SALVADOR H.

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

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

G.R. No. L-24661 February 28, 1974
BENJAMIN RABUCO, VENANCIO G. GUIRNALDA, LEODEGARIO ALOBA,
ELEUTERIO IBAES, ROGELIO ARAGONES, ASENCIO ABANCO, BENEDICTO
BAUTISTA, MAXIMO AQUINO, PAULINA DALUMIAS, NENITA RAMOS,
GUILLERMO VARIAS, EMELDA ARELLANO, PEDRO BILBAO, ERNESTO
BONBALES, ROSITA OCA BAUTISTA, TERESITA ESTEBAN, JOSE BENJAMIN,
LORENZO BELDEVER, LEODEGARIO TUMLOS, PATRICIO MALATE, ANSELMO
CORTEJOS, ANACLETA ADUCA, SALOME BARCELONA, ENRICO CELSO, IRENE
CAMBA, MARIA COLLADO, RUFINO CANTIL, ANANIAS CANILLO, MAXIMO DE
CASTRO, CEFERINO SALAZAR, PATRIA ANAYA, FELISA VELASCO, IGNACIO
SARASPI, FLAVIO DINAGUIT, REMEDIOS BAROMETRO, PEDRO GEBANIA,
RUBEN GEGABALEN, EMETRIO EDAO, LUCIANO ARAGONES, ADRIANO
ESTRELLADO, BONIFACIO EVARISTO, ISIDORO EDORIA, TIMOTEA ECARUAN,
BIENVENIDO COLLADO, CENON DAJUYA, RAFAELA FERNANDEZ, ALFONSO
FAUSTINO, AVELINO GARCIA, RICARDO GUIRNALDA, FRANCISCO HENERAL,
CARMEN KIONESALA, FELICIANO LUMACTOD, DOLORES VILLACAMPA,
NARCISO LIM, EUFEMIO LEGASPI, MATILDE MABAQUIAO, EULOGIO VIA,
MACARIO ANTONIO, JEREMIAS DE LA CRUZ, MARTIN MANGABAN, SIMEON
MANGABA T., CARIDAD MER MILLA, FELIX MAHINAY, NAPOLEON MARZAN,
ISAIAS MANALASTAS, JOSEFA CORVERA, JOSE APRUEDO, ARSENIO REYES,
EUGENIA A. ONO, CORNELIO OPOLENCIA, SEDECIAS PASCUA, ABUNDIO
PAGUNTALAN, ESPERANZA DE QUIROS, CRESENCIO SALEM, MOISES
FERNANDEZ, FORTUNATO GONZALES, SOCORRO R. VALEN, RODOLFO
COLLADO, VENERIO CELSO, GREGORIO DE LA CRUZ, CELSO ALCERA,
NICOLAS ARAGONES, JOSEFINA MANANSALA, ADELAIDA CALASIN , JOSE
AGUSTIN, TOMAS JOSEPH, MANUEL DADOR, SERGIO LIPATON, ERNESTO
SUMAYDING, MARCELINO DIOSO, MIGUEL ALCERA, CRISANTA ENAMER,
JUAN VIADO HILARION CHIOCO, EUROPIA CABAHUG, VICTORIA DUERO,
CONSORCIO ENOC, MAMERTO GAMONIDO, BONIFACIO SABADO, MARIA
INTROLIZO, HENRY ENOLBA, REYNALDO LIM, FORTUNATO LIPON, ERNESTO
MALLOS, FLORENTINA PATRICIO, MAMERTO PALAPALA, RAMON DE
PERALTA, JOSE PARRAS, APOLINARIO YAP, JUAN ROQUE, FELIX ROQUE,
GLICERIA SALAZAR, MIGUELA SABIO, AGAPITO SAYAS, PAULINO SARROZA,
PACIFICO JUANICO, LIBERADO TULAWAN, LIGAYA LAUS, ERNESTO
VERZOSA, LEOPOLDO BERNALES, JAIME VISTA, ISAIAS AMURAO, BENITA M.
BARENG, and BRIGIDA SANCHEZ,petitioners,
vs.
HON. ANTONIO J. VILLEGAS substituted by HON. RAMON BAGATSING as CITY
MAYOR OF MANILA, HON. LADISLAO J. TOLENTINO, City Engineer of Manila,
their agents, employees, assistants and all persons acting under them; HON. BENJAMIN
GOZON, Administrator, Land Reform Authority substituted by HON CONRADO
ESTRELLA as Secretary of the Department of Agrarian Reforms and his agents,
employees, assistants and all persons acting under his orders, respondent.
1

G.R. No. L-24915 February 28, 1974
BENJAMIN RABUCO, et al., (the same co-petitioners in L-24661), petitioners,
vs.
HON. ANTONIO J. VILLEGAS substituted by HON. RAMON BAGATSING as CITY
MAYOR OF MANILA, et al., (the same co-respondents in L-24661), respondents.
G.R. No. L-24916 February 28, 1974
BENJAMIN RABUCO, et al. (the same co-petitioners in L-24661), petitioners-appellants,
vs.
HON. ANTONIO J. VILLEGAS substituted by HON. RAMON BAGATSING as CITY
MAYOR OF MANILA, et al., (the same co-respondents in L-24661), respondents-appellees.
Manuel D. Melotindos and Ricardo M. Guirnalda for petitioners.
Second Assistant City Fiscal Manuel T. Reyes for respondents.

TEEHANKEE, J .:p
The Court herein upholds the constitutionality of Republic Act 3120 on the strength of the
established doctrine that the subdivision of communal land of the State (although titled in the
name of the municipal corporation) and conveyance of the resulting subdivision lots by sale on
installment basis to bona fide occupants by Congressional authorization and disposition does not
constitute infringements of the due process clause or the eminent domain provisions of the
Constitution but operates simply as a manifestation of the legislature's right of control and power
to deal with State property.
The origin and background of the cases at bar which deal with the decisive issue of
constitutionality of Republic Act 3120 enacted on June 17, 1961, as raised by respondent mayor
of Manila in resisting petitioners' pleas that respondent mayor not only lacks the authority to
demolish their houses or eject them as tenants and bona fide occupants of a parcel of land in San
Andres, Malate
2
but is also expressly prohibited from doing so by section 2 of the Act, may be
summarized from the Court of Appeals'
3
certification of resolution of May 31, 1965 as follows:
Case L-24916 involves petitioners' appeal to the Court of Appeals
4
from the decision of the
Manila court of first instance dismissing their petition for injunction and mandamus to enjoin the
demolition of their houses and the ejectment from the public lots in question and to direct
respondent administrator of the Land Authority (now Secretary of Agrarian Reform) to
implement the provisions of Republic Act 3120 for the subdivision and sale on installment basis
of the subdivided lots to them as the tenants and bona fide occupants thereof, and instead
ordering their ejectment.
Case L-24915 involves petitioners' independent petition for injunction filed directly with the
Court of Appeals January 29, 1965
5
to forestall the demolition overnight of their houses
pursuant to the order of demolition set for January 30, 1965 at 8 a.m. issued by respondents city
officials pending the elevation of their appeal. The appellate court gave due course thereto and
issued the writ of preliminary injunction as prayed for.
The two cases were ordered "consolidated into one" since they were "unavoidably interlaced."
The appellate court, finding that the constitutionality of Republic Act 3120 was "the dominant
and inextricable issue in the appeal" over which it had no jurisdiction and that the trial court
incorrectly "sidetracked" the issue, thereafter certified the said cases to this Court, as follows:
The validity of Republic Act 3120 which was seasonably posed in issue in the
court below was sidetracked by the trial court, thus:
The constitutionality of Republic Act No. 3120 need not be passed
upon as the principal question in issue is whether the houses of the
petitioners are public nuisances, which the court resolved in the
affirmative. As a matter of fact even if the petitioners were already
the owners of the land on which their respected houses are erected,
the respondent city officials could cause the removal thereof as
they were constructed in violation of city ordinances and constitute
public nuisance.
It is significant to note, however, that what is sought by the respondent City
Mayor and City Engineer of Manila is not only the demolition of the petitioners'
houses in the premises in controversy, but their ejectment as well. Moreover,
Republic Act 3120 does intend not only the dismissal of the ejectment
proceedings against the petitioners from the land in controversy upon their
motion, but as well that any demolition order issued against them shall also have
to be dismissed. The law says:
Upon approval of this Act no ejectment proceedings against any
tenants or bona fide occupant shall be instituted and any
proceedings against any such tenant or bona fideoccupant shall be
dismissed upon motion of the defendant. Provided, That any
demolition order directed against any tenant or bona fide occupant
thereof, shall be dismissed. (Sec. 2, R. A. 3120).
Indeed, the petitioners-appellants, who contended in the court below that it was
not necessary to decide on the validity or constitutionality of the law, now
asseverate that 'Republic Act No. 3120 expressly prohibits ejectment and
demolition of petitioners' home.' The petitioners' argument in their appeal to this
Court runs as follows:
1. Petitioners-appellants are entitled to the remedies of injunction
and mandamus, being vested with lawful possession over Lot 21-
B, Block 610, granted by law, Republic Act No. 3120.
2. Civil Case No. 56092 has not been barred by any prior
judgment, as wrongly claimed by respondents-appellees.
3. Ejectment and demolition against petitioners-appellants are
unlawful and clearly prohibited by Republic Act No. 3120.
The defense of the respondents Mayor and City Engineer of Manila to arguments
2 and 3 is the invalidity of the said Republic Act 3120 for being in violation of the
Constitutional prohibition against the deprivation of property without due process
of law and without just compensation. So that even if argument 2 interposed by
the petitioners-appellants should be rejected, still they may claim a right, by virtue
of the aforesaid provisions of Republic Act 3120, to continue possession and
occupation of the premises and the lifting of the order of demolition issued
against them. The constitutionality of the said Republic Act 3120, therefore,
becomes the dominant and inextricable issue of the appeal.
Case L-24661 for the continuation and maintenance of the writ of preliminary injunction
previously issued by the Court of Appeals for preservation of the status quo was filed by
petitioners directly with this Court on June 21, 1965, pending transmittal of the records of Cases
L-24915 and L-24916 to this Court as certified by the Court of Appeals which declared itself
without jurisdiction over the principal and decisive issue of constitutionality of Republic Act
3120.
The Court gave due course thereto and on August 17, 1965 issued upon a P1,000 bond the
writ of preliminary injunction as prayed for enjoining respondents "from demolishing and/or
continuing to demolish the houses of herein petitioners situated in Lot No. 21-B, Block No. 610
of the Cadastral Survey of the City of Manila, or from performing any act constituting an
interference in or disturbance of their present possession."
The records of two cases certified by the appellate court, L-24915 and L-24916, were eventually
forwarded to this Court which per its resolution of August 24, 1965 ordered that they be
docketed and be considered together with case L-24661.
In the early morning of April 19, 1970, a large fire of undetermined origin gutted the Malate area
including the lot on which petitioners had built their homes and dwellings. Respondents city
officials then took over the lot and kept petitioners from reconstructing or repairing their burned
dwellings. At petitioners' instance, the Court issued on June 17, 1970 a temporary restraining
order enjoining respondents city officials "from performing any act constituting an interference
in or disturbance of herein petitioners' possession of Lot No. 21-B, Block No. 610, of the
Cadastral Survey of the City of Manila" as safeguarded them under the Court's subsisting
preliminary injunction of August 17, 1965.
The "dominant and inextricable issue" at bar, as correctly perceived by the appellate court is the
constitutionality of Republic Act 3120 whereby Congress converted the lot in question together
with another lot in San Andres, Malate "which are reserved as communal property" into
"disposable or alienable lands of the State to be placed under the administration and disposal of
the Land Tenure Administration" for subdivision into small lots not exceeding 120 square meters
per lot for sale on installment basis to the tenants or bona fide occupants thereof
6
and expressly
prohibited ejectment and demolition of petitioners' homes under section 2 of the Act as quoted in
the appellate court's certification resolution, supra.
The incidental issue seized upon by the trial court as a main issue for "sidetracking" the decisive
issue of constitutionality, to wit, that petitioners' houses as they stood at the time of its judgment
in 1965 "were constructed in violation of city ordinances and constituted public nuisances"
whose removal could be ordered "even if petitioners were already the owners of the land on
which their respective houses are erected" has become moot with the burning down of the
petitioners' houses in the fire of April 19, 1970.
If the Act is invalid and unconstitutional for constituting deprivation of property without due
process of law and without just compensation as contended by respondents city officials, then the
trial court's refusal to enjoin ejectment and demolition of petitioners' houses may be upheld.
Otherwise, petitioners' right under the Act to continue possession and occupation of the premises
and to the lifting and dismissal of the order of demolition issued against them must be enforced
and the trial court's judgment must be set aside.
Respondents city officials' contention that the Act must be stricken down as unconstitutional for
depriving the city of Manila of the lots in question and providing for their sale in subdivided
small lots to bona fide occupants or tenants without payment of just compensation is untenable
and without basis, since the lots in question are manifestly owned by the city in
its public and governmental capacity and are therefore public property over which Congress had
absolute control as distinguished from patrimonial property owned by it in
its private or proprietarycapacity of which it could not be deprived without due process and
without just compensation.
7

Here, Republic Act 3120 expressly declared that the properties were "reserved as communal
property" and ordered their conversion into "disposable and alienable lands of the State" for sale
in small lots to the bona fide occupants thereof. It is established doctrine that the act of
classifying State property calls for the exercise of wide discretionary legislative power which
will not be interfered with by the courts.
The case of Salas vs. Jarencio
8
wherein the Court upheld the constitutionality of Republic Act
4118 whereby Congress in identical terms as in Republic Act 3120 likewise converted another
city lot (Lot 1-B-2-B of Block 557 of the cadastral survey of Manila also in Malate) which was
reserved as communal property into disposable land of the State for resale in small lots by the
Land Tenure, Administration to the bona fide occupants is controlling in the case at bar.
The Court therein reaffirmed the established general rule that "regardless of the source or
classification of land in the possession of a municipality, excepting those acquired with its own
funds in its private or corporate capacity, such property is held in trust for the State for the
benefit of its inhabitants, whether it be for governmental or proprietary purposes. It holds such
lands subject to the paramount power of the legislature to dispose of the same, for after all it
owes its creation to it as an agent for the performance of a part of its public work, the
municipality being but a subdivision or instrumentality thereof for purposes of local
administration. Accordingly, the legal situation is the same as if the State itself holds the
property and puts it to a different use"
9
and stressed that "the property, as has been previously
shown, was not acquired by the City of Manila with its own funds in its private or proprietary
capacity. That it has in its name a registered title is not questioned, but this title should be
deemed to be held in trust for the State as the land covered thereby was part of the territory of the
City of Manila granted by the sovereign upon its creation."
10

There as here, the Court holds that the Acts in question (Republic Acts 4118 in Salas and
Republic Act 3120 in the case at bar) were intended to implement the social justice policy of the
Constitution and the government program of land for the landless and that they
were not "intended to expropriate the property involved but merely to confirm its character
as communal land of the State and to make it available for disposition by the National
Government: ... The subdivision of the land and conveyane of the resulting subdivision lots to
the occupants by Congressional authorization does not operate as an exercise of the power of
eminent domain without just compensation in violation of Section 1, subsection (2), Article III of
the Constitution,
11
but simply as a manifestationof its right and power to deal with state
property."
12

Since the challenge of respondents city officials against the constitutionality of Republic Act
3120 must fail as the City was not deprived thereby of anything it owns by acquisition with its
private or corporate funds either under the due process clause or under the eminent domain
provisions of the Constitution, the provisions of said Act must be enforced and petitioners are
entitled to the injunction as prayed for implementing the Act's prohibition against their ejectment
and demolition of their houses.
WHEREFORE, the appealed decision of the lower court (in Case No. L-24916) is hereby set
aside, and the preliminary injunction heretofore issued on August 17, 1965 is hereby made
permanent. The respondent Secretary of Agrarian Reform as successor agency of the Land
Tenure Administration may now proceed with the due implementation of Republic Act 3120 in
accordance with its terms and provisions. No costs.
Makalintal, C.J., Zaldivar, Castro, Barredo, Makasiar, Antonio, Esguerra, Muoz Palma and
Aquino, JJ., concur.
Fernandez, J., took no part.
G.R. No. 97764 August 10, 1992
LEVY D. MACASIANO, Brigadier General/PNP Superintendent, Metropolitan Traffic
Command, petitioner,
vs.
HONORABLE ROBERTO C. DIOKNO, Presiding Judge, Branch 62, Regional Trial
Court of Makati, Metro Manila, MUNICIPALITY OF PARAAQUE, METRO MANILA,
PALANYAG KILUSANG BAYAN FOR SERVICE,respondents.
Ceferino, Padua Law Office for Palanyag Kilusang Bayan for service.
Manuel de Guia for Municipality of Paraaque.

MEDIALDEA, J .:
This is a petition for certiorari under Rule 65 of the Rules of Court seeking the annulment of the
decision of the Regional Trial Court of Makati, Branch 62, which granted the writ of preliminary
injunction applied for by respondents Municipality of Paraaque and Palanyag Kilusang Bayan
for Service (Palanyag for brevity) against petitioner herein.
The antecedent facts are as follows:
On June 13, 1990, the respondent municipality passed Ordinance No. 86, Series of 1990 which
authorized the closure of J. Gabriel, G.G. Cruz, Bayanihan, Lt. Garcia Extension and Opena
Streets located at Baclaran, Paraaque, Metro Manila and the establishment of a flea market
thereon. The said ordinance was approved by the municipal council pursuant to MMC Ordinance
No. 2, Series of 1979, authorizing and regulating the use of certain city and/or municipal streets,
roads and open spaces within Metropolitan Manila as sites for flea market and/or vending areas,
under certain terms and conditions.
On July 20, 1990, the Metropolitan Manila Authority approved Ordinance No. 86, s. 1990 of the
municipal council of respondent municipality subject to the following conditions:
1. That the aforenamed streets are not used for vehicular traffic, and that the
majority of the residents do not oppose the establishment of the flea
market/vending areas thereon;
2. That the 2-meter middle road to be used as flea market/vending area shall be
marked distinctly, and that the 2 meters on both sides of the road shall be used by
pedestrians;
3. That the time during which the vending area is to be used shall be clearly
designated;
4. That the use of the vending areas shall be temporary and shall be closed once
the reclaimed areas are developed and donated by the Public Estate Authority.
On June 20, 1990, the municipal council of Paraaque issued a resolution authorizing Paraaque
Mayor Walfrido N. Ferrer to enter into contract with any service cooperative for the
establishment, operation, maintenance and management of flea markets and/or vending areas.
On August 8, 1990, respondent municipality and respondent Palanyag, a service cooperative,
entered into an agreement whereby the latter shall operate, maintain and manage the flea market
in the aforementioned streets with the obligation to remit dues to the treasury of the municipal
government of Paraaque. Consequently, market stalls were put up by respondent Palanyag on
the said streets.
On September 13, 1990, petitioner Brig. Gen. Macasiano, PNP Superintendent of the
Metropolitan Traffic Command, ordered the destruction and confiscation of stalls along G.G.
Cruz and J. Gabriel St. in Baclaran. These stalls were later returned to respondent Palanyag.
On October 16, 1990, petitioner Brig. General Macasiano wrote a letter to respondent Palanyag
giving the latter ten (10) days to discontinue the flea market; otherwise, the market stalls shall be
dismantled.
Hence, on October 23, 1990, respondents municipality and Palanyag filed with the trial court a
joint petition for prohibition and mandamus with damages and prayer for preliminary injunction,
to which the petitioner filed his memorandum/opposition to the issuance of the writ of
preliminary injunction.
On October 24, 1990, the trial court issued a temporary restraining order to enjoin petitioner
from enforcing his letter-order of October 16, 1990 pending the hearing on the motion for writ of
preliminary injunction.
On December 17, 1990, the trial court issued an order upholding the validity of Ordinance No.
86 s. 1990 of the Municipality' of Paraaque and enjoining petitioner Brig. Gen. Macasiano from
enforcing his letter-order against respondent Palanyag.
Hence, this petition was filed by the petitioner thru the Office of the Solicitor General alleging
grave abuse of discretion tantamount to lack or excess of jurisdiction on the part of the trial judge
in issuing the assailed order.
The sole issue to be resolved in this case is whether or not an ordinance or resolution issued by
the municipal council of Paraaque authorizing the lease and use of public streets or
thoroughfares as sites for flea markets is valid.
The Solicitor General, in behalf of petitioner, contends that municipal roads are used for public
service and are therefore public properties; that as such, they cannot be subject to private
appropriation or private contract by any person, even by the respondent Municipality of
Paraaque. Petitioner submits that a property already dedicated to public use cannot be used for
another public purpose and that absent a clear showing that the Municipality of Paraaque has
been granted by the legislature specific authority to convert a property already in public use to
another public use, respondent municipality is, therefore, bereft of any authority to close
municipal roads for the establishment of a flea market. Petitioner also submits that assuming that
the respondent municipality is authorized to close streets, it failed to comply with the conditions
set forth by the Metropolitan Manila Authority for the approval of the ordinance providing for
the establishment of flea markets on public streets. Lastly, petitioner contends that by allowing
the municipal streets to be used by market vendors the municipal council of respondent
municipality violated its duty under the Local Government Code to promote the general welfare
of the residents of the municipality.
In upholding the legality of the disputed ordinance, the trial court ruled:
. . . that Chanter II Section 10 of the Local Government Code is a statutory grant
of power given to local government units, the Municipality of Paraaque as such,
is empowered under that law to close its roads, streets or alley subject to
limitations stated therein (i.e., that it is in accordance with existing laws and the
provisions of this code).
xxx xxx xxx
The actuation of the respondent Brig. Gen. Levi Macasiano, though apparently
within its power is in fact an encroachment of power legally vested to the
municipality, precisely because when the municipality enacted the ordinance in
question the authority of the respondent as Police Superintendent ceases to be
operative on the ground that the streets covered by the ordinance ceases to be a
public thoroughfare. (pp. 33-34, Rollo)
We find the petition meritorious. In resolving the question of whether the disputed municipal
ordinance authorizing the flea market on the public streets is valid, it is necessary to examine the
laws in force during the time the said ordinance was enacted, namely, Batas Pambansa Blg. 337,
otherwise known as Local Government Code, in connection with established principles
embodied in the Civil Code an property and settled jurisprudence on the matter.
The property of provinces, cities and municipalities is divided into property for public use and
patrimonial property (Art. 423, Civil Code). As to what consists of property for public use,
Article 424 of Civil Code states:
Art. 424. Property for public use, in the provinces, cities and municipalities,
consists of the provincial roads, city streets, the squares, fountains, public waters,
promenades, and public works for public service paid for by said provinces, cities
or municipalities.
All other property possessed by any of them is patrimonial and shall be governed
by this Code, without prejudice to the provisions of special laws.
Based on the foregoing, J. Gabriel G.G. Cruz, Bayanihan, Lt. Garcia Extension and Opena
streets are local roads used for public service and are therefore considered public properties of
respondent municipality. Properties of the local government which are devoted to public service
are deemed public and are under the absolute control of Congress (Province of Zamboanga del
Norte v. City of Zamboanga, L-24440, March 28, 1968, 22 SCRA 1334). Hence, local
governments have no authority whatsoever to control or regulate the use of public properties
unless specific authority is vested upon them by Congress. One such example of this authority
given by Congress to the local governments is the power to close roads as provided in Section
10, Chapter II of the Local Government Code, which states:
Sec. 10. Closure of roads. A local government unit may likewise, through its
head acting pursuant to a resolution of its sangguniang and in accordance with
existing law and the provisions of this Code, close any barangay, municipal, city
or provincial road, street, alley, park or square. No such way or place or any part
of thereof shall be close without indemnifying any person prejudiced thereby. A
property thus withdrawn from public use may be used or conveyed for any
purpose for which other real property belonging to the local unit concerned might
be lawfully used or conveyed. (Emphasis ours).
However, the aforestated legal provision which gives authority to local government units to close
roads and other similar public places should be read and interpreted in accordance with basic
principles already established by law. These basic principles have the effect of limiting such
authority of the province, city or municipality to close a public street or thoroughfare. Article
424 of the Civil Code lays down the basic principle that properties of public dominion devoted to
public use and made available to the public in general are outside the commerce of man and
cannot be disposed of or leased by the local government unit to private persons. Aside from the
requirement of due process which should be complied with before closing a road, street or park,
the closure should be for the sole purpose of withdrawing the road or other public property from
public use when circumstances show that such property is no longer intended or necessary for
public use or public service. When it is already withdrawn from public use, the property then
becomes patrimonial property of the local government unit concerned (Article 422, Civil Code;
Cebu Oxygen, etc. et al. v. Bercilles, et al., G.R. No. L-40474, August 29, 1975, 66 SCRA 481).
It is only then that the respondent municipality can "use or convey them for any purpose for
which other real property belonging to the local unit concerned might be lawfully used or
conveyed" in accordance with the last sentence of Section 10, Chapter II of Blg. 337, known as
Local Government Code. In one case, the City Council of Cebu, through a resolution, declared
the terminal road of M. Borces Street, Mabolo, Cebu City as an abandoned road, the same not
being included in the City Development Plan. Thereafter, the City Council passes another
resolution authorizing the sale of the said abandoned road through public bidding. We held
therein that the City of Cebu is empowered to close a city street and to vacate or withdraw the
same from public use. Such withdrawn portion becomes patrimonial property which can be the
object of an ordinary contract (Cebu Oxygen and Acetylene Co., Inc. v. Bercilles, et al., G.R. No.
L-40474, August 29, 1975, 66 SCRA 481). However, those roads and streets which are available
to the public in general and ordinarily used for vehicular traffic are still considered public
property devoted to public use. In such case, the local government has no power to use it for
another purpose or to dispose of or lease it to private persons. This limitation on the authority of
the local government over public properties has been discussed and settled by this Court en
banc in "Francisco V. Dacanay, petitioner v. Mayor Macaria Asistio, Jr., et al., respondents, G.R.
No. 93654, May 6, 1992." This Court ruled:
There is no doubt that the disputed areas from which the private respondents'
market stalls are sought to be evicted are public streets, as found by the trial court
in Civil Case No. C-12921. A public street is property for public use hence
outside the commerce of man (Arts. 420, 424, Civil Code). Being outside the
commerce of man, it may not be the subject of lease or others contract
(Villanueva, et al. v. Castaeda and Macalino, 15 SCRA 142 citing the
Municipality of Cavite v. Rojas, 30 SCRA 602; Espiritu v. Municipal Council of
Pozorrubio, 102 Phil. 869; And Muyot v. De la Fuente, 48 O.G. 4860).
As the stallholders pay fees to the City Government for the right to occupy
portions of the public street, the City Government, contrary to law, has been
leasing portions of the streets to them. Such leases or licenses are null and void
for being contrary to law. The right of the public to use the city streets may not be
bargained away through contract. The interests of a few should not prevail over
the good of the greater number in the community whose health, peace, safety,
good order and general welfare, the respondent city officials are under legal
obligation to protect.
The Executive Order issued by acting Mayor Robles authorizing the use of
Heroes del '96 Street as a vending area for stallholders who were granted licenses
by the city government contravenes the general law that reserves city streets and
roads for public use. Mayor Robles' Executive Order may not infringe upon the
vested right of the public to use city streets for the purpose they were intended to
serve: i.e., as arteries of travel for vehicles and pedestrians.
Even assuming, in gratia argumenti, that respondent municipality has the authority to pass the
disputed ordinance, the same cannot be validly implemented because it cannot be considered
approved by the Metropolitan Manila Authority due to non-compliance by respondent
municipality of the conditions imposed by the former for the approval of the ordinance, to wit:
1. That the aforenamed streets are not used for vehicular traffic, and that the
majority of the residents do(es) not oppose the establishment of the flea
market/vending areas thereon;
2. That the 2-meter middle road to be used as flea market/vending area shall be
marked distinctly, and that the 2 meters on both sides of the road shall be used by
pedestrians;
3. That the time during which the vending area is to be used shall be clearly
designated;
4. That the use of the vending areas shall be temporary and shall be closed once
the reclaimed areas are developed and donated by the Public Estate Authority. (p.
38, Rollo)
Respondent municipality has not shown any iota of proof that it has complied with the foregoing
conditions precedent to the approval of the ordinance. The allegations of respondent municipality
that the closed streets were not used for vehicular traffic and that the majority of the residents do
not oppose the establishment of a flea market on said streets are unsupported by any evidence
that will show that this first condition has been met. Likewise, the designation by respondents of
a time schedule during which the flea market shall operate is absent.
Further, it is of public notice that the streets along Baclaran area are congested with people,
houses and traffic brought about by the proliferation of vendors occupying the streets. To license
and allow the establishment of a flea market along J. Gabriel, G.G. Cruz, Bayanihan, Lt. Garcia
Extension and Opena streets in Baclaran would not help in solving the problem of congestion.
We take note of the other observations of the Solicitor General when he said:
. . . There have been many instances of emergencies and fires where ambulances
and fire engines, instead of using the roads for a more direct access to the fire
area, have to maneuver and look for other streets which are not occupied by stalls
and vendors thereby losing valuable time which could, otherwise, have been spent
in saving properties and lives.
Along G.G. Cruz Street is a hospital, the St. Rita Hospital. However, its
ambulances and the people rushing their patients to the hospital cannot pass
through G.G. Cruz because of the stalls and the vendors. One can only imagine
the tragedy of losing a life just because of a few seconds delay brought about by
the inaccessibility of the streets leading to the hospital.
The children, too, suffer. In view of the occupancy of the roads by stalls and
vendors, normal transportation flow is disrupted and school children have to get
off at a distance still far from their schools and walk, rain or shine.
Indeed one can only imagine the garbage and litter left by vendors on the streets
at the end of the day. Needless to say, these cause further pollution, sickness and
deterioration of health of the residents therein. (pp. 21-22, Rollo)
Respondents do not refute the truth of the foregoing findings and observations of petitioners.
Instead, respondents want this Court to focus its attention solely on the argument that the use of
public spaces for the establishment of a flea market is well within the powers granted by law to a
local government which should not be interfered with by the courts.
Verily, the powers of a local government unit are not absolute. They are subject to limitations
laid down by toe Constitution and the laws such as our Civil Code. Moreover, the exercise of
such powers should be subservient to paramount considerations of health and well-being of the
members of the community. Every local government unit has the sworn obligation to enact
measures that will enhance the public health, safety and convenience, maintain peace and order,
and promote the general prosperity of the inhabitants of the local units. Based on this objective,
the local government should refrain from acting towards that which might prejudice or adversely
affect the general welfare.
As what we have said in the Dacanay case, the general public have a legal right to demand the
demolition of the illegally constructed stalls in public roads and streets and the officials of
respondent municipality have the corresponding duty arising from public office to clear the city
streets and restore them to their specific public purpose.
The instant case as well as the Dacanay case, involves an ordinance which is void and illegal for
lack of basis and authority in laws applicable during its time. However, at this point, We find it
worthy to note that Batas Pambansa Blg. 337, known as Local Government Lode, has already
been repealed by Republic Act No. 7160 known as Local Government Code of 1991 which took
effect on January 1, 1992. Section 5(d) of the new Code provides that rights and obligations
existing on the date of effectivity of the new Code and arising out of contracts or any other
source of prestation involving a local government unit shall be governed by the original terms
and conditions of the said contracts or the law in force at the time such rights were vested.
ACCORDINGLY, the petition is GRANTED and the decision of the respondent Regional Trial
Court dated December 17, 1990 which granted the writ of preliminary injunction enjoining
petitioner as PNP Superintendent, Metropolitan Traffic Command from enforcing the demolition
of market stalls along J. Gabriel, G.G. Cruz, Bayanihan, Lt. Garcia Extension and Opena streets
is hereby RESERVED and SET ASIDE.
SO ORDERED.
[G.R. No. 100709. November 14, 1997]
REPUBLIC OF THE PHILIPPINES, represented by the DIRECTOR OF
LANDS, petitioner, vs. COURT OF APPEALS, JOSEFINA L. MORATO,
SPOUSES NENITA CO and ANTONIO QUILATAN AND THE REGISTER OF
DEEDS OF QUEZON PROVINCE, respondents.
D E C I S I O N
PANGANIBAN, J .:
Will the lease and/or mortgage of a portion of a realty acquired through free patent
constitute sufficient ground for the nullification of such land grant? Should such property revert
to the State once it is invaded by the sea and thus becomes foreshore land?
The Case
These are the two questions raised in the petition before us assailing the Court of
Appeals
[1]
Decision in CA-G.R. CV No. 02667 promulgated on June 13, 1991 which answered
the said questions in the negative.
[2]
Respondent Courts Decision dismissed
[3]
petitioners appeal
and affirmed in toto the decision of the Regional Trial Court
[4]
of Calauag, Quezon, dated
December 28, 1983 in Civil Case No. C-608. In turn, the Regional Trial Courts decision
dismissed petitioners complaint for cancellation of the Torrens Certificate of Title of
Respondent Morato and for reversion of the parcel of land subject thereof to the public domain.
The Facts
The petition of the solicitor general, representing the Republic of the Philippines, recites the
following facts:
[5]

Sometime in December, 1972, respondent Morato filed a Free Patent Application No. III-3-
8186-B on a parcel of land with an area of 1,265 square meters situated at Pinagtalleran,
Calauag, Quezon. On January 16, 1974, the patent was approved and the Register of Deeds of
Quezon at Lucena City issued on February 4, 1974 Original Certificate of Title No. P-
17789. Both the free patent and the title specifically mandate that the land shall not
be alienated nor encumbered within five (5) years from the date of the issuance of the patent
(Sections 118 and 124 of CA No. 141, as amended).
Subsequently, the District Land Officer in Lucena City, acting upon reports that respondent
Morato had encumbered the land in violation of the condition of the patent, conducted an
investigation. Thereafter, it was established that the subject land is a portion of the Calauag Bay,
five (5) to six (6) feet deep under water during high tide and two (2) feet deep at low tide, and
not suitable to vegetation. Moreover, on October 24, 1974, a portion of the land was mortgaged
by respondent Morato to respondents Nenita Co and Antonio Quilatan for P10,000.00 (pp. 2, 25,
Folder of Exhibits). The spouses Quilatan constructed a house on the land. Another portion of
the land was leased to Perfecto Advincula on February 2, 1976 at P100.00 a month, where a
warehouse was constructed.
On November 5, 1978, petitioner filed an amended complaint against respondents Morato,
spouses Nenita Co and Antonio Quilatan, and the Register of Deeds of Quezon for the
cancellation of title and reversion of a parcel of land to the public domain, subject of a free
patent in favor of respondent Morato, on the grounds that the land is a foreshore land and was
mortgaged and leased within the five-year prohibitory period (p. 46, Records).
After trial, the lower court, on December 28, 1983, rendered a decision dismissing petitioners
complaint. In finding for private respondents, the lower court ruled that there was no violation of
the 5-year period ban against alienating or encumbering the land, because the land was merely
leased and not alienated. It also found that the mortgage to Nenita Co and Antonio Quilatan
covered only the improvement and not the land itself.
On appeal, the Court of Appeals affirmed the decision of the trial court. Thereafter, the
Republic of the Philippines filed the present petition.
[6]

The Issues
Petitioner alleges that the following errors were committed by Respondent Court:
[7]

I
Respondent Court erred in holding that the patent granted and certificate of title issued to
Respondent Morato cannot be cancelled and annulled since the certificate of title becomes
indefeasible after one year from the issuance of the title.
II
Respondent Court erred in holding that the questioned land is part of a disposable public land
and not a foreshore land.
The Courts Ruling
The petition is meritorious.
First Issue: I ndefeasibility of a Free Patent Title
In resolving the first issue against petitioner, Respondent Court held:
[8]

x x x. As ruled in Heirs of Gregorio Tengco vs. Heirs of Jose Alivalas, 168 SCRA 198. x
x. The rule is well-settled that an original certificate of title issued on the strength of a
homestead patent partakes of the nature of a certificate of title issued in a judicial proceeding, as
long as the land disposed of is really part of the disposable land of the public domain, and
becomes indefeasible and incontrovertible upon the expiration of one year from the date of
promulgation of the order of the Director of Lands for the issuance of the patent. (Republic
v. Heirs of Carle, 105 Phil. 1227 (1959); Ingaran v. Ramelo, 107 Phil. 498 (1960); Lopez
v. Padilla, (G.R. No. L-27559, May 18, 1972, 45 SCRA 44). A homestead patent, one registered
under the Land Registration Act, becomes as indefeasible as a Torrens Title. (Pamintuan v. San
Agustin, 43 Phil. 558 (1982); El Hogar Filipino v. Olviga, 60 Phil. 17 (1934); Duran v. Oliva,
113 Phil. 144 (1961); Pajomayo v. Manipon, G.R. No. L-33676, June 30, 1971, 39 SCRA 676).
(p. 203).
Again, in Lopez vs. Court of Appeals, 169 SCRA 271, citing Iglesia ni Cristo v. Hon. Judge, CFI
of Nueva Ecija, Branch I, (123 SCRA 516 (1983) and Pajomayo, et al. v. Manipon, et al. (39
SCRA 676 (1971) held that once a homestead patent granted in accordance with the Public Land
Act is registered pursuant to Section 122 of Act 496, the certificate of title issued in virtue of said
patent has the force and effect of a Torrens Title issued under the Land Registration Act.
Indefeasibility of the title, however, may not bar the State, thru the Solicitor General, from filing
an action for reversion, as ruled in Heirs of Gregorio Tengo v. Heirs of Jose Aliwalas, (supra), as
follows:
But, as correctly pointed out by the respondent Court of Appeals, Dr. Aliwalas title to the
property having become incontrovertible, such may no longer be collaterally attacked. If indeed
there had been any fraud or misrepresentation in obtaining the title, an action for reversion
instituted by the Solicitor General would be the proper remedy (Sec. 101, C.A. No. 141; Director
of Lands v. Jugado, G.R. No. L-14702, May 21, 1961, 2 SCRA 32; Lopez v. Padilla, supra). (p.
204).
Petitioner contends that the grant of Free Patent (IV-3) 275 and the subsequent issuance of
Original Certificate of Title No. P-17789 to Respondent Josefina L. Morato were subject to the
conditions provided for in Commonwealth Act (CA) No. 141. It alleges that on October 24,
1974, or nine (9) months and eight (8) days after the grant of the patent, Respondent Morato, in
violation of the terms of the patent, mortgaged a portion of the land to Respondent Nenita Co,
who thereafter constructed a house thereon. Likewise, on February 2, 1976 and within the five-
year prohibitory period, Respondent Morato leased a portion of the land to Perfecto Advincula
at a monthly rent of P100.00 who, shortly thereafter, constructed a house of concrete materials
on the subject land.
[9]
Further, petitioner argues that the defense of indefeasibility of title is
inaccurate. The original certificate of title issued to Respondent Morato contains the seeds of
its own cancellation: such certificate specifically states on its face that it is subject to the
provisions of Sections 118, 119, 121, 122, 124 of CA No. 141, as amended.
[10]

Respondent Morato counters by stating that although a portion of the land was previously
leased, it resulted from the fact that Perfecto Advincula built a warehouse in the subject land
without [her] prior consent. The mortgage executed over the improvement cannot be
considered a violation of the said grant since it can never affect the ownership.
[11]
She states
further:
x x x. the appeal of the petitioner was dismissed not because of the principle of indefeasibility
of title but mainly due to failure of the latter to support and prove the alleged violations of
respondent Morato. The records of this case will readily show that although petitioner was able
to establish that Morato committed some acts during the prohibitory period of 5 years, a perusal
thereof will also show that what petitioner was able to prove never constituted a violation of the
grant.
[12]

Respondent-Spouses Quilatan, on the other hand, state that the mortgage contract they
entered into with Respondent Morato can never be considered as [an] alienation inasmuch as
the ownership over the property remains with the owner.
[13]
Besides, it is the director of lands
and not the Republic of the Philippines who is the real party in interest in this case, contrary to
the provision of the Public Land Act which states that actions for reversion should be instituted
by the solicitor general in the name of Republic of the Philippines.
[14]

We find for petitioner.
Quoted below are relevant sections of Commonwealth Act No. 141, otherwise known as the
Public Land Act:
Sec. 118. Except in favor of the Government or any of its branches, units or institutions, or
legally constituted banking corporations, lands acquired under free patent or homestead
provisions shall not be subject to encumbrance or alienation from the date of the approval of the
application and for a term of five years from and after the date of issuance of the patent or
grant nor shall they become liable to the satisfaction of any debt contracted prior to the
expiration of said period; but the improvements or crops on the land may be mortgaged or
pledged to qualified persons, associations, or corporations.
No alienation, transfer, or conveyance of any homestead after five years and before twenty-five
years after issuance of title shall be valid without the approval of the Secretary of Agriculture
and Natural Resources, which approval shall not be denied except on constitutional and legal
grounds. (As amended by Com. Act No. 456, approved June 8, 1939.)
x x x x x x x x x
Sec. 121. Except with the consent of the grantee and the approval of the Secretary of
Agriculture and Natural Resources, and solely for educational, religious, or charitable purposes
or for a right of way, no corporation, association, or partnership may acquire or have any right,
title, interest, or property right whatsoever to any land granted under the free patent, homestead,
or individual sale provisions of this Act or to any permanent improvement on such land. (As
amended by Com. Act No. 615, approved May 5, 1941)
Sec. 122. No land originally acquired in any manner under the provisions of this Act, nor any
permanent improvement on such land, shall be encumbered, alienated or transferred, except to
persons, corporations, association, or partnerships who may acquire lands of the public domain
under this Act or to corporations organized in the Philippines authorized therefore by their
charters.
Except in cases of hereditary successions, no land or any portion thereof originally acquired
under the free patent, homestead, or individual sale provisions of this Act, or any permanent
improvement on such land, shall be transferred or assigned to any individual, nor shall such land
or any permanent improvement thereon be leased to such individual, when the area of said land,
added to that of his own, shall exceed one hundred and forty-four hectares. Any transfer,
assignment, or lease made in violation hereto shall be null and void. (As amended by Com. Act
No. 615, Id.)
x x x x x x x x x
Sec. 124. Any acquisition, conveyance, alienation, transfer, or other contract made or executed
in violation of any of the provisions of sections one hundred and eighteen, one hundred and
twenty, one hundred and twenty-one, one hundred and twenty-two, and one hundred and twenty-
three of this Act shall be unlawful and null and void from its execution and shall produce the
effect of annulling and cancelling the grant, title, patent, or permit originally issued, recognized
or confirmed, actually or presumptively, and cause the reversion of the property and its
improvements to the State. (Underscoring supplied.)
The foregoing legal provisions clearly proscribe the encumbrance of a parcel of land
acquired under a free patent or homestead within five years from the grant of such patent.
Furthermore, such encumbrance results in the cancellation of the grant and the reversion of the
land to the public domain. Encumbrance has been defined as [a]nything that impairs the use or
transfer of property; anything which constitutes a burden on the title; a burden or charge upon
property; a claim or lien upon property. It may be a legal claim on an estate for the discharge
of which the estate is liable; an embarrassment of the estate or property so that it cannot be
disposed of without being subject to it; an estate, interest, or right in lands, diminishing their
value to the general owner; a liability resting upon an estate.
[15]
Do the contracts of lease and
mortgage executed within five (5) years from the issuance of the patent constitute an
encumbrance and violate the terms and conditions of such patent? Respondent Court answered
in the negative:
[16]

From the evidence adduced by both parties, it has been proved that the area of the portion of the
land, subject matter of the lease contract (Exh. B) executed by and between Perfecto Advincula
and Josefina L. Morato is only 10 x 12 square meters, whereas the total area of the land granted
to Morato is 1,265 square meters. It is clear from this that the portion of the land leased by
Advincula does not significantly affect Moratos ownership and possession. Above all, the
circumstances under which the lease was executed do not reflect a voluntary and blatant intent to
violate the conditions provided for in the patent issued in her favor. On the contrary, Morato was
compelled to enter into that contract of lease out of sympathy and the goodness of her heart to
accommodate a fellow man. x x x
It is indisputable, however, that Respondent Morato cannot fully use or enjoy the land
during the duration of the lease contract. This restriction on the enjoyment of her property
sufficiently meets the definition of an encumbrance under Section 118 of the Public Land Act,
because such contract impairs the use of the property by the grantee. In a contract of lease
which is consensual, bilateral, onerous and commutative, the owner temporarily grants the use of
his or her property to another who undertakes to pay rent therefor.
[17]
During the term of the
lease, the grantee of the patent cannot enjoy the beneficial use of the land leased. As already
observed, the Public Land Act does not permit a grantee of a free patent from encumbering any
portion of such land. Such encumbrance is a ground for the nullification of the award.
Moratos resort to equity, i.e. that the lease was executed allegedly out of the goodness of
her heart without any intention of violating the law, cannot help her. Equity, which has been
aptly described as justice outside legality, is applied only in the absence of, and never against,
statutory law or judicial rules of procedure. Positive rules prevail over all abstract arguments
based on equity contra legem.
[18]

Respondents failed to justify their position that the mortgage should not be considered an
encumbrance. Indeed, we do not find any support for such contention. The questioned mortgage
falls squarely within the term encumbrance proscribed by Section 118 of the Public Land
Act.
[19]
Verily, a mortgage constitutes a legal limitation on the estate, and the foreclosure of such
mortgage would necessarily result in the auction of the property.
[20]

Even if only part of the property has been sold or alienated within the prohibited period of
five years from the issuance of the patent, such alienation is a sufficient cause for the reversion
of the whole estate to the State. As a condition for the grant of a free patent to an applicant, the
law requires that the land should not be encumbered, sold or alienated within five years from the
issuance of the patent. The sale or the alienation of part of the homestead violates that
condition.
[21]

The prohibition against the encumbrance -- lease and mortgage included -- of a homestead
which, by analogy applies to a free patent, is mandated by the rationale for the grant, viz.:
[22]

It is well-known that the homestead laws were designed to distribute disposable agricultural lots
of the State to land-destitute citizens for their home and cultivation. Pursuant to such benevolent
intention the State prohibits the sale or encumbrance of the homestead (Section 116) within five
years after the grant of the patent. After that five-year period the law impliedly permits
alienation of the homestead; but in line with the primordial purpose to favor the homesteader and
his family the statute provides that such alienation or conveyance (Section 117) shall be subject
to the right of repurchase by the homesteader, his widow or heirs within five years. This section
117 is undoubtedly a complement of section 116. It aims to preserve and keep in the family of
the homesteader that portion of public land which the State had gratuitously given to him. It
would, therefore, be in keeping with this fundamental idea to hold, as we hold, that the right to
repurchase exists not only when the original homesteader makes the conveyance, but also when
it is made by his widow or heirs. This construction is clearly deducible from the terms of the
statute.
By express provision of Section 118 of Commonwealth Act 141 and in conformity with the
policy of the law, any transfer or alienation of a free patent or homestead within five years from
the issuance of the patent is proscribed. Such transfer nullifies said alienation and constitutes a
cause for the reversion of the property to the State.
The prohibition against any alienation or encumbrance of the land grant is a proviso attached
to the approval of every application.
[23]
Prior to the fulfillment of the requirements of law,
Respondent Morato had only an inchoate right to the property; such property remained part of
the public domain and, therefore, not susceptible to alienation or encumbrance. Conversely,
when a homesteader has complied with all the terms and conditions which entitled him to a
patent for [a] particular tract of public land, he acquires a vested interest therein and has to be
regarded an equitable owner thereof.
[24]
However, for Respondent Moratos title of ownership
over the patented land to be perfected, she should have complied with the requirements of the
law, one of which was to keep the property for herself and her family within the prescribed
period of five (5) years. Prior to the fulfillment of all requirements of the law, Respondent
Moratos title over the property was incomplete. Accordingly, if the requirements are not
complied with, the State as the grantor could petition for the annulment of the patent and the
cancellation of the title.
Respondent Morato cannot use the doctrine of the indefeasibility of her Torrens title to bar
the state from questioning its transfer or encumbrance. The certificate of title issued to her
clearly stipulated that its award was subject to the conditions provided for in Sections 118, 119,
121, 122 and 124 of Commonwealth Act (CA) No. 141. Because she violated Section 118, the
reversion of the property to the public domain necessarily follows, pursuant to Section 124.
Second Issue: Foreshore Land Reverts to the Public Domain
There is yet another reason for granting this petition.
Although Respondent Court found that the subject land was foreshore land, it nevertheless
sustained the award thereof to Respondent Morato:
[25]

First of all, the issue here is whether the land in question, is really part of the foreshore
lands. The Supreme Court defines foreshore land in the case of Republic vs. Alagad, 169 SCRA
455, 464, as follows:
Otherwise, where the rise in water level is due to, the extraordinary action of nature, rainful,
for instance, the portions inundated thereby are not considered part of the bed or basin of the
body of water in question. It cannot therefore be said to be foreshore land but land outside of the
public dominion, and land capable of registration as private property.
A foreshore land, on the other hand has been defined as follows:
... that part of (the land) which is between high and low water and left dry by the flux and reflux
of the tides x x x x (Republic vs. C.A., Nos. L-43105, L-43190, August 31, 1984, 131 SCRA
532; Government vs.Colegio de San Jose, 53 Phil 423)
The strip of land that lies between the high and low water marks and that is alternatively wet and
dry according to the flow of the tide. (Rep. vs. CA, supra, 539).
The factual findings of the lower court regarding the nature of the parcel of land in question
reads:
Evidence disclose that the marginal area of the land radically changed sometime in 1937 up to
1955 due to a strong earthquake followed by frequent storms eventually eroding the land. From
1955 to 1968, however, gradual reclamation was undertaken by the lumber company owned by
the Moratos. Having thus restored the land thru mostly human hands employed by the lumber
company, the area continued to be utilized by the owner of the sawmill up to the time of his
death in 1965. On or about March 17, 1973, there again was a strong earthquake unfortunately
causing destruction to hundreds of residential houses fronting the Calauag Bay including the
Santiago Building, a cinema house constructed of concrete materials. The catastrophe totally
caused the sinking of a concrete bridge at Sumulong river also in the municipality of Calauag,
Quezon.
On November 13, 1977 a typhoon code named Unding wrought havoc as it lashed the main
land of Calauag, Quezon causing again great erosion this time than that which the area suffered
in 1937. The Court noted with the significance of the newspaper clipping entitled Baryo ng
Mangingisda Kinain ng Dagat (Exh. 11).
x x x x x x x x x
Evidently this was the condition of the land when on or about December 5, 1972 defendant
Josefina L. Morato filed with the Bureau of Lands her free patent application. The defendant
Josefina Morato having taken possession of the land after the demise of Don Tomas Morato, she
introduced improvement and continued developing the area, planted it to coconut trees. Having
applied for a free patent, defendant had the land area surveyed and an approved plan (Exh. 9)
based on the cadastral survey as early as 1927 (Exh. 10) was secured. The area was declared
for taxation purposes in the name of defendant Josefina Morato denominated as Tax Declaration
No. 4115 (Exh. 8) and the corresponding realty taxes religiously paid as shown by Exh. 8-
A). (pp. 12-14, DECISION).
Being supported by substantial evidence and for failure of the appellant to show cause which
would warrant disturbance, the afore-cited findings of the lower court, must be respected.
Petitioner correctly contends, however, that Private Respondent Morato cannot own
foreshore land:
Through the encroachment or erosion by the ebb and flow of the tide, a portion of the subject
land was invaded by the waves and sea advances. During high tide, at least half of the land
(632.5 square meters) is 6 feet deep under water and three (3) feet deep during low tide. The
Calauag Bay shore has extended up to a portion of the questioned land.
While at the time of the grant of free patent to respondent Morato, the land was not reached by
the water, however, due to gradual sinking of the land caused by natural calamities, the sea
advances had permanently invaded a portion of subject land. As disclosed at the trial, through
the testimony of the court-appointed commissioner, Engr. Abraham B. Pili, the land was under
water during high tide in the month of August 1978. The water margin covers half of the
property, but during low tide, the water is about a kilometer (TSN, July 19, 1979, p. 12). Also,
in 1974, after the grant of the patent, the land was covered with vegetation, but it disappeared in
1978 when the land was reached by the tides (Exhs. E-1; E-14). In fact, in its decision dated
December 28, 1983, the lower court observed that the erosion of the land was caused by natural
calamities that struck the place in 1977 (Cf. Decision, pp. 17-18).
[26]

Respondent-Spouses Quilatan argue, however, that it is unfair and unjust if Josefina
Morato will be deprived of the whole property just because a portion thereof was immersed in
water for reasons not her own doing.
[27]

As a general rule, findings of facts of the Court of Appeals are binding and conclusive upon
this Court, unless such factual findings are palpably unsupported by the evidence on record or
unless the judgment itself is based on a misapprehension of facts.
[28]
The application for a free
patent was made in 1972. From the undisputed factual findings of the Court of Appeals,
however, the land has since become foreshore. Accordingly, it can no longer be subject of a free
patent under the Public Land Act. Government of the Philippine Islands vs.
Cabagis
[29]
explained the rationale for this proscription:
Article 339, subsection 1, of the Civil Code, reads:
Art. 339. Property of public ownership is
1. That devoted to public use, such as roads, canals, rivers, torrents, ports and bridges
constructed by the State, riverbanks, shores, roadsteads, and that of a similar character.
* * * * * * * *
Article 1, case 3, of the Law of Waters of August 3, 1866, provides as follows:
ARTICLE 1. The following are part of the national domain open to public use:
* * * * * * * *
3. The Shores. By the shore is understood that space covered and uncovered by the movement
of the tide. Its interior or terrestrial limit is the line reached by the highest equinoctal
tides. Where the tides are not appreciable, the shore begins on the land side at the line reached
by the sea during ordinary storms or tempests.
In the case of Aragon vs. Insular Government (19 Phil. 223), with reference to article 339 of the
Civil Code just quoted, this Court said:
We should not be understood, by this decision, to hold that in a case of gradual encroachment or
erosion by the ebb and flow of the tide, private property may not become property of public
ownership. as defined in article 339 of the code, where it appear that the owner has to all intents
and purposes abandoned it and permitted it to be totally destroyed, so as to become a part of the
playa (shore of the sea), rada (roadstead), or the like. * * *
In the Enciclopedia Jurdica Espaola, volume XII, page 558, we read the following:
With relative frequency the opposite phenomenon occurs; that is, the sea advances and private
properties are permanently invaded by the waves, and in this case they become part of the shore
or beach. They then pass to the public domain, but the owner thus dispossessed does not retain
any right to the natural products resulting from their new nature; it is a de facto case of eminent
domain, and not subject to indemnity.
In comparison, Article 420 of the Civil Code provides:
Art. 420. The following things are property of public dominion:
(1) Those intended for public use, such as roads, canals, rivers, torrents, ports and
bridges constructed by the State, banks, shores, roadsteads, and others of similar
character;
(2) Those which belong to the State, without being for public use, and are intended for
some public service or for the development of the national wealth.
When the sea moved towards the estate and the tide invaded it, the invaded property became
foreshore land and passed to the realm of the public domain. In fact, the Court in Government
vs. Cabangis
[30]
annulled the registration of land subject of cadastral proceedings when the parcel
subsequently became foreshore land.
[31]
In another case, the Court voided the registration decree
of a trial court and held that said court had no jurisdiction to award foreshore land to any private
person or entity.
[32]
The subject land in this case, being foreshore land, should therefore be
returned to the public domain.
WHEREFORE, the petition is GRANTED. This Court hereby REVERSES and SETS
ASIDE the assailed Decision of Respondent Court and ORDERS the CANCELLATION of Free
Patent No. (IV-3) 275 issued to Respondent Morato and the subsequent Original Certificate of
Title No. P-17789. The subject land therefore REVERTS to the State. No costs.
SO ORDERED.
Romero, Melo, and Francisco, JJ., concur.
Narvasa, C.J., (Chairman), on leave.
G.R. No. L-24440 March 28, 1968
THE PROVINCE OF ZAMBOANGA DEL NORTE, plaintiff-appellee,
vs.
CITY OF ZAMBOANGA, SECRETARY OF FINANCE and COMMISSIONER OF
INTERNAL REVENUE,defendants-appellants.
Fortugaleza, Lood, Sarmiento, M. T. Yap & Associates for plaintiff-appellee.
Office of the Solicitor General for defendants-appellants.
BENGZON, J.P., J .:
Prior to its incorporation as a chartered city, the Municipality of Zamboanga used to be the
provincial capital of the then Zamboanga Province. On October 12, 1936, Commonwealth Act
39 was approved converting the Municipality of Zamboanga into Zamboanga City. Sec. 50 of the
Act also provided that
Buildings and properties which the province shall abandon upon the transfer of the
capital to another place will be acquired and paid for by the City of Zamboanga at a price
to be fixed by the Auditor General.
The properties and buildings referred to consisted of 50 lots and some buildings
constructed thereon, located in the City of Zamboanga and covered individually by Torrens
certificates of title in the name of Zamboanga Province. As far as can be gleaned from the
records,
1
said properties were being utilized as follows
No. of Lots Use
1 ................................................ Capitol Site
3 ................................................ School Site
3 ................................................ Hospital Site
3 ................................................ Leprosarium
1 ................................................ Curuan School
1 ................................................ Trade School
2 ................................................ Burleigh School
2 ................................................ High School Playground
9 ................................................ Burleighs
1 ................................................ Hydro-Electric Site (Magay)
1 ................................................ San Roque
23 ................................................ vacant
It appears that in 1945, the capital of Zamboanga Province was transferred to
Dipolog.
2
Subsequently, or on June 16, 1948, Republic Act 286 was approved creating the
municipality of Molave and making it the capital of Zamboanga Province.
On May 26, 1949, the Appraisal Committee formed by the Auditor General, pursuant to
Commonwealth Act 39, fixed the value of the properties and buildings in question left by
Zamboanga Province in Zamboanga City at P1,294,244.00.
3

On June 6, 1952, Republic Act 711 was approved dividing the province of Zamboanga
into two (2): Zamboanga del Norte and Zamboanga del Sur. As to how the assets and obligations
of the old province were to be divided between the two new ones, Sec. 6 of that law provided:
Upon the approval of this Act, the funds, assets and other properties and the
obligations of the province of Zamboanga shall be divided equitably between the
Province of Zamboanga del Norte and the Province of Zamboanga del Sur by the
President of the Philippines, upon the recommendation of the Auditor General.
Pursuant thereto, the Auditor General, on January 11, 1955, apportioned the assets and
obligations of the defunct Province of Zamboanga as follows: 54.39% for Zamboanga del Norte
and 45.61% for Zamboanga del Sur. Zamboanga del Norte therefore became entitled to 54.39%
of P1,294,244.00, the total value of the lots and buildings in question, or P704,220.05 payable by
Zamboanga City.
On March 17, 1959, the Executive Secretary, by order of the President, issued a
ruling
4
holding that Zamboanga del Norte had a vested right as owner (should be co-owner pro-
indiviso) of the properties mentioned in Sec. 50 of Commonwealth Act 39, and is entitled to the
price thereof, payable by Zamboanga City. This ruling revoked the previous Cabinet Resolution
of July 13, 1951 conveying all the said 50 lots and buildings thereon to Zamboanga City for
P1.00, effective as of 1945, when the provincial capital of the then Zamboanga Province was
transferred to Dipolog.
The Secretary of Finance then authorized the Commissioner of Internal Revenue to deduct
an amount equal to 25% of the regular internal revenue allotment for the City of Zamboanga for
the quarter ending March 31, 1960, then for the quarter ending June 30, 1960, and again for the
first quarter of the fiscal year 1960-1961. The deductions, all aggregating P57,373.46, was
credited to the province of Zamboanga del Norte, in partial payment of the P764,220.05 due it.
However, on June 17, 1961, Republic Act 3039 was approved amending Sec. 50 of
Commonwealth Act 39 by providing that
All buildings, properties and assets belonging to the former province of
Zamboanga and located within the City of Zamboanga are hereby transferred, free of
charge, in favor of the said City of Zamboanga. (Stressed for emphasis).
Consequently, the Secretary of Finance, on July 12, 1961, ordered the Commissioner of
Internal Revenue to stop from effecting further payments to Zamboanga del Norte and to return
to Zamboanga City the sum of P57,373.46 taken from it out of the internal revenue allotment of
Zamboanga del Norte. Zamboanga City admits that since the enactment of Republic Act 3039,
P43,030.11 of the P57,373.46 has already been returned to it.
This constrained plaintiff-appellee Zamboanga del Norte to file on March 5, 1962, a
complaint entitled "Declaratory Relief with Preliminary Mandatory Injunction" in the Court of
First Instance of Zamboanga del Norte against defendants-appellants Zamboanga City, the
Secretary of Finance and the Commissioner of Internal Revenue. It was prayed that: (a) Republic
Act 3039 be declared unconstitutional for depriving plaintiff province of property without due
process and just compensation; (b) Plaintiff's rights and obligations under said law be declared;
(c) The Secretary of Finance and the Internal Revenue Commissioner be enjoined from
reimbursing the sum of P57,373.46 to defendant City; and (d) The latter be ordered to continue
paying the balance of P704,220.05 in quarterly installments of 25% of its internal revenue
allotments.
On June 4, 1962, the lower court ordered the issuance of preliminary injunction as prayed
for. After defendants filed their respective answers, trial was held. On August 12, 1963,
judgment was rendered, the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered declaring Republic Act No. 3039
unconstitutional insofar as it deprives plaintiff Zamboanga del Norte of its private
properties, consisting of 50 parcels of land and the improvements thereon under
certificates of title (Exhibits "A" to "A-49") in the name of the defunct province of
Zamboanga; ordering defendant City of Zamboanga to pay to the plaintiff the sum of
P704,220.05 payment thereof to be deducted from its regular quarterly internal revenue
allotment equivalent to 25% thereof every quarter until said amount shall have been fully
paid; ordering defendant Secretary of Finance to direct defendant Commissioner of
Internal Revenue to deduct 25% from the regular quarterly internal revenue allotment for
defendant City of Zamboanga and to remit the same to plaintiff Zamboanga del Norte
until said sum of P704,220.05 shall have been fully paid; ordering plaintiff Zamboanga
del Norte to execute through its proper officials the corresponding public instrument
deeding to defendant City of Zamboanga the 50 parcels of land and the improvements
thereon under the certificates of title (Exhibits "A" to "A-49") upon payment by the latter
of the aforesaid sum of P704,220.05 in full; dismissing the counterclaim of defendant
City of Zamboanga; and declaring permanent the preliminary mandatory injunction
issued on June 8, 1962, pursuant to the order of the Court dated June 4, 1962. No costs
are assessed against the defendants.
It is SO ORDERED.
Subsequently, but prior to the perfection of defendants' appeal, plaintiff province filed a
motion to reconsider praying that Zamboanga City be ordered instead to pay the P704,220.05 in
lump sum with 6% interest per annum. Over defendants' opposition, the lower court granted
plaintiff province's motion.
The defendants then brought the case before Us on appeal.
Brushing aside the procedural point concerning the property of declaratory relief filed in
the lower court on the assertion that the law had already been violated and that plaintiff sought to
give it coercive effect, since assuming the same to be true, the Rules anyway authorize the
conversion of the proceedings to an ordinary action,
5
We proceed to the more important and
principal question of the validity of Republic Act 3039.
The validity of the law ultimately depends on the nature of the 50 lots and buildings
thereon in question. For, the matter involved here is the extent of legislative control over the
properties of a municipal corporation, of which a province is one. The principle itself is simple:
If the property is owned by the municipality (meaning municipal corporation) in its public and
governmental capacity, the property is public and Congress has absolute control over it. But if
the property is owned in its private or proprietary capacity, then it is patrimonial and Congress
has no absolute control. The municipality cannot be deprived of it without due process and
payment of just compensation.
6

The capacity in which the property is held is, however, dependent on the use to which it is
intended and devoted. Now, which of two norms, i.e., that of the Civil Code or that obtaining
under the law of Municipal Corporations, must be used in classifying the properties in question?
The Civil Code classification is embodied in its Arts. 423 and 424 which
provide:1wph1.t
ART. 423. The property of provinces, cities, and municipalities is divided into
property for public use and patrimonial property.
ART. 424. Property for public use, in the provinces, cities, and municipalities,
consists of the provincial roads, city streets, municipal streets, the squares, fountains,
public waters, promenades, and public works for public service paid for by said
provinces, cities, or municipalities.
All other property possessed by any of them is patrimonial and shall be governed by this
Code, without prejudice to the provisions of special laws. (Stressed for emphasis).
Applying the above cited norm, all the properties in question, except the two (2) lots used
as High School playgrounds, could be considered as patrimonial properties of the former
Zamboanga province. Even the capital site, the hospital and leprosarium sites, and the school
sites will be considered patrimonial for they are not for public use. They would fall under the
phrase "public works for public service" for it has been held that under theejusdem generis rule,
such public works must be for free and indiscriminate use by anyone, just like the preceding
enumerated properties in the first paragraph of Art 424.
7
The playgrounds, however, would fit
into this category.
This was the norm applied by the lower court. And it cannot be said that its actuation was
without jurisprudential precedent for in Municipality of Catbalogan v. Director of Lands,
8
and
in Municipality of Tacloban v. Director of Lands,
9
it was held that the capitol site and the school
sites in municipalities constitute their patrimonial properties. This result is understandable
because, unlike in the classification regarding State properties, properties for public service in
the municipalities are not classified as public. Assuming then the Civil Code classification to be
the chosen norm, the lower court must be affirmed except with regard to the two (2) lots used as
playgrounds.
On the other hand, applying the norm obtaining under the principles constituting the law of
Municipal Corporations, all those of the 50 properties in question which are devoted to public
service are deemed public; the rest remain patrimonial. Under this norm, to be considered public,
it is enough that the property be held and, devoted for governmental purposes like local
administration, public education, public health, etc.
10

Supporting jurisprudence are found in the following cases: (1) HINUNANGAN V.
DIRECTOR OF LANDS,
11
where it was stated that "... where the municipality has occupied
lands distinctly for public purposes, such as for the municipal court house, the public school, the
public market, or other necessary municipal building, we will, in the absence of proof to the
contrary, presume a grant from the States in favor of the municipality; but, as indicated by the
wording, that rule may be invoked only as to property which is used distinctly for public
purposes...." (2) VIUDA DE TANTOCO V. MUNICIPAL COUNCIL OF ILOILO
12
held that
municipal properties necessary for governmental purposes are public in nature. Thus, the auto
trucks used by the municipality for street sprinkling, the police patrol automobile, police stations
and concrete structures with the corresponding lots used as markets were declared exempt from
execution and attachment since they were not patrimonial properties. (3) MUNICIPALITY OF
BATANGAS VS. CANTOS
13
held squarely that a municipal lot which had always been devoted
to school purposes is one dedicated to public use and is not patrimonial property of a
municipality.
Following this classification, Republic Act 3039 is valid insofar as it affects the lots used
as capitol site, school sites and its grounds, hospital and leprosarium sites and the high school
playground sites a total of 24 lots since these were held by the former Zamboanga
province in its governmental capacity and therefore are subject to the absolute control of
Congress. Said lots considered as public property are the following:
TCT
Number
Lot Number U s e
2200 ...................................... 4-B ...................................... Capitol Site
2816 ...................................... 149 ...................................... School Site
3281 ...................................... 1224 ...................................... Hospital Site
3282 ...................................... 1226 ...................................... Hospital Site
3283 ...................................... 1225 ...................................... Hospital Site
3748 ...................................... 434-A-1 ...................................... School Site
5406 ...................................... 171 ...................................... School Site
5564 ...................................... 168 ......................................
High School Play-
ground
5567 ...................................... 157 & ...................................... Trade School
158
5583 ...................................... 167 ......................................
High School Play-
ground
6181 ...................................... (O.C.T.) ...................................... Curuan School
11942 ...................................... 926 ...................................... Leprosarium
11943 ...................................... 927 ...................................... Leprosarium
11944 ...................................... 925 ...................................... Leprosarium
5557 ...................................... 170 ...................................... Burleigh School
5562 ...................................... 180 ...................................... Burleigh School
5565 ...................................... 172-B ...................................... Burleigh
5570 ...................................... 171-A ...................................... Burleigh
5571 ...................................... 172-C ...................................... Burleigh
5572 ...................................... 174 ...................................... Burleigh
5573 ...................................... 178 ...................................... Burleigh
5585 ...................................... 171-B ...................................... Burleigh
5586 ...................................... 173 ...................................... Burleigh
5587 ...................................... 172-A ...................................... Burleigh
We noticed that the eight Burleigh lots above described are adjoining each other and in
turn are between the two lots wherein the Burleigh schools are built, as per records appearing
herein and in the Bureau of Lands. Hence, there is sufficient basis for holding that said eight lots
constitute the appurtenant grounds of the Burleigh schools, and partake of the nature of the same.
Regarding the several buildings existing on the lots above-mentioned, the records do not
disclose whether they were constructed at the expense of the former Province of Zamboanga.
Considering however the fact that said buildings must have been erected even before 1936 when
Commonwealth Act 39 was enacted and the further fact that provinces then had no power to
authorize construction of buildings such as those in the case at bar at their own expense,
14
it can
be assumed that said buildings were erected by the National Government, using national funds.
Hence, Congress could very well dispose of said buildings in the same manner that it did with
the lots in question.
But even assuming that provincial funds were used, still the buildings constitute mere
accessories to the lands, which are public in nature, and so, they follow the nature of said lands,
i.e., public. Moreover, said buildings, though located in the city, will not be for the exclusive use
and benefit of city residents for they could be availed of also by the provincial residents. The
province then and its successors-in-interest are not really deprived of the benefits thereof.
But Republic Act 3039 cannot be applied to deprive Zamboanga del Norte of its share in
the value of the rest of the 26 remaining lots which are patrimonial properties since they are not
being utilized for distinctly, governmental purposes. Said lots are:
TCT Number Lot Number U s e
5577 ...................................... 177 ...................................... Mydro, Magay

13198 ...................................... 127-0 ...................................... San Roque

5569 ...................................... 169 ...................................... Burleigh
15


5558 ...................................... 175 ...................................... Vacant

5559 ...................................... 188 ...................................... "

5560 ...................................... 183 ...................................... "

5561 ...................................... 186 ...................................... "

5563 ...................................... 191 ...................................... "

5566 ...................................... 176 ...................................... "

5568 ...................................... 179 ...................................... "

5574 ...................................... 196 ...................................... "

5575 ...................................... 181-A ...................................... "

5576 ...................................... 181-B ...................................... "

5578 ...................................... 182 ...................................... "

5579 ...................................... 197 ...................................... "

5580 ...................................... 195 ...................................... "

5581 ...................................... 159-B ...................................... "

5582 ...................................... 194 ...................................... "

5584 ...................................... 190 ...................................... "

5588 ...................................... 184 ...................................... "

5589 ...................................... 187 ...................................... "

5590 ...................................... 189 ...................................... "

5591 ...................................... 192 ...................................... "

5592 ...................................... 193 ...................................... "

5593 ...................................... 185 ...................................... "

7379 ...................................... 4147 ...................................... "

Moreover, the fact that these 26 lots are registered strengthens the proposition that they are
truly private in nature. On the other hand, that the 24 lots used for governmental purposes are
also registered is of no significance since registration cannot convert public property to
private.
16

We are more inclined to uphold this latter view. The controversy here is more along the
domains of the Law of Municipal Corporations State vs. Province than along that of Civil
Law. Moreover, this Court is not inclined to hold that municipal property held and devoted to
public service is in the same category as ordinary private property. The consequences are dire.
As ordinary private properties, they can be levied upon and attached. They can even be acquired
thru adverse possession all these to the detriment of the local community. Lastly, the
classification of properties other than those for public use in the municipalities as patrimonial
under Art. 424 of the Civil Code is "... without prejudice to the provisions of special laws."
For purpose of this article, the principles, obtaining under the Law of Municipal Corporations
can be considered as "special laws". Hence, the classification of municipal property devoted for
distinctly governmental purposes as public should prevail over the Civil Code classification in
this particular case.
Defendants' claim that plaintiff and its predecessor-in-interest are "guilty of laches is
without merit. Under Commonwealth Act 39, Sec. 50, the cause of action in favor of the defunct
Zamboanga Province arose only in 1949 after the Auditor General fixed the value of the
properties in question. While in 1951, the Cabinet resolved transfer said properties practically for
free to Zamboanga City, a reconsideration thereof was seasonably sought. In 1952, the old
province was dissolved. As successor-in-interest to more than half of the properties involved,
Zamboanga del Norte was able to get a reconsideration of the Cabinet Resolution in 1959. In
fact, partial payments were effected subsequently and it was only after the passage of Republic
Act 3039 in 1961 that the present controversy arose. Plaintiff brought suit in 1962. All the
foregoing, negative laches.
It results then that Zamboanga del Norte is still entitled to collect from the City of
Zamboanga the former's 54.39% share in the 26 properties which are patrimonial in nature, said
share to computed on the basis of the valuation of said 26 properties as contained in Resolution
No. 7, dated March 26, 1949, of the Appraisal Committee formed by the Auditor General.
Plaintiff's share, however, cannot be paid in lump sum, except as to the P43,030.11 already
returned to defendant City. The return of said amount to defendant was without legal basis.
Republic Act 3039 took effect only on June 17, 1961 after a partial payment of P57,373.46 had
already been made. Since the law did not provide for retroactivity, it could not have validly
affected a completed act. Hence, the amount of P43,030.11 should be immediately returned by
defendant City to plaintiff province. The remaining balance, if any, in the amount of plaintiff's
54.39% share in the 26 lots should then be paid by defendant City in the same manner originally
adopted by the Secretary of Finance and the Commissioner of Internal Revenue, and not in lump
sum. Plaintiff's prayer, particularly pars. 5 and 6, read together with pars. 10 and 11 of the first
cause of action recited in the complaint
17
clearly shows that the relief sought was merely the
continuance of the quarterly payments from the internal revenue allotments of defendant City.
Art. 1169 of the Civil Code on reciprocal obligations invoked by plaintiff to justify lump sum
payment is inapplicable since there has been so far in legal contemplation no complete delivery
of the lots in question. The titles to the registered lots are not yet in the name of defendant
Zamboanga City.
WHEREFORE, the decision appealed from is hereby set aside and another judgment is
hereby entered as follows:.
(1) Defendant Zamboanga City is hereby ordered to return to plaintiff Zamboanga del
Norte in lump sum the amount of P43,030.11 which the former took back from the latter out of
the sum of P57,373.46 previously paid to the latter; and
(2) Defendants are hereby ordered to effect payments in favor of plaintiff of whatever
balance remains of plaintiff's 54.39% share in the 26 patrimonial properties, after deducting
therefrom the sum of P57,373.46, on the basis of Resolution No. 7 dated March 26, 1949 of the
Appraisal Committee formed by the Auditor General, by way of quarterly payments from the
allotments of defendant City, in the manner originally adopted by the Secretary of Finance and
the Commissioner of Internal Revenue. No costs. So ordered.
Reyes, J.B.L., Actg. C.J., Dizon, Makalintal, Zaldivar, Sanchez, Castro, Angeles and Fernando,
JJ., concur.
Concepcion, C.J., is on leave.
G.R. No. 133250 July 9, 2002
FRANCISCO I. CHAVEZ, petitioner,
vs.
PUBLIC ESTATES AUTHORITY and AMARI COASTAL BAY DEVELOPMENT
CORPORATION, respondents.
CARPIO, J .:
This is an original Petition for Mandamus with prayer for a writ of preliminary injunction and a
temporary restraining order. The petition seeks to compel the Public Estates Authority ("PEA"
for brevity) to disclose all facts on PEA's then on-going renegotiations with Amari Coastal Bay
and Development Corporation ("AMARI" for brevity) to reclaim portions of Manila Bay. The
petition further seeks to enjoin PEA from signing a new agreement with AMARI involving such
reclamation.
The Facts
On November 20, 1973, the government, through the Commissioner of Public Highways, signed
a contract with the Construction and Development Corporation of the Philippines ("CDCP" for
brevity) to reclaim certain foreshore and offshore areas of Manila Bay. The contract also
included the construction of Phases I and II of the Manila-Cavite Coastal Road. CDCP obligated
itself to carry out all the works in consideration of fifty percent of the total reclaimed land.
On February 4, 1977, then President Ferdinand E. Marcos issued Presidential Decree No. 1084
creating PEA. PD No. 1084 tasked PEA "to reclaim land, including foreshore and submerged
areas," and "to develop, improve, acquire, x x x lease and sell any and all kinds of lands."
1
On
the same date, then President Marcos issued Presidential Decree No. 1085 transferring to PEA
the "lands reclaimed in the foreshore and offshore of the Manila Bay"
2
under the Manila-Cavite
Coastal Road and Reclamation Project (MCCRRP).
On December 29, 1981, then President Marcos issued a memorandum directing PEA to amend
its contract with CDCP, so that "[A]ll future works in MCCRRP x x x shall be funded and owned
by PEA." Accordingly, PEA and CDCP executed a Memorandum of Agreement dated December
29, 1981, which stated:
"(i) CDCP shall undertake all reclamation, construction, and such other works in the
MCCRRP as may be agreed upon by the parties, to be paid according to progress of
works on a unit price/lump sum basis for items of work to be agreed upon, subject to
price escalation, retention and other terms and conditions provided for in Presidential
Decree No. 1594. All the financing required for such works shall be provided by PEA.
x x x
(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 Court's Ruling
First issue: whether the principal reliefs prayed for in the petition are moot and academic
because of subsequent events.
The petition prays that PEA publicly disclose the "terms and conditions of the on-going
negotiations for a new agreement." The petition also prays that the Court enjoin PEA from
"privately entering into, perfecting and/or executing any new agreement with AMARI."
PEA and AMARI claim the petition is now moot and academic because AMARI furnished
petitioner on June 21, 1999 a copy of the signed Amended JVA containing the terms and
conditions agreed upon in the renegotiations. Thus, PEA has satisfied petitioner's prayer for a
public disclosure of the renegotiations. Likewise, petitioner's prayer to enjoin the signing of the
Amended JVA is now moot because PEA and AMARI have already signed the Amended JVA
on March 30, 1999. Moreover, the Office of the President has approved the Amended JVA on
May 28, 1999.
Petitioner counters that PEA and AMARI cannot avoid the constitutional issue by simply fast-
tracking the signing and approval of the Amended JVA before the Court could act on the issue.
Presidential approval does not resolve the constitutional issue or remove it from the ambit of
judicial review.
We rule that the signing of the Amended JVA by PEA and AMARI and its approval by the
President cannot operate to moot the petition and divest the Court of its jurisdiction. PEA and
AMARI have still to implement the Amended JVA. The prayer to enjoin the signing of the
Amended JVA on constitutional grounds necessarily includes preventing its implementation if in
the meantime PEA and AMARI have signed one in violation of the Constitution. Petitioner's
principal basis in assailing the renegotiation of the JVA is its violation of Section 3, Article XII
of the Constitution, which prohibits the government from alienating lands of the public domain
to private corporations. If the Amended JVA indeed violates the Constitution, it is the duty of the
Court to enjoin its implementation, and if already implemented, to annul the effects of such
unconstitutional contract.
The Amended JVA is not an ordinary commercial contract but one which seeks to transfer title
and ownership to 367.5 hectares of reclaimed lands and submerged areas of Manila Bay to a
single private corporation. It now becomes more compelling for the Court to resolve the issue to
insure the government itself does not violate a provision of the Constitution intended to
safeguard the national patrimony. Supervening events, whether intended or accidental, cannot
prevent the Court from rendering a decision if there is a grave violation of the Constitution. In
the instant case, if the Amended JVA runs counter to the Constitution, the Court can still prevent
the transfer of title and ownership of alienable lands of the public domain in the name of
AMARI. Even in cases where supervening events had made the cases moot, the Court did not
hesitate to resolve the legal or constitutional issues raised to formulate controlling principles to
guide the bench, bar, and the public.
17

Also, the instant petition is a case of first impression. All previous decisions of the Court
involving Section 3, Article XII of the 1987 Constitution, or its counterpart provision in the 1973
Constitution,
18
covered agricultural landssold 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 I I 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 purchaseunder PD No. 1084 (charter of PEA) and Title I I I of CA No. 141. Certain
undertakings by AMARI under the Amended JVA constitute the consideration for the purchase.
Neither AMARI nor PEA can claim judicial confirmation of their titles because the lands
covered by the Amended JVA are newly reclaimed or still to be reclaimed. Judicial confirmation
of imperfect title requires open, continuous, exclusive and notorious occupation of agricultural
lands of the public domain for at least thirty years since June 12, 1945 or earlier. Besides, the
deadline for filing applications for judicial confirmation of imperfect title expired on December
31, 1987.
20

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

Second issue: whether the petition merits dismissal for failing to observe the principle
governing the hierarchy of courts.
PEA and AMARI claim petitioner ignored the judicial hierarchy by seeking relief directly from
the Court. The principle of hierarchy of courts applies generally to cases involving factual
questions. As it is not a trier of facts, the Court cannot entertain cases involving factual issues.
The instant case, however, raises constitutional issues of transcendental importance to the
public.
22
The Court can resolve this case without determining any factual issue related to the
case. Also, the instant case is a petition for mandamus which falls under the original jurisdiction
of the Court under Section 5, Article VIII of the Constitution. We resolve to exercise primary
jurisdiction over the instant case.
Third issue: whether the petition merits dismissal for non-exhaustion of administrative
remedies.
PEA faults petitioner for seeking judicial intervention in compelling PEA to disclose publicly
certain information without first asking PEA the needed information. PEA claims petitioner's
direct resort to the Court violates the principle of exhaustion of administrative remedies. It also
violates the rule that mandamus may issue only if there is no other plain, speedy and adequate
remedy in the ordinary course of law.
PEA distinguishes the instant case from Taada v. 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
the disposition of
government lands to private parties requires public bidding. PEA was under a positive legal duty
to disclose to the public the terms and conditions for the sale of its lands. The law obligated
PEA to make this public disclosure even without demand from petitioner or from anyone. PEA
failed to make this public disclosure because the original JVA, like the Amended JVA, was the
result of a negotiated contract, not of a public bidding. Considering that PEA had an affirmative
statutory duty to make the public disclosure, and was even in breach of this legal duty, petitioner
had the right to seek direct judicial intervention.
Moreover, and this alone is determinative of this issue, the principle of exhaustion of
administrative remedies does not apply when the issue involved is a purely legal or constitutional
question.
27
The principal issue in the instant case is the capacity of AMARI to acquire lands held
by PEA in view of the constitutional ban prohibiting the alienation of lands of the public domain
to private corporations. We rule that the principle of exhaustion of administrative remedies does
not apply in the instant case.
Fourth issue: whether petitioner has locus standi to bring this suit
PEA argues that petitioner has no standing to institute mandamus proceedings to enforce his
constitutional right to information without a showing that PEA refused to perform an affirmative
duty imposed on PEA by the Constitution. PEA also claims that petitioner has not shown that he
will suffer any concrete injury because of the signing or implementation of the Amended JVA.
Thus, there is no actual controversy requiring the exercise of the power of judicial review.
The petitioner has standing to bring this taxpayer's suit because the petition seeks to compel PEA
to comply with its constitutional duties. There are two constitutional issues involved here. First is
the right of citizens to information on matters of public concern. Second is the application of a
constitutional provision intended to insure the equitable distribution of alienable lands of the
public domain among Filipino citizens. The thrust of the first issue is to compel PEA to disclose
publicly information on the sale of government lands worth billions of pesos, information which
the Constitution and statutory law mandate PEA to disclose. The thrust of the second issue is to
prevent PEA from alienating hundreds of hectares of alienable lands of the public domain in
violation of the Constitution, compelling PEA to comply with a constitutional duty to the nation.
Moreover, the petition raises matters of transcendental importance to the public. In Chavez v.
PCGG,
28
the Court upheld the right of a citizen to bring a taxpayer's suit on matters of
transcendental importance to the public, thus -
"Besides, petitioner emphasizes, the matter of recovering the ill-gotten wealth of the
Marcoses is an issue of 'transcendental importance to the public.' He asserts that ordinary
taxpayers have a right to initiate and prosecute actions questioning the validity of acts or
orders of government agencies or instrumentalities, if the issues raised are of 'paramount
public interest,' and if they 'immediately affect the social, economic and moral well being
of the people.'
Moreover, the mere fact that he is a citizen satisfies the requirement of personal interest,
when the proceeding involves the assertion of a public right, such as in this case. He
invokes several decisions of this Court which have set aside the procedural matter
of locus standi, when the subject of the case involved public interest.
x x x
In Taada v. Tuvera, the Court asserted that when the issue concerns a public right and
the object of mandamus is to obtain the enforcement of a public duty, the people are
regarded as the real parties in interest; and because it is sufficient that petitioner is a
citizen and as such is interested in the execution of the laws, he need not show that he has
any legal or special interest in the result of the action. In the aforesaid case, the
petitioners sought to enforce their right to be informed on matters of public concern, a
right then recognized in Section 6, Article IV of the 1973 Constitution, in connection
with the rule that laws in order to be valid and enforceable must be published in the
Official Gazette or otherwise effectively promulgated. In ruling for the petitioners' legal
standing, the Court declared that the right they sought to be enforced 'is a public right
recognized by no less than the fundamental law of the land.'
Legaspi v. Civil Service Commission, while reiterating Taada, further declared that
'when a mandamus proceeding involves the assertion of a public right, the requirement of
personal interest is satisfied by the mere fact that petitioner is a citizen and, therefore,
part of the general 'public' which possesses the right.'
Further, in Albano v. Reyes, we said that while expenditure of public funds may not have
been involved under the questioned contract for the development, management and
operation of the Manila International Container Terminal, 'public interest [was] definitely
involved considering the important role [of the subject contract] . . . in the economic
development of the country and the magnitude of the financial consideration involved.'
We concluded that, as a consequence, the disclosure provision in the Constitution would
constitute sufficient authority for upholding the petitioner's standing.
Similarly, the instant petition is anchored on the right of the people to information and
access to official records, documents and papers a right guaranteed under Section 7,
Article III of the 1987 Constitution. Petitioner, a former solicitor general, is a Filipino
citizen. Because of the satisfaction of the two basic requisites laid down by decisional
law to sustain petitioner's legal standing, i.e. (1) the enforcement of a public right (2)
espoused by a Filipino citizen, we rule that the petition at bar should be allowed."
We rule that since the instant petition, brought by a citizen, involves the enforcement of
constitutional rights - to information and to the equitable diffusion of natural resources - matters
of transcendental public importance, the petitioner has the requisite locus standi.
Fifth issue: whether the constitutional right to information includes official information on
on-going negotiations before a final agreement.
Section 7, Article III of the Constitution explains the people's right to information on matters of
public concern in this manner:
"Sec. 7. The right of the people to information on matters of public concern shall be
recognized. Access to official records, and to documents, and papers pertaining to
official acts, transactions, or decisions, as well as to government research data used as
basis for policy development, shall be afforded the citizen, subject to such limitations as
may be provided by law." (Emphasis supplied)
The State policy of full transparency in all transactions involving public interest reinforces the
people's right to information on matters of public concern. This State policy is expressed in
Section 28, Article II of the Constitution, thus:
"Sec. 28. Subject to reasonable conditions prescribed by law, the State adopts and
implements a policy of full public disclosure of all its transactions involving public
interest." (Emphasis supplied)
These twin provisions of the Constitution seek to promote transparency in policy-making and in
the operations of the government, as well as provide the people sufficient information to exercise
effectively other constitutional rights. These twin provisions are essential to the exercise of
freedom of expression. If the government does not disclose its official acts, transactions and
decisions to citizens, whatever citizens say, even if expressed without any restraint, will be
speculative and amount to nothing. These twin provisions are also essential to hold public
officials "at all times x x x accountable to the people,"
29
for unless citizens have the proper
information, they cannot hold public officials accountable for anything. Armed with the right
information, citizens can participate in public discussions leading to the formulation of
government policies and their effective implementation. An informed citizenry is essential to the
existence and proper functioning of any democracy. As explained by the Court inValmonte v.
Belmonte, J r.
30

"An essential element of these freedoms is to keep open a continuing dialogue or process
of communication between the government and the people. It is in the interest of the State
that the channels for free political discussion be maintained to the end that the
government may perceive and be responsive to the people's will. Yet, this open dialogue
can be effective only to the extent that the citizenry is informed and thus able to
formulate its will intelligently. Only when the participants in the discussion are aware of
the issues and have access to information relating thereto can such bear fruit."
PEA asserts, citing Chavez v. PCGG,
31
that in cases of on-going negotiations the right to
information is limited to "definite propositions of the government." PEA maintains the right does
not include access to "intra-agency or inter-agency recommendations or communications during
the stage when common assertions are still in the process of being formulated or are in the
'exploratory stage'."
Also, AMARI contends that petitioner cannot invoke the right at the pre-decisional stage or
before the closing of the transaction. To support its contention, AMARI cites the following
discussion in the 1986 Constitutional Commission:
"Mr. Suarez. And when we say 'transactions' which should be distinguished from
contracts, agreements, or treaties or whatever, does the Gentleman refer to the steps
leading to the consummation of the contract, or does he refer to the contract itself?
Mr. Ople: The 'transactions' used here, I suppose is generic and therefore, it can cover
both steps leading to a contract and already a consummated contract, Mr. Presiding
Officer.
Mr. Suarez: This contemplates inclusion of negotiations leading to the consummation
of the transaction.
Mr. Ople: Yes, subject only to reasonable safeguards on the national interest.
Mr. Suarez: Thank you."
32
(Emphasis supplied)
AMARI argues there must first be a consummated contract before petitioner can invoke the
right. Requiring government officials to reveal their deliberations at the pre-decisional stage will
degrade the quality of decision-making in government agencies. Government officials will
hesitate to express their real sentiments during deliberations if there is immediate public
dissemination of their discussions, putting them under all kinds of pressure before they decide.
We must first distinguish between information the law on public bidding requires PEA to
disclose publicly, and information the constitutional right to information requires PEA to release
to the public. Before the consummation of the contract, PEA must, on its own and without
demand from anyone, disclose to the public matters relating to the disposition of its property.
These include the size, location, technical description and nature of the property being disposed
of, the terms and conditions of the disposition, the parties qualified to bid, the minimum price
and similar information. PEA must prepare all these data and disclose them to the public at the
start of the disposition process, long before the consummation of the contract, because the
Government Auditing Code requires public bidding. If PEA fails to make this disclosure, any
citizen can demand from PEA this information at any time during the bidding process.
Information, however, on on-going evaluation or review of bids or proposals being undertaken
by the bidding or review committee is not immediately accessible under the right to information.
While the evaluation or review is still on-going, there are no "official acts, transactions, or
decisions" on the bids or proposals. However, once the committee makes its official
recommendation, there arises a "definite proposition" on the part of the government. From this
moment, the public's right to information attaches, and any citizen can access all the non-
proprietary information leading to such definite proposition. In Chavez v. PCGG,
33
the Court
ruled as follows:
"Considering the intent of the framers of the Constitution, we believe that it is incumbent
upon the PCGG and its officers, as well as other government representatives, to disclose
sufficient public information on any proposed settlement they have decided to take up
with the ostensible owners and holders of ill-gotten wealth. Such information, though,
must pertain to definite propositions of the government, not necessarily to intra-agency
or inter-agency recommendations or communications during the stage when common
assertions are still in the process of being formulated or are in the "exploratory" stage.
There is need, of course, to observe the same restrictions on disclosure of information in
general, as discussed earlier such as on matters involving national security, diplomatic
or foreign relations, intelligence and other classified information." (Emphasis supplied)
Contrary to AMARI's contention, the commissioners of the 1986 Constitutional Commission
understood that the right to information "contemplates inclusion of negotiations leading to the
consummation of the transaction." Certainly, a consummated contract is not a requirement for
the exercise of the right to information. Otherwise, the people can never exercise the right if no
contract is consummated, and if one is consummated, it may be too late for the public to expose
its defects.1wphi1.nt
Requiring a consummated contract will keep the public in the dark until the contract, which may
be grossly disadvantageous to the government or even illegal, becomes a fait accompli. This
negates the State policy of full transparency on matters of public concern, a situation which the
framers of the Constitution could not have intended. Such a requirement will prevent the
citizenry from participating in the public discussion of any proposedcontract, effectively
truncating a basic right enshrined in the Bill of Rights. We can allow neither an emasculation of
a constitutional right, nor a retreat by the State of its avowed "policy of full disclosure of all its
transactions involving public interest."
The right covers three categories of information which are "matters of public concern," namely:
(1) official records; (2) documents and papers pertaining to official acts, transactions and
decisions; and (3) government research data used in formulating policies. The first category
refers to any document that is part of the public records in the custody of government agencies or
officials. The second category refers to documents and papers recording, evidencing,
establishing, confirming, supporting, justifying or explaining official acts, transactions or
decisions of government agencies or officials. The third category refers to research data, whether
raw, collated or processed, owned by the government and used in formulating government
policies.
The information that petitioner may access on the renegotiation of the JVA includes evaluation
reports, recommendations, legal and expert opinions, minutes of meetings, terms of reference
and other documents attached to such reports or minutes, all relating to the JVA. However, the
right to information does not compel PEA to prepare lists, abstracts, summaries and the like
relating to the renegotiation of the JVA.
34
The right only affords access to records, documents
and papers, which means the opportunity to inspect and copy them. One who exercises the right
must copy the records, documents and papers at his expense. The exercise of the right is also
subject to reasonable regulations to protect the integrity of the public records and to minimize
disruption to government operations, like rules specifying when and how to conduct the
inspection and copying.
35

The right to information, however, does not extend to matters recognized as privileged
information under the separation of powers.
36
The right does not also apply to information on
military and diplomatic secrets, information affecting national security, and information on
investigations of crimes by law enforcement agencies before the prosecution of the accused,
which courts have long recognized as confidential.
37
The right may also be subject to other
limitations that Congress may impose by law.
There is no claim by PEA that the information demanded by petitioner is privileged information
rooted in the separation of powers. The information does not cover Presidential conversations,
correspondences, or discussions during closed-door Cabinet meetings which, like internal
deliberations of the Supreme Court and other collegiate courts, or executive sessions of either
house of Congress,
38
are recognized as confidential. This kind of information cannot be pried
open by a co-equal branch of government. A frank exchange of exploratory ideas and
assessments, free from the glare of publicity and pressure by interested parties, is essential to
protect the independence of decision-making of those tasked to exercise Presidential, Legislative
and Judicial power.
39
This is not the situation in the instant case.
We rule, therefore, that the constitutional right to information includes official information
on on-going 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 J VA 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.
x x x
(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.
x x x
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 State's natural resources, became inalienable by constitutional fiat,
available only for lease for 25 years, renewable for another 25 years. The government could
alienate foreshore lands only after these lands were reclaimed and classified as alienable
agricultural lands of the public domain. Government reclaimed and marshy lands of the public
domain, being neither timber nor mineral lands, fell under the classification of public agricultural
lands.
50
However, government reclaimed and marshy lands, although subject to classification as
disposable public agricultural lands, could only be leased and not sold to private parties because
of Act No. 2874.
The prohibition on private parties from acquiring ownership of government reclaimed and
marshy lands of the public domain was only a statutory prohibition and the legislature could
therefore remove such prohibition. The 1935 Constitution did not prohibit individuals and
corporations from acquiring government reclaimed and marshy lands of the public domain that
were classified as agricultural lands under existing public land laws. Section 2, Article XIII of
the 1935 Constitution provided as follows:
"Section 2. No private corporation or association may acquire, lease, or hold public
agricultural lands in excess of one thousand and twenty four hectares, nor may any
individual acquire such lands by purchase in excess of one hundred and forty hectares,
or by lease in excess of one thousand and twenty-four hectares, or by homestead in
excess of twenty-four hectares. Lands adapted to grazing, not exceeding two thousand
hectares, may be leased to an individual, private corporation, or association." (Emphasis
supplied)
Still, after the effectivity of the 1935 Constitution, the legislature did not repeal Section 58 of Act
No. 2874 to open for sale to private parties government reclaimed and marshy lands of the public
domain. On the contrary, the legislature continued the long established State policy of retaining
for the government title and ownership of government reclaimed and marshy lands of the public
domain.
Commonwealth Act No. 141 of the Philippine National Assembly
On November 7, 1936, the National Assembly approved Commonwealth Act No. 141, also
known as the Public Land Act, which compiled the then existing laws on lands of the public
domain. CA No. 141, as amended, remains to this day the existing general law governing the
classification and disposition of lands of the public domain other than timber and mineral
lands.
51

Section 6 of CA No. 141 empowers the President to classify lands of the public domain into
"alienable or disposable"
52
lands of the public domain, which prior to such classification are
inalienable and outside the commerce of man. Section 7 of CA No. 141 authorizes the President
to "declare what lands are open to disposition or concession." Section 8 of CA No. 141 states
that the government can declare open for disposition or concession only lands that are "officially
delimited and classified." Sections 6, 7 and 8 of CA No. 141 read as follows:
"Sec. 6. The President, upon the recommendation of the Secretary of Agriculture and
Commerce, shall from time to time classify the lands of the public domain into
(a) Alienable or disposable,
(b) Timber, and
(c) Mineral lands,
and may at any time and in like manner transfer such lands from one class to
another,
53
for the purpose of their administration and disposition.
Sec. 7. For the purposes of the administration and disposition of alienable or disposable
public lands, the President, upon recommendation by the Secretary of Agriculture and
Commerce, shall from time to time declare what lands are open to disposition or
concession under this Act.
Sec. 8. Only those lands shall be declared open to disposition or concession which have
been officially delimited and classified and, when practicable, surveyed, and which have
not been reserved for public or quasi-public uses, nor appropriated by the Government,
nor in any manner become private property, nor those on which a private right authorized
and recognized by this Act or any other valid law may be claimed, or which, having been
reserved or appropriated, have ceased to be so. x x x."
Thus, before the government could alienate or dispose of lands of the public domain, the
President must first officially classify these lands as alienable or disposable, and then declare
them open to disposition or concession. There must be no law reserving these lands for public or
quasi-public uses.
The salient provisions of CA No. 141, on government reclaimed, foreshore and marshy lands of
the public domain, are as follows:
"Sec. 58. Any tract of land of the public domain which, being neither timber nor
mineral land, is intended to be used for residential purposes or for commercial,
industrial, or other productive purposes other than agricultural, and is open to
disposition or concession, shall be disposed of under the provisions of this chapter and
not otherwise.
Sec. 59. The lands disposable under this title shall be classified as follows:
(a) Lands reclaimed by the Government by dredging, filling, or other means;
(b) Foreshore;
(c) Marshy lands or lands covered with water bordering upon the shores or banks
of navigable lakes or rivers;
(d) Lands not included in any of the foregoing classes.
Sec. 60. Any tract of land comprised under this title may be leased or sold, as the case
may be, to any person, corporation, or association authorized to purchase or lease public
lands for agricultural purposes. x x x.
Sec. 61. The lands comprised in classes (a), (b), and (c) of section fifty-nine shall be
disposed of to private parties by lease only and not otherwise, as soon as the President,
upon recommendation by the Secretary of Agriculture, shall declare that the same are
not necessary for the public service and are open to disposition under this chapter. The
lands included in class (d) may be disposed of by sale or lease under the provisions of
this Act." (Emphasis supplied)
Section 61 of CA No. 141 readopted, after the effectivity of the 1935 Constitution, Section 58 of
Act No. 2874 prohibiting the sale of government reclaimed, foreshore and marshy disposable
lands of the public domain. All these lands are intended for residential, commercial, industrial or
other non-agricultural purposes. As before, Section 61 allowed only the lease of such lands to
private parties. The government could sell to private parties only lands falling under Section 59
(d) of CA No. 141, or those lands for non-agricultural purposes not classified as government
reclaimed, foreshore and marshy disposable lands of the public domain. Foreshore lands,
however, became inalienable under the 1935 Constitution which only allowed the lease of these
lands to qualified private parties.
Section 58 of CA No. 141 expressly states that disposable lands of the public domain intended
for residential, commercial, industrial or other productive purposes other than agricultural "shall
be disposed of under the provisions of this chapter and not otherwise." Under Section 10 of CA
No. 141, the term "disposition" includes lease of the land. Any disposition of government
reclaimed, foreshore and marshy disposable lands for non-agricultural purposes must comply
with Chapter IX, Title III of CA No. 141,
54
unless a subsequent law amended or repealed these
provisions.
In his concurring opinion in the landmark case of Republic Real Estate Corporation v. Court of
Appeals,
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 leaseof 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
leasenot 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.
x x x
(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.
x x x
(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 fromacquiring 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 J oint Venture Agreement
The subject matter of the Amended JVA, as stated in its second Whereas clause, consists of three
properties, namely:
1. "[T]hree partially reclaimed and substantially eroded islands along Emilio Aguinaldo
Boulevard in Paranaque and Las Pinas, Metro Manila, with a combined titled area of
1,578,441 square meters;"
2. "[A]nother area of 2,421,559 square meters contiguous to the three islands;" and
3. "[A]t AMARI's option as approved by PEA, an additional 350 hectares more or less to
regularize the configuration of the reclaimed area."
65

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

In short, the Amended JVA covers a reclamation area of 750 hectares. Only 157.84 hectares of
the 750-hectare reclamation project have been reclaimed, and the rest of the 592.15 hectares
are still submerged areas forming part of Manila Bay.
Under the Amended JVA, AMARI will reimburse PEA the sum of P1,894,129,200.00 for PEA's
"actual cost" in partially reclaiming the Freedom Islands. AMARI will also complete, at its own
expense, the reclamation of the Freedom Islands. AMARI will further shoulder all the
reclamation costs of all the other areas, totaling 592.15 hectares, still to be reclaimed. AMARI
and PEA will share, in the proportion of 70 percent and 30 percent, respectively, the total net
usable area which is defined in the Amended JVA as the total reclaimed area less 30 percent
earmarked for common areas. Title to AMARI's share in the net usable area, totaling 367.5
hectares, will be issued in the name of AMARI. Section 5.2 (c) of the Amended JVA provides
that
"x x x, PEA shall have the duty to execute without delay the necessary deed of transfer or
conveyance of the title pertaining to AMARI's Land share based on the Land Allocation
Plan. PEA, when requested in writing by AMARI , shall then cause the issuance and
delivery of the proper certificates of title covering AMARI's Land Share in the name of
AMARI , x x x; provided, that if more than seventy percent (70%) of the titled area at any
given time pertains to AMARI, PEA shall deliver to AMARI only seventy percent (70%)
of the titles pertaining to AMARI, until such time when a corresponding proportionate
area of additional land pertaining to PEA has been titled." (Emphasis supplied)
I ndisputably, under the Amended J VA AMARI will acquire and own a maximum of 367.5
hectares of reclaimed land which will be titled in its name.
To implement the Amended JVA, PEA delegated to the unincorporated PEA-AMARI joint
venture PEA's statutory authority, rights and privileges to reclaim foreshore and submerged areas
in Manila Bay. Section 3.2.a of the Amended JVA states that
"PEA hereby contributes to the joint venture its rights and privileges to perform Rawland
Reclamation and Horizontal Development as well as own the Reclamation Area, thereby
granting the Joint Venture the full and exclusive right, authority and privilege to
undertake the Project in accordance with the Master Development Plan."
The Amended JVA is the product of a renegotiation of the original JVA dated April 25, 1995 and
its supplemental agreement dated August 9, 1995.
The Threshold I ssue
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.
x x x
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 Aquino's actual issuanceof a special patent covering the
Freedom Islands, is equivalent to an official proclamation classifying the Freedom Islands as
alienable or disposable lands of the public domain. PD No. 1085 and President Aquino's issuance
of a land patent also constitute a declaration that the Freedom Islands are no longer needed for
public service. The Freedom I slands are thus alienable or disposable lands of the public
domain, open to disposition or concession to qualified parties.
At the time then President Aquino issued Special Patent No. 3517, PEA had already reclaimed
the Freedom Islands although subsequently there were partial erosions on some areas. The
government had also completed the necessary surveys on these islands. Thus, the Freedom
Islands were no longer part of Manila Bay but part of the land mass. Section 3, Article XII of the
1987 Constitution classifies lands of the public domain into "agricultural, forest or timber,
mineral lands, and national parks." Being neither timber, mineral, nor national park lands, the
reclaimed Freedom Islands necessarily fall under the classification of agricultural lands of the
public domain. Under the 1987 Constitution, agricultural lands of the public domain are the only
natural resources that the State may alienate to qualified private parties. All other natural
resources, such as the seas or bays, are "waters x x x owned by the State" forming part of the
public domain, and are inalienable pursuant to Section 2, Article XII of the 1987 Constitution.
AMARI claims that the Freedom Islands are private lands because CDCP, then a private
corporation, reclaimed the islands under a contract dated November 20, 1973 with the
Commissioner of Public Highways. AMARI, citing Article 5 of the Spanish Law of Waters of
1866, argues that "if the ownership of reclaimed lands may be given to the party constructing the
works, then it cannot be said that reclaimed lands are lands of the public domain which the State
may not alienate."
75
Article 5 of the Spanish Law of Waters reads as follows:
"Article 5. Lands reclaimed from the sea in consequence of works constructed by the
State, or by the provinces, pueblos or private persons, with proper permission, shall
become the property of the party constructing such works, unless otherwise provided by
the terms of the grant of authority." (Emphasis supplied)
Under Article 5 of the Spanish Law of Waters of 1866, private parties could reclaim from the sea
only with "proper permission" from the State. Private parties could own the reclaimed land only
if not "otherwise provided by the terms of the grant of authority." This clearly meant that no one
could reclaim from the sea without permission from the State because the sea is property of
public dominion. It also meant that the State could grant or withhold ownership of the reclaimed
land because any reclaimed land, like the sea from which it emerged, belonged to the State.
Thus, a private person reclaiming from the sea without permission from the State could not
acquire ownership of the reclaimed land which would remain property of public dominion like
the sea it replaced.
76
Article 5 of the Spanish Law of Waters of 1866 adopted the time-honored
principle of land ownership that "all lands that were not acquired from the government, either by
purchase or by grant, belong to the public domain."
77

Article 5 of the Spanish Law of Waters must be read together with laws subsequently enacted on
the disposition of public lands. In particular, CA No. 141 requires that lands of the public domain
must first be classified as alienable or disposable before the government can alienate them. These
lands must not be reserved for public or quasi-public purposes.
78
Moreover, the contract between
CDCP and the government was executed after the effectivity of the 1973 Constitution which
barred private corporations from acquiring any kind of alienable land of the public domain. This
contract could not have converted the Freedom Islands into private lands of a private
corporation.
Presidential Decree No. 3-A, issued on January 11, 1973, revoked all laws authorizing the
reclamation of areas under water and revested solely in the National Government the power to
reclaim lands. Section 1 of PD No. 3-A declared that
"The provisions of any law to the contrary notwithstanding, the reclamation of areas
under water, whether foreshore or inland, shall be limited to the National Government or
any person authorized by it under a proper contract. (Emphasis supplied)
x x x."
PD No. 3-A repealed Section 5 of the Spanish Law of Waters of 1866 because reclamation of
areas under water could now be undertaken only by the National Government or by a person
contracted by the National Government. Private parties may reclaim from the sea only under a
contract with the National Government, and no longer by grant or permission as provided in
Section 5 of the Spanish Law of Waters of 1866.
Executive Order No. 525, issued on February 14, 1979, designated PEA as the National
Government's implementing arm to undertake "all reclamation projects of the government,"
which "shall be undertaken by the PEA or through a proper contract executed by it with any
person or entity." Under such contract, a private party receives compensation for reclamation
services rendered to PEA. Payment to the contractor may be in cash, or in kind consisting of
portions of the reclaimed land, subject to the constitutional ban on private corporations from
acquiring alienable lands of the public domain. The reclaimed land can be used as payment in
kind only if the reclaimed land is first classified as alienable or disposable land open to
disposition, and then declared no longer needed for public service.
The Amended JVA covers not only the Freedom Islands, but also an additional 592.15 hectares
which are still submerged and forming part of Manila Bay. There is no legislative or
Presidential act classifying these submerged areas as alienable or disposable lands of the
public domain open to disposition. These submerged areas are not covered by any patent or
certificate of title. There can be no dispute that these submerged areas form part of the public
domain, and in their present state are inalienable and outside the commerce of man. Until
reclaimed from the sea, these submerged areas are, under the Constitution, "waters x x x owned
by the State," forming part of the public domain and consequently inalienable. Only when
actually reclaimed from the sea can these submerged areas be classified as public agricultural
lands, which under the Constitution are the only natural resources that the State may alienate.
Once reclaimed and transformed into public agricultural lands, the government may then
officially classify these lands as alienable or disposable lands open to disposition. Thereafter, the
government may declare these lands no longer needed for public service. Only then can these
reclaimed lands be considered alienable or disposable lands of the public domain and within the
commerce of man.
The classification of PEA's reclaimed foreshore and submerged lands into alienable or
disposable lands open to disposition is necessary because PEA is tasked under its charter to
undertake public services that require the use of lands of the public domain. Under Section 5 of
PD No. 1084, the functions of PEA include the following: "[T]o own or operate railroads,
tramways and other kinds of land transportation, x x x; [T]o construct, maintain and operate such
systems of sanitary sewers as may be necessary; [T]o construct, maintain and operate such storm
drains as may be necessary." PEA is empowered to issue "rules and regulations as may be
necessary for the proper use by private parties of any or all of the highways, roads, utilities,
buildings and/or any of its properties and to impose or collect fees or tolls for their use." Thus,
part of the reclaimed foreshore and submerged lands held by the PEA would actually be needed
for public use or service since many of the functions imposed on PEA by its charter constitute
essential public services.
Moreover, Section 1 of Executive Order No. 525 provides that PEA "shall be primarily
responsible for integrating, directing, and coordinating all reclamation projects for and on behalf
of the National Government." The same section also states that "[A]ll reclamation projects shall
be approved by the President upon recommendation of the PEA, and shall be undertaken by the
PEA or through a proper contract executed by it with any person or entity; x x x." Thus, under
EO No. 525, in relation to PD No. 3-A and PD No.1084, PEA became the primary implementing
agency of the National Government to reclaim foreshore and submerged lands of the public
domain. EO No. 525 recognized PEA as the government entity "to undertake the reclamation of
lands and ensure their maximum utilization in promoting public welfare and interests."
79
Since
large portions of these reclaimed lands would obviously be needed for public service, there must
be a formal declaration segregating reclaimed lands no longer needed for public service from
those still needed for public service.1wphi1.nt
Section 3 of EO No. 525, by declaring that all lands reclaimed by PEA "shall belong to or be
owned by the PEA," could not automatically operate to classify inalienable lands into alienable
or disposable lands of the public domain. Otherwise, reclaimed foreshore and submerged lands
of the public domain would automatically become alienable once reclaimed by PEA, whether or
not classified as alienable or disposable.
The Revised Administrative Code of 1987, a later law than either PD No. 1084 or EO No. 525,
vests in the Department of Environment and Natural Resources ("DENR" for brevity) the
following powers and functions:
"Sec. 4. Powers and Functions. The Department shall:
(1) x x x
x x x
(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;
x x x
(14) Promulgate rules, regulations and guidelines on the issuance of licenses, permits,
concessions, lease agreements and such other privileges concerning the development,
exploration and utilization of the country's marine, freshwater, and brackish water and
over all aquatic resources of the country and shall continue to oversee, supervise and
police our natural resources; cancel or cause to cancel such privileges upon failure, non-
compliance or violations of any regulation, order, and for all other causes which are in
furtherance of the conservation of natural resources and supportive of the national
interest;
(15) Exercise exclusive jurisdiction on the management and disposition of all lands of
the public domain and serve as the sole agency responsible for classification, sub-
classification, surveying and titling of lands in consultation with appropriate
agencies."
80
(Emphasis supplied)
As manager, conservator and overseer of the natural resources of the State, DENR exercises
"supervision and control over alienable and disposable public lands." DENR also exercises
"exclusive jurisdiction on the management and disposition of all lands of the public domain."
Thus, DENR decides whether areas under water, like foreshore or submerged areas of Manila
Bay, should be reclaimed or not. This means that PEA needs authorization from DENR before
PEA can undertake reclamation projects in Manila Bay, or in any part of the country.
DENR also exercises exclusive jurisdiction over the disposition of all lands of the public domain.
Hence, DENR decides whether reclaimed lands of PEA should be classified as alienable under
Sections 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

PEA's Authority to Sell Reclaimed Lands
PEA, like the Legal Task Force, argues that as alienable or disposable lands of the public
domain, the reclaimed lands shall be disposed of in accordance with CA No. 141, the Public
Land Act. PEA, citing Section 60 of CA No. 141, admits that reclaimed lands transferred to a
branch or subdivision of the government "shall not be alienated, encumbered, or otherwise
disposed of in a manner affecting its title, except when authorized by Congress: x x
x."
85
(Emphasis by PEA)
In Laurel vs. Garcia,
86
the Court cited Section 48 of the Revised Administrative Code of 1987,
which states that
"Sec. 48. Official Authorized to Convey Real Property. Whenever real property of the
Government is authorized by law to be conveyed, the deed of conveyance shall be
executed in behalf of the government by the following: x x x."
Thus, the Court concluded that a law is needed to convey any real property belonging to the
Government. The Court declared that -
"It is not for the President to convey real property of the government on his or her own
sole will. Any such conveyance must be authorized and approved by a law enacted by
the Congress. It requires executive and legislative concurrence." (Emphasis supplied)
PEA contends that PD No. 1085 and EO No. 525 constitute the legislative authority allowing
PEA to sell its reclaimed lands. PD No. 1085, issued on February 4, 1977, provides that
"The land reclaimed in the foreshore and offshore area of Manila Bay pursuant to the
contract for the reclamation and construction of the Manila-Cavite Coastal Road Project
between the Republic of the Philippines and the Construction and Development
Corporation of the Philippines dated November 20, 1973 and/or any other contract or
reclamation covering the same area is hereby transferred, conveyed and assigned to the
ownership and administration of the Public Estates Authority established pursuant to
PD No. 1084; Provided, however, That the rights and interests of the Construction and
Development Corporation of the Philippines pursuant to the aforesaid contract shall be
recognized and respected.
Henceforth, the Public Estates Authority shall exercise the rights and assume the
obligations of the Republic of the Philippines (Department of Public Highways) arising
from, or incident to, the aforesaid contract between the Republic of the Philippines and
the Construction and Development Corporation of the Philippines.
In consideration of the foregoing transfer and assignment, the Public Estates Authority
shall issue in favor of the Republic of the Philippines the corresponding shares of stock in
said entity with an issued value of said shares of stock (which) shall be deemed fully paid
and non-assessable.
The Secretary of Public Highways and the General Manager of the Public Estates
Authority shall execute such contracts or agreements, including appropriate agreements
with the Construction and Development Corporation of the Philippines, as may be
necessary to implement the above.
Special land patent/patents shall be issued by the Secretary of Natural Resources in
favor of the Public Estates Authority without prejudice to the subsequent transfer to
the contractor or his assignees of such portion or portions of the land reclaimed or to
be reclaimed as provided for in the above-mentioned contract. On the basis of such
patents, the Land Registration Commission shall issue the corresponding certificate of
title." (Emphasis supplied)
On the other hand, Section 3 of EO No. 525, issued on February 14, 1979, provides that -
"Sec. 3. All lands reclaimed by PEA shall belong to or be owned by the PEA which
shall be responsible for its administration, development, utilization or disposition in
accordance with the provisions of Presidential Decree No. 1084. Any and all income that
the PEA may derive from the sale, lease or use of reclaimed lands shall be used in
accordance with the provisions of Presidential Decree No. 1084."
There is no express authority under either PD No. 1085 or EO No. 525 for PEA to sell its
reclaimed lands. PD No. 1085 merely transferred "ownership and administration" of lands
reclaimed from Manila Bay to PEA, while EO No. 525 declared that lands reclaimed by PEA
"shall belong to or be owned by PEA." EO No. 525 expressly states that PEA should dispose of
its reclaimed lands "in accordance with the provisions of Presidential Decree No. 1084," the
charter of PEA.
PEA's charter, however, expressly tasks PEA "to develop, improve, acquire, administer, deal in,
subdivide, dispose, lease and sell any and all kinds of lands x x x owned, managed, controlled
and/or operated by the government."
87
(Emphasis supplied) There is, therefore, legislative
authority granted to PEA to sell its lands, whether patrimonial or alienable lands of the public
domain. PEA may sell to private parties its patrimonial properties in accordance with the PEA
charter free from constitutional limitations. The constitutional ban on private corporations from
acquiring alienable lands of the public domain does not apply to the sale of PEA's patrimonial
lands.
PEA may also sell its alienable or disposable lands of the public domain to private individuals
since, with the legislative authority, there is no longer any statutory prohibition against such sales
and the constitutional ban does not apply to individuals. PEA, however, cannot sell any of its
alienable or disposable lands of the public domain to private corporations since Section 3, Article
XII of the 1987 Constitution expressly prohibits such sales. The legislative authority benefits
only individuals. Private corporations remain barred from acquiring any kind of alienable land of
the public domain, including government reclaimed lands.
The provision in PD No. 1085 stating that portions of the reclaimed lands could be transferred by
PEA to the "contractor or his assignees" (Emphasis supplied) would not apply to private
corporations but only to individuals because of the constitutional ban. Otherwise, the provisions
of PD No. 1085 would violate both the 1973 and 1987 Constitutions.
The requirement of public auction in the sale of reclaimed lands
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. I f 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. I n 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 PEA's reclaimed
foreshore and submerged alienable lands of the public domain. Private corporations are barred
from bidding at the auction sale of any kind of alienable land of the public domain.
PEA originally scheduled a public bidding for the Freedom Islands on December 10, 1991. PEA
imposed a condition that the winning bidder should reclaim another 250 hectares of submerged
areas to regularize the shape of the Freedom Islands, under a 60-40 sharing of the additional
reclaimed areas in favor of the winning bidder.
92
No one, however, submitted a bid. On
December 23, 1994, the Government Corporate Counsel advised PEA it could sell the Freedom
Islands through negotiation, without need of another public bidding, because of the failure of the
public bidding on December 10, 1991.
93

However, the original JVA dated April 25, 1995 covered not only the Freedom Islands and the
additional 250 hectares still to be reclaimed, it also granted an option to AMARI to reclaim
another 350 hectares. The original JVA, a negotiated contract, enlarged the reclamation area
to 750 hectares.
94
The failure of public bidding on December 10, 1991, involving only 407.84
hectares,
95
is not a valid justification for a negotiated sale of 750 hectares, almost double the area
publicly auctioned. Besides, the failure of public bidding happened on December 10, 1991, more
than three years before the signing of the original JVA on April 25, 1995. The economic
situation in the country had greatly improved during the intervening period.
Reclamation under the BOT Law and the Local Government Code
The constitutional prohibition in Section 3, Article XII of the 1987 Constitution is absolute and
clear: "Private corporations or associations may not hold such alienable lands of the public
domain except by lease, x x x." Even Republic Act No. 6957 ("BOT Law," for brevity), cited by
PEA and AMARI as legislative authority to sell reclaimed lands to private parties, recognizes the
constitutional ban. Section 6 of RA No. 6957 states
"Sec. 6. Repayment Scheme. - For the financing, construction, operation and
maintenance of any infrastructure projects undertaken through the build-operate-and-
transfer arrangement or any of its variations pursuant to the provisions of this Act, the
project proponent x x x may likewise be repaid in the form of a share in the revenue of
the project or other non-monetary payments, such as, but not limited to, the grant of a
portion or percentage of the reclaimed land, subject to the constitutional requirements
with respect to the ownership of the land: x x x." (Emphasis supplied)
A private corporation, even one that undertakes the physical reclamation of a government BOT
project, cannot acquire reclaimed alienable lands of the public domain in view of the
constitutional ban.
Section 302 of the Local Government Code, also mentioned by PEA and AMARI, authorizes
local governments in land reclamation projects to pay the contractor or developer in kind
consisting of a percentage of the reclaimed land, to wit:
"Section 302. Financing, Construction, Maintenance, Operation, and Management of
Infrastructure Projects by the Private Sector. x x x
x x x
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 titlesissued to private parties. These four cases uniformly hold that the Director of
Lands has no jurisdiction over private lands or that upon issuance of the certificate of title the
land automatically comes under the Torrens System. The fifth case cited involves the registration
under the Torrens System of a 12.8-hectare public land granted by the National Government to
Mindanao Medical Center, a government unit under the Department of Health. The National
Government transferred the 12.8-hectare public land to serve as the site for the hospital buildings
and other facilities of Mindanao Medical Center, which performed a public service. The Court
affirmed the registration of the 12.8-hectare public land in the name of Mindanao Medical Center
under Section 122 of Act No. 496. This fifth case is an example of a public land being registered
under Act No. 496 without the land losing its character as a property of public dominion.
In the instant case, the only patent and certificates of title issued are those in the name of PEA, a
wholly government owned corporation performing public as well as proprietary functions. No
patent or certificate of title has been issued to any private party. No one is asking the Director of
Lands to cancel PEA's patent or certificates of title. In fact, the thrust of the instant petition is
that PEA's certificates of title should remain with PEA, and the land covered by these
certificates, being alienable lands of the public domain, should not be sold to a private
corporation.
Registration of land under Act No. 496 or PD No. 1529 does not vest in the registrant private or
public ownership of the land. Registration is not a mode of acquiring ownership but is merely
evidence of ownership previously conferred by any of the recognized modes of acquiring
ownership. Registration does not give the registrant a better right than what the registrant had
prior to the registration.
102
The registration of lands of the public domain under the Torrens
system, by itself, cannot convert public lands into private lands.
103

Jurisprudence holding that upon the grant of the patent or issuance of the certificate of title the
alienable land of the public domain automatically becomes private land cannot apply to
government units and entities like PEA. The transfer of the Freedom Islands to PEA was made
subject to the provisions of CA No. 141 as expressly stated in Special Patent No. 3517 issued by
then President Aquino, to wit:
"NOW, THEREFORE, KNOW YE, that by authority of the Constitution of the
Philippines and in conformity with the provisions of Presidential Decree No. 1084,
supplemented by Commonwealth Act No. 141, as amended, there are hereby granted and
conveyed unto the Public Estates Authority the aforesaid tracts of land containing a total
area of one million nine hundred fifteen thousand eight hundred ninety four (1,915,894)
square meters; the technical description of which are hereto attached and made an
integral part hereof." (Emphasis supplied)
Thus, the provisions of CA No. 141 apply to the Freedom Islands on matters not covered by PD
No. 1084. Section 60 of CA No. 141 prohibits, "except when authorized by Congress," the sale
of alienable lands of the public domain that are transferred to government units or entities.
Section 60 of CA No. 141 constitutes, under Section 44 of PD No. 1529, a "statutory lien
affecting title" of the registered land even if not annotated on the certificate of title.
104
Alienable
lands of the public domain held by government entities under Section 60 of CA No. 141 remain
public lands because they cannot be alienated or encumbered unless Congress passes a law
authorizing their disposition. Congress, however, cannot authorize the sale to private
corporations of reclaimed alienable lands of the public domain because of the constitutional ban.
Only individuals can benefit from such law.
The grant of legislative authority to sell public lands in accordance with Section 60 of CA No.
141 does not automatically convert alienable lands of the public domain into private or
patrimonial lands. The alienable lands of the public domain must be transferred to qualified
private parties, or to government entities not tasked to dispose of public lands, before these lands
can become private or patrimonial lands. Otherwise, the constitutional ban will become illusory
if Congress can declare lands of the public domain as private or patrimonial lands in the hands of
a government agency tasked to dispose of public lands. This will allow private corporations to
acquire directly from government agencies limitless areas of lands which, prior to such law, are
concededly public lands.
Under EO No. 525, PEA became the central implementing agency of the National Government
to reclaim foreshore and submerged areas of the public domain. Thus, EO No. 525 declares that

"EXECUTIVE ORDER NO. 525
Designating the Public Estates Authority as the Agency Primarily Responsible for all
Reclamation Projects
Whereas, there are several reclamation projects which are ongoing or being proposed to
be undertaken in various parts of the country which need to be evaluated for consistency
with national programs;
Whereas, there is a need to give further institutional support to the Government's declared
policy to provide for a coordinated, economical and efficient reclamation of lands;
Whereas, Presidential Decree No. 3-A requires that all reclamation of areas shall be
limited to the National Government or any person authorized by it under proper contract;
Whereas, a central authority is needed to act on behalf of the National Government
which shall ensure a coordinated and integrated approach in the reclamation of lands;
Whereas, Presidential Decree No. 1084 creates the Public Estates Authority as a
government corporation to undertake reclamation of lands and ensure their maximum
utilization in promoting public welfare and interests; and
Whereas, Presidential Decree No. 1416 provides the President with continuing authority
to reorganize the national government including the transfer, abolition, or merger of
functions and offices.
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by
virtue of the powers vested in me by the Constitution and pursuant to Presidential Decree
No. 1416, do hereby order and direct the following:
Section 1. The Public Estates Authority (PEA) shall be primarily responsible for
integrating, directing, and coordinating all reclamation projects for and on behalf of
the National Government. All reclamation projects shall be approved by the President
upon recommendation of the PEA, and shall be undertaken by the PEA or through a
proper contract executed by it with any person or entity; Provided, that, reclamation
projects of any national government agency or entity authorized under its charter shall be
undertaken in consultation with the PEA upon approval of the President.
x x x ."
As the central implementing agency tasked to undertake reclamation projects nationwide, with
authority to sell reclaimed lands, PEA took the place of DENR as the government agency
charged with leasing or selling reclaimed lands of the public domain. The reclaimed lands being
leased or sold by PEA are not private lands, in the same manner that DENR, when it disposes of
other alienable lands, does not dispose of private lands but alienable lands of the public domain.
Only when qualified private parties acquire these lands will the lands become private lands. I n
the hands of the government agency tasked and authorized to dispose of alienable of
disposable lands of the public domain, these lands are still public, not private lands.
Furthermore, PEA's charter expressly states that PEA "shall hold lands of the public domain" as
well as "any and all kinds of lands." PEA can hold both lands of the public domain and private
lands. Thus, the mere fact that alienable lands of the public domain like the Freedom Islands are
transferred to PEA and issued land patents or certificates of title in PEA's name does not
automatically make such lands private.
To allow vast areas of reclaimed lands of the public domain to be transferred to PEA as private
lands will sanction a gross violation of the constitutional ban on private corporations from
acquiring any kind of alienable land of the public domain. PEA will simply turn around, as PEA
has now done under the Amended J VA, and transfer several hundreds of hectares of these
reclaimed and still to be reclaimed lands to a single private corporation in only one transaction.
This scheme will effectively nullify the constitutional ban in Section 3, Article XII of the 1987
Constitution which was intended to diffuse equitably the ownership of alienable lands of the
public domain among Filipinos, now numbering over 80 million strong.
This scheme, if allowed, can even be applied to alienable agricultural lands of the public domain
since PEA can "acquire x x x any and all kinds of lands." This will open the floodgates to
corporations and even individuals acquiring hundreds of hectares of alienable lands of the public
domain under the guise that in the hands of PEA these lands are private lands. This will result in
corporations amassing huge landholdings never before seen in this country - creating the very
evil that the constitutional ban was designed to prevent. This will completely reverse the clear
direction of constitutional development in this country. The 1935 Constitution allowed private
corporations to acquire not more than 1,024 hectares of public lands.
105
The 1973 Constitution
prohibited private corporations from acquiring any kind of public land, and the 1987 Constitution
has unequivocally reiterated this prohibition.
The contention of PEA and AMARI that public lands, once registered under Act No. 496 or PD
No. 1529, automatically become private lands is contrary to existing laws. Several laws authorize
lands of the public domain to be registered under the Torrens System or Act No. 496, now PD
No. 1529, without losing their character as public lands. Section 122 of Act No. 496, and Section
103 of PD No. 1529, respectively, provide as follows:
Act No. 496
"Sec. 122. Whenever public lands in the Philippine Islands belonging to the x x x
Government of the Philippine Islands are alienated, granted, or conveyed to persons or
the public or private corporations, the same shall be brought forthwith under the
operation of this Act and shall become registered lands."
PD No. 1529
"Sec. 103. Certificate of Title to Patents. Whenever public land is by the Government
alienated, granted or conveyed to any person, the same shall be brought forthwith under
the operation of this Decree." (Emphasis supplied)
Based on its legislative history, the phrase "conveyed to any person" in Section 103 of PD No.
1529 includes conveyances of public lands to public corporations.
Alienable lands of the public domain "granted, donated, or transferred to a province,
municipality, or branch or subdivision of the Government," as provided in Section 60 of CA No.
141, may be registered under the Torrens System pursuant to Section 103 of PD No. 1529. Such
registration, however, is expressly subject to the condition in Section 60 of CA No. 141 that the
land "shall not be alienated, encumbered or otherwise disposed of in a manner affecting its title,
except when authorized by Congress." This provision refers to government reclaimed, foreshore
and marshy lands of the public domain that have been titled but still cannot be alienated or
encumbered unless expressly authorized by Congress. The need for legislative authority prevents
the registered land of the public domain from becoming private land that can be disposed of to
qualified private parties.
The Revised Administrative Code of 1987 also recognizes that lands of the public domain may
be registered under the Torrens System. Section 48, Chapter 12, Book I of the Code states
"Sec. 48. Official Authorized to Convey Real Property. Whenever real property of the
Government is authorized by law to be conveyed, the deed of conveyance shall be
executed in behalf of the government by the following:
(1) x x x
(2) For property belonging to the Republic of the Philippines, but titled in the name of
any political subdivision or of any corporate agency or instrumentality, by the
executive head of the agency or instrumentality." (Emphasis supplied)
Thus, private property purchased by the National Government for expansion of a public wharf
may be titled in the name of a government corporation regulating port operations in the country.
Private property purchased by the National Government for expansion of an airport may also be
titled in the name of the government agency tasked to administer the airport. Private property
donated to a municipality for use as a town plaza or public school site may likewise be titled in
the name of the municipality.
106
All these properties become properties of the public domain, and
if already registered under Act No. 496 or PD No. 1529, remain registered land. There is no
requirement or provision in any existing law for the de-registration of land from the Torrens
System.
Private lands taken by the Government for public use under its power of eminent domain become
unquestionably part of the public domain. Nevertheless, Section 85 of PD No. 1529 authorizes
the Register of Deeds to issue in the name of the National Government new certificates of title
covering such expropriated lands. Section 85 of PD No. 1529 states
"Sec. 85. Land taken by eminent domain. Whenever any registered land, or interest
therein, is expropriated or taken by eminent domain, the National Government, province,
city or municipality, or any other agency or instrumentality exercising such right shall file
for registration in the proper Registry a certified copy of the judgment which shall state
definitely by an adequate description, the particular property or interest expropriated, the
number of the certificate of title, and the nature of the public use. A memorandum of the
right or interest taken shall be made on each certificate of title by the Register of Deeds,
and where the fee simple is taken, a new certificate shall be issued in favor of the
National Government, province, city, municipality, or any other agency or
instrumentality exercising such right for the land so taken. The legal expenses incident to
the memorandum of registration or issuance of a new certificate of title shall be for the
account of the authority taking the land or interest therein." (Emphasis supplied)
Consequently, lands registered under Act No. 496 or PD No. 1529 are not exclusively private or
patrimonial lands. Lands of the public domain may also be registered pursuant to existing laws.
AMARI makes a parting shot that the Amended JVA is not a sale to AMARI of the Freedom
Islands or of the lands to be reclaimed from submerged areas of Manila Bay. In the words of
AMARI, the Amended JVA "is not a sale but a joint venture with a stipulation for
reimbursement of the original cost incurred by PEA for the earlier reclamation and construction
works performed by the CDCP under its 1973 contract with the Republic." Whether the
Amended JVA is a sale or a joint venture, the fact remains that the Amended JVA requires PEA
to "cause the issuance and delivery of the certificates of title conveying AMARI's Land Share in
the name of AMARI."
107

This stipulation still contravenes Section 3, Article XII of the 1987 Constitution which provides
that private corporations "shall not hold such alienable lands of the public domain except by
lease." The transfer of title and ownership to AMARI clearly means that AMARI will "hold" the
reclaimed lands other than by lease. The transfer of title and ownership is a "disposition" of the
reclaimed lands, a transaction considered a sale or alienation under CA No. 141,
108
the
Government Auditing Code,
109
and Section 3, Article XII of the 1987 Constitution.
The Regalian doctrine is deeply implanted in our legal system. Foreshore and submerged areas
form part of the public domain and are inalienable. Lands reclaimed from foreshore and
submerged areas also form part of the public domain and are also inalienable, unless converted
pursuant to law into alienable or disposable lands of the public domain. Historically, lands
reclaimed by the government are sui generis, not available for sale to private parties unlike other
alienable public lands. Reclaimed lands retain their inherent potential as areas for public use or
public service. Alienable lands of the public domain, increasingly becoming scarce natural
resources, are to be distributed equitably among our ever-growing population. To insure such
equitable distribution, the 1973 and 1987 Constitutions have barred private corporations from
acquiring any kind of alienable land of the public domain. Those who attempt to dispose of
inalienable natural resources of the State, or seek to circumvent the constitutional ban on
alienation of lands of the public domain to private corporations, do so at their own risk.
We can now summarize our conclusions as follows:
1. The 157.84 hectares of reclaimed lands comprising the Freedom Islands, now covered
by certificates of title in the name of PEA, are alienable lands of the public domain.
PEA may lease these lands to private corporations but may not sell or transfer ownership
of these lands to private corporations. PEA may only sell these lands to Philippine
citizens, subject to the ownership limitations in the 1987 Constitution and existing laws.
2. The 592.15 hectares of submerged areas of Manila Bay remain inalienable natural
resources of the public domain until classified as alienable or disposable lands open to
disposition and declared no longer needed for public service. The government can make
such classification and declaration only after PEA has reclaimed these submerged areas.
Only then can these lands qualify as agricultural lands of the public domain, which are
the only natural resources the government can alienate. In their present state, the 592.15
hectares of submerged areas are inalienable and outside the commerce of man.
3. Since the Amended JVA seeks to transfer to AMARI, a private corporation, ownership
of 77.34 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 J VA null and void ab initio.
Seventh issue: whether the Court is the proper forum to raise the issue of whether the
Amended J VA 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.
TEOFILO C. VILLARICO, petitioner, vs. VIVENCIO SARMIENTO, SPOUSES BESSIE
SARMIENTO-DEL MUNDO & BETH DEL MUNDO, ANDOKS LITSON
CORPORATION and MARITES CARINDERIA, respondents.
D E C I S I O N
SANDOVAL-GUTIERREZ, J .:
Before us is a petition for review on certiorari of the Decision
[1]
of the Court of Appeals
dated December 7, 1998 in CA-G.R. CV No. 54883, affirming in toto the Decision
[2]
of the
Regional Trial Court (RTC) of Paraaque City, Branch 259, dated November 14, 1996, in Civil
Case No. 95-044.
The facts of this case, as gleaned from the findings of the Court of Appeals, are:
Teofilo C. Villarico, petitioner, is the owner of a lot in La Huerta, Paraaque City, Metro
Manila with an area of sixty-six (66) square meters and covered by Transfer Certificate of Title
(T.C.T.) No. 95453 issued by the Registry of Deeds, same city.
Petitioners lot is separated from the Ninoy Aquino Avenue (highway) by a strip of land
belonging to the government. As this highway was elevated by four (4) meters and therefore
higher than the adjoining areas, the Department of Public Works and Highways (DPWH)
constructed stairways at several portions of this strip of public land to enable the people to have
access to the highway.
Sometime in 1991, Vivencio Sarmiento, his daughter Bessie Sarmiento and her husband
Beth Del Mundo, respondents herein, had a building constructed on a portion of said government
land. In November that same year, a part thereof was occupied by Andoks Litson Corporation
and Marites Carinderia, also impleaded as respondents.
In 1993, by means of a Deed of Exchange of Real Property, petitioner acquired a 74.30
square meter portion of the same area owned by the government. The property was registered in
his name as T.C.T. No. 74430 in the Registry of Deeds of Paraaque City.
In 1995, petitioner filed with the RTC, Branch 259, Paraaque City, a complaint for accion
publiciana against respondents, docketed as Civil Case No. 95-044. He alleged inter alia that
respondents structures on the government land closed his right of way to the Ninoy Aquino
Avenue; and encroached on a portion of his lot covered by T.C.T. No. 74430.
Respondents, in their answer, specifically denied petitioners allegations, claiming that they
have been issued licenses and permits by Paraaque City to construct their buildings on the area;
and that petitioner has no right over the subject property as it belongs to the government.
After trial, the RTC rendered its Decision, the dispositive portion of which reads:
WHEREFORE, premises considered, judgment is hereby rendered:
1. Declaring the defendants to have a better right of possession over the subject
land except the portion thereof covered by Transfer Certificate of Title No.
74430 of the Register of Deeds of Paraaque;
2. Ordering the defendants to vacate the portion of the subject premises described
in Transfer Certificate of Title No. 74430 and gives its possession to plaintiff;
and
3. Dismissing the claim for damages of the plaintiff against the defendants, and
likewise dismissing the claim for attorneys fees of the latter against the former.
Without pronouncement as to costs.
SO ORDERED.
[3]

The trial court found that petitioner has never been in possession of any portion of the public
land in question. On the contrary, the defendants are the ones who have been in actual
possession of the area. According to the trial court, petitioner was not deprived of his right of
way as he could use the Kapitan Tinoy Street as passageway to the highway.
On appeal by petitioner, the Court of Appeals issued its Decision affirming the trial courts
Decision in toto, thus:
WHEREFORE, the judgment hereby appealed from is hereby AFFIRMED in toto, with costs
against the plaintiff-appellant.
SO ORDERED.
[4]

In this petition, petitioner ascribes to the Court of Appeals the following assignments of
error:
I
THE FINDINGS OF FACT OF THE HON. COURT OF APPEALS CONTAINED A
CONCLUSION WITHOUT CITATION OF SPECIFIC EVIDENCE ON WHICH THE SAME
WAS BASED.

II
THE HON. COURT OF APPEALS ERRED IN CONSIDERING THAT THE ONLY ISSUE IN
THIS CASE IS WHETHER OR NOT THE PLAINTIFF-APPELLANT HAS ACQUIRED A
RIGHT OF WAY OVER THE LAND OF THE GOVERNMENT WHICH IS BETWEEN HIS
PROPERTY AND THE NINOY AQUINO AVENUE.

III
THE HON. COURT OF APPEALS ERRED IN CONCLUDING THAT ACCION
PUBLICIANA IS NOT THE PROPER REMEDY IN THE CASE AT BAR.
IV
THE HON. COURT OF APPEALS ERRED IN CONCLUDING THAT THE EXISTENCE OF
THE PLAINTIFF-APPELLANTS RIGHT OF WAY DOES NOT CARRY POSSESSION
OVER THE SAME.
V
THE HON. COURT OF APPEALS ERRED IN NOT RESOLVING THE ISSUE OF WHO
HAS THE BETTER RIGHT OF POSSESSION OVER THE SUBJECT LAND BETWEEN
THE PLAINTIFF-APPELLANT AND THE DEFENDANT-APPELLEES.
[5]

In their comment, respondents maintain that the Court of Appeals did not err in ruling that
petitioners action for accion publiciana is not the proper remedy in asserting his right of way
on a lot owned by the government.
Here, petitioner claims that respondents, by constructing their buildings on the lot in
question, have deprived him of his right of way and his right of possession over a considerable
portion of the same lot, which portion is covered by his T.C.T. No. 74430 he acquired by means
of exchange of real property.
It is not disputed that the lot on which petitioners alleged right of way exists belongs to
the state or property of public dominion. Property of public dominion is defined by Article 420
of the Civil Code as follows:
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 other 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.
Public use is use that is not confined to privileged individuals, but is open to the indefinite
public.
[6]
Records show that the lot on which the stairways were built is for the use of the people
as passageway to the highway. Consequently, it is a property of public dominion.
Property of public dominion is outside the commerce of man and hence it: (1) cannot be
alienated or leased or otherwise be the subject matter of contracts; (2) cannot be acquired by
prescription against the State; (3) is not subject to attachment and execution; and (4) cannot be
burdened by any voluntary easement.
[7]

Considering that the lot on which the stairways were constructed is a property of public
dominion, it can not be burdened by a voluntary easement of right of way in favor of herein
petitioner. In fact, its use by the public is by mere tolerance of the government through the
DPWH. Petitioner cannot appropriate it for himself. Verily, he can not claim any right of
possession over it. This is clear from Article 530 of the Civil Code which provides:

ART. 530. Only things and rights which are susceptible of being appropriated may be the object
of possession.


Accordingly, both the trial court and the Court of Appeals erred in ruling that respondents
have better right of possession over the subject lot.
However, the trial court and the Court of Appeals found that defendants buildings were
constructed on the portion of the same lot now covered by T.C.T. No. 74430 in petitioners
name. Being its owner, he is entitled to its possession.
WHEREFORE, the petition is DENIED. The assailed Decision of the Court of Appeals
dated December 7, 1998 in CA-G.R. CV No. 54883 is AFFIRMED with MODIFICATION in
the sense that neither petitioner nor respondents have a right of possession over the disputed lot
where the stairways were built as it is a property of public dominion. Costs against petitioner.
SO ORDERED.
G.R. No. L-48050 October 10, 1994
FELICIDAD JAVIER, petitioner,
vs.
HON. REGINO T. VERIDIANO II, Presiding Judge, Branch I, Court of First Instance of
Zambales and REINO ROSETE, respondents.
Cesar E. Palma for petitioner.
Saturnino V. Bactad for private respondent.

BELLOSILLO, J .:
Petitioner Felicidad Javier questions before us the order of a regional trial court citing the final
decision of the city court previously dismissing her complaint for forcible entry, and on the basis
thereof, dismissed her petition to quiet title on the ground of res judicata. We summon the time-
honored remedies accion interdictal, accion publiciana and accion reivindicatoria or accion de
reivindicacion to resolve the issues presented in the petition.
It appears that on 25 January 1963, petitioner filed a Miscellaneous Sales Application for Lot
No. 1641, Ts-308 of the Olongapo Townsite Subdivision, Lower Kalaklan, Olongapo City, with
the District Land Officer, Bureau of Lands, Olongapo City. Sometime in December 1970,
alleging that she was forcibly dispossessed of a portion of the land by a certain Ben Babol, she
instituted a complaint for forcible entry before the City Court of Olongapo City, docketed as
Civil Case No. 926, stating in pars. 2 and 3 therein that
. . . plaintiff is the true, lawful and in actual, prior physical possession of a certain
parcel of land situated at Lower Kalaklan, City of Olongapo, said lot being
designated as Lot No. 1641, Ts-308 of the Olongapo Townsite Subdivision since
1961 and up to the present time, until the day and incidents hereinafter narrated. .
. . Sometime on December 12, 1970, the defendant, without express consent of
plaintiff and without lawful authority, through scheme, strategy and stealth,
forcibly entered a portion on the southwestern part of Lot No. 1641, Ts-308, with
the assistance of hired helpers, started construction of riprap along the Kalaklan
River perimeter of said portion of land; said entry was further augmented by
removing plaintiff's chain link, fence with galvanized iron posts embedded in
concrete, likewise destroying plants introduced by plaintiff by removing existing
BL (Bureau of Lands) monuments thereon, and by these actions, defendant started
exercising illegal possession of said portion of land which contains an area of 200
square meters, more or less.
1

On 7 November 1972 the City Court of Olongapo City, Br. 4,
2
dismissed Civil Case No. 926 on
the ground that "it appears to the Court that the Bureau of Lands has considered the area in
question to be outside Lot 1641 of the plaintiff. . . ."
3
The Decision of the City Court of
Olongapo City became final and executory on 30 April 1973 when the then Court of First
Instance of Zambales and Olongapo City, Br. 3,
4
dismissed the appeal and affirmed the findings
and conclusions of the City Court holding that appellant (herein petitioner) failed to give
sufficient evidence to prove that the area in question was within the boundaries of Lot No.
1641.
5

Subsequently, on 17 December 1973, petitioner was granted Miscellaneous Sales Patent No.
5548 and issued Original Certificate of Title No. P-3259 covering Lot No. 1641. Meanwhile,
Ben Babol who was the defendant and appellee in the complaint for forcible entry had sold the
property he was occupying, including the portion of about 200 square meters in question, to a
certain Reino Rosete. Thus petitioner demanded the surrender of the same area in dispute from
Reino Rosete who repeatedly refused to comply with the demand.
On 29 June 1977, or after about four (4) years from the finality of the dismissal of Civil Case No.
926, petitioner instituted a complaint for quieting of title and recovery of possession with
damages against Ben Babol and Reino Rosete before the then Court of First Instance of
Zambales and Olongapo City, docketed as Civil Case No. 2203-0, alleging in pars. 2 and 3
therein that
. . . plaintiff is the absolute owner in fee simple of a parcel of land identified as
Lot No. 1641, Ts-308, Olongapo Townsite Subdivision . . . covered by Original
Certificate of Title No. P-3259, issued by the Register of Deeds for the province
of Zambales. . . . Sometime in December,
1970, and until present, defendants, relying on an application filed on December
23, 1969, with the Bureau of Lands, however have squatted, illegally occupied
and unlawfully possessed the southwestern portion of plaintiff's above-described
property of about 200 square meters, then by defendant BEN BABOL and now by
defendant REINO ROSETE, the former having sold the entirety of his property to
the latter, including the portion in question. . . .
6

Instead of filing a responsive pleading, therein defendant Reino Rosete (private respondent
herein) moved to dismiss the complaint on the ground of res judicata. Defendant Ben Babol did
not file any pleading.
In its Order dated 27 January 1978,
7
the then Court of First Instance of Zambales, Br.
1,
8
sustained the argument of Rosete and granted his motion to dismiss. Thereafter, petitioner's
motion for reconsideration was denied.
9
Hence, this petition for review on certiorari.
Petitioner contends that res judicata cannot apply in the instant case since there is no identity of
parties and causes of action between her complaint for forcible entry, which had long become
final and executory, and her subsequent petition for quieting of title. She argues that private
respondent Reino Rosete, who invokes the defense or res judicata, was never impleaded in the
forcible entry case, which is an action in personam; neither was he a purchaser pendente
lite who, perhaps, could have validly invoked the defense of res judicata. With regard to the
cause of action, she maintains that there is no identity of causes of action since the first case was
for forcible entry, which is merely concerned with the possession of the property, whereas the
subsequent case was for quieting of title, which looks into the ownership of the disputed land.
Private respondent however submits that there is identity of parties in the two cases since he is a
successor in interest by title of the defendant in the first case after the commencement of the first
action. On the issue of identity of causes of action, he simply states that neither of the two cases,
i.e., the complaint for forcible entry and the subsequent petition for quieting of title, alleges a
cause of action. Thus, private respondent continues, both cases have to be dismissed.
Time and again it has been said that for res judicata to bar the institution of a subsequent action
the following requisites must concur: (1) There must be a final judgment or order; (2) The court
rendering the judgment must have jurisdiction over the subject matter; (3) The former judgment
is a judgment on the merits; and, (4) There is between the first and second actions identity of
parties, of subject matter and of causes of action.
10
The presence of the first three requirements
and the identity of subject matter in the fourth requirement are not disputed. Hence, the only
issues remaining are whether as between Civil Case No. 926 and Civil Case No. 2203-0 there is
identity of parties and of causes of action which would bar the institution of Civil Case No.
2203-0.
Petitioner's argument that there is no identity of parties between the two actions is without merit.
We have repeatedly ruled that for res judicata to apply, what is required is not absolute but only
substantial identity of parties.
11
It is fundamental that the application of res judicata may not be
evaded by simply including additional parties in a subsequent litigation. In fact we have said that
there is still identity of parties although in the second action there is one party who was not
joined in the first action, if it appears that such party is not
a necessary party either in the first or second action,
12
or is a mere nominal party.
13
Thus, Sec.
49, par. (b), Rule 39, Rules of Court, provides that ". . . the judgment or order is, with respect to
the matter directly adjudged or as to any other matter that could have been raised in relation
thereto, conclusive between the parties and their successors in interest by title subsequent to the
commencement of the action or special proceeding, litigating for the same thing and under the
same title and in the same capacity."
In the case at bench, it is evident that private respondent Reino Rosete is a successor in interest
of Ben Babol by title subsequent to the commencement and termination of the first action.
Hence, there is actual, if not substantial, identity of the parties between the two actions. But,
there is merit in petitioner's argument that there is no identity of causes of action between Civil
Case
No. 926 and Civil Case No. 2203-0.
Civil Case No. 926 is a complaint for forcible entry, where what is at issue is prior possession,
regardless of who has lawful title over the disputed property.
14
Thus, "[t]he only issue in an
action for forcible entry is the physical or material possession of real property, that is,
possession de facto and not possession de jure. The philosophy underlying this remedy is that
irrespective of the actual condition of the title to the property, the party in peaceable quiet
possession shall not be turned out by strong hand, violence or terror."
15
And, a judgment
rendered in a case for recovery of possession is conclusive only on the question of possession
and not on the ownership. It does not in any way bind the title or affect the ownership of the land
or building.
16

On the other hand, Civil Case No. 2203-0 while inaccurately captioned as an action for "Quieting
of Title and Recovery of Possession with Damages" is in reality an action to recover a parcel of
land or an accion reivindicatoria under Art. 434
17
of the Civil Code, and should be distinguished
from Civil Case No. 926, which is an accion interdictal. From the averments of the complaint in
Civil Case No. 2203-0, plaintiff therein (petitioner herein) clearly sets up title to herself and
prays that respondent Rosete be ejected from the disputed land and that she be declared the
owner and given possession thereof. Certainly, the allegations partake of the nature of an accion
reivindicatoria.
18

The doctrine in Emilia v. Bado,
19
, decided more than twenty-five years ago, is still good law and
has preserved the age-old remedies available under existing laws and jurisprudence to recover
possession of real property, namely accion interdictal, which is the summary action for forcible
entry (detentacion) where the defendant's possession of the property is illegal ab initio, or the
summary action for unlawful detainer (desahuico) where the defendant's possession was
originally lawful but ceased to be so by the expiration of his right to possess, both of which must
be brought within one year from the date of actual entry on the land, in case of forcible entry,
and from the date of last demand, in case of unlawful detainer, in the proper municipal trial court
or metropolitan trial court;
20
accion publiciana which is a plenary action for recovery of the
right to possess and which should be brought in the proper regional trial court when the
dispossession has lasted for more than one year; and, accion reivindicatoria or accion de
reivindicacion which seeks the recovery of ownership and includes thejus utendi and the jus
fruendi brought in the proper regional trial court.
Accion reivindicatoria or accion de reivindicacion is thus an action whereby plaintiff alleges
ownership over a parcel of land and seeks recovery of its full possession.
21
It is different
from accion interdictal or accion publicianawhere plaintiff merely alleges proof of a better right
to possess without claim of title.
22

In Civil Case No. 926 petitioner merely claimed a better right or prior possession over the
disputed area without asserting title thereto. It should be distinguished from Civil Case No. 2203-
0 where she expressly alleged ownership, specifically praying that she be declared the rightful
owner and given possession of the disputed portion. Hence, in Civil Case No. 926 petitioner
merely alleged that she was "the true, lawful (possessor) and in actual, prior physical possession"
of the subject parcel of land, whereas in Civil Case
No. 2203-0 she asserted that she was "the absolute owner in fee simple" of the parcel of land
"covered by Original Transfer Certificate of Title No. P-3259." The complaint in Civil Case No.
2203-0 definitely raises the question of ownership and clearly gives defendants therein notice of
plaintiff's claim of exclusive and absolute ownership, including the right to possess which is an
elemental attribute of such ownership. Thus, this Court has ruled that a judgment in forcible
entry or detainer case disposes of no other issue than possession and declares only who has the
right of possession, but by no means constitutes a bar to an action for determination of who has
the right or title of ownership.
23

And, applying the ruling of the Court En Banc in Quimpo v. De la Victoria,
24
even if we treat
Civil Case No. 2203-0 as a petition to quiet title, as its caption suggests, still it has a cause of
action different from that for ejectment. Consequently, there being no identity of causes of action
between Civil Case No. 926 and Civil Case No. 2203-0, the prior complaint for ejectment cannot
bar the subsequent action for recovery, or petition to quiet title.
WHEREFORE, the petition is GRANTED. The Order dated 27 January 1978 of the then Court
of First Instance of Zambales, Br. I, with station in Olongapo City, dismissing Civil Case No.
2203-0, and its subsequent Order denying reconsideration of the dismissal are REVERSED and
SET ASIDE.
The Clerk of Court is directed to remand the records immediately to the court of a quo and the
latter to proceed with the trial of Civil Case No. 2203-0 with deliberate dispatch. This decision is
immediately executory.
SO ORDERED.
Cruz, Davide, Jr., Quiason and Kapunan, JJ., concur.

[G.R. Nos. 120784-85. January 24, 2001]
SPOUSES WARLITO BUSTOS and HERMINIA REYES-
BUSTOS, petitioners, vs. COURT OF APPEALS, SPOUSES VENANCIO VIRAY
and CECILIA NUNGA-VIRAY, respondents.
D E C I S I O N
PARDO, J .:
The case before the Court is an appeal via certiorari seeking to set aside the decision of the
Court of Appeals
[1]
modifying that of the Regional Trial Court, Pampanga, Macabebe, Branch
55
[2]
and the resolution denying reconsideration.
[3]

Paulino Fajardo died intestate on April 2, 1957.
[4]
He had four (4) children, namely:
Manuela, Trinidad, Beatriz and Marcial, all surnamed Fajardo.
On September 30, 1964, the heirs executed an extra-judicial partition
[5]
of the estate of
Paulino Fajardo. On the same date, Manuela sold her share to Moses
[6]
G. Mendoza, husband of
Beatriz by deed of absolute sale.
[7]
The description of the property reads as follows:
A parcel of an irrigated riceland located in the barrio of San Isidro, Masantol,
Pampanga. Bounded on the North, by Paulino Fajardo; on the East, by Paulino Fajardo; on the
South, by Eleuterio Bautista; and on the West, by Paulino Guintu. Containing an area of 5,253
sq. mts., more or less. Declared under Tax Declaration No. 3029 in the sum of P710.00.
At the time of the sale, there was no cadastral survey in Masantol, Pampanga. Later, the
cadastre was conducted, and the property involved in the partition case were specified as Lots
280, 283, 284, 1000-A and 1000-B. The share of Manuela, which was sold to Moses, includes
Lot 284 of the Masantol Cadastre and Lot 284 was subdivided into Lots 284-A and 284-B.
Trinidad was in physical possession of the land. She refused to surrender the land to her
brother-in-law Moses G. Mendoza, despite several demands.
On September 3, 1971, Moses filed with the Court of First Instance, Pampanga a complaint
for partition claiming the one fourth () share of Manuela which was sold to him.
[8]

During the pendency of the case for partition, Trinidad Fajardo died. On December 15,
1984, the heirs executed an extra-judicial partition of the estate of Trinidad Fajardo. On
February 16, 1987, Lucio Fajardo Ignacio, son of Trinidad sold Lot 284-B to spouses Venancio
Viray and Cecilia Nunga-Viray.
On February 8, 1989, the Regional Trial Court, Pampanga, Macabebe, Branch 55 rendered a
decision in favor of Moses G. Mendoza, the dispositive portion of which provides:
WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiffs and
against the defendants, and hereby orders
1. The division and partition of the parcel of land identified and described earlier with
the aid and assistance of a qualified surveyor, segregating therefrom an area
equivalent to portion to be taken from the vacant right eastern portion which is
toward the national road the same to be determined by one (or the said surveyor)
standing on the subject land facing the municipal road, at the expense of the
plaintiffs;
2. The said portion segregated shall be a fixed portion, described by metes and
bounds, and shall be adjudicated and assigned to the plaintiffs;
3. In case of disagreement as to where the said right eastern portion should be taken, a
commission is hereby constituted, and the OIC-Clerk of Court is hereby appointed
chairman, and the OIC-Branch Clerk of Court of Branches 54 and 55 of this Court
are hereby appointed members, to carry out the orders contained in the foregoing
first two paragraphs;
4. The defendants to pay the plaintiffs the sum of P500.00 as attorneys fees, and to
pay the costs of the proceedings.
SO ORDERED.
[9]

On September 13, 1991, Moses sold the subject land to spouses Warlito Bustos and
Herminia Reyes-Bustos.
In the meantime, on November 6, 1989, spouses Venancio Viray and Cecilia Nunga-Viray,
buyers of Lucio Ignacios share of the property, filed with the Municipal Circuit Trial Court,
Macabebe-Masantol, Pampanga an action for unlawful detainer
[10]
against spouses Bustos, the
buyers of Moses G. Mendoza, who were in actual possession as lessees of the husband of
Trinidad, Francisco Ignacio, of the subject land.
The municipal circuit trial court decided the case in favor of spouses Viray. Subsequently,
the trial court issued writs of execution and demolition, but were stayed when spouses Bustos
filed with the Regional Trial Court, Pampanga, Macabebe, Branch 55,
[11]
a petition for certiorari,
prohibition and injunction.
On December 18, 1992, the regional trial court rendered a decision, the dispositive portion
of which reads:
WHEREFORE, premises considered, this case, is as it is hereby, dismissed. The preliminary
injunction is ordered dissolved and the petitioners and Meridian Assurance Corporation are
hereby ordered jointly and severally, to pay the private respondents the sum of P20,000.00 by
way of litigation expenses and attorneys fees, and to pay the cost of the proceedings.
[12]

In time, the spouses Bustos appealed the decision to the Court of Appeals.
[13]

On February 27, 1989, Lucio Fajardo Ignacio also appealed the decision to the Court of
Appeals.
[14]

Upon motion for consolidation of the petitioners, on August 9, 1993, the Court of Appeals
resolved to consolidate CA-G. R. SP No. 30369 and CA-G. R. CV No. 37606.
[15]

On August 26, 1994, the Court of Appeals promulgated its decision in the two cases, the
dispositive portion of which provides:
WHEREFORE, in view of all the foregoing, consolidated judgment is hereby rendered for both
CA-G. R. SP No. 37607 and CA-G. R. SP NO. 30369 as follows:
1. The appeal docketed as CA-G. R. CV No. 37607 is dismissed; Moses Mendoza is
declared as owner of the undivided share previously owned by Manuela Fajardo; and
the decision of the Regional Trial Court dated February 8, 1989 in Civil Case No. 83-
0005-M is affirmed but MODIFIED as follows:
WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiffs and
against the defendants, and hereby orders
1. A relocation survey to be conducted (at the expense of the plaintiffs) to retrace the land
subject of the deed of sale dated September 30, 1964 between Manuela Fajardo and Moses
Mendoza;
2. The division and partition of said relocated land by segregating therefrom an area equivalent
to portion to be taken from the vacant right eastern portion which is toward the national road,
the same to be determined by one standing on the subject land facing the municipal road, at the
expense of the plaintiff-appellees;
3. The said portion segregated shall be a fixed portion, described by metes and bounds, and
shall be adjudicated and assigned to the plaintiffs-appellees;
4. In case of disagreement as to where the said right eastern portion should be taken, a
Commission is hereby constituted, with the OIC/present Clerk of Court as Chairman, and the
OIC/present Branch Clerks of Court of Branches 54 and 55 of the Court (RTC) as members, to
carry out and implement the Orders contained in the second and third paragraphs hereof;
5. The defendants are ordered to pay the plaintiffs the sum of P500.00 as attorneys fees, and to
pay the costs of the proceedings.
2. The dismissal of Civil Case No. 92-0421-M is AFFIRMED but the reasons for its
dismissal shall be effective only as to the issue of possession. CA-G. R. SP No. 30369
is DISMISSED.
3. No pronouncement as to costs.
SO ORDERED.
[16]

On September 9, 1994, petitioners filed a motion for reconsideration;
[17]
however, on June
21, 1995, the Court of Appeals denied the motion.
[18]

Hence, this petition.
[19]

The issue raised is whether petitioners could be ejected from what is now their own land.
The petition is meritorious.
In this case, the issue of possession is intertwined with the issue of ownership. In the
unlawful detainer case, the Court of Appeals affirmed the decision of the trial court as to
possession on the ground that the decision has become final and executory. This means that the
petitioners may be evicted. In the accion reinvindicatoria, the Court of Appeals affirmed the
ownership of petitioners over the subject land. Hence, the court declared petitioners as the
lawful owners of the land.
Admittedly, the decision in the ejectment case is final and executory. However, the
ministerial duty of the court to order execution of a final and executory judgment admits of
exceptions. In Lipana vs. Development Bank of Rizal,
[20]
the Supreme Court reiterated the rule
once a decision becomes final and executory, it is the ministerial duty of the court to order its
execution, admits of certain exceptions as in cases of special and exceptional nature where it
becomes imperative in the higher interest of justice to direct the suspension of its execution
(Vecine v. Geronimo, 59 O. G. 579); whenever it is necessary to accomplish the aims of justice
(Pascual v. Tan, 85 Phil. 164); or when certain facts and circumstances transpired after the
judgment became final which could render the execution of the judgment unjust (Cabrias v. Adil,
135 SCRA 354).
In the present case, the stay of execution is warranted by the fact that petitioners are now
legal owners of the land in question and are occupants thereof. To execute the judgment by
ejecting petitioners from the land that they owned would certainly result in grave
injustice. Besides, the issue of possession was rendered moot when the court adjudicated
ownership to the spouses Bustos by virtue of a valid deed of sale.
Placing petitioners in possession of the land in question is the necessary and logical
consequence of the decision declaring them as the rightful owners of the property.
[21]
One of the
essential attributes of ownership is possession. It follows that as owners of the subject property,
petitioners are entitled to possession of the same. An owner who cannot exercise the seven
(7) juses or attributes of ownership--the right to possess, to use and enjoy, to abuse or
consume, to accessories, to dispose or alienate, to recover or vindicate and to the fruits--is a
crippled owner.
[22]

WHEREFORE, we GRANT the petition. We SET ASIDE the decision of the Court of
Appeals in CA G. R. SP No. 30609 for being moot and academic. We AFFIRM the decision of
the Court of Appeals in CA G. R. CV No. 37606.
No costs.
SO ORDERED.
Davide, Jr., C.J., Puno, Kapunan, and Ynares-Santiago, JJ., concur.

[G.R. No. 128177. August 15, 2001]
HEIRS OF ROMAN SORIANO, petitioners, vs. THE HONORABLE COURT OF
APPEALS, SPOUSES BRAULIO ABALOS and AQUILINA ABALOS,respondents.
D E C I S I O N
YNARES-SANTIAGO, J .:
May a winning party in a land registration case effectively eject the possessor thereof, whose
security of tenure rights are still pending determination before the DARAB?
The instant petition for certiorari seeks to set aside the Decision
[1]
dated September 20, 1996
of the Court of Appeals in CA-G.R. SP No. 34930 as well as its Resolution
[2]
dated January 15,
1997, denying petitioners Motion for Reconsideration.
We quote the undisputed facts as narrated by the Court of Appeals, to wit
The property subject of this case is a parcel of land containing an area of 24,550 square meters,
more or less, located in Lingayen, Pangasinan, and particularly described as follows:
A parcel of land (Nipa with an area of 8,410 square meters; fishpond with an area of 14,000
square meters; and residential land with an area of 1,740 square meters, more or less. Bounded
on the N, by river and Filemon Anselmo; on the South by Alejandro Soriano and Filemon
Anselmo; and on the West by Fortunata Soriano.
Originally owned by Adriano Soriano until his death in 1947, the above-described property
passed on to his heirs who leased the same to spouses David de Vera and Consuelo Villasista for
a period of fifteen (15) years beginning July 1, 1967 with Roman Soriano, one of the children of
Adriano Soriano, acting as caretaker of the property during the period of the lease. After
executing an extra judicial settlement among themselves, the heirs of Adriano Soriano
subsequently subdivided the property into two (2) lots, Lot No. 60052 and Lot No. 8459. Lot
No. 60052 was assigned to Lourdes, Candido and the heirs of Dionisia while Lot No. 8459 was
assigned to Francisca, Librada, Elocadio and Roman. In 1971, Lot No. 60052 was sold by
Lourdes, Candido and the heirs of Dionisia to petitioner spouses Braulio and Aquilina Abalos
(hereinafter referred to as petitioners), while, Elocadio, Francisca and Librada sold their three-
fourths shares in Lot No. 8459 also to petitioners.
On March 14, 1968, the de Vera spouses ousted Roman Soriano as caretaker and appointed
Isidro Verzosa and Vidal Verzosa as his substitutes. Thereafter, Roman Soriano filed CAR Case
No. 1724-P-68 for reinstatement and reliquidation against the de Vera spouses. The agrarian
court authorized the ejectment of Roman Soriano but on appeal, the decision was reversed by the
Court of Appeals, which decision became final and executory. However, prior to the execution
of the said decision, the parties entered into a post-decisional agreement wherein the de Vera
spouses allowed Roman Soriano to sub-lease the property until the termination of the lease in
1982. In an Order dated December 22, 1972, the post-decisional agreement was approved by the
agrarian court.
On August 16, 1976, petitioners filed with the Regional Trial Court of Lingayen, Pangasinan,
Branch 38, an application for registration of title over Lot No. 60052 and three-fourths (3/4) pro-
indiviso of Lot No. 8459, docketed as LRC Case No. N-3405. Said application for registration
was granted by the trial court, acting as a land registration court, per Decision dated June 27,
1983. On appeal, the Court of Appeals affirmed the decision of the land registration court. The
petition for review filed with the Supreme Court by Roman Soriano docketed as G.R. 70842, was
denied for lack of merit and entry of judgment was entered on December 16, 1985.
Meanwhile, it appears that on July 15, 1983, a day after the promulgation of the land registration
courts decision, Roman Soriano, together with Elocadio and Librada Soriano, filed before the
Regional Trial Court of Lingayen, Branch 37, and against petitioners, an action for annulment of
document and/or redemption, ownership and damages, docketed as Civil Case No. 159568 (sic;
should be 15958). Petitioners filed a motion to dismiss on the ground of res judicata, pendency
of another action, laches, misjoinder of parties and lack of jurisdiction, which was denied by the
trial court.
Thereafter, on August 22, 1984, or eleven (11) years after the approval of the post-decisional
agreement between Roman Soriano and the spouses de Vera in CAR Case No. 1724-P-68 for
reinstatement and reliquidation, petitioners filed with the agrarian court a motion for execution of
said post-decisional agreement which allowed Roman Soriano to sub-lease the property. The
motion prayed that petitioners be placed in possession of the subject property, jointly with
Roman Soriano, and to levy so much of Romans property to answer for the use and occupation
by Soriano of 6/7 share of the property. On October 25, 1984, Roman Soriano filed a motion to
suspend hearing on the rental demanded by petitioners, which, however, was denied by the
agrarian court. The agrarian court likewise authorized the substitution of the de Vera spouses by
petitioners. Sorianos motion for reconsideration was also denied, prompting Soriano to file a
petition for certiorari with the Court of Appeals.
In the meantime, Roman Soriano died on December 11, 1985. Thus, the complaint in Civil Case
No. 159568 (sic) for annulment of document and/or redemption, ownership and damages, was
amended to substitute Sorianos heirs, herein private respondents, as party-plaintiffs. The
complaint was again amended to include Juanito Ulanday as party-defendant for having
allegedly purchased part of the disputed property from petitioners. On motion of petitioners, the
re-amended complaint was dismissed by the trial court on the ground that the re-amended
complaint altered the cause of action. Upon reconsideration, the dismissal was set aside and
petitioners were ordered to file their Answer, in view of which petitioners filed a petition for
certiorari and prohibition with the Court of Appeals, docketed as C.A. GR SP No. 22149.
On April 25, 1990, the Court of Appeals denied the petition filed by Roman Soriano (substituted
by private respondents) impugning the denial of their motion to suspend hearing on the rental
demanded by petitioners, and authorizing the substitution of the de Vera spouses by petitioners,
on the ground that no grave abuse of discretion was committed by the agrarian court. Thus,
private respondents filed a petition for review on certiorari with the Supreme Court, docketed
as G.R. 93401.
Meanwhile, on December 7, 1990, the Court of Appeals in C.A. GR SP No. 22149, also denied
the petition for certiorari and prohibition filed by petitioners, ruling that the land registration
court committed no error when it refused to adhere to the rule of res judicata. Petitioners then
filed with the Supreme Court a petition for review on certiorari, docketed as G.R. 99843.
On June 26, 1991, the Supreme Court promulgated its decision in G.R. 93401, and granted the
petition filed by private respondents. Thus, the decision of the Court of Appeals denying the
petition of private respondents was set aside, and the motion for execution filed by petitioners
in CAR Case No. 1724-P-48 was denied.
On June 22, 1993, the Supreme Court, in G.R. 99843, reversed and set aside the denial of the
Court of Appeals in C.A. GR SP No. 22149, and consequently, Civil Case No. 15958 for
annulment of document and/or redemption, ownership and damages, was ordered dismissed.
On October 18, 1993, private respondents filed with the Department of Agrarian Adjudication
Board (sic), a complaint against petitioners for Security of Tenure with prayer for Status Quo
Order and Preliminary Injunction docketed as DARAB Case No. 528-P-93.
Meanwhile, it appears that the decision of the land registration court in LRC Case No. N-
3405 was partially executed with the creation of a Committee on Partition per Order dated March
25, 1987. On July 27, 1988, the land registration court approved the partition of Lot No. 8459,
with Lot No. 8459-A assigned to private respondent, and Lot No. 8459-B assigned to
petitioners. For Lot No. 60052, O.C.T. No. 22670 was issued in the name of petitioners; for Lot
No. 8459-B, O.C.T. No. 22687 was issued, also in the name of petitioner; and for Lot No. 8459-
A, O.C.T. No. 22686 was issued in the name of Roman Soriano. Dissatisfied with said partition,
private respondents appealed to the Court of Appeals, docketed as CA G.R. SP No. 119497. The
appellate court affirmed the partition but reversed the order of the land registration court
directing the issuance of a writ of possession on the ground of pendency of Civil Case No.
15958.
On November 15, 1993, the trial court in compliance with the decision of the Supreme Court
in G.R. No. 99843, dismissed Civil Case No. 15958, in view of which, petitioner, on November
25, 1993, in LRC Case No. N-3405, moved for the issuance of an alias writ of execution and/or
writ of possession to place them in possession of Lot No. 60052 and Lot No. 8459-B. Per
Resolution dated January 21, 1994, said motion was held in abeyance by the land registration
court until and after DARAB Case No. 528-P-93 for security of tenure with prayer for status quo,
has been resolved.
Their motion for reconsideration having been denied on April 5, 1984, petitioners interposed an
appeal to the Supreme Court, docketed as G.R. 115073. In a Resolution dated July 27, 1994
issued by the Supreme Court, petitioners appeal, which was treated as a petition for certiorari,
was referred to this Court [of Appeals] for determination and disposition.
[3]

The Court of Appeals annulled and set aside the Resolution of the land registration court and
ordered instead the issuance of the corresponding writ of possession in favor of private
respondents. With the denial of their Motion for Reconsideration, petitioners are now before us
raising the following grounds:
1. THE DECISION AND RESOLUTION OF THE RESPONDENT COURT OF
APPEALS ARE CONTRARY TO THE PROVISIONS OF THE AGRARIAN
REFORM LAWS AND JURISPRUDENCE ON THE SECURITY OF TENURE OF
TENANT-CARETAKER.
2. THE DECISION AND RESOLUTION OF THE RESPONDENT COURT OF
APPEALS ARE VIOLATIVE OF THE PROVISION ON RIGHT TO DUE
PROCESS.
3. THE HONORABLE COURT OF APPEALS GRAVELY ABUSED ITS
DISCRETION IN GIVING DUE COURSE TO THE PETITION CONSIDERING
THAT PRIVATE RESPONDENTS HAD EARLIER PERFECTED AN APPEAL
OF THE RESOLUTION SUBJECT OF THEIR PETITION.
[4]

Possession and ownership are distinct legal concepts. There is ownership when a thing
pertaining to one person is completely subjected to his will in a manner not prohibited by law
and consistent with the rights of others. Ownership confers certain rights to the owner, among
which are the right to enjoy the thing owned and the right to exclude other persons from
possession thereof. On the other hand, possession is defined as the holding of a thing or the
enjoyment of a right. Literally, to possess means to actually and physically occupy a thing with
or without right. Possession may be had in one of two ways: possession in the concept of an
owner and possession of a holder.
[5]
A person may be declared owner but he may not be entitled
to possession. The possession may be in the hands of another either as a lessee or a tenant. A
person may have improvements thereon of which he may not be deprived without due
hearing. He may have other valid defenses to resist surrender of possession. A judgment for
ownership, therefore, does not necessarily include possession as a necessary incident.
[6]

There is no dispute that private respondents (petitioners below) title over the land under
litigation has been confirmed with finality. As explained above, however, such declaration
pertains only to ownership and does not automatically include possession, especially so in the
instant case where there is a third party occupying the said parcel of land, allegedly in the
concept of an agricultural tenant.
While the issue of ownership of the subject land has been laid to rest in the final judgment of
the land registration court, the right of possession thereof is, as yet, controverted. This is
precisely what is put in issue in the security of tenure case filed by petitioners (private
respondents below) before the DARAB.
It is important to note that although private respondents have been declared titled owners of
the subject land, the exercise of their rights of ownership are subject to limitations that may be
imposed by law.
[7]
The Tenancy Act provides one such limitation. Agricultural lessees are
entitled to security of tenure and they have the right to work on their respective landholdings
once the leasehold relationship is established. Security of tenure is a legal concession to
agricultural lessees which they value as life itself and deprivation of their landholdings is
tantamount to deprivation of their only means of livelihood.
[8]
The exercise of the right of
ownership, then, yields to the exercise of the rights of an agricultural tenant.
However, petitioners status as tenant has not yet been declared by the DARAB. In keeping
with judicial order, we refrain from ruling on whether petitioners may be dispossessed of the
subject property. As ratiocinated in Nona v. Plan
[9]

It is to the credit of respondent Judge that he has shown awareness of the recent Presidential
Decrees which are impressed with an even more solicitous concern for the rights of the
tenants. If, therefore, as he pointed out in his order granting the writ of possession, there is
a pending case between the parties before the Court of Agrarian Relations, ordinary
prudence, let alone the letter of the law, ought to have cautioned him against granting the
plea of private respondents that they be placed in possession of the land in controversy. x x
x. At the time the challenged orders were issued, without any showing of how the tenancy
controversy in the Court of Agrarian Relations was disposed of, respondent Judge could not by
himself and with due observance of the restraints that cabin and confine his jurisdiction pass
upon the question of tenancy. (Emphasis ours)
In its challenged Decision, the Court of Appeals relied heavily on the principle of finality of
judgments. It applied the legal doctrine that once a judgment has become final, the issuance of a
writ of execution becomes ministerial. The appellate court held that petitioners situation does
not fall under any of the exceptions to this rule since his occupation of the subject land did not
transpire after the land registration courts adjudication became final.
In so ruling, however, the Court of Appeals loses sight of the fact that petitioners claim of
possession as a tenant of the litigated property, if proven, entitles him to protection against
dispossession.
Private respondents argue that petitioners tenancy claim is barred by res judicata, having
been ruled upon in G.R. Nos. 99843 and 93401. However, not being an issue in the case before
us, this question should properly be resolved in DARAB Case No. 528-P-93. To restate, the only
issue before us is whether or not a winning party in a land registration case can effectively eject
the possessor thereof, whose security of tenure rights are still pending determination before the
DARAB.
A judgment in a land registration case cannot be effectively used to oust the possessor of the
land, whose security of tenure rights are still pending determination before the DARAB. Stated
differently, the prevailing party in a land registration case cannot be placed in possession of the
area while it is being occupied by one claiming to be an agricultural tenant, pending a declaration
that the latters occupancy was unlawful.
WHEREFORE, the instant petition for certiorari is hereby GRANTED. The Decision of
respondent Court of Appeals in CA-G.R. SP No. 34930 dated September 20, 1996, as well as its
Resolution dated January 15, 1997 are SET ASIDE. The Resolution of the Regional Trial Court
of Lingayen, Pangasinan in LRC Case No. N-3405 dated January 21, 1994 is ordered
REINSTATED.
SO ORDERED.
JOSE MA. T. GARCIA, petitioner, vs. COURT OF APPEALS, SPS. LUISITO & MA.
LUISA MAGPAYO AND PHILIPPINE BANK OF
COMMUNICATIONS,respondents.
D E C I S I O N
PUNO, J .:
This is a petition for review under Rule 45 of the Rules of Court to set aside the decision
rendered by the Court of Appeals in CA-G.R. No. 44707 entitled "Jose Ma. T. Garcia, Plaintiff-
Appellee versus Spouses Luisito and Ma. Luisa Magpayo and Sheriff of Makati, Defendants,
Philippine Bank of Communications, Defendant-Appellant".
[1]

The facts are as succinctly summarized by the appellate court, viz:
"Atty. Pedro V. Garcia, in whose name TCT No. S-31269 covering a parcel of land identified as
Lot 17 situated at Bel Air II Village, Makati, was registered, sold with the consent of his wife
Remedios T. Garcia, the same to their daughter Ma. Luisa Magpayo and her husband Luisito
Magpayo (the Magpayos).
"On March 5, 1981, the Magpayos mortgaged the land to the Philippine Bank of
Communications (PBCom) to secure a loan, Five Hundred Sixty Four Thousand (P564,000.00)
Pesos according to them, One Million Two Hundred Thousand (P1,200,000.00) Pesos according
to PBCom.
"On March 9, 1981, Atty. Garcia's Title was cancelled and in its stead Transfer Certificate of
Title No. S-108412/545 was issued in the name of the Magpayos.
"The Deed of Real Estate Mortgage was registered at the Makati Register of Deeds and
annotated on the Magpayos title.
"The Magpayos failed to pay their loan upon its maturity, hence, the mortgage was
extrajudicially foreclosed and at the public auction sale, PBCom which was the highest bidder
bought the land.
"The redemption period of the foreclosed mortgage expired without the Magpayos redeeming the
same, hence, title over the land was consolidated in favor of PBCom which cancelled the
Magpayo's title and Transfer Certificate of Title No. 138233 was issued in its name.
"On October 4, 1985, the Magpayos filed at the RTC of Makati a complaint seeking the
nullification of the extrajudicial foreclosure of mortgage, public auction sale, and PBCom's title
docketed as Civil Case No. 11891. This complaint was dismissed for failure to prosecute.
"On October 15, 1985, PBCom filed at the Regional Trial Court (RTC) of Makati a petition for
the issuance of a writ of possession over the land, docketed as LRC Case No. M-731, which
Branch 148 thereof granted.
"Upon service of the writ of possession, Mrs. Magpayo's brother, Jose Ma. T. Garcia (Garcia),
who was in possession of the land, refused to honor it and filed a motion for Intervention in the
above-said PBCom petition, which motion was denied.
"Garcia thereupon filed against PBCom, the Magpayos, and the RTC Sheriff the instant suit for
recovery of realty and damages wherein he alleged, inter alia, that he inherited the land as one of
the heirs of his mother Remedios T. Garcia, and that PBCom acquired no right thereover.
"In its answer, PBCom averred, inter alia, that Garcia's claim over the land is belied by the fact
that it is not among the properties owned by his mother listed in the Inventory of Real Estate
filed at the then CFI of Pasay City, Branch 27, in SP Proc. No. 2917-P, "In the Matter of the
Intestate Estate of Remedios T. Garcia Petition for Letters of Administration, Pedro V. Garcia
Petitioner-Administrator".
"The Magpayos, on the other hand, asserted that title over the land was transferred to them by
Mrs. Magpayo's parents to enable them (Magpayos) to borrow from PBCom.
"Garcia filed a Motion for Summary Judgment praying that judgment be rendered in his favor to
which PBCom counter-motioned that judgment should be rendered in its favor.
"The court a quo denied the motion for summary judgment on the ground that PBCom raised in
its answer both factual and legal issues which could only be ventilated in a full-blown trial.
"The court a quo, however, later issued a summary judgment."
[2]

In its summary judgment, the lower court held that the mortgage executed by the Magpayo
spouses in favor of PBCom was void. It found that:
"x x x [A]t the time that the defendants Magpayo spouses executed the mortgage in favor of the
defendant PBCom on March 5, 1981, the said spouses were not yet the owners of the
property. This finding is evident from the other undisputed fact that a new Torrens title was
issued to the defendants Magpayo spouses only on March 9, 1981 x x x. The Magpayo spouses
could not have acquired the said property merely by the execution of the Deed of Sale because
the property was in the possession of the plaintiff. The vendor, Pedro V. Garcia, was not in
possession and hence could not deliver the property merely by the execution of the document
(MANALILI V. CESAR, 39 PHIL. 134). The conclusion is therefore inescapable that the said
mortgage is null and void for lack of one of the essential elements of a mortgage as required by
Art. 2085 of our Civil Code x x x."
[3]

Thus, it invalidated the foreclosure sale and nullified TCT No. 138233 issued to
PBCom. Dissatisfied, PBCom appealed. In reversing the trial court, the Court of Appeals held:
"(P)laintiff-appellee's assertion that ownership over the disputed property was not transmitted to
his sister and her husband-Magpayo spouses at the time of the execution of the Deed of Sale as
he was still in actual and adverse possession thereof does not lie.
"For in his complaint, plaintiff-appellee alleged that he entered into possession of the disputed
property only upon the demise of his mother, from whom he alleges to have inherited it but who
was not the registered owner of the property, that is, on October 31, 1980 (Certificate of Death,
p. 17, Records), by which admission he is bound. Since the execution of the deed of sale by
Atty. Pedro V. Garcia in favor of the Magpayos took place earlier or on August 1, 1980, then
contrary to his claim, plaintiff-appellee was not in possession of the property at the time of the
execution of said public instrument.
"Furthermore, it appearing that the vendor Atty. Garcia had control of the property which was
registered in his name and that the deed of sale was likewise registered, then the sale was
consummated and the Magpayos were free to exercise the attributes of ownership including the
right to mortgage the land.
"`When the land is registered in the vendor's name, and the public instrument of sale is also
registered, the sale may be considered consummated and the buyer may exercise the actions of
an owner (Tolentino, Commentaries and Jurisprudence on the Civil Code of the Philippines,
1992 Ed., p. 55).'
"That the Magpayos' title, TCT No. S-108412, was issued four (4) days following the execution
of the deed of real estate mortgage is of no moment, for registration under the Torrens system
does not vest ownership but is intended merely to confirm and register the title which one may
already have on the land (Municipality of Victorias v. Court of Appeals, 149 SCRA 32, 44-45
[1987])."
Petitioner Garcia moved for a reconsideration of the above decision which was denied. He
now comes before us raising the following errors committed by the Court of Appeals:
I
The respondent Court of Appeals has departed from the accepted and usual course of
proceedings when it decided the appeal subject of this case based on issues which were raised
neither in the trial court nor in the appellant's brief.
II
The Court of Appeals decided the appeal in a manner not in accord with applicable jurisprudence
when it disregarded the admissions of the private respondents and, despite ruling that Summary
Judgment was proper, made its own findings of facts which were contrary to the said admissions.
III
The Decision of the respondent Court of Appeals was not in accord with established
jurisprudence and even contradicts itself, as far as the issue of the propriety of the Summary
Judgment is concerned.
The petition has no merit.
Anent the first assignment of error, petitioner alleged that the Court of Appeals resolved the
issues of "ownership" and "possession" though they were not raised by PBCom in its appellant's
brief. The allegation is belied by page 17 of PBCom's appellate brief, viz:
"Due to the wrong cited case, the trial court opined erroneously that `Magpayo Spouses could
not have acquired the property merely by the execution of the deed of sale because the property
was in the possession of the plaintiff' (Order, p. 10).
"Again, the trial court could not distinguish ownership from possession. Ownership and
possession are two entirely different legal concepts.
"Plaintiff-appellee's possession as found by the trial court, started only `at the time of the filing
of the complaint in this present case up to the present.' (page 2, Summary Judgment).
"Assuming that to be true, plaintiff-appellee's possession which started only in 1986 could
not ripen into ownership. He has no valid title thereto. His possession in fact was that of
an intruder, one done in bad faith (to defeat PBCom's Writ of Possession). His possession
is certainly not in the concept of an owner. This is so because as early as 1981, title thereto
was registered in the name of the Magpayo Spouses which title was subsequently cancelled when
the property was purchased by PBCom in a public auction sale resulting in the issuance of title in
favor of the latter in 1985."
Anent the second assignment of error, petitioner contends that the following facts were
admitted by the parties in the trial court:
"1. The petitioner is a compulsory heir of the late spouses Atty. Pedro V. Garcia and Remedios
Tablan Garcia;
"2. The property subject of this dispute was previously the conjugal property of the said spouses;
"3. The petitioner and his family have been and are continuously to the present in actual
physical possession of the property. At the time of the alleged sale to the Magpayo spouses,
petitioner was in possession of the property;
"4. When his mother Remedios Tablan (sic) Garcia died, sometime in October, 1980, he
became, by operation of law, a co-owner of the property;
"5. Atty. Pedro V. Garcia, at the time of the execution of the instrument in favor of the Magpayo
spouses was not in possession of the subject property."
[4]

We reject the contention of petitioner for a perusal of the records shows that these alleged
admitted facts are his own paraphrased portions of the findings of fact listed by the trial court in
the summary judgment.
[5]
Indeed, petitioner did not cite any page number of the records or refer
to any documentary Exhibit to prove how and who admitted the said facts.
Petitioner's third assignment of error that he alone as plaintiff in the trial court is entitled to
summary judgment merits scant attention. A summary judgment is one granted by the
court, upon motion by either party, for an expeditious settlement of the case, there appearing
from the pleadings, depositions, admissions, and affidavits that no important questions or issues
of fact are involved (except the determination of the amount of damages) and that therefore the
moving party is entitled to a judgment as a matter of law.
[6]
Under Rule 34, either party may
move for a summary judgment - the claimant by virtue of Section 1 and the defending party by
virtue of Section 2, viz:
"Section 1. Summary judgment for claimant. - A party seeking to recover upon a claim, counter-
claim, 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.
"Section 2. Summary judgment for defending party. - A party against whom a claim,
counterclaim, or cross-claim is asserted or a declaratory relief is sought may, at any time, move
with supporting affidavits for a summary judgment in his favor as to all or any part thereof."
It is true that petitioner made the initial move for summary judgment. Nonetheless, PBCom
likewise moved for a summary judgment with supporting affidavit and documentary exhibits, to
wit:
"COUNTER-MOTION FOR SUMMARY JUDGMENT"
"PBCom Is Entitled To A Summary Judgment"
"The procedure for summary judgment may be availed of also by the defending parties who may
be the object of unfounded claims as clearly shown in Sections 1 and 2 of Rule 34."
x x x.
"WHEREFORE, it is respectfully prayed of this Honorable Court to render summary judgment
in PBCom's favor by DISMISSING plaintiff's Complaint as well as Sps. Magpayo's Cross-Claim
for being sham and frivolous."
[7]

Needless to state, there was no error on the part of the appellate court in resorting to
summary judgment as prayed for by both parties.
We stress again that possession and ownership are distinct legal concepts. Ownership
exists when a thing pertaining to one person is completely subjected to his will in a manner not
prohibited by law and consistent with the rights of others.
[8]
Ownership confers certain rights to
the owner, one of which is the right to dispose of the thing by way of sale.
[9]
Atty. Pedro Garcia
and his wife Remedios exercised their right to dispose of what they owned when they sold the
subject property to the Magpayo spouses. On the other hand, possession is defined as the
holding of a thing or the enjoyment of a right.
[10]
Literally, to possess means to actually and
physically occupy a thing with or without right. Possession may be had in one of two
ways: possession in the concept of an owner and possession of a holder.
[11]
"A possessor in the
concept of an owner may be the owner himself or one who claims to be so."
[12]
On the other
hand, "one who possesses as a mere holder acknowledges in another a superior right which
he believes to be ownership, whether his belief be right or wrong."
[13]
The records show that
petitioner occupied the property not in the concept of an owner for his stay was merely tolerated
by his parents. We held in Caniza v. Court of Appeals
[14]
that an owner's act of allowing
another to occupy his house, rent-free does not create a permanent and indefeasible right of
possession in the latter's favor. Consequently, it is of no moment that petitioner was in
possession of the property at the time of the sale to the Magpayo spouses. It was not a hindrance
to a valid transfer of ownership. On the other hand, petitioner's subsequent claim of ownership
as successor to his mother's share in the conjugal asset is belied by the fact that the property was
not included in the inventory of the estate submitted by his father to the intestate court. This
buttresses the ruling that indeed the property was no longer considered owned by petitioner's
parents. We also uphold the Court of Appeals in holding that the mortgage to PBCom by the
Magpayo spouses is valid notwithstanding that the transfer certificate of title over the property
was issued to them after the mortgage contract was entered into. Registration does not confer
ownership, it is merely evidence of such ownership over a particular property.
[15]
The deed
of sale operates as a formal or symbolic delivery of the property sold and authorizes the buyer to
use the document as proof of ownership.
[16]
All said, the Magpayo spouses were already the
owners when they mortgaged the property to PBCom.
[17]

IN VIEW WHEREOF, the decision of the Court of Appeals in CA-G.R. No. 44707 is
AFFIRMED. Costs against petitioner.
SO ORDERED.
[G.R. No. 129609. November 29, 2001]
RODIL ENTERPRISES, INC., petitioner, vs. COURT OF APPEALS, CARMEN
BONDOC, TERESITA BONDOC-ESTO, DIVISORIA FOOTWEAR and CHUA
HUAY SOON, respondents.
[G.R. No. 135537. November 29, 2001]
RODIL ENTERPRISES, INC., petitioner, vs. IDES O'RACCA BUILDING TENANTS
ASSOCIATION, INC., respondent.
D E C I S I O N
BELLOSILLO, J .:
These twin petitions filed under Rule 45 seek to set aside the Decisions of the Court of
Appeals in CA-G.R. Nos. 39919, 36381 and 37243.
Petitioner Rodil Enterprises Inc. (RODIL) is the lessee of the Ides O'Racca Building
(O'RACCA) since 1959.
[1]
It was a "former alien property" over which the Republic of the
Philippines acquired ownership by virtue of RA 477, as amended.
[2]

Sometime in 1980 RODIL entered into a sublease contract with respondents Carmen
Bondoc, Teresita Bondoc-Esto, Divisoria Footwear and Chua Huay Soon,
[3]
members of the Ides
O'Racca Building Tenants Association Inc. (ASSOCIATION).
On 4 September 1972 the lease contract between RODIL and the REPUBLIC was renewed
for another fifteen (15) years.
[4]
At that time the O'RACCA was under the administration of
the Building Services and Real Property Management Office (BSRPMO) then headed by
Director Jesus R. Factora.
[5]

On 12 September 1982 BP 233
[6]
was enacted. It authorized the sale of "former alien
properties" classified as commercial and industrial, and the O'RACCA building was classified as
commercial property.
[7]

On 8 January 1987 RODIL offered to purchase the subject property conformably with BP
233 and the REPUBLIC responded that its offer to purchase would be acted upon once the
Committee on Appraisal shall have determined the market value of the property.
[8]

On 22 July 1997 the ASSOCIATION also offerred to lease the same building through
the Department of General Services and Real Estate Property Management (DGSREPM).
[9]

Pending action on the offer of RODIL to purchase the property, Director Factora of the
BSRPMO granted RODILs request for another renewal of the lease contract on 23 September
1987 for another five (5) years from 1 September 1987.
[10]
The renewal contract was forwarded
to then Secretary Jose de Jesus of DGSREPM for approval.
On 25 September 1987 Undersecretary of DGSREPM Rufino B. Banas recommended to
Secrectary De Jesus the suspension of the approval of the renewal contract because the offer of
the ASSOCIATION was more beneficial to the REPUBLIC.
Resultantly, on 30 September 1987 Secretary De Jesus issued another memorandum to
Director Factora disapproving the renewal contract in favor of RODIL, at the same time recalling
all papers signed by him regarding the subject. Secretary De Jesus likewise directed RODIL to
pay its realty tax delinquency and ordered the issuance of a temporary occupancy permit to the
ASSOCIATION.
[11]

On 6 October 1987 RODIL filed an action for specific performance, damages and injunction
with prayer for temporary restraining order before the Regional Trial Court of Manila against the
REPUBLIC, De Jesus, Banas, Factora and the ASSOCIATION.
[12]
RODIL prayed that a
restraining order be issued enjoining the ASSOCIATION or any person acting under it from
collecting rentals from the occupants or sub-lessees of O'RACCA. On 26 October 1987 the trial
court granted the writ of preliminary injunction.
[13]
On appeal, the Court of Appeals upheld the
issuance of the writ of preliminary injunction and ordered the deposit of the monthly rentals with
the lower court pendente lite.
On 20 November 1987 the REPUBLIC, De Jesus, Banas and Factora filed their Answer
with Counterclaim for damages. On 21 December 1987 the ASSOCIATION also filed its
Answer with Counterclaim for damages.
De Jesus, Banas and Factora were later substituted by Secretary Fulgencio Factoran of the
Department of Environment and Natural Resources (DENR) in the action for specific
performance. On 31 May 1988 Factoran issued Order No. 1 designating the Land Management
Bureau represented by Director Abelardo Palad, Jr. as custodian of all "former alien
properties" owned by the REPUBLIC.
On 18 May 1992 RODIL signed a renewal contract with Director Palad which was approved
by Secretary Factoran.
[14]
The renewal contract would extend the lease for ten (10) years from 1
September 1987. A supplement to the renewal contract was subsequently entered into on 25
May 1992 where rentals on the previous lease contract were increased.
[15]

On 14 August 1972 the action for specific performance was dismissed by the trial court
upon joint motion to dismiss by RODIL and the Solicitor General. The order of dismissal
however was appealed by the ASSOCIATION to the Court of Appeals.
[16]

On 25 September 1992 the spouses Saturnino Alvarez and Epifania Alvarez, sublessees of
RODIL, filed with the Office of the President a letter-appeal assailing the authority of Factoran
to enter into the renewal contract of 18 May 1992 with RODIL, and claiming the right to
purchase the subject property.
[17]

While the appeal of the ASSOCIATION from the order of dismissal and the letter-appeal of
the spouses Alvarez were pending, the ASSOCIATION instituted Civil Case No. 92-63833 with
the Regional Trial Court of Manila
[18]
praying for the setting aside of the renewal contract of 18
May 1992 as well as the supplementary contract of 25 May 1992, and further praying for the
issuance of a writ of preliminary injunction. On 3 May 1993 the trial court denied the prayer for
preliminary injunction.
On 30 July 1993 RODIL filed an action for unlawful detainer against Divisoria
Footwear,
[19]
and on 4 August 1993, a similar action against Chua Huay Soon.
[20]

On 10 September 1993 the trial court dismissed the action for declaration of nullity of the
lease contract filed by the ASSOCIATION on the ground of litis pendentia.
[21]
The Order stated
that the action for declaration of nullity and the action for specific performance filed by RODIL
were practically between the same parties and for the same causes of action.
[22]
This Order was
appealed by the ASSOCIATION to the Court of Appeals.
[23]

On 19 January 1994 RODIL filed an action for unlawful detainer against respondent
Teresita Bondoc-Esto,
[24]
and on 1 February 1994 filed another action against respondent
Carmen Bondoc,
[25]
both with the Metropolitan Trial Court of Manila.
On 8 February 1994 the Office of the President through Executive Secretary Teofisto
Guingona Jr. denied the letter-appeal of the spouses Alvarez, but nullified the renewal contract of
18 May 1992 and the supplementary contract of 25 May 1992.
[26]

Meanwhile, the Metropolitan Trial Court of Manila upheld RODIL's right to eject
respondents Bondoc, Bondoc-Esto, Divisoria Footwear and Chua Huay Soon,
[27]
as promulgated
in separate decisions the dispositive portions of which read -
IN CIVIL CASE NO. 143301 -
WHEREFORE, IN VIEW OF THE FOREGOING, judgment is hereby rendered in favor of the
plaintiff [RODIL ENTERPRISES, INC.] and against the defendant [CARMEN BONDOC], to
wit: 1. Ordering the defendant and all those claiming title under her to vacate the subleased
portion of the ORacca Building, corner Folgueras and M. de los Santos Streets, Binondo,
Manila; 2. Ordering the defendant to pay plaintiff the back rentals from October 1987 to August
1992 at the rate of P2,665.00 per month and from September 1992 at the rate of P2,665.00 per
month plus a yearly increase of 20% per month up to the time that she vacates the premises;
3. Ordering the defendant to pay the amount of P10,000.00 as attorneys fees and to pay the cost
of suit.
IN CIVIL CASE NO. 143216 -
WHEREFORE, judgment is hereby rendered in favor of the plaintiff [RODIL ENTERPRISES,
INC.] as against the defendant [TERESITA BONDOC ESTO] ordering the defendant and all
persons claiming rights under her to vacate the premises at ORacca Building located at corner
Folgueras and M. de los Santos Streets, Binondo, Manila, and turn over the possession thereof to
plaintiff; ordering the defendant to pay plaintiff the amount of P29,700.00 as rental in arrears for
the period from September 1992 plus legal rate of interest less whatever amount deposited with
the Court; ordering defendant to pay the sum of P3,000.00 as reasonable compensation for the
use and occupancy of the premises from January 1994 until defendant shall have finally vacated
the premises minus whatever amount deposited with the Court as rental; ordering defendant to
pay reasonable attorneys fees in the amount of P2,000.00 and the costs of suit.
IN CIVIL CASE NO. 142258 -
WHEREFORE, judgment is hereby rendered in favor of plaintiff [RODIL ENTERPRISES,
INC.], ordering defendant [DIVISORIA FOOTWEAR], its representatives, agents, employees
and/or assigns to vacate the leased premises or portion of the Ides ORacca Building presently
occupied by said defendant and to pay plaintiff the following: a) Rentals in arrears from October
1987 to June 1993 in the amount of P521,000.00; b) Rentals in the amount of P9,000.00 a month
from July, 1993 until defendant will have vacated the premises; c) Attorneys fees in the amount
of P15,000.00; d) Costs of suit.
IN CIVIL CASE NO. 142282-CV -
IN VIEW THEREOF, judgment is hereby rendered ordering: 1. defendant CHUA HUAY SOON
and all persons claiming rights through him, to vacate the premises occupied by him at
ORACCA Building, located at the corner of Folgueras and M. delos Santos Street, Binondo,
Manila, and turn over possession thereof to plaintiff RODIL ENTERPRISES, INC.; 2. defendant
to pay rentals in arrears from October 1987 up to June 1993 at the rate of P6,175.00 a month,
representing the rentals in arrears; 3. defendant to pay P6,175.00 per month from July 1993 until
he vacates the premises, as reasonable compensation for the use of the premises; 4. defendant to
pay the sum of P20,000.00 as attorneys fees; 5. defendant to pay interests on the amounts
mentioned in Nos. 2 and 3 above at ten (10%) percent per annum from the date of the filing of
the complaint until said amounts are fully paid; and, 6. defendant to pay the costs.
The Regional Trial Court affirmed the Metropolitan Trial Court
[28]
in all the four (4)
decisions above quoted. Thus, respondents Bondoc, Bondoc-Esto and Divisoria Footwear
subsequently filed a Petition for Review with the Court of Appeals,
[29]
followed by respondent
Chua Huay Soon.
[30]

While the consolidated appeals from the unlawful detainer cases were pending, the Second
Division of the Court of Appeals promulgated its decision on 12 April 1996 with regard to CA-
G.R. No. 39919 declaring the renewal contract between RODIL and the REPUBLIC null and
void.
[31]
RODIL moved for reconsideration but its motion was denied.
[32]
Hence, this petition for
review on certiorari under Rule 45.
[33]

On 29 November 1996 the Special Fourth Division of the Court of Appeals promulgated its
Decision in CA-G.R. No. 36381 and CA-G.R. No. 37243 setting aside the decisions of the
Regional Trial Court, which sustained the Metropolitan Trial Court, and dismissing the action for
unlawful detainer filed by RODIL against its lessees.
[34]
RODIL moved for reconsideration but
the motion was denied.
[35]
Hence, this petition for review on certiorari.
[36]

On respondents' motion, G.R. Nos. 129609 and 135537 were consolidated.
RODIL now contends that the Court of Appeals erred in annulling its renewal contract with
the REPUBLIC and in dismissing its actions for unlawful detainer against respondents Bondoc,
Bondoc-Esto, Divisoria Footwear and Chua. RODIL claims that the assailed contracts are
neither void nor voidable as the facts show they do not fall within the enumerations under Arts.
1305 and 1409, and an implied new lease still exists by virtue of Art. 1670. As a result, the right
to eject respondents properly belongs to it.
[37]

With regard to CA-G.R. No. 39919, RODIL argues that the REPUBLIC, the only defendant
who is a real party in interest, signified its assent to having the action
dismissed. Assuming arguendo that the ASSOCIATION was a real party in interest, its
counterclaim was nonetheless unmeritorious.
[38]

On the other hand, respondents Bondoc, Bondoc-Esto, Divisoria Footwear and Chua
contend that the lease contract which the lease contract of 18 May 1992 was to renew, never
came into existence. Therefore, since there was no contract to "renew," the renewal contract had
no leg to stand on, hence, is also void.
[39]
Respondents then conclude that since there was no
lease contract to speak of, RODIL had no right to relief in its action for unlawful detainer. The
ASSOCIATION, for its part, argues that the counterclaim it filed against RODIL cannot be
dismissed because the trial court has not passed upon it.
[40]

We rule for RODIL. The owner has the right to enjoy and dispose of a thing, without other
limitations than those established by law.
[41]
Every owner has the freedom of disposition over his
property. It is an attribute of ownership, and this rule has no exception. The REPUBLIC being
the owner of the disputed property enjoys the prerogative to enter into a lease contract with
RODIL in the exercise of its jus disponendi. Hence, as lessor, the REPUBLIC has the right to
eject usurpers of the leased property where the factual elements required for relief in an action
for unlawful detainer are present.
Private respondents claim that the agreements of 23 September 1987, 18 May 1992 and 25
May 1992 did not give rise to valid contracts.
[42]
This is true only of the Contract of
Lease entered into on 23 September 1987 which the REPUBLIC did not approve. RODIL
neither alleged nor proved that such approval was made known to it. The so-called approval of
the lease contract was merely stated in an internal memorandum of Secretary De Jesus addressed
to Director Factora.
[43]
This is evident from the fact that Secretary De Jesus, in his letter, asked
Factora to duly execute a lease contract and forward it to his office for approval.
[44]
The
consequences of this fact are clear. The Civil Code provides that no contract shall arise unless
acceptance of the contract is communicated to the offeror.
[45]
Until that moment, there is no real
meeting of the minds, no concurrence of offer and acceptance, hence, no contract.
[46]

However, the same is not true of the contracts of 18 May 1992 and 25 May 1992. As argued
by RODIL, these contracts are not proscribed by law; neither is there a law prohibiting the
execution of a contract with provisions that are retroactive. Where there is nothing in a contract
that is contrary to law, morals, good customs, public policy or public order, the validity of the
contract must be sustained.
[47]

The Court of Appeals invalidated the contracts because they were supposedly executed in
violation of a temporary restraining order issued by the Regional Trial Court.
[48]
The appellate
court however failed to note that the order restrains the REPUBLIC from awarding the lease
contract only as regards respondent ASSOCIATION but not petitioner RODIL. While a
temporary restraining order was indeed issued against RODIL, it was issued only on 25 May
1992 or after the assailed contracts were entered into. As correctly stated by petitioner, one
cannot enjoin an act already fait accompli.
[49]

Private respondents argue that the "renewal contract" cannot "renew" a void
contract. However, they could cite no legal basis for this assertion. It would seem that
respondents consider the renewal contract to be a novation of the earlier lease contract of 23
September 1987. However, novation is never presumed.
[50]
Also, the title of a contract does not
determine its nature. On the contrary, it is the specific provisions of the contract which dictate
its nature.
[51]
Furthermore, where a contract is susceptible of two (2) interpretations, one that
would make it valid and another that would make it invalid, the latter interpretation is to be
adopted.
[52]
The assailed agreement of 18 May 1992, "Renewal of Contract of Lease," merely
states that the term of the contract would be for ten (10) years starting 1 September 1987. This is
hardly conclusive of the existence of an intention by the parties to novate the contract of 23
September 1987. Nor can it be argued that there is an implied novation for the requisite
incompatibility between the original contract and the subsequent one is not present.
[53]
Based on
this factual milieu, the presumption of validity of contract cannot be said to have been
overturned.
Respondent ASSOCIATION claims that the Decision of the Office of the President
declaring null and void the lease contracts of 18 May 1992 and 25 May 1992 should be counted
in its favor.
We do not agree. The contention does not hold water. It is well-settled that a court's
judgment in a case shall not adversely affect persons who were not parties thereto.
Respondent ASSOCIATION finally argues that the 18 May 1992 and 25 May 1992
contracts can be considered rescissible because they concern property under litigation and were
entered into without the knowledge and approval of the litigants or of competent judicial
authority.
[54]
Civil Case No. 87-42323 involved an action for specific performance and damages
filed by RODIL against the REPUBLIC and the ASSOCIATION. The right to file the action for
rescission arises in favor of the plaintiff when the defendant enters into a contract over the thing
under litigation without the knowledge and approval of the plaintiff or the court. The right of
action therefore arose in favor of petitioner RODIL and not respondent ASSOCIATION.
Having preliminarily dealt with the validity of the lease contracts, we now proceed to
resolve the issue raised by respondent ASSOCIATION with regard to its counterclaim.
The ASSOCIATION argues that its counterclaim should not have been dismissed. On this
point, we agree. The requisites for the application of Rule 17 of the Rules of Civil Procedure are
clearly present.
[55]
The counterclaim is necessarily connected with the transaction that is the
subject matter of the claim. In malicious prosecution, there must be proof that the prosecution
was prompted by a sinister design to vex and humiliate a person, and that it was initiated
deliberately by the defendant knowing that his charge was false and groundless.
[56]
A
determination of whether the charge is groundless would necessarily involve an analysis of
whether the action instituted by RODIL is meritorious. The counterclaim did not require the
presence of third parties over which the court could not acquire jurisdiction, and that the court
had jurisdiction over the subject matter of the counterclaim since the amount of damages claimed
by the ASSOCIATION in its counterclaim amounted to P3,500,000.00, clearly within the
jurisdictional amount for the Regional Trial Court under BP 129.
However, in the interest of making a final adjudication on an issue which has been pending
for fourteen (14) years, we will rule on the issues raised by the ASSOCIATION in its
counterclaim, and accordingly deny the same, dispensing with any discussion regarding the
merits of RODIL's cause of action which is clearly neither "false" nor "groundless." Therefore,
the elements of malicious prosecution are absent.
As regards the action for unlawful detainer, respondents Bondoc, Bondoc-Esto, Divisoria
Footwear and Chua argue that this should not prosper because RODIL is not in actual possession
of the property and because they are not its sublessees.
[57]
Their arguments do not convince.
In an action for unlawful detainer the plaintiff need not have been in prior physical
possession. Respondents have admitted that they have not entered into any lease contract with
the REPUBLIC and that their continued occupation of the subject property was merely by virtue
of acquiescence.
[58]
The records clearly show this to be the case. The REPUBLIC merely issued
a "temporary occupancy permit" which was not even in the name of the respondents Bondoc,
Bondoc-Esto, Divisoria Footwear or Chua but of respondent ASSOCIATION. Since the
occupation of respondents was merely tolerated by the REPUBLIC, the right of possession of the
latter remained uninterrupted. It could therefore alienate the same to anyone it
chose. Unfortunately for respondents, the REPUBLIC chose to alienate the subject premises to
RODIL by virtue of a contract of lease entered into on 18 May 1992. Resultantly, petitioner had
the right to file the action for unlawful detainer against respondents as one from whom
possession of property has been unlawfully withheld.
Respondents finally argue that petitioner failed to comply with the mandatory provisions of
Rule 45 so that its petition must be dismissed. They allege that petitioner failed to state in its
petition that a motion for reconsideration was filed, the date of filing, when the motion was
denied, and the date when the resolution denying the motion was received.
A cursory review of RODIL's petition belies respondents' assertion. All dates required
under Rule 45, Sec. 4, are properly indicated except when the motion for reconsideration was
filed. Procedural rules are required to be followed as a general rule, but they may be relaxed to
relieve a litigant of an injustice not commensurate with the degree of his noncompliance with the
procedure required. Dismissal of appeals purely on technical grounds is frowned upon and the
rules of procedure ought not to be applied in a very rigid, technical sense, for they are adopted to
help secure, not override, substantial justice, and thereby defeat their very aims. The rules have
been drafted with the primary objective of enhancing fair trials and expediting the proper
dispensation of justice. As a corollary, if their application and operation tend to subvert and
defeat, instead of promote and enhance its objective, suspension of the rules is
justified.
[59]
Petitioner did not repeat its error in its later petition filed under G.R. No.
135537. The oversight must be fashioned with leniency.
WHEREFORE, the consolidated petitions are GRANTED. The assailed Decisions of the
Court of Appeals in CA-G.R. Nos. 36381, 37243 and 39919 are REVERSED and SET
ASIDE. Accordingly, the Decisions of the Regional Trial Court, Br. 39, in Civil Cases Nos. 94-
70776, 94-71122 and 94-71123 as well as the Decision of the Regional Trial Court, Br. 23, in
Civil Case No. 94-72209 affirming in toto the Decisions of the MeTC - Br. 28 in Civil Case No.
143301, MeTC - Br. 15 in Civil Case No. 143216, MeTC - Br. 7 in Civil Case No. 142258, and
MeTC - Br. 24 in Civil Case No. 142282-CV, as herein quoted, and the Orders dated 14 August
1992 and 6 November 1992 of the Regional Trial Court, Br. 8 in Civil Case No. 87-42323,
recognizing the validity and legality of the Renewal of the Lease Contract dated 18 May 1992
and the Supplemental Contract dated 25 May 1992, are REINSTATED, AFFIRMED and
ADOPTED. Costs against private respondents in both cases.
SO ORDERED.
Mendoza, Quisumbing, Buena, and De Leon, Jr., JJ., concur.
CORNELIO M. ISAGUIRRE, petitioner, vs. FELICITAS DE LARA, respondent.
D E C I S I O N
GONZAGA-REYES, J .:
In this petition for review on certiorari under Rule 45 of the 1997 Revised Rules of Civil
Procedure, petitioner Cornelio M. Isaguirre assails the October 5, 1998 decision
[1]
of the Court of
Appeals
[2]
and its Resolution promulgated on March 5, 1999.
The antecedent facts of the present case are as follows:
Alejandro de Lara was the original applicant-claimant for a Miscellaneous Sales Application
over a parcel of land identified as portion of Lot 502, Guianga Cadastre, filed with the Bureau of
Lands on January 17, 1942 and with an area of 2,342 square meters. Upon his death, Alejandro
de Lara was succeeded by his wife - respondent Felicitas de Lara, as claimant. On November 19,
1954, the Undersecretary of Agriculture and Natural Resources amended the sales application to
cover only 1,600 square meters. Then, on November 3, 1961, by virtue of a decision rendered by
the Secretary of Agriculture and Natural Resources dated November 19, 1954, a subdivision
survey was made and the area was further reduced to 1,000 square meters. On this lot stands a
two-story residential-commercial apartment declared for taxation purposes under TD 43927 in
the name of respondents sons - Apolonio and Rodolfo, both surnamed de Lara.
Sometime in 1953, respondent obtained several loans from the Philippine National Bank. When
she encountered financial difficulties, respondent approached petitioner Cornelio M. Isaguirre,
who was married to her niece, for assistance. On February 10, 1960, a document denominated as
"Deed of Sale and Special Cession of Rights and Interests" was executed by respondent and
petitioner, whereby the former sold a 250 square meter portion of Lot No. 502, together with the
two-story commercial and residential structure standing thereon, in favor of petitioner, for and in
consideration of the sum of P5,000.
Sometime in May, 1968, Apolonio and Rodolfo de Lara filed a complaint against petitioner for
recovery of ownership and possession of the two-story building.
[3]
However, the case was
dismissed for lack of jurisdiction.
On August 21, 1969, petitioner filed a sales application over the subject property on the basis of
the deed of sale. His application was approved on January 17, 1984, resulting in the issuance of
Original Certificate of Title No. P-11566 on February 13, 1984, in the name of petitioner.
Meanwhile, the sales application of respondent over the entire 1,000 square meters of subject
property (including the 250 square meter portion claimed by petitioner) was also given due
course, resulting in the issuance of Original Certificate of Title No. P-13038 on June 19, 1989, in
the name of respondent.
[4]

Due to the overlapping of titles, petitioner filed an action for quieting of title and damages with
the Regional Trial Court of Davao City against respondent on May 17, 1990. The case was
docketed as Civil Case No. 20124-90. After trial on the merits, the trial court rendered judgment
on October 19, 1992, in favor of petitioner, declaring him to be the lawful owner of the disputed
property. However, the Court of Appeals reversed the trial courts decision, holding that the
transaction entered into by the parties, as evidenced by their contract, was an equitable mortgage,
not a sale.
[5]
The appellate courts decision was based on the inadequacy of the consideration
agreed upon by the parties, on its finding that the payment of a large portion of the "purchase
price" was made after the execution of the deed of sale in several installments of minimal
amounts; and finally, on the fact that petitioner did not take steps to confirm his rights or to
obtain title over the property for several years after the execution of the deed of sale. As a
consequence of its decision, the appellate court also declared Original Certificate of Title No.P-
11566 issued in favor of petitioner to be null and void. On July 8, 1996, in a case docketed as G.
R. No. 120832, this Court affirmed the decision of the Court of Appeals and on September 11,
1996, we denied petitioners motion for reconsideration.
On May 5, 1997, respondent filed a motion for execution with the trial court, praying for the
immediate delivery of possession of the subject property, which motion was granted on August
18, 1997. On February 3, 1998, respondent moved for a writ of possession, invoking our ruling
in G. R. No. 120832. Petitioner opposed the motion, asserting that he had the right of retention
over the property until payment of the loan and the value of the improvements he had introduced
on the property. On March 12, 1998, the trial court granted respondents motion for writ of
possession. Petitioners motion for reconsideration was denied by the trial court on May 21,
1998. Consequently, a writ of possession dated June 16, 1998, together with the Sheriffs Notice
to Vacate dated July 7, 1998, were served upon petitioner.
Petitioner filed with the Court of Appeals a special civil action for certiorari and prohibition
with prayer for a temporary restraining order or preliminary injunction to annul and set aside the
March 12, 1998 and May 21, 1998 orders of the trial court, including the writ of possession dated
June 16, 1998 and the sheriffs notice to vacate dated July 7, 1998.
[6]

The appellate court summarized the issues involved in the case as follows: (1) whether or not the
mortgagee in an equitable mortgage has the right to retain possession of the property pending
actual payment to him of the amount of indebtedness by the mortgagor; and (b) whether or not
petitioner can be considered a builder in good faith with respect to the improvements he made on
the property before the transaction was declared to be an equitable mortgage.
The Court of Appeals held that petitioner was not entitled to retain possession of the subject
property. It said that -
the mortgagee merely has to annotate his claim at the back of the certificate of
title in order to protect his rights against third persons and thereby secure the debt.
There is therefore no necessity for him to actually possess the property. Neither
should a mortgagee in an equitable mortgage fear that the contract relied upon is
not registered and hence, may not operate as a mortgage to justify its foreclosure.
In Feliza Zubiri v. Lucio Quijano, 74 Phil 47, it was ruled "that when a contract x
x x is held as an equitable mortgage, the same shall be given effect as if it had
complied with the formal requisites of mortgage. x x x by its very nature the lien
thereby created ought not to be defeated by requiring compliance with the
formalities necessary to the validity of a voluntary real estate mortgage, as long as
the land remains in the hands of the petitioner (mortgagor) and the rights of
innocent parties are not affected."
Proceeding from the foregoing, petitioners imagined fears that his lien would be
lost by surrendering possession are unfounded.
In the same vein, there is nothing to stop the mortgagor de Lara from acquiring
possession of the property pending actual payment of the indebtedness to
petitioner. This does not in anyway endanger the petitioners right to security
since, as pointed out by private respondents, the petitioner can always have the
equitable mortgage annotated in the Certificate of Title of private respondent and
pursue the legal remedies for the collection of the alleged debt secured by the
mortgage. In this case, the remedy would be to foreclose the mortgage upon
failure to pay the debt within the required period.
It is unfortunate however, that the Court of Appeals, in declaring the transaction
to be an equitable mortgage failed to specify in its Decision the period of time
within which the private respondent could settle her account, since such period
serves as the reckoning point by which foreclosure could ensue. As it is, petitioner
is now in a dilemma as to how he could enforce his rights as a mortgagee. ...
Hence, this Court, once and for all resolves the matter by requiring the trial court
to determine the amount of total indebtedness and the period within which
payment shall be made.
Petitioners claims that he was a builder in good faith and entitled to reimbursement for the
improvements he introduced upon the property were rejected by the Court of Appeals. It held
that petitioner knew, or at least had an inkling, that there was a defect or flaw in his mode of
acquisition. Nevertheless, the appellate court declared petitioner to have the following rights:
He is entitled to reimbursement for the necessary expenses which he may have
incurred over the property, in accordance with Art. 526 and Art. 452 of the Civil
Code. Moreover, considering that the transaction was merely an equitable
mortgage, then he is entitled to payment of the amount of indebtedness plus
interest, and in the event of non-payment to foreclose the mortgage. Meanwhile,
pending receipt of the total amount of debt, private respondent is entitled to
possession over the disputed property.
The case was finally disposed of by the appellate court in the following manner:
WHERFORE, the Petition is hereby DISMISSED, and this case is ordered
remanded to the Regional Trial Court of Davao City for further proceedings, as
follows:
1) The trial court shall determine
a) The period within which the mortgagor must pay his total amount of
indebtedness.
b) The total amount of indebtedness owing the petitioner-mortgagee plus interest
computed from the time when the judgment declaring the contract to be an
equitable mortgage became final.
c) The necessary expenses incurred by petitioner over the property.
[7]

On March 5, 1999, petitioners motion for reconsideration was denied by the appellate
court.
[8]
Hence, the present appeal wherein petitioner makes the following assignment of errors:
A.......THE HONORABLE COURT OF APPEALS ERRED IN NOT RULING
THAT THE RTC ACTED WITHOUT OR IN EXCESS OF ITS JURISDICTION
OR WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR
EXCESS OF JURISDICTION IN ISSUING A WRIT OF POSSESSION IN
FAVOR OF RESPONDENT.
A.1......The RTC patently exceeded the scope of its authority and acted with grave
abuse of discretion in ordering the immediate delivery of possession of the
Property to respondent as said order exceeded the parameters of the final and
executory decision and constituted a variance thereof.
B.......THE HONORABLE COURT OF APPEALS ERRED IN HOLDING
THAT PETITIONER IS NOT ENTITLED TO THE POSSESSION OF THE
PROPERTY PRIOR TO THE PAYMENT OF RESPONDENTS MORTGAGE
LOAN.
C.......THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT
PETITIONER WAS NOT A BUILDER IN GOOD FAITH.
D.......THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT
PETITIONER IS ENTITLED TO INTEREST COMPUTED ONLY FROM THE
TIME WHEN THE JUDGMENT DECLARING THE CONTRACT TO BE AN
EQUITABLE MORTGAGE BECAME FINAL.
[9]

Basically, petitioner claims that he is entitled to retain possession of the subject property until
payment of the loan and the value of the necessary and useful improvements he made upon such
property.
[10]
According to petitioner, neither the Court of Appeals decision in G.R. CV No.
42065 nor this Courts decision in G.R. No. 120832 ordered immediate delivery of possession of
the subject property to respondent.
The dispositive portion of the March 31, 1995 decision of the Court of Appeals in G.R. CV No.
42065, which was affirmed by this Court, provides that
IN VIEW OF ALL THE FOREGOING, the judgment appealed from
is REVERSED and SET ASIDE and a new one entered: (1) dismissing the
complaint; (2) declaring the "Document of Sale and Special Cession of Rights and
Interests" (Exhibit B) dated February 10, 1960, to be an equitable mortgage not a
sale; (3) upholding the validity of OCT No. P-13038 in the name of Felicitas de
Lara; and (3) declaring null and void OCT No. P-11566 in the name of plaintiff
Cornelio Isaguirre. All other counterclaims for damages are likewise dismissed.
Costs against the appellee.
[11]

Petitioner argues that the abovementioned decision merely settled the following matters: (1) that
the transaction between petitioner and respondent was not a sale but an equitable mortgage; (2)
that OCT No. P-13038 in the name of respondent is valid; and (3) that OCT No. P-11566 in the
name of petitioner is null and void. Since the aforementioned decision did not direct the
immediate ouster of petitioner from the subject property and the delivery thereof to respondent,
the issuance of the writ of possession by the trial court on June 16, 1998 constituted an
unwarranted modification or addition to the final and executory decision of this Court in G.R.
No. 120832.
[12]

We do not agree with petitioners contentions. On the contrary, the March 31, 1995 decision of
the appellate court, which was affirmed by this Court on July 8, 1996, served as more than
adequate basis for the issuance of the writ of possession in favor of respondent since these
decisions affirmed respondents title over the subject property. As the sole owner, respondent has
the right to enjoy her property, without any other limitations than those established by
law.
[13]
Corollary to such right, respondent also has the right to exclude from the possession of
her property any other person to whom she has not transmitted such property.
[14]

It is true that, in some instances, the actual possessor has some valid rights over the property
enforceable even against the owner thereof, such as in the case of a tenant or lessee.
[15]
Petitioner
anchors his own claim to possession upon his declared status as a mortgagee. In his
Memorandum, he argues that
4.8 It was respondent who asserted that her transfer of the Property to petitioner
was by way of an equitable mortgage and not by sale. After her assertion was
sustained by the Courts, respondent cannot now ignore or disregard the legal
effects of such judicial declaration regarding the nature of the transaction.
xxx......xxx......xxx
4.13 Having delivered possession of the Property to petitioner as part of the
constitution of the equitable mortgage thereon, respondent is not entitled to the
return of the Property unless and until the mortgage loan is discharged by full
payment thereof. Petitioners right as mortgagee to retain possession of the
Property so long as the mortgage loan remains unpaid is further supported by the
rule that a mortgage may not be extinguished even though then mortgagor-debtor
may have made partial payments on the mortgage loan:
"Art. 2089. A pledge or mortgage is indivisible, even though the
debt may be divided among the successors in interest of the debtor
or the creditor.
"Therefore, the debtors heir who has paid a part of the debt cannot
ask for the proportionate extinguishment of the pledge or mortgage
as long as the debt is not completely satisfied.
"Neither can the creditors heir who has received his share of the
debt return the pledge or cancel the mortgage, to the prejudice of
the other heirs who have not been paid."
(Emphasis supplied.)
xxx......xxx......xxx
4.14 ......To require petitioner to deliver possession of the Property to respondent
prior to the full payment of the latters mortgage loan would be equivalent to the
cancellation of the mortgage. Such effective cancellation would render
petitioners rights ineffectual and nugatory and would constitute unwarranted
judicial interference.
xxx......xxx......xxx
4.16 The fact of the present case show that respondent delivered possession of the
Property to petitioner upon the execution of the Deed of Absolute Sale and
Special Cession of Rights and Interest dated 10 February 1960. Hence, transfer of
possession of the Property to petitioner was an essential part of whatever
agreement the parties entered into, which, in this case, the Supreme Court
affirmed to be an equitable mortgage.
xxx......xxx......xxx
4.19 Petitioner does not have the mistaken notion that the mortgagee must be in
actual possession of the mortgaged property in order to secure the debt. However,
in this particular case, the delivery of possession of the Property was an integral
part of the contract between petitioner and respondent. After all, it was supposed
to be a contract of sale. If delivery was not part of the agreement entered into by
the parties in 1960, why did respondent surrender possession thereof to petitioner
in the first place?
4.20 Now that the Courts have ruled that the transaction was not a sale but a
mortgage, petitioners entitlement to the possession of the Property should be
deemed as one of the provisions of the mortgage, considering that at the time the
contract was entered into, possession of the Property was likewise delivered to
petitioner. Thus, until respondent has fully paid her mortgage loan, petitioner
should be allowed to retain possession of the subject property.
[16]

Petitioners position lacks sufficient legal and factual moorings.
A mortgage is a contract entered into in order to secure the fulfillment of a principal
obligation.
[17]
It is constituted by recording the document in which it appears with the proper
Registry of Property, although, even if it is not recorded, the mortgage is nevertheless binding
between the parties.
[18]
Thus, the only right granted by law in favor of the mortgagee is to
demand the execution and the recording of the document in which the mortgage is
formalized.
[19]
As a general rule, the mortgagor retains possession of the mortgaged property
since a mortgage is merely a lien and title to the property does not pass to the
mortgagee.
[20]
However, even though a mortgagee does not have possession of the property,
there is no impairment of his security since the mortgage directly and immediately subjects the
property upon which it is imposed, whoever the possessor may be, to the fulfillment of the
obligation for whose security it was constituted.
[21]
If the debtor is unable to pay his debt, the
mortgage creditor may institute an action to foreclose the mortgage, whether judicially or
extrajudicially, whereby the mortgaged property will then be sold at a public auction and the
proceeds therefrom given to the creditor to the extent necessary to discharge the mortgage loan.
Apparently, petitioners contention that "[t]o require [him] to deliver possession of the
Property to respondent prior to the full payment of the latters mortgage loan would be
equivalent to the cancellation of the mortgage" is without basis. Regardless of its possessor, the
mortgaged property may still be sold, with the prescribed formalities, in the event of the debtors
default in the payment of his loan obligation.
Moreover, this Court cannot find any justification in the records to uphold petitioners contention
that respondent delivered possession of the subject property upon the execution of the "Deed of
Sale and Special Cession of Rights and Interests" on February 10, 1960 and that the transfer of
possession to petitioner must therefore be considered an essential part of the agreement between
the parties. This self-serving assertion of petitioner was directly contradicted by respondent in
her pleadings.
[22]
Furthermore, nowhere in the Court of Appeals decisions promulgated on
March 31, 1995 (G.R. CV No. 42065) and on October 5, 1998 (G.R. SP No. 48310), or in our
own decision promulgated on July 8, 1996 (G.R. No. 120832) was it ever established that the
mortgaged properties were delivered by respondent to petitioner.
In Alvano v. Batoon,
[23]
this Court held that "[a] simple mortgage does not give the mortgagee a
right to the possession of the property unless the mortgage should contain some special provision
to that effect." Regrettably for petitioner, he has not presented any evidence, other than his own
gratuitous statements, to prove that the real intention of the parties was to allow him to enjoy
possession of the mortgaged property until full payment of the loan.
Therefore, we hold that the trial court correctly issued the writ of possession in favor of
respondent. Such writ was but a necessary consequence of this Courts ruling in G.R. No.
120832 affirming the validity of the original certificate of title (OCT No. P-13038) in the name
of respondent Felicitas de Lara, while at the same time nullifying the original certificate of title
(OCT No. P-11566) in the name of petitioner Cornelio Isaguirre. Possession is an essential
attribute of ownership; thus, it would be redundant for respondent to go back to court simply to
establish her right to possess subject property. Contrary to petitioners claims, the issuance of the
writ of possession by the trial court did not constitute an unwarranted modification of our
decision in G.R. No. 120832, but rather, was a necessary complement thereto.
[24]
It bears
stressing that a judgment is not confined to what appears upon the face of the decision, but also
those necessarily included therein or necessary thereto.
[25]

With regard to the improvements made on the mortgaged property, we confirm the Court of
Appeals characterization of petitioner as a possessor in bad faith. Based on the factual findings
of the appellate court, it is evident that petitioner knew from the very beginning that there was
really no sale and that he held respondents property as mere security for the payment of the loan
obligation. Therefore, petitioner may claim reimbursement only for necessary expenses;
however, he is not entitled to reimbursement for any useful expenses
[26]
which he may have
incurred.
[27]

Finally, as correctly pointed out by the Court of Appeals, this case should be remanded to the
Regional Trial Court of Davao City for a determination of the total amount of the loan, the
necessary expenses incurred by petitioner, and the period within which respondent must pay such
amount.
[28]
However, no interest is due on the loan since there has been no express stipulation in
writing.
[29]

WHEREFORE, the assailed Decision of the Court of Appeals dated October 5, 1998 and its
Resolution dated March 5, 1999 are hereby AFFIRMED. Respondent is entitled to delivery of
possession of the subject property. This case is hereby REMANDED to the trial court for
determination of the amount of the loan, the necessary expenses incurred by petitioner and the
period within which the respondent must pay the same.
SO ORDERED.
Melo, (Chairman), Vitug, and Purisima, JJ., concur.
Panganiban, J., on leave.
[G.R. No. 116100. February 9, 1996]
SPOUSES CRISTINO and BRIGIDA CUSTODIO and SPOUSES LITO and MARIA
CRISTINA SANTOS, petitioners, vs. COURT OF APPEALS, HEIRS OF
PACIFICO C. MABASA and REGIONAL TRIAL COURT OF PASIG, METRO
MANILA, BRANCH 181, respondents.
D E C I S I O N
REGALADO, J .:
This petition for review on certiorari assails the decision of respondent Court of Appeals in
CA-G.R. CV No. 29115, promulgated on November 10, 1993, which affirmed with modification
the decision of the trial court, as well as its resolution dated July 8, 1994 denying petitioners
motion for reconsideration.
[1]

On August 26, 1982, Civil Case No. 47466 for the grant of an easement of right of way was
filed by Pacifico Mabasa against Cristino Custodio, Brigida R. Custodio, Rosalina R. Morato,
Lito Santos and Maria Cristina C. Santos before the Regional Trial Court of Pasig and assigned
to Branch 22 thereof.
[2]

The generative facts of the case, as synthesized by the trial court and adopted by the Court
of Appeals, are as follows:
Perusing the record, this Court finds that the original plaintiff Pacifico Mabasa died during the
pendency of this case and was substituted by Ofelia Mabasa, his surviving spouse [and children].
The plaintiff owns a parcel of land with a two-door apartment erected thereon situated at Interior
P. Burgos St., Palingon, Tipas, Taguig, Metro Manila. The plaintiff was able to acquire said
property through a contract of sale with spouses Mamerto Rayos and Teodora Quintero as
vendors last September 1981. Said property may be described to be surrounded by other
immovables pertaining to defendants herein. Taking P. Burgos Streetas the point of reference, on
the left side, going to plaintiffs property, the row of houses will be as follows: That of
defendants Cristino and Brigido Custodio, then that of Lito and Maria Cristina Santos and then
that of Ofelia Mabasa. On the right side (is) that of defendant Rosalina Morato and then a Septic
Tank (Exhibit D). As an access to P. Burgos Street from plaintiffs property, there are two
possible passageways. The first passageway is approximately one meter wide and is about 20
meters distan(t) from Mabasas residence to P. Burgos Street. Such path is passing in between
the previously mentioned row of houses. The second passageway is about 3 meters in width and
length from plaintiff Mabasas residence to P. Burgos Street; it is about 26 meters. In passing
thru said passageway, a less than a meter wide path through the septic tank and with5-6 meters in
length has to be traversed.
When said property was purchased by Mabasa, there were tenants occupying the premises and
who were acknowledged by plaintiff Mabasa as tenants. However, sometime in February, 1982.
one of said tenants vacated the apartment and when plaintiff Mabasa went to see the premises,
he saw that there had been built an adobe fence in the first passageway making it narrower in
width. Said adobe fence was first constructed by defendants Santoses along their property which
is also along the first passageway. Defendant Morato constructed her adobe fence and even
extended said fence in such a way that the entire passageway was enclosed (Exhibit 1-Santoses
and Custodios, Exh. D for plaintiff, Exhs. 1-C, 1-D and I -E) And it was then that the
remaining tenants of said apartment vacated the area. Defendant Ma. Cristina Santos testified
that she constructed said fence because there was an incident when her daughter was dragged by
a bicycle pedalled by a son of one of the tenants in said apartment along the first passageway.
She also mentioned some other inconveniences of having (at) the front of her house a pathway
such as when some of the tenants were drunk and would bang their doors and windows. Some of
their footwear were even lost. x x x
[3]
(Italics in original text; corrections in parentheses supplied)
On February 27, 1990, a decision was rendered by the trial court, with this dispositive part:
Accordingly, judgment is hereby rendered as follows:
1) Ordering defendants Custodios and Santoses to give plaintiff permanent access - ingress and
egress, to the public street;
2) Ordering the plaintiff to pay defendants Custodios and Santoses the sum of Eight Thousand
Pesos (P8,000) as indemnity for the permanent use of the passageway.
The parties to shoulder their respective litigation expenses.
[4]

Not satisfied therewith, therein plaintiff represented by his heirs, herein private respondents,
went to the Court of Appeals raising the sole issue of whether or not the lower court erred in not
awarding damages in their favor. On November 10, 1993, as earlier stated, the Court of Appeals
rendered its decision affirming the judgment of the trial court with modification, the decretal
portion of which disposes as follows:
WHEREFORE, the appealed decision of the lower court is hereby AFFIRMED WITH
MODIFICATION only insofar as the herein grant of damages to plaintiffs-appellants. The Court
hereby orders defendants-appellees to pay plaintiffs-appellants the sum of Sixty Five
Thousand (P65,000) Pesos as Actual Damages, Thirty Thousand (P30,000) Pesos as Moral
Damages, and Ten Thousand (P10,000) Pesos as Exemplary Damages. The rest of the appealed
decision is affirmed to all respects.
[5]

On July 8, 1994, the Court of Appeals denied petitioners motion for
reconsideration.
[6]
Petitioners then took the present recourse to us, raising two issues, namely,
whether or not the grant of right of way to herein private respondents is proper, and whether or
not the award of damages is in order.
With respect to the first issue, herein petitioners are already barred from raising the same.
Petitioners did not appeal from the decision of the court a quo granting private respondents the
right of way, hence they are presumed to be satisfied with the adjudication therein. With the
finality of the judgment of the trial court as to petitioners, the issue of propriety of the grant of
right of way has already been laid to rest.
For failure to appeal the decision of the trial court to the Court of Appeals, petitioners cannot
obtain any affirmative relief other than those granted in the decision of the trial court. That
decision of the court below has become final as against them and can no longer be reviewed,
much less reversed, by this Court. The rule in this jurisdiction is that whenever an appeal is
taken in a civil case, an appellee who has not himself appealed may not obtain from the appellate
court any affirmative relief other than what was granted in the decision of the lower court. The
appellee can only advance any argument that he may deem necessary to defeat the appellants
claim or to uphold the decision that is being disputed, and he can assign errors in his brief if such
is required to strengthen the views expressed by the court a quo. These assigned errors, in turn,
may be considered by the appellate court solely to maintain the appealed decision on other
grounds, but not for the purpose of reversing or modifying the judgment in the appellees favor
and giving him other affirmative reliefs.
[7]

However, with respect to the second issue, we agree with petitioners that the Court of
Appeals erred in awarding damages in favor of private respondents. The award of damages has
no substantial legal basis. A reading of the decision of the Court of Appeals will show that the
award of damages was based solely on the fact that the original plaintiff, Pacifico Mabasa,
incurred losses in the form of unrealized rentals when the tenants vacated the leased premises by
reason of the closure of the passageway.
However, the mere fact that the plaintiff suffered losses does not give rise to a right to
recover damages. To warrant the recovery of damages, there must be both a right of action for a
legal wrong inflicted by the defendant, and damage resulting to the plaintiff therefrom. Wrong
without damage, or damage without wrong, does not constitute a cause of action, since damages
are merely part of the remedy allowed for the injury caused by a breach or wrong.
[8]

There is a material distinction between damages and injury. Injury is the illegal invasion of a
legal right; damage is the loss, hurt, or harm which results from the injury; and damages are the
recompense or compensation awarded for the damage suffered. Thus, there can be damage
without injury in those instances in which the loss or harm was not the result of a violation of a
legal duty. These situations are often called damnum absque injuria.
[9]
in order that a plaintiff
may maintain an action for the injuries of which he complains, he must establish that such
injuries resulted from a breach of duty which the defendant owed to the plaintiff - a concurrence
of injury to the plaintiff and legal responsibility by the person causing it.
[10]
The underlying basis
for the award of tort damages is the premise that an individual was injured in contemplation of
law. Thus, there must first be the breach of some duty and the imposition of liability for that
breach before damages may be awarded; it is not sufficient to state that there should be tort
liability merely because the plaintiff suffered some pain and suffering)
[11]

Many accidents occur and many injuries are inflicted by acts or omissions which cause
damage or loss to another but which violate no legal duty to such other person, and consequently
create no cause of action in his favor. In such cases, the consequences must be borne by the
injured person alone. The law affords no remedy for damages resulting from an act which does
not amount to a legal injury or wrong.
[12]

In other words, in order that the law will give redress for an act causing damage, that act
must be not only hurtful, but wrongful. There must be damnum et injuria.
[13]
If, as may happen
in many cases, a person sustains actual damage, that is, harm or loss to his person or property,
without sustaining any legal injury, that is, an act or omission which the law does not deem an
injury, the damage is regarded as damnum absque injuria.
[14]

In the case at bar, although there was damage, there was no legal injury. Contrary to the
claim of private respondents, petitioners could not be said to have violated the principle of abuse
of right. In order that the principle of abuse of right provided in Article 21 of the Civil Code can
be applied, it is essential that the following requisites concur: (1) The defendant should have
acted in a manner that is contrary to morals, good customs or public policy; (2) The acts should
be willful; and (3) There was damage or injury to the plaintiff.
[15]

The act of petitioners in constructing a fence within their lot is a valid exercise of their right
as owners, hence not contrary to morals, good customs or public policy. The law recognizes in
the owner the right to enjoy and dispose of a thing, without other limitations than those
established by law.
[16]
It is within the right of petitioners, as owners, to enclose and fence their
property. Article 430 of the Civil Code provides that (e)very owner may enclose or fence his
land or tenements by means of walls, ditches, live or dead hedges, or by any other means without
detriment to servitudes constituted thereon.
At the time of the construction of the fence, the lot was not subject to any servitudes. There
was no easement of way existing in favor of private respondents, either by law or by
contract. The fact that private respondents had no existing right over the said passageway is
confirmed by the very decision of the trial court granting a compulsory right of way in their
favor after payment of just compensation. It was only that decision which gave private
respondents the right to use the said passageway after payment of the compensation and imposed
a corresponding duty on petitioners not to interfere in the exercise of said right.
Hence, prior to said decision, petitioners had an absolute right over their property and their
act of fencing and enclosing the same was an act which they may lawfully perform in the
employment and exercise of said right. To repeat, whatever injury or damage may have been
sustained by private respondents by reason of the rightful use of the said land by petitioners
isdamnum absque injuria.
[17]

A person has a right to the natural use and enjoyment of his own property, according to his
pleasure, for all the purposes to which such property is usually applied. As a general rule,
therefore, there is no cause of action for acts done by one person upon his own property in a
lawful and proper manner, although such acts incidentally cause damage or an unavoidable loss
to another, as such damage or loss is damnum absque injuria.
[18]
When the owner of property
makes use thereof in the general and ordinary manner in which the property is used, such as
fencing or enclosing the same as in this case, nobody can complain of having been injured,
because the inconvenience arising from said use can be considered as a mere consequence of
community life.
[19]

The proper exercise of a lawful right cannot constitute a legal wrong for which an action
will lie,
[20]
although the act may result in damage to another, for no legal right has been
invaded
[21]
One may use any lawful means to accomplish a lawful purpose and though the means
adopted may cause damage to another, no cause of action arises in the latters favor. Any injury
or damage occasioned thereby is damnum absque injuria. The courts can give no redress for
hardship to an individual resulting from action reasonably calculated to achieve a lawful end by
lawful means.
[22]

WHEREFORE, under the compulsion of the foregoing premises, the appealed decision of
respondent Court of Appeals is hereby REVERSED and SET ASIDE and the judgment of the
trial court is correspondingly REINSTATED.
SO ORDERED.
Romero and Puno, JJ., concur.
Mendoza, J., took no part.
[G.R. No. 84831. June 20, 2001]
PACENCIO ABEJARON, as represented by his Attorney-in-Fact, ALEJANDRO
ABEJARON, petitioner, vs. FELIX NABASA and the COURT OF
APPEALS,respondents.
D E C I S I O N
*

PUNO, J .:
With the burgeoning population comes a heightened interest in the limited land resource,
especially so if, as in the case at bar, one's home of many years stands on the land in dispute. It
comes as no surprise therefore that while this case involves a small parcel of land, a 118-square
meter portion of Lot 1, Block 5, Psu-154953 in Silway, General Santos City, the parties have
tenaciously litigated over it for more than twenty years.
Petitioner Abejaron filed this petition for review on certiorari to annul the respondent court's
Decision dated April 26, 1988 and Resolution dated July 12, 1988 reversing the trial court's
decision and declaring respondent Nabasa the owner of the subject lot.
The following facts spurred the present controversy:
Petitioner Abejaron avers that he is the actual and lawful possessor and claimant of a 118-
square meter portion of a 175-square meter residential lot in Silway, General Santos City
described as "Block 5, Lot 1, Psu-154953, bounded on the North by Road, on the South by Lot 2
of the same Psu, on the East by Felix Nabasa, and on the West by Road."
[1]
In 1945, petitioner
Abejaron and his family started occupying the 118-square meter land. At that time, the land had
not yet been surveyed. They fenced the area and built thereon a family home with nipa roofing
and a small store. In 1949, petitioner improved their abode to become a two-storey house
measuring 16 x 18 feet or 87.78 square meters made of round wood and nipa roofing.
[2]
This
house, which stands to this day, occupies a portion of Lot 1, Block 5, Psu-154953 and a portion
of the adjoining Lot 2 of the same Psu. Lot 2 belongs to petitioners daughter, Conchita
Abejaron-Abellon. In 1950, the small store was destroyed and in its stead, petitioner Abejaron
built another store which stands up to the present. In 1951, he planted five coconut trees on the
property in controversy. Petitioner's wife, Matilde Abejaron, harvested coconuts from these
trees.
[3]
Petitioner Abejaron also planted banana and avocado trees. He also put up a pitcher
pump.
[4]
All this time that the Abejarons introduced these improvements on the land in
controversy, respondent Nabasa did not oppose or complain about the improvements.
Knowing that the disputed land was public in character, petitioner declared only his house,
and not the disputed land, for taxation purposes in 1950, 1966, 1976, and 1978.
[5]
The last two
declarations state that petitioner Abejarons house stands on Lots 1 and 2, Block 5, Psu
154953.
[6]
Abejaron paid taxes on the house in 1955, 1966, and 1981.
[7]

Petitioner stated that beginning 1955, respondent Nabasa resided on the remaining 57-square
meter portion of Lot 1, Block 5, Psu-154953.
[8]
Nabasa built his house about four (4) meters
away from petitioner Abejaron's house. Beatriz Gusila, a neighbor of the Abejarons and the
Nabasas confirmed that when she arrived in Silway in 1949, Nabasa was not yet residing there
while Abejaron was already living in their house which stands to this day.
Before 1974, employees of the Bureau of Lands surveyed the area in controversy. Abejaron
merely watched them do the survey
[9]
and did not thereafter apply for title of the land on the
belief that he could not secure title over it as it was government property.
[10]
Without his
(Abejaron) knowledge and consent, however, Nabasa "clandestinely, willfully, fraudulently, and
unlawfully applied for and caused the titling in his name" of the entire Lot 1, Block 5, Psu-
154953, including petitioner Abejaron's 118-square meter portion.
[11]
Petitioner imputes bad faith
and fraud on the part of Nabasa because in applying for and causing the titling in his name of Lot
1, Block 5, Psu-154953, Nabasa represented himself to be the actual and lawful possessor of the
entire Lot 1, Block 5, including petitioner Abejaron's 118-square meter portion despite
knowledge of Abejaron's actual occupation and possession of said portion.
[12]

On September 24, 1974, Nabasa was issued Original Certificate of Title No. P-4140
pursuant to Free Patent No. (XI-4) 2877 covering Lot 1, Block 5, Psu-154953. As the title
included petitioner Abejarons 118-square meter portion of the lot, his son, Alejandro Abejaron,
representing Matilde Abejaron (petitioner Abejaron's wife), filed a protest with the Bureau of
Lands, Koronadal, South Cotabato against Nabasa's title and application. The protest was
dismissed on November 22, 1979 for failure of Matilde and Alejandro to attend the
hearings.
[13]
Alejandro claims, however, that they did not receive notices of the
hearings. Alejandro filed a motion for reconsideration dated January 10, 1980. Alejandro also
filed a notice of adverse claim on January 14, 1980. Subsequently, he requested the Bureau of
Lands to treat the motion as an appeal considering that it was filed within the 60-day
reglementary period. The motion for reconsideration was endorsed and forwarded by the District
Land Office XI-3 of the Bureau of Lands in Koronadal, Cotabato to the Director of Lands in
Manila on November 24, 1981.
[14]
But because the appeal had not been resolved for a prolonged
period for unknown reasons, petitioner Abejaron filed on March 12, 1982 an action for
reconveyance with damages against respondent Nabasa before Branch 22, Regional Trial Court
of General Santos City.
[15]
On May 10, 1982, petitioner filed a notice of lis pendens.
[16]

Abner Lagsub, geodetic engineer, testified for the petitioner. Lagsub stated that on March
30, 1980, Alejandro Abejaron hired him to relocate Lot 1, Block 5, Psu-154953, the land in
controversy. He surveyed the lot measuring 175 square meters. Fifty-seven (57) square meters
of Lot 1 and a portion of the adjoining Lot 3 were occupied by Nabasa's house. This portion was
fenced partly by hollow blocks and partly by bamboo. On the remaining 118 square meters stood
a portion of petitioner Abejarons house and two coconut trees near it, and his store. Abejaron's
118-square meter portion was separated from Nabasa's 57-square meter part by Abejaron's fence
made of hollow blocks. Both Nabasas and Abejarons houses appeared more than twenty years
old while the coconut trees appeared about 25 years old.
Back in 1971, Lagsub conducted a subdivision survey on Psu-154953. He was then hired by
the Silway Neighborhood Association to conduct the survey for purposes of allocating lots to the
members of the association, among whom were respondent Nabasa and petitioner
Abejaron. When the 1971 survey was conducted, both the Abejarons and Nabasa were already
occupying their respective 118 and 57 square meter portions of Lot 1, Block 5. Nabasa and
Matilde Abejaron, representative of petitioner, were present during the survey.
[17]

Respondent Nabasa had a different story to tell. He contends that he had been residing on a
12 x 15 meter or 180-square meter public land in Silway, General Santos City since 1945. He
admits that petitioner Abejaron was already residing in Silway when he arrived there. Nabasa
constructed a house which stands to this day and planted five coconut trees on this 180-square
meter land, but only two of the trees survived. Nabasa never harvested coconuts from these trees
as petitioner Abejaron claims to own them and harvests the coconuts. In many parts of
respondent Nabasas testimony, however, he declared that he started occupying the 180-square
meter area in 1976.
[18]

Nabasa avers that previously, he and petitioner Abejaron were in possession of portions of
Lot 2, Psu-154953. This lot was subsequently surveyed and divided into smaller lots with the
area of petitioner Abejaron designated as Lot 2, Block 5, Psu-154953 measuring one hundred
eighty (180) square meters, while his was designated as Lot 1, Block 5, Psu-154953 with an area
of one hundred seventy five (175) square meters.
Instead of applying for free patent over his Lot 2, petitioner Abejaron gave this lot to his
daughter Conchita Abejaron-Abellon and allowed her to file the application with the District
Land Office XI-4, Bureau of Lands, Koronadal, South Cotabato. Conchita secured Free Patent
No. (XI-4)-3293 over Lot 2. Pursuant to this, she was issued Original Certificate of Title No. P-
4420. On April 27, 1981, Conchita's title was transcribed in the Registration Book of General
Santos City.
Respondent Nabasa, on the other hand, filed an application for Free Patent over Lot 1, Block
5, Psu-154953 with the District Land Office No. XI-4, Bureau of Lands, Koronadal, South
Cotabato. While the application was pending, petitioner Abejaron forcibly encroached upon the
northern and southwestern portion of Lot 1, Block 5, Psu-159543. Abejaron fenced the disputed
118-square meter portion of Lot 1 and despite Nabasa's opposition, constructed a store near the
road. Petitioner Abejaron then transferred his old house constructed on Lot 2, Block 5, Psu-
154953 to a portion of the disputed 118-square meter area. Petitioner's daughter, Conchita,
patentee and title holder of Lot 2, constructed her own house in Lot 2.
Free Patent No. (XI-4)-2877, covering Lot 1, Block 5, was issued to respondent Nabasa on
September 24, 1974. But before the patent could be transcribed on the Registration Book of the
Registrar of Deeds of General Santos City, the District Land Officer of District Land Office No.
XI-4 recalled it for investigation of an administrative protest filed by the petitioner.
[19]
The
protest was given due course, but petitioner Abejaron or his representative failed to appear in the
hearings despite notice.
On November 22, 1979, the administrative protest was dismissed by the District Land
Officer for failure of petitioner Abejaron or his representative to appear in the hearings despite
notice.
[20]
Respondent Nabasa's Free Patent No. (XI-4)-2877 was then re-transmitted by the
District Land Officer of District Land Office XI-4 to the Register of Deeds, General Santos City,
and the same was transcribed in the Registration Book of the Registry of Property of General
Santos City on December 13, 1979. Original Certificate of Title No. P-4140, covering Lot 1,
Block 2, Psu-154953, was issued to respondent Nabasa.
[21]

On March 12, 1982, petitioner Abejaron filed against respondent Nabasa an action for
reconveyance with damages seeking reconveyance of his 118-square meter portion of Lot 1,
Block 5, Psu-154953.
During the trial, respondent Nabasa presented Abundio Guiral, his neighbor who had been
living since 1945 in Lot 3, Block 5, Psu-154953, adjoining Nabasa's Lot 1. He testified that
when he arrived in Silway, petitioner Abejaron was already living there. Four months after,
Nabasa started residing in the area. Nabasa constructed a house, planted coconut trees, and
fenced his 12 x 15 meter area. Abejaron's house in 1945 is still the same house he lives in at
present, but in 1977, it was jacked up and transferred from Lot 2 to Lot 1, Block 5. Nabasa tried
to prevent the transfer to no avail. The house was then extended towards Lot 2.
[22]

On rebuttal, petitioner Abejaron presented two neighbors. One of them, Alejandra Doria,
started living in Silway in 1947. She testified that when she arrived in the neighborhood,
Abejaron's fence as it now stands between the 57-square meter portion occupied by Nabasa's
house and the 118-square meter area claimed by petitioner Abejaron was already there.
[23]
The
other neighbor, Pacencia Artigo, also started living in Silway in 1947. She declared that the
house of the Abejarons stands now where it stood in 1947. She also testified that the Abejarons
previously had a store smaller than their present store.
[24]

On September 27, 1985, after trial on the merits, the trial court ruled in favor of petitioner
Abejaron, viz:
"WHEREFORE, IN VIEW OF ALL THE FOREGOING, this court hereby renders judgment as
follows:
1. Declaring the possession and occupancy of Pacencio Abejaron over 118 square meters of Lot
No. 1, Block 5, Psu-154953 in good faith and thereby declaring the inclusion of 118 square
meters of said lot in OCT No. P-4140 erroneous and a mistake, and for which, defendant Felix
Nabasa is hereby ordered to reconvey and execute a registerable document in favor of plaintiff
Pacencio Abejaron, Filipino, married and a resident of Silway, General Santos City, his heirs,
successors and assigns over an area of one hundred eighteen (118) square meters of Lot No. 1,
Block 5, Psu-154953, situated at Silway, General Santos City, on the Western portion of said lot
as shown in the sketch plan, Exhibit "R", and the remaining portion of 57 square meters of said
lot to be retained by defendant Felix Nabasa;
2) Should Felix Nabasa fails (sic) to do so, upon the finality of this judgment, the Clerk of Court
shall executed (sic) it in the name of Felix Nabasa, widower, and will have the same effect as if
executed by the latter and the Register of Deeds, General Santos City, is hereby directed to issue
New Transfer Certificate of Title to Alejandro Abejaron over 118 square meters of Lot No. 1,
Block 5, Psu-154953, and New Transfer Certificate of Title over 57 square meters of same Lot
No. 1, Block 5, Psu-154953, in favor of Felix Nabasa, and ultimately to have OCT No. P-4140 of
Felix Nabasa cancelled accordingly."
Respondent Nabasa's motion for reconsideration having been denied, he appealed to the
Court of Appeals. On April 26, 1988, the Court of Appeals rendered a decision in favor of
respondent Nabasa, viz:
". . . the only basis for reconveyance is actual fraud. In this case, Abejaron failed to substantiate
the existence of actual fraud. . . There was no proof of irregularity in the issuance of title nor in
the proceedings incident thereto nor was there a claim that fraud intervened in the issuance of the
title, thus, the title has become indefeasible (Frias v. Esquival, 67 SCRA 487). Abejaron was not
able to establish his allegation that Nabasa misrepresented his status of possession in his
application for the title. . . In fact, in Abejaron's answer to Nabasa's counterclaim, he said that
Nabasa has been occupying the area since 1950.
Contrary to the finding of the court a quo, the Bureau of Lands conducted an ocular inspection
before the title was issued. This was confirmed by Abejaron himself (tsn, January 19, 1984).
xxx
WHEREFORE, premises considered, the decision appealed from is hereby REVERSED and
SET ASIDE and a new one entered declaring Felix Nabasa as the owner of the lot covered by
O.C.T. No. P-4140. Costs against plaintif-appellee.
SO ORDERED."
Petitioner Abejaron filed a motion for reconsideration of the Court of Appeals decision. On
July 22, 1988, the Court of Appeals rendered a resolution denying the motion for reconsideration
for lack of merit. Hence, this petition for review on certiorari with the following assignment of
errors:
"I. THE HONORABLE COURT OF APPEALS ERRED IN NOT FINDING THAT ACTUAL
FRAUD WAS COMMITTED BY THE PRIVATE RESPONDENT AND PROVEN BY THE
PETITIONER AND SUSTAINED BY THE TRIAL COURT WHEN PRIVATE
RESPONDENT PROCURED THE TITLE IN HIS NAME OF THE AREA OF THE LOT IN
QUESTION, LOT 1, BLOCK 5, LOCATED AT SILWAY, DADIANGAS, GENERAL
SANTOS CITY.
II. THE HONORABLE COURT OF APPEALS ERRED IN CONCLUDING THAT THE LOT
WHICH BELONGS TO THE PETITIONER IS LOT 2 OF THE SAME BLOCK AND PSU,
AND THAT THE PETITIONER FORCIBLY ENTERED INTO LOT 1 OF THE SAME
BLOCK AND PSU, AND FORCIBLY TRANSFERRED HIS OLD HOUSE FROM LOT 2 TO
LOT 1 IS BASED ONLY ON THE SELF-SERVING ALLEGATIONS OF THE PRIVATE
RESPONDENT AND NOT SUPPORTED BY ANY COMPETENT AND CONVINCING
EVIDENCE.
III. THE HONORABLE COURT OF APPEALS ERRED IN DISREGARDING THE FACT
THAT PETITIONER HAS A CLEAR RIGHT OVER THE PROPERTY IN QUESTION
BECAUSE HE HAS BEEN IN ACTUAL AND LAWFUL POSSESSION FOR SO MANY
YEARS AND A CLAIMANT OF THE PROPERTY IN QUESTION."
We affirm the decision of the Court of Appeals.
An action for reconveyance of a property is the sole remedy of a landowner whose property
has been wrongfully or erroneously registered in another's name after one year from the date of
the decree so long as the property has not passed to an innocent purchaser for value.
[25]
The
action does not seek to reopen the registration proceeding and set aside the decree of registration
but only purports to show that the person who secured the registration of the property in
controversy is not the real owner thereof.
[26]
Fraud is a ground for reconveyance. For an action
for reconveyance based on fraud to prosper, it is essential for the party seeking reconveyance to
prove by clear and convincing evidence his title to the property and the fact of fraud.
[27]

Petitioner Abejaron does not claim to own Lot 1, Block 5, Psu-154953. He in fact admits
that he believed the land in dispute was public in character, thus he did not declare it for taxation
purposes despite possession of it for a long time. Neither did he apply for title over it on the
mistaken belief that he could not apply for title of a public land. In his Complaint, he stated that
respondent Nabasa's fraudulent procurement of Free Patent No. (XI-4)-2877 and OCT No. P-
4140 over the disputed land deprived him not of ownership, but of his "right to file the necessary
application thereon with the authorities concerned"
[28]
as long-time possessor of the land.
Nonetheless, petitioner contends that an action for reconveyance is proper, viz:
". . . for an action of reconveyance of a parcel of land to prosper, it is not necessary that the
proponent be the absolute owner thereof. It is enough that the proponent has an equitable right
thereon. In the case at bar, the plaintiff had been in lawful, open, continuous and notorious
possession, occupation and control in the concept of an owner of a greater portion of the subject
lot since 1945 and have (sic) thereby acquired an equitable right thereon protected by
law. Possession of public lands once occupation of the same is proven, as the herein plaintiff
did, under claim of ownership constitutes a grant from the state (Republic vs. Vera, 120 SCRA
210). A portion of the public land ceased to be public as soon as its claimant had performed all
the conditions essential to a grant (Republic vs. Villanueva, 114 SCRA 875)."
[29]

Petitioner's contention, buttressed by the Vera case and Chief Justice Teehankee's dissent in
the Villanueva case, is similar to the position taken by the plaintiff in Mesina v. Vda. de Sonza,
et al.
[30]
In that case, plaintiff filed in the Court of First Instance of Nueva Ecija an action for
cancellation of the original certificate of title procured by the defendant by virtue of a homestead
patent. The title covered a public land which she claimed to own through public, open, and
peaceful possession for more than thirty years. The law applicable in that case, which petitioner
Abejaron apparently relies on in the case at bar, is Sec. 48(b) of Commonwealth Act 141 or the
Public Land Act, as amended by Republic Act No. 1942, which took effect on June 22, 1957, viz:
"Sec. 48. The following-described citizens of the Philippines, occupying lands of the public
domain or claiming to own any such lands or an interest therein, but whose titles have not been
perfected or completed, may apply to the Court of First Instance (now Regional Trial Courts) of
the province where the land is located for confirmation of their claims and the issuance of a
certificate of title therefor, under the Land Registration Act (now Property Registration Decree),
to wit:
xxx
(b) Those who by themselves or through their predecessors in interest have been in open,
continuous, exclusive, and notorious possession and occupation of agricultural lands of the
public domain, under a bona fide claim of acquisition of ownership, for at least thirty years
immediately preceding the filing of the application for confirmation of title except when
prevented by war or force majeure. These shall be conclusively presumed to have performed
all the conditions essential to a Government grant and shall be entitled to a certificate of
title under the provisions of this Chapter." (emphasis supplied)
Citing Susi v. Razon,
[31]
the Court interpreted this law, viz:
". . . where all the necessary requirements for a grant by the Government are complied with
through actual physical possession openly, continuously, and publicly with a right to a certificate
of title to said land under the provisions of Chapter VIII of Act No. 2874, amending Act No. 926
(carried over as Chapter VIII of Commonwealth Act No. 141), the possessor is deemed to have
already acquired by operation of law not only a right to a grant, but a grant of the Government,
for it is not necessary that a certificate of title be issued in order that said grant may be
sanctioned by the courts -an application therefor being sufficient under the provisions of Section
47 of Act No. 2874 (reproduced as Section 50, Commonwealth Act No. 141). If by a legal
fiction, Valentin Susi had acquired the land in question by grant of the State, it had already
ceased to be of the public domain and had become private property, at least by presumption, of
Valentin Susi, beyond the control of the Director of Lands. (Italics supplied)"
The Mesina and Susi cases were cited in Herico v. Dar,
[32]
another action for cancellation of
title issued pursuant to a free patent. Again, the Court ruled that under Section 48(b) of the
Public Land Act, as amended by Rep. Act No. 1942, with the plaintiff's proof of occupation and
cultivation for more than 30 years since 1914, by himself and by his predecessor-in-interest, title
over the land had vested in him as to segregate the land from the mass of public
land. Thenceforth, the land was no longer disposable under the Public Land Act by free
patent.
[33]
The Court held, viz:
"As interpreted in several cases (Susi v. Razon, et al., 48 Phil. 424; Mesina v. Pineda Vda. de
Sonza, G.R. No. L-14722, May 25, 1960) when the conditions as specified in the foregoing
provision are complied with, the possessor is deemed to have acquired, by operation of law, a
right to a grant, a government grant, without the necessity of a certificate of title being
issued. The land, therefore, ceases to be of public domain, and beyond the authority of the
Director of Lands to dispose of. The application for confirmation is a mere formality, the lack of
which does not affect the legal sufficiency of the title as would be evidenced by the patent and
the Torrens title to be issued upon the strength of said patent."
[34]

In citing Republic v. Villanueva, et al.,
[35]
petitioner Abejaron relied on the dissenting
opinion of Chief Justice Teehankee. However, the en banc majority opinion in that case and
in Manila Electric Company v. Bartolome,
[36]
departed from the doctrines enunciated in
the Susi, Mesina, and Herico cases. Citing Uy Un v. Perez,
[37]
the Court ruled that "the right of
an occupant of public agricultural land to obtain a confirmation of his title under Sec. 48(b) of
Com. Act. No. 141, as amended by Rep. Act No. 1942, is 'derecho dominical incoativo' and that
before the issuance of the certificate of title the occupant is not in the juridical sense the true
owner of the land since it still pertains to the State."
[38]

The Court pointed out that the Villanueva and Meralco cases are different from the oft-
cited Susi case as the latter involved a parcel of land possessed by a Filipino citizen since time
immemorial, while the land in dispute in the Villanueva and Meralco cases were sought to be
titled by virtue of Sec. 48(b) of the Public Land Act, as amended. In explaining the nature of
land possessed since time immemorial, the Court quoted Oh Cho v. Director of Lands,
[39]
viz:
"All lands that were not acquired from the Government, either by purchase or by grant, belong to
the public domain. An exception to the rule would be any land that should have been in the
possession of an occupant and of his predecessors-in-interest since time immemorial, for such
possession would justify the presumption that the land had never been part of the public domain
or that it had been a private property even before the Spanish conquest."
In 1986, however, in Director of Lands v. Intermediate Appellate Court, et al.,
[40]
this
Court en banc recognized the strong dissent registered by Chief Justice Teehankee in
the Villanueva case and abandoned the Villanueva and Meralco ruling to revert to
the Susi doctrine. Reiterating the Susi and Herico cases, the Court ruled:
"Nothing can more clearly demonstrate the logical inevitability of considering possession of
public land which is of character and duration prescribed by statute as the equivalent of express
grant from the State than the dictum of the statute itself [Sec. 48(b)] 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."
[41]
(Emphasis supplied)
This is the prevailing rule as reiterated in the more recent case of Rural Bank of
Compostela v. Court of Appeals, a ponencia of now Chief Justice Davide, Jr.,
[42]
viz:
"The rule under the latter (Section 48[b] of the Public Land Act, as amended by R.A. No. 1942),
is that when the conditions specified therein are complied with, the possessor is deemed to have
acquired, by operation of law, a right to a government grant, without necessity of a certificate of
title being issued, and the land ceases to be part of the public domain and beyond the authority of
the Director of Lands."
[43]

The question brought to the fore, therefore, is whether or not petitioner Abejaron has
satisfied the conditions specified in Sec. 48(b) of the Public Land Act, as amended by R.A. No.
1942. Sec. 48(b) has been further amended by P.D. No. 1073 which took effect on January 25,
1977. Sec. 4 of the P.D. reads as follows:
"Sec. 4. The provision of Section 48(b) and Section 48(c), Chapter VIII, of the Public Land Act,
are hereby amended in the sense that these provisions shall apply only to alienable and
disposable lands of the public domain which have been in open, continuous, exclusive and
notorious possession and occupation by the applicant himself or thru his predecessor-in-interest,
under a bona fide claim of acquisition of ownership, since June 12, 1945.
Sec. 48(b) of the Public Land Act, as further amended by P.D. No. 1073, now reads:
"(b) Those who by themselves or through their predecessors-in-interest have been in open,
continuous, exclusive and notorious possession and occupation of agricultural lands of the public
domain, under a bona fide claim of acquisition or ownership, since June 12, 1945, or earlier,
immediately preceding the filing of the application for confirmation of title, except when
prevented by wars or force majeure. Those shall be conclusively presumed to have performed
all the conditions essential to a Government grant and shall be entitled to a certificate of title
under the provisions of this chapter." (Italics ours)
[44]

However, as petitioner Abejaron's 30-year period of possession and occupation required by
the Public Land Act, as amended by R.A. 1942 ran from 1945 to 1975, prior to the effectivity of
P.D. No. 1073 in 1977, the requirement of said P.D. that occupation and possession should have
started on June 12, 1945 or earlier, does not apply to him. As the Susi doctrine holds that the
grant of title by virtue of Sec. 48(b) takes place by operation of law, then upon Abejaron's
satisfaction of the requirements of this law, he would have already gained title over the disputed
land in 1975. This follows the doctrine laid down in Director of Lands v. Intermediate
Appellate Court, et al.,
[45]
that the law cannot impair vested rights such as a land grant. More
clearly stated, "Filipino citizens who by themselves or their predecessors-in-interest have been,
prior to the effectivity of P.D. 1073 on January 25, 1977, in open, continuous, exclusive and
notorious possession and occupation of agricultural lands of the public domain, under a bona fide
claim of acquisition of ownership, for at least 30 years, or at least since January 24, 1947" may
apply for judicial confirmation of their imperfect or incomplete title under Sec. 48(b) of the
Public Land Act.
[46]

Having laid down the law applicable to the case at bar, i.e., Sec. 48(b) of the Public Land
Act, as amended by R.A. 1942, we now determine whether or not petitioner has acquired title
over the disputed land. In doing so, it is necessary for this Court to wade through the evidence
on record to ascertain whether petitioner has been in open, continuous, exclusive and notorious
possession and occupation of the 118-square meter disputed land for 30 years at least since
January 24, 1947. It is axiomatic that findings of fact by the trial court and the Court of Appeals
are final and conclusive on the parties and upon this Court, which will not be reviewed or
disturbed on appeal unless these findings are not supported by evidence or unless strong and
cogent reasons dictate otherwise.
[47]
One instance when findings of fact of the appellate court
may be reviewed by this Court is when, as in the case at bar, the factual findings of the Court of
Appeals and the trial court are contradictory.
[48]

Petitioner claims that he started occupying the disputed land in 1945. At that time, he built
a nipa house, a small store, and a fence made of wood to delineate his area. This nipa house was
improved in 1949 into a two-storey house. The small store was also made bigger in 1950. The
wooden fence was also changed to a fence made of hollow blocks. The two-storey house, bigger
store, and hollow-block fence all stand to this day. In 1951, petitioner planted coconut trees near
his house. While the petitioner has shown continued existence of these improvements on the
disputed land, they were introduced later than January 24, 1947. He has failed to establish the
portion of the disputed land that his original nipa house, small store and wooden fence actually
occupied as of January 24, 1947. In the absence of this proof, we cannot determine the land he
actually possessed and occupied for thirty years which he may acquire under Sec. 48(b) of the
Public Land Act. Worthy of notice is the fact that the disputed land was surveyed, subdivided
into and identified by lots only in the 1970's. Therefore, prior to the survey, it would be difficult
to determine the metes and bounds of the land petitioner claims to have occupied since 1947 in
the absence of specific and incontrovertible proof.
The neighbors presented by the petitioner, namely Alejandra Doria, Pacencia Artigo, and
Beatriz Gusila, could not also further his cause as both Doria and Artigo stated that they started
residing in Silway in 1947, without specifying whether it was on or prior to January 24, 1947,
while Gusila arrived in the neighborhood in 1949. While Doria testified that there was a fence
between Abejaron's and Nabasa's houses in 1947, she did not state that Abejaron's 118-square
meter area was enclosed by a fence which stands to this day. This is confirmed by Geodetic
Engineer Lagsub's 1984 survey plan which shows that a fence stands only on one side of the
118-square meter area, the side adjacent to Nabasa's 57-square meter portion. Again, this poses
the problem of determining the area actually occupied and possessed by Abejaron at least since
January 24, 1947.
Finally, as admitted by the petitioner, he has never declared the disputed land for taxation
purposes. While tax receipts and tax declarations are not incontrovertible evidence of
ownership, they become strong evidence of ownership acquired by prescription when
accompanied by proof of actual possession of the property or supported by other effective
proof.
[49]
Even the tax declarations and receipts covering his house do not bolster his case as the
earliest of these was dated 1950.
Petitioner's evidence does not constitute the "well-nigh incontrovertible" evidence necessary
to acquire title through possession and occupation of the disputed land at least since January 24,
1947 as required by Sec. 48(b) of the Public Land Act, as amended by R.A. 1942. The basic
presumption is that lands of whatever classification belong to the State and evidence of a land
grant must be "well-nigh incontrovertible."
[50]
As petitioner Abejaron has not adduced any
evidence of title to the land in controversy, whether by judicial confirmation of title, or
homestead, sale, or free patent, he cannot maintain an action for reconveyance.
In De La Pea v. Court of Appeals and Herodito Tan,
[51]
the petitioner filed an action for
reconveyance, claiming preferential right to acquire ownership over a 3/4 hectare of land and
imputing fraud and misrepresentation to respondent in securing a free patent and original
certificate of title over the land in controversy. The action for reconveyance was dismissed by
the trial court and the Court of Appeals. This Court affirmed the decision of the Court of
Appeals, viz:
"It is well-settled that reconveyance is a remedy granted only to the owner of the property
alleged to be erroneously titled in another's name. (Tomas v. Court of Appeals, G.R. No. 79328,
21 May 1990, 185 SCRA 627, 633; Esconde v. Barlongay, G.R. No. 67583, 31 July 1987, 152
SCRA 603, 611; Nebrada v. Heirs of Alivio, et al., 104 Phil. 126 [1958]; Director of Lands v.
Register of Deeds of Rizal, 92 Phil. 826 [1953]; Azurin v. Quitoriano, et al., 81 Phil. 261
[1948]). In the case at bench, petitioner does not claim to be the owner of the disputed
portion. Admittedly, what he has is only a "preferential right" to acquire ownership thereof by
virtue of his actual possession since January 1947. . . Title to alienable public lands can be
established through open, continuous, and exclusive possession for at least thirty (30) years. . .
Not being the owner, petitioner cannot maintain the present suit.
Persons who have not obtained title to public lands could not question the titles legally issued by
the State. (Reyes v. Rodriguez, 62 Phil. 771, 776 [1936]) In such cases, the real party in interest
is the Republic of the Philippines to whom the property would revert if it is ever established,
after appropriate proceedings, that the free patent issued to the grantee is indeed vulnerable to
annulment on the ground that the grantee failed to comply with the conditions imposed by the
law. (See Sec. 101 of C.A. 141 [Public Land Act]; Lucas v. Durian, 102 Phil. 1157, 1158
[1957]; Sumail v. Judge of the Court of First Instance of Cotabato, et al., 96 Phil. 946, 953
[1955]). Not being an applicant, much less a grantee, petitioner cannot ask for
reconveyance." (emphasis supplied)
[52]

In the more recent case of Tankiko, et al. v. Cezar, et al.,
[53]
plaintiffs filed an action for
reconveyance claiming that they were the actual occupants and residents of a 126,112-square
meter land which was titled to another person. The trial court dismissed the action, but the Court
of Appeals reversed the dismissal. Despite the appellate court's finding that plaintiffs had no
personality to file the action for reconveyance, the disputed land being part of the public domain,
it exercised equity jurisdiction to avoid leaving unresolved the matter of possession of the land in
dispute. On appeal to this Court, we reinstated the decision of the trial court and dismissed the
action for reconveyance, viz:
". . . equity is invoked only when the plaintiff, on the basis of the action filed and relief sought,
has a clear right that he seeks to enforce, or that would obviously be violated if the action filed
were to be dismissed for lack of standing. In the present case, respondents have no clear
enforceable right, since their claim over the land in question is merely inchoate and
uncertain. Admitting that they are only applicants for sales patents on the land, they are not and
they do not even claim to be owners thereof.
Second, it is evident that respondents are not the real parties in interest. Because they admit that
they are not the owners of the land but mere applicants for sales patents thereon, it is daylight
clear that the land is public in character and that it should revert to the State. This being the case,
Section 101 of the Public Land Act categorically declares that only the government may institute
an action for reconveyance of ownership of a public land. . .
x x x
In the present dispute, only the State can file a suit for reconveyance of a public land. Therefore,
not being the owners of the land but mere applicants for sales patents thereon, respondents have
no personality to file the suit. Neither will they be directly affected by the judgment in such suit.
x x x
Clearly, a suit filed by a person who is not a party in interest must be dismissed. Thus, in Lucas
v. Durian, 102 Phil. 1157, September 23, 1957, the Court affirmed the dismissal of a Complaint
filed by a party who alleged that the patent was obtained by fraudulent means and consequently,
prayed for the annulment of said patent and the cancellation of a certificate of title. The Court
declared that the proper party to bring the action was the government, to which the property
would revert."
[54]

Similarly, as petitioner Abejaron has failed to show his title to the disputed land, he is not
the proper party to file an action for reconveyance that would result in the reversion of the land
to the government. It is the Solicitor General, on behalf of the government, who is by law
mandated to institute an action for reversion.
[55]
He has the specific power and function to
"represent the Government in all land registration and related proceedings" and to "institute
actions for the reversion to the Government of lands of the public domain and improvements
thereon as well as lands held in violation of the Constitution."
[56]
Since respondent Nabasa's Free
Patent and Original Certificate of Title originated from a grant by the government, their
cancellation is a matter between the grantor and the grantee.
[57]

Having resolved that petitioner Abejaron does not have legal standing to sue and is not the
real party in interest, we deem it unnecessary to resolve the question of fraud and the other issues
raised in the petition. These shall be timely for adjudication if a proper suit is filed by the
Solicitor General in the future.
WHEREFORE, the petition is DENIED and the impugned decision of the Court of
Appeals is AFFIRMED. The Complaint filed in Civil Case No. 2492 before the Regional Trial
Court of South Cotabato, Branch 1, is DISMISSED. No costs.
SO ORDERED.
Davide, Jr., C.J. (Chairman), Kapunan, Pardo, and Ynares-Santiago, JJ., concur.