patent, the land covered thereby automatically comes under the
operation of Republic Act 496 subject to all the safeguards provided therein.
3. Heirs of Gregorio Tengco v. Heirs of Jose Aliwalas,[99] where the Court ruled -
While the Director of Lands has the power to review homestead patents, he may do so
only so long as the land remains part of the public domain and continues to be under his
exclusive control; but once the patent is registered and a certificate of title is issued, the
land ceases to be part of the public domain and becomes private property over which
the Director of Lands has neither control nor jurisdiction.
4. Manalo v. Intermediate Appellate Court,[100] where the Court held
When the lots in dispute were certified as disposable on May 19, 1971, and free patents
were issued covering the same in favor of the private respondents, the said lots ceased
to be part of the public domain and, therefore, the Director of Lands lost jurisdiction
over the same.
5.Republic v. Court of Appeals,[101] where the Court stated
Proclamation No. 350, dated October 9, 1956, of President Magsaysay legally effected a
land grant to the Mindanao Medical Center, Bureau of Medical Services, Department of
Health, of the whole lot, validly sufficient for initial registration under the Land
Registration Act. Such land grant is constitutive of a fee simple title or absolute title in
favor of petitioner Mindanao Medical Center.Thus, Section 122 of the Act, which
governs the registration of grants or patents involving public lands, provides that
Whenever public lands in the Philippine Islands belonging to the Government of the
United States or to the Government of the Philippines are alienated, granted or
conveyed to persons or to public or private corporations, the same shall be brought
forthwith under the operation of this Act (Land Registration Act, Act 496) and shall
become registered lands.
The first four cases cited involve petitions to cancel the land patents and the corresponding
certificates of titles issued to private parties. These four cases uniformly hold that the Director of Lands
has no jurisdiction over private lands or that upon issuance of the certificate of title the land automatically
comes under the Torrens System. The fifth case cited involves the registration under the Torrens System
of a 12.8-hectare public land granted by the National Government to Mindanao Medical Center, a
government unit under the Department of Health. The National Government transferred the 12.8-hectare
public land to serve as the site for the hospital buildings and other facilities of Mindanao Medical Center,
which performed a public service. The Court affirmed the registration of the 12.8-hectare public land in
the name of Mindanao Medical Center under Section 122 of Act No. 496. This fifth case is an example of a
public land being registered under Act No. 496 without the land losing its character as a property of public
dominion.
In the instant case, the only patent and certificates of title issued are those in the name of PEA, a
wholly government owned corporation performing public as well as proprietary functions. No patent or
certificate of title has been issued to any private party. No one is asking the Director of Lands to cancel
PEAs patent or certificates of title. In fact, the thrust of the instant petition is that PEAs 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 Governments declared policy to
provide for a coordinated, economical and efficient reclamation of lands;
Whereas, Presidential Decree No. 3-A requires that all reclamation of areas shall be limited to the
National Government or any person authorized by it under proper contract;
Whereas, a central authority is needed to act on behalf of the National Government which shall ensure
a coordinated and integrated approach in the reclamation of lands;
Whereas, Presidential Decree No. 1084 creates the Public Estates Authority as a government
corporation to undertake reclamation of lands and ensure their maximum utilization in promoting
public welfare and interests; and
Whereas, Presidential Decree No. 1416 provides the President with continuing authority to reorganize the
national government including the transfer, abolition, or merger of functions and offices.
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the powers vested
in me by the Constitution and pursuant to Presidential Decree No. 1416, do hereby order and direct the
following:
Section 1. The Public Estates Authority (PEA) shall be primarily responsible for integrating, directing,
and coordinating all reclamation projects for and on behalf of the National Government. All reclamation
projects shall be approved by the President upon recommendation of the PEA, and shall be undertaken by
the PEA or through a proper contract executed by it with any person or entity; Provided, that, reclamation
projects of any national government agency or entity authorized under its charter shall be undertaken in
consultation with the PEA upon approval of the President.
xxx.
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, PEAs 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 PEAs name does not automatically make such lands private.
To allow vast areas of reclaimed lands of the public domain to be transferred to PEA as private
lands will sanction a gross violation of the constitutional ban on private corporations from acquiring any
kind of alienable land of the public domain. PEA will simply turn around, as PEA has now done under the
Amended JVA, and transfer several hundreds of hectares of these reclaimed and still to be reclaimed
lands to a single private corporation in only one transaction. This scheme will effectively nullify the
constitutional ban in Section 3, Article XII of the 1987 Constitution which was intended to diffuse equitably
the ownership of alienable lands of the public domain among Filipinos, now numbering over 80 million
strong.
This scheme, if allowed, can even be applied to alienable agricultural lands of the public domain
since PEA can acquire x x x any and all kinds of lands. This will open the floodgates to corporations and
even individuals acquiring hundreds of hectares of alienable lands of the public domain under the guise
that in the hands of PEA these lands are private lands. This will result in corporations amassing huge
landholdings never before seen in this country - creating the very evil that the constitutional ban was
designed to prevent. This will completely reverse the clear direction of constitutional development in this
country. The 1935 Constitution allowed private corporations to acquire not more than 1,024 hectares of
public lands.[105] The 1973 Constitution prohibited private corporations from acquiring any kind of public
land, and the 1987 Constitution has unequivocally reiterated this prohibition.
The contention of PEA and AMARI that public lands, once registered under Act No. 496 or PD No.
1529, automatically become private lands is contrary to existing laws. Several laws authorize lands of the
public domain to be registered under the Torrens System or Act No. 496, now PD No. 1529, without losing
their character as public lands. Section 122 of Act No. 496, and Section 103 of PD No. 1529, respectively,
provide as follows:
Act No. 496
Sec. 122. Whenever public lands in the Philippine Islands belonging to the x x x Government of the
Philippine Islands are alienated, granted, or conveyed to persons or the public or private corporations,
the same shall be brought forthwith under the operation of this Act and shall become registered lands.
PD No. 1529
Sec. 103. Certificate of Title to Patents. Whenever public land is by the Government alienated, granted or
conveyed to any person, the same shall be brought forthwith under the operation of this Decree.
(Emphasis supplied)
Based on its legislative history, the phrase conveyed to any person in Section 103 of PD No. 1529 includes
conveyances of public lands to public corporations.
Alienable lands of the public domain granted, donated, or transferred to a province, municipality,
or branch or subdivision of the Government, as provided in Section 60 of CA No. 141, may be registered
under the Torrens System pursuant to Section 103 of PD No. 1529. Such registration, however, is expressly
subject to the condition in Section 60 of CA No. 141 that the land shall not be alienated, encumbered or
otherwise disposed of in a manner affecting its title, except when authorized by Congress. This provision
refers to government reclaimed, foreshore and marshy lands of the public domain that have
been titled but still cannot be alienated or encumbered unless expressly authorized by Congress. The
need for legislative authority prevents the registered land of the public domain from becoming private
land that can be disposed of to qualified private parties.
The Revised Administrative Code of 1987 also recognizes that lands of the public domain may be
registered under the Torrens System. Section 48, Chapter 12, Book I of the Code states
Sec. 48. Official Authorized to Convey Real Property. Whenever real property of the Government is
authorized by law to be conveyed, the deed of conveyance shall be executed in behalf of the government
by the following:
(1) x x x
(2) For property belonging to the Republic of the Philippines, but titled in the name of any political
subdivision or of any corporate agency or instrumentality, by the executive head of the agency or
instrumentality. (Emphasis supplied)
Thus, private property purchased by the National Government for expansion of a public wharf may be
titled in the name of a government corporation regulating port operations in the country. Private property
purchased by the National Government for expansion of an airport may also be titled in the name of the
government agency tasked to administer the airport.Private property donated to a municipality for use as
a town plaza or public school site may likewise be titled in the name of the municipality.[106] All these
properties become properties of the public domain, and if already registered under Act No. 496 or PD No.
1529, remain registered land. There is no requirement or provision in any existing law for the de-
registration of land from the Torrens System.
Private lands taken by the Government for public use under its power of eminent domain become
unquestionably part of the public domain. Nevertheless, Section 85 of PD No. 1529 authorizes the Register
of Deeds to issue in the name of the National Government new certificates of title covering such
expropriated lands. Section 85 of PD No. 1529 states
Sec. 85. Land taken by eminent domain. Whenever any registered land, or interest therein, is expropriated
or taken by eminent domain, the National Government, province, city or municipality, or any other agency
or instrumentality exercising such right shall file for registration in the proper Registry a certified copy of
the judgment which shall state definitely by an adequate description, the particular property or interest
expropriated, the number of the certificate of title, and the nature of the public use. A memorandum of
the right or interest taken shall be made on each certificate of title by the Register of Deeds, and where
the fee simple is taken, a new certificate shall be issued in favor of the National Government, province,
city, municipality, or any other agency or instrumentality exercising such right for the land so taken. The
legal expenses incident to the memorandum of registration or issuance of a new certificate of title shall be
for the account of the authority taking the land or interest therein. (Emphasis supplied)
Consequently, lands registered under Act No. 496 or PD No. 1529 are not exclusively private or
patrimonial lands. Lands of the public domain may also be registered pursuant to existing laws.
AMARI makes a parting shot that the Amended JVA is not a sale to AMARI of the Freedom Islands
or of the lands to be reclaimed from submerged areas of Manila Bay. In the words of AMARI, the
Amended JVA is not a sale but a joint venture with a stipulation for reimbursement of the original cost
incurred by PEA for the earlier reclamation and construction works performed by the CDCP under its 1973
contract with the Republic. Whether the Amended JVA is a sale or a joint venture, the fact remains that
the Amended JVA requires PEA to cause the issuance and delivery of the certificates of title conveying
AMARIs Land Share in the name of AMARI.[107]
This stipulation still contravenes Section 3, Article XII of the 1987 Constitution which provides that
private corporations shall not hold such alienable lands of the public domain except by lease. The transfer
of title and ownership to AMARI clearly means that AMARI will hold the reclaimed lands other than by
lease. The transfer of title and ownership is a disposition of the reclaimed lands, a transaction considered
a sale or alienation under CA No. 141,[108] the Government Auditing Code,[109] and Section 3, Article XII of
the 1987 Constitution.
The Regalian doctrine is deeply implanted in our legal system. Foreshore and submerged areas
form part of the public domain and are inalienable. Lands reclaimed from foreshore and submerged areas
also form part of the public domain and are also inalienable, unless converted pursuant to law into
alienable or disposable lands of the public domain. Historically, lands reclaimed by the government are sui
generis, not available for sale to private parties unlike other alienable public lands. Reclaimed lands retain
their inherent potential as areas for public use or public service. Alienable lands of the public domain,
increasingly becoming scarce natural resources, are to be distributed equitably among our ever-growing
population. To insure such equitable distribution, the 1973 and 1987 Constitutions have barred private
corporations from acquiring any kind of alienable land of the public domain. Those who attempt to
dispose of inalienable natural resources of the State, or seek to circumvent the constitutional ban on
alienation of lands of the public domain to private corporations, do so at their own risk.
We can now summarize our conclusions as follows:
1. The 157.84 hectares of reclaimed lands comprising the Freedom Islands, now covered by
certificates of title in the name of PEA, are alienable lands of the public domain. PEA
may lease these lands to private corporations but may not sell or transfer ownership of
these lands to private corporations. PEA may only sell these lands to Philippine citizens,
subject to the ownership limitations in the 1987 Constitution and existing laws.
2. The 592.15 hectares of submerged areas of Manila Bay remain inalienable natural
resources of the public domain until classified as alienable or disposable lands open to
disposition and declared no longer needed for public service. The government can make
such classification and declaration only after PEA has reclaimed these submerged
areas. Only then can these lands qualify as agricultural lands of the public domain, which
are the only natural resources the government can alienate. In their present state, the
592.15 hectares of submerged areas are inalienable and outside the commerce of man.
3. Since the Amended JVA seeks to transfer to AMARI, a private corporation, ownership of
77.34 hectares[110] 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
hectares[111] of still submerged areas of Manila Bay, such transfer is void for being
contrary to Section 2, Article XII of the 1987 Constitution which prohibits the alienation
of natural resources other than agricultural lands of the public domain. PEA may reclaim
these submerged areas. Thereafter, the government can classify the reclaimed lands as
alienable or disposable, and further declare them no longer needed for public
service. Still, the transfer of such reclaimed alienable lands of the public domain to
AMARI will be void in view of Section 3, Article XII of the 1987 Constitution which
prohibits private corporations from acquiring any kind of alienable land of the public
domain.
Clearly, the Amended JVA violates glaringly Sections 2 and 3, Article XII of the 1987 Constitution. Under
Article 1409[112] of the Civil Code, contracts whose object or purpose is contrary to law, or whose object is
outside the commerce of men, are inexistent and void from the beginning. The Court must perform its
duty to defend and uphold the Constitution, and therefore declares the Amended JVA null and void ab
initio.

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

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

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

SO ORDERED.

Davide, Jr., C.J., Bellosillo, Puno, Vitug, Kapunan, Mendoza, Panganiban, Quisumbing, Ynares-
Santiago, Sandoval-Gutierrez, Austria-Martinez, and Corona, JJ., concur.
Republic of the Philippines
SUPREME COURT to declare NULL AND VOID the Joint Venture Agreement (JVA) dated March 9, 1993
Manila between the National Housing Authority and R-II Builders, Inc. and the Smokey
Mountain Development and Reclamation Project embodied therein; the subsequent
amendments to the said JVA; and all other agreements signed and executed in
EN BANC relation thereto including, but not limited to the Smokey Mountain Asset Pool
Agreement dated 26 September 1994 and the separate agreements for Phase I and
Phase II of the Projectas well as all other transactions which emanated therefrom,
FRANCISCO I. CHAVEZ, G.R. No. 164527 for being UNCONSTITUTIONAL and INVALID;
Petitioner,
Present: to enjoin respondentsparticularly respondent NHAfrom further implementing
and/or enforcing the said project and other agreements related thereto, and from
PUNO, CJ, further deriving and/or enjoying any rights, privileges and interest therefrom x x x;
QUISUMBING, and
YNARES-SANTIAGO,
SANDOVAL-GUTIERREZ, to compel respondents to disclose all documents and information relating to the
- versus - CARPIO, projectincluding, but not limited to, any subsequent agreements with respect to the
AUSTRIA-MARTINEZ, different phases of the project, the revisions over the original plan, the additional
CORONA, works incurred thereon, the current financial condition of respondent R-II Builders,
CARPIO MORALES, Inc., and the transactions made respecting the project.[1]
AZCUNA,
TINGA,
CHICO-NAZARIO, The Facts
GARCIA,
NATIONAL HOUSING VELASCO, On March 1, 1988, then President Corazon C. Aquino issued Memorandum Order No. (MO)
AUTHORITY, R-II BUILDERS, NACHURA, and 161[2] approving and directing the implementation of the Comprehensive and Integrated Metropolitan
INC., R-II HOLDINGS, INC., REYES, JJ. Manila Waste Management Plan (the Plan). The Metro Manila Commission, in coordination with various
HARBOUR CENTRE PORT government agencies, was tasked as the lead agency to implement the Plan as formulated by the
TERMINAL, INC., and Promulgated: Presidential Task Force on Waste Management created by Memorandum Circular No. 39. A day after, on
MR. REGHIS ROMERO II, March 2, 1988, MO 161-A[3] was issued, containing the guidelines which prescribed the functions and
Respondents. August 15, 2007 responsibilities of fifteen (15) various government departments and offices tasked to implement the Plan,
x-----------------------------------------------------------------------------------------x namely: Department of Public Works and Highway (DPWH), Department of Health (DOH), Department of
Environment and Natural Resources (DENR), Department of Transportation and Communication,
DECISION Department of Budget and Management, National Economic and Development Authority (NEDA),
VELASCO, JR., J.: Philippine Constabulary Integrated National Police, Philippine Information Agency and the Local
Government Unit (referring to the City of Manila), Department of Social Welfare and Development,
Presidential Commission for Urban Poor, National Housing Authority (NHA), Department of Labor and
In this Petition for Prohibition and Mandamus with Prayer for Temporary Restraining Order and/or Writ of Employment, Department of Education, Culture and Sports (now Department of Education), and
Preliminary Injunction under Rule 65, petitioner, in his capacity as taxpayer, seeks: Presidential Management Staff.

Specifically, respondent NHA was ordered to conduct feasibility studies and develop low-cost housing
projects at the dumpsite and absorb scavengers in NHA resettlement/low-cost housing projects.[4] On the
other hand, the DENR was tasked to review and evaluate proposed projects under the Plan with regard to
their environmental impact, conduct regular monitoring of activities of the Plan to ensure compliance
with environmental standards and assist DOH in the conduct of the study on hospital waste
management.[5]
At the time MO 161-A was issued by President Aquino, Smokey Mountain was a wasteland in Balut,
Tondo, Manila, where numerous Filipinos resided in subhuman conditions, collecting items that may have
some monetary value from the garbage. The Smokey Mountain dumpsite is bounded on the north by the
Estero Marala, on the south by the property of the National Government, on the east by the property of B
and I Realty Co., and on the west by Radial Road 10 (R-10).
Pursuant to MO 161-A, NHA prepared the feasibility studies of the Smokey Mountain low-cost housing
project which resulted in the formulation of the Smokey Mountain Development Plan and Reclamation of
the Area Across R-10 or the Smokey Mountain Development and Reclamation Project (SMDRP; the
Project). The Project aimed to convert the Smokey Mountain dumpsite into a habitable housing project,
inclusive of the reclamation of the area across R-10, adjacent to the Smokey Mountain as the enabling
component of the project.[6] Once finalized, the Plan was submitted to President Aquino for her approval.
On July 9, 1990, the Build-Operate-and-Transfer (BOT) Law (Republic Act No. [RA] 6957) was enacted.[7] Its
declared policy under Section 1 is [t]o recognize the indispensable role of the private sector as the main
engine for national growth and development and provide the most appropriate favorable incentives to
mobilize private resources for the purpose. Sec. 3 authorized and empowered [a]ll government
infrastructure agencies, including government-owned and controlled corporations and local government
units x x x to enter into contract with any duly pre-qualified private contractor for the financing,
construction, operation and maintenance of any financially viable infrastructure facilities through the
build-operate-transfer or build and transfer scheme.
RA 6957 defined build-and-transfer scheme as [a] contractual arrangement whereby the contractor
undertakes the construction, including financing, of a given infrastructure facility, and its turnover after
the completion to the government agency or local government unit concerned which shall pay the
contractor its total investment expended on the project, plus reasonable rate of return thereon. The last
paragraph of Sec. 6 of the BOT Law provides that the repayment scheme in the case of land reclamation
or the building of industrial estates may consist of [t]he grant of a portion or percentage of the reclaimed
land or industrial estate built, subject to the constitutional requirements with respect to the ownership of
lands.
On February 10, 1992, Joint Resolution No. 03[8] was passed by both houses of Congress. Sec. 1
of this resolution provided, among other things, that:
Section 1. There is hereby approved the following national infrastructure projects
for implementation under the provisions of Republic Act No. 6957 and its
implementing rules and regulations:
xxxx
(d) Port infrastructure like piers, wharves, quays, storage handling, ferry service and
related facilities;
xxxx
(k) Land reclamation, dredging and other related development facilities;
(l) Industrial estates, regional industrial centers and export processing zones
including steel mills, iron-making and petrochemical complexes and related
infrastructure and utilities;
xxxx
(p) Environmental and solid waste management-related facilities such as collection
equipment, composting plants, incinerators, landfill and tidal barriers, among others;
and
(q) Development of new townsites and communities and related facilities.
This resolution complied with and conformed to Sec. 4 of the BOT Law requiring the approval of all
national infrastructure projects by the Congress.
On January 17, 1992, President Aquino proclaimed MO 415[9] approving and directing the implementation
of the SMDRP. Secs. 3 and 4 of the Memorandum Order stated:
Section 3. The National Housing Authority is hereby directed to implement the
Smokey Mountain Development Plan and Reclamation of the Area Across R-
 10 through a private sector joint venture scheme at the least cost to the
government.
Section 4. The land area covered by the Smokey Mountain dumpsite is hereby
conveyed to the National Housing Authority as well as the area to be reclaimed
across R-10. (Emphasis supplied.)
In addition, the Public Estates Authority (PEA) was directed to assist in the evaluation of proposals
regarding the technical feasibility of reclamation, while the DENR was directed to (1) facilitate titling
of Smokey Mountain and of the area to be reclaimed and (2) assist in the technical evaluation of proposals
regarding environmental impact statements.[10]
In the same MO 415, President Aquino created an Executive Committee (EXECOM) to oversee the
implementation of the Plan, chaired by the National Capital Region-Cabinet Officer for Regional
Development (NCR-CORD) with the heads of the NHA, City of Manila, DPWH, PEA, Philippine Ports
Authority (PPA), DENR, and Development Bank of the Philippines (DBP) as members.[11] The NEDA
subsequently became a member of the EXECOM. Notably, in a September 2, 1994 Letter,[12] PEA General
Manager Amado Lagdameo approved the plans for the reclamation project prepared by the NHA.
In conformity with Sec. 5 of MO 415, an inter-agency technical committee (TECHCOM) was created
composed of the technical representatives of the EXECOM [t]o assist the NHA in the evaluation of the
project proposals, assist in the resolution of all issues and problems in the project to ensure that all
aspects of the development from squatter relocation, waste management, reclamation, environmental
protection, land and house construction meet governing regulation of the region and to facilitate the
completion of the project.[13]
Subsequently, the TECHCOM put out the Public Notice and Notice to Pre-Qualify and Bid for the right to
become NHAs joint venture partner in the implementation of the SMDRP. The notices were published in
newspapers of general circulation on January 23 and 26 and February 1, 14, 16, and 23, 1992,
respectively. Out of the thirteen (13) contractors who responded, only five (5) contractors fully complied
with the required pre-qualification documents. Based on the evaluation of the pre-qualification
documents, the EXECOM declared the New San Jose Builders, Inc. and R-II Builders, Inc. (RBI) as the top
two contractors.[14]
Thereafter, the TECHCOM evaluated the bids (which include the Pre-feasibility Study and Financing Plan)
of the top two (2) contractors in this manner:
(1) The DBP, as financial advisor to the Project, evaluated their Financial Proposals;
(2) The DPWH, PPA, PEA and NHA evaluated the Technical Proposals for the Housing Construction and
Reclamation;
(3) The DENR evaluated Technical Proposals on Waste Management and Disposal by conducting the
Environmental Impact Analysis; and
(4) The NHA and the City of Manila evaluated the socio-economic benefits presented by the proposals.
On June 30, 1992, Fidel V. Ramos assumed the Office of the President (OP) of the Philippines.
On August 31, 1992, the TECHCOM submitted its recommendation to the EXECOM to approve the R-II
Builders, Inc. (RBI) proposal which garnered the highest score of 88.475%.
Subsequently, the EXECOM made a Project briefing to President Ramos. As a result, President
Ramos issued Proclamation No. 39[15] on September 9, 1992, which reads:
WHEREAS, the National Housing Authority has presented a viable conceptual plan
to convert the Smokey Mountain dumpsite into a habitable housing project,
inclusive of the reclamation of the area across Road Radial 10 (R-10) adjacent to the
Smokey Mountain as the enabling component of the project;
xxxx
These parcels of land of public domain are hereby placed under the
administration and disposition of the National Housing Authority to develop,
subdivide and dispose to qualified beneficiaries, as well as its development for
mix land use (commercial/industrial) to provide employment opportunities to on-
site families and additional areas for port-related activities.
In order to facilitate the early development of the area for disposition, the
Department of Environment and Natural Resources, through the Lands and
Management Bureau, is hereby directed to approve the boundary and subdivision
survey and to issue a special patent and title in the name of the National Housing
Authority, subject to final survey and private rights, if any there be.(Emphasis
supplied.)
On October 7, 1992, President Ramos authorized NHA to enter into a Joint Venture Agreement with RBI
[s]ubject to final review and approval of the Joint Venture Agreement by the Office of the President.[16]
On March 19, 1993, the NHA and RBI entered into a Joint Venture Agreement[17] (JVA) for the
development of the Smokey Mountain dumpsite and the reclamation of the area across R-10 based on
Presidential Decree No. (PD) 757[18] which mandated NHA [t]o undertake the physical and socio-economic
upgrading and development of lands of the public domain identified for housing, MO 161-A which
required NHA to conduct the feasibility studies and develop a low-cost housing project at the Smokey
Mountain, and MO 415 as amended by MO 415-A which approved the Conceptual Plan for Smokey
Mountain and creation of the EXECOM and TECHCOM. Under the JVA, the Project involves the clearing
of Smokey Mountain for eventual development into a low cost medium rise housing complex and
industrial/commercial site with the reclamation of the area directly across [R-10] to act as the enabling
component of the Project.[19] The JVA covered a lot in Tondo, Manila with an area of two hundred twelve
thousand two hundred thirty-four (212,234) square meters and another lot to be reclaimed also in Tondo
with an area of four hundred thousand (400,000) square meters.
The Scope of Work of RBI under Article II of the JVA is as follows:
a) To fully finance all aspects of development of Smokey Mountain and reclamation
of no more than 40 hectares of Manila Bay area across Radial Road 10.
b) To immediately commence on the preparation of feasibility report and detailed
engineering with emphasis to the expedient acquisition of the Environmental
Clearance Certificate (ECC) from the DENR.
c) The construction activities will only commence after the acquisition of the ECC,
and
d) Final details of the contract, including construction, duration and delivery
timetables, shall be based on the approved feasibility report and detailed
engineering.
Other obligations of RBI are as follows:
2.02 The [RBI] shall develop the PROJECT based on the Final Report and Detailed
Engineering as approved by the Office of the President. All costs and expenses for
hiring technical personnel, date gathering, permits, licenses, appraisals, clearances,
testing and similar undertaking shall be for the account of the [RBI].
2.03 The [RBI] shall undertake the construction of 3,500 temporary housing units
complete with basic amenities such as plumbing, electrical and sewerage facilities
within the temporary housing project as staging area to temporarily house the
squatter families from the Smokey Mountain while development is being
undertaken. These temporary housing units shall be turned over to the [NHA] for
disposition.
2.04 The [RBI] shall construct 3,500 medium rise low cost permanent housing units
on the leveled Smokey Mountain complete with basic utilities and amenities, in
accordance with the plans and specifications set forth in the Final Report approved
by the [NHA]. Completed units ready for mortgage take out shall be turned over by
the [RBI] to NHA on agreed schedule.
2.05 The [RBI] shall reclaim forty (40) hectares of Manila Bay area directly across [R-
10] as contained in Proclamation No. 39 as the enabling component of the project
and payment to the [RBI] as its asset share.
2.06 The [RBI] shall likewise furnish all labor materials and equipment necessary to
complete all herein development works to be undertaken on a phase to phase basis
in accordance with the work program stipulated therein.
The profit sharing shall be based on the approved pre-feasibility report submitted to the EXECOM, viz:
For the developer (RBI):
1. To own the forty (40) hectares of reclaimed land.
2. To own the commercial area at the Smokey Mountain area composed of 1.3
hectares, and
3. To own all the constructed units of medium rise low cost permanent housing
units beyond the 3,500 units share of the [NHA].
For the NHA:
1. To own the temporary housing consisting of 3,500 units.
 2. To own the cleared and fenced incinerator site consisting of 5 hectares situated
at the Smokey Mountain area.
3. To own the 3,500 units of permanent housing to be constructed by [RBI] at
the Smokey Mountain area to be awarded to qualified on site residents.
4. To own the Industrial Area site consisting of 3.2 hectares, and
5. To own the open spaces, roads and facilities within the Smokey Mountain area.
In the event of extraordinary increase in labor, materials, fuel and non-recoverability of total project
expenses,[20] the OP, upon recommendation of the NHA, may approve a corresponding adjustment in the
enabling component.
For the NHA:
The functions and responsibilities of RBI and NHA are as follows:
For RBI:
4.01 Immediately commence on the preparation of the FINAL REPORT with
emphasis to the expedient acquisition, with the assistance of the [NHA] of
Environmental Compliance Certificate (ECC) from the Environmental Management
Bureau (EMB) of the [DENR]. Construction shall only commence after the
acquisition of the ECC. The Environment Compliance Certificate (ECC) shall form
part of the FINAL REPORT.
The FINAL REPORT shall provide the necessary subdivision and housing plans,
detailed engineering and architectural drawings, technical specifications and other
related and required documents relative to the Smokey Mountain area.
With respect to the 40-hectare reclamation area, the [RBI] shall have the discretion
to develop the same in a manner that it deems necessary to recover the [RBIs]
investment, subject to environmental and zoning rules.
4.02 Finance the total project cost for land development, housing construction and
reclamation of the PROJECT.
4.03 Warrant that all developments shall be in compliance with the requirements of
the FINAL REPORT.
4.04 Provide all administrative resources for the submission of project
accomplishment reports to the [NHA] for proper evaluation and supervision on the
actual implementation.
4.05 Negotiate and secure, with the assistance of the [NHA] the grant of rights of
way to the PROJECT, from the owners of the adjacent lots for access road, water,
electrical power connections and drainage facilities.
4.06 Provide temporary field office and transportation vehicles (2 units), one (1)
complete set of computer and one (1) unit electric typewriter for the [NHAs] field
personnel to be charged to the PROJECT.
4.07 The [NHA] shall be responsible for the removal and relocation of all squatters
within Smokey Mountain to the Temporary Housing Complex or to other areas
prepared as relocation areas with the assistance of the [RBI]. The [RBI] shall be
responsible in releasing the funds allocated and committed for relocation as
detailed in the FINAL REPORT.
4.08 Assist the [RBI] and shall endorse granting of exemption fees in the acquisition
of all necessary permits, licenses, appraisals, clearances and accreditations for the
PROJECT subject to existing laws, rules and regulations.
4.09 The [NHA] shall inspect, evaluate and monitor all works at
the Smokey Mountain and Reclamation Area while the land development and
construction of housing units are in progress to determine whether the
development and construction works are undertaken in accordance with the FINAL
REPORT. If in its judgment, the PROJECT is not pursued in accordance with the FINAL
REPORT, the [NHA] shall require the [RBI] to undertake necessary remedial
works. All expenses, charges and penalties incurred for such remedial, if any, shall
be for the account of the [RBI].
4.10 The [NHA] shall assist the [RBI] in the complete electrification of the PROJECT. x
xx
 4.11 Handle the processing and documentation of all sales transactions related to
its assets shares from the venture such as the 3,500 units of permanent housing and
the allotted industrial area of 3.2 hectares.
4.12 All advances outside of project costs made by the [RBI] to the [NHA] shall be
deducted from the proceeds due to the [NHA].
4.13 The [NHA] shall be responsible for the acquisition of the Mother Title for
the Smokey Mountain and Reclamation Area within 90 days upon submission of
Survey returns to the Land Management Sector. The land titles to the 40-hectare
reclaimed land, the 1.3 hectare commercial area at the Smokey Mountain area and
the constructed units of medium-rise permanent housing units beyond the 3,500
units share of the [NHA] shall be issued in the name of the [RBI] upon completion of
the project. However, the [RBI] shall have the authority to pre-sell its share as
indicated in this agreement.
The final details of the JVA, which will include the construction duration, costs, extent of reclamation, and
delivery timetables, shall be based on the FINAL REPORT which will be contained in a Supplemental
Agreement to be executed later by the parties.
The JVA may be modified or revised by written agreement between the NHA and RBI specifying the
clauses to be revised or modified and the corresponding amendments.
If the Project is revoked or terminated by the Government through no fault of RBI or by mutual agreement,
the Government shall compensate RBI for its actual expenses incurred in the Project plus a reasonable
rate of return not exceeding that stated in the feasibility study and in the contract as of the date of such
revocation, cancellation, or termination on a schedule to be agreed upon by both parties.
As a preliminary step in the project implementation, consultations and dialogues were conducted with the
settlers of the Smokey Mountain Dumpsite Area. At the same time, DENR started processing the
application for the Environmental Clearance Certificate (ECC) of the SMDRP. As a result however of the
consultative dialogues, public hearings, the report on the on-site field conditions, the Environmental
Impact Statement (EIS) published on April 29 and May 12, 1993 as required by the Environmental
Management Bureau of DENR, the evaluation of the DENR, and the recommendations from other
government agencies, it was discovered that design changes and additional work have to be undertaken
to successfully implement the Project.[21]
Thus, on February 21, 1994, the parties entered into another agreement denominated as the Amended
and Restated Joint Venture Agreement[22] (ARJVA) which delineated the different phases of the
Project. Phase I of the Project involves the construction of temporary housing units for the current
residents of the Smokey Mountain dumpsite, the clearing and leveling-off of the dumpsite, and the
construction of medium-rise low-cost housing units at the cleared and leveled dumpsite.[23] Phase II of the
Project involves the construction of an incineration area for the on-site disposal of the garbage at the
dumpsite.[24] The enabling component or consideration for Phase I of the Project was increased from 40
hectares of reclaimed lands across R-10 to 79 hectares.[25] The revision also provided for the enabling
component for Phase II of 119 hectares of reclaimed lands contiguous to the 79 hectares of reclaimed
lands for Phase I.[26] Furthermore, the amended contract delineated the scope of works and the terms and
conditions of Phases I and II, thus:
The PROJECT shall consist of Phase I and Phase II.
Phase I shall involve the following:
a. the construction of 2,992 units of temporary housing for the affected
residents while clearing and development of Smokey Mountain [are] being
undertaken
b. the clearing of Smokey Mountain and the subsequent construction of
3,520 units of medium rise housing and the development of the
industrial/commercial site within the SmokeyMountain area
c. the reclamation and development of a 79 hectare area directly across
Radial Road 10 to serve as the enabling component of Phase I
Phase II shall involve the following:
a. the construction and operation of an incinerator plant that will conform
to the emission standards of the DENR
b. the reclamation and development of 119-hectare area contiguous to that to be
reclaimed under Phase I to serve as the enabling component of Phase II.
Under the ARJVA, RBI shall construct 2,992 temporary housing units, a reduction from 3,500 units under
the JVA.[27] However, it was required to construct 3,520 medium-rise low-cost permanent housing units
instead of 3,500 units under the JVA. There was a substantial change in the design of the permanent
housing units such that a loft shall be incorporated in each unit so as to increase the living space from 20 c. Silt removal approximately Need to remove more than 3.0
to 32 square meters. The additions and changes in the Original Project Component are as follows: 1.0 meter only meters of silt after sub-soil investigation.[28]
These material and substantial modifications served as justifications for the increase in the
ORIGINAL CHANGES/REVISIONS share of RBI from 40 hectares to 79 hectares of reclaimed land.

1. TEMPORARY HOUSING Under the JVA, the specific costs of the Project were not stipulated but under the ARJVA, the stipulated
cost for Phase I was pegged at six billion six hundred ninety-three million three
Wood/Plywood, ga. 31 G.I. Concrete/Steel Frame Structure Sheet hundred eighty-seven thousand three hundred sixty-four pesos (PhP 6,693,387,364).
usable life of 3 years, gauge 26 G.I. roofing sheets future 12 SM floor
area. use as permanent structures for factory and warehouses In his February 10, 1994 Memorandum, the Chairperson of the SMDRP EXECOM submitted the
mixed 17 sm & 12 sm floor area. ARJVA for approval by the OP. After review of said agreement, the OP directed that certain terms and
conditions of the ARJVA be further clarified or amended preparatory to its approval. Pursuant to the
2. MEDIUM RISE MASS Presidents directive, the parties reached an agreement on the clarifications and amendments required to
HOUSING be made on the ARJVA.

Box type precast Shelter Conventional and precast component 20 On August 11, 1994, the NHA and RBI executed an Amendment To the Amended and Restated Joint
square meter concrete structures, 32 square Venture Agreement (AARJVA)[29] clarifying certain terms and condition of the ARJVA, which was submitted
floor area with 2.4 meter meter floor area with loft floor height; bare to President Ramos for approval, to wit:
type, 160 units/ (sleeping quarter) 3.6 m. floor
building. height, painted and improved
architectural faade, 80 units/ Phase II shall involve the following:
building.
3. MITIGATING a. the construction and operation of an incinerator plant that will conform to the
MEASURES emission standards of the DENR

3.1 For reclamation work Use of clean dredgefill material below the b. the reclamation and development of 119-hectare area contiguous to that to be
MLLW and SM reclaimed under Phase I to serve as the enabling component of Phase II, the
material mixed with exact size and configuration of which shall be approved by the SMDRP
dredgefill above Committee[30]
MLLW.
Other substantial amendments are the following:
a. 100% use of Smokey
Mountain material as 4. Paragraph 2.05 of Article II of the ARJVA is hereby amended to read as follows:
dredgefill Use of Steel Sheet Piles needed
for longer depth of embedment. 2.05. The DEVELOPER shall reclaim seventy nine (79) hectares of the
b. Concrete Sheet Piles Manila Bay area directly across Radial Road 10 (R-10) to serve as
short depth of payment to the DEVELOPER as its asset share for Phase I and to develop
embedment such land into commercial area with port facilities; provided, that the
port plan shall be integrated with the Philippine Port Authoritys North
 Harbor plan for the Manila Bay area and provided further, that the final
reclamation and port plan for said reclaimed area shall be submitted for
approval by the Public Estates Authority and the Philippine Ports
Authority, respectively: provided finally, that subject to par. 2.02 above,
actual reclamation work may commence upon approval of the final
reclamation plan by the Public Estates Authority.
xxxx
9. A new paragraph to be numbered 5.05 shall be added to Article V of the ARJVA,
and shall read as follows:
5.05. In the event this Agreement is revoked, cancelled or
terminated by the AUTHORITY through no fault of the DEVELOPER, the
AUTHORITY shall compensate the DEVELOPER for the value of the
completed portions of, and actual expenditures on the PROJECT plus a
reasonable rate of return thereon, not exceeding that stated in the Cost
Estimates of Items of Work previously approved by the SMDRP Executive
Committee and the AUTHORITY and stated in this Agreement, as of the
date of such revocation, cancellation, or termination, on a schedule to be
agreed upon by the parties, provided that said completed portions of
Phase I are in accordance with the approved FINAL REPORT.
Afterwards, President Ramos issued Proclamation No. 465 dated August 31, 1994[31] increasing
the proposed area for reclamation across R-10 from 40 hectares to 79 hectares,[32] to wit:
NOW, THEREFORE, I, FIDEL V. RAMOS, President of the Republic of the
Philippines, by virtue of the powers vested in me by the law, and as recommended
by the SMDRP Executive Committee, do hereby authorize the increase of the area
of foreshore or submerged lands of Manila Bay to be reclaimed, as previously
authorized under Proclamation No. 39 (s. 1992) and Memorandum Order No. 415 (s.
1992), from Four Hundred Thousand (400,000) square meters, more or less, to
Seven Hundred Ninety Thousand (790,000) square meters, more or less.
On September 1, 1994, pursuant to Proclamation No. 39, the DENR issued Special Patent No.
3591 conveying in favor of NHA an area of 211,975 square meters covering the Smokey Mountain
Dumpsite.
In its September 7, 1994 letter to the EXECOM, the OP through then Executive Secretary
Teofisto T. Guingona, Jr., approved the ARJVA as amended by the AARJVA.
On September 8, 1994, the DENR issued Special Patent 3592 pursuant to Proclamation No. 39,
conveying in favor of NHA a 401,485-square meter area.
On September 26, 1994, the NHA, RBI, Home Insurance and Guaranty Corporation (HIGC), now
known as the Home Guaranty Corporation, and the Philippine National Bank (PNB)[33] executed the
Smokey Mountain Asset Pool Formation Trust Agreement (Asset Pool Agreement).[34] Thereafter, a
Guaranty Contract was entered into by NHA, RBI, and HIGC.
On June 23, 1994, the Legislature passed the Clean Air Act.[35] The Act made the establishment
of an incinerator illegal and effectively barred the implementation of the planned incinerator project
under Phase II. Thus, the off-site disposal of the garbage at the Smokey Mountain became necessary.[36]
The land reclamation was completed in August 1996.[37]
Sometime later in 1996, pursuant likewise to Proclamation No. 39, the DENR issued Special
Patent No. 3598 conveying in favor of NHA an additional 390,000 square meter area.
During the actual construction and implementation of Phase I of the SMDRP, the Inter-Agency
Technical Committee found and recommended to the EXECOM on December 17, 1997 that additional
works were necessary for the completion and viability of the Project. The EXECOM approved the
recommendation and so, NHA instructed RBI to implement the change orders or necessary works.[38]
Such necessary works comprised more than 25% of the original contract price and as a result,
the Asset Pool incurred direct and indirect costs. Based on C1 12 A of the Implementing Rules and
Regulations of PD 1594, a supplemental agreement is required for all change orders and extra work orders,
the total aggregate cost of which being more than twenty-five (25%) of the escalated original contract
price.
The EXECOM requested an opinion from the Department of Justice (DOJ) to determine
whether a bidding was required for the change orders and/or necessary works. The DOJ, through DOJ
Opinion Nos. 119 and 155 dated August 26, 1993 and November 12, 1993, opined that a rebidding,
pursuant to the aforequoted provisions of the implementing rules (referring to PD 1594) would not be
necessary where the change orders inseparable from the original scope of the project, in which case, a
negotiation with the incumbent contractor may be allowed.
Thus, on February 19, 1998, the EXECOM issued a resolution directing NHA to enter into a
supplemental agreement covering said necessary works.
On March 20, 1998, the NHA and RBI entered into a Supplemental Agreement covering the
aforementioned necessary works and submitted it to the President on March 24, 1998 for approval.
Outgoing President Ramos decided to endorse the consideration of the Supplemental
Agreement to incoming President Joseph E. Estrada. On June 30, 1998, Estrada became the 13th
Philippine President.
However, the approval of the Supplemental Agreement was unacted upon for five months. As
a result, the utilities and the road networks were constructed to cover only the 79-hectare original
enabling component granted under the ARJVA. The 220-hectare extension of the 79-hectare area was no
longer technically feasible. Moreover, the financial crises and unreliable real estate situation made it
difficult to sell the remaining reclaimed lots. The devaluation of the peso and the increase in interest cost
led to the substantial increase in the cost of reclamation.
On August 1, 1998, the NHA granted RBIs request to suspend work on the SMDRP due to the
delay in the approval of the Supplemental Agreement, the consequent absence of an enabling component
to cover the cost of the necessary works for the project, and the resulting inability to replenish the Asset
Pool funds partially used for the completion of the necessary works.[39]
As of August 1, 1998 when the project was suspended, RBI had already accomplished a portion
of the necessary works and change orders which resulted in [RBI] and the Asset Pool incurring advances
for direct and indirect cost which amount can no longer be covered by the 79-hectare enabling
component under the ARJVA.[40]
Repeated demands were made by RBI in its own capacity and on behalf of the asset pool on
NHA for payment for the advances for direct and indirect costs subject to NHA validation.
In November 1998, President Estrada issued Memorandum Order No. 33 reconstituting the
SMDRP EXECOM and further directed it to review the Supplemental Agreement and submit its
recommendation on the completion of the SMDRP.
The reconstituted EXECOM conducted a review of the project and recommended the
amendment of the March 20, 1998 Supplemental Agreement to make it more feasible and to identify and
provide new sources of funds for the project and provide for a new enabling component to cover the
payment for the necessary works that cannot be covered by the 79-hectare enabling component under
the ARJVA.[41]
The EXECOM passed Resolution Nos. 99-16-01 and 99-16-02[42] which approved the
modification of the Supplemental Agreement, to wit:
a) Approval of 150 hectares additional reclamation in order to make the
reclamation feasible as part of the enabling component.
b) The conveyance of the 15-hectare NHA Vitas property (actually 17 hectares based
on surveys) to the SMDRP Asset Pool.
c) The inclusion in the total development cost of other additional, necessary and
indispensable infrastructure works and the revision of the original cost stated in the
Supplemental Agreement dated March 20, 1998 from PhP 2,953,984,941.40 to PhP
2,969,134,053.13.
d) Revision in the sharing agreement between the parties.
In the March 23, 2000 OP Memorandum, the EXECOM was authorized to proceed and
complete the SMDRP subject to certain guidelines and directives.
After the parties in the case at bar had complied with the March 23, 2000 Memorandum, the
NHA November 9, 2000 Resolution No. 4323 approved the conveyance of the 17-hectare Vitas property in
favor of the existing or a newly created Asset Pool of the project to be developed into a mixed
commercial-industrial area, subject to certain conditions.
On January 20, 2001, then President Estrada was considered resigned. On the same day,
President Gloria M. Arroyo took her oath as the 14th President of the Philippines.
As of February 28, 2001, the estimated total project cost of the SMDRP has reached P8.65
billion comprising of P4.78 billion in direct cost and P3.87 billion in indirect cost,[43] subject to validation by
the NHA.
On August 28, 2001, NHA issued Resolution No. 4436 to pay for the various necessary
works/change orders to SMDRP, to effect the corresponding enabling component consisting of the
conveyance of the NHAs Vitas Property and an additional 150-hectare reclamation area and to authorize
the release by NHA of PhP 480 million as advance to the project to make the Permanent Housing xxxx
habitable, subject to reimbursement from the proceeds of the expanded enabling component.[44]
5. SETTLEMENT OF CLAIMS
On November 19, 2001, the Amended Supplemental Agreement (ASA) was signed by the
parties, and on February 28, 2002, the Housing and Urban Development Coordinating Council (HUDCC) 5.1 Subject to the validation of the DEVELOPERs claims, the NHA
submitted the agreement to the OP for approval. hereby agrees to initially compensate the Developer for
In the July 20, 2002 Cabinet Meeting, HUDCC was directed to submit the works covered by the the abovementioned costs as follows:
PhP 480 million [advance to the Project] and the ASA to public bidding. [45] On August 28, 2002, the HUDCC
informed RBI of the decision of the Cabinet. a. Direct payment to DEVELOPER of the amounts herein
listed in the following manner:
In its September 2, 2002 letter to the HUDCC Chairman, RBI lamented the decision of the a.1 P250 Million in cash from the escrow account in
government to bid out the remaining works under the ASA thereby unilaterally terminating the Project accordance with Section 2 herewith;
with RBI and all the agreements related thereto. RBI demanded the payment of just compensation for all
accomplishments and costs incurred in developing the SMDRP plus a reasonable rate of return thereon a.2 Conveyance of a 3 hectare portion of the
pursuant to Section 5.05 of the ARJVA and Section 6.2 of the ASA.[46] Vitas Industrial area immediately after
joint determination of the appraised
Consequently, the parties negotiated the terms of the termination of the JVA and other value of the said property in accordance
subsequent agreements. with the procedure herein set forth in
the last paragraph of Section 5.3. For
On August 27, 2003, the NHA and RBI executed a Memorandum of Agreement (MOA) whereby purposes of all payments to be made
both parties agreed to terminate the JVA and other subsequent agreements, thus: through conveyance of real properties,
the parties shall secure from the NHA
Board of Directors all documents
1. TERMINATION necessary and sufficient to effect the
transfer of title over the properties to be
1.1 In compliance with the Cabinet directive dated 30 July 2002 to conveyed to RBI, which documents shall
submit the works covered by the P480 Million and the be issued within a reasonable period.
ASA to public bidding, the following agreements
executed by and between the NHA and the DEVELOPER 5.2 Any unpaid balance of the DEVELOPERS claims determined after
are hereby terminated, to wit: the validation process referred to in Section 4 hereof,
may be paid in cash, bonds or through the conveyance of
a. Joint Venture Agreement (JVA) dated 19 March 1993 properties or any combination thereof. The manner,
b. Amended and Restated Joint Venture Agreement terms and conditions of payment of the balance shall be
(ARJVA) dated 21 February 1994 specified and agreed upon later within a period of three
c. Amendment and Restated Joint Venture Agreement months from the time a substantial amount representing
dated 11 August 1994 the unpaid balance has been validated pursuant hereto
d. Supplemental Agreement dated 24 March 1998 including, but not limited to the programming of
e. Amended Supplemental Agreement (ASA) dated 19 quarterly cash payments to be sourced by the NHA from
November 2001.
 its budget for debt servicing, from its income or from any
other sources.
5.3 In any case the unpaid balance is agreed to be paid, either
partially or totally through conveyance of properties, the
parties shall agree on which properties shall be subject to
conveyance. The NHA and DEVELOPER hereby agree to
determine the valuation of the properties to be conveyed
by getting the average of the appraisals to be made by
two (2) mutually acceptable independent appraisers.
Meanwhile, respondent Harbour Centre Port Terminal, Inc. (HCPTI) entered into an agreement with the
asset pool for the development and operations of a port in the Smokey Mountain Area which is a major
component of SMDRP to provide a source of livelihood and employment for Smokey Mountain residents
and spur economic growth. A Subscription Agreement was executed between the Asset Pool and HCPTI
whereby the asset pool subscribed to 607 million common shares and 1,143 million preferred shares of
HCPTI. The HCPTI preferred shares had a premium and penalty interest of 7.5% per annum and a
mandatory redemption feature. The asset pool paid the subscription by conveying to HCPTI a 10-hectare
land which it acquired from the NHA being a portion of the reclaimed land of the SMDRP. Corresponding
certificates of titles were issued to HCPTI, namely: TCT Nos. 251355, 251356, 251357, and 251358.
Due to HCPTIs failure to obtain a license to handle foreign containerized cargo from PPA, it suffered a net
income loss of PhP 132,621,548 in 2002 and a net loss of PhP 15,540,063 in 2003. The Project Governing
Board of the Asset Pool later conveyed by way of dacion en pago a number of HCPTI shares to RBI in lieu
of cash payment for the latters work in SMDRP.
On August 5, 2004, former Solicitor General Francisco I. Chavez, filed the instant petition which impleaded
as respondents the NHA, RBI, R-II Holdings, Inc. (RHI), HCPTI, and Mr. Reghis Romero II, raising
constitutional issues.
The NHA reported that thirty-four (34) temporary housing structures and twenty-one (21) permanent
housing structures had been turned over by respondent RBI. It claimed that 2,510 beneficiary-families
belonging to the poorest of the poor had been transferred to their permanent homes and benefited from
the Project.
The Issues
The grounds presented in the instant petition are:
I
NEITHER RESPONDENT NHA NOR RESPONDENT R-II BUILDERS MAY VALIDLY
RECLAIM FORESHORE AND SUBMERGED LAND BECAUSE:
1. RESPONDENT NHA AND R-II BUILDERS WERE NEVER GRANTED ANY POWER AND
AUTHORITY TO RECLAIM LANDS OF THE PUBLIC DOMAIN AS THIS POWER IS VESTED
EXCLUSIVELY WITH THE PEA.
2. EVEN ASSUMING THAT RESPONDENTS NHA AND R-II BUILDERS WERE GIVEN THE
POWER AND AUTHORITY TO RECLAIM FORESHORE AND SUBMERGED LAND, THEY
WERE NEVER GIVEN THE AUTHORITY BY THE DENR TO DO SO.
II
RESPONDENT R-II BUILDERS CANNOT ACQUIRE THE RECLAIMED FORESHORE AND
SUBMERGED LAND AREAS BECAUSE:
1. THE RECLAIMED FORESHORE AND SUBMERGED PARCELS OF LAND ARE
INALIENABLE PUBLIC LANDS WHICH ARE BEYOND THE COMMERCE OF MAN.
2. ASSUMING ARGUENDO THAT THE SUBJECT RECLAIMED FORESHORE AND
SUBMERGED PARCELS OF LAND WERE ALREADY DECLARED ALIENABLE
LANDS OF THE PUBLIC DOMAIN, RESPONDENT R-II BUILDERS STILL
COULD NOT ACQUIRE THE SAME BECAUSE THERE WAS NEVER ANY
DECLARATION THAT THE SAID LANDS WERE NO LONGER NEEDED FOR
PUBLIC USE.
3. EVEN ASSUMING THAT THE SUBJECT RECLAIMED LANDS ARE ALIENABLE AND NO
LONGER NEEDED FOR PUBLIC USE, RESPONDENT R-II BUILDERS STILL CANNOT
ACQUIRE THE SAME BECAUSE THERE WAS NEVER ANY LAW AUTHORIZING THE SALE
THEREOF.
4. THERE WAS NEVER ANY PUBLIC BIDDING AWARDING OWNERSHIP OF
THE SUBJECT LAND TO RESPONDENT R-II BUILDERS.
 5. ASSUMING THAT ALL THE REQUIREMENTS FOR A VALID TRANSFER OF ALIENABLE
PUBLIC HAD BEEN PERFORMED, RESPONDENT R-II BUILDERS, BEING
PRIVATE CORPORATION IS NONETHELESS EXPRESSLYPROHIBITED BY THE
PHILIPPINE CONSTITUTION TO ACQUIRE LANDS OF THE PUBLIC DOMAIN.
III
RESPONDENT HARBOUR, BEING A PRIVATE CORPORATION WHOSE MAJORITY
STOCKS ARE OWNED AND CONTROLLED BY RESPONDENT ROMEROS
CORPORATIONS R-II BUILDERS AND R-II HOLDINGS IS DISQUALIFIED FROM BEING A
TRANSFEREE OF PUBLIC LAND.
IV
RESPONDENTS MUST BE COMPELLED TO DISCLOSE ALL INFORMATION RELATED TO
THE SMOKEY MOUNTAIN DEVELOPMENT AND RECLAMATION PROJECT.
The Courts Ruling
Before we delve into the substantive issues raised in this petition, we will first deal with several
procedural matters raised by respondents.
Whether petitioner has the requisite locus standi to file this case
Respondents argue that petitioner Chavez has no legal standing to file the petition.
Only a person who stands to be benefited or injured by the judgment in the suit or entitled to
the avails of the suit can file a complaint or petition.[47] Respondents claim that petitioner is not a proper
party-in-interest as he was unable to show that he has sustained or is in immediate or imminent danger of
sustaining some direct and personal injury as a result of the execution and enforcement of the assailed
contracts or agreements.[48] Moreover, they assert that not all government contracts can justify a
taxpayers suit especially when no public funds were utilized in contravention of the Constitution or a law.
We explicated in Chavez v. PCGG[49] that in cases where issues of transcendental public
importance are presented, there is no necessity to show that petitioner has experienced or is in actual
danger of suffering direct and personal injury as the requisite injury is assumed. We find our ruling
in Chavez v. PEA[50] as conclusive authority on locus standi in the case at bar since the issues raised in this
petition are averred to be in breach of the fair diffusion of the countrys natural resources and the
constitutional right of a citizen to information which have been declared to be matters of transcendental
public importance. Moreover, the pleadings especially those of respondents readily reveal that public
funds have been indirectly utilized in the Project by means of Smokey Mountain Project Participation
Certificates (SMPPCs) bought by some government agencies.
Hence, petitioner, as a taxpayer, is a proper party to the instant petition before the court.
Whether petitioners direct recourse to this Court was proper
Respondents are one in asserting that petitioner circumvents the principle of hierarchy of courts in his
petition. Judicial hierarchy was made clear in the case of People v. Cuaresma, thus:
There is after all a hierarchy of courts. That hierarchy is determinative of the venue
of appeals, and should also serve as a general determinant of the appropriate forum
for petitions for the extraordinary writs. A becoming regard for that judicial
hierarchy most certainly indicates that petitions for the issuance of extraordinary
writs against first level (inferior) courts should be filed with the Regional Trial Court,
and those against the latter, with the Court of Appeals. A direct invocation of the
Supreme Courts original jurisdiction to issue these writs should be allowed only
when there are special and important reasons therefor, clearly and specifically set
out in the petition. This is established policy. It is a policy that is necessary to
prevent inordinate demands upon the Courts time and attention which are better
devoted to those matters within its exclusive jurisdiction, and to prevent further
over-crowding of the Courts docket.[51] x x x
The OSG claims that the jurisdiction over petitions for prohibition and mandamus is concurrent
with other lower courts like the Regional Trial Courts and the Court of Appeals. Respondent NHA argues
that the instant petition is misfiled because it does not introduce special and important reasons or
exceptional and compelling circumstances to warrant direct recourse to this Court and that the lower
courts are more equipped for factual issues since this Court is not a trier of facts. Respondents RBI and RHI
question the filing of the petition as this Court should not be unduly burdened with repetitions, invocation
of jurisdiction over constitutional questions it had previously resolved and settled.
In the light of existing jurisprudence, we find paucity of merit in respondents postulation.
While direct recourse to this Court is generally frowned upon and discouraged, we have however ruled
in Santiago v. Vasquez that such resort to us may be allowed in certain situations, wherein this Court ruled
that petitions for certiorari, prohibition, or mandamus, though cognizable by other courts, may directly be
filed with us if the redress desired cannot be obtained in the appropriate courts or where exceptional
compelling circumstances justify availment of a remedy within and calling for the exercise of [this Courts]
primary jurisdiction.[52]
The instant petition challenges the constitutionality and legality of the SMDRP involving several hectares
of government land and hundreds of millions of funds of several government agencies. Moreover, serious
constitutional challenges are made on the different aspects of the Project which allegedly affect the right
of Filipinos to the distribution of natural resources in the country and the right to information of a
citizenmatters which have been considered to be of extraordinary significance and grave consequence to
the public in general. These concerns in the instant action compel us to turn a blind eye to the judicial
structure meant to provide an orderly dispensation of justice and consider the instant petition as a
justified deviation from an established precept.
Core factual matters undisputed
Respondents next challenge the projected review by this Court of the alleged factual issues intertwined in
the issues propounded by petitioner. They listed a copious number of questions seemingly factual in
nature which would make this Court a trier of facts.[53]
We find the position of respondents bereft of merit.
For one, we already gave due course to the instant petition in our January 18, 2005 Resolution.[54] In said
issuance, the parties were required to make clear and concise statements of established facts upon which
our decision will be based.
Secondly, we agree with petitioner that there is no necessity for us to make any factual findings since the
facts needed to decide the instant petition are well established from the admissions of the parties in their
pleadings[55] and those derived from the documents appended to said submissions. Indeed, the core facts
which are the subject matter of the numerous issues raised in this petition are undisputed.
Now we will tackle the issues that prop up the instant petition.
Since petitioner has cited our decision in PEA as basis for his postulations in a number of issues,
we first resolve the queryis PEA applicable to the case at bar?
A juxtaposition of the facts in the two cases constrains the Court to rule in the negative.
The Court finds that PEA is not a binding precedent to the instant petition because the facts in said case
are substantially different from the facts and circumstances in the case at bar, thus:
(1) The reclamation project in PEA was undertaken through a JVA entered into between PEA and
AMARI. The reclamation project in the instant NHA case was undertaken by the NHA, a national
government agency in consultation with PEA and with the approval of two Philippine Presidents;
(2) In PEA, AMARI and PEA executed a JVA to develop the Freedom Islands and reclaim submerged areas
without public bidding on April 25, 1995. In the instant NHA case, the NHA and RBI executed a JVA after
RBI was declared the winning bidder on August 31, 1992 as the JVA partner of the NHA in the SMDRP after
compliance with the requisite public bidding.
(3) In PEA, there was no law or presidential proclamation classifying the lands to be reclaimed as alienable
and disposal lands of public domain. In this RBI case, MO 415 of former President Aquino and
Proclamation No. 39 of then President Ramos, coupled with Special Patents Nos. 3591, 3592, and 3598,
classified the reclaimed lands as alienable and disposable;
(4) In PEA, the Chavez petition was filed before the amended JVA was executed by PEA and AMARI. In this
NHA case, the JVA and subsequent amendments were already substantially implemented. Subsequently,
the Project was terminated through a MOA signed on August 27, 2003. Almost one year later on August 5,
2004, the Chavez petition was filed;
(5) In PEA, AMARI was considered to be in bad faith as it signed the amended JVA after the Chavez
petition was filed with the Court and after Senate Committee Report No. 560 was issued finding that the
subject lands are inalienable lands of public domain. In the instant petition, RBI and other respondents are
considered to have signed the agreements in good faith as the Project was terminated even before the
Chavez petition was filed;
(6) The PEA-AMARI JVA was executed as a result of direct negotiation between the parties and not in
accordance with the BOT Law. The NHA-RBI JVA and subsequent amendments constitute a BOT contract
governed by the BOT Law; and
(7) In PEA, the lands to be reclaimed or already reclaimed were transferred to PEA, a government entity
tasked to dispose of public lands under Executive Order No. (EO) 525.[56] In the NHA case, the reclaimed
lands were transferred to NHA, a government entity NOT tasked to dispose of public land and therefore
said alienable lands were converted to patrimonial lands upon their transfer to NHA.[57]
Thus the PEA Decision[58] cannot be considered an authority or precedent to the instant
case. The principle of stare decisis[59] has no application to the different factual setting of the instant case.
We will now dwell on the substantive issues raised by petitioner. After a perusal of the grounds
raised in this petition, we find that most of these issues are moored on our PEA Decision which, as earlier
discussed, has no application to the instant petition. For this reason alone, the petition can already be
rejected. Nevertheless, on the premise of the applicability of said decision to the case at bar, we will
proceed to resolve said issues.
First Issue: Whether respondents NHA and RBI have been granted
the power and authority to reclaim lands of the public domain as
this power is vested exclusively in PEA as claimed by petitioner
Petitioner contends that neither respondent NHA nor respondent RBI may validly reclaim foreshore and
submerged land because they were not given any power and authority to reclaim lands of the public
domain as this power was delegated by law to PEA.
Asserting that existing laws did not empower the NHA and RBI to reclaim lands of public domain, the
Public Estates Authority (PEA), petitioner claims, is the primary authority for the reclamation of all
foreshore and submerged lands of public domain, and relies on PEA where this Court held:
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. 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.[60]
In the Smokey Mountain Project, petitioner clarifies that the reclamation was not done by PEA
or through a contract executed by PEA with another person or entity but by the NHA through an
agreement with respondent RBI. Therefore, he concludes that the reclamation is null and void.
Petitioners contention has no merit.
EO 525 reads:
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. (Emphasis supplied.)
The aforequoted provision points to three (3) requisites for a legal and valid reclamation project, viz:
(1) approval by the President;
(2) favorable recommendation of PEA; and
(3) undertaken by any of the following:
a. by PEA
b. by any person or entity pursuant to a contract it executed with PEA
c. by the National Government agency or entity authorized under its charter to reclaim lands subject to
consultation with PEA
Without doubt, PEA under EO 525 was designated as the agency primarily responsible for integrating,
directing, and coordinating all reclamation projects. Primarily means mainly, principally, mostly,
generally. Thus, not all reclamation projects fall under PEAs authority of supervision, integration, and
coordination. The very charter of PEA, PD 1084,[61] does not mention that PEA has the exclusive and sole
power and authority to reclaim lands of public domain. EO 525 even reveals the exceptionreclamation
projects by a national government agency or entity authorized by its charter to reclaim land. One example
is EO 405 which authorized the Philippine Ports Authority (PPA) to reclaim and develop submerged areas
for port related purposes. Under its charter, PD 857, PPA has the power to reclaim, excavate, enclose or
raise any of the lands vested in it.
Thus, while PEA under PD 1084 has the power to reclaim land and under EO 525 is primarily responsible
for integrating, directing and coordinating reclamation projects, such authority is NOT exclusive and such
power to reclaim may be granted or delegated to another government agency or entity or may even be
undertaken by the National Government itself, PEA being only an agency and a part of the National
Government.
Let us apply the legal parameters of Sec. 1, EO 525 to the reclamation phase of SMDRP. After a scrutiny of
the facts culled from the records, we find that the project met all the three (3) requirements, thus:
1. There was ample approval by the President of the Philippines; as a matter of fact, two Philippine
Presidents approved the same, namely: Presidents Aquino and Ramos.President Aquino sanctioned the
reclamation of both the SMDRP housing and commercial-industrial sites through MO 415 (s. 1992) which
approved the SMDRP under Sec. 1 and directed NHA x x x to implement the Smokey Mountain
Development Plan and Reclamation of the Area across R-10 through a private sector joint venture
scheme at the least cost to government under Section 3.
For his part, then President Ramos issued Proclamation No. 39 (s. 1992) which expressly reserved the
Smokey Mountain Area and the Reclamation Area for a housing project and related
commercial/industrial development.
Moreover, President Ramos issued Proclamation No. 465 (s. 1994) which authorized the
increase of the Reclamation Area from 40 hectares of foreshore and submerged land of
the Manila Bay to 79 hectares. It speaks of the reclamation of 400,000 square meters, more or less, of the
foreshore and submerged lands of Manila Bayadjoining R-10 as an enabling component of the SMDRP.
As a result of Proclamations Nos. 39 and 465, Special Patent No. 3591 covering 211,975 square meters
of Smokey Mountain, Special Patent No. 3592 covering 401,485 square meters of reclaimed land, and
Special Patent No. 3598 covering another 390,000 square meters of reclaimed land were issued by the
DENR.
Thus, the first requirement of presidential imprimatur on the SMDRP has been satisfied.
2. The requisite favorable endorsement of the reclamation phase was impliedly granted by PEA. President
Aquino saw to it that there was coordination of the project with PEA by designating its general manager as
member of the EXECOM tasked to supervise the project implementation. The assignment was made in Sec.
2 of MO 415 which provides:
Section 2. An Executive Committee is hereby created to oversee the
implementation of the Plan, chaired by the NCR-CORD, with the heads of the
following agencies as members: The National Housing Authority, the City of Manila,
the Department of Public Works and Highways, the Public Estates Authority, the
Philippine Ports Authority, the Department of Environment and Natural Resources
and the Development Bank of the Philippines. (Emphasis supplied.)
The favorable recommendation by PEA of the JVA and subsequent amendments were incorporated as
part of the recommendations of the EXECOM created under MO 415. While there was no specific
recommendation on the SMDRP emanating solely from PEA, we find that the approbation of the Project
and the land reclamation as an essential component by the EXECOM of which PEA is a member, and its
submission of the SMDRP and the agreements on the Project to the President for approval amply met the
second requirement of EO 525.
3. The third element was also presentthe reclamation was undertaken either by PEA or any person or
entity under contract with PEA or by the National Government agency or entity authorized under its
charter to reclaim lands subject to consultation with PEA. It cannot be disputed that the reclamation
phase was not done by PEA or any person or entity under contract with PEA. However, the reclamation
was implemented by the NHA, a national government agency whose authority to reclaim lands under
consultation with PEA is derived from its charterPD 727 and other pertinent lawsRA 7279 [62] and RA 6957
as amended by RA 7718.
While the authority of NHA to reclaim lands is challenged by petitioner, we find that the NHA had more
than enough authority to do so under existing laws. While PD 757, the charter of NHA, does not explicitly
mention reclamation in any of the listed powers of the agency, we rule that the NHA has an implied power
to reclaim land as this is vital or incidental to effectively, logically, and successfully implement an urban
land reform and housing program enunciated in Sec. 9 of Article XIII of the 1987 Constitution.
Basic in administrative law is the doctrine that a government agency or office has express and implied
powers based on its charter and other pertinent statutes. Express powers are those powers granted,
allocated, and delegated to a government agency or office by express provisions of law. On the other
hand, implied powers are those that can be inferred or are implicit in the wordings of the law [63] or
conferred by necessary or fair implication in the enabling act.[64] In Angara v. Electoral Commission, the
Court clarified and stressed that when a general grant of power is conferred or duty enjoined, every
particular power necessary for the exercise of the one or the performance of the other is also conferred
by necessary implication.[65] It was also explicated that when the statute does not specify the particular
method to be followed or used by a government agency in the exercise of the power vested in it by law,
said agency has the authority to adopt any reasonable method to carry out its functions.[66]
The power to reclaim on the part of the NHA is implicit from PD 757, RA 7279, MO 415, RA 6957, and PD
3-A,[67] viz:
1. NHAs power to reclaim derived from PD 757 provisions:
a. Sec. 3 of PD 757 implies that reclamation may be resorted to in order to attain the goals of NHA:
 Section 3. Progress and Objectives. The Authority shall have the following purposes
and objectives:
xxxx
b) To undertake housing, development, resettlement or other activities as
would enhance the provision of housing to every Filipino;
c) To harness and promote private participation in housing ventures in
terms of capital expenditures, land, expertise, financing and other
facilities for the sustained growth of the housing industry. (Emphasis
supplied.)
Land reclamation is an integral part of the development of resources for some of the housing
requirements of the NHA. Private participation in housing projects may also take the form of land
reclamation.
b. Sec. 5 of PD 757 serves as proof that the NHA, as successor of the Tondo Foreshore Development
Authority (TFDA), has the power to reclaim, thus:
Section 5. Dissolution of Existing Housing Agencies. The People's
Homesite and Housing Corporation (PHHC), the Presidential Assistant on Housing
Resettlement Agency (PAHRA), the Tondo Foreshore Development Authority
(TFDA), the Central Institute for the Training and Relocation of Urban Squatters
(CITRUS), the Presidential Committee for Housing and Urban Resettlement
(PRECHUR), Sapang Palay Development Committee, Inter-Agency Task Force to
Undertake the Relocation of Families in Barrio Nabacaan, Villanueva, Misamis
Oriental and all other existing government housing and resettlement agencies, task
forces and ad-hoc committees, are hereby dissolved. Their powers and functions,
balance of appropriations, records, assets, rights, and choses in action, are
transferred to, vested in, and assumed by the Authority. x x x (Emphasis supplied.)
PD 570 dated October 30, 1974 created the TFDA, which defined its objectives, powers, and
functions. Sec. 2 provides:
Section 2. Objectives and Purposes. The Authority shall have the following purposes
and objectives:
a) To undertake all manner of activity, business or development projects for the
establishment of harmonious, comprehensive, integrated and healthy living
community in the Tondo Foreshoreland and its resettlement site;
b) To undertake and promote the physical and socio-economic amelioration of
the Tondo Foreshore residents in particular and the nation in general (Emphasis
supplied.)
The powers and functions are contained in Sec. 3, to wit:
a) To develop and implement comprehensive and integrated urban renewal
programs for the Tondo Foreshore and Dagat-dagatan lagoon and/or any other
additional/alternative resettlement site and to formulate and enforce general and
specific policies for its development which shall ensure reasonable degree of
compliance with environmental standards.
b) To prescribe guidelines and standards for the reservation, conservation
and utilization of public lands covering the Tondo Foreshore land and its
resettlement sites;
c) To construct, acquire, own, lease, operate and maintain infrastructure facilities,
housing complex, sites and services;
d) To determine, regulate and supervise the establishment and operation of housing,
sites, services and commercial and industrial complexes and any other enterprises
to be constructed or established within the Tondo Foreshore and its resettlement
sites;
e) To undertake and develop, by itself or through joint ventures with other public or
private entities, all or any of the different phases of development of the Tondo
Foreshore land and its resettlement sites;
f) To acquire and own property, property-rights and interests, and encumber or
otherwise dispose of the same as it may deem appropriate (Emphasis supplied.
From the foregoing provisions, it is readily apparent that the TFDA has the explicit power to develop
public lands covering the Tondo foreshore land and any other additional and alternative resettlement
sites under letter b, Sec. 3 of PD 570. Since the additional and/or alternative sites adjacent to Tondo
foreshore land cover foreshore and submerged areas, the reclamation of said areas is necessary in order
to convert them into a comprehensive and integrated resettlement housing project for the slum dwellers
and squatters of Tondo.Since the powers of TFDA were assumed by the NHA, then the NHA has the power
to reclaim lands in the Tondo foreshore area which covers the 79-hectare land subject of Proclamations
Nos. 39 and 465 and Special Patents Nos. 3592 and 3598.
c. Sec. 6 of PD 757 delineates the functions and powers of the NHA which embrace the authority to
reclaim land, thus:
Sec. 6. Powers and functions of the Authority.The Authority shall have the following
powers and functions to be exercised by the Board in accordance with its
established national human settlements plan prepared by the Human Settlements
Commission:
(a) Develop and implement the comprehensive and integrated housing
program provided for in Section hereof;
xxxx
(c) Prescribe guidelines and standards for the reservation, conservation
and utilization of public lands identified for housing and resettlement;
xxxx
(e) Develop and undertake housing development and/or resettlement
projects through joint ventures or other arrangements with public and private
entities;
xxxx
(k) Enter into contracts whenever necessary under such terms and conditions as it
may deem proper and reasonable;
(l) Acquire property rights and interests and encumber or otherwise dispose the
same as it may deem appropriate;
xxxx
(s) Perform such other acts not inconsistent with this Decree, as may be necessary
to effect the policies and objectives herein declared. (Emphasis supplied.)
The NHAs authority to reclaim land can be inferred from the aforequoted provisions. It can
make use of public lands under letter (c) of Sec. 6 which includes reclaimed land as site for its
comprehensive and integrated housing projects under letter (a) which can be undertaken through joint
ventures with private entities under letter (e). Taken together with letter (s) which authorizes NHA to
perform such other activities necessary to effect the policies and objectives of PD 757, it is safe to
conclude that the NHAs power to reclaim lands is a power that is implied from the exercise of its explicit
powers under Sec. 6 in order to effectively accomplish its policies and objectives under Sec. 3 of its
charter. Thus, the reclamation of land is an indispensable component for the development and
construction of the SMDRP housing facilities.
2. NHAs implied power to reclaim land is enhanced by RA 7279.
PD 757 identifies NHAs mandate to [d]evelop and undertake housing development and/or resettlement
projects through joint ventures or other arrangements with public and private entities.
The power of the NHA to undertake reclamation of land can be inferred from Secs. 12 and 29 of RA 7279,
which provide:
Section 12. Disposition of Lands for Socialized Housing.The National Housing
Authority, with respect to lands belonging to the National Government, and the
local government units with respect to other lands within their respective localities,
shall coordinate with each other to formulate and make available various
alternative schemes for the disposition of lands to the beneficiaries of the
Program. These schemes shall not be limited to those involving transfer of
ownership in fee simple but shall include lease, with option to purchase, usufruct or
such other variations as the local government units or the National Housing
Authority may deem most expedient in carrying out the purposes of this Act.
xxxx
Section 29. Resettlement.With two (2) years from the effectivity of this Act, the local
government units, in coordination with the National Housing Authority, shall
implement the relocation and resettlement of persons living in danger areas such
as esteros, railroad tracks, garbage dumps, riverbanks, shorelines, waterways, and
in other public places as sidewalks, roads, parks, and playgrounds. The local
government unit, in coordination with the National Housing Authority, shall provide
relocation or resettlement sites with basic services and facilities and access to
employment and livelihood opportunities sufficient to meet the basic needs of the
affected families. (Emphasis supplied.)

Lands belonging to the National Government include foreshore and submerged lands which can be
reclaimed to undertake housing development and resettlement projects.
3. MO 415 explains the undertaking of the NHA in SMDRP:
WHEREAS, Memorandum Order No. 161-A mandated the National Housing
Authority to conduct feasibility studies and develop low-cost housing projects at
the dumpsites of Metro Manila;
WHEREAS, the National Housing Authority has presented a viable Conceptual Plan
to convert the Smokey Mountain dumpsite into a habitable housing
project inclusive of the reclamation area across R-10 as enabling component of the
Project;
WHEREAS, the said Plan requires the coordinated and synchronized efforts of the
City of Manila and other government agencies and instrumentalities to ensure
effective and efficient implementation;
WHEREAS, the government encourages private sector initiative in the
implementation of its projects. (Emphasis supplied.)
Proceeding from these whereas clauses, it is unequivocal that reclamation of land in
the Smokey Mountain area is an essential and vital power of the NHA to effectively implement its avowed
goal of developing low-cost housing units at the Smokey Mountain dumpsites. The interpretation made by
no less than the President of the Philippines as Chief of the Executive Branch, of which the NHA is a part,
must necessarily command respect and much weight and credit.
4. RA 6957 as amended by RA 7718the BOT Lawserves as an exception to PD 1084 and EO 525.
Based on the provisions of the BOT Law and Implementing Rules and Regulations, it is
unequivocal that all government infrastructure agencies like the NHA can undertake infrastructure or
development projects using the contractual arrangements prescribed by the law, and land reclamation is
one of the projects that can be resorted to in the BOT project implementation under the February 10,
1992 Joint Resolution No. 3 of the 8th Congress.
From the foregoing considerations, we find that the NHA has ample implied authority to undertake
reclamation projects.
Even without an implied power to reclaim lands under NHAs charter, we rule that the authority granted to
NHA, a national government agency, by the President under PD 3-A reinforced by EO 525 is more than
sufficient statutory basis for the reclamation of lands under the SMDRP.
PD 3-A is a law issued by then President Ferdinand E. Marcos under his martial law powers on September
23, 1972. It provided that [t]he provisions of any law to the contrary notwithstanding, the reclamation of
areas, underwater, whether foreshore or inland, shall be limited to the National Government or any
person authorized by it under the proper contract. It repealed, in effect, RA 1899 which previously
delegated the right to reclaim lands to municipalities and chartered cities and revested it to the National
Government.[68] Under PD 3-A, national government can only mean the Executive Branch headed by the
President. It cannot refer to Congress as it was dissolved and abolished at the time of the issuance of PD
3-A on September 23, 1972. Moreover, the Executive Branch is the only implementing arm in the
government with the equipment, manpower, expertise, and capability by the very nature of its assigned
powers and functions to undertake reclamation projects. Thus, under PD 3-A, the Executive Branch
through the President can implement reclamation of lands through any of its departments, agencies, or
offices.
Subsequently, on February 4, 1977, President Marcos issued PD 1084 creating the PEA, which was granted,
among others, the power to reclaim land, including foreshore and submerged areas by dredging, filling or
other means or to acquire reclaimed lands. The PEAs power to reclaim is not however exclusive as can be
gleaned from its charter, as the President retained his power under PD 3-A to designate another agency to
reclaim lands.
On February 14, 1979, EO 525 was issued. It granted PEA primary responsibility for integrating, directing,
and coordinating reclamation projects for and on behalf of the National Government although other
national government agencies can be designated by the President to reclaim lands in coordination with
the PEA. Despite the issuance of EO 525, PD 3-A remained valid and subsisting. Thus, the National
Government through the President still retained the power and control over all reclamation projects in
the country.
The power of the National Government through the President over reclamation of areas, that is,
underwater whether foreshore or inland, was made clear in EO 543[69] which took effect on June 24,
2006. Under EO 543, PEA was renamed the Philippine Reclamation Authority (PRA) and was granted the
authority to approve reclamation projects, a power previously reposed in the President under EO 525. EO
543 reads:
 Section 1. The power of the President to approve reclamation projects is hereby
delegated to the Philippine Reclamation Authority [formerly PEA], through its
governing board, subject to compliance with existing laws and rules and subject to
the condition that reclamation contracts to be executed with any person or entity
go through public bidding.
Section 2. Nothing in the Order shall be construed as diminishing the Presidents
authority to modify, amend or nullify PRAs action.
Section 3. All executive issuances inconsistent with this Executive Order are hereby
repealed or amended accordingly. (Emphasis supplied.)
Sec. 2 of EO 543 strengthened the power of control and supervision of the President over
reclamation of lands as s/he can modify, amend, or nullify the action of PEA (now PRA).
From the foregoing issuances, we conclude that the Presidents delegation to NHA, a national
government agency, to reclaim lands under the SMDRP, is legal and valid, firmly anchored on PD 3-A
buttressed by EO 525 notwithstanding the absence of any specific grant of power under its charter, PD
757.
Second Issue: Whether respondents NHA and RBI were given the
power and authority by DENR to reclaim foreshore and submerged
lands
Petitioner Chavez puts forth the view that even if the NHA and RBI were granted the authority to reclaim,
they were not authorized to do so by the DENR.
Again, reliance is made on our ruling in PEA where it was held that the DENRs authority is
necessary in order for the government to validly reclaim foreshore and submerged lands. In PEA, we
expounded in this manner:
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 6 and 7 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.[70]
Despite our finding that PEA is not a precedent to the case at bar, we find after all that under
existing laws, the NHA is still required to procure DENRs authorization before a reclamation project in
Manila Bay or in any part of the Philippines can be undertaken. The requirement applies to PEA, NHA, or
any other government agency or office granted with such power under the law.
Notwithstanding the need for DENR permission, we nevertheless find petitioners position
bereft of merit.
The DENR is deemed to have granted the authority to reclaim in the Smokey Mountain Project for the
following reasons:
1. Sec. 17, Art. VII of the Constitution provides that the President shall have control of all executive
departments, bureaus and offices. The President is assigned the task of seeing to it that all laws are
faithfully executed. Control, in administrative law, means the power of an officer to alter, modify, nullify
or set aside what a subordinate officer has done in the performance of his duties and to substitute the
judgment of the former for that of the latter.[71]
As such, the President can exercise executive power motu proprio and can supplant the act or decision of
a subordinate with the Presidents own. The DENR is a department in the executive branch under the
President, and it is only an alter ego of the latter. Ordinarily the proposed action and the staff work are
initially done by a department like the DENR and then submitted to the President for approval. However,
there is nothing infirm or unconstitutional if the President decides on the implementation of a certain
project or activity and requires said department to implement it. Such is a presidential prerogative as long
as it involves the department or office authorized by law to supervise or execute the Project. Thus, as in
this case, when the President approved and ordered the development of a housing project with the
corresponding reclamation work, making DENR a member of the committee tasked to implement the
project, the required authorization from the DENR to reclaim land can be deemed satisfied. It cannot be
disputed that the ultimate power over alienable and disposable public lands is reposed in the President of
the Philippines and not the DENR Secretary. To still require a DENR authorization on
the Smokey Mountain when the President has already authorized and ordered the implementation of the
Project would be a derogation of the powers of the President as the head of the executive
branch. Otherwise, any department head can defy or oppose the implementation of a project approved
by the head of the executive branch, which is patently illegal and unconstitutional.
In Chavez v. Romulo, we stated that when a statute imposes a specific duty on the executive
department, the President may act directly or order the said department to undertake an activity, thus:
[A]t the apex of the entire executive officialdom is the President. Section 17, Article
VII of the Constitution specifies [her] power as Chief executive departments,
bureaus and offices. [She] shall ensure that the laws be faithfully executed. As Chief
Executive, President Arroyo holds the steering wheel that controls the course of her
government. She lays down policies in the execution of her plans and
programs. Whatever policy she chooses, she has her subordinates to implement
them. In short, she has the power of control. Whenever a specific function is
entrusted by law or regulation to her subordinate, she may act directly or merely
direct the performance of a duty x x x. Such act is well within the prerogative of
her office (emphasis supplied).[72]
Moreover, the power to order the reclamation of lands of public domain is reposed first in the Philippine
President. The Revised Administrative Code of 1987 grants authority to the President to reserve lands of
public domain for settlement for any specific purpose, thus:
Section 14. Power to Reserve Lands of the Public and Private Domain of the
Government.(1) The President shall have the power to reserve for settlement or
public use, and for specific public purposes, any of the lands of the public domain,
the use of which is not otherwise directed by law. The reserved land shall thereafter
remain subject to the specific public purpose indicated until otherwise provided by
law or proclamation. (Emphasis supplied.)
President Aquino reserved the area of the Smokey Mountain dumpsite for settlement and
issued MO 415 authorizing the implementation of the Smokey Mountain Development Project plus the
reclamation of the area across R-10. Then President Ramos issued Proclamation No. 39 covering the 21-
hectare dumpsite and the 40-hectare commercial/industrial area, and Proclamation No. 465 and MO 415
increasing the area of foreshore and submerged lands of Manila Bay to be reclaimed from 40 to 79
hectares.Having supervision and control over the DENR, both Presidents directly assumed and exercised
the power granted by the Revised Administrative Code to the DENR Secretary to authorize the NHA to
reclaim said lands. What can be done indirectly by the DENR can be done directly by the President. It
would be absurd if the power of the President cannot be exercised simply because the head of a
department in the executive branch has not acted favorably on a project already approved by the
President. If such arrangement is allowed then the department head will become more powerful than the
President.
2. Under Sec. 2 of MO 415, the DENR is one of the members of the EXECOM chaired by the NCR-CORD to
oversee the implementation of the Project. The EXECOM was the one which recommended approval of
the project plan and the joint venture agreements. Clearly, the DENR retained its power of supervision
and control over the laws affected by the Project since it was tasked to facilitate the titling of
the Smokey Mountain and of the area to be reclaimed, which shows that it had tacitly given its authority
to the NHA to undertake the reclamation.
3. Former DENR Secretary Angel C. Alcala issued Special Patents Nos. 3591 and 3592 while then Secretary
Victor O. Ramos issued Special Patent No. 3598 that embraced the areas covered by the
reclamation. These patents conveyed the lands to be reclaimed to the NHA and granted to said agency the
administration and disposition of said lands for subdivision and disposition to qualified beneficiaries and
for development for mix land use (commercial/industrial) to provide employment opportunities to on-site
families and additional areas for port related activities. Such grant of authority to administer and dispose
of lands of public domain under the SMDRP is of course subject to the powers of the EXECOM of SMDRP,
of which the DENR is a member.
4. The issuance of ECCs by the DENR for SMDRP is but an exercise of its power of supervision and control
over the lands of public domain covered by the Project.
Based on these reasons, it is clear that the DENR, through its acts and issuances, has ratified and
confirmed the reclamation of the subject lands for the purposes laid down in Proclamations Nos. 39 and
465.
Third Issue: Whether respondent RBI can acquire reclaimed
foreshore and submerged lands considered as inalienable and
outside the commerce of man
Petitioner postulates that respondent RBI cannot acquire the reclaimed foreshore and submerged areas
as these are inalienable public lands beyond the commerce of man based on Art. 1409 of the Civil Code
which provides:
Article 1409. The following contracts are inexistent and void from the beginning:
(1) Those whose cause, object or purpose is contrary to law, morals, good customs,
public order or public policy;
xxxx
(7) Those expressly prohibited or declared void by law.
These contracts cannot be ratified. Neither can the right to set up the defense of
illegality be waived.
Secs. 2 and 3, Art. XII of the Constitution declare that all natural resources are owned by the State and
they cannot be alienated except for alienable agricultural lands of the public domain. One of the States
natural resources are lands of public domain which include reclaimed lands.
Petitioner contends that for these reclaimed lands to be alienable, there must be a law or
presidential proclamation officially classifying these reclaimed lands as alienable and disposable and open
to disposition or concession. Absent such law or proclamation, the reclaimed lands cannot be the enabling
component or consideration to be paid to RBI as these are beyond the commerce of man.
We are not convinced of petitioners postulation.
The reclaimed lands across R-10 were classified alienable and disposable lands of public domain of the
State for the following reasons, viz:
First, there were three (3) presidential proclamations classifying the reclaimed lands across R-10 as
alienable or disposable hence open to disposition or concession, to wit:
(1) MO 415 issued by President Aquino, of which Sec. 4 states that [t]he land covered by the Smokey
Mountain Dumpsite is hereby conveyed to the National Housing Authority as well as the area to be
reclaimed across R-10.
The directive to transfer the lands once reclaimed to the NHA implicitly carries with it the declaration that
said lands are alienable and disposable. Otherwise, the NHA cannot effectively use them in its housing and
resettlement project.
(2) Proclamation No. 39 issued by then President Ramos by which the reclaimed lands were conveyed to
NHA for subdivision and disposition to qualified beneficiaries and for development into a mixed land use
(commercial/industrial) to provide employment opportunities to on-site families and additional areas for
port-related activities. Said directive carries with it the pronouncement that said lands have been
transformed to alienable and disposable lands. Otherwise, there is no legal way to convey it to the
beneficiaries.
(3) Proclamation No. 465 likewise issued by President Ramos enlarged the reclaimed area to 79 hectares
to be developed and disposed of in the implementation of the SMDRP.The authority put into the hands of
the NHA to dispose of the reclaimed lands tacitly sustains the conversion to alienable and disposable lands.
Secondly, Special Patents Nos. 3591, 3592, and 3598 issued by the DENR anchored on Proclamations Nos.
39 and 465 issued by President Ramos, without doubt, classified the reclaimed areas as alienable and
disposable.
Admittedly, it cannot be said that MO 415, Proclamations Nos. 39 and 465 are explicit declarations that
the lands to be reclaimed are classified as alienable and disposable. We find however that such conclusion
is derived and implicit from the authority given to the NHA to transfer the reclaimed lands to qualified
beneficiaries.
The query is, when did the declaration take effect? It did so only after the special patents covering the
reclaimed areas were issued. It is only on such date that the reclaimed lands became alienable and
disposable lands of the public domain. This is in line with the ruling in PEA where said issue was clarified
and stressed:
PD No. 1085, coupled with President Aquinos actual issuance of a special patent
covering the Freedom Islands, is equivalent to an official proclamation classifying
the FreedomIslands as alienable or disposable lands of the public domain. PD No.
1085 and President Aquinos 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. [73] (Emphasis
supplied.
Thus, MO 415 and Proclamations Nos. 39 and 465 cumulatively and jointly taken together with
Special Patent Nos. 3591, 3592, and 3598 more than satisfy the requirement in PEA that [t]here must be a
law or presidential proclamation officially classifying these reclaimed lands as alienable or disposable and
open to disposition or concession (emphasis supplied).[74]
Apropos the requisite law categorizing reclaimed land as alienable or disposable, we find that RA 6957 as
amended by RA 7718 provides ample authority for the classification of reclaimed land in the SMDRP for
the repayment scheme of the BOT project as alienable and disposable lands of public domain. Sec. 6 of RA
6957 as amended by RA 7718 provides:
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. (Emphasis supplied.)
While RA 6957 as modified by RA 7718 does not expressly declare that the reclaimed lands that shall serve
as payment to the project proponent have become alienable and disposable lands and opened for
disposition; nonetheless, this conclusion is necessarily implied, for how else can the land be used as the
enabling component for the Project if such classification is not deemed made?
It may be argued that the grant of authority to sell public lands, pursuant to PEA, does not convert
alienable lands of public domain into private or patrimonial lands. We ruled in PEA that alienable lands of
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 (emphasis
supplied).[75] To lands reclaimed by PEA or through a contract with a private person or entity, such
reclaimed lands still remain alienable lands of public domain which can be transferred only to Filipino
citizens but not to a private corporation. This is because PEA under PD 1084 and EO 525 is tasked to hold
and dispose of alienable lands of public domain and it is only when it is transferred to Filipino citizens that
it becomes patrimonial property. On the other hand, the NHA is a government agency not tasked to
dispose of public lands under its charterThe Revised Administrative Code of 1987. The NHA is an end-user
agency authorized by law to administer and dispose of reclaimed lands. The moment titles over reclaimed
lands based on the special patents are transferred to the NHA by the Register of Deeds, they are
automatically converted to patrimonial properties of the State which can be sold to Filipino citizens and
private corporations, 60% of which are owned by Filipinos. The reason is obvious: if the reclaimed land is
not converted to patrimonial land once transferred to NHA, then it would be useless to transfer it to the
NHA since it cannot legally transfer or alienate lands of public domain. More importantly, it cannot attain
its avowed purposes and goals since it can only transfer patrimonial lands to qualified beneficiaries and
prospective buyers to raise funds for the SMDRP.
From the foregoing considerations, we find that the 79-hectare reclaimed land has been declared
alienable and disposable land of the public domain; and in the hands of NHA, it has been reclassified as
patrimonial property.
Petitioner, however, contends that the reclaimed lands were inexistent prior to the three (3) Presidential
Acts (MO 415 and Proclamations Nos. 39 and 465) and hence, the declaration that such areas are
alienable and disposable land of the public domain, citing PEA, has no legal basis.
Petitioners contention is not well-taken.
Petitioners sole reliance on Proclamations Nos. 39 and 465 without taking into consideration the special
patents issued by the DENR demonstrates the inherent weakness of his proposition. As was ruled
in PEA cited by petitioner himself, PD No. 1085, coupled with President Aquinos 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 public domain. In a similar vein, the combined and
collective effect of Proclamations Nos. 39 and 465 with Special Patents Nos. 3592 and 3598 is tantamount
to and can be considered to be an official declaration that the reclaimed lots are alienable or disposable
lands of the public domain.
The reclaimed lands covered by Special Patents Nos. 3591, 3592, and 3598, which evidence
transfer of ownership of reclaimed lands to the NHA, are official acts of the DENR Secretary in the exercise
of his power of supervision and control over alienable and disposable public lands and his exclusive
jurisdiction over the management and disposition of all lands of public domain under the Revised
Administrative Code of 1987. Special Patent No. 3592 speaks of the transfer of Lots 1 and 2, and RI-
003901-000012-D with an area of 401,485 square meters based on the survey and technical description
approved by the Bureau of Lands. Lastly, Special Patent No. 3598 was issued in favor of the NHA
transferring to said agency a tract of land described in Plan RL-00-000013 with an area of 390,000 square
meters based on the survey and technical descriptions approved by the Bureau of Lands.
The conduct of the survey, the preparation of the survey plan, the computation of the technical
description, and the processing and preparation of the special patent are matters within the technical
area of expertise of administrative agencies like the DENR and the Land Management Bureau and are
generally accorded not only respect but at times even finality. [76] Preparation of special patents calls for
technical examination and a specialized review of calculations and specific details which the courts are ill-
equipped to undertake; hence, the latter defer to the administrative agency which is trained and
knowledgeable on such matters.[77]
Subsequently, the special patents in the name of the NHA were submitted to the Register of Deeds of the
City of Manila for registration, and corresponding certificates of titles over the reclaimed lots were issued
based on said special patents. The issuance of certificates of titles in NHAs name automatically converts
the reclaimed lands to patrimonial properties of the NHA. Otherwise, the lots would not be of use to the
NHAs housing projects or as payment to the BOT contractor as the enabling component of the BOT
contract. The laws of the land have to be applied and interpreted depending on the changing conditions
and times. Tempora mutantur et legis mutantur in illis (time changes and laws change with it). One such
law that should be treated differently is the BOT Law (RA 6957) which brought about a novel way of
implementing government contracts by allowing reclaimed land as part or full payment to the contractor
of a government project to satisfy the huge financial requirements of the undertaking. The NHA holds the
lands covered by Special Patents Nos. 3592 and 3598 solely for the purpose of the SMDRP undertaken by
authority of the BOT Law and for disposition in accordance with said special law. The lands become
alienable and disposable lands of public domain upon issuance of the special patents and become
patrimonial properties of the Government from the time the titles are issued to the NHA.
As early as 1999, this Court in Baguio v. Republic laid down the jurisprudence that:
It is true that, once a patent is registered and the corresponding certificate of title is
issued, the land covered by them ceases to be part of the public domain and
becomes private property, and the Torrens Title issued pursuant to the patent
becomes indefeasible upon the expiration of one year from the date of issuance of
such patent.[78]
The doctrine was reiterated in Republic v. Heirs of Felipe Alijaga, Sr.,[79] Heirs of Carlos Alcaraz v.
Republic,[80] and the more recent case of Doris Chiongbian-Oliva v. Republic of the Philippines.[81] Thus, the
79-hectare reclaimed land became patrimonial property after the issuance of certificates of titles to the
NHA based on Special Patents Nos. 3592 and 3598.
One last point. The ruling in PEA cannot even be applied retroactively to the lots covered by Special
Patents Nos. 3592 (40 hectare reclaimed land) and 3598 (39-hectare reclaimed land). The reclamation of
the land under SMDRP was completed in August 1996 while the PEA decision was rendered on July 9,
2002. In the meantime, subdivided lots forming parts of the reclaimed land were already sold to private
corporations for value and separate titles issued to the buyers. The Project was terminated through a
Memorandum of Agreement signed on August 27, 2003. The PEA decision became final through
the November 11, 2003 Resolution. It is a settled precept that decisions of the Supreme Court can only be
applied prospectively as they may prejudice vested rights if applied retroactively.
In Benzonan v. Court of Appeals, the Court trenchantly elucidated the prospective application of its
decisions based on considerations of equity and fair play, thus:
At that time, the prevailing jurisprudence interpreting section 119 of R.A.
141 as amended was that enunciated in Monge and Tupas cited above. The
petitioners Benzonan and respondent Pe and the DBP are bound by these decisions
for pursuant to Article 8 of the Civil Code judicial decisions applying or interpreting
the laws of the Constitution shall form a part of the legal system of
the Philippines. But while our decisions form part of the law of the land, they are
also subject to Article 4 of the Civil Code which provides that laws shall have no
retroactive effect unless the contrary is provided. This is expressed in the familiar
legal maxim lex prospicit, non respicit, the law looks forward not backward. The
rationale against retroactivity is easy to perceive. The retroactive application of a
law usually divests rights that have already become vested or impairs the
obligations of contract and hence, is unconstitutional.
The same consideration underlies our rulings giving only prospective effect to
decisions enunciating new doctrines. Thus, we emphasized in People v. Jabinal, 55
SCRA 607 [1974] x x x when a doctrine of this Court is overruled and a different view
is adopted, the new doctrine should be applied prospectively and should not apply
to parties who had relied on the old doctrine and acted on the faith thereof.[82]
Fourth Issue: Whether respondent RBI can acquire reclaimed
lands when there was no declaration that said lands are no
longer needed for public use
Petitioner Chavez avers that despite the declaration that the reclaimed areas are alienable lands of the
public domain, still, the reclamation is flawed for there was never any declaration that said lands are no
longer needed for public use.
We are not moved by petitioners submission.
Even if it is conceded that there was no explicit declaration that the lands are no longer needed for public
use or public service, there was however an implicit executive declaration that the reclaimed areas R-10
are not necessary anymore for public use or public service when President Aquino through MO 415
conveyed the same to the NHA partly for housing project and related commercial/industrial development
intended for disposition to and enjoyment of certain beneficiaries and not the public in general and partly
as enabling component to finance the project.
President Ramos, in issuing Proclamation No. 39, declared, though indirectly, that the
reclaimed lands of the Smokey Mountain project are no longer required for public use or service, thus:
These parcels of land of public domain are hereby placed under the administration
and disposition of the National Housing Authority to develop, subdivide and dispose
to qualified beneficiaries, as well as its development for mix land use
(commercial/industrial) to provide employment opportunities to on-site families
and additional areas for port related activities.(Emphasis supplied.)

While numerical count of the persons to be benefited is not the determinant whether the property is to
be devoted to public use, the declaration in Proclamation No. 39 undeniably identifies only particular
individuals as beneficiaries to whom the reclaimed lands can be sold,
namelythe Smokey Mountain dwellers. The rest of the Filipinos are not qualified; hence, said lands are no
longer essential for the use of the public in general.
In addition, President Ramos issued on August 31, 1994 Proclamation No. 465 increasing the
area to be reclaimed from forty (40) hectares to seventy-nine (79) hectares, elucidating that said lands are
undoubtedly set aside for the beneficiaries of SMDRP and not the publicdeclaring the power of NHA to
dispose of land to be reclaimed, thus: The authority to administer, develop, or dispose lands identified
and reserved by this Proclamation and Proclamation No. 39 (s.1992), in accordance with the SMDRP, as
enhance, is vested with the NHA, subject to the provisions of existing laws. (Emphasis supplied.)
MO 415 and Proclamations Nos. 39 and 465 are declarations that proclaimed the non-use of the
reclaimed areas for public use or service as the Project cannot be successfully implemented without the
withdrawal of said lands from public use or service. Certainly, the devotion of the reclaimed land to public
use or service conflicts with the intended use of the Smokey Mountain areas for housing and employment
of the Smokey Mountain scavengers and for financing the Project because the latter cannot be
accomplished without abandoning the public use of the subject land. Without doubt, the presidential
proclamations on SMDRP together with the issuance of the special patents had effectively removed the
reclaimed lands from public use.
More decisive and not in so many words is the ruling in PEA which we earlier cited, that PD No. 1085 and
President Aquinos issuance of a land patent also constitute a declaration that the Freedom Islands are no
longer needed for public service. Consequently, we ruled in that case that the reclaimed lands are open to
disposition or concession to qualified parties.[83]
In a similar vein, presidential Proclamations Nos. 39 and 465 jointly with the special patents have classified
the reclaimed lands as alienable and disposable and open to disposition or concession as they would be
devoted to units for Smokey Mountain beneficiaries. Hence, said lands are no longer intended for public
use or service and shall form part of the patrimonial properties of the State under Art. 422 of the Civil
Code.[84] As discussed a priori, the lands were classified as patrimonial properties of the NHA ready for
disposition when the titles were registered in its name by the Register of Deeds.
Moreover, reclaimed lands that are made the enabling components of a BOT infrastructure project
are necessarily reclassified as alienable and disposable lands under the BOT Law; otherwise, absurd and
illogical consequences would naturally result. Undoubtedly, the BOT contract will not be accepted by the
BOT contractor since there will be no consideration for its contractual obligations. Since reclaimed land
will be conveyed to the contractor pursuant to the BOT Law, then there is an implied declaration that such
land is no longer intended for public use or public service and, hence, considered patrimonial property of
the State.
Fifth Issue: Whether there is a law authorizing sale of
reclaimed lands
Petitioner next claims that RBI cannot acquire the reclaimed lands because there was no law authorizing
their sale. He argues that unlike PEA, no legislative authority was granted to the NHA to sell reclaimed
land.
This position is misplaced.
Petitioner relies on Sec. 60 of Commonwealth Act (CA) 141 to support his view that the NHA is not
empowered by any law to sell reclaimed land, thus:
Section 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. The area of the land 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 if
requested and shall in no case exceed one hundred and forty-four
hectares: Provided, however, That this limitation shall not apply to grants,
donations, 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; Provided, further, That any person, corporation,
association or partnership disqualified from purchasing public land for agricultural
purposes under the provisions of this Act, may lease land included under this title
suitable for industrial or residential purposes, but the lease granted shall only be
valid while such land is used for the purposes referred to. (Emphasis supplied.)
Reliance on said provision is incorrect as the same applies only to a province, municipality or branch or
subdivision of the Government. The NHA is not a government unit but a government corporation
performing governmental and proprietary functions.
In addition, PD 757 is clear that the NHA is empowered by law to transfer properties acquired by it under
the law to other parties, thus:
Section 6. Powers and functions of the Authority. The Authority shall have the
following powers and functions to be exercised by the Boards in accordance with
the established national human settlements plan prepared by the Human
Settlements Commission:
xxxx
(k) Enter into contracts whenever necessary under such terms and conditions as it
may deem proper and reasonable;
(l) Acquire property rights and interests, and encumber or otherwise dispose the
same as it may deem appropriate (Emphasis supplied.)
Letter (l) is emphatic that the NHA can acquire property rights and interests and encumber or otherwise
dispose of them as it may deem appropriate. The transfer of the reclaimed lands by the National
Government to the NHA for housing, commercial, and industrial purposes transformed them into
patrimonial lands which are of course owned by the State in its private or proprietary capacity. Perforce,
the NHA can sell the reclaimed lands to any Filipino citizen or qualified corporation.
Sixth Issue: Whether the transfer of reclaimed lands to RBI
was done by public bidding
Petitioner also contends that there was no public bidding but an awarding of ownership of said reclaimed
lands to RBI. Public bidding, he says, is required under Secs. 63 and 67 of CA 141 which read:
Section 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 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, that the
Government will lease or sell, as the case may be, the lots or blocks specified in the
advertisement, for the purpose stated in the notice and subject to the conditions
specified in this chapter.
xxxx
Section 67. The lease or sale shall be made through oral bidding; and adjudication
shall be made to the highest bidder. However, where an applicant has made
improvements on the land by virtue of a permit issued to him by competent
authority, the sale or lease shall be made by sealed bidding as prescribed in section
twenty-six of this Act, the provisions of which shall be applied whenever
applicable. If all or part of the lots remain unleased or unsold, the Director of Lands
shall from time to time announce in the Official Gazette or in any other newspapers
of general circulation, the lease of sale of those lots, if necessary.
He finds that the NHA and RBI violated Secs. 63 and 67 of CA 141, as the reclaimed lands were conveyed
to RBI by negotiated contract and not by public bidding as required by law.
This stand is devoid of merit.
There is no doubt that respondent NHA conducted a public bidding of the right to become its joint venture
partner in the Smokey Mountain Project. Notices or Invitations to Bid were published in the national
dailies on January 23 and 26, 1992 and February 1, 14, 16, and 23, 1992. The bidding proper was done by
the Bids and Awards Committee (BAC) on May 18, 1992. On August 31, 1992, the Inter-Agency Techcom
made up of the NHA, PEA, DPWH, PPA, DBP, and DENR opened the bids and evaluated them, resulting in
the award of the contract to respondent RBI on October 7, 1992.
On March 19, 1993, respondents NHA and RBI signed the JVA. On February 23, 1994, said JVA was
amended and restated into the ARJVA. On August 11, 1994, the ARJVA was again amended. On September
7, 1994, the OP approved the ARJVA and the amendments to the ARJVA. From these factual settings, it
cannot be gainsaid that there was full compliance with the laws and regulations governing public biddings
involving a right, concession, or property of the government.
Petitioner concedes that he does not question the public bidding on the right to be a joint venture partner
of the NHA, but the absence of bidding in the sale of alienable and disposable lands of public domain
pursuant to CA 141 as amended.
Petitioners theory is incorrect.
Secs. 63 and 67 of CA 141, as amended, are in point as they refer to government sale by the Director of
Lands of alienable and disposable lands of public domain. This is not present in the case at bar. The lands
reclaimed by and conveyed to the NHA are no longer lands of public domain. These lands became
proprietary lands or patrimonial properties of the State upon transfer of the titles over the reclaimed
lands to the NHA and hence outside the ambit of CA 141. The NHA can therefore legally transfer
patrimonial land to RBI or to any other interested qualified buyer without any bidding conducted by the
Director of Lands because the NHA, unlike PEA, is a government agency not tasked to sell lands of public
domain. Hence, it can only hold patrimonial lands and can dispose of such lands by sale without need of
public bidding.
Petitioner likewise relies on Sec. 79 of PD 1445 which requires public bidding when
government property has become unserviceable for any cause or is no longer needed.It appears from the
Handbook on Property and Supply Management System, Chapter 6, that reclaimed lands which have
become patrimonial properties of the State, whose titles are conveyed to government agencies like the
NHA, which it will use for its projects or programs, are not within the ambit of Sec. 79. We quote the
determining factors in the Disposal of Unserviceable Property, thus:
Determining Factors in the Disposal of Unserviceable Property
Property, which can no longer be repaired or reconditioned;
Property whose maintenance costs of repair more than outweigh the benefits
and services that will be derived from its continued use;
Property that has become obsolete or outmoded because of changes in
technology;
Serviceable property that has been rendered unnecessary due to change in the
agencys function or mandate;
Unused supplies, materials and spare parts that were procured in excess of
requirements; and
Unused supplies and materials that [have] become dangerous to use because
of long storage or use of which is determined to be hazardous.[85]
Reclaimed lands cannot be considered unserviceable properties. The reclaimed lands in
question are very much needed by the NHA for the Smokey Mountain Project because without it, then the
projects will not be successfully implemented. Since the reclaimed lands are not unserviceable properties
and are very much needed by NHA, then Sec. 79 of PD 1445 does not apply.
More importantly, Sec. 79 of PD 1445 cannot be applied to patrimonial properties like reclaimed lands
transferred to a government agency like the NHA which has entered into a BOT contract with a private
firm. The reason is obvious. If the patrimonial property will be subject to public bidding as the only way of
disposing of said property, then Sec. 6 of RA 6957 on the repayment scheme is almost impossible or
extremely difficult to implement considering the uncertainty of a winning bid during public
auction. Moreover, the repayment scheme of a BOT contract may be in the form of non-monetary
payment like the grant of a portion or percentage of reclaimed land. Even if the BOT partner participates
in the public bidding, there is no assurance that he will win the bid and therefore the payment in kind as
agreed to by the parties cannot be performed or the winning bid prize might be below the estimated
valuation of the land. The only way to harmonize Sec. 79 of PD 1445 with Sec. 6 of RA 6957 is to consider
Sec. 79 of PD 1445 as inapplicable to BOT contracts involving patrimonial lands. The law does not intend
anything impossible (lex non intendit aliquid impossibile).
Seventh Issue: Whether RBI, being a private corporation,
is barred by the Constitution to acquire lands of public domain
Petitioner maintains that RBI, being a private corporation, is expressly prohibited by the 1987
Constitution from acquiring lands of public domain.
Petitioners proposition has no legal mooring for the following reasons:
1. RA 6957 as amended by RA 7718 explicitly states that a contractor can be paid a portion as percentage
of the reclaimed land subject to the constitutional requirement that only Filipino citizens or corporations
with at least 60% Filipino equity can acquire the same. It cannot be denied that RBI is a private
corporation, where Filipino citizens own at least 60% of the stocks. Thus, the transfer to RBI is valid and
constitutional.
2. When Proclamations Nos. 39 and 465 were issued, inalienable lands covered by said
proclamations were converted to alienable and disposable lands of public domain.When the titles to the
reclaimed lands were transferred to the NHA, said alienable and disposable lands of public domain were
automatically classified as lands of the private domain or patrimonial properties of the State because the
NHA is an agency NOT tasked to dispose of alienable or disposable lands of public domain. The only way it
can transfer the reclaimed land in conjunction with its projects and to attain its goals is when it is
automatically converted to patrimonial properties of the State. Being patrimonial or private properties of
the State, then it has the power to sell the same to any qualified personunder the Constitution, Filipino
citizens as private corporations, 60% of which is owned by Filipino citizens like RBI.
3. The NHA is an end-user entity such that when alienable lands of public domain are transferred to said
agency, they are automatically classified as patrimonial properties. The NHA is similarly situated as BCDA
which was granted the authority to dispose of patrimonial lands of the government under RA 7227. The
nature of the property holdings conveyed to BCDA is elucidated and stressed in the May 6,
2003 Resolution in Chavez v. PEA, thus:
 BCDA is an entirely different government entity. BCDA is authorized by law to
sell specific government lands that have long been declared by presidential
proclamations as military reservations for use by the different services of the
armed forces under the Department of National Defense. BCDAs mandate is
specific and limited in area, while PEAs mandate is general and national. BCDA
holds government lands that have been granted to end-user government
entitiesthe military services of the armed forces. In contrast, under Executive
Order No. 525, PEA holds the reclaimed public lands, not as an end-user entity,
but as the government agency primarily responsible for integrating, directing, and
coordinating all reclamation projects for and on behalf of the National
Government.
x x x Well-settled is the doctrine that public land granted to an end-user
government agency for a specific public use may subsequently be withdrawn by
Congress from public use and declared patrimonial property to be sold to private
parties. R.A. No. 7227 creating the BCDA is a law that declares specific military
reservations no longer needed for defense or military purposes and reclassifies
such lands as patrimonial property for sale to private parties.
Government owned lands, as long as they are patrimonial property, can be sold to
private parties, whether Filipino citizens or qualified private corporations. Thus,
the so-called Friar Lands acquired by the government under Act No. 1120 are
patrimonial property which even private corporations can acquire by
purchase. Likewise, reclaimed alienable lands of the public domain if sold or
transferred to a public or municipal corporation for a monetary consideration
become patrimonial property in the hands of the public or municipal corporation.
Once converted to patrimonial property, the land may be sold by the public or
municipal corporation to private parties, whether Filipino citizens or qualified
private corporations.[86] (Emphasis supplied.)
The foregoing Resolution makes it clear that the SMDRP was a program adopted by the Government
under Republic Act No. 6957 (An Act Authorizing the Financing, Construction, Operation and Maintenance
of Infrastructure Projects by the Private Sector, and For Other Purposes), as amended by RA 7718, which is
a special law similar to RA 7227. Moreover, since the implementation was assigned to the NHA, an end-
user agency under PD 757 and RA 7279, the reclaimed lands registered under the NHA are automatically
classified as patrimonial lands ready for disposition to qualified beneficiaries.
The foregoing reasons likewise apply to the contention of petitioner that HCPTI, being a private
corporation, is disqualified from being a transferee of public land. What was transferred to HCPTI is a 10-
hectare lot which is already classified as patrimonial property in the hands of the NHA. HCPTI, being a
qualified corporation under the 1987 Constitution, the transfer of the subject lot to it is valid and
constitutional.
Eighth Issue: Whether respondents can be compelled to disclose
all information related to the SMDRP
Petitioner asserts his right to information on all documents such as contracts, reports, memoranda, and
the like relative to SMDRP.
Petitioner asserts that matters relative to the SMDRP have not been disclosed to the public like the
current stage of the Project, the present financial capacity of RBI, the complete list of investors in the
asset pool, the exact amount of investments in the asset pool and other similar important information
regarding the Project.
He prays that respondents be compelled to disclose all information regarding the SMDRP and
furnish him with originals or at least certified true copies of all relevant documents relating to the said
project including, but not limited to, the original JVA, ARJVA, AARJVA, and the Asset Pool Agreement.
This relief must be granted.
The right of the Filipino people to information on matters of public concern is enshrined in the
1987 Constitution, thus:
ARTICLE II
xxxx
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.
ARTICLE III
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
In Valmonte v. Belmonte, Jr., this Court explicated this way:
 [A]n 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 peoples
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.[87]
In PEA, this Court elucidated the rationale behind the right to information:
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, 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.[88]
Sec. 28, Art. II compels the State and its agencies to fully disclose all of its transactions
involving public interest. Thus, the government agencies, without need of demand from anyone, must
bring into public view all the steps and negotiations leading to the consummation of the transaction and
the contents of the perfected contract.[89] Such information must pertain to definite propositions of the
government, meaning official recommendations or final positions reached on the different matters
subject of negotiation.The government agency, however, need not disclose 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. The limitation also covers privileged communication like
information on military and diplomatic secrets; information affecting national security; information on
investigations of crimes by law enforcement agencies before the prosecution of the accused; information
on foreign relations, intelligence, and other classified information.
It is unfortunate, however, that after almost twenty (20) years from birth of the 1987
Constitution, there is still no enabling law that provides the mechanics for the compulsory duty of
government agencies to disclose information on government transactions. Hopefully, the desired enabling
law will finally see the light of day if and when Congress decides to approve the proposed Freedom of
Access to Information Act. In the meantime, it would suffice that government agencies post on their
bulletin boards the documents incorporating the information on the steps and negotiations that produced
the agreements and the agreements themselves, and if finances permit, to upload said information on
their respective websites for easy access by interested parties. Without any law or regulation governing
the right to disclose information, the NHA or any of the respondents cannot be faulted if they were not
able to disclose information relative to the SMDRP to the public in general.
The other aspect of the peoples right to know apart from the duty to disclose is the duty to
allow access to information on matters of public concern under Sec. 7, Art. III of the Constitution. The
gateway to information opens to the public the following: (1) official records; (2) documents and papers
pertaining to official acts, transactions, or decisions; and (3) government research data used as a basis for
policy development.
Thus, the duty to disclose information should be differentiated from the duty to permit access to
information. There is no need to demand from the government agency disclosure of information as this is
mandatory under the Constitution; failing that, legal remedies are available. On the other hand, the
interested party must first request or even demand that he be allowed access to documents and papers in
the particular agency. A request or demand is required; otherwise, the government office or agency will
not know of the desire of the interested party to gain access to such papers and what papers are
needed. The duty to disclose covers only transactions involving public interest, while the duty to allow
access has a broader scope of information which embraces not only transactions involving public interest,
but any matter contained in official communications and public documents of the government agency.
We find that although petitioner did not make any demand on the NHA to allow access to information, we
treat the petition as a written request or demand. We order the NHA to allow petitioner access to its
official records, documents, and papers relating to official acts, transactions, and decisions that are
relevant to the said JVA and subsequent agreements relative to the SMDRP.
Ninth Issue: Whether the operative fact doctrine applies to the
instant petition
Petitioner postulates that the operative fact doctrine is inapplicable to the present case because it is an
equitable doctrine which could not be used to countenance an inequitable result that is contrary to its
proper office.
On the other hand, the petitioner Solicitor General argues that the existence of the various agreements
implementing the SMDRP is an operative fact that can no longer be disturbed or simply ignored,
citing Rieta v. People of the Philippines.[90]
The argument of the Solicitor General is meritorious.
The operative fact doctrine is embodied in De Agbayani v. Court of Appeals, wherein it is stated that a
legislative or executive act, prior to its being declared as unconstitutional by the courts, is valid and must
be complied with, thus:
As the new Civil Code puts it: When the courts declare a law to be inconsistent with
the Constitution, the former shall be void and the latter shall govern. Administrative
or executive acts, orders and regulations shall be valid only when they are not
contrary to the laws of the Constitution. It is understandable why it should be so,
the Constitution being supreme and paramount. Any legislative or executive act
contrary to its terms cannot survive.
Such a view has support in logic and possesses the merit of simplicity. It may not
however be sufficiently realistic. It does not admit of doubt that prior to the
declaration of nullity such challenged legislative or executive act must have been
in force and had to be complied with. This is so as until after the judiciary, in an
appropriate case, declares its invalidity, it is entitled to obedience and
respect. Parties may have acted under it and may have changed their
positions. What could be more fitting than that in a subsequent litigation regard be
had to what has been done while such legislative or executive act was in operation
and presumed to be valid in all respects. It is now accepted as a doctrine that prior
to its being nullified, its existence as a fact must be reckoned with. This is merely to
reflect awareness that precisely because the judiciary is the governmental organ
which has the final say on whether or not a legislative or executive measure is valid,
a period of time may have elapsed before it can exercise the power of judicial
review that may lead to a declaration of nullity. It would be to deprive the law of its
quality of fairness and justice then, if there be no recognition of what had
transpired prior to such adjudication.
In the language of an American Supreme Court decision: The actual existence of a
statute, prior to such a determination [of unconstitutionality], is an operative fact
and may have consequences which cannot justly be ignored. The past cannot
always be erased by a new judicial declaration. The effect of the subsequent ruling
as to invalidity may have to be considered in various aspects, with respect to
particular relations, individual and corporate, and particular conduct, private and
official. This language has been quoted with approval in a resolution in Araneta v.
Hill and the decision in Manila Motor Co., Inc. v. Flores. An even more recent
instance is the opinion of Justice Zaldivar speaking for the Court in Fernandez v.
Cuerva and Co.[91] (Emphasis supplied.)
This doctrine was reiterated in the more recent case of City of Makati v. Civil Service Commission, wherein
we ruled that:
Moreover, we certainly cannot nullify the City Governments order of suspension, as
we have no reason to do so, much less retroactively apply such nullification to
deprive private respondent of a compelling and valid reason for not filing the leave
application. For as we have held, a void act though in law a mere scrap of paper
nonetheless confers legitimacy upon past acts or omissions done in reliance
thereof. Consequently, the existence of a statute or executive order prior to its
being adjudged void is an operative fact to which legal consequences are
attached. It would indeed be ghastly unfair to prevent private respondent from
relying upon the order of suspension in lieu of a formal leave
application.[92] (Emphasis supplied.)
The principle was further explicated in the case of Rieta v. People of the Philippines, thus:
In similar situations in the past this Court had taken the pragmatic and realistic
course set forth in Chicot County Drainage District vs. Baxter Bank to wit:
The courts below have proceeded on the theory that the Act of Congress,
having been found to be unconstitutional, was not a law; that it was
inoperative, conferring no rights and imposing no duties, and hence
affording no basis for the challenged decree. x x x It is quite clear,
however, that such broad statements as to the effect of a determination
of unconstitutionality must be taken with qualifications. The actual
existence of a statute, prior to [the determination of its invalidity], is an
operative fact and may have consequences which cannot justly be
ignored. The past cannot always be erased by a new judicial
declaration. The effect of the subsequent ruling as to invalidity may have
to be considered in various aspects with respect to particular conduct,
private and official. Questions of rights claimed to have become vested,
of status, of prior determinations deemed to have finality and acted
 upon accordingly, of public policy in the light of the nature both of the
statute and of its previous application, demand examination. These
questions are among the most difficult of those which have engaged the
attention of courts, state and federal, and it is manifest from numerous
decisions that an all-inclusive statement of a principle of absolute
retroactive invalidity cannot be justified.
In the May 6, 2003 Resolution in Chavez v. PEA,[93] we ruled that De Agbayani[94] is not applicable to the
case considering that the prevailing law did not authorize private corporations from owning land. The
prevailing law at the time was the 1935 Constitution as no statute dealt with the same issue.
In the instant case, RA 6957 was the prevailing law at the time that the joint venture
agreement was signed. RA 6957, entitled An Act Authorizing The Financing, Construction, Operation And
Maintenance Of Infrastructure Projects By The Private Sector And For Other Purposes, which was passed
by Congress on July 24, 1989, allows repayment to the private contractor of reclaimed lands.[95] Such law
was relied upon by respondents, along with the above-mentioned executive issuances in pushing through
with the Project. The existence of such law and issuances is an operative fact to which legal consequences
have attached. This Court is constrained to give legal effect to the acts done in consonance with such
executive and legislative acts; to do otherwise would work patent injustice on respondents.
Further, in the May 6, 2003 Resolution in Chavez v. PEA, we ruled that in certain cases, the transfer of land,
although illegal or unconstitutional, will not be invalidated on considerations of equity and social
justice. However, in that case, we did not apply the same considering that PEA, respondent in said case,
was not entitled to equity principles there being bad faith on its part, thus:
There are, moreover, special circumstances that disqualify Amari from invoking
equity principles. Amari cannot claim good faith because even before Amari signed
the Amended JVA on March 30, 1999, petitioner had already filed the instant case
on April 27, 1998 questioning precisely the qualification of Amari to acquire
the Freedom Islands. Even before the filing of this petition, two Senate Committees
had already approved on September 16, 1997 Senate Committee Report No.
560. This Report concluded, after a well-publicized investigation into PEAs sale of
the Freedom Islands to Amari, that the Freedom Islands are inalienable lands of the
public domain. Thus, Amari signed the Amended JVA knowing and assuming all the
attendant risks, including the annulment of the Amended JVA.[96]
Such indicia of bad faith are not present in the instant case. When the ruling in PEA was rendered by this
Court on July 9, 2002, the JVAs were all executed. Furthermore, when petitioner filed the instant case
against respondents on August 5, 2004, the JVAs were already terminated by virtue of the MOA between
the NHA and RBI. The respondents had no reason to think that their agreements were unconstitutional or
even questionable, as in fact, the concurrent acts of the executive department lent validity to the
implementation of the Project. The SMDRP agreements have produced vested rights in favor of the slum
dwellers, the buyers of reclaimed land who were issued titles over said land, and the agencies and
investors who made investments in the project or who bought SMPPCs. These properties and rights
cannot be disturbed or questioned after the passage of around ten (10) years from the start of the SMDRP
implementation. Evidently, the operative fact principle has set in. The titles to the lands in the hands of
the buyers can no longer be invalidated.
The Courts Dispositions
Based on the issues raised in this petition, we find that the March 19, 1993 JVA between NHA and RBI and
the SMDRP embodied in the JVA, the subsequent amendments to the JVA and all other agreements signed
and executed in relation to it, including, but not limited to, the September 26, 1994 Smokey Mountain
Asset Pool Agreement and the agreement on Phase I of the Project as well as all other transactions which
emanated from the Project, have been shown to be valid, legal, and constitutional. Phase II has been
struck down by the Clean Air Act.
With regard to the prayer for prohibition, enjoining respondents particularly respondent NHA from
further implementing and/or enforcing the said Project and other agreements related to it, and from
further deriving and/or enjoying any rights, privileges and interest from the Project, we find the same
prayer meritless.
Sec. 2 of Rule 65 of the 1997 Rules of Civil Procedure provides:
Sec. 2. Petition for prohibition.When the proceedings of any tribunal, corporation,
board, officer or person, whether exercising judicial, quasi-judicial or ministerial
functions, are without or in excess of its or his jurisdiction, or with grave abuse of
discretion amounting to lack or excess of jurisdiction, and there is no appeal or any
other plain, speedy, and adequate remedy in the ordinary course of law, a person
aggrieved thereby may file a verified petition in the proper court, alleging the facts
with certainty and praying that judgment be rendered commanding the respondent
to desist from further proceedings in the action or matter specified therein, or
otherwise granting such incidental reliefs as law and justice may require.
It has not been shown that the NHA exercised judicial or quasi-judicial functions in relation to
the SMDRP and the agreements relative to it. Likewise, it has not been shown what ministerial functions
the NHA has with regard to the SMDRP.
A ministerial duty is one which is so clear and specific as to leave no room for the exercise of discretion in
its performance. It is a duty which an officer performs in a given state of facts in a prescribed manner in
obedience to the mandate of legal authority, without regard to the exercise of his/her own judgment
upon the propriety of the act done.[97]
Whatever is left to be done in relation to the August 27, 2003 MOA, terminating the JVA and other related
agreements, certainly does not involve ministerial functions of the NHA but instead requires exercise of
judgment. In fact, Item No. 4 of the MOA terminating the JVAs provides for validation of the developers
(RBIs) claims arising from the termination of the SMDRP through the various government
agencies.[98] Such validation requires the exercise of discretion.

In addition, prohibition does not lie against the NHA in view of petitioners failure to avail and exhaust all
administrative remedies. Clear is the rule that prohibition is only available when there is no adequate
remedy in the ordinary course of law.

More importantly, prohibition does not lie to restrain an act which is already a fait accompli. The
operative fact doctrine protecting vested rights bars the grant of the writ of prohibition to the case at bar.
It should be remembered that petitioner was the Solicitor General at the time SMDRP was formulated and
implemented. He had the opportunity to question the SMDRP and the agreements on it, but he did
not. The moment to challenge the Project had passed.

On the prayer for a writ of mandamus, petitioner asks the Court to compel respondents to
disclose all documents and information relating to the project, including, but not limited to, any
subsequent agreements with respect to the different phases of the Project, the revisions of the original
plan, the additional works incurred on the Project, the current financial condition of respondent RBI, and
the transactions made with respect to the project. We earlier ruled that petitioner will be allowed access
to official records relative to the SMDRP. That would be adequate relief to satisfy petitioners right to the
information gateway.

WHEREFORE, the petition is PARTIALLY GRANTED.

The prayer for a writ of prohibition is DENIED for lack of merit.

The prayer for a writ of mandamus is GRANTED. Respondent NHA is ordered to allow access to petitioner
to all public documents and official records relative to the SMDRPincluding, but not limited to, the March
19, 1993 JVA between the NHA and RBI and subsequent agreements related to the JVA, the revisions over
the original plan, and the additional works incurred on and the transactions made with respect to the
Project.

No costs..SO ORDERED.
THIRD DIVISION
[G.R. No. 113549. July 5, 1996]
REPUBLIC OF THE PHILIPPINES, (Represented by the DIRECTOR OF LANDS), petitioner, vs. COURT OF
APPEALS and HEIRS OF LUIS RIBAYA, namely, ANDREA RIBAYA BUENVIAJE, LUIS RIBAYA,
ANTONIA RIBAYACONDE, and JOHN DOE REBAYA, all represented by ANDREA RIBAYA-
BUENVIAJE as Administratrix of the Estate of Luis Ribaya, respondents.
DECISION
DAVIDE, JR., J.:
Petitioner seeks the reversal of the Resolution[1] of 24 January 1994 of the Court of Appeals in CA-
G.R. CV No. 17351, which set aside its earlier decision[2] of 9 January 1991. The latter affirmed the
decision[3] of 11 November 1987 of the Regional Trial Court (RTC), Branch 7, Legazpi City, in Civil Case No.
6198 which declared null and void an original certificate of title issued pursuant to a decree and a decision
in a land registration case decided on 18 September 1925.
After the private respondents filed their Comment and the petitioner their Reply, we gave due
course to the petition and required the parties to submit their respective memoranda.
The Court of Appeals' reversal was primarily due to its disagreement with the trial court's findings
of fact. Hence, such removes this case from the general rule that factual findings of the Court of Appeals
bind us in a petition for review under Rule 45 of the Rules of Court.[4] We are thus compelled to review the
factual antecedents.
From the decisions of the trial court and the Court of Appeals and the pleadings of the parties, the
following were established:
On the basis of the private respondents' exhibits,[5] on 9, 10, 12-16, 23, 24, 26, and 27 July 1920, a
parcel of land located in the barrio of Magragondong, Municipality of Ligao, Province of Albay, was
surveyed for the spouses Luis Ribaya and Agustina Revatoris (hereinafter the spouses Ribaya) by Telesforo
Untalan, a Bureau of Lands surveyor. The parcel of land was found to comprise an area of 25,542,603
square meters. The survey plan was denominated as Plan II-13961 and allegedly approved by the Acting
Director of Lands on 3 January 1922.However, as noted by the Court of Appeals in its 9 January 1991
decision,[6] these exhibits do not at all show the surveyor's signature. Moreover, as per Land Classification
Map No. 871 of the Bureau of Forestry, the above parcel of land was considered part of the public forest
and released for disposition only on 31 December 1930.[7]
In 1925, the spouses Ribaya applied for registration and confirmation of title of the lot covered by
Plan II-13961 before the then Court of First Instance (CFI) of Albay. The case was docketed as LRC Case No.
52, G.L.R.O. Record No. 26050. Notice of the application, and hearing thereof were published in the 17
March 1925 issue of the Official Gazette,[8] and in its decision of 18 September 1925,[9] the CFI granted the
said application.
Sometime later, or on 18-21 November and 23-30 November 1925, a resurvey of the parcel of land
covered by Plan II-13961 was conducted at the instance of the spouses Ribaya. This gave rise to Plan
II13961-Amd., which embraced, inter alia, four different parcels of land with an aggregate area of only
10,975,022 square meters, instead of the original 25,542,603 square meters. Plan II-13961-Amd. appeared
to have been approved by the Director of Lands on 26 February 1926.[10] The application was not amended
to reflect the resurvey and the amended plan was not published.
On 31 July 1926, the corresponding decree of registration was issued,[11] while on 19 August 1926,
Original Certificate of Title (OCT) No. 3947 covering the four lots embraced by Plan II-13961-Amd. was
issued in the names of the spouses Ribaya.[12]
On 11 September 1958, OCT No. 3947 was administratively reconstituted from the owner's
duplicate copy thereof and the reconstituted title was denominated as OCT No. PO-10848 (3947).[13]
In 1964, the heirs of Luis Ribaya (herein private respondents) received compensation from the
Foreign Claims Settlement Commission of the United States for damages sustained by the land during the
war.[14]
In 1968, pursuant to a deed of partition executed by the private respondents herein, the land
covered by OCT No. RO-10848 (3947) was subdivided per Subdivision Plan LRC Psd-96075, approved on 16
December 1968.[15] Then, OCT No. RO-10848 (3947) was cancelled and separate Transfer Certificates of
Title (TCT) were issued to the private respondents.[16]
In a letter dated 6 January 1977, sixty-two (62) farmers occupying the land[17] and claiming
ownership thereof, requested the Director of Lands to institute an action to annul OCT No. RO-10848
(3947).[18] Finding merit in the request, herein petitioner filed a verified complaint, dated 17 August 1978,
with the CFI (now Regional Trial Court) of Albay, Branch V, for the declaration of nullity of OCT No. 3947,
OCT No. RO-10848 (3947), and all subsequent titles emanating from the original title, viz., TCT Nos. T-
31333 to T-31358, inclusive. The case was docketed as Civil Case No. 6198.
The petitioner claimed therein that OCT No. 3947 was obtained through fraud and that the land
registration court did not acquire jurisdiction over the land for lack of republication of the amended plan,
neither did the spouses-applicants comply with Section 45(b) of Act No. 2874.[19] The petitioner further
alleged that at the time the petition for registration was filed, the land covered therein was forest land,
and therefore, inalienable.
On 27 October 1979, the aforementioned 62 farmers filed a complaint-in-intervention and prayed
that the land revert to the petitioner and their titles over the portions respectively occupied by them
confirmed.
In its decision of 11 November 1987[20] the Regional Trial Court (RTC) held for the petitioner as
follows:
WHEREFORE, decision is hereby rendered as follows:
1. Declaring Original Certificate of Title No. 3947 and administratively reconstituted Original
Certificate of Title No. RO-10848 (3947) as null and void ab initio and without force and
effect;
2. Declaring separate Transfer Certificates of Title, to wit: T-31333, T-31334, T-31335, T-
31336, T- 31337, T-31338, T-31339, T-31340, T-31341, T-31342, T-31343, T-31344, T-
31345, T-31346, T-31347, T- 31348, T-31349, T-31350, T-31351, T-31352, T-31353, T-
31354, T-31355, T-31356, T-31357 and T-31358, emanating from OCT No. 3947 and OCT
No. RO-10848 (3947), all issued to the heirs of Luis Ribaya and Agustina Revatoris, as
likewise null and void and without force and effect;
3. Ordering [respondents] Heirs of Luis Ribaya and Agustina Revatoris to surrender their copy
of OCT No. RO-10848 (3947) as well as their separate transfer certificates of title to the
Register of Deeds of Albay, who (sic) is thereafter directed or ordered to cancel the
same;
4. Ordering the reversion of the land to [petitioner] Republic of the Philippines, as alienable
and disposable land of the public domain.
5. And ordering the dismissal of the counterclaim.
The trial court found that at the time the spouses Ribaya filed their petition for registration, the
land was already classified as alienable and disposable agricultural land; however, the then CFI, as a land
registration court, did not acquire jurisdiction over the said lot due to lack of publication or republication
in the Official Gazette of Plan II-13961-Amd., which was the basis of the decree of registration and OCT No.
3947. Consequently, said OCT No. 3947 and its derivative titles were void.[21] In so finding, it relied
on Fewkes vs. Vasquez,[22] where it was held that any amendment or alteration in the description of the
land after its publication and decree of registration was not permissible unless coupled with republication.
The trial court likewise ruled that there was no evidence that the possession of the spouses Ribaya
and their predecessors-in-interests was open, continuous, and adverse under a bona fide claim of
ownership for the required number of years; moreover, they failed to present any tax declarations. It then
concluded that the said Spouses may have occupied portions of the land at a later time, but not in the
concept of bona fide owners, for mere casual cultivation and raising of cattle on the land did not
constitute "possession" as contemplated by law.[23]
The private respondents appealed to the Court of Appeals (CA-G.R. CV No. 17351), which, in its
decision[24] of 9 January 1991, affirmed in toto the appealed decision of the trial court.The appellate court
further pointed out another reason why the registration in favor of the applicants was invalid, thus:
[W]hen [the] spouses [Luis Ribaya and Agustina Revatoris] applied for registration thereof in their names
said land was still part of the public forest. The land was released for public disposition only on December
31, 1930 as shown by the Land Classification Map No. 871 of the Bureau of Forestry (Exhs K, K-
5). Consequently, OCT No. 3947 as reconstituted by OCT No. RO-10848 is void ab initio.
It is well-settled that lands of the public domain classified as forest or timber lands, are incapable of
registration in the names of private persons and their inclusion in a title nullifies the title (Director of
Lands vs. Reyes, 68 SCRA 177 and cases cited therein.)[25]
In refuting the claim of the private respondents that publication of the amended survey plan was
unnecessary in light of the decision of this Court in Benin vs. Tuazon,[26] the Court of Appeals held that the
facts in Benin were different. In Benin, an approved survey plan was submitted before the property was
decreed for registration, while in the present case:
[T]he land was decreed for registration on September 18, 1925, while its survey was performed sometime
in November and December 1925. The amended survey plan (plan II-13961-Amd.) thereof was approved
by the Director of Lands on February 26, 1926. In other words, the survey plan (plan II-13961-Amd.) of the
land in the instant case was approved when the land was already decreed for registration. . . .[27]
There was then, the Court of Appeals concluded, a violation of Sections 23 and 26 of Act No. 496.[28]
The private respondents seasonably moved for a reconsideration of this decision.
 In its resolution[29] of 24 January 1994, the Court of Appeals granted the motion for reconsideration
and set aside its decision of 9 January 1991, reversed that of the trial court of 11 November 1987, and
dismissed the complaint and the complaint-in-intervention in Civil Case No. 6198 of Branch 7 of the RTC of
Legazpi City. In overturning its previous decision, the Court of Appeals ruled that OCT No. 3947 "is
conclusive upon and against all persons, including the Government and all its branches (Sec. 38, Act No.
496) as to all matters contained therein (Sec. 47, Act No. 496). One (1) year after its transcription which is
the date of its effectivity (Sec. 42, Act No. 496), said certificate of title became incontrovertible (Sec. 38,
Act No. 496)."[30]
It further applied the presumption of regularity in the grant of the land applied for by the spouses
Ribaya, and even extended said presumption to their compliance with all conditions required by law, in
particular, their "open, continuous, exclusive and notorious possession and occupation of the land under
a bona fide claim of ownership since July 26, 1894." It thus burdened the Republic "to prove otherwise."[31]
It likewise ruled that the failure of the spouses Ribaya to present tax receipts was not fatal, and that
although they actually lived in Oas, Albay, such did not negate the character of their possession for
"[p]ossession in the eyes of the law does not mean that a man has to have his feet on every square meter
of ground before he can be said that he is in possession."[32]
The Court of Appeals also rejected the application of the Fewkes case and applied, instead, the
decision in Benin, where this Court held that republication could be dispensed with in an amendment in
the application or in the survey plan, where such amendment consisted of the exclusion of a portion
covered by the original application and the original survey plan as published. Accordingly, the land
registration court retained its jurisdiction.
Finally, the Court of Appeals withdrew its earlier finding that the land in question still formed part
of the public forest at the time of the application for registration. It asserted, instead, that there was
insufficient basis to conclude that a parcel of land only became open to disposition on the basis of the
date of approval of the land classification map, because such approval may have been made later by
authority of a prior executive declaration.[33]
Unsatisfied, the petitioner filed the instant petition and asserts that (1) the indefeasibility of title
does not lie against the State in an action for reversion of land; (2) the spouses-applicants failed to prove
possession of the land for the period required by law, and the evidence shows that their possession was
not open, continuous, exclusive, and notorious under a bona fide claim of ownership; (3) the amended
survey plan was not published, (4) the land covered by OCT No. 3947 was then part of the forest land,
hence, inalienable; and (5) the accuracy of the land survey was doubtful.[34]
In their Comment, the private respondents allege that the petition merely raises factual matters
and argue that OCT No. 3947 is absolutely incontestable, considering that the land was no longer part of
the public forest when it was decreed in favor of their parents. They further contend, invoking Benin, that
the issue of republication is inapplicable since the publication of the original survey plan was already had
in compliance with law. Moreover, possession of the land by their parents, the spouses-applicants, was
duly proven, i.e., donations of portions thereof in favor of the government and the compensation they
received from the Foreign Claims Settlement Commission of the United States for damages sustained by
the land during the war sufficiently proved that they were the legitimate owners of the land. Finally, the
original survey plan could no longer be questioned by the petitioner.[35]
As the Court sees it, only two relevant issues need be resolved, to wit:
1. Whether the Republic of the Philippines is barred by prescription to bring the action for
annulment of OCT No. 3947 and all its derivative certificates of title; and
2. Whether the land registration court acquired jurisdiction over the four parcels of land
subject of the amended survey plan (Plan II-13961-Amd.) and covered by the decree
issued on 31 July 1926 by the General Land Registration Office pursuant to the decision
of the said court of 18 September 1925.
As to the first issue, we find that the Court of Appeals erred in holding that OCT No. 3947 was, to
repeat:
[C]onclusive upon and against all persons, including the Government and all its branches (Sec. 38, Act No.
496) as to all matters contained therein (Sec. 47, Act No. 496). One (1) year after its transcription which is
the date of its effectivity (Sec. 42, Act No. 496), said certificate of title became incontrovertible (Sec. 38,
Act No. 496).[36]
First, the one-year period provided for in Section 38 of Act No. 496 merely refers to a petition for review
and is reckoned from the entry of the decree. In the second place, there are other remedies available to
an aggrieved party after the said one-year period, e.g., reconveyance, covered by Section 65 of Act No.
496 which, inter alia, provides that "in all cases of registration procured by fraud, the owner may pursue
all his legal and equitable remedies against the parties to such fraud, without prejudice, however, to the
rights of any innocent holder for value of a certificate of title."[37] Likewise, an action for damages is
sanctioned in cases where the property has been transferred to an innocent purchaser for value, which
may be filed within four years from discovery of the fraud.[38] Recourse may also be had against the
Assurance Fund.[39]
Finally, prescription never lies against the State for the reversion of property which is part of the
public forest or of a forest reservation which was registered in favor of any party. Then too, public land
registered under the Land Registration Act may be recovered by the State at any time. In Republic vs.
Animas,[40] we ruled:
 Public land fraudulently included in patents or certificates of title may be recovered or reverted to
the state in accordance with Section 101 of the Public Land Act. Prescription does not lie against the state
in such cases for the Statute of Limitation does not run against the state. The right of reversion or
reconveyance to the state is not barred by prescription.
We therefore hold that since the land applied for by the spouses Ribaya was part of the public
forest and released only on 31 December 1930,[41] the land registration court acquired no jurisdiction over
the land, which was not yet alienable and disposable. Hence, the State's action to annul the certificates of
title issued thereunder and for the reversion of the land is not barred by prescription.
Anent the second issue, we hold that the land registration court in LRC Case No. 52, G.L.R.O. Record
No. 26050 never acquired jurisdiction over the land covered by either the original plan (Plan II-13961) or
the amended plan (Plan II-13961-Amd.) for lack of sufficient publication of the first and total want of
publication of the second.
As found by both the trial court in Civil Case No. 6198 and the Court of Appeals, the notice of the
hearing of application of the spouses Ribaya for the registration of the land covered by the original plan
was published in the 17 March 1925 issue of the Official Gazette. In short, there was only one publication
thereof. Section 31 of Act No. 496, the governing law then, required two publications. Hence, the decision
of 18 September 1925 of the land registration court was void for want of the required publications. The
requirement of dual publication is one of the essential bases of the jurisdiction of the registration
court;[42] it is a jurisdictional requisite.[43] Land registration is a proceeding in rem and jurisdiction in
rem cannot be acquired unless there be constructive seizure of the Land through publication and service
of notice.[44]
Worse, the decision of 18 September 1925 was entirely based on an alleged original survey
plan. The fact remains, however, that in November of that year that original plan was amended (Plan II-
13961-Amd.) and the amended plan was not published at all. There is no evidence that the court amended
its decision to conform to the amended plan, neither is there a showing that the parties even attempted
publication thereof. However, the decree that was subsequently issued was based on the amended plan
insofar as the four lots were concerned.
A decree of registration is required to recite the description of the land.[45] On the basis of the
decree, OCT No. 3947 was issued. It follows then that the land registration court may have amended its
decision to conform to the amended plan for the four lots which ultimately found their way into the
decree issued by the General Land Registration Office, and finally, into OCT No. 3947. Whether it did so or
not and the General Land Registration Office merely adjusted the decree to conform to the amended plan,
such aims were fatally flawed due to the absence of publication of the amended plan. As such, the land
registration court acquired no jurisdiction over the land embraced by the amended plan.
The Court of Appeals in its challenged resolution of 24 January 1994 and the private respondents,
however, maintain that the publication of the amended plan was unnecessary under our pronouncements
in Benin vs. Tuazon.[46] This case reiterates our rulings in Philippine Manufacturing Co. vs. Imperial,[47] Juan
and Chuongco vs. Ortiz,[48] Bank of the Philippine Islands vs. Acua,[49] Lichauco vs. Herederos de
Corpus,[50] and Director of Lands vs. Benitez,[51] that only where the original survey plan is amended during
the registration proceedings, by the addition of land not previously included in the original plan, should
publication be made in order to confer jurisdiction on the court to order the registration of the area added
after the publication of the original plan. Conversely, if the amendment does not involve an addition, but
on the contrary, a reduction of the original area that was published, no new publication is required.
Reliance on Benin and its predecessors is misplaced. In the first place, the amendment of the
original survey plan for the land applied for by the spouses Ribaya was made after the land registration
court rendered its decision. It follows then that a re-opening of the case was indispensable; however, no
such re- opening appears to have been done therein. Second, as earlier shown, the land registration court
acquired no jurisdiction over the land covered by the original plan because of insufficient publication in
the Official Gazette. Third, it has not been sufficiently shown that the four parcels of land covered by OCT
No. 3947, which are based on the amended plan, are but a small part of the same and covered by the
original survey plan.This conclusion is thoroughly discussed below.
In the 24 January 1994 resolution of the Court of Appeals, it found the original areas covered by
Plan 13961 to be 25,542,603 square meters and the four parcels of land embraced in the amended plan,
Plan II-13961-Amd., to be in the aggregate of 10,975,022 square meters. Thus:
In the case at bar, in 1925, the spouses Ribaya sought for a judicial confirmation of imperfect or
incomplete title of the land described as follows:
Parcel of land (Plan II-13961) containing an area of 25,542,603 square meters, with the buildings and
improvements thereon, situated in the Barrio Magragondong, Municipality of Ligao, Province of Albay, P.I.
x x x (Italics Supplied).
Said 25,542,603 square meter land was surveyed on July 9, 10, 12-16, 23, 24, 26 and 27, 1920 by
Telesforo Untalan, a surveyor of the Bureau of Lands which survey was approved by the Acting Director of
Lands on January 3, 1922, (Exh. 6).
The notice of application and hearing of the land as aforedescribed, was published in the March 17,
1925 issue of the Official Gazette (Exhs. J and J-1).
The land registration court issued a decision in favor of the spouses Ribaya on September 18, 1925
but for a smaller parcel of land than the 25,542,503 square meters are applied for.On November 23 and
30, 1925, said smaller parcel of land was surveyed by Land Surveyor Wenceslao Manuel, and was
approved by the Director of Lands on February 26, 1926 as Plan II-13961-Amd. (Exh. H and series).
Plan II-13961-Amd. embraced 4 parcels of land in the aggregate area of 10,975,022 square meters
separately described as follows:
1. A parcel of land (Lot No. 1 Plan II-13961-Amd.), containing an area of 3,318,454 square
meters, more or less;
2. A parcel of land (Lot No. 2 Plan II-13961-Amd.), containing an area of 1,575,195 square
meters more or less;
3. A parcel of land (Lot No. 3 Plan II-13961-Amd.), containing an area of 4,844,205 square
meters, more or less;
4. A parcel of land (Lot No. 4 Plan II-13961-Amd.), containing an area of 1,237,368 square
meters, more or less.[52]
This was also its finding in its earlier decision of 9 January 1991.[53]
In their Comment of 30 May 1994, the private respondents do not, for obvious reasons, dispute
such finding and so they not only quoted it therein,[54] they also explicitly assert that:
The undisputed facts are that the original plan of the land applied for which was published in the Official
Gazette contained an area of 25,542,603 square meters. The land actually embraced in the decree of
registration contained only 10,975,022 square meters.[55] (Italics supplied)
In hectares, the 25,542,603 square meters means Two Thousand Five Hundred and Fifty Four Hectares,
two ares, and six hundred and three centares (2,554 has., 2 ares, and 603 centares); and the 10,975,022
square meters means one thousand and ninety seven hectares, five ares, and twenty-two centares (1,097
has., 5 ares, and 22 centares).
However, the trial court is somewhat confused as to the area of the land covered by Plan II-13961,
as well as, that covered by the amended plan (Plan II-13961-Amd.). Thus:
[A]nd on March 7, 1978 Land Investigator Selecio San Felipe wrote the Director of Lands that the report of
the ocular inspection and investigation conducted on May 14, 15 and 16, 1977 was true and correct, . . .
that Plan II 3961-Amd., Sheet no. 1, surveyed for Luis Ribaya, with an area of 489.3649 hectares, located
at Magragondong, Ligao, Albay, was surveyed on November 18-21, December 8-9, 1925 by Private Land
Surveyor Wenceslao Manuel, and was approved by the Director of Lands on February 26, 1926 (Exhibits G,
G-l and G-2 for plaintiff and Exhibits GG, GG-l and GG-2 for Intervenors); that Plan II-13961 Amd., Sheet no.
2, surveyed for Luis Ribaya, with an area of 608.1373 hectares, located at Magragondong, Ligao, Albay,
was surveyed on November 23-30, 1925 by Private Land Surveyor Wenceslao Manuel, and was approved
by the Director of Lands on February 26, 1926 (Exhibits H, H-l and H-2 for plaintiff and Exhibits HH, HH-1
and HH-2 for intervenors); . . . that Original Certificate of Title No RO-10848 (3947) covers 4 parcels of land,
to wit: Lot No. 1, Plan II-13961-Amd.), containing an area of 3,318.454 square meters more or less, Lot No.
2, Plan II-13961-Amd.), containing an area of 1,575.195 square meters more or less, Lot No. 3, Plan II-
13961- Amd.), containing an area of 4,844.005 square meters more or less, and Lot No. 4, Plan II-13961-
Amd.), containing an area of 1,237.368 square meters more or less with a total of 10,975.022 square
meters more or less; x x x that Plan II-13961 of property as surveyed for Luis Ribaya, situated in the barrio
of Magragondong, Municipality of Ligao, province of Albay, containing an area of 25,542.603 square
meters, was surveyed on July 9, 10, 12-16, 23, 24, 26 and 27, 1920 in accordance with Section 45 of Act
2874 by Telesforo Untalan, a surveyor of the Bureau of Lands, and the said plan was approved by the
Acting Director of Lands on January 3, 1922 (Exhibits 6 and 6-A). . . .[56] (Italics supplied)
Note that instead of a comma (,) before the last three digits in the areas of the four lots covered by the
amended plan, as well as the areas embraced in the original plan, the trial court placed a period (.). The
change from a comma to a period is of vital significance. For, translated into hectares, the 25,542.603
square meters would be only Two (2) hectares, five (5) ares, and five hundred and forty-two (542) centares;
and the aggregate of 10,975.022 square meters for the four lots embraced in Plan II-13961-Amd. would
be one (1) hectare and nine hundred seventy-five (975) centares.
Indeed, the disagreement between the Court of Appeals and the trial court as to the land area of
the original survey plan (Plan II-13961), i.e., whether it was 25,542,603 square meters (twenty-five million
five hundred and forty-two thousand and six hundred three square meters) as found by the former,
or 25,542.6
03 square meters (twenty-five thousand, five hundred forty-two point six hundred and three square
meters) as found by the latter, only shows the unreliability of the original plan sought to be established
through Exhibits 6 and 6-A. The Court of Appeals itself so found it to be in its decision of 9 January 1991
because these exhibits did not show that the survey plan was signed by the surveyor. Thus:
Although the trial court said so (decision, p. 4) its basis, which is (original) Plan II-13961 (Exhs. 6, 6-A), did
not indubitably establish the same. In the first place, said original plan (Plan II-13961) does not bear the
signature of the surveyor thereof, thereby casting doubt on its genuineness and due execution. x x
x[57] (Italics supplied)
Such doubt gains strength if we consider that if indeed the area embraced therein was that found by the
Court of Appeals, i.e., 25,542,603 square meters with a comma before the last three digits it would have
been physically impossible to finish the survey thereof in only eleven days (9, 10, 12-16, 23, 24, 26, and 27
July 1920). Plainly, the present-day sophisticated survey instruments were not then
available. Furthermore, the trial court indicated in its findings of fact that in addition to the four lots
covered by OCT No. 3947, there were other large tracts covered by the amended survey plan (Plan II-
13961-Amd.), viz.:

[T]hat Plan II-13961-Amd., Sheet no. 1, surveyed for Luis Ribaya, with an area of 489.3649 hectares,
located at Magragondong, Ligao, Albay, . . . (Exhibits G, G-1 and G-2 for plaintiff and Exhibits GG, GG-1
and GG-2 for Intervenors); that Plan II-13961 Amd., Sheet no. 2, surveyed for Luis Ribaya, with an area
of 608.1373 hectares, located at Magragondong, Ligao, Albay,... (Exhibits H, H-1 and H-2 for plaintiff and
Exhibits HH, HH-1 and HH-2 for intervenors);[58] (Italics supplied)

The disagreement between the trial court and the Court of Appeals cannot be definitely resolved
because no reliable copy of the original Plan II-13961 was presented. Exhibits "6 and 6-A are a machine
copy of the blueprint of the said Plan, which is not the best evidence under Section 3, Rule 130 of the
Rules of Court. They are, at most, secondary evidence, which are inadmissible for failure of the offer or to
prove any of the exception provided therein and to established the conditions for their admissibility. Even
if they are admitted, they have no probative value.

Clearly then, there is absence of factual basis to conclude that the four parcels of land included in
OCT No. 3947 are but a part of the land covered by the original plan (Plan II-13961).

WHEREFORE, the petition is GRANTED. The challenged resolution of 24 January 1994 of the
respondent Court of Appeals in CA-G.R. CV No. 17351 is SET ASIDE, while its decision therein of 9 January
1991 affirming in toto that of Branch 7 of the Regional Trial Court of Legaspi City of 11 November 1987 in
Civil Case No. 6198 is REINSTATED and AFFIRMED.

Costs against the private respondents.

SO ORDERED.
Republic of the Philippines
Supreme Court This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, seeking to
Manila reverse and set aside the decision[1] dated February 28, 2006 of the Court of Appeals (CA) in CA-G.R. CV No.
67417, which dismissed the appeal of petitioner Eland Philippines, Inc. and affirmed the Resolutions dated
THIRD DIVISION November 3, 1999 and June 28, 2006 of Branch 18, Regional Trial Court (RTC) of Tagaytay City.
The facts of the case, as shown in the records, are the following:

ELAND PHILIPPINES, INC., G.R. No. 173289 Respondents Azucena Garcia, Elino Fajardo, and Teresa Malabanan, the heir of Tiburcio
Petitioner, Malabanan, filed a Complaint[2] dated March 2, 1998 for Quieting of Title with Writ of Preliminary
Injunction with the RTC, Branch XVIII, Tagaytay City against petitioner Eland Philippines, Inc. Respondents
Present: claimed that they are the owners, in fee simple title, of a parcel of land identified as Lot 9250 Cad-355,
Tagaytay Cadastre, Plan Ap-04-008367, situated in Barangay Iruhin, Tagaytay City, containing an area of
-versus- Two Hundred Forty-Four Thousand One Hundred Twelve (244,112) square meters, by occupation and
CARPIO,* J., possession under the provisions of Sec. 48 (b)[3] of the Public Land Law or Commonwealth Act No. 141, as
CORONA, J., Chairperson, amended.
NACHURA,
AZUCENA GARCIA, ELINO FAJARDO, and HEIR PERALTA, and For having been in continuous, public, and adverse possession as owners of the said lot for at
OF TIBURCIO MALABANAN named TERESA MENDOZA, JJ. least thirty years, respondents stated that they were not aware of any person or entity who had a legal or
MALABANAN, equitable interest or claim on the same lot until the time they were requesting that the lot be declared for
Respondents. tax purposes. They found out that the lot was the subject of a land registration proceeding that had
Promulgated: already been decided by the same court[4] where their complaint was filed. They also found out that
February 17, 2010 Decree No. N-217313, LRC Record No. N-62686, was already issued on August 20, 1997 to the petitioner
pursuant to the Decision dated June 7, 1994 of the same court. They averred that they were not notified
of the said land registration case; thus, they claimed the presence of misrepresentation amounting to
actual or extrinsic fraud. Thus, they argued that they were also entitled to a writ of preliminary injunction
in order to restrain or enjoin petitioner, its privies, agents, representatives, and all other persons acting on
its behalf, to refrain from committing acts of dispossession on the subject lot.

x-----------------------------------------------------------------------------------------x
Summons, together with a copy of the complaint, were served on the petitioner on April 7,
1998. On April 29, 1998, petitioner filed an Entry of Appearance with Motion for Extension of
Time,[5] which the trial court granted[6] for a period of ten (10) days within which to file a responsive
pleading. Petitioner filed a Second Motion for Extension of Time to File Answer[7] dated April 29, 1998,
which the trial court likewise granted.[8]

DECISION Thereafter, petitioner filed a Motion to Dismiss[9] dated May 9, 1998, stating that the pleading
asserting the claim of respondents stated no cause of action, and that the latter were not entitled to the
issuance of a writ of preliminary injunction, setting the same for hearing on May 21, 1998. On the date of
PERALTA, J.: the hearing, the trial court issued an Order,[10] which granted the respondents ten (10) days from that day
to file a comment, and set the date of the hearing on July 23, 1998. Respondents filed a Motion to Admit
Comment/Opposition to Defendant Eland,[11] together with the
corresponding Comment/Opposition[12] dated June 8, 1998.
On the scheduled hearing of September 23, 1998, the trial court issued an
Order,[13] considering the Motion to Dismiss submitted for resolution due to the non-appearance of the
parties and their respective counsels. The said motion was eventually denied by the trial court in an
Order[14] dated September 25, 1998, ruling that the allegations in the complaint established a cause of
action and enjoined petitioner Eland to file its answer to the complaint within ten (10) days from receipt
of the same. Petitioner then filed two Motions for Extension to File an Answer.[15]
Petitioner, on November 9, 1998, filed a Motion for Reconsideration[16] of the trial court's
Order dated September 25, 1998, denying the former's Motion to Dismiss.Again, petitioner filed a Motion
for Final Extension of Time to File Answer[17] dated November 6, 1998. Respondents filed their
Comment/Opposition to Motion for Reconsideration dated November 24, 1998. Subsequently, the trial
court denied petitioner's motion for reconsideration in an Order[18] dated January 11, 1999.
Meanwhile, respondents filed a Motion to Declare Defendant Eland in Default[19] dated
November 17, 1998. On December 4, 1998 Petitioner Eland filed its Comment (on Plaintiff's Motion to
Declare Defendant Eland in Default)[20] dated December 2, 1998, while respondents filed a Reply to
Comment (on Plaintiff's Motion to Declare Defendant Eland in Default)[21] dated December 29,
1998. Thereafter, the trial court issued an Order[22] dated January 11, 1999 declaring the petitioner in
default and allowed the respondents to present evidence ex parte. Petitioner filed a Motion for
Reconsideration (of the Order dated 11 January 1999)[23] dated February 5, 1999 on the trial court's denial
of its motion to dismiss and in declaring it in default. The trial court in an Order[24] dated March 18, 1999,
denied the former and granted the latter. In the same Order, the trial court admitted petitioner's
Answer Ad Cautelam.
Earlier, petitioner filed its Answer Ad Cautelam (With Compulsory Counterclaim)[25] dated
November 12, 1998. Respondents countered by filing a Motion to Expunge Eland's Answer from the
Records[26] dated December 2, 1998. Petitioner filed its Opposition (to Plaintiff's Motion to Expunge
Eland's Answer from the Records)[27] dated December 21, 1998, as well as a Comment (on Plaintiff's
Motion to Expunge Eland's Answer from the Records)[28] dated January 26, 1999.
Consequently, respondents filed a Motion to Set Presentation of Evidence Ex Parte[29] dated
January 18, 1999, which was granted in an Order[30] dated January 22, 1999.
On January 28, 1999, respondents presented their evidence before the Clerk of Court of the
trial court which ended on February 3, 1999; and, on February 10, 1999, respondents filed their Formal
Offer of Evidence.[31] However, petitioner filed an Urgent Motion to Suspend Plaintiff's Ex
Parte Presentation of Evidence[32] dated February 8, 1999. In that regard, the trial court issued an
Order[33] dated February 11, 1999 directing the Clerk of Court to suspend the proceedings.
On May 14, 1999, respondents filed a Motion for Clarification[34] as to whether or not the
evidence presented ex parte was nullified by the admission of petitioner's Answer Ad Cautelam. Petitioner
filed its Comment[35] dated May 13, 1999 on the said motion for clarification.
A pre-trial conference was scheduled on May 27, 1999, wherein the parties submitted their
pre-trial briefs.[36] However, petitioner filed a Motion to Suspend Proceedings[37] dated May 24, 1999 on
the ground that the same petitioner had filed a petition for certiorari with the CA, asking for the
nullification of the Order dated March 18, 1999 of the trial court and for the affirmation of its earlier
Order denying petitioner's Motion to Dismiss. The petition for certiorari was subsequently denied; and a
copy of the Resolution[38] dated June 14, 1999 was received by the trial court. Hence, in an Order[39] dated
July 7, 1999, the trial court ruled that the reception of evidence already presented by the respondents
before the Clerk of Court remained as part of the records of the case, and that the petitioner had the right
to cross-examine the witness and to comment on the documentary exhibits already
presented. Consequently, petitioner filed a Motion for Reconsideration[40] dated July 19, 1999, but it was
denied by the trial court in an Omnibus Order[41] dated September 14, 1999.
Eventually, respondents filed a Motion for Summary Judgment[42] dated August 5, 1999, while
petitioner filed its Opposition[43] to the Motion dated August 31, 1999. In its Resolution[44] dated
November 3, 1999, the trial court found favor on the respondents. The dispositive portion of the
Resolution reads:
WHEREFORE, premises considered, the motion for summary judgment is
hereby GRANTED and it is hereby adjudged that:
1. Plaintiffs are the absolute owners and rightful possessors of Lot 9250,
CAD-355, Tagaytay Cadastre, subject to the rights of occupancy of the farm workers
on the one-third area thereof;
2. The Judgment dated June 7, 1994 in Land Registration Case No. TG-
423 is set aside and the Decree No. N-217313, LRC Record No. N-62686 dated
August 20, 1997 is null and void;
 3. The Original Transfer Certificate of Title is ordered to be canceled, as
well as tax declaration covering Lot 9250, Cad-355.
SO ORDERED.
Petitioner appealed the Resolution of the trial court with the CA, which dismissed it in a
Decision dated February 28, 2006, which reads:
WHEREFORE, for lack of merit, the appeal is DISMISSED. The assailed
Resolution dated November 3, 1999, of the RTC, Branch 18, Tagaytay City, in Civil
Case No. TG-1784, is AFFIRMED. No pronouncement as to cost.
SO ORDERED.
Hence, the present petition.
The grounds relied upon by the petitioner are the following:
5.1 THE COURT OF APPEALS ACTED IN A MANNER NOT IN ACCORD WITH
LAW AND WITH THE APPLICABLE DECISIONS OF THIS HONORABLE COURT WHEN IT
RULED THAT RESPONDENTS' MOTION FOR SUMMARY JUDGMENT DATED AUGUST
05, 1999 DID NOT VIOLATE THE TEN (10)-DAY NOTICE RULE UNDER SECTION 3, RULE
35 OF THE 1997 RULES OF CIVIL PROCEDURE.
5.2 THE COURT OF APPEALS ACTED IN A MANNER NOT IN ACCORD WITH
LAW AND WITH THE APPLICABLE DECISIONS OF THIS HONORABLE COURT WHEN IT
RULED THAT A MOTION FOR SUMMARY JUDGMENT IS PROPER IN AN ACTION FOR
QUIETING OF TITLE.
5.3 THE COURT OF APPEALS ACTED IN A MANNER NOT IN ACCORD WITH
LAW AND WITH THE APPLICABLE DECISIONS OF THIS HONORABLE COURT WHEN IT
RULED THAT THERE ARE NO GENUINE FACTUAL AND TRIABLE ISSUES IN CIVIL CASE
NO. TG-1784.
5.4 THE COURT OF APPEALS ACTED IN A MANNER NOT IN ACCORD WITH
LAW AND WITH THE APPLICABLE DECISIONS OF THIS HONORABLE COURT WHEN IT
UPHELD THE RESOLUTION DATED NOVEMBER 03, 1999 OF THE COURT A QUO,
BASED ON TESTIMONIES OF RESPONDENTS' WITNESSES TAKEN WITHOUT
GRANTING HEREIN PETITIONER THE RIGHT TO CROSS-EXAMINE AND UPON
DOCUMENTARY EXHIBITS PRESENTED BUT NOT ADMITTED AS EVIDENCE.
5.5 THE COURT OF APPEALS ACTED IN A MANNER NOT IN ACCORD WITH
LAW AND WITH THE APPLICABLE DECISIONS OF THIS HONORABLE COURT WHEN IT
UPHELD THE RESOLUTION DATED NOVEMBER 03, 1999 OF THE COURT A
QUO BASED ON FALSIFIED EVIDENCE.
5.6 THE COURT OF APPEALS ACTED IN A MANNER NOT IN ACCORD WITH
LAW AND WITH THE APPLICABLE DECISIONS OF THIS HONORABLE COURT WHEN IT
FAILED TO RULE THAT THE COURT A QUO PATENTLY DEPRIVED PETITIONER OF ITS
RIGHT TO DUE PROCESS IN RENDERING ITS SUMMARY JUDGMENT.
5.7 THE COURT OF APPEALS ACTED IN A MANNER NOT IN ACCORD WITH
LAW AND WITH THE APPLICABLE DECISIONS OF THIS HONORABLE COURT WHEN IT
HELD THAT THE COURT A QUO HAS JURISDICTION TO CANCEL PETITIONER'S
ORIGINAL CERTIFICATE OF TITLE (OCT) NO. 0-660 IN AN ACTION TO QUIET TITLE.
According to the petitioner, a motion for summary judgment must be served at least ten (10)
days before the date set for hearing thereof, and that a hearing must be held to hear the parties on the
propriety of a summary judgment, per Sec. 3 of Rule 35 of the Revised Rules of Court, which was not
observed because the petitioner received a copy of the respondents' motion for summary judgment only
on August 20, 1999, or the very same day that the motion was set for hearing. Petitioner further claims
that the trial court never conducted any hearing on the motion for summary judgment.
Petitioner also argued that a summary judgment is only available to a claimant seeking to
recover upon a claim, counterclaim or cross-claim or to obtain a declaratory relief, and does not include
cases for quieting of title. Furthermore, petitioner also averred that a summary judgment has no place in
a case where genuine factual and triable issues exist, like in the present case. It added that the genuine
and triable issues were all raised in its Answer Ad Cautelam.
Another ground relied upon by petitioner is its failure to cross-examine the witnesses for the
respondents without fault on its part. It also stated that the trial court did not issue any order admitting in
evidence the documentary exhibits presented by the respondents. Hence, according to the petitioner, the
trial court gravely erred in relying upon the testimonies of the witnesses for the respondents, without
having the latter cross-examined; and upon the documentary exhibits presented but not admitted as
evidence.
 Petitioner further claimed that the trial court based its Resolution dated November 3, 1999 on
falsified evidence.
Lastly, petitioner raised the issue that by rendering summary judgment, the trial court
deprived the former of its right to due process.
Respondents, in their Comment[45] dated October 16, 2006, countered the first issue raised by
the petitioner, stating that their filing of the motion for summary judgment fourteen (14) days before the
requested hearing of the same motion was in compliance with Sec. 3, Rule 35 of the Rules of Court.
As to the second and third issues, respondents argued that petitioner had a constricted
perception of the coverage of the Rules of Summary Judgment, and that the latter's citation of cases
decided by this Court showed the diverse causes of action that could be the subject matters of summary
judgment. Respondents also posited that petitioner's statements in its Answer Ad Cautelam, although
denominated as Specific Denial, were really general denials that did not comply with the provisions of
Section 10, Rule 8 of the Rules of Court.
Anent the fourth and fifth issues, respondents claimed that despite the opportunity, or the
right allowed in the Order dated July 17, 1999 of the trial court, for the petitioner to cross-examine
respondents' witnesses and to comment on the documentary evidence presented ex parte after the
default order against the same petitioner, the latter evasively moved to set aside respondents' evidence
in order to suspend further proceedings that were intended to abort the pre-trial conference. They added
that petitioner neglected to avail itself of, or to comply with, the prescription of the rules found in Rule 35
of the Rules of Court by opting not to avail itself of the hearing of its opposition to the summary judgment
after receiving the Order dated August 20, 1999; by failing to serve opposing affidavit, deposition or
admission in the records; and by not objecting to the decretal portion of the said Order dated August 20,
1999, which stated that the motion for summary judgment has been submitted for resolution without
further argument. With regard to the contention of the petitioner that the trial court wrongly appreciated
falsified evidence, respondents asserted that petitioner's counsel failed to study carefully the records of
the proceedings for the presentation of the evidence ex parte to be able to know that it was not only a
single-day proceeding, and that more than one witness had been presented.They further averred that the
trial court did not only rely on the photographs of the houses of the occupants of the property in question.
Finally, as to the sixth and seventh issues, respondents asseverated that their complaint
alleged joint causes of action for quieting of title under Art. 476 of the New Civil Code and for the review
of the decree of registration pursuant to Sec. 32 of the Property Registration Decree or P.D. No. 1529,
because they are complimentary with each other.
The petition is impressed with merit.
The basic contention that must be resolved by this Court is the propriety of the summary
judgment in this particular case of quieting of title.
Rule 35 of the 1997 Rules of Civil Procedure provides:
SEC. 1. Summary judgment for claimant. - A party seeking to recover
upon a claim, counterclaim, or cross-claim or to obtain a declaratory relief may, at
any time after the pleading in answer thereto has been served, move with
supporting affidavits for a summary judgment in his favor upon all or any part
thereof
SEC. 3. Motion and proceedings thereon. - The motion shall be served at
least ten (10) days before the time specified for the hearing. The adverse party prior
to the day of hearing may serve opposing affidavits. After the hearing, the judgment
sought shall be rendered forthwith if the pleading, depositions, and admissions on
file together with the affidavits, show that, except as to the amount of damages,
there is no genuine issue as to any material fact and that the moving party is
entitled to a judgment as a matter of law.[46]
In the present case, it was the respondents who moved for a summary judgment.
Petitioner contended that the ten-day notice rule was violated, because the copy of the motion
for summary judgment was served only on August 20, 1999 or on the same day it was set for hearing. It
also added that even if the petitioner received a copy of the motion only on August 20, 1999, there was
no hearing conducted on that date because the trial court issued an order giving petitioner 10 days within
which to file its comment or opposition.
The above specific contention, however, is misguided. The CA was correct in its observation
that there was substantial compliance with due process. The CA ruled, as the records show, that the ten-
day notice rule was substantially complied with because when the respondents filed the motion for
summary judgment on August 9, 1999, they furnished petitioner with a copy thereof on the same day as
shown in the registry receipt and that the motion was set for hearing on August 20, 1999, or 10 days from
the date of the filing thereof.
Due process, a constitutional precept, does not, therefore, always and in all situations a trial-
type proceeding. The essence of due process is found in the reasonable opportunity to be heard and
submit one's evidence in support of his defense. What the law prohibits is not merely the absence of
previous notice, but the absence thereof and the lack of opportunity to be heard.[47]
 Petitioner further argues that summary judgment is not proper in an action for quieting of
title. This particular argument, however, is misplaced. This Court has already ruled that any action can be
the subject of a summary judgment with the sole exception of actions for annulment of marriage or
declaration of its nullity or for legal separation.[48]
Proceeding to the main issue, this Court finds that the grant of summary judgment was not
proper. A summary judgment is permitted only if there is no genuine issue as to any material fact and a
moving party is entitled to a judgment as a matter of law. A summary judgment is proper if, while the
pleadings on their face appear to raise issues, the affidavits, depositions, and admissions presented by the
moving party show that such issues are not genuine.[49]
It must be remembered that the non-existence of a genuine issue is the determining factor in
granting a motion for summary judgment, and the movant has the burden of proving such
nonexistence. The trial court found no genuine issue as to any material fact that would necessitate
conducting a full-blown trial. However, a careful study of the case shows otherwise.
In their motion for summary judgment, the respondents failed to clearly demonstrate the
absence of any genuine issue of fact. They merely reiterated their averments in the complaint for quieting
of title and opposed some issues raised by the petitioner in its Answer Ad Cautelam, to wit:
Nonetheless, going by the records of the admitted and uncontroverted
facts and facts established there is no more litigious or genuine issue of basic fact to
be the subject of further trial on the merits.
The first defense as to the identity of the subject property, the issue has
already become nil because of not only the lack of seriousness in the allegations but
also because the identity of the subject parcel of land Lot 9250 was proven by the
approved plan Ap-04-008367 that was already presented and offered in evidence as
Exhibit B for the plaintiffs.
The second defense that plaintiffs' claim of the property is barred by
prior judgment rule is unavailing considering that the vital documentary evidence
they presented in Land Registration Case No. TG-423 before this Honorable Court
the markings and descriptions of such documents are stated in the Judgment
quoted as follows:
(1) Tax Declaration No. 015224-A (Exhibit Q; x x x.
(2) Tax Declaration No. 05019-B (Exhibit R; x x x.
(3) Tax Declaration No. 01926-B (Exhibit S; x x x.
(4) Tax Declaration No. GR-007-0007 (Exhibit T x x x.
are the very documentary evidence adopted and relied upon by the plaintiffs in
seeking the review and nullity of the Decree No. 217313 issued on August 20, 1997
under LRC Record No. N-62686 pursuant to the Judgment dated June 7, 1994
rendered by this Honorable Court penned by the acting presiding Judge Eleuterio F.
Guerrero in said Land Registration Case No. TG-423.
On the other hand, as to the gravamen of the claims in the complaint,
the plaintiffs have presented clear and convincing evidence as the well-nigh or
almost incontrovertible evidence of a registerable title to the subject land in the
proceedings conducted on the reception of evidence ex-parte for the plaintiffs
establishing in detail the specifications of continuous, open, exclusive possession as
aspects of acquisitive prescription as confirmed in the affidavit herein attached as
Annex A;
In ruling that there was indeed no genuine issue involved, the trial court merely stated that:
This Court, going by the records, observed keenly that plaintiffs cause of
action for quieting of title on the disputed parcel of land is based on the
alleged fraud in the substitution of their landholdings of Lot 9250, Cad 355,
Tagaytay Cadastre containing only an area of 244,112 square meters with Lot 9121,
Cad 335, Tagaytay Cadastre, containing only an area of 19,356square meters. While
defendant Eland in its answer practically and mainly interposed the defenses of: (a)
the parcel of land being claimed by the plaintiffs is not the parcel of land subject
matter of Land Registration Case No. TG-423; (b) the claim of the plaintiffs is barred
by prior judgment of this Court in said Land Registration Case; and (c) plaintiffs'
complaint is barred by the Statute of Limitation since Original Certificate of Title No.
0-660 has become incontrovertible.
Cross-reference of the above-cited Land Registration Case No. TG-423
that was decided previously by this Court with the case at bench was imperatively
made by this Court. Being minded that the Court has and can take judicial notice of
the said land registration case, this Court observed that there is no genuine issue of
fact to be tried on the merits. Firstly, because the supposed identity crisis of the
controverted parcel of land covered by the Land Registration Case No. TG-423 with
the subject parcel of land is established by Plan Ap-04-006275 (Exhibit N) LRC Case
No. 423 and by Plan A04 008367 (Exhibit B of the plaintiffs) and the Technical
Description of Lot 9250, Cad 355 (Exhibit B-1 of the plaintiffs). Secondly, the prior
judgment rule cannot be availed of by defendant Eland since not only intrinsic fraud
but extrinsic fraud were alleged in and established by the records. (Heirs of Manuel
Roxas v. Court of Appeals, G. R. No. 1184436, pro. March 21, 1997). Thirdly, it is
incontrovertible that the complaint in this case seeking to review the judgment and
annul the decree was filed on March 5, 1998 or within one (1) year from August 20,
1997 or the date of issuance of Decree No. 217313, LRC Record No. N-62686, hence,
the Original Certificate of Title No. 0-660 issued to defendant Eland has not attained
incontrovertibility. (Heirs of Manuel Roxas v. Court of Appeals, G.R. No. 118436,
prom. March 21, 1997).
Notwithstanding, the issue of possession is a question of fact by the
interaction of the basic pleadings, the observation of this Court is that the plaintiffs
were able to prove by the well-nigh incontrovertible evidence, the aspects of
possession in accordance with Section 48 (b) of Commonwealth Act 141, as
amended, as hereinafter illustrated.
The CA, in affirming the above Resolution of the trial court, propounded thus:
The contention of defendant-appellant is untenable. Summary judgment
is not only limited to solving actions involving money claims. Under Rule 35 of the
1997 Rules of Court, except as to the amount of damages, when there is no genuine
issue as to any material fact and the moving party is entitled to a judgment as a
matter of law, summary judgment may be allowed. The term genuine issue has
been defined as an issue of fact which calls for the presentation of evidence as
distinguished from an issue which is sham, fictitious, contrived, set up in bad faith
and patently unsubstantial so as not to constitute a genuine issue for trial.
Thus, under the aforecited rule, summary judgment is appropriate when
there are no genuine issues of fact, which call for the presentation of evidence in a
full-blown trial. Thus, even if on their face the pleadings appear to raise issues, but
when the affidavits, depositions and admissions show that such issues are not
genuine, then summary judgment as prescribed by the rules must ensue as a matter
of law.
It should be stressed that the court a quo which rendered the assailed
resolution in Civil Case No. TG-1784 was the very court that decided the LRC Case
No. TG-423. Such being the case, the court a quo was privy to all relevant facts and
rulings pertaining to LRC Case No. TG-423 which it considered and applied to this
case. Thus, where all the facts are within the judicial knowledge of the court,
summary judgment may be granted as a matter of right.
On the contrary, in petitioner's Answer Ad Cautelam, genuine, factual and triable issues were
raised, aside from specifically denying all the allegations in the complaint, thus:
2. SPECIFIC DENIALS
2.1 Answering defendant specifically denies the allegations contained in
paragraphs 1 and 3 of the Complaint insofar as it alleges the personal circumstances
of the plaintiff and one A. F. Development Corporation for lack of knowledge or
information sufficient to form a belief as to the truth thereof.
2.2 Answering defendant specifically denies the allegations contained in
paragraphs 4, 5, 6 and 7 of the Complaint for lack of knowledge or information
sufficient to form a belief as to the truth of said allegations. And if the property
referred to in said paragraphs is that parcel of land which was the subject matter of
Land Registration Case No. TG-423 which was previously decided by this Honorable
Court with finality, said allegations are likewise specifically denied for the obvious
reason that the said property had already been adjudged with finality by no less
than this Honorable Court as absolutely owned by herein answering defendant as
will be further discussed hereunder.
2.3 Answering defendant specifically denies the allegations contained in
paragraph 8 of the Complaint insofar as it alleged that (u)pon exercise of further
circumspection, counsel for the plaintiffs once followed-up in writing the 1994
request of the plaintiffs to have the subject parcel of land be declared for taxation
purposes and insofar as it is made to appear that parcel of land being claimed by
the plaintiffs is the same parcel of land subject matter of Land Registration Case No.
TG-423 for lack of knowledge or information sufficient to form a belief as to the
truth thereof and for the reason that the names of the herein plaintiffs were never
mentioned during the entire proceedings in said land registration case and by
reason of the Affirmative Allegations contained hereunder.
2.4 Answering defendant specifically denies the allegations contained in
paragraphs 9, 10, 10 (a), 10 (b), 10 (c), 10 (d), 10 (e), 10 (f), 10 (g), 10 (h), and 11 for
the reason that there is no showing that the parcel of land being claimed by the
plaintiff is the same parcel of land which was the subject matter of Land
Registration Case No. TG- 423, and in the remote possibility that the parcel of land
being claimed by the plaintiffs is the same as that parcel of land subject of Land
Registration Case No. TG-423, the allegations contained in said paragraphs are still
specifically denied for the reason that no less than the Honorable Court had
decided with finality that the parcel of land is absolutely owned by herein
defendant to the exclusion of all other persons as attested to by the subsequent
issuance of an Original Certificate of Title in favor of answering defendant and for
reasons stated in the Affirmative Allegations.
2.5 Answering defendant specifically denies the allegations contained in
paragraph 12 of the Complaint for the obvious reason that it was the plaintiffs who
appear to have been sleeping on their rights considering that up to the present they
still do not have any certificate of title covering the parcel of land they are claiming
in the instant case, while on the part of herein defendant, no less than the
Honorable Court had adjudged with finality that the parcel of land subject matter of
Land Registration Case No. TG-423 is absolutely owned by herein defendant.
2.6 Answering defendant specifically denies the allegations contained in
paragraph 13 of the complaint for the reason that defendant has never ladgrabbed
any parcel of land belonging to others, much less from the plaintiffs, and further,
answering defendant specifically denies the allegations therein that plaintiffs
engaged the services of a lawyer for a fee for lack of knowledge r information
sufficient to form a belief as to the truth thereof.
2.7 Answering defendant specifically denies the allegations contained in
paragraphs 14, 15, 16, 17 and 18 of the Complaint for lack of knowledge or
information sufficient to form a belief as the truth thereof.
2.8 Answering defendant specifically denies the allegations contained in
paragraphs IV (a) to IV (c) for the reason that, as above-stated, if the parcel of land
being claimed by the plaintiffs is the same as that parcel of land subject matter of
Land Registration Case No. TG-423, this Honorable Court had already decided with
finality that said parcel of land is absolutely owned by herein answering defendant
and additionally, for those reasons stated in defendant's Motion to Dismiss.
2.9 Answering defendant specifically denies the allegations contained in
paragraph IV (d) of the Complaint for lack of knowledge or information sufficient to
form a belief as to the truth thereof.
Special and affirmative defenses were also raised in the same Answer Ad Cautelam, to wit:
xxxx
4.1 The pleading asserting the claim of the plaintiff states no cause of
action as asserted in the Motion To Dismiss filed by herein answering defendant
and for the reason that there is no evidence whatsoever showing or attesting to the
fact that the parcel of land being claimed by the plaintiffs in the Complaint is the
same parcel of land which was the subject matter of Land Registration Case No. TG-
423.
4.2 The complaint was barred by the prior judgment rendered by this
Honorable in Land Registration Case No. TG-423.
4.3 The complaint is barred by the Statute of Limitation in that OCT No.
0-660 had become incontrovertible by virtue of the Torrens System of Registration;
and to allow plaintiffs to question the validity of answering defendant's title through
the instant complaint would be a collateral of OCT No. 0-660 which is not
permissible under the law.
4.4 Plaintiffs are barred by their own acts and/or omission from filing the
present complaint under the principles of estoppel and laches.
4.5 Plaintiffs does not to the Court with clean hands as they appear to be
well aware of the proceedings in said Land Registration Case No. TG- 423 and
inspite of such knowledge, plaintiffs never bothered to present their alleged claims
in the proceedings.
4.6 Answering defendant has always acted with justice, given everyone
his due, and observed honesty and good faith in his dealings.
Clearly, the facts pleaded by the respondents in their motion for summary judgment have
been duly disputed and contested by petitioner, raising genuine issues that must be resolved only after a
full-blown trial. When the facts as pleaded by the parties are disputed or contested, proceedings
for summary judgment cannot take the place of trial.[50]In the present case, the petitioner was able to
point out the genuine issues. A genuine issue is an issue of fact that requires the presentation of evidence
as distinguished from a sham, fictitious, contrived or false claim.[51]

It is of utmost importance to remember that petitioner is already the registered owner
(Original Certificate of Title [OCT] No. 0-660 issued by the Register of Deeds) of the parcel of land in
question, pursuant to a decree of registration (Decree No. N-217313, LRC Record No. 62686) based on the
ruling of the same court that granted the summary judgment for the quieting of title.
Incidentally, the findings of the trial court contained in the disputed summary judgment were
obtained through judicial notice of the facts and rulings pertaining to that earlier case (LRC Case No. TG-
423) wherein the same trial court ruled in favor of the petitioner. It is, therefore, disorienting that the
same trial court reversed its earlier ruling, which categorically stated that:
x x x There is overwhelming evidence or proof on record that the vendors
listed in Exhibit HH, with submarkings, are the previous owners of the parcel of land
mentioned in the same deed of sale and aside form the tax declarations covering
the same property (Exhibits Q to T, inclusive), the uncontroverted testimony of Atty.
Ruben Roxas establishes beyond any shadow of doubt that applicant's (referring to
herein defendant-appellant) sellers/predecessors-in-interest are the grandchildren,
great grandchildren and great great grandchildren of the spouses Lucio Petate and
Maria Pobleta Petate, the former owners of the same property, whose ownership is
further bolstered by tax receipts showing payments of realty taxes (Exhibits U to GG,
inclusive, with submarkings).
xxx
On the basis of the foregoing facts and circumstances, and considering
that applicant is a domestic corporation not otherwise disqualified from owning real
properties in the Philippines, this Court finds that applicant has satisfied all the
conditions/requirements essential to the grant of its application pursuant to the
provisions of the Land Registration Law, as amended, inspite of the opposition filed
by the Heirs of the late Doroteo Miranda. Hence, the grant of applicant's petition
appears to be inevitable.
WHEREFORE, this Court hereby approves the instant petition for land
registration and, thus, places under the operation of Act 141, Act 496 and/or P.D.
1529, otherwise known as the Property Registration Law, the land described in Plan
Ap-04-006275 and containing an area of Two Hundred Forty-Two Thousand Seven
Hundred Ninety-Four (242,794) square meters, as supported by its technical
description now forming part of the record of this case, in addition to other proofs
adduced in the name of the applicant, ELAND PHILIPPINES, INC., with principal office
at No. 43 E. Rodriguez Ave. (Espaa Extension), Quezon City, Metro Manila.
Once this decision becomes final and executory, the corresponding
decree of registration shall forthwith issue.
SO ORDERED.
By granting the summary judgment, the trial court has in effect annulled its former ruling based
on a claim of possession and ownership of the same land for more than thirty years without the benefit of
a full-blown trial. The fact that the respondents seek to nullify the original certificate of title issued to the
petitioner on the claim that the former were in possession of the same land for a number of years, is
already a clear indicium that a genuine issue of a material fact exists. This, together with the failure of the
respondents to show that there were no genuine issues involved, should have been enough for the trial
court to give the motion for summary judgment, filed by respondents, scant consideration. Trial courts
have limited authority to render summary judgments and may do so only when there is clearly no genuine
issue as to any material fact.[52]
Based on the foregoing, this Court deems it necessary to delve briefly on the nature of the
action of quieting of title as applied in this case. This Court's ruling in Calacala, et al. v. Republic, et al.[53] is
instructive on this matter, thus:
To begin with, it bears emphasis that an action for quieting of title is
essentially a common law remedy grounded on equity. As we held in Baricuatro, Jr.
vs. CA:[54]
Regarding the nature of the action filed before the
trial court, quieting of title is a common law remedy for the
removal of any cloud upon or doubt or uncertainty with
respect to title to real property. Originating in equity
jurisprudence, its purpose is to secure x x x an adjudication
that a claim of title to or an interest in property, adverse to
that of the complainant, is invalid, so that the complainant
and those claiming under him may be forever afterward free
from any danger of hostile claim. In an action
for quieting of title, the competent court is tasked to
determine the respective rights of the complainant and other
claimants, x x x not only to place things in their proper place,
to make the one who has no rights to said immovable
 respect and not disturb the other, but also for the benefit of
both, so that he who has the right would see every cloud of
doubt over the property dissipated, and he could afterwards
without fear introduce the improvements he may desire, to
use, and even to abuse the property as he deems best xxx.
Under Article 476 of the New Civil Code, the remedy may be availed of
only when, by reason of any instrument, record, claim, encumbrance or proceeding,
which appears valid but is, in fact, invalid, ineffective, voidable, or unenforceable, a
cloud is thereby cast on the complainants title to real property or any interest
therein. The codal provision reads:
Article 476. Whenever there is a cloud on title to
real property or any interest therein, by reason of any
instrument, record, claim, encumbrance or proceeding which
is apparently valid or effective but is in truth and in fact
invalid, ineffective, voidable, or unenforceable, and may be
prejudicial to said title, an action may be brought to remove
such cloud or to quiet the title.
An action may also be brought to prevent a cloud from being cast upon
title to real property or any interest therein.
In turn, Article 477 of the same Code identifies the party who may bring
an action to quiet title, thus:
Article 477. The plaintiff must have legal or
equitable title to, or interest in the real property which is the
subject-matter of the action. He need not be in possession of
said property.
It can thus be seen that for an action for quieting of title to prosper, the
plaintiff must first have a legal, or, at least, an equitable title on the real property
subject of the action and that the alleged cloud on his title must be shown to be in
fact invalid. So it is that in Robles, et al. vs. CA,[55] we ruled:
It is essential for the plaintiff or complainant to
have a legal title or an equitable title to or interest in the real
property which is the subject matter of the action. Also, the
deed, claim, encumbrance or proceeding that is being alleged
as a cloud on plaintiffs title must be shown to be in fact
invalid or inoperative despite its prima facie appearance of
validity or legal efficacy.
Verily, for an action to quiet title to prosper, two (2) indispensable
requisites must concur, namely: (1) the plaintiff or complainant has a legal or an
equitable title to or interest in the real property subject of the action; and (2) the
deed, claim, encumbrance, or proceeding claimed to be casting cloud on his title
must be shown to be in fact invalid or inoperative despite its prima
facie appearance of validity or legal efficacy.
Respondents, in their Complaint, claim that they have become the owners in fee-simple title of
the subject land by occupation and possession under the provisions of Sec. 48 (b) of the Public Land Law
or Commonwealth Act No. 141, as amended. Thus, it appears that the first requisite has been
satisfied. Anent the second requisite, respondents enumerated several facts that would tend to prove the
invalidity of the claim of the petitioner. All of these claims, which would correspond to the two requisites
for the quieting of title, are factual; and, as discussed earlier, the petitioner interposed its objections and
duly disputed the said claims, thus, presenting genuine issues that can only be resolved through a full-
blown trial.
Anent the propriety of the filing of an action for the quieting of title, the indefeasibility and
incontrovertibility of the decree of registration come into question. Under Sec. 32 of P.D. No. 1529 or the
Property Registration Decree:
Section 32. Review of decree of registration; Innocent purchaser for
value. The decree of registration shall not be reopened or revised by reason of
absence, minority, or other disability of any person adversely affected thereby, nor
by any proceeding in any court for reversing judgments, subject, however, to the
right of any person, including the government and the branches thereof, deprived
of land or of any estate or interest therein by such adjudication or confirmation of
title obtained by actual fraud, to file in the proper Court of First Instance a petition
for reopening and review of the decree of registration not later than one year from
and after the date of the entry of such decree of registration, but in no case shall
such petition be entertained by the court where an innocent purchaser for value
has acquired the land or an interest therein, whose rights may be prejudiced.
Whenever the phrase "innocent purchaser for value" or an equivalent phrase occurs
 in this Decree, it shall be deemed to include an innocent lessee, mortgagee, or other
encumbrancer for value.
Upon the expiration of said period of one year, the decree of
registration and the certificate of title issued shall become incontrovertible. Any
person aggrieved by such decree of registration in any case may pursue his remedy
by action for damages against the applicant or any other persons responsible for the
fraud.
As borne out by the records and undisputed by the parties, OCT No. 0-660 of petitioner was issued on
August 29, 1997 pursuant to a Decree issued on August 20, 1997, while the complaint for the quieting of
title in Civil Case No. TG-1784 was filed and docketed on March 5, 1998; hence, applying the above
provisions, it would seem that the period of one (1) year from the issuance of the decree of registration
has not elapsed for the review thereof. However, a closer examination of the above provisions would
clearly indicate that the action filed, which was for quieting of title, was not the proper remedy.
Courts may reopen proceedings already closed by final decision or decree when an application for review
is filed by the party aggrieved within one year from the issuance of the decree of registration.[56] However,
the basis of the aggrieved party must be anchored solely on actual fraud. Shedding light on the matter is a
discussion presented in one of the recognized textbooks on property registration,[57] citing decisions of
this Court, thus:
The right of a person deprived of land or of any estate or interest therein
by adjudication or confirmation of title obtained by actual fraud is recognized by
law as a valid and legal basis for reopening and revising a decree of
registration.[58] One of the remedies available to him is a petition for review. To
avail of a petition for review, the following requisites must be satisfied:
(a) The petitioner must have an estate or interest in the land;
(b) He must show actual fraud in the procurement of the decree of
registration;
(c) The petition must be filed within one year from the issuance of the
decree by the Land Registration Authority; and
(d) The property has not yet passed to an innocent purchaser for value.[59]
A mere claim of ownership is not sufficient to avoid a certificate of title
obtained under the Torrens system. An important feature of a certificate of title is
its finality. The proceedings whereby such a title is obtained are directed against all
persons, known or unknown, whether actually served with notice or not, and
includes all who have an interest in the land. If they do not appear and oppose the
registration of their own estate or interest in the property in the name of another,
judgment is rendered against them by default, and, in the absence of fraud, such
judgment is conclusive. If an interest in the land will not by itself operate to vacate a
decree of registration, a fortiori, fraud is not alone sufficient to do so.[60]
As further pointed out in the same book,[61] the petition for review must be filed within one
year from entry of the decree of registration. As written:
As long as a final decree has not been entered by the Land Registration
Authority and period of one year has not elapsed from the date of entry of such
decree, the title is not finally adjudicated and the decision in the registration case
continues to be under the control and sound discretion of the registration
court.[62] After the lapse of said period, the decree becomes incontrovertible and no
longer subject to reopening or review.
Section 32 provides that a petition for review of the decree of
registration may be filed not later than one year from and after the date of entry
of such decree of registration.Giving this provision a literal interpretation, it may at
first blush seem that the petition for review cannot be presented until the final
decree has been entered. However, it has been ruled that the petition may be filed
at any time after the rendition of the court's decision and before the expiration of
one year from the entry of the final decree of registration for, as noted in Rivera v.
Moran,[63] there can be no possible reason requiring the complaining party to wait
until the final decree is entered before urging his claim for fraud.
The one-year period stated in Sec. 32 within which a petition to re-open
and review the decree of registration refers to the decree of registration described
in Section 31, which decree is prepared and issued by the Land Registration
Administrator.[64]
The provision of Section 31 that every decree of registration shall bind
the land, quiet title thereto, and be conclusive upon and against all persons,
including the national government, and Sec. 32 that the decree shall not be
reopened or revised by reason of absence, minority or other disability or by any
proceeding in court, save only in cases of actual fraud and then only for one year
 from the entry of the decree, must be understood as referring to final and
unappealable decrees of registration. A decision or, as it is sometimes called after
entry, a decree of a registration court, does not become final and unappealable until
fifteen days after the interested parties have been notified of its entry, and during
that period may be set aside by the trial judge on motion for new trial, upon any of
the grounds stated in the Rules of Court.[65] An appeal from the decision of the trial
court prevents the judgment from becoming final until that decree is affirmed by
the judgment of the appellate court.[66]

A petition for review under Section 32 is a remedy separate and distinct

from a motion for new trial and the right to the remedy is not affected by the
denial of such a motion irrespective of the grounds upon which it may have been
presented. Thus, where petitioners acquired their interest in the land before any
final decree had been entered, the litigation was therefore in effect still pending and,
in these circumstances, they can hardly be considered innocent purchasers in good
faith.[67]

Where the petition for review of a decree of registration is filed within

the one-year period from entry of the decree, it is error for the court to deny the
petition without hearing the evidence in support of the allegation of actual and
extrinsic fraud upon which the petition is predicated. The petitioner should be
afforded an opportunity to prove such allegation.[68]

In the present case, the one-year period before the Torrens title becomes indefeasible and
incontrovertible has not yet expired; thus, a review of the decree of registration would have been the
appropriate remedy.

Based on the above disquisitions, the other issues raised by the petitioner are necessarily
rendered inconsequential.

WHEREFORE, the petition for review on certiorari of petitioner Eland Philippines, Inc. is
hereby GRANTED, and the decision dated February 28, 2006 of the Court of Appeals (CA) in CA-G.R. CV No.
67417, which dismissed the appeal of petitioner Eland Philippines, Inc. and affirmed the resolutions dated
November 3, 1999 and June 28, 2006 of Branch 18, RTC of Tagaytay City, is hereby REVERSED and SET
ASIDE. Consequently, the resolutions dated November 3, 1999 and June 28, 2006 of Branch 18, RTC of
Tagaytay City in Civil Case No. TG-1784 are hereby declared NULL and VOID.
 On August 21, 1955, for a consideration of one thousand seven hundred pesos (P1,700.00), Rosa
sold the land to her nephew, respondent Santiago Fontanilla, evidenced by a notarized deed of absolute
FIRST DIVISION sale, signed by Rosa. The instrument was not registered.

[G.R. No. 124605. June 18, 1999] In 1955, respondents constructed their house of strong materials on the lot in question, which was
completed in 1957.

On December 16, 1957, Rosas heirs, Estanislao Pajaro and his two (2) children, Fructoso and
Paciencia, executed another deed of absolute sale over the same land in favor of respondent Santiago
ENRIQUITO SERNA and AMPARO RASCA, petitioners, vs. COURT OF APPEALS, SANTIAGO FONTANILLA, Fontanilla.
and RAFAELA RASING, respondents.
In 1978, respondents went to the United States to visit their daughter Mila Fontanilla Borillo. They
stayed there until 1981.
DECISION
On December 20, 1978, taking advantage of respondents' absence from the country, petitioners
PARDO, J.: Enriquito and Amparo Serna applied to the land registration court of Pangasinan for registration[4] of the
said parcel of land in their name.
The petition for review on certiorari before us seeks to review the decision of the Court of
In 1979, the land registration court approved the application, and pursuant to Decree N-176768,
Appeals,[1] which affirmed that of the Regional Trial Court, Alaminos, Pangasinan,[2] declaring respondents
the Register of Deeds of Pangasinan issued Original Certificate of Title No. 139 to petitioners. On January
as the absolute an lawful owners of the land covered by Original Certificate of Title No. 139 of the Registry
10, 1980, the title was transcribed in the registration book of the register of Deeds of Pangasinan.
of Deeds of Pangasinan.
On May 27, 1981, respondents filed with the Court of First Instance, Branch XIII, Alaminos,
The antecedent facts are as follows:
Pangasinan, an action for reconveyance with damages, and sought the annulment of O.C.T. No. 139.[5]
Dionisio Fontanilla had four (4) children, namely, Rosa, Antonio, Jose and Lorenza, all surnamed
In the trial court, petitioners admitted that Dionisio Fontanilla originally owned the land in
Fontanilla. Rosa married Estanislao Pajaro and their union produced Fructoso and Paciencia. Lorenza
dispute. However, they claimed that in 1978 they bought the property for three thousand pesos
married Alberto Rasca and they had a daughter, petitioner Amparo Rasca (married to Enriquito
(P3,000.00) from Lorenza Fontanilla-Rasca. Lorenza, in turn, traced her title from her husband, Alberto
Serna). Jose had a son, respondent Santiago Fontanilla (married to Rafaela Rasing). Hence, the parties
Rasca.
involved are first cousins.
Petitioner Amparo said that when Dionisio failed to pay the survey costs in 1921, Turner Land
Dionisio Fontanilla was the original owner and possessor of a parcel of land, containing an area of
Surveying Company took the property in question as payment for services. Her father, Alberto Rasca,
twelve thousand five hundred eight square meters (12,508 sq. m.), located in Barangay Lucap, Alaminos,
redeemed the property from Turner evidenced by a deed of sale, which, however, Amparo could not
Pangasinan.[3]
produce in court. When her father died, Santiago Fontanilla borrowed from her mother the deed covering
In 1921, the property was declared in his name for taxation purposes. In the same year, Turner the transfer of the property, which Santiago did not return. She said that the property was first declared in
Land Surveying Company surveyed the land for Dionisio Fontanilla, with the agreement that the cost of Alberto's name for taxation purposes in 1951. Later, the property was ceded to her.
survey would be paid upon approval of the plan by the Bureau of Lands. On March 2, 1923, the Bureau of
After due trial and consideration of the evidence presented before the trial court and in the land
Lands approved the survey plan.
registration case, on June 5, 1992, the trial court rendered judgment in favor of the plaintiffs (herein
In 1938, for failing to pay the survey costs and to prevent foreclosure, Dionisio Fontanilla sold the respondents) spouses Santiago Fontanilla and Rafaela Rasing, decreeing:
land to his daughter, Rosa Fontanilla. In 1939, Rosa began paying the real estate property tax thereon.
WHEREFORE, judgment is hereby rendered:
"(a) Declaring the plaintiffs as the absolute and legal owners of the land in question particularly described
and bounded and stated in paragraph two (2) of the complaint;
"(b) Ordering the defendants to Transfer and Recover [sic] Original Certificate of Title No. 139 to the
plaintiffs;
"(c) Ordering the defendants to pay plaintiffs the amount of P5,000.00 as attorney's fees;
"(d) Ordering the defendants to pay the plaintiffs the amount of P5,000.00 as exemplary damages;
"(e) And to pay the costs, without pronouncement as to moral damages.
"Done at Alaminos, Pangasinan, this 5th day of August, 1992.
"(t/s) Vivencio A. Bantugan[6]
From the decision of the trial court, both parties appealed to the Court of Appeals. Respondents
questioned the court a quo's failure to grant their claim for moral damages. On the other hand,
petitioners claimed that the trial court committed serious error in the appreciation of facts and
application of law and Jurisprudence.
On August 22, 1995, the Court of Appeals rendered decision affirming that of the trial court.
In a resolution dated February 26, 1996,[7] the Court of Appeals denied petitioners' motion for
reconsideration.
Hence, this petition for review.
Petitioners submit these issues for resolution: (1) whether or not the appealed decision is
supported by evidence; (2) whether or not the decision is in accordance with law and Jurisprudence.[8]
The first issue is factual, which we cannot review on appeal.[9] However, petitioners make an issue
of the fact that the judge who penned the decision was not the one who presided over the proceedings.
We have ruled in People vs. Rayray,[10] that the fact that the judge who heard the evidence is not
himself the one who prepared, signed and promulgated the decision constitutes no compelling reason to
jettison his findings and conclusions, and does not per se render his decision void. While it is true that the
trial Judge who conducted the hearing would be in a better position to ascertain the truth or falsity of the
testimonies of the witnesses, it does not necessarily follow that a judge who was not present during the
trial cannot render a valid and just decision. For a judge who was not present during the trial can rely on
the transcript of stenographic notes taken during the trial as basis of his decision. Such reliance does not
violate substantive and procedural due process.[11]
As a general rule, findings of fact of the Court of Appeals are binding and conclusive upon us, and
we will not normally disturb such factual findings. This is because in an appeal by certiorari to this Court,
only questions of law may be raised.[12] And for a question to be one of law it must involve no examination
of the probative value of the evidence presented by the litigants or any of them.[13] To reiterate the
distinction between the two types of questions: there is a question of law in a given case when the doubt
or difference arises as to what the law is pertaining to a certain state of facts, and there is a question of
fact when the doubt arises as to the truth or the falsity of alleged facts.[14]
Petitioners claim ownership of the land based on the deed of sale executed by Turner Land
Surveying Co. in favor of Alberto Rasca, which, however, they failed to present in court. The truth or falsity
of this claim is a question of fact, which, as aforesaid, is not reviewable in this appeal.
On the other hand, respondents proved that they were enjoying open, continuous and adverse
possession of the property for more than sixty (60) years tacking in the possession of their predecessors in
interest, Dionisio Fontanilla and Rosa Pajaro. As early as 1921, Dionisio Fontanilla was in adverse
possession and paying taxes over the land. Rosa in turn, paid taxes for the first time in 1939,[15] while
respondents began paying taxes in 1967.[16] They had their residential house built in 1955, which was
completed in 1957. In 1980, Santiago executed a tenancy agreement[17] with Sixto Fontanilla. Until 1984,
Santiago paid the taxes together with his tenant Sixto.
Though mere tax declaration does not prove ownership of the property of the declarant, [18] tax
declarations and receipts can be strong evidence of ownership of land when accompanied by possession
for a period sufficient for prescription.[19]
Going to the second issue that the appellate court's decision is not supported by law and
Jurisprudence, we find this to be vague and without merit as well.
At the time material hereto, registration of untitled land was pursuant to Act No. 496, as
amended. Later, Presidential Decree 1529, the Property Registration Decree, amended and codified laws
relative to registration of property. Adjudication of land in a registration (or cadastral) case does not
become final and incontrovertible until the expiration of one (1) year after the entry of the final
decree."[20] After the lapse of said period, the decree becomes incontrovertible and no longer subject to
reopening or review.
 However, the right of a person deprived of land or of any estate or interest therein by adjudication
or confirmation of title obtained by actual fraud is recognized by law[21] as a valid and legal basis for
reopening and revising a decree of registration.

The fraud contemplated by the law is actual and extrinsic fraud, which includes an intentional
omission of a fact required by law. For fraud to Justify a review of a decree, it must be extrinsic or
collateral, and the facts upon which it is based have not been controverted or resolved in the case where
the judgment sought to be annulled was rendered. Persons who were fraudulently deprived of their
opportunity to be heard in the original registration case are entitled to a review of a decree of
registration.[22]

An action based on implied on constructive trust prescribes in ten (10) years. This means that
petitioners should have enforced the trust within ten (10) years from the time of its creation or upon the
alleged fraudulent registration of the property."[23] Discovery of the fraud must be deemed to have taken
place from the issuance of the certificate of title because registration of real property is considered a
'constructive notice to all persons' and it shall be counted 'from the time of such registering, filing or
entering.[24]

In the present case, respondents came to know of the fraud in securing title to the land sometime
after its registration, however, an innocent purchaser for value had not acquired the property. Extrinsic
fraud attended the application for the land registration. It was filed when respondents were out of the
country and they had no way of finding out that petitioners applied for a title under their name.

Fortunately, respondents' action for reconveyance was timely, as it was filed within ten (10) years
from the issuance of the torrens title over the property.[25]

WHEREFORE, we DENY the petition for review on certiorari for lack of merit. We AFFIRM the
decision and resolution of the Court of Appeals in CA-G.R. CV No. 39922.

No costs.

SO ORDERED.

Davide, Jr., C.J., Melo, Kapunan, and Ynares-Santiago, JJ., concur.

Republic of the Philippines
SUPREME COURT
Baguio City
SECOND DIVISION
G.R. No. 193787 April 7, 2014
SPOUSES JOSE C. ROQUE AND BEATRIZ DELA CRUZ ROQUE, with deceased Jose C. Roque represented by
his substitute heir JOVETTE ROQUE-LIBREA, Petitioners,
vs.
MA. PAMELA P. AGUADO, FRUCTUOSO C. SABUG, JR., NATIONAL COUNCIL OF CHURCHES IN THE
PHILIPPINES (NCCP), represented by its Secretary General SHARON ROSE JOY RUIZ-DUREMDES, LAND
BANK OF THE PHILIPPINES (LBP), represented by Branch Manager EVELYN M. MONTERO, ATTY. MARIO
S.P. DIAZ, in his Official Capacity as Register of Deeds for Rizal, Morong Branch, and CECILIO U. PULAN,
in his Official Capacity as Sheriff, Office of the Clerk of Court, Regional Trial Court, Binangonan,
Rizal,Respondents.
DECISION
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari1 are the Decision2 dated May 12, 2010 and the
Resolution3 dated September 15, 2010 of the Court of Appeals (CA) in CA G.R. CV No. 92113 which
affirmed the Decision4 dated July 8, 2008 of the Regional Trial Court of Binangonan, Rizal, Branch 69 (RTC)
that dismissed Civil Case Nos. 03-022 and 05-003 for reconveyance, annulment of sale, deed of real estate
mortgage, foreclosure and certificate of sale, and damages.
The Facts
The property subject of this case is a parcel of land with an area of 20,862 square meters (sq. m.), located
in Sitio Tagpos, Barangay Tayuman, Binangonan, Rizal, known as Lot 18089.5
On July 21, 1977, petitioners-spouses Jose C. Roque and Beatriz dela Cruz Roque (Sps. Roque) and the
original owners of the then unregistered Lot 18089 namely, Velia R. Rivero (Rivero), Magdalena Aguilar,
Angela Gonzales, Herminia R. Bernardo, Antonio Rivero, Araceli R. Victa, Leonor R. Topacio, and Augusto
Rivero (Rivero, et al.) executed a Deed of Conditional Sale of Real Property6 (1977 Deed of Conditional
Sale) over a 1,231-sq. m. portion of Lot 18089 (subject portion) for a consideration of P30,775.00. The
parties agreed that Sps. Roque shall make an initial payment of P15,387.50 upon signing, while the
remaining balance of the purchase price shall be payable upon the registration of Lot 18089, as well as the
segregation and the concomitant issuance of a separate title over the subject portion in their names. After
the deeds execution, Sps. Roque took possession and introduced improvements on the subject portion
which they utilized as a balut factory.7
On August 12, 1991, Fructuoso Sabug, Jr. (Sabug, Jr.), former Treasurer of the National Council of
Churches in the Philippines (NCCP), applied for a free patent over the entire Lot 18089 and was eventually
issued Original Certificate of Title (OCT) No. M-59558 in his name on October 21, 1991. On June 24, 1993,
Sabug, Jr. and Rivero, in her personal capacity and in representation of Rivero, et al., executed a Joint
Affidavit9 (1993 Joint Affidavit), acknowledging that the subject portion belongs to Sps. Roque and
expressed their willingness to segregate the same from the entire area of Lot 18089.
On December 8, 1999, however, Sabug, Jr., through a Deed of Absolute Sale10 (1999 Deed of Absolute
Sale), sold Lot 18089 to one Ma. Pamela P. Aguado (Aguado) for P2,500,000.00, who, in turn, caused the
cancellation of OCT No. M-5955 and the issuance of Transfer Certificate of Title (TCT) No. M-96692 dated
December 17, 199911 in her name.
Thereafter, Aguado obtained an P8,000,000.00 loan from the Land Bank of the Philippines (Land Bank)
secured by a mortgage over Lot 18089.12 When she failed to pay her loan obligation, Land Bank
commenced extra-judicial foreclosure proceedings and eventually tendered the highest bid in the auction
sale. Upon Aguados failure to redeem the subject property, Land Bank consolidated its ownership, and
TCT No. M-11589513 was issued in its name on July 21, 2003.14
On June 16, 2003, Sps. Roque filed a complaint15 for reconveyance, annulment of sale, deed of real estate
mortgage, foreclosure, and certificate of sale, and damages before the RTC, docketed as Civil Case No. 03-
022, against Aguado, Sabug, Jr., NCCP, Land Bank, the Register of Deeds of Morong, Rizal, and Sheriff
Cecilio U. Pulan, seeking to be declared as the true owners of the subject portion which had been
erroneously included in the sale between Aguado and Sabug, Jr., and, subsequently, the mortgage to Land
Bank, both covering Lot 18089 in its entirety.
In defense, NCCP and Sabug, Jr. denied any knowledge of the 1977 Deed of Conditional Sale through
which the subject portion had been purportedly conveyed to Sps. Roque.16
For her part, Aguado raised the defense of an innocent purchaser for value as she allegedly derived her
title (through the 1999 Deed of Absolute Sale) from Sabug, Jr., the registered owner in OCT No. M-5955,
covering Lot 18089, which certificate of title at the time of sale was free from any lien and/or
encumbrances. She also claimed that Sps. Roques cause of action had already prescribed because their
adverse claim was made only on April 21, 2003, or four (4) years from the date OCT No. M-5955 was
issued in Sabug, Jr.s name on December 17, 1999.17
On the other hand, Land Bank averred that it had no knowledge of Sps. Roques claim relative to the
subject portion, considering that at the time the loan was taken out, Lot 18089 in its entirety was
registered in Aguados name and no lien and/or encumbrance was annotated on her certificate of title.18
Meanwhile, on January 18, 2005, NCCP filed a separate complaint19 also for declaration of nullity of
documents and certificates of title and damages, docketed as Civil Case No. 05-003. It claimed to be the
real owner of Lot 18089 which it supposedly acquired from Sabug, Jr. through an oral contract of sale 20 in
the early part of 1998, followed by the execution of a Deed of Absolute Sale on December 2, 1998 (1998
Deed of Absolute Sale).21 NCCP also alleged that in October of the same year, it entered into a Joint
Venture Agreement (JVA) with Pilipinas Norin Construction Development Corporation (PNCDC), a
company owned by Aguados parents, for the development of its real properties, including Lot 18089, into
a subdivision project, and as such, turned over its copy of OCT No. M-5955 to PNCDC.22 Upon knowledge
of the purported sale of Lot 18089 to Aguado, Sabug, Jr. denied the transaction and alleged forgery.
Claiming that the Aguados23 and PNCDC conspired to defraud NCCP, it prayed that PNCDCs corporate veil
be pierced and that the Aguados be ordered to pay the amount of 38,092,002.00 representing the
unrealized profit from the JVA.24 Moreover, NCCP averred that Land Bank failed to exercise the diligence
required to ascertain the true owners of Lot 18089. Hence, it further prayed that: (a) all acts of ownership
and dominion over Lot 18089 that the bank might have done or caused to be done be declared null and
void; (b) it be declared the true and real owners of Lot 18089; and (c) the Register of Deeds of Morong,
Rizal be ordered to cancel any and all certificates of title covering the lot, and a new one be issued in its
name.25 In its answer, Land Bank reiterated its stance that Lot 18089 was used as collateral for
the P8,000,000.00 loan obtained by the Countryside Rural Bank, Aguado, and one Bella Palasaga. There
being no lien and/ or encumbrance annotated on its certificate of title, i.e., TCT No. M-115895, it cannot
be held liable for NCCPs claims. Thus, it prayed for the dismissal of NCCPs complaint. 26
On September 7, 2005, Civil Case Nos. 02-022 and 05-003 were ordered consolidated.27
The RTC Ruling
After due proceedings, the RTC rendered a Decision28 dated July 8, 2008, dismissing the complaints of Sps.
Roque and NCCP.
With respect to Sps. Roques complaint, the RTC found that the latter failed to establish their ownership
over the subject portion, considering the following: (a) the supposed owners-vendors, i.e., Rivero, et al.,
who executed the 1977 Deed of Conditional Sale, had no proof of their title over Lot 18089; (b) the 1977
Deed of Conditional Sale was not registered with the Office of the Register of Deeds;29 (c) the 1977 Deed
of Conditional Sale is neither a deed of conveyance nor a transfer document, as it only gives the holder
the right to compel the supposed vendors to execute a deed of absolute sale upon full payment of the
consideration; (d) neither Sps. Roque nor the alleged owners-vendors, i.e., Rivero, et al., have paid real
property taxes in relation to Lot 18089; and (e) Sps. Roques occupation of the subject portion did not
ripen into ownership that can be considered superior to the ownership of Land Bank. 30 Moreover, the RTC
ruled that Sps. Roques action for reconveyance had already prescribed, having been filed ten (10) years
after the issuance of OCT No. M-5955.31
On the other hand, regarding NCCPs complaint, the RTC observed that while it anchored its claim of
ownership over Lot 18089 on the 1998 Deed of Absolute Sale, the said deed was not annotated on OCT
No. M-5955. Neither was any certificate of title issued in its name nor did it take possession of Lot 18089
or paid the real property taxes therefor. Hence, NCCPs claim cannot prevail against Land Banks title,
which was adjudged by the RTC as an innocent purchaser for value. Also, the RTC disregarded NCCPs
allegation that the signature of Sabug, Jr. on the 1999 Deed of Absolute Sale in favor of Aguado was
forged because his signatures on both instruments bear semblances of similarity and appear genuine.
Besides, the examiner from the National Bureau of Investigation, who purportedly found that Sabug, Jr.s
signature thereon was spurious leading to the dismissal of a criminal case against him, was not presented
as a witness in the civil action.32
Finally, the RTC denied the parties respective claims for damages.33
The CA Ruling
On appeal, the Court of Appeals (CA) affirmed the foregoing RTC findings in a Decision34 dated May 12,
2010. While Land Bank was not regarded as a mortgagee/purchaser in good faith with respect to the
subject portion considering Sps. Roques possession thereof,35 the CA did not order its reconveyance or
segregation in the latters favor because of Sps. Roques failure to pay the remaining balance of the
purchase price. Hence, it only directed Land Bank to respect Sps. Roques possession with the option to
appropriate the improvements introduced thereon upon payment of compensation.36
As regards NCCP, the CA found that it failed to establish its right over Lot 18089 for the following reasons:
(a) the sale to it of the lot by Sabug, Jr. was never registered; and (b) there is no showing that it was in
possession of Lot 18089 or any portion thereof from 1998. Thus, as far as NCCP is concerned, Land Bank is
a mortgagee/purchaser in good faith.37
Aggrieved, both Sps. Roque38 and NCCP39 moved for reconsideration but were denied by the CA in a
Resolution40dated September 15, 2010, prompting them to seek further recourse before the Court.
of the registered owner and that the property has not yet passed to the hands of an innocent purchaser
for value.50
Sps. Roque claim that the subject portion covered by the 1977 Deed of Conditional Sale between them
and Rivero, et al. was wrongfully included in the certificates of title covering Lot 18089, and, hence, must
be segregated therefrom and their ownership thereof be confirmed. The salient portions of the said deed
state:

The Issue Before the Court ; The central issue in this case is whether or not the CA erred in not ordering DEED OF CONDITIONAL SALE OF REAL PROPERTY
the reconveyance of the subject portion in Sps. Roques favor.
KNOW ALL MEN BY THESE PRESENTS:
Sps. Roque maintain that the CA erred in not declaring them as the lawful owners of the subject portion
despite having possessed the same since the execution of the 1977 Deed of Conditional Sale, sufficient for
That for and in consideration of the sum of THIRTY THOUSAND SEVEN HUNDRED SEVENTY FIVE PESOS
acquisitive prescription to set in in their favor.41 To bolster their claim, they also point to the 1993 Joint
(P30,775.00), Philippine Currency, payable in the manner hereinbelow specified, the VENDORS do hereby
Affidavit whereby Sabug, Jr. and Rivero acknowledged their ownership thereof.42 Being the first
sell, transfer and convey unto the VENDEE, or their heirs, executors, administrators, or assignors, that
purchasers and in actual possession of the disputed portion, they assert that they have a better right over
unsegregated portion of the above lot, x x x.
the 1,231- sq. m. portion of Lot 18089 and, hence, cannot be ousted therefrom by Land Bank, which was
adjudged as a ortgagee/purchaser in bad faith, pursuant to Article 1544 of the Civil Code.43
That the aforesaid amount shall be paid in two installments, the first installment which is in the amount of
__________ (P15,387.50) and the balance in the amount of __________ (P15,387.50), shall be paid as
In opposition, Land Bank espouses that the instant petition should be dismissed for raising questions of
soon as the described portion of the property shall have been registered under the Land Registration Act
fact, in violation of the proscription under Rule 45 of the Rules of Court which allows only pure questions
and a Certificate of Title issued accordingly;
of law to be raised.44 Moreover, it denied that ownership over the subject portion had been acquired by
Sps. Roque who admittedly failed to pay the remaining balance of the purchase price. 45 Besides, Land
Bank points out that Sps. Roques action for reconveyance had already prescribed.46 That as soon as the total amount of the property has been paid and the Certificate of Title has been issued,
an absolute deed of sale shall be executed accordingly;
Instead of traversing the arguments of Sps. Roque, NCCP, in its Comment47 dated December 19, 2011,
advanced its own case, arguing that the CA erred in holding that it failed to establish its claimed x x x x51
ownership over Lot 18089 in its entirety. Incidentally, NCCPs appeal from the CA Decision dated May 12,
2010 was already denied by the Court,48 and hence, will no longer be dealt with in this case. Examining its provisions, the Court finds that the stipulation above-highlighted shows that the 1977 Deed
of Conditional Sale is actually in the nature of a contract to sell and not one of sale contrary to Sps.
The Courts Ruling : The petition lacks merit. Roques belief.52 In this relation, it has been consistently ruled that where the seller promises to execute a
deed of absolute sale upon the completion by the buyer of the payment of the purchase price, the
contract is only a contract to sell even if their agreement is denominated as a Deed of Conditional
The essence of an action for reconveyance is to seek the transfer of the property which was wrongfully or
Sale,53 as in this case. This treatment stems from the legal characterization of a contract to sell, that is, a
erroneously registered in another persons name to its rightful owner or to one with a better right. 49 Thus,
bilateral contract whereby the prospective seller, while expressly reserving the ownership of the subject
it is incumbent upon the aggrieved party to show that he has a legal claim on the property superior to that
property despite delivery thereof to the prospective buyer, binds himself to sell the subject property
exclusively to the prospective buyer upon fulfillment of the condition agreed upon, such as, the full
payment of the purchase price.54 Elsewise stated, in a contract to sell, ownership is retained by the vendor
and is not to pass to the vendee until full payment of the purchase price.55 Explaining the subject matter
further, the Court, in Ursal v. CA,56 held that:
[I]n contracts to sell the obligation of the seller to sell becomes demandable only upon the happening of
the suspensive condition, that is, the full payment of the purchase price by the buyer. It is only upon the
existence of the contract of sale that the seller becomes obligated to transfer the ownership of the thing
sold to the buyer. Prior to the existence of the contract of sale, the seller is not obligated to transfer the
ownership to the buyer, even if there is a contract to sell between them.
Here, it is undisputed that Sps. Roque have not paid the final installment of the purchase price. 57 As such,
the condition which would have triggered the parties obligation to enter into and thereby perfect a
contract of sale in order to effectively transfer the ownership of the subject portion from the sellers (i.e.,
Rivero et al.) to the buyers (Sps. Roque) cannot be deemed to have been fulfilled. Consequently, the latter
cannot validly claim ownership over the subject portion even if they had made an initial payment and
even took possession of the same.58
The Court further notes that Sps. Roque did not even take any active steps to protect their claim over the
disputed portion. This remains evident from the following circumstances appearing on record: (a) the
1977 Deed of Conditional Sale was never registered; (b) they did not seek the actual/physical segregation
of the disputed portion despite their knowledge of the fact that, as early as 1993, the entire Lot 18089
was registered in Sabug, Jr.s name under OCT No. M-5955; and (c) while they signified their willingness to
pay the balance of the purchase price,59Sps. Roque neither compelled Rivero et al., and/or Sabug, Jr. to
accept the same nor did they consign any amount to the court, the proper application of which would
have effectively fulfilled their obligation to pay the purchase price.60 Instead, Sps. Roque waited 26 years,
reckoned from the execution of the 1977 Deed of Conditional Sale, to institute an action for reconveyance
(in 2003), and only after Lot 18089 was sold to Land Bank in the foreclosure sale and title thereto was
consolidated in its name. Thus, in view of the foregoing, Sabug, Jr. as the registered owner of Lot 18089
borne by the grant of his free patent application could validly convey said property in its entirety to
Aguado who, in turn, mortgaged the same to Land Bank. Besides, as aptly observed by the RTC, Sps.
Roque failed to establish that the parties who sold the property to them, i.e., Rivero, et al., were indeed
its true and lawful owners.61 In fine, Sps. Roque failed to establish any superior right over the subject
portion as against the registered owner of Lot 18089, i.e., Land Bank, thereby warranting the dismissal of
their reconveyance action, without prejudice to their right to seek damages against the vendors, i.e.,
Rivero et al.62 As applied in the case of Coronel v. CA:63
It is essential to distinguish between a contract to sell and a conditional contract of sale specially in cases
where the subject property is sold by the owner not to the party the seller contracted with, but to a third
person, as in the case at bench. In a contract to sell, there being no previous sale of the property, a third
person buying such property despite the fulfilment of the suspensive condition such as the full payment of
the purchase price, for instance, cannot be deemed a buyer in bad faith and the prospective buyer cannot
seek the relief of reconveyance of the property.
There is no double sale in such case.1wphi1 Title to the property will transfer to the buyer after
registration because there is no defect in the owner-sellers title per se, but the latter, of course, may be
sued for damages by the intending buyer. (Emphasis supplied)
On the matter of double sales, suffice it to state that Sps. Roques reliance64 on Article 154465 of the Civil
Code has been misplaced since the contract they base their claim of ownership on is, as earlier stated, a
contract to sell, and not one of sale. In Cheng v. Genato,66 the Court stated the circumstances which must
concur in order to determine the applicability of Article 1544, none of which are obtaining in this case, viz.:
(a) The two (or more) sales transactions in issue must pertain to exactly the same subject
matter, and must be valid sales transactions;
(b) The two (or more) buyers at odds over the rightful ownership of the subject matter must
each represent conflicting interests; and
(c) The two (or more) buyers at odds over the rightful ownership of the subject matter must
each have bought from the same seller.
Finally, regarding Sps. Roques claims of acquisitive prescription and reimbursement for the value of the
improvements they have introduced on the subject property,67 it is keenly observed that none of the
arguments therefor were raised before the trial court or the CA.68 Accordingly, the Court applies the well-
settled rule that litigants cannot raise an issue for the first time on appeal as this would contravene the
basic rules of fair play and justice. In any event, such claims appear to involve questions of fact which are
generally prohibited under a Rule 45 petition.69 With the conclusions herein reached, the Court need not
belabor on the other points raised by the parties, and ultimately finds it proper to proceed with the denial
of the petition.
WHEREFORE, the petition is DENIED. The Decision dated May 12, 2010 and the Resolution dated
September 15, 2010 of the Court of Appeals in CAG.R. CV No. 92113 are hereby AFFIRMED.SO ORDERED.
ESTELA M. PERLAS-BERNABE
Associate Justice
THIRD DIVISION petitioners the Owners Duplicate Copy of TCT No. T-58459. Petitioners accordingly paid the taxes on the
sale of the subject property. However, they were unable to register the sale and effect the transfer of the
certificate of title to the subject property to their names.
EMMA VER REYES and RAMON REYES, G.R. No. 166516
Petitioners claimed that they had consistently paid the real estate taxes on the subject
Petitioners,
property since their acquisition of the same in 1976 until 1991. In 1993, when they went to the Office of
Present:
the Register of Deeds of Cavite to pay their real estate taxes for the years 1992 and 1993, they were
informed that the subject property was sold by Marciano to private respondent on 10 November 1992,
YNARES-SANTIAGO, J.,
and TCT No. T-369793 covering it was issued in private respondents name on 4 January 1993.
- versus - Chairperson,
CHICO-NAZARIO,
Petitioners asserted that private respondent was able to cause the issuance of TCT No. T-
VELASCO, JR.,
369793 in her name by presenting a simulated and fictitious Deed of Absolute Sale dated 10 November
NACHURA, and
1992. The signatures of the sellers, spouses Virginia (Virginia) and Marciano Cuevas (spouses Cuevas),
IRENE MONTEMAYOR and THE REGISTER OF PERALTA, JJ.
were forged in the said Deed.[6]
DEEDS OF CAVITE,
Respondents. Promulgated:
Hence, petitioners prayed for the cancellation of TCT No. T-369793 in private respondents
name; the issuance of a new certificate of title in petitioners names; the award of nominal damages
September 3, 2009
of P50,000.00 and exemplary damages of P100,000.00, by reason of the fraud employed by private
x-------------------------------------------------x
respondent in having the subject property registered in her name; the award of attorneys fees of not less
than P50,000; and the costs of suit. [7]
DECISION
On 18 April 1994, private respondent filed with the RTC her Answer with Counterclaim,
wherein she denied petitioners allegation that the signatures of the spouses Cuevas in the Deed of
Absolute Sale dated 10 November 1992 were forged. Private respondent averred that the subject
CHICO-NAZARIO, J.:
property was offered to her for sale, but she did not disclose who actually made the offer. She discovered
that there was no adverse claim or any kind of encumbrance annotated on the certificate of title of the
spouses Cuevas covering the subject property. She had purchased the subject property for value and in
This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, assailing the
good faith and had been in possession thereof. Private respondent insisted that she had a better title to
Decision[1] dated 20 May 2004, rendered by the Court of Appeals in CA-G.R. CV No. 54517, which affirmed
the subject property, since she was the first registrant of its sale. Private respondent thus prayed for the
the Decision[2] dated 7 October 1996, of the Regional Trial Court (RTC), Branch 21, of Imus, Cavite, in Civil
award of moral damages in the amount of not less than P100,000.00 for the mental anguish, serious
Case No. 878-94, dismissing the Complaint for Reconveyance of petitioners, spouses Emma Ver-Reyes
anxiety, and besmirched reputation she suffered by reason of the unjustified filing by petitioners of the
(Emma) and Ramon Reyes (Ramon), and declaring private respondent Irene Montemayor as the owner of
case; the award of exemplary damages in the amount of P100,000.00 for petitioners malicious filing of the
the subject property.
case; and the award of attorneys fees, and costs of suit. [8]
On 18 February 1994, petitioners filed before the RTC a Complaint for Reconveyance[3] against
After the conduct of pre-trial, petitioners offered the testimonies of Marciano, petitioner
private respondent and the Register of Deeds of Cavite. The Complaint was docketed as Civil Case No.
Emma, and Carolyn Moldez-Pitoy (Carolyn).
878-94. Petitioners alleged in their Complaint that they were the owners of a parcel of land covered by
Marciano testified that he and his wife Virginia signed, on 8 October 1976, a Deed of Absolute
Transfer Certificate of Title (TCT) No. T-58459[4] situated in Paliparan, Dasmarias, Cavite (subject
Sale covering the subject property in petitioner Emmas favor. He denied selling the subject property to
property). They bought the subject property from the previous owner, Marciano Cuevas (Marciano), as
any other person, including private respondent. Marciano, when shown the Deed of Absolute Sale
evidenced by a Deed of Absolute Sale dated 8 October 1976.[5] Thereafter, Marciano surrendered to
dated 10 November 1992, involving the same property, in private respondents favor, flatly stated that the
signatures found therein were not his or his wifes. [9]
Petitioner Emma personally confirmed that Marciano sold the subject property to her in
1976. She had faithfully paid the real property taxes on it from 1976 until 1993, when she learned that it
had been registered in private respondents name. Upon examining the Deed of Absolute Sale dated 10
November 1992, supposedly executed by the spouses Cuevas over the subject property in private
respondents favor, petitioner Emma observed that the spouses Cuevas signatures found therein appeared
to have been forged. She further claimed that after finding that the subject property had been registered
in private respondents name, she suffered from nervousness and the aggravation of her rheumatoid
arthritis. She was compelled to engage the services of a lawyer to prosecute her case against private
respondent, which could cost her P100,000.00 or more. During the cross-examination and re-direct
examination, petitioner Emma explained that she had not been able to register the subject property in her
name because of her diabetes and rheumatoid arthritis.[10]
Carolyn introduced herself as a Senior Document Examiner in the National Bureau of
Investigation (NBI), performing, among her other duties, handwriting analysis. She admitted to preparing
Questioned Documents Report No. 548-795, dated 18 July 1995.[11]
Questioned Documents Report No. 548-795, prepared by Carolyn, was submitted by
petitioners as evidence and was marked as Exhibit G.[12] They had obtained the report for the purpose of
finding out whether (1) the signatures of the spouses Cuevas in the Deed of Absolute Sale dated 10
November 1992, which they purportedly executed in private respondents favor; and (2) the signature of
Escolastico Cuevas (Escolastico), Registrar of Deeds (ROD) of Cavite, in the Owners Duplicate Copy of TCT
No. T-58459, which Mariano surrendered to petitioners in 1972, were forged, by comparing them with the
specimen signatures given by the spouses Cuevas and ROD Escolastico. As stated in her Report, Carolyn
found that:
1. The questioned and the standard/specimen signatures VIRGINIA M.
CUEVAS were not written by one and the same person.
2. The questioned and the standard /specimen signatures of ESCOLASTICO
CUEVAS were written by one and the same person.
3. No definite opinion on MARCIANO CUEVAS per above stated findings no. 3.[13]
On the other hand, private respondent offered the testimonies of Jaime Laudato
(Jaime) and Angelina Cortez (Angelina) in support of her version of events.
Jaime disclosed that it was Vice-Mayor Lauro Carungcong (Carungcong) of Dasmarias who
supposedly brokered the sale of the subject property, and who instructed Jaime to verify with the Register
of Deeds the existence of the Original Copy of TCT No. T-58459, and to check for any encumbrances
thereon. Three weeks thereafter, Vice-Mayor Carungcong gave Jaime a copy of the Deed of Absolute Sale
dated 10 November 1992 executed by the spouses Cuevas over the subject property in private
respondents favor, and directed Jaime to pay the obligatory taxes and to register the subject property in
private respondents name. On cross-examination, Jaime admitted that he had never met nor was he
acquainted with either of the spouses Cuevas, the alleged vendors of the subject property.[14]
Angelina, employed as a Deeds Examiner in the Register of Deeds of Cavite, was tasked, as part
of her duties, to examine the documents related to the transfer of the subject property in private
respondents name before issuing the corresponding certificate of title. However, she admitted during
cross-examination that she was not in a position to determine the authenticity of the documents
presented to her.[15]
The RTC rendered a Decision[16] in Civil Case No. 878-94 on 7 October 1996, dismissing
petitioners Complaint. The RTC found that the statements of their witness Marciano and the results of
Questioned Documents Report No. 548-795 issued by the NBI were contradictory. The RTC noted that
Marciano testified that the signatures found in the Deed of Absolute Sale dated 8 October 1976 and
the Kasunduan sa Bilihan ng Lupa[17] dated 15 June 1971 were Virginias; but the NBI Report stated that the
questioned and the standard/specimen signatures VIRGINIA M. CUEVAS were not written by one and the
same person. The RTC also gave little credence to Marcianos denial of the sale of the subject property to
private respondent, on the ground that it was self-serving. Although the RTC did observe differences in
Marcianos signature in the Kasunduan ng Bilihan ng Lupa dated 15 June 1971 and the Deed of Absolute
Sale dated 10 November 1992, the trial court dismissed the same as mere changes in a persons
penmanship or signature that could occur over the years. The RTC concluded that Civil Case No. 878-94
involved a double sale of the subject property, wherein private respondent, an innocent purchaser for
value who first registered the property in her name, should be adjudged to have a better title. The
dispositive part of the RTC Decision dated 7 October 1996 reads:
WHEREFORE, judgment is hereby rendered dismissing this case and
declaring that the true and lawful owner of the subject property as described in,
and covered by, TCT No. T-369793 is [herein respondent] Irene Montemayor.
All other claims of the parties are dismissed for inadequate
substantiation.[18]
On 11 July 1997, petitioners filed an appeal with the Court of Appeals,
docketed as CA-G.R. CV No. 54517, which challenged the afore-mentioned RTC
judgment.
During the pendency of CA-G.R. CV No. 54517, petitioners filed with the Court of Appeals an
Urgent Manifestation[19] on 20 October 1998. According to them, they obtained information that private
respondents TCT No. T-369793 covering the subject property had already been canceled; that a new
certificate of title, TCT No. T-784707, had been issued in the name of another person, Engracia Isip
(Engracia); and that a mortgage was constituted on the subject property. It began with private respondent
executing a Waiver and Quitclaim on 15 January 1998, wherein she confessed to obtaining TCT No. T-
369793 over the subject property in bad faith. In the same document, private respondent recognized
Engracias title to the subject property and, thus, private respondent relinquished her right over it to
Engracia and the latters heirs and successors-in-interest.The Register of Deeds, impleaded as a party in
CA-G.R. CV No. 54517, canceled TCT No. T-369793 in private respondents name; issued TCT No. T-784707
in the names of Engracias heirs; and annotated on the latest certificate of title private respondents Waiver
and Quitclaim dated 15 January 1998.
On 18 November 1998, Perfecto Dumay-as, Deputy ROD of Trece Martires City, Cavite, filed a
Comment/Manifestation stating that Civil Case No. 878-94 was not inscribed on private respondents TCT
No. T-369793, since the case before the RTC had already been resolved in favor of private respondent,
thus, the presentation of the owners original certificate of title along with the Waiver/Quitclaim, dated 15
January 1998, complied with the requirements of a voluntary transaction, justifying the issuance of TCT
No. T-784707 in the name of Engracias heirs.[20]
In its Decision dated 20 May 2004 in CA-G.R. CV No. 54517, the Court of Appeals denied
petitioners appeal and affirmed the RTC Decision dated 7 October 1996 in Civil Case No. 878-94. The
appellate court held that petitioners were negligent in failing to register the subject property in their
names. And, just like the RTC, the Court of Appeals declared Marcianos denial of the sale of the subject
property in private respondents favor as self-serving. The appellate court also pointed out that the
findings of the NBI were not definite as regards the alleged forgery of Marcianos signature in the Deed of
Absolute Sale dated 10 November 1992. Lastly, the Court of Appeals took judicial notice of the
Comment/Manifestation of Perfecto Dumay-as, Deputy ROD of Trece Martires City, Cavite, stating that
Civil Case No. 878-94 was not inscribed on private respondents TCT No. T-369793, since the case before
the RTC had already been resolved in favor of private respondent, and the acquisition by Engracias heirs of
the subject property and TCT No. T-784707 over the same was in good faith and, therefore, valid. The
Court of Appeals decreed:
WHEREFORE, premises considered, the appealed Decision dated October
7, 1996 of the Regional Trial Court of Cavite is hereby AFFIRMED.[21]
Petitioners filed a Motion for Reconsideration[22] of the foregoing Decision on 25 June 2004,
which the Court of Appeals denied in a Resolution[23] dated 28 December 2004.
Hence, the present Petition, where petitioners made the following assignment of errors:
I unless said findings are not supported by or are totally devoid of or inconsistent with the evidence on
RESPONDENT COURT COMMITTED SERIOUS ERROR IN RENDERING THE DECISION
AND RESOLUTION IN QUESTION IN COMPLETE DISREGARD OF LAW AND
JURISPRUDENCE BY SUSTAINING THE ORDER OF THE REGIONAL TRIAL COURT
(BRANCH 21) OF CAVITE NOTWITHSTANDING THE CLEAR AND AUTHENTIC RECORDS
PRESENTED DURING TRIAL WHICH NEGATE AND CONTRADICT ITS FINDINGS.
II
RESPONDENT COURT COMMITED GRAVE AND REVERSIBLE ERROR IN RENDERING
THE DECISION AND RESOLUTION IN QUESTION IN VIOLATION OF LAW AND
JURISPRUDENCE BY SUSTAINING THE ORDER OF THE REGIONAL TRIAL COURT
(BRANCH 21) OF CAVITE THEREBY IGNORING THE EVIDENCE ON RECORD SHOWING
THE PETITIONERS CLEAR RIGHTS OF OWNERSHIP OVER THE SUBJECT PROPERTY.
III
RESPONDENT COURT COMMITTED SERIOUS ERROR IN AFFIRMING THAT THE TRUE
AND LAWFUL OWNER OVER (sic) THE SUBJECT PROPERTY AS DESCRIBED IN AND
COVERED BY TCT NO. T-369793 IS PRIVATE RESPONDENT IRENE MONTEMAYOR
DESPITE DOCUMENTARY AND TESTIMONIAL EVIDENCE TO THE CONTRARY.[24]
The fundamental issue for resolution of this Court in this case is who has better right to the
subject property. Before the Court can settle the same, it must first determine the question of whether
there was a double sale of the subject property to both petitioners and private respondent, which is
essentially a question of fact requiring the Court to review, examine and evaluate, or weigh the probative
value of the evidence presented by the parties.
Rule 45 of the Rules of Court provides that only questions of law shall be raised in a Petition for
Review before this Court. This rule, however, admits of certain exceptions, namely, (1) when the findings
are grounded entirely on speculations, 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 misappreciation of facts; (5) when the findings of fact are conflicting; (6) when, in
making its findings, the same are contrary to the admissions of both appellant and appellee; (7) when the
findings are contrary to those of 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
petitioners main and reply briefs are not disputed by the respondent; and (10) when the findings of fact
are premised on the supposed absence of evidence and contradicted by the evidence on record.[25]
While as a general rule appellate courts do not usually disturb the lower court's findings of fact,
record, such finding must of necessity be modified to conform with the evidence if the reviewing tribunal
were to arrive at the proper and just resolution of the controversy.[26] Thus, although the findings of fact
of the Court of Appeals are generally conclusive on this Court, which is not a trier of facts, if said factual
findings do not conform to the evidence on record, this Court will not hesitate to review and reverse the
factual findings of the lower courts. In the instant case, the Court finds sufficient basis to deviate from the
rule since the extant evidence and prevailing law support a finding different from the conclusion of the
Court of Appeals and the RTC.[27]
Contrary to the findings of both the Court of Appeals and the RTC, the evidence on record
reveals that the spouses Cuevas, the previous owners of the subject property, did not sell the said
property to private respondent.
Marcianos explicit statements, made under oath before the trial court, that he did not sell the
subject property to anyone other than petitioners, and that the signatures of the vendors appearing in the
Deed of Absolute Sale dated 10 November 1992 were not made by him and his wife, were not
refuted. Private respondents witness, Jaime, who was tasked to verify if there was no encumbrance on
the spouses Cuevas title to the subject property and to register it in private respondents name after the
alleged sale, admitted that he had never met the supposed vendors of the subject property and, thus,
could not competently testify on whether it was actually the spouses Cuevas who executed the Deed of
Absolute Sale dated 10 November 1992 in private respondents favor.
The pronouncement of the RTC, affirmed by the Court of Appeals, that Marcianos testimony
was self-serving was utterly baseless. Neither the RTC nor the Court of Appeals explained how Marcianos
confirmation of the sale of the subject property to petitioners, and his renunciation of the supposed sale
of the same property to private respondent, would accrue to Marcianos benefit. In giving such a
testimony in 1994, Marciano did not stand to gain back the subject property, which he had already
admitted to selling to petitioners 18 years prior, in 1976. On the other hand, if Marciano falsely testified in
open court that he and his wife did not sell the subject property to private respondent, Marciano was
risking prosecution for the crime of perjury and liability for damages.
Additionally, although Questioned Documents Report No. 548-795 of the NBI did not make a
definitive finding on whether Marcianos purported signature on the Deed of Sale dated 10 November
1992 was actually his or a forgery, the same Report did unqualifiedly state that the signature that Virginia
supposedly affixed to the said Deed and the specimen signatures that she provided the NBI were not
written by the same person. Clearly, Questioned Documents Report No. 548-795 of the NBI established
that her purported signature in the Deed of Absolute Sale dated 10 November 1992 was forged.
It is true that a finding of forgery does not depend exclusively on the testimonies of expert
witnesses and that judges must use their own judgment, through an independent examination of the
questioned signature, in determining the authenticity of the handwriting. [28] However, it is important to
note that in this case neither the RTC nor the Court of Appeals made any finding through an independent
examination of Virginias signatures. The RTC gave credence to Questioned Documents Report No. 548-795
of the NBI, but misread it as saying that the two specimen signatures given by Virginia were not written by
the same person. Hence, Questioned Documents Report No. 548-795 of the NBI, finding that the signature
of Virginia in the Deed of Absolute Sale dated 10 November 1992 is a forgery, stands unquestioned.
That at least one of the signatures of the alleged vendors was indubitably established as a
forgery should have already raised serious doubts as to the authenticity and validity of the Deed of
Absolute Sale dated 10 November 1992. This, taken together with Marcianos candid and categorical
testimony that he and his wife did not sell the subject property to private respondent or executed any
deed to evidence the same, strongly militates against the existence of a second sale of the subject
property to private respondent.
In comparison, the circumstances surrounding the alleged second sale of the subject property
by the spouses Cuevas to private respondent are sketchy at best. Vice Mayor Carungcong, who allegedly
brokered the sale, had already died during the pendency of the case and was not presented as witness. It
was not made clear whether he was duly authorized by the spouses Cuevas to broker such sale. Private
respondents witness, Jaime, did not claim to have been present during the negotiations or in any part of
the sale transaction, and had not even met the spouses Cuevas. All he was able to testify on was that he
verified with the Register of Deeds that there was no encumbrance annotated on TCT No. T-58459 of the
spouses Cuevas, and eventually, he was able to cause the cancellation of TCT No. T-58459 in the spouses
Cuevas names and the issuance of TCT No. T-369793 in private respondents name based on the
questionable Deed of Absolute Sale dated 10 November 1992. Similarly ambiguous was how Jaime was
able to have TCT No. T-58459 of the spouses Cuevas cancelled when the Owners Duplicate Copy thereof
was with petitioners. When a certificate of title is cancelled, the owners duplicate must also be
surrendered to the Register of Deeds for cancellation, in accordance with Section 53 [29] of Presidential
Decree No. 1529, otherwise known as the Property Registration Decree, as amended.
Other than the forged Deed of Absolute Sale dated 10 November 1992, private respondents
bad faith in registering the subject property in her name and her dishonest scheme in appropriating the
land for herself are further evidenced by her own admissions in the Waiver and Quitclaim dated 15
January 1998, which she executed in favor of Engracias heirs, to wit[30]:
1. That, I am the holder of Transfer Certificate of Title No. 369793 covering a
parcel of land (Lot No. 6961-N) with an area of Forty One Thousand Eight
Hundred and Thirty Seven square meters (41, 837 sq. m.) situated in
Barangay Paliparan, Dasmarias, Cavite and declared for taxation purposes
under Tax Declaration No. 151746 Dasmarias, Cavite;
2. That, I know (sic) from the very beginning the dubiousness of my title to the
above described roperty (sic);
3. That, I have neither legal or equitable title to the said property as the
previous document (Deed of Conveyance) which is the basis of immediate
transfer from OCT No. 1002 is of questionable origin;
 4. That, all documents relative to the issuance of subsequent transfer certificate
of titles including TCT No. 369793 under my name were in reality, entirely
simulated and fictitious;
5. That, I am recognizing the genuineness of Transfer Certificate of Title No.
769357-3911 in the name of ENGRACIA ISIP with Tax Declaration No. 151745,
which has been transferred to her heirs, APOLONIA I.R. ALCARAZ, ELIZA I.
REYES-GLORIA, VICTOR ISIP REYES and EPITACIO ISIP REYES, covered by TCT.
No. T-784707;
6. That, in the light of the foregoing, I do hereby waive and renounce, now and
forever, all claims of whatever nature to the said property in favor of the said
ENGRACIA ISIP, her heirs, executors, administrator or assigns.
Private respondents unabashed confession that she knew of the dubiousness of her title from
the very beginning is contrary to the concept of good faith. Good faith consists in the belief of the
possessors that the persons from whom they received the thing are its rightful owners who could convey
their title.[31]
Based on the foregoing, the preponderance of evidence in this case is in petitioners favor. The
spouses Cuevas only sold the subject property to them in 1976, and did not sell it a second time to private
respondent in 1992. As a consequence, the rules on the double sale of registered property are not
relevant herein. The Court then proceeds to rule on the consequence of private respondents fraudulent
registration of the subject property in her name.
The Deed of Absolute Sale dated 10 November 1992, a forged deed, is a nullity and conveys no
title.[32] Paragraph 2 of Section 53 of Presidential Decree No. 1529 reads:
In all cases of registration procured by fraud, the owner may pursue all his legal and
equitable remedies against the parties to such fraud without prejudice, however, to
the rights of any innocent holder for value of a certificate of title. After the entry of
the decree of registration on the original petition or application, any subsequent
registration procured by the presentation of a forged duplicate certificate of title, or
of a forged deed or other instrument, shall be null and void.
Insofar as a person who fraudulently obtained a property is concerned, the registration of the
property in said persons name would not be sufficient to vest in him or her the title to the property. A
certificate of title merely confirms or records title already existing and vested. The indefeasibility of
the Torrens title should not be used as a means to perpetrate fraud against the rightful owner of real
property. Good faith must concur with registration because, otherwise, registration would be an exercise
in futility.[33] A Torrens title does not furnish a shield for fraud, notwithstanding the long-standing rule that
registration is a constructive notice of title binding upon the whole world. The legal principle is that if the
registration of the land is fraudulent, the person in whose name the land is registered holds it as a mere
trustee.[34]
It has long been established that the sole remedy of the landowner whose property has been
wrongfully or erroneously registered in another's name is to bring an ordinary action in an ordinary court
of justice for reconveyance or, if the property has passed into the hands of an innocent purchaser for
value, for damages. It is one thing to protect an innocent third party; it is entirely a different matter and
one devoid of justification if deceit would be rewarded by allowing the perpetrator to enjoy the fruits of
his nefarious deed.[35] Reconveyance is all about the transfer of the property, in this case the title thereto,
which has been wrongfully or erroneously registered in another person's name, to its rightful and legal
owner, or to one with a better right.[36] Evidently, petitioners, being the rightful owners of the subject
property, are entitled to the reconveyance of the title over the same.
However, as a further demonstration of private respondents continuing bad faith and
persistent effort to unlawfully deprive petitioners of the subject property, private respondent executed
the Waiver and Quitclaim dated 15 January 1998, in which she admitted that her title to the said property
was void and, instead, recognized the title of Engracia, who owned the subject property prior to the
spouses Cuevas. Pursuant to said Waiver and Quitclaim, the Register of Deeds cancelled TCT No. T-369793
in private respondents name and issued TCT No. T-784707 in the names of Engracias heirs.
It must be stressed that Engracia, whose TCT No. T-13105 over the subject property was
already cancelled on 26 April 1965, had never filed a case questioning the cancellation of said certificate
of title during her lifetime.[37] There is also nothing in the records that would show that after Engracias
death in 1981, her heirs attempted to recover title to the subject property.
The Waiver and Quitclaim dated 15 January 1998 deserves little evidentiary weight as to the
truth or veracity of the statements contained therein, considering that they were unilaterally made by
private respondent. There is no independent evidence that all certificates of title subsequent to OCT No.
1002 covering the subject property were simulated and fictitious. In fact, private respondent contradicted
herself by acknowledging in the very same document that Engracias title, which was transferred to her
heirs, was genuine. The only fact that said Waiver and Quitclaim established was private respondents bad
faith in having the subject property registered in her name. For the Court to make such finding of bad faith
on private respondents part, it need not actually be true that all titles to the subject property, prior to
private respondents, were simulated and fictitious, only, private respondent believed them to be so, but
still persisted in acquiring and registering in her name what she already knew was a dubious title.
What is apparent to this Court is that private respondent executed the Waiver and Quitclaim
dated 15 January 1998 so as to effect the transfer of the subject property to third persons, i.e., Engracias
heirs, and defeat any judgment granting the petitioners the remedy of reconveyance of the subject
property.
In connection therewith, this Court expresses its disfavor over the cavalier attitude of the
Register of Deeds of Cavite in canceling TCT No. T-369793 in private respondents name and issuing TCT No.
T-784707 in the names of Engracias heirs, on the sole basis of the Waiver and Quitclaim dated 15 January
1998, executed by private respondent. The Register of Deeds of Cavite, who was a party to petitioners
case for reconveyance, and was undoubtedly aware of the issues involved in the said case and the
pendency of the same. Yet it blindly allowed the registration of the alleged title to the subject property of
Engracia and her heirs, in effect, reviving a title that had already been cancelled way back in 1965, and
disregarding all other titles issued in between, based entirely on the unilateral claims of a self-confessed
fraud. Moreover, in placing its faith in the unsupported statements of the private respondent, who had
confessed to having acquired and registered the property in bad faith, against the presumed good faith of
the former owners, the Register of Deeds acted in a manner that was highly irregular.
This having been said, an action for reconveyance is an action in personam available to a
person whose property has been wrongfully registered under the Torrens system in anothers
name. Reconveyance is always available as long as the property has not passed to an innocent person for
value.[38]
Engracias heirs cannot be considered innocent persons or persons who acquired the subject
property for value. Engracias heirs re-acquired the subject property by virtue of the private
respondents Waiver and Quitclaim dated 15 January 1998. That the said document was executed by
private respondent, who admitted to holding a dubious title to the subject property, should be sufficient
to put Engracias heirs on notice and to cause the latter to investigate the other transfers and titles issued
for the subject property. The Waiver and Quitclaim dated 15 January 1998 also does not establish that the
subject property was transferred to Engracias heirs for value, it appearing to have been executed by
private respondent in favor of Engracias heirs without any consideration at all. Hence, the cancellation
of TCT No. T-369793 in private respondents name and the issuance of TCT No. T-784707 in the names of
Engracias heirs cannot bar the reconveyance of the subject property to petitioners.
A judgment directing a party to deliver possession of a property to another is in personam; it
is binding only against the parties and their successors in interest by title subsequent to the
commencement of the action.[39] The Court may deem Engracias heirs as private respondents successors-
in-interest, having acquired title to the subject property through private respondent after the
commencement of petitioners action for reconveyance of the same property.
Since private respondents fraudulent registration of the subject property in her name violated
petitioners right to remain in peaceful possession of the subject property, petitioners are entitled to
nominal damages under Article 2221 of the Civil Code, which provides:
Art. 2221. Nominal damages are adjudicated in order that a right of the
plaintiff which has been violated or invaded by the defendant, may be vindicated or
recognized, and not for the purpose of indemnifying the plaintiff for any loss
suffered by him.
This Court finds that petitioners prayer for nominal damages in the amount of P50,000.00 is proper and
reasonable.
The award of attorneys fees is also in order because private respondent acted in gross and
evident bad faith in refusing to satisfy petitioners plainly valid, just and demandable claim. [40] Given the
time spent on the present case, which lasted for more than 15 years, the extent of services rendered by
petitioners lawyers, the benefits resulting in favor of the client, as well as said lawyers professional
standing, the award of P100,000.00 is proper.[41]
However, exemplary damages cannot be imposed in this case, where petitioners only prayed
for the award of nominal damages and attorneys fees, but not for moral, temperate, liquidated, or
compensatory damages. Article 2229 of the Civil Code imposes exemplary damages only under the
following circumstances:
Art. 2229. Exemplary or corrective damages are imposed, by way of
example or correction for public good, in addition to the moral, temperate,
liquidated or compensatory damages.
IN VIEW OF THE FOREGOING, the instant Petition is GRANTED. The assailed Decision dated 20
May 2004 of the Court of Appeals in CA-G.R. CV No. 54517 is REVERSED and SET ASIDE. The Register of
Deeds is ORDERED to (1) CANCEL TCT No. T-784707 over the subject property in the name of Engracias
heirs, which was derived, not in good faith or for value, but from the fraudulently procured TCT No. T-
369793 in private respondents name; and (2) ISSUE a new certificate of title over the subject property in
the name of petitioners, the rightful owners thereof. Private respondent is ORDERED to PAY petitioners
nominal damages in the amount of P50,000.00 and attorneys fees in the amount of P100,000.00. Costs
against private respondent.
SO ORDERED.
 FIRST DIVISION Subsequently, respondent entered into an agreement with petitioners father, Sabas Gasataya,
for the latter to assume payment of her obligation to DBP. They further agreed that Sabas Gasataya would
JESSIE GASATAYA, G.R. No. 148147 take possession of the lots for 20 years and develop them into a fishpond. As consideration thereof,
Petitioner, respondent received P10,000 cash, in addition to the P25,000 that Sabas Gasataya had to pay DBP on her
Present: behalf.

PUNO, C.J., Chairperson, Upon representation by Sabas Gasataya that respondents obligation to DBP had already been
SANDOVAL-GUTIERREZ, settled, they entered into another agreement denominated as Deed of Sale of Fishpond Lands with Right
- v e r s u s - CORONA, to Repurchase.
AZCUNA and Eight years after the execution of the above deed of sale with right to repurchase, respondent
GARCIA, JJ. discovered that Sabas Gasataya had stopped paying DBP. As a result, DBP revoked her right to repurchase
the subject lots.
EDITHA MABASA,
Respondent. Promulgated: DBP later on held a public auction of the properties where petitioner participated and bid the highest
price of P27,200. Eventually, he acquired titles to the lots for which he was issued TCT No. T-11720 in lieu
February 16, 2007 of TCT No. T-2447 (Lot 279) and TCT No. T-11721 for TCT No. T-2448 (Lots 272 and 972).
Respondent then filed a complaint in the RTC for reconveyance of titles of lands with
x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x damages[4] against petitioner and Sabas Gasataya (Gasatayas). She claimed that the latter deliberately
reneged on his commitment to pay DBP to: (1) revoke her right to repurchase the lots under the deed of
DECISION conditional sale and (2) subject the properties to another public auction where petitioner could bid.

CORONA, J.:
Before us is an appeal by certiorari under Rule 45 of the 1997 Rules of Civil Procedure assailing
the decision[1] of the Court of Appeals (CA) in CA-G.R. CV No. 55055 which, in turn, affirmed the decision
of the Regional Trial Court (RTC) of Lanao del Norte, Branch 7.[2]
The facts follow.
Respondent Editha Mabasas father, Buenaventura Mabasa, was granted a homestead patent
on Lots 279, 272 and 972 located in Lala, Lanao del Norte. Buenaventura Mabasa mortgaged these lots to
secure a loan from the Development Bank of the Philippines (DBP). Because of his failure to pay his
indebtedness, DBP foreclosed on the lots and sold them at public auction where it emerged as the highest
bidder. DBP then obtained titles to the lots: Lot 279 under TCT No. T-2247 and consolidated Lots 272 and
972 under TCT No. T-2448.
When Buenaventura Mabasa died, respondents siblings authorized her to negotiate with DBP
for the repurchase of the lots. DBP allowed respondent to reacquire the foreclosed properties through a
deed of conditional sale for P25,875.[3]
Petitioner and his father denied the allegations saying that the deed of conditional sale
assumed by the latter from respondent was rendered ineffective by DBPs refusal to accept payments
thereon.
The trial court ruled in favor of respondent finding that the Gasatayas failed to controvert her
claim that they defrauded her just so petitioner could acquire the lots at public auction.[5] According to the
trial court, the Gasatayas failed to prove that DBP indeed rejected payments from Sabas Gasataya. The
trial court ruled:
WHEREFORE, judgment is hereby rendered in favor of the [respondent]
and against [the Gasatayas] ordering [them] to wit:
a. Ordering [petitioner] to reconvey to [respondent] TCT. No.[T-11720]
and TCT No. T-11721, both of the Registry of Deeds for the Province of Lanao del
Norte, upon tender to and receipt by [petitioner] of the amount of P37,200.00
Philippine money;
b. Ordering the Registrar of Deeds for the Province of Lanao del Norte
to procure and cause the transfer and registration of the aforesaid transfer
certificates of title in favor and in the name of herein [respondent] Editha S. Mabasa;
 c. Ordering [the Gasatayas] to cede, transfer and reconvey to
[respondent] the physical possession and occupancy of Lot 279, 272 and Lot 972as
covered by the aforesaid certificates of title;
d. Ordering [the Gasatayas] to pay [respondent] the sum of P5,000.00
for attorneys fees; P5,000.00 as litigation expenses;
e. Ordering [the Gasatayas] to pay costs of this proceeding[s].
SO ORDERED.[6]
Petitioner and his father appealed to the CA which affirmed the RTCs decision and dismissed
their appeal for lack of merit. The CA declared:
The contention of [respondent] that [the Gasatayas] deliberately chose
not to pay DBP as agreed, in order for them to acquire said properties in a
fraudulent and treacherous manner, was not fully controverted by [them].
[The Gasatayas] failed to produce evidence to support their defenses.
xxx xxx xxx
Moreover, [the Gasatayas] are in possession of said land[s] by virtue of a
Deed of Sale with a Right to Repurchase and not because the DBP granted it to
them[T]o facilitate their acquisition of the land in question, [they] deliberately
defaulted in the payment of the assumed obligation to the damage and prejudice of
[respondent]. Consequently, the lands in question were subjected to public bidding
wherein [petitioner] participated and eventually won[the Gasatayas] committed a
breach of trust amounting to fraud which would warrant an action
for reconveyance.[7]
Petitioner alone came to us via this appeal by certiorari seeking the reversal of the CA decision.
Before us, petitioner contests the CA decision affirming the trial courts order to reconvey his
titles on the disputed lots to respondent who, according to him, is not the owner thereof.
We affirm the CA.
Reconveyance is available not only to the legal owner of a property but also to the person with
a better right than the person under whose name said property was erroneously registered.[8] While
respondent is not the legal owner of the disputed lots, she has a better right than petitioner to the
contested lots on the following grounds: first, the deed of conditional sale executed by DBP vested on her
the right to repurchase the lots and second, her right to repurchase them would have subsisted had they
(the Gasatayas) not defrauded her.
The trial courts findings, as affirmed by the CA, that petitioner and his father deceived
respondent to acquire the disputed lots bind us. Well-settled is the rule that factual conclusions of the
trial court deserve respect and become irrefutable especially when affirmed by the CA. [9] Absent any
evidence that the CA overlooked salient matters that could justify a reversal of the outcome of this case,
we decline to disturb such factual conclusions.
Petitioner, however, insists that respondent had no right to the disputed lots since the
conditional sale agreement where such right was based had long been cancelled by DBP. According to
petitioner, a void and inexistent deed cannot override his right as registered owner of the lots.
We disagree.
Petitioner cannot discredit the deed of conditional sale just so he can to keep his titles to the
lots. Petitioner should be reminded that DBP revoked respondents right to repurchase the lots under said
deed because of the deceitful maneuverings that he and his father employed. If we were to sustain
petitioners argument, then we would, in effect, reward him for his misdeed.
Neither can this Court uphold petitioners contention that his titles are unsullied on the mere
fact that he purchased the properties at public auction. Fraud overthrows the presumption that the public
sale was attended with regularity. The public sale did not vest petitioner with any valid title to the
properties since it was but the consequence of his and his fathers fraudulent schemes.
The registration of the properties in petitioners name did not obliterate the fact that fraud
preceded and facilitated such registration. Actual or positive fraud proceeds from an intentional deception
practiced by means of misrepresentation of material facts,[10] which in this case was the conscious
representation by petitioners father (Sabas Gasataya) that respondents obligation to DBP had already
been settled. It is fraud to knowingly omit or conceal a fact, upon which benefit is obtained, to the
prejudice of another.[11]Consequently, fraud is a ground for reconveyance.[12]
Moreover, the law only protects an innocent purchaser for value and not one who has
knowledge of and participation in the employment of fraud. An innocent purchaser for value is one who
buys the property of another without notice that some other person has a right to or interest in that same
property, and who pays a full and fair price at the time of the purchase or before receiving any notice of
another persons claim.[13] Obviously, petitioner was not an innocent purchaser for value.
As a final point, the Court takes significant note of the fact that respondents father originally
acquired the subject lots through homestead grant. Commonwealth Act 141 (Public Land Act) aims to
confine and preserve to the homesteader and his kin the homestead lots. We, therefore, agree with the
CAs disquisition that courts should lend a stout shoulder to help keep a homestead in the homesteaders
family for the stern reality cannot be belied that homesteaders and their families are generally in the
lower stratum of life and most likely, when they alienate the homestead, it is out of dire
necessity.[14] According to the CA, desperation does not allow much of a choice, hence homesteaders and
their kin should be given every opportunity to repurchase their homestead.
WHEREFORE, the assailed decision of the Court of Appeals in CA-G.R. CV No. 55055 is
hereby AFFIRMED.
Costs against petitioner.SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-33261 September 30, 1987
LIWALUG AMEROL, MACATANTO AMEROL, TAIB AMEROL, DIBARATUN AMEROL, DIBARATUN,
MATABALAO, MINDALANO DIBARATUN, DIPUNDUGUN MORO, and MANUCAO MORO, petitioners,
vs.
MOLOK BAGUMBARAN, respondent
SARMIENTO, J.:
This is a petition for review on certiorari of the decision 1 of the then Court of First Instance of Lanao del
Sur, Branch III, Marawi City, in Civil Case No. 1354, entitled, "Molok Bagumbaran vs. Liwalug Amerol et
al.," under Republic Act No. 5400, "as only question of law is raised." 2
The only issue for resolution is the prescriptive period of an action for reconveyance of real property
which has been wrongfully or erroneously registered under the Torrens System in another's name. In
other words, what is the prescriptive period for the action to reconvey the title to real property arising
from an implied or constructive trust and, corrolarily reference. The petitioners herein, defendants in the
trial court, assert that they have ten years to bring the action, while the respondent, plaintiff in the court
below, claims the prescriptive period is four years. The trial court ruled tor the plaintiff, now respondent.
We reverse. We hold that the prescriptive period for such an action for reconveyance, as this case, is ten
years. The point of reference is, or the ten-year prescriptive period commences to run from, the. date of
the issuance of the certificate of title over the real property.
There is no issue as to the facts, this case having been elevated to this Court, as aforestated, on purely a
question of law. Be that as it may, in order to satisfy constitutional requirements as well as to place the
question of law in proper perspective, there is need to state the facts of the case. On this regard, the
findings of the trial court would best serve the stated purposes.
xxx xxx xxx
From the evidence submitted during the trial there is no dispute concerning the fact
relative to the Identity of the land in litigation. It is commonly known as Lot No. 524,
Pls-126 and technically described and bounded in the sketch (Exh. "7 "). This is the
very tract of land alleged by the plaintiff to have been forcibly entered into by the
defendants and which plaintiff now w&s to recover possession thereof. It has also
been proven that the same lot was covered by two free patent applications: (l)
that of defendant Liwalug Datomanong (erroneously surnamed Amerol) which he
filed on the 4th day of September, 1953, and (2) that of Molok Bagumbaran which
was filed on December 27, 1954. There is also no question regarding the fact that as
to these two free patent applications, that of plaintiff Molok Bagumbaran was given
due course as a result of which Free Patent No. V-19050 was issued on August
16,1955 by authority of the President of the Philippines Ramon Magsaysay, by
Jaime Ferrer, Undersecretary of Agriculture and Natural Resources and duly
registered with the office of the Register of Deeds of the Province of Lanao (now
Lanao del Sur) in the mm year whereupon Original Certificate of Title No. P-466 was
duly issued, owner's duplicate certificate having been furnished the herein plaintiff.
This court is also inclined to believe that defendant Liwalug Datomanong had never
known of plaintiff's free patent application on the land in question nor was he ever
notified or participated in the administrative proceedings relative to plaintiff's free
patent application. In the meantime, since the date he purchased the land from
Mandal Tondo, said defendant has been and up to the present in con. tinuous
occupation and cultivation of the same. His co-defendants named in the complaint
are merely his tenants.
It is also incontrovertible fact that said defendant did not take appropriate action to
annul the patent and title of the plaintiff within one year from issuance thereof and
that the first step taken by him to contest said patent and title was a formal protest
(Exh. "12", p. 408, Record) dated April 24, 1964, filed before the Bureau of Lands
after the lapse of Nine (9) long years from the issuance of patent in favor of the
plaintiff. The second step he took was his counterclaim contained in his answer to
the complaint in the above entitled case, which answer was filed with this court on
December 4, 1964. In said counterclaim, defendant reiterated his stand that plaintiff
secured patent on the land by means of deceit and fraud, wherefore, defendant
prayed that said title be annulled, or, alternatively, plaintiff be ordered to reconvey
the said land to the said defendant Liwalug Datomanong.
First question to be resolved is whether or not the plaintiff is guilty of fraud or
misrepresentation in securing the Free Patent No. V-19050 covering the land in
question.
Upon a thorough examination of the evidence, proofs are sufficient to support
defendant's contention that plaintiff is guilty of fraud and misrepresentation. In the
first place, proofs are abundant tending to show that since 1952 when Mandal
Tando transferred the land to said defendant, the latter occupied, took possession
thereof and cultivated the same continuously, publicly, adversely against any
claimant and in the concept of owner up to the present; that said defendant had
introduced considerable improvements such as coconut and coffee plantations and
other fruit trees besides his farm house, a mosque, cassava plantation and clearing
and full cultivation of the entire area. The fact of possession on the part of said
defendant has been attested to by competent and creditable witnesses like Mandal
Tando who conveyed the land to the defendant; Hadji Sirad Gomandang, the barrio
captain of Montay, Malabang, Lanao del Sur, Hadji Rasol Maruhom and Hadji
Abdulcadir Pagayawan, both of Pialot, Malabang, Lanao del Sur who are farmers
and barrio-mates of said defendant; and also Disomnong Dimna Macabuat, an
employee in the office of the District Land Officer at Marawi City who had officially
conducted occular inspection and investigation of the premises in connection with
the protest of said defendant found thereon the above-mentioned improvements
introduced by the said defendant.
What is more, on or before filing his free patent application, plaintiff knew that the
land in question which was covered by his free patent application was then actually
occupied and cultivated by defendant Liwalug Datomanong if not by Mandal Tando,
the original occupant. Be it remembered that Mandal Tando had transferred to
defendant Liwalug Datomanong Twenty Four (24) hectares, more than eleven
hectares of which is (sic) outside the military reservation and designated as Lot No.
524, Pls-126 and the rest which is in the southern portion lies within the military
reservation. Now, immediately adjacent thereto on the south is the land claimed
and occupied by the herein plaintiff also consisting of Twenty Four (24) hectares but
wholly within the military reservation. It appears that plaintiff declared this Twenty
four hectares for the first time on October 24, 1950 for taxation purposes (Tax
Declaration No. 1529, Record) and stated in said tax declaration (Exhs. "8" and "8-
A," p. 414, Record) regarding the boundaries that the adjacent owner on the north
is Mandal Tando. In other words, plaintiff had expressly recognized the fact that
Mandal Tando is an adjacent land owner north of plaintiff's property. On February
19, 1951 herein plaintiff revised the above-stated tax declaration and secured
another (Tax Declaration No. 1794, Exh. "9" and "9-A," p. 413, Record) and still
plaintiff stated therein that his boundary land owner on the north is Hadji Abdul
Gani. 3 [a.k.a.Liwalug Datomanong(Amerol)]. 4
xxx xxx xxx
Notwithstanding the aforequoted findings, very unequivocal to be sure, the trial court denied the
counterclaim of the defendants, now petitioners, for the affirmative relief of reconveyance on the ground
of prescription. Said the court:
xxx xxx xxx
The patent of the plaintiff having been registered back in 1955 and in contemplation
of law registration thereof is notice to the whole world and yet defendant exerted
no effort whatsoever either to annul the title or institute proceedings for
reconveyance except in his counterclaim contained in his answer to the complaint
in this case at bar which answer and counter-claim was filed on December 4, 1964,
some nine long years from the date of registration of the patent, defendant
unfortunately lost his right to reconveyance within the period of four (4) years from
the date of registration of said patent. 5
xxx xxx xxx
Thus, the dispositive portion of the assailed decision stated:
xxx xxx xxx
PREMISES CONSIDERED, judgment is hereby rendered as follows: (1) declaring the
herein plaintiff the registered owner of Lot No. 524, Pls-126 and sustaining and
respecting the validity of the plaintiff's Original Certificate of Title No. P-466
covering the said land; (2) ordering the defendants to vacate the premises of Lot No.
524; Pls-126 and deliver possession thereof to the herein plaintiff under certain
terms and conditions herein below stated; (3) denying and hereby dismissing the
counterclaim of the herein defendants and consequently the prayer to annul the
title and/or for reconveyance of the land to said defendant Liwalug Datomanong
 must Likewise be denied; (4) that before plaintiff could take possession of said
premises he must reimburse defendant Liwalug Datomanong the total sum of Six
Thousand Seven Hundred Fifty-Two Pesos and Sixty-Two Centavos (P6,752.62)
which he incurred for the necessary and useful expenses on the land in question
with the right of said defendant to retain possession of the premises if said
reimbursement be not completely made. No pronouncement as to costs. 6
xxx xxx xxx
Hence, this petition. 7
The petitioners in their Brief 8 assign the following two errors allegedly committed by the trial court:
I.
THE COURT ERRED IN ITS CONCLUSION OF LAW TOTHE EFFECT THAT PETITIONERS RIGHT OF ACTION FOR
RECONVEYANCE FOR VIOLATION OF AN IMPLIED TRUST PRESCRIBED AFTER FOUR YEARS FROM THE
REGISTRATION OF THE PATENT OF RESPONDENT.
II.
THE COURT ERRED IN NOT REQUIRING THE INTRODUCTION OF EVIDENCE AS BASIS IN THE ASSESSMENT
OF THE FAIR MARKET VALUE OF THE IMPROVEMENT INTRODUCED ON THE LAND IN GOOD FAITH BY
PETITIONERS INSTEAD OF BASING SUCH ASSESSMENT UPON PURE AND SIMPLE GUESS WORKS AND WILD
ESTIMATIONS.
The first assignment of error is well-taken as adverted to at the outset.
Indubitably, the act of respondent in misrepresenting that he was in actual possession and occupation of
the property in question, obtaining a patent and Original Certificate of Title No. P- 466 in his name,
created an implied trust in favor of the actual possessor of the said property. The Civil Code provides:
ARTICLE 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.
In this case, the land in question was patented and titled in respondent's name by and through his false
pretenses. Molok Bagumbaran fraudulently misrepresented that he was the occupant and actual
possessor of the land in question when he was not because it was Liwalug Datomanong. Bagumbaran
falsely pretended that there was no prior applicant for a free patent over the land but there was
Liwalug Datomanong. By such fraudulent acts, Molok Bagumbaran is deemed to hold the title of the
property in trust and for the benefit of petitioner Liwalug Datomanong. Notwithstanding the irrevocability
of the Torrens title already issued in the name of respondent, he, even being already the registered owner
under the Torrens system, may still be compelled under the law to reconvey the subject property to
Liwalug Datomanong. After all, the Torrens system was not designed to shield and protect one who had
committed fraud or misrepresentation and thus holds title in bad faith. Further, contrary to the erroneous
claim of the respondent, 9 reconveyance does not work to set aside and put under review anew the
findings of facts of the Bureau of Lands. In an action for reconveyance, the decree of registration is
respected as incontrovertible. What is sought instead is the transfer of the property, in this case the title
thereof, which has been wrongfully or erroneously registered in another person's name, to its rightful and
legal owner, 10 or to one with a better right. That is what reconveyance is all about.
Yet, the right to seek reconveyance based on an implied or constructive trust is not absolute. It is subject
to extinctive prescription. 11 Happily, both parties agree on this point. The seeming impediment however,
is that while the petitioners assert that the action prescribes in ten years, the respondent avers that it
does in only four years.
In support of his submission, the respondent invokes several cases. We have examined the invocations
and find them inapplicable. For instance, the case of Fabian vs. Fabian, 12 relied on by the respondent,
does not square with the present case. In Fabian, the party who prayed for reconveyance was not in
actual possession and occupation of the property. It was instead the party to whom title over the property
had been issued who occupied and possessed it. Further, the litigated property had been in the adverse
possession of the registered owner for well-nigh over twenty-nine big years, hence, reconveyance had
been irretrievably lost.
Miguel vs. Court of Appeals, 13 is, likewise, inapplicable. In Miguel, the actual occupant and possessor of
the controverted parcel of land, after having been enticed by Leonor Reyes, an ambulatory notary public,
with promise of help, engaged and retained the services of the latter to facilitate the issuance of a patent
for the said land in his (Miguel's) favor. Thus, there existed between the parties a relationship very much
akin to that of lawyer-client and which is similarly fiduciary in character. But Reyes, inspite of his
compensation of one-fifth of the yearly produce of the property, still violated the trust reposed on him
and instead worked for the issuance of the patent in the name of his own wife. So, after the demise of
Leonor Reyes, the property was fraudulently patented and titled in his widow's favor. The reconveyance
of the property was decreed by the Court based on "breach of fiduciary relations and/or fraud." It was
shown that the parties were legally bound to each other by a bond of fiduciary trust, a bond lacking in the
case at bar.
Finally, the case of Ramirez vs. Court of Appeals 14 can not be availed of because the period of
prescription was not there definitely and squarely settled. In fact, Ramirez underscores a vacillation
between the four-year and the ten-year rule. There it was stated that "an action for relief on the ground
of fraud to which class the remedy prayed for by Paguia belong scan only be brought within four
years after accrual of the right of action, or from the discovery of the fraud." If the decision just stayed pat
on that statement, there would be merit in the respondent's presentation. But Ramirez continues:
"(I)ndepedently, however, of the alleged fraud on the part of Ramirez, the right to demand a
reconveyance prescribes after 10 years from accrual of the cause of action, June 22, 1944, the date of
registration of the patent and of the issuance of OCT No. 282- A in his name." 15
Significantly, the three cases cited by the respondent to buttress his position and support the ruling of the
trial court have a common denominator, so to speak. The cause of action assailing the frauds committed
and impugning the Torrens titles issued in those cases, all accrued prior to the effectivity of the present
Civil Code. The accrual of the cause of action in Fabian was in 1928, in Miguel, February, 1950, and in
Ramirez, 1944. It must be remembered that before August 30, 1950, the date of the effectivity of the new
Civil Code, the old Code of Civil Procedure (Act No. 190) governed prescription. It provided:
SEC. 43. Other civil actions; how limited-Civil actions other than for the recovery of
real property can only be brought within the following periods after the right of
action accrues:
xxx xxx xxx
3. Within four years: x x x An action for relief on the ground of fraud, but the right of
action in such case shall not be deemed to have accrued until the discovery of the
fraud;
xxx xxx xxx
In contrast, under the present Civil Code, we find that just as an implied or constructive trust is an
offspring of the law (Art. 1456, Civil Code), so is the corresponding obligation to reconvey the property
and the title thereto in favor of the true owner. In this context, and vis-a-vis prescription, Article 1144 of
the Civil Code is applicable.
Article 1144. The following actions must be brought within ten years from the time
the right of action accrues:
(1) Upon a written contract;
(2) Upon an obligation created by law;
(3) Upon a judgment.
xxx xxx xxx
(Emphasis supplied)
An action for reconveyance based on an implied or constructive trust must perforce prescribed in ten
years and not otherwise. A long line of decisions of this Court, and of very recent vintage at that,
illustrates this rule. Undoubtedly, it is now well-settled that an action for reconveyance based on an
implied or constructive trust prescribes in ten years from the issuance of the Torrens title over the
property. 16 The only discordant note, it seems, is Balbin vs. Medalla, 17 which states that the
prescriptive period for a reconveyance action is four years. However, this variance can be explained by the
erroneous reliance on Gerona vs. de Guzman. 18 But in Gerona, the fraud was discovered on June 25,
1948, hence Section 43(3) of Act No. 190, was applied, the new Civil Code not coming into effect until
August 30, 1950 as mentioned earlier. It must be stressed, at this juncture, that Article 1144 and Article
1456, are new provisions. They have no counterparts in the old Civil Code or in the old Code of Civil
Procedure, the latter being then resorted to as legal basis of the four-year prescriptive period for an
action for reconveyance of title of real property acquired under false pretenses.
It is abundantly clear from all the foregoing that the action of petitioner Datomanong for reconveyance, in
the nature of a counterclaim interposed in his Answer, filed on December 4, 1964, to the complaint for
recovery of possession instituted by the respondent, has not yet prescribed. Between August 16, 1955,
the date of reference, being the date of the issuance of the Original Certificate of Title in the name of the
respondent, and December 4, 1964, when the period of prescription was interrupted by the filing of the
Answer cum Counterclaim, is less than ten years.
The respondent also interposed as a deterrent to reconveyance the existence of a mortgage on the
property. It is claimed by the respondent that reconveyance would not be legally possible because the
property under litigation has already been mortgaged by him to the Development Bank of the
Philippines. 19 This claim is untenable otherwise the judgment for reconveyance could be negated at the
will of the holder of the title. By the simple expedient of constituting a mortgage or other encumbrance
on the property, the remedy of reconveyance would become illusory. In the instant case, the respondent
being doubly in bad faith for applying for and obtaining a patent and the Original Certificate of Title
therefor without being in possession of the land and for mortgaging it to the Development Bank knowing
that his Original Certificate of Title was issued under false pretenses must alone suffer the
consequences.

Besides, given the undisputed facts, we cannot consider the mortgage contracted by the respondent in
favor of the Development Bank of the Philippines as valid and binding against petitioner Liwalug
Datomanong. It would be most unjust to saddle him, as owner of the land, with a mortgage lien not of his
own making and from which he derived no benefit whatsoever. The consequences of the void mortgage
must be left between the mortgagor and the mortgagee. In no small measure the Development Bank of
the Philippines might even be faulted for not making the requisite investigation on the possession of the
land mortgaged.

Premises considered, we deemed it superfluous to rule on the second assignment of error raised by the
petitioners.

WHEREFORE, the petition is GRANTED and the Decision dated June 3, 1970 of the then Court of First
Instance of Lanao del Sur in Civil Case No. 1354 is hereby ANNULLED and SET ASIDE and a new one
entered ORDERING the respondent to RECONVEY Original Certificate of Title No. P-466 in favor of
petitioner Liwalug Datomanong, free of any encumbrance. Costs against the respondent.

SO ORDERED.

Yap (Chairman), Melencio-Herrera and Paras, JJ., concur.

SECOND DIVISION
[G.R. No. 140457. January 19, 2005]
HEIRS OF MAXIMO SANJORJO, namely, VICENTE SANJORJO, MACARIA SANJORJO, DOMINGO SANJORJO,
ALFREDO CASTRO, and SPOUSES SANTOS AND LOLITA INOT, petitioners, vs. HEIRS OF
MANUEL Y. QUIJANO, namely, ROSA Q. LEDESMA, MILAGROS Q. YULIONGSIU, ALAN P.
QUIJANO AND GWENDOLYN P. ENRIQUEZ, and VICENTE Z. GULBE, respondents.
DECISION
CALLEJO, SR., J.:
This is a petition for review on certiorari under Rule 45 of the Revised Rules of Court of the
Decision[1] dated February 17, 1999 of the Court of Appeals (CA) in CA-G.R. CV No. 50246 and its
Resolution[2] dated October 12, 1999 denying the petitioners motion for reconsideration.
The Antecedents
On August 29, 1988, Free Patent No. VII-4-2974 was issued to Alan P. Quijano, married to Mila
Matutina, over a parcel of land located in Antipolo, Medellin, Cebu, with an area of 14,197 square meters
identified as Lot 374, Cadastre 374-D. Based on the said patent, Original Certificate of Title (OCT) No. OP-
38221 was issued by the Register of Deeds to and in the name of Alan P. Quijano on September 6,
1988.[3] On November 11, 1988, Free Patent No. VII-4-3088 was issued to and in favor of Gwendolyn Q.
Enriquez, married to Eugenio G. Enriquez, over a parcel of land located in Antipolo, Medellin, Cebu,
identified as Lot 379, Cadastre 374-D, with an area of 6,640 square meters. Based on the said patent, OCT
No. OP-39847 was issued in her favor on February 11, 1989.[4]
In the meantime, Gwendolyn Enriquez filed an application for a free patent over Lot 376 of
Cadastre 374-D with the Department of Environment and Natural Resources (DENR). The application was
docketed as Free Patent Application (F.P.A.) No. VII-4-3152. She also filed an application for a free patent
over Lot 378, docketed as F.P.A. No. VII-4-3152-A. However, the heirs of Guillermo Sanjorjo, namely,
Tranquilina, Pablo, Boir, Erlinda, Josefina, Maria, Maximo, Isabel, Jose, Dario, Vicente, Noel, Albina, Ramon,
Domingo, Adriano and Celedonia, all surnamed Sanjorjo, filed a protest/complaint with the DENR on May
22, 1991, praying for the cancellation of Free Patent No. VII-4-2974, as well as Free Patent No. VII-4-3088,
and for the dismissal of the free patent applications over Lots 376 and 378. [5] The complaint was docketed
as PENRO Claim No. PN 072231-4, and was assigned to the Regional Executive Director for hearing and
decision.
The protestants/claimants alleged that the said parcels of land were originally owned by Ananias
Ursal but were exchanged for a parcel of land located in San Remegio, Cebu, owned by their predecessor,
Guillermo Sanjorjo, married to Maria Ursal, and from whom they inherited the property. They prayed that:
WHEREFORE, premises considered and after hearing on the merits, it is most respectfully prayed of this
most Honorable Office to render judgment ordering:
1. The cancellation of Free Patent Titles Nos. VII-4-2974 and VII-4-3088 issued to respondents Alan P.
Quijano and Gwendolyn Quijano Enriquez concerning Lot Nos. 374 and 379, respectively.
2. The cancellation of Free Patent Application Nos. VII-4-3152, VII-4-3152-A, and VII-1-18277-I of
respondents concerning Lot Nos. 376 and 378.
3. The return of possession and ownership of these lots to the complainants/protestants who are the
rightful owners by inheritance.
Protestants further pray for other relief, just and equitable, under the premises.[6]
During the pre-trial conference of August 2, 1991, the protestants/claimants manifested that they
were withdrawing their protest/complaint. Thus, on April 14, 1992, the Regional Executive Director
rendered a decision[7] giving due course to the applications. However, he ruled that the free patents over
Lots 374 and 379 could no longer be disturbed since the complaint for the cancellation was filed more
than one year from their issuance. The dispositive portion of the decision reads:
WHEREFORE, it is hereby ordered that the above-entitled administrative case be dismissed and dropped
from the records. It is further ordered that the Free Patent Application of applicants-respondents over Lot
Nos. 376 and 378 be given due course for being in the actual adverse and continuous possession of the
land in controversy. Patent/Titles already issued and entered in the Registry Book in favor of applicants-
respondents on Lot Nos. 374 and 379 in 1988 and 1989 need not be disturbed anymore, for failure to
show evidence of actual fraud in the procurement of such titles.[8]
 On September 13, 1993, Vicente Sanjorjo, the heirs of Maximo Sanjorjo, namely, Macaria Sanjorjo, the said properties ever returned to the plaintiffs, despite repeated demands on QUIJANO to return the
Domingo Sanjorjo, Alfredo Castro, and the Spouses Santos and Lolita Inot, herein petitioners, filed a same;
complaint for cancellation of titles under tax declarations and reconveyance of possession of real property
covering Lots 374, 376, 378 and 379 located in Medellin, Cebu, against the private respondents, the heirs
6. That MANUEL QUIJANO died in 1987 and the herein defendants, the heirs of MANUEL QUIJANO,
of Manuel Quijano, namely, Rosa Q. Ledesma, Milagros Q. Yuliongsiu, Alan P. Quijano and Gwendolyn P.
divided among themselves the land belonging to the plaintiffs. Titles and Tax Declarations were then
Enriquez, and Vicente Gulbe. The petitioners did not implead the rest of the heirs of Guillermo Sanjorjo,
issued on the said lots in the name of the defendants, as follows:
including his daughter Tranquilina Sanjorjo, as parties-plaintiffs, and alleged, inter alia

(a) Lot No. 374 is now covered by OCT No. OP-38221 in the name of defendant ALAN P.
3. That the plaintiffs are the owners of several parcels of land in Antipolo, Medellin, Cebu, which are more
QUIJANO. A copy of the title is hereto attached and marked as Annex G and made
particularly described as follows:
an integral part of this complaint;

(a) Lot No. 374 with an area of 14,179 sq.m. and covered by Tax Declaration No. 00718 in the
(b) Lot No. 376 is now covered by Tax Declaration No. 10015 in the name of MANUEL Y.
name of PONCIANO DEMIAR and Tax Declaration No. 01042 in the name of
QUIJANO married to FLAVIANA P. QUIJANO. A copy of the said tax declaration is
TRANQUILINA SANJORJO;
hereto attached and marked as Annex H and made an integral part of this complaint;

(b) Lot No. 376 with an area of 6,177 sq.m. and covered by Tax Declaration No. 01038 in the
(c) Lot No. 379 is now covered by OCT No. OP-39847 in the name of GWENDOLYN Q.
name of MAURO SANJORJO;
ENRIQUEZ. A copy of the title is hereto attached and marked as Annex I and made
an integral part of this complaint;
(c) Lot No. 378 with an area of 3,201 sq.m. and covered by Tax Declaration No. 01035 in the
name of FLORENTINO SANJORJO;
7. That the plaintiffs nor their ascendants have never sold, donated, or mortgaged any of these lots in
question to the defendants or their ascendants;
(d) Lot No. 379 with an area of 6,640 sq.m. and covered by Tax Declaration No. 00772 in the
name of SANTOS INOT and Tax Declaration No. 01039 in the name of SABINIANO
8. That sometime in September 1991, the defendant ALAN QUIJANO charged plaintiff ALFREDO CASTRO
SANJORJO;
with QUALIFIED THEFT for allegedly having stolen the coconuts on the properties in question.
Subsequently, the Municipal Court of Medellin acquitted CASTRO on the ground that he was the real
The said Tax Declarations are hereto attached and marked as Annexes A, B, C, D, E and F, respectively, and owner of the lot. It was only on that time that plaintiffs discovered that defendants had already titled their
made integral parts of this complaint; lots. Furthermore, in 1992, the herein plaintiffs were sued by the defendants for Quieting of Title, which
case they subsequently withdrew. This case made the plaintiffs realize that all their properties had already
been titled in defendants names;
4. That the aforestated lots originally belonged to the late MAXIMO SANJORJO who died during World
War II. His children MAURO, FLORENTINO, SABINIANO, TRANQUILINA and RAYMUNDA, all surnamed
SANJORJO, inherited the said properties. They have also passed away and the plaintiffs, who are the 9. That, at present, defendants have leased these lots to a certain VICENTE GULBE, who is named as a
children of MAXIMO SANJORJOs children are now the rightful heirs of the aforementioned parcels of land; defendant in this case. Plaintiffs also demanded from defendant GULBE the return of their possession
over these lots but to no avail. The Certification to File Action from the barangay captain of Antipolo,
Medellin, Cebu, is hereto attached and marked as Annex J and made an integral part of this complaint;
5. That sometime in 1983, the parcels of land in question were leased to MANUEL QUIJANO for a two (2)
year period at the rate of P4,500.00 per year. However, the lease was never paid for nor was possession of
10. That upon their discovery of defendants fraudulent acts, plaintiffs demanded the return of their
properties but the defendants have failed and refused and continue to fail and refuse to do so.[9]
The petitioners prayed that, after due proceedings, judgment be rendered in their favor:
(a) Ordering the cancellation of OCT Nos. OP-38221 and OP-39847 and Tax Declaration No. 10015;
(b) Ordering the defendants to pay rentals to the plaintiffs in the amount of P4,500.00 per year from 1983
up to the time the properties are returned to the plaintiffs; and
(c) Ordering the defendants to pay the plaintiffs moral damages in the amount of not less than P20,000.00.
Plaintiffs further pray for such other relief and remedies as this Court may deem just and equitable under
the premises.[10]
The private respondents filed a motion to dismiss the complaint on the ground of res
judicata based on the decision of the Regional Executive Director on April 14, 1992. They maintained that
the decision of the Regional Executive Director had become final and executory and, as such, barred the
petitioners action.
The petitioners opposed the motion. In their reply to such opposition, the private respondents
invoked another ground that the petitioners action was barred by the issuance of OCT No. OP-38221
covering Lot 374 on August 29, 1988, and OCT No. OP-39847 covering Lot 379 on November 11, 1988.
On September 13, 1994, the trial court issued an Order dismissing the complaint on the ground
of res judicata. The petitioners appealed the order to the CA.
We note that the petitioners limited the issues to the two titled lots, Lots 374 and 379, arguing that
there can be no res judicata in this case because one of its elements, i.e., that the former judgment is a
judgment on the merits, was lacking. The petitioners did not assail the trial courts order dismissing the
complaint insofar as Lots 376 and 378 are concerned. Moreover, according to the petitioners, the April 14,
1992 Decision of the Regional Executive Director was not a decision on the merits of the complaint, as
they had yet to prove their allegation of fraud as regards the said lots.
In its Decision promulgated on February 17, 1999, the appellate court affirmed the assailed order of
the trial court, albeit for a different reason, i.e., prescription. Citing Section 32 of Presidential Decree No.
1529,[11] it held that the OCTs issued to the respondents on the basis of their respective free patents
became as indefeasible as one which was judicially secured upon the expiration of one year from the date
of the issuance of the patent. The CA did not deem it necessary to rule on the issue of res judicata since it
dismissed the case on the ground of prescription.[12]
When their motion for reconsideration of the said decision of the CA was denied,[13] the petitioners
filed the instant petition for review, contending that:
THE HONORABLE COURT OF APPEALS (THIRD DIVISION) GRAVELY ERRED IN AFFIRMING THE
DECISION OF THE REGIONAL TRIAL COURT, BRANCH 13, CEBU CITY, DATED SEPTEMBER 13, 1994.
PETITIONERS BEG THAT THIS PETITION BE GIVEN DUE COURSE IN THE INTEREST OF SUBSTANTIAL
JUSTICE, [SINCE] THE DECISION OF THE COURT OF APPEALS, IF NOT CORRECTED, WOULD CAUSE
IRREPARABLE INJURY TO THE PREJUDICE OF HEREIN PETITIONERS WHO ARE THE REAL OWNERS OF
THE LOTS IN QUESTION.[14]
The petitioners maintain that the appellate court erred in holding that their action in Civil Case No.
CEB 14580 was barred by the Decision dated April 14, 1992 of the DENR Regional Executive Director. They
contend that the latter decision is not a decision on its merits so as to bar their complaint.
We agree.
The elements of res judicata are the following: (1) the previous judgment has become final; (2) the
prior judgment was rendered by a court having jurisdiction over the subject matter and the parties; (3) the
first judgment was made on the merits; and (4) there was substantial identity of parties, subject matter
and causes of action, as between the prior and subsequent actions.[15]
A judgment on the merits is one rendered after argument and investigation, and when there is
determination which party is right, as distinguished from a judgment rendered upon some preliminary or
formal or merely technical point, or by default and without trial.[16]
As gleaned from the decision of the DENR Regional Executive Director, he dismissed the petitioners
complaint for the cancellation of Free Patent Nos. VII-4-2974 and VII-4-3088 on the ground that it was
filed only on May 22, 1991, more than three years from the issuance of the said patents on August 29,
1988 and November 11, 1988, respectively. In the said decision, the Regional Executive Director declared
that after the lapse of one year from the issuance of patent and registry thereof in the Registry Book of
the Register of Deeds, Cebu Province, only the regular courts of justice have jurisdiction on the matter of
cancellation of title.[17] The petitioners agreed with the Regional Executive Director and withdrew their
complaint, opting to file an appropriate action in court for the nullification of the said patents and titles.
Hence, the decision of the Regional Executive Director was not a decision on the merits of the petitioners
complaint.
On the second issue, we agree with the petitioners that their action against the private respondents
for the reconveyance of Lots 374 and 379, covered by OCT No. OP-38221 issued on September 6, 1988
and OCT No. OP-39847 issued on February 11, 1989, respectively, was not barred by Section 32 of P.D. No.
1529, which reads:
SEC. 32. Review of decree of registration; Innocent purchaser for value. The decree of registration shall not
be reopened or revised by reason of absence, minority, or other disability of any person adversely
affected thereby, nor by any proceeding in any court for reversing judgments, subject, however, to the
right of any person, including the government and the branches thereof, deprived of land or of any estate
or interest therein by such adjudication or confirmation of title obtained by actual fraud, to file in the
proper Court of First Instance a petition for reopening and review of the decree of registration not later
than one year from and after the date of the entry of such decree of registration, but in no case shall such
petition be entertained by the court where an innocent purchaser for value has acquired the land or an
interest therein, whose rights may be prejudiced. Whenever the phrase innocent purchaser for value or
any equivalent phrase occurs in this Decree, it shall be deemed to include an innocent lessee, mortgagee,
or other encumbrancer for value.[18]
We agree with the ruling of the CA that the torrens title issued on the basis of the free patents
became as indefeasible as one which was judicially secured upon the expiration of one year from date of
issuance of the patent.[19] The order or decision of the DENR granting an application for a free patent can
be reviewed only within one year thereafter, on the ground of actual fraud via a petition for review in the
Regional Trial Court (RTC) provided that no innocent purchaser for value has acquired the property or any
interest thereon. However, an aggrieved party may still file an action for reconveyance based on implied
or constructive trust, which prescribes in ten years from the date of the issuance of the Certificate of Title
over the property provided that the property has not been acquired by an innocent purchaser for value.
Thus:
The basic rule is that after the lapse of one (1) year, a decree of registration is no longer open to review or
attack although its issuance is attended with actual fraud. This does not mean, however, that the
aggrieved party is without a remedy at law. If the property has not yet passed to an innocent purchaser
for value, an action for reconveyance is still available. The decree becomes incontrovertible and can no
longer be reviewed after one (1) year from the date of the decree so that the only remedy of the
landowner whose property has been wrongfully or erroneously registered in anothers name is to bring an
ordinary action in court for reconveyance, which is an action in personam and is always available as long
as the property has not passed to an innocent third party for value. If the property has passed into the
hands of an innocent purchaser for value, the remedy is an action for damages. In this case, the disputed
property is still registered in the name of respondent Demetrio Caringal, so that petitioner was correct in
availing himself of the procedural remedy of reconveyance.[20]
An action for reconveyance is one that seeks to transfer property, wrongfully registered by another,
to its rightful and legal owner.[21] All that must be alleged in the complaint are two (2) facts which,
admitting them to be true, would entitle the plaintiff to recover title to the disputed land, namely, (1) that
the plaintiff was the owner of the land and, (2) that the defendant had illegally dispossessed him of the
same.[22] The body of the pleading or complaint determines the nature of an action, not its title or
heading.[23] In their complaint, the petitioners clearly asserted that their predecessors-in-interest have
long been the absolute and exclusive owners of the lots in question and that they were fraudulently
deprived of ownership thereof when the private respondents obtained free patents and certificates of
title in their names.[24] These allegations certainly measure up to the requisite statement of facts to
constitute an action for reconveyance.
Article 1456 of the New Civil Code provides that a person acquiring property through fraud
becomes by operation of law a trustee of an implied trust for the benefit of the real owner of the property.
The presence of fraud in this case created an implied trust in favor of the petitioners, giving them the right
to seek reconveyance of the property from the private respondents. However, because of the trial courts
dismissal order adverted to above, the petitioners have been unable to prove their charges of fraud and
misrepresentation.
The petitioners action for reconveyance may not be said to have prescribed, for, basing the present
action on implied trust, the prescriptive period is ten years.[25] The questioned titles were obtained on
August 29, 1988 and November 11, 1988, in OCT Nos. OP-38221 and OP-39847, respectively. The
petitioners commenced their action for reconveyance on September 13, 1993. Since the petitioners cause
of action is based on fraud, deemed to have taken place when the certificates of title were issued,[26] the
complaint filed on September 13, 1993 is, therefore, well within the prescriptive period.
IN LIGHT OF ALL THE FOREGOING, the petition is PARTIALLY GRANTED. The Decision of the Court of
Appeals is MODIFIED. Accordingly, the Regional Trial Court of Cebu City, Branch 13, is DIRECTED to
reinstate the complaint insofar as Lots 374 and 379 are concerned. No costs.
SO ORDERED.
Puno, (Chairman), Austria-Martinez, Tinga, and Chico-Nazario, JJ., concur.